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INTRODUCTION

ACCORDING TO BANKING COMPANIES ORDINANCE 1962

“Banking means the accepting, for the purpose of lending, or investment, of

deposits of money from the public, repayable on demand or otherwise, and

withdraw able by cheque, draft, order or otherwise.”

“Banking companies mean companies which transact the business of banking in

Pakistan.”

COMMERCIAL BANK

“The commercial bank receives surplus money from the public and lend to others

who needs funds. Bank collects cheque, bills of exchange etc from customers. It

transfers money from one place to another. It provides agency and general utility

services. Purpose of commercial bank is to earn profit.”

HISTORY OF ASKARI COMMERCIAL BANK

The banking sector has witnessed a dramatic change during the last ten

years with the development of Askari Bank, which is not only redefining priorities

and focus of the banks, but also threatening the domination of traditional

players.

The story begins with the incorporation of Askari Commercial Bank

limited in Pakistan on October 09, 1991, Askari Bank Commenced (begin)

to operations in April 1992, as a public limited company. The bank is

listed on the Karachi, Lahore and Islamabad Stock Exchanges and the

initial public offering was over subscribed by 16 times.

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While capturing the target market share amongst the view banks, Askari

has provided good value to its shareholders. Its share price has remained

approximately 12% higher than the average share price of quoted banks during

the last four years.

Askari Bank has expanded into a nation wide presence of 83

Branches, and an Offshore Banking Unit in Bahrain. A shared network of

over 800 online ATMs covering all major cities in Pakistan supports the

delivery channels for customer service. As on December 31, 2004, the

Bank had equity of Rs. 6.016 billion and total assets of Rs. 107.168

billion, with over 475,000 banking customers, serviced by a total staff of

2,118.

Askari Bank is the only bank with its operational head office in the twin

cities of Rawalpindi-Islamabad, which have relatively limited opportunities as

compared to Karachi and Lahore. This created its own challenges and

opportunities, and forced as to evolve an outward-looking strategy in terms of Askari market emphasis. As a result, Askari developed a geographically

diversified assets base instead of a concentration and heavy reliance on business

in the major commercial centers of Karachi and Lahore, where most other banks

have their operational Head offices.

MOTIVATION OF ASKARI COMMERCIAL BANK

While successfully penetrating the key domestic markets through

strategic expansion and business diversification they remain alive to the

challenge emanating from the development in the global financial

markets; the opportunities and threats engendered by greater

deregulation and increased customer expectations. These provide them

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the impetus (moment) to make the best use of available resources,

including modern technologies, to meet the challenges ahead.

Historically, Askari’s core marketing focus for its asset base has been the

middle and upper middle business houses (including wholesalers andmanufacturers) operating in the large urban centers of Pakistan, which are

primarily oriented towards foreign trade. This segment constitutes significant

revenues to the bank. The liability side remains focused on the middle and upper

middle class retired and serving government and armed forces personal and

mid-size business houses.

Their corporate banking division was established in April 1999 with the

primary focus on servicing large corporate and multi-national companies(MNCs). Benefiting from the bank’s growing balance sheet size, this division B

now gaining momentum and their long-term aim D to develop it into an

independent.

Strategic business unit (SBU)… This would the bank to acquire, develop

and specialized abilities, and enhance their focus on serving the emerging needs

of the corporate clients.

With this branch network of 75 and further expected increase in

future, the ATM’s facility and internet Banking, Askari Bank’s reach is ever

increasing. In recognition of this reach, they have set up a retail-banking

group in July 2000, the mobile ATM’s facility is first time started by Askari

commercial bank in 2005 dedicated to serving the urban consumer

market; Askari is committed to aggressively market this segment. The

strategy is to provide their customers with a basket of innovative

products to meet their varying needs.

Askari Commercial Bank is the only Private Sector bank that has been approved

by the World Bank as a Participating Financial Institution for the US$ 200 million

Line of Credit sanctioned (authorized) to the Government of Pakistan for the

Financial Sector Deepening and Intermediation Project.

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Askari's emphasis on further broadening its core foreign trade business

translated into handling a higher volume of Export and Import business of

Rs. 36 billion registering a growth of 42% over the pervious year. This

enhanced foreign trade business was secured due to excellent customerservices and efficient international settlement arrangements with our

correspondent banks.

Askari Bank is operating throughout Pakistan. Most of the branches are

connected through our State of the Art, On-line Communications Network, which

gives the bank a competitive edge in providing instant services to its clientele.

We also offer direct access to the latest Foreign Exchange Rates through our

Online Communications.

FIELD OF ACTIVITIES

THE BANK BASICALLY WORKS UNDER THREE GROUPS NAMED AS

1) Corporate banking and financial institutions group2) Retail banking group

3) Operations and credit group.

1-CORPORATE BANKING AND FINANCIAL INSTITUTION

GROUP

This Group is responsible for serving the needs of large corporate clients in

public and private sector, managing correspondent banking relationships and

undertaking money market transactions. The Group is organized in three

divisions namely

Corporate and Merchant Banking Division,

International Division

And Treasury.

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2-RETAIL BANKING GROUP

Retail banking group was formed in 2000, this group is responsible for servingthe needs of the retail market. Focusing on individual consumers and small and

medium size enterprises, for purpose of product differentiation, the group is

managed in three business arms.

Investments products unit,

Asset products unit,

And the credit cards division.

INVESTMENT PRODUCTS UNIT

Responsible for developing and managing brands which serve the investment

needs of the consumer market, this unit focuses on deposit mobilization,

provision of value added services based on modern technology and undertaking

the centralized marketing and advertising for the Bank. This unit is also actively

involved in the acquisition business and has signed-up over 300 merchants

nation-wide which offers shopping discounts to the Bank's Privilege Card

members.

Askari Bank's Value Plus is a unique deposits account, which offers handsome

monthly profits, accidental insurance cover, partial liquidity on all time deposits

and free Privilege Card membership. The Unit is also administering the sales and

distribution, including arrangement for strategic partnership alliances for Askari-

i-Net Banking, the first internet banking in Pakistan, which allows routine

banking transactions from any where in the World, round the clock, over the

internet.

ASSET PRODUCTS UNIT

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This Unit is engaged in the development and management of retail credit

schemes. The consumer market in Pakistan has not only grows exponentially

over the last decade or so, but the needs of this segment have become

extremely diverse. In order to sustain competition, it is but imperative to

continue offering innovative consumer credit schemes. With the launch of Askari

Bank's Personal Finance an Askar (auto-loans), this unit is emerging as a

significant contributor to the Bank's loan growth. The unit also administers the

first e-commerce banking solution in Pakistan, under the brand name ASK-IBL

online. This is a b2b automated credit transaction module, offering merchandise

credit to retailers on goods purchased form one of the largest distributors n the

country. Strong collection and prudent risk management policies have restricted

delinquencies to very low levels.

CREDIT CARDS DIVISION

This Division manages Askari Master Card brand and is headquartered at

Karachi. With a new fully automated transaction processing system, the brand

was re-launched in 2001, supported by an aggressive advertising campaign and

strong sales team network. The product now has portfolio of nearly 20,000

cards, in less than one year. The brand is accepted worldwide and over 3,000

locations in Pakistan.

3- OPERATIONS AND CREDIT GROUP

A support function group mainly responsible for development of systems and

procedures, process re-engineering, automation and credit management. The

group is organized in three divisions,

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System and operations division

Electronic technology divisions

And the credit division

SYSTEM AND OPERATIONS DIVISIONS

This group has been instrumental in development of procedures and manuals for

various operating requirements of the bank. After careful mapping of the

existing process flows, the division recommends automation and re-engineering

requirements. To improve transaction efficiencies. The division is active in

providing equipment procurement support and development of new branches.

The protection of fixed assets of the bank is also managed by the by this

division, as directs function. During year 2001, the division has proposed several

cost cutting initiatives based upon improvement of our existing procedures and

documentation reduction. Seven new branches have been opened during this

year. The division successfully implements the model branch concept during

2001, which has been proved to be a milestone towards improving our customer

service standards and achieving process uniformity with optimum resource

utilization.

ELECTRONIC TECHNOLOGY DIVISION

This division operates as the backbone for all operational functions in the bank.Responsible primarily for the development of banking software and provision of

computer hardware to all business units, the division also engaged in the

development of technology based value added customer service products. The

division has helped the bank in playing the pioneering role in offering Internet

banking service e-commerce solution and on-line banking. The division provides

online real time branch connectivity and has full-automated transaction

processing support programmers in the place. The division is focusing on use of

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administration. This division operates on future oriented strategy focusing on

employee’s personal and professional growth.

Staff development activities are geared to enhance their capabilities for applying

the knowledge and facts towards development of practical situations. Under our

human resource management policy, we develop and groom our management

personal for positions of greater responsibilities analytical, interpersonal,

conceptualized and specialized skills to enable them understand cause-and-effect

relationships and to think logically.

Staff is given on the-the -job as off-site training in diverse areas of banking and

management. Our hiring philosophy is based upon meritocracy and selecting the

right person for the right job. We lay greater emphasis on employee’s honesty

and integrity besides technical competence. Candidates are selected through

well defined and systematic selection procedure.

FINANCE DIVISION

Responsible for bookkeeping and accounts, this division at head office, prepare

all financial return and the MIS through its management-reporting wing. The

division is actively involved in preparing market comparative analysis,

consolidation of bank's budgets, its monitoring and constant review of various

financial indicators.

Finance division works as the backbone for the bank's operations. The division,

which reports directly to the president and chief executive of the bank, has been

instrumental in preparation of banks business plans and future strategies. The

budgetary performance are constantly reviewed and through a sophisticated "

monthly performance report” which is a computer based program, the division

provides feed back to the senior on strategic issue like reasons for budgetary

variance and methods to arrest negative performance factors.

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The bank's branch network has been divided into 6 regions:

1) North region

2) Comparison of Islamabad and Rawalpindi area and the north area.

3) Central region

4) Comprising of Lahore and East area.

5) South region: and

6) West region

A process of effective decentralization has been implemented, with delegation of

authority and greater responsibility and accountability. Under this system the

regional heads have the primary responsibility for business development,

profitability productivity, operational efficiency and credit quality.

The system helps the customers through quick decision-making and fast product

delivery. It has now enabled the bank to further expand and diversify its

geographical reach and business activities.

THE MISSION, VISION

&

OBJECTIVE

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THE MISSION STATEMENT:

To be the leading private sector bank in Pakistan

With an international presence,

Delivering quality services

Through innovative technology

An effective resource management

In a modern and progressive organization

Culture of meritocracy, maintain

High ethical and professional standards,

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With providing enhance value to all our stakeholders,

And contributing to society

VISION

To be the leading bank in the region...

CORE VALUES

The intrinsic values, which are corner stones of Askari corporate behavior,

are:

• Commitment

• Integrity

• Fairness

• Team-work

• Service

OBJECTIVES OF THE ACBL

As Askari Bank looks ahead to the future by moving through the decade of

the 1990's its efforts are guided by a broad framework of corporate

objectives, which are as follows:

Askari is committed to its identity of " security & trust " and will endure to

uphold this image at al the times.

It will endure to provide its customers with as many creative financialservices and products, as is required. As today customer demands a

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package of services suited to his particular business, Askari plans to

develop different and new products to cater to the customer's demand.

Askari bank has they strength to be a market leader.

Bank will keep standing and by and develop, its human capital base. It is

planning to provide all the required training to its staff towards achieving

a higher level of professionalism. Askari will continue striving to build a

strong, motivated and dedicated work force where total commitment will

be towards customer's satisfaction and wealthy growth of organization.

Askari bank will endure to provide a competitive return to its shareholders

and will strive to maximize its share value. The enhancement in its capital

and returns will be a continuous process. Askari bank is interested in

being one of the most financially viable institutions. So it lays great

emphasis on gradual building up to a healthy deposit mix. In the years

ahead, the bank will enhance its focus on growth through operational

efficiency, creating strategic alliances developing well-structured

networking system innovating new products, enhancing marketing and

sales efforts improving customer service, achieving greater employee

motivation and providing the best value to its stakeholders - will make it a

leader in the corporate world.

HOW CHALLENGE BE DELIVERED

These objectives and guiding mission will be achieved through

• Focused objective

• Winning as a team

• Excellence in delivery

• Relentless quality

• Upward rising sales

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CODE OF BUSINESS PRINCIPLES

Askari code of business principles is to:

• Deliver solutions that meet customers financial need;

• Build and sustain a high performance culture;

• Build trusted relationships with all shareholders;

• Build and manage the bank’s portfolio of businesses to achieve strong and

sustainable shareholder returns; and

• Create and leverage strategic assets and capabilities for competitive

advantage.

CORPORATE PHILOSOPHY

“The Challenge... to bring a dream to life”

From knowing Askari customers' requirements to understanding employee

needs, from utilizing modern technology to making responsible social

contributions, from enhancing stake-holders' value to practicing corporate

ethics, Askari is continuously and consistently striving to address newer

challenges with a single motivation - the power to inspire and be inspired.

Organizational goal and strategy define the purpose and competitive techniques

that set it apart from others organizations. Goals are often written down as an

enduring statement of company intent.

A strategy is the plan of action that describes the resource allocation and

activities for dealing with the environment and for reaching the organizational

goal. Goals and strategies define the scope of operations and the relationship

with employees, clients and competitors.

With over 14 years of experience in trade finance and an extensive international

branch network, Askari Commercial Bank is committed to help the customer

succeed in every competitive environment. To keep pace with changing needs,

ACBL constantly review its comprehensive cash, trade and treasury products and

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services, ensuring that a full range of flexible and innovative services is always

available for the customer wherever they trade.

CUSTOMER RELATIONSHIPS

"Before we discover, we must explore"

Knowing Askari customers and their needs is the key to Askari business

success. Askari products and services are structured to touch and improve the

quality of lives of all segments of society. Service quality standards are

designed and monitored to ensure a consistent and convenient customer

experience. Askari client relationship managers are well equipped and well

trained to provide most efficient and personalized service to each and every

customer. Askari products and services are as diverse as Askari market

segments. Askari have structured and syndicated financing arrangements,

working capital finance, Balancing-Modernization Replacement (BMR)

facilities, financing of international trade, consumer credit, small business

loans, credit cards and unparalleled investment products for the individual

saver. Askari Bank is proud of the pioneering role in providing the most

modern technological services to its customer base, which today exceeds

150,000 relationships.

EMPLOYEE RELATIONSHIPS

"Unusual effort on part of the employees who are apparently

ordinary workers is one of the key indications of a superior

enterprise"

Askari staff is Askari most valuable asset. The human resource

philosophy at Askari Bank focuses on multi-talent hiring, professional

grooming, requisite training and meritocracy based reward system. Askari

lays great emphasis on the development and nurturing of "Askari Culture", a

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cohesive teamwork, where each relies on the strength of the other and

together they achieve common objectives.

Staff welfare has always been a priority. New initiatives like

hospitalization plan, car buy-back facility and home loan insurance have

added new dimensions to the staff-care policy and motivated them to out-

perform Askari competitors.

Employee productivity enhancement is organized through extensive in-

house and external training programs. Askari continue to offer opportunities

for people to develop their knowledge, skills and personalities, thus ensuring

greater self-fulfillment and progression in the organization.

TECHNOLOGICAL INNOVATION

"Modern science is not an option, it is an obligation”

Technology is rapidly changing the way Askari think, act and does

business. It has played a pivotal role in enhancing customer

expectations, particularly with respect to speed and quality of service.

Askari enjoy a strategic competitive advantage over all domestic players by

virtue of Askari leadership in technological innovations. Askari have fully

automated transaction-processing systems for back-office support. Askari

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branch network is connected on-line real-time and Askari customers have

access to off-site as well as on-site ATMs, all over Pakistan.

Askari Phone Banking service and Internet Banking facility allows

customers to enjoy routine banking services from anywhere in the

world, 365 days a year, 24 hours a day. Askari have also pioneered

commerce venture in Pakistan through a major retail distributor.

Askari qualified and experienced technology team is now focusing on data

warehousing to enhance the Customer Relationship Management (CRM)

program

ETHICAL VALUES

"Professionalism without integrity is like a book without pages"

Because the right may not always be obvious, Askari must be guided in every

action by a set of well-defined values, governing Askari decisions. Askari

understand that its commitment to satisfy customers’ needs must be fulfilled

within a professional and ethical framework. Askari subscribe to a culture of

high ethical standards, based upon development of right attitudes.

The following primary core values provide the guiding principles for Askari

corporate behavior:

• Commitment

•

Integrity• Fairness

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• Team-work

• Service

As part of Askari internal communications program, these core values are

inculcated in Askari employees through internal memos, posters and most

importantly leading by example.

CORPORATE CITIZENSHIP

"The greatest of life's pleasures are shared"

• Askari role as a responsible corporate citizen is as important to ACBL as

the products and services they offer.

• Askari have made useful contributions in the areas of sports, culture,

poverty alleviation, health & medical sciences, education and scientific

research.

• Askari was one of the co-sponsors of the 9th South Asian Federation

Games, held at Islamabad in the Year 2003. Askari have also sponsored

various sports tournaments at both amateur and professional level.

• Askari contributions to the NGOs dedicated to the treatment and

welfare of the blind is a ray of hope in the darkness. Askari have made

donations to the drug-addiction control programs and Askari efforts to

help support Aids Awareness programs and contributions to the mental

and social welfare of women and children have won much acclaim.

• Askari participated in IUCN Water conservation initiative and have

helped in creating better understanding about the country on theinternational platform by cosponsoring the first interactive encyclopedia

on Pakistan.

GROWTH

"There is no sin punished more implacably by nature than the sin

of resistance to change"

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Askari live in a moment of history where everything is changing so fast

that Askari begin to see the present only when it is already disappearing.

Askari customer needs are changing and their expectations are

growing. Technology is fast proliferating the distribution channels and now

banking services can be accessed from multiple contact points. Askari believe

that balanced growth is the key to survival in today's global banking

environment.

From a humble beginning with just 7 branches in 1992, today Askari

enjoy a network of 73 outlets in Pakistan, spread across the country. A

network of self-service ATMs supports these outlets.

Askari total assets now exceed Rs.50.9 billion and Askari have over 17

products and services to match Askari customers' individual needs. Bank's

equity base stands at Rs. 2.58 billion with 20% growth over the last 5 years.

The human resource capital of the bank today exceeds 1,200 employees. As

part of Askari growth strategy Askari is now extending Askari banking

services to the remote and rural areas.

CORPORATE ACHIEVEMENT

"Winning isn't everything, it's the only thing.”

Amidst tough competition, Askari efforts to go an extra mile inproviding superior services to Askari customers have been acknowledged at

the national as well as international levels. These acknowledgements serve as

a great source of encouragement and appreciation at one hand and inspire

ACBL to perform even better, on the other.

The Global Finance Magazine has honored Askari with the “The Best

Bank in Pakistan” award. Askari won the Euro money and Asia money awards

as early as 1994, 1995 and 1996. Askari have Al+, the highest possible creditrating, for the short-term obligations, and Askari long-term rating stands at

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AA. Askari won the prestigious "Best Presented Annual Accounts" award from

the Institute of Chartered Accountants in Pakistan, and The Institute of Cost

and Management Accountants, Pakistan, for the services sector, for 2000.

Askari have also received prizes during the last four years from the South

Asian Federation of Accountants (SAFA) for the "Best Presented Annual

Accounts" for the financial sector, in the SAARC region.

Askari was the first bank in Pakistan to offer Internet Banking

services and b2b e-commerce solutions for merchants looking to purchase

on credit.

MANAGEMENT SYSTEM

CORPORATE INFORMATION

MANGERIAL POLICIES

ORGANOGRAM

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BOARD OF DIRECTORS

Executive

Committee

President and

Chief Executive

Internal Audit

Corp. Banking

& Fin. Inst.Group

Operating and

credit group Regions

Retail

BankingGroup

Credit Cards

International Credit

Rawalpin

di/Islama

badAsset

Products

Planning and

Corporate

affairs

Treasury

Electronic

TechnologyNorth

Investment

products

Human

Resource

Corporate andMerchant

Banking

Systems and

Operations Lahore Finance

Data Reporting East

Legal Affairs South I

South II

West

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MANGERIAL POLICIES

A. Financial policies

B. Procurement policies

C. Marketing policies

D. Promotional policies

E. Lending policies

F. Personal policies

FINANCIAL POLICIES

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

• Use of funds

SOURCE OF FUNDS:

The 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 open various types of accounts for its customers Services are

provided for earning.

• Interest income and commission bank providing the services to its

customer.

USE OF FUNDS:

After the acquisition of the funds their acquisition become necessary. Thebank seeks the best way for making investment to got more profit with the

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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. for allocation of funds a bank has

to follow some banking policies and the prudential regulations of SBP these

are:

A bank has to maintain a liquidity with central bank ,i.e. 25 %of its total

deposits.

A bank cannot invest all of its funds otherwise it will be difficult to meet urgent

needs.

A substantial part of funds is received from interest on loans and advances.

Before granting a loan the bank analyze and observe the borrower and conduct a

complete ratio analysis. Bank prepare credit line for this purpose the major thing

is granting an advance is the security offered by the borrower and its actual

market value.

PROCUREMENT POLICIES

Procurement policies are more concerned with manufacturing

organizations. In bank industry that is service industry procurement means

the procurement of funds from various sources such as deposits. It

involves attracting and holding the funds of the depositors. After the

acquisition of funds, the bank invest the acquire funds. One alternative is

to lend its money and earned interest markup or invest in govt. securities

etc. as already mentioned in the above paragraph the major sources of

funds for a bank are the deposit of the general and the other sources of

income includes interest or markup charges received for various services

offered by the bank to its clients.

A bank tries to attract maximum no. Of accounts so that it can increase it’s

deposits and these lending ability. In order to get maximum no. of accounts the

staff of the bank must be efficient as compared to the other banks and the

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manager of the branch must take personal interest in attracting deposits. Good

quality of the service is the key to success.

MARKETING POLICIES

Marketing policies are also one of the most important policies because they are

related to the growth of the organization. Marketing for a bank would mean:

1. Creation of new product and services.

2. The bank marketing must be consumer oriented.

Following are the marketing policies of the ACBL.

a. Keeping the track of latest development in the world and

incorporating the latest and most modern equipment to make the

banking procedures simple and easy for the customers.

b. Development of products for the customers.

c. Giving good services and maintaining good relations with the

customers.

These policies can be implemented by providing the right product and service to

the customer at the right place, at the right time, at the right price.

It is necessary for the managers to keep in touch with consumers, observe their

needs and develop products, which meet their needs.

PROMOTIONAL POLICIES

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Public relation and advertising has assumed a great importance in the modern

banking business. As for as promotional activities are concerned, the main

objective of the bank is to inform the existing clients and other people about its

new products or change in the existing services. ACBL establishes its purpose

through:

1. Direct contact with customers.

2. Relation with business organizations.

3. Community relations.

LENDING POLICIES

Every bank has its own lending policies except for those, which are common for

all the banks, i.e. the policies, which are imposed on all the commercial banks by

the SBP, are known as prudential regulations. The lending policies of ACBL are

as follows:

1. The bank only invests in those sound and viable projects, which have

good rate of return.

2. Bank prefers to advance loan to their account holders.

3. Loan is given to reliable person only.

4. No political loan is sanctioned by bank.

5. Any account holder can apply for running finance or demand finance. Themanger apprises the past record of account holder and his credit

worthiness. If he finds any thing wrong he can refuse to sanction the

amount.

6. The bank while taking security prefers govt. Securities to shares.

7. It also advances working capital loans.

PERSONAL POLICIES

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Personal policies have an important role in the success of an any organization.

ACBL have its proper personal policies. Good personal policies motivate the

employees towards hardworking.

Following are the main personal policies of ACBL:

1. Selection of employees on merit

2. Selection of capable employees.

3. Attractive salary package for motivation of employees.

4. To train and develop the future management of the bank.

5. Every employee must have certain set of clearly defined duties6. Effective communication at al levels of the organization.

DEPARTMENTS

GENERAL BANKING DEPARTMENT

CREDIT DEPARTMENT

FOREIGN EXCHANGE DEPARTMENT

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Banking procedures are divided between various departments.

Different departments do their jobs in occurrence with the bank policies.

In ACBL each branch is divided into various departments. Head of

department manages each department & officials of the branch follow

procedures.

The departments working within a branch are as:

GENERAL BANKING DEPARTMENT

Account opening department

Remittances department Cash department

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Clearing department

PRIVILEGE BANKING DEPARTMENT

Online banking

Lockers

CREDIT DEPARTMENT

FOREX DEPARTMENT

Import department

Export department

Foreign currency department

ACCOUNTS DEPARTMENT

IT- DEPARTMENT

ACCOUNT OPENING DEPARTMENT

Account Opening In-

charge

OfficeOfficer

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Functions of Account Opening Department

• Providing account opening form according to the customer's requirements,

• Guide the customer about the requirements of the account opening and

form filling,

• Check the forms whether they are correctly completed or not,

• Preparing checklist,

• Stamping on the form,

• Maintaining account opening register,

• Pasting of forms in register after release from general banking in charge,

• Issuance of cheque books,

• Issuance of accounts maintenance certificate,

• Closure of account

• Verification of signature in case of cheque presented before releasing of

account opening from SS card is not yet scanned

IMPORTANCE OF INTRODUCTION

FOR A\C OPENING

Introductory references As soon as a person opens an account with the

bank, the banker customer relationship is established. In such situation

this is advisable the banker should not open new accounts of unknown

persons unless references regarding the integrity and responsibility of the

purposed persons are obtained from respectable parties.

Failure to exercise this care may result in serious consequences not onlyfor the banker concerned but also for the other bankers and general

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public. It is not sufficient to obtain the reference but its genuineness must

also be verified. Omission of this may have serious consequences.

In practice we see that there is tough competition among bankers for

procurement of deposits, so to press a prospective new customer to findthe desired reference may offend him, yet he is to be welcomed by the

banker as a source of fresh deposits. But these practical difficulties have

to be handled tactfully because the risk involved to carry out this

requirement partially or wholly may lead to undesirable results.

PRECAUTIONS TO AVOID FRAUD

If preliminary necessary inquiries mentioned above are not made and account is

opened, it is possible that an undesirable person is provided with a chequebook

to defraud innocent people or the person being an undercharged bankrupt may

put the banker in difficult situation.

1. SAFEGUARD AGAINST UNINTENTIONAL OVERDRAFT

Sometimes due to misreading of the balance an account may be inadvertently

overdrawn or the credit entry of customer is placed into the account of another

person by mistake who happens to have withdrawn that amount. in all such cases

the amount can only be realized if the person is man of integrity.

2. INQURIES ABOUT CUSTOMERS

Have all necessary information with him regarding his Generally a banker

is asked by another banker to give his opinion about his customer’s

financial position. Therefore, it is beneficial for the both that the banker

should customers.

3. PROOFS FOR REASONABLE CARE AND INQUIRY

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Under section 131 of negotiable instrument act, 1881 a collecting banker

is protected provided he collects the cheques of his customers in good

faith and without negligence. But if the banker fails to make preliminary

inquiries he may be deprived of statutory protection, being guilty of negligence.

ACCOUNT OPENING PROCEDURE &PRECAUTIONS:-

KNOW YOUR CUSTOMERS

The objective of knowing a customer is to have a fair idea about the identity,

financial resources, and general information about the customer at the time

when the relationship is established. A banker must have following information

about the customer:

Customer name:

Enter complete name as mentioned in original ID card /other business

documents.

Nature of business /profession: if customer is of salaried class enter his

employer name. If the customer is a businessman, trader, sole proprietor, enter

the business name, for example “Jamil Traders”etc.also enter the customer’s

title/position and address of the business/employer. Address with P.O.BOX is not

acceptable. Similarly remarks like

“Private service”, “business” are not acceptable, rather specify what type of

company/business the customer is associated with for example Manager Philips

Electrical Company.

Address:

Enter the complete business/residential address. With in the brackets you may

also provide prominent address identification marks for ease of physically

locating the address.

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Contact Numbers:

Enter home, official, mobile, fax number and e-mail address (if available).

Banker can verify the number by giving the customer a courtesy call or by

sending him a e-mail.

Other/ secondary/ mailing address:

Some customer may volunteer their parents or siblings’ addressor second home

address or a mailing address other than a permanent address.

Special instructions:

Clear-cut special instructions must be obtained from customers. If the

customer has not given any special instruction specified column must be

cancelled by drawing a line, as this column must not be left blank in any

circumstance.

Existing/other bankers:

Almost most all the bankers usually have a banking relationship with another

bank. In case of customer who does not have an existing banking relationship,

or does not want to disclose the existing relationship, then it is strongly

recommended that at least for some time this particular account must be kept

under observation.

TYPES OF ACCOUNTS

1) ACCOUNTS OF GENERAL CUSTOMERS

• Minor account

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• Illiterate person account

• Joint account

2) ACCOUNT OF SPECIAL PERSONS

• Proprietorship account

• Partnership account

• Limited company’s account

• Accounts of club societies and associations

•

Agent’s accounts• Trust account

• Liquidator’s account executer’s and administrator’s account

REMITTANCE DEPARTMENT

Functions of remittances department

The functions of remittance departments is to handle with the following

instruments:

• Pay Order

• Demand Draft

• Pay slip

• Telegraphic Transfer

• Payment of Remittances

• Cancellation of pay order & demand draft

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The remittance department deals with the transfer of money from one place to

another.

This department deals with the local currency transfer only. ACBL provides these

services to both customers & non-customers

Remittance can be made through:

1) Instrument transfer

2) Electronic transfer

3) Mail transfer

Instruments of the Remittances Departments

PAY ORDER

Pay order issued from one branch only be payable from the same branch. It is

normally issued for payment in the same city. It is normally referred as banker's

cheque

Get the application form.

Issue pay order after recovering cheques.

Do necessary vouchering.

Make entry in PO issue register.

All pay order shall be crossed" payees account only".

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Charges on issue of Pay Order

Amount (Rs) Charges (Rs)

Less then 100,000 50

Above 100,000 Nil

Duplicate Pay Order:

Check the record to insure that payment has not been effected.

Get application for issuing of duplicate PO.

Recover charges.

Issue duplicate pay order.

DEMAND DRAFT

It is an instrument on demand for which value has been received, issued by the

branch of the bank drawn i.e. payable at some other place(branch) of the same

bank. In case of agency arrangement- demand draft can also be issued by one

branch of the bank payable to other branch of the other bank e.g. DD issued by

ACBL payable by MCB.

Charges on issue of Demand Draft

Amount (Rs) Charges (Rs)

1 - 10,000 2510,000 – 100,000 50 or .1%

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100,000 - 1000,000 200 or .07%

Over 1000,00 1000 or .05%

PAY SLIP

The bank for settlement of it own payment issue pay slip.

• No excise duty

• No commission

CASH DEPARTMENT

All physical movement of cash in the bank is made through the cash

department. Normally cash department performs following functions

Receipt

Payments

Act according to any standing instructions

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Transfer of funds from one account to another

Handling of ATM

Verification of signatures

Posting

Handling of prize bond

Cash receipt section

In this section the cashier in following manner receives cash:

Fill- up

deposit slip

Cashier counts the amountsand fulfills other

requirement

Deposited on

Receipt

Customer

Cashier counts theamount and fulfills

other requirements

Process of

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Cash payment section

In this section honoring the cheque through following process makes payment.

Cheque is presented

at token counter

Cheque is recorded

& token # is allotted

Cashier counts

the amount &payment is made

Cancellation officer

cancels cheque

Posting is made

Two signatures on

back of the cheque

by customer

Process of

payment

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CLEARING DEPARTMENT

MEANING OF CLEARING

The word clearing has been derived from the word “Clear” and is defined

as “ a system by which banks exchange cheques and other negotiable

instruments drawn on each other within a specific area and thereby

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secure payment for their clients through the Clearing House At specified

time” in an efficient way”.

1. Since clearing does not involve any cash etc. and all the transaction take

place through book entries , the number of transaction can be unlimited.

2. No cash is needed as such the risk of robbery, embezzlements and

pilferage are totally eliminated.

3. As major payments are made through clearing, the banks came manage

cash payments at the counters with a minimum amount of cash in vaults.

4. A lot of time, cost and labor are saved.

5. Since it provides an extra service to the customer of banks without any

service charges or costs, more and more people are inclined and attracted

towards banking.

CLEARING HOUSE

It is a place where representatives of all banks sit together and interchange their

claims against each other with the help of controlling staff of State Bank of

Pakistan And where there is no branch of State Bank of Pakistan the designated

branch of National Bank of Pakistan act as controlling member instead of State

Bank of Pakistan

MEMBERSHIP CEASES

It ceases to be a scheduled Bank.

It is not able to meet its liabilities.

State Bank of Pakistan or Central Govt. prohibits it to receive fresh

deposits.

RULES AND REGULATIONS HAVE CLEARING HOUSE:

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Timing:(Monday through Saturday)

i. 1st Clearing at 10:00 a.m.

ii. 2nd Clearing at 2.30 p.m.

Each bank will send competent representative to exchange the cheques.

Each bank is required to insure that all cheques and other negotiable

instruments are properly stamped and suitably discharged

An objection memo must accompany each and every cheque when return

unpaid duly initialed.

Each bank is required to maintain sufficient funds in the principal accountwith SBP to meet the payment obligations.

The State Bank of Pakistan debit the account of each member of the

clearinghouse with the proportionate working expenses incurred on the

operation of clearing house. These expenses are very nominal.

.

OUTWARD CLEARING AT THE BRANCH:

The following points are to be taken into consideration while an instrument is

accepted at the counter to be presented in outward clearing:

The name of the branch appears on its face where it is drawn o.

It should be stale or post dated or without date.

Amount in words and figures does not differ.

Signature of the drawer appears on the face of the instrument.

Instrument is not mutilated.

There should be no material alteration ,if so, it should be properly

authenticated.

If order instrument suitably indorsed and the last endorsee’s account

being credited.

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Endorsement is in accordance with the crossing if any.

The amount of the instrument is same as mentioned on the paying-in-

slip and counterfoil.

The title of the account on the paying-in-slip is that of payee or

endorsee (with the exception of bearer cheque).

If an instrument is in order than our bank special crossing stamp is affixed

across the face of the instrument. Clearing stamp is affixed on the face of the

instruments, paying-in-slip and counterfoil (The stamp is affixed in such a

manner that half appears on counterfoil and paying-in-slip). The instrument is

suitably discharged, where a bearer cheque does not require any discharge and

also an instrument in favor a bank not need be discharged.

The instrument along with pay-in-slip is retained while the counterfoil is given to

the customer duly signed. Then the following steps are to be taken:

1. The particulars of the instrument and the pay-in-slip or credit voucher are

entered in the outward clearing register.

2. Serial no. Is given to each voucher.

3. The register is balanced; the credit vouchers are balanced from the

instruments and are released to the respective departments against

acknowledgement in the register.

4. The instruments are arranged bank wise.

5. The schedules are prepared in triplicate, two copies which are attached

with the relevant instrument and the third is kept as office copy.

6. The house page is prepared from schedules in triplicate.

7. The schedules and house pages are signed by the house incharge with

branch stamp.

8. The grand total of the house page is taken and agreed with that of the

outward clearing register.

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9. The instrument along with duplicate schedule and house page are sent to

the main office.

However the amount is kept in float till final status of various instruments is

known from respective paying banks in second dealing.

The entry of the instrument returned unpaid is made in Cheques returned

Register. If the instrument is not to be presented again in clearing then a

covering memo is prepared. The covering memo along with returned instrument

and objection memo is sent to the customer who sent the same to his account.

INWARD CLEARING OF THE BRANCH:

1. The particulars of the instruments are compared with the list.

2. The instruments are detached and sort out department wise.

3. The entry is made in the inward clearing register (serial no. Instrument

no. Account no. Is written).

4. The instruments are sent top the respective departments

5. The instruments are scrutinized in each respect before honoring the same.

OUTWARD CHEQUES RETURNED UNPAID:

These are the cheque returned unpaid by us in inward clearing. due to some

objections.

INWARD CHEQUES RETAINED UNPAID:

These are the cheques retained unpaid to us which were lodged by us in

Outward Clearing.

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RETURN OF CHEQUES AFTER CLEARING HOUSE:

Suppose all cheques received in the inward clearing are passed and later on it is

found that a cheque should have been returned, in such cases, we contact the

collecting branch and request them not to make payment against the proceeds

of the cheque which was not returned unpaid by us in due time. the cheque with

objection memo along with a covering letter is sent to the collecting branch,

making request to issue a payment order in favour to balance the Cash-cum-day

book we may debit suspense account sundry debtors with the approval of the

manager. When the payment order is received, it is lodged in clearing and

suspense account, sundry debtors is adjusted accordingly.

SPECIAL CLEARING:

In addition to the normal clearing function at Clearing house it is mutually

agreed to hold an extra clearing at the clearing house on the particular day and

time which is known as “special clearing” it is arranged due to the rush of work

arising out of say, more Holidays declared by the Central Govt. at a time, but

normally special clearing is he4ld on last working day of our half yearly and

yearly closing i.e. 30th June and 31st Dec. every year.

ONLINE BANKING

Online banking means that the customer of ACBL can deposit / withdraw funds

in / from other branches of ACBL. Askari bank provides online facility to all its

branches.

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ONLINE CHARGES

Amount of Deposits Charges ( Rs)

25,000 or below 50

25,000 - 200,000 100

200,001 - 500,000 250

500,001 - 2000,000 500

Above 2000,000 750

LOKERS

Askari bank offers facility of lockers to its customers.

There are three sizes of lockers available:

CHARGES

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

Large 2500

Medium 1500

Small 1000

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CREDIT DEPARTMENT

Although the study of money is important for the understanding of the

way in which our economic system operates, we must recall this point

that most exchange transactions in this system are carried on today

without the use of actual money, i.e. Those are carried on by means of

credit and credit instruments rather than money. While money still forms

the basis of credit and deferred payments, it is necessary to examine the

nature of credit operations, and the instruments and institutions trough,

which these operations are carried on, in considerable detail.

THE NATURE OF CREDIT

On the surface, credit operation appears to be of many kinds, but they all have a

fundamental similarity. In credit transactions, one party to the transaction, the

creditor, turns over to the debtor a certain amount of money, commodities or

services at the present time and relies on the debtor to repay an equivalent

amount, usually the money in the future plus interest at some future time.

THE BASIS OF CREDIT

There has been much discussion, concerning the essential basis of credit or

borrowing operation. Some writers on the subject have stoutly insisted that

confidence is the basis of all grants of credit, that if one did not have confidence

that the borrower would repay a loan one would never thinks of making the

loan, save on grounds of friendship of philanthropy. Others have held property,

rather than confidence is the basis of all genuine credit transactions. Some insist

that character is the essential factor, while still other writers have indulged in a

propensity of alliteration by sating that the bases of credit are character, capital

and capacity; or the man and the means; or reliability and resources.

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TYPES OF CREDIT

The verities of credit may be classified in numerous ways- according to the

status of eh debtor, according to the status of the creditor, according to the time

for which the credit is granted, and so on; but the most fruitful classification

usually indicates the use to which the credit is put.

1.Public and Private Credit:

In the first place, a distinction is usually made between public and private credit.

Public credit comprises the promises to pay off governmental bodies, that is,

their acquisition of goods in the present in return for promises to pay in future;

and private credit refers to the promises to pay all non-government debtors.

Among the sub-classes of private credit, the most significant are band credit,

commercial credit and consumption credit.

2. Band Credit:

In Comprehends all kinds of promises to pay off banking institutions, including

demand deposits, time deposits, notes, bankers, acceptances, cash, letters of

credit, debentures, and bonded obligations. Frequently, the term bank credit is

restricted in use to refer only to the demand deposit liabilities of the commercial

banks, and one must constantly be on guard to recognize the employment of the

term in this restricted sense. As a sub-class of bank credit, central bank credit is

of outstanding importance in modern monetary system it includes the central

bank's circulating notes and its deposit liabilities, the better consisting chiefly of

the reserve balances of the commercial banks.

3. Investment Credit.

The credit structure, business if found upon examination to consist very largely

of two forms of credit. Investment credit is extended through loans, the

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proceeds of which are put into the fixed assets of a business enterprise. If the

owners of business cannot themselves furnish all of the capital necessary for

investments in land, buildings and equipment. Obviously what they need is loans

of capital running over a considerable period of years.

4. Commercial credit

In addition to seeking credit in long term investment in fixed assets, most

business periodically ask for credit in the form of short term loans. Commercial

credit is business supplier for current business operations, such as

manufacturing and marketing of goods. It often take more business capital than

business can themselves supply to pay for raw materials, to make the outlays

for wages and to carry inventories of finished goods until they can be converted

into cash. To help finance such operations short-term loans usually running from

thirty days to six months are negotiated. Commercial loans like investment loan

must ultimately be paid out of accumulated earnings of a business. But if the

business earnings are of immediate future, such loans can be safely made and

promptly paid. Commercial loans are base done quick assets, such as raw

material and finished goods, which are in constant process of liquidation and

thereby provide the cash with to extinguish loans.

5. Consumers credit and producers’ credit

Consumers credit involves advance of purchasing power for economic goods to

consumers for consumption purposes. Its distinguish characteristic lies in the

factor that the things acquired by the debtors as result of the loans are not

supposed to furnish them with the means of repaying the loans the loan must be

repaid out of the income of the borrowers.

TYPES OF CREDIT INSTRUMENTS

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There are various types of credit instruments. The more important credit

instruments are as follows:

Bills of exchange:

A bill of exchange is define by negotiable instruments act as "an instrument in

writing, containing an unconditional order, signed by the maker, directing a

certain person, to pay certain sum of money, only to or to the order of a certain

person, or to the bearer the instrument".

Cheque:

A Cheque is defined “a bill of exchange drawn on specific banker and not

expresses to be payable otherwise than on demand."

Cheques may be of various types, which are as follows:

Bearer cheque

Order cheque

Open cheque

Crossed cheque

Marked cheque

Drafts:

These are bills of exchange issued by a banker on his branch office. Banks draft

like bills of exchange, are of great importance in the financing of trade,

especially foreign trade

Promissory note:

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It is an instrument in writing containing an unconditional undertaking, signed by

the maker, to pay the certain sum of money only to or to the order of a certain

person to the bearer of the instrument. a promissory note in order to be the so,

must fulfill all conditions.

Letter of credit:

A letter of credit as name signifies does one person or bank to another

requesting the letter to pay any amount of money up to a certain limit to the

person write a letter named in the letter or in whose favor the letter is written.

In this letter generally a date is fixed upto only the addressee should make

which advances. Thus a letter of credit remains in force upto a certain date only.

Generally banks grant this letter of credit.

FOREIGN EXCHANGE DEPARTMENT

The term "foreign exchange" is used to denote either a foreign currency or the

rate at which one currency is converted into another or the means & methods by

which one currency is exchanged for another.

Functions of Foreign Currency Account DepartmentForeign exchange department performs following functions:

• Foreign Bills for collection (FBC)

• Foreign telegraphic transfer (FTT)

• Foreign Demand Draft (FDD)

• TDR

• Issuance of Proceed realization certificate

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• Inward remittances

• Daily Reporting

Requirement of Funds TransferFor transfer of fund in foreign currency, a person must have his account in

foreign exchange in the bank.

Requirement of account opening is $500 or any other currency equivalent to

$500.

Types of currency Interest p.a.

Dollar .25%

Pound sterling 2%

Euro 1%

THE CORPORATE AND INVESTMENT BANKING

DIVISIONS

CBD & IBD are strongly positioned across priority markets with a distinctstrategy for developing corporate business. Our strategic framework generates

sustainable returns based on strong market presence and financial solutions

ranging from debt and equity market transactions to syndicate finance, and from

transaction banking to corporate finance advisory services.

2004 was challenging year due to historic lows in interest rates, particularly for

corporate business. The Corporate Banking Division (CBD) undertook a number

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of dept re-pricing swap transactions, aimed at reducing the financial burden of

its key client portfolios and also managed advisory and loan arrangement

activities. The major new relationships cover telecommunications, oil and gas,

and chemicals sectors. CBD has dedicated marketing and support units

functioning at Karachi and Lahore. In order to enhance focus on relationship

management, and service quality, more dedicated staff is being assigned.

The investment banking activity mainly covers, debt / capital markets, advisory

services and trading (both equities and derivatives).After the initial start-up

phase, the capital market desk, based at Karachi, increased the volume of

capital market related transactions.

The corporate and investment banking will continue to play a major role in loan

syndications, structured financing and debt / capital raising transactions with the

objective of providing entire range of corporate and investment banking

solutions to its valued clients under one umbrella.

AWARD AND ACHIEVEMENTS

In 1994, 1996 and 1997 the bank received Euro money and Asia money awards.

Askari has A1+ rating for short-term obligations the highest possible for the

category, while the long-term rating stands

at AA. Askari Bank Won the prestigious “Best

presented Annual Accounts” awards for 2000

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and 2001 from the institute of cost and Management Accountants of Pakistan,

for the services sector.

Mr. Kalim-ur-Rahman, President Askari Bank, with group having award of

'The Best Retail Bank of Pakistan 2004'

For the past four years, the Bank has received prizes from the South Asian

Federalism of Accountants for “The Best presented Annual Accounts” for the

financial sector, in the SAARC region.

Over the years, Askari Bank has proved its strength as a leading bankingsector entity, by achieving the following firsts in Pakistan banking.

i) First Pakistani Bank to offer on-line real-time banking on a countrywide

basis.

ii) First bank with a nation-wide ATM network

First bank to offer Internet Banking services

First Bank to offer e-commerce solutions.

The Askari Commercial Bank Limited has been declared “The Best Bank in

Pakistan” by the Global finance, an international financial magazine of high

repute as a result of their latest study of Banks in the Emerging Markets. This is

the 2nd consecutive year that the magazine has selected their bank for this

prestigious Award.

The award will be presented to the Bank on the occasion of the World

Bank IMF meetings in Washington this autumn. While the magazine will be

formally announcing the names of the award winning Banks in its May 2002

issue, they have already issued press information for the international media,

giving names of the award winning banks, including the Askari commercial Bank

limited.

Over the years, we have received several awards for the quality of our

banking service to individuals and corporate.

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These Include:

Best Commercial Bank Consumer Choice award 2005 by The Consumers

Association of Pakistan

Best Retail Bank in Pakistan award 2004 & 2005 by The Asian Banker

Best Corporate Report 1st prize awarded for 2000, 01, 03 & 04 by

Institute of Chartered Accountants of Pakistan (ICAP) and institute of Cost

& Management of Accountants of Pakistan (ICMAP)

Corporate Excellence awards for 2002 & 03 The Management

Association of Pakistan (MAP)

Best Corporate / Institutional Internet Bank in Pakistan award for

2004 by Global Finance magazine

Best Consumer Internet Bank in Pakistan

award for 2002, 03 & 04 by Global Finance magazine

The Best Bank in Pakistan

award for 2001 & 02 by Global Finance Magazine

Best Presented Accounts

Ranking prizes awarded from 1997 to 2002 by South Asian Federation of Accountants (SAFA)

Commercial Bank of the Year

award for 1994 & 96 by Asia money magazine

Best Domestic Bank in Pakistan

award for 1995 by Euro money

PRODUCTS AND SERVICES

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PRODUCT AND SERVICES

The product & services of askari commercial bank limited are developed

keeping in view the customers needs & wants, & the expectation that the

customer attaches with its financial institutions.

A product ACBL includes all those services which customer normally required for

effectively managing his business.

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ACBL offers the following financial services to its customers.

1) Deposits

2) Advances

3) Products

4) International banking services

5) Agency services to customers

1) DEPOSITS

One of the basic functions of commercial banking is to receive deposits. ACBL

accepts deposits in both local & foreign currency.

Local currency deposits

•

Current Account• PLS Saving Account

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• Term Deposit

• Notice Deposit

• Askari Faida Account

• Askari Special Deposit Account

• Value Plus Saving Account

• Askari Advantage

Current Account

A current account is a running & active account, which may be operatedupon any number of transactions during a working day. The banker

undertakes to repay these on demand & therefore theses account are

called demand deposits.

Transaction fee

The bank charges no transaction fees if the minimum balance

requirement is met. However, if the average balance falls below the min.

balance then the fees is charged at the rate of Rs. 10 per transaction.

Saving Accounts

The saving account is usually opened by lower or middle class people so

that they can meet their future contingencies, as the objective of such

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account is to promoting the habit of thrift among people, the bank impose

certain restrictions on withdrawals from the saving accounts.

Transaction fees

Transaction fees are charged of Rs. 20 per transaction if the min balance is not

met.

2. ADVANCES

Advances are major sources of earning of income for commercial banks. Banks attracts surplus balances

from the customers at low interest rates & makes advances at higher interest rates to the individuals or

business firms.

ACBL offer these facilities in two forms:

• Funded facilities

• Non- Funded facilities

Funded facilities

In funded facilities the bank actually advance money against further repayment.

These facilities are known as cash credits.

Non- Funded facilities

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Non- Funded facilities are those in which bank substitutes its own credit for its

customers.

ACBL offers to its customers are large number of non-funded facilities.

These facilities includes:

1. Guarantee

2. Latter of credit

Irrevocable letter of credit

Revocable letter of credit

Sight letter of credit

Usance letter of credit

3.PRODUCTS

PERSONAL FINANCE

Personal Finance is a parameter driven product for catering to the needs of the

general public belonging to different segments. One can avail unlimited

opportunities through Askari Bank's Personal Finance. With unmatched finance

features in terms of loan amount, payback period and most affordable monthly

installments, Askari Bank's Personal Finance makes sure that one gets the most

out of his/her loan. Once a good credit history is established, the door to

opportunity opens much wider.

MORTGAGE FINANCE

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Askari "Mortgage Finance" offers the convenience of owning a house of

choice, while living in it at its rental value. The installment plan has

carefully designed to suit both the budget & accommodation

requirements. It has been designed for enhancing financing facility

initially for employees of corporate companies for purchase/ construction/

renovation of house. The maximum financing amount is Rs. 10 million

with a repayment tenure upto 20 years.

BUSINESS FINANCE

In pursuance of the National objectives to review the economy of the country,

ACBL is providing loans to small and medium size business enterprises under

Askari Bank's Business Finance Scheme. Our goal is to offer a loan, which

enables business community to receive the financing required by them based on

their cash flows. Ore valued customers can enjoy the convenience of getting

financing on attractive terms with the minimum processing turnaround time.

ASKCAR (Car Finance)

Yet another of our products, Askar offers the most convenient and

affordable vehicle- financing scheme, which provides our valuable

customers an opportunity to own a brand new vehicle of their choice.

With minimum down payment, lowest insurance rates and widest range of

available car makes and models, Askcar offers the best value to our

esteemed customers.

ASKCARD

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ASKCARD means freedom, comfort, convenience and security, so that you can

have retail transactions with complete peace of mind. ASKCARD is your new

shopping companion which enhances your quality of life by letting you do

shopping, dine at restaurants, pay your utility bills, transfer funds, withdraw and

deposit cash through ATM anywhere, anytime.

TRAVELLER CHEQUES

The range of our products and value added services enhances with

introduction of Rupee Travellers Cheques (RTCs) launched in March 2002.

In spite of our constraint on issuing higher denomination of RTCs against

restrictions imposed by the Central Bank of Pakistan we have been

striving to attain our shares with sizeable portfolio. Total volume handled

by the department during the year 2004 is Rs. 798 Million.

ASKPOWER

Askpower represents a useful tool with which to make secure payments

without the need to have any account, a debit or credit card. This card

comes with a number of unique features and diversified usage capabilities

like cash withdrawal from ATMs, payment of utility bills through ATMs and

internet Banking, transfer of balance to another card and refill option. The

prepaid card is enjoying a great success all over the country.

VALUE PLUS

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The first liability product launched by this unit is showing a remarkable

acceptability in the market. The growth of this product is witnessed by its share,

which has presently reached at Rs. 1,079 Million even after lowering down the

profit rates due to sufficient liquidity in the market.

ASKARI MASTER CARD

NO JOINING FEE

When you successfully apply for an Askari MasterCard, we will not charge you

any Joining Fee. It’s almost like you are getting it for FREE!

GLOBAL ACCEPTABILITY

Your card provides you with service at thousands of locations in Pakistan, and at

over 23 million establishments worldwide. As an added convenience, you will

have the benefit of receiving your monthly billing in Pak Rupees, regardless of

the currency of purchase.

Think of the freedom this gives you!

24-HOUR CUSTOMER SERVICE

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With Askari MasterCard, you are always a phone call away from the assistance

you need. To speak to one of our friendly Customer Service representatives,

please call our UAN 111-000-787 for Karachi, Lahore or Rawalpindi/ Islamabad.

LOW SERVICE CHARGES

Your Askari MasterCard provides you the experience of revolving your spending

at comparatively low service charges. In addition, the same rate also applies to

cash advance obtained on your Askari MasterCard.

ZERO LOSS LIABILITY

Please report loss or theft of your Askari MasterCard immediately at our

Customer Services UAN 111-000-787 for Karachi, Lahore and

Rawalpindi/Islamabad. Once you have registered the loss of your credit card,your liability against its fraudulent use will be limited and we will send a

replacement card within 48 hours of reporting.

SUPPLEMENTARY CARDS FOR YOUR LOVED ONES

Save yourself the inconvenience of applying for a separate Askari MasterCard

for your loved ones by requesting supplementary cards when you apply for your

own card. You will receive a consolidated monthly account statement, which

covers all the cards. This offer is available for your loved ones over 18 years of

age.

CASH ADVANCE FACILITY

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Cash advance facility is available for Askari MasterCard holders. You can get up

to 80% of your sanctioned credit limit as cash advance in Pakistan or anywhere

else in the world. The facility is available at all ATMs displaying the Cirrus logo

around the world and in Pakistan. You may also avail this facility at designated

branches of Askari Commercial Bank, during banking hours.

BALANCE TRANSFER FACILITY

With Askari MasterCard, you can avail an incredible offer of a Balance Transfer

at the exclusive rate of just 1.5%* per month.

A special privilege exclusively for Askari MasterCard members

FREE TRAVEL INSURANCE

Just purchase your travel tickets on Askari MasterCard and you are automatically

covered under our Travel Insurance Plan (in case of personal accident resulting

in death or permanent disablement) for up to Rs.8,000,000/- on a Gold Card and

Rs.4,000,000/- on a Silver Card.

STRESS FREE TRAVELLING

When you purchase your airline tickets for international travel on Askari

MasterCard you get:

· UPto * Rs.10,000 insurance cover for flight delays exceeding 6 hours.

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· Upto* Rs.10,000 insurance cover for baggage delays exceeding 6 hours.

· Upto* Rs.20,000 as baggage loss claim.

(*Certain conditions apply)

COMPLIMENTARY CIP & RAWAL LOUNGE FACILITIES

The next time you travel internationally, be a privileged guest at the CIP lounge

of Quaid-e-Azam International Airport, Karachi and RAWAL Lounge of Islamabad

International Airport. Your Askari MasterCard entitles you to a host of

Complimentary services like;

· Snacks and Beverages

· Free Internet, phone and fax facilities

· Newspapers and magazines

· Flight details information

· Cellular phone charger connections

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· So, no matter where you are going, you are always assured of a red carpet

welcome.

DISCOUNT AT AVARI HOTELS

Your Askari MasterCard entitles you to the following exciting discounts*

at Avari Hotel in Karachi, Lahore and Dubai:

· 60% on Room Rack Rates

· 10% on Restaurants

· 15% on Hall Rentals

· 15% on Family Health Club membership only

· 15% at the Business Center

· 10% on Conferences / Meetings Package Rate (cannot be used in conjunction

with Hall Rentals

· 10% at Beauty Saloon

· 10% on Rent a Car

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*(Where available. Certain conditions apply)

AGRICULTURE BANKING

The role of agriculture in Pakistan economy is of pivotal nature. Due to

diverse geographical and climatic conditions the country has tremendous

potential for growth and development in agriculture. However, adequate and

timely financial assistance to the farmers will improve production potential of agriculture sector in the country. The modern concept of agricultural credit

envisages establishment of an efficient institutional credit system to serve as a

package of credit, supplies and knowledge for the overall strength of the farmers

who at present suffer from low productivity and financial insecurity. A successful

credit evaluation system, therefore, should have the basic ingredients to provide

adequate amount at the right time and in the right form to help farmers in

making a productive use of loan funds.

ASKARI KISSAN AGRICULTURE FINANCE PROGRAM

The Askari Kissan Agriculture Finance Program (AKAFP) has been designed to

meet ON FARM / OFF FARM credit requirements of farmers on the most

convenient, flexible, easy terms and conditions. The program features:

A broad array of credit lines designed to meet farming requirements.

Repay and borrow at your convenience on revolving credit basis at lowest mark-

up rates renewal able after three years.

Convenient repayment terms based on cash flow abilities.

Availability of leased Tractors / Transport without Land / Collateral.

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NO HIDDEN COST.

Availability of interest free package for inputs and tractors etc.

No Pre-adjustment penalties.

Earn prompt payment Bonuses and reduce financial costs.

Insurance cover of leased assets, animals, crops and life assurance of

borrowers.

PRODUCTS

Askari Kissan Ever Green Finance

Askari Kissan Tractor Finance

Askari Kissan Aabpashi Finance

Askari Kissan Livestock Development Finance

Askari Kissan Farm Mechanization Finance

Askari Kissan Farm Transport Finance

Ask Card

OBJECTIVES OF FINANCIAL STSEMENTS

“Financial statements are like a firm perfume – to be sniffed but not toswallowed.” “Abraham Brillof”

The firm itself and outside providers of capital – creditors, and investors – all take

benefit from the firm’s financial statements. The type of analysis varies according to

the specific interest of the party involved. Similarly objectives of the financial

statements analysis vary from person to person.

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Trade creditors are primarily interested in the liquidity of the firm. Their claims

are short terms, and the ability of the firm to pay their claims quickly is best

judged by an analysis of the firm’s liquidity.

Bondholders are more interested in the cash flow ability of the firm to service a

debt over a long period of time. They may evaluate their ability by analyzing the

capital statement of the firm.

Investors usually focus on the profitability of the firm. They would be concerned

with the financial conditions insofar as it’s affects the ability of the firm to pay

dividends and avoid bankruptcy.

Management employees financial analysis for the purpose of internal control and

to better provide what capital suppliers seek in financial conditions and

performance from the firm

Management needs to undertake the financial analysis in order to plan and

control effectively.

Financial ratios are the tools, which are used to analyze the financial conditions

and performances.

Finally, financial statement analysis deals with the outcomes of the past

decisions and leads to the future planning.

STAFF RETIREMENT BENEFITS

DEFINED BENEFIT PLAN

The Bank operates an approved funded gratuity scheme for all its permanent

employees. Contributions are made in accordance with the actuarial

recommendation. The actuarial valuation is carried out periodically using

“Projected Unit Credit Actuarial Cost Method”. The actuarial gains/losses of one

accounting period are recognized in the following accounting period.

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DEFINED CONTRIBUTION PLAN

The Bank operates a recognized provident funds scheme for all its permanent

employees for which equal monthly contributions are made both by the Bank

and by the employees to the fund at the rate of 8.33% of basic salaries of the

employees.

COMPENSATED ABSENCES

The bank grants compensated absence of 15 days per annum to all its

permanent employees. Annual provision for liabilities towards vested

compensated absences is made on the basis of 1st drawn basic salary.

FOREIGN CURRENCIES

Foreign currencies are translated into Rupees at exchange rats on the date of transaction. Assets and liabilities in foreign currencies are translated into Pak

Rupees at the rates of exchange approximating those ruling at the Balance

Sheet date except those covered by forward exchange contracts, which are

converted at contracted rates. Exchange gains and losses are taken to the profit

and loss account.

PROVISION OF CONTINGENCIES

Provision for guarantee claims and other off balance sheet obligations is

recognized when intimated and reasonable certainty exists for the Bank to settle

the obligations. Debating the customer’s account recognizes expected

recoveries. Charge to profit and loss account is stated net off expected

recoveries.

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OFF-SETTING

Financial assets and financial liabilities are only offset and the net amount is

reported in the financial statements when there is a legally enforceable right to

set-off the recognized amount and the bank intend either to settle on a net

basis, or to realize the assets and to settle the liabilities simultaneously.

BALANCE SHEET

AND

INCOME STATMENT

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BALANCE SHEET AS ON

DEC.31 2004 2004 2003

ASSETS:

Cash and balances with treasury bank 8,762,866 6,678,026

Balances with other banks 4,847,899 2,650,166

Lending to financial institutions 2,324,839 5,770,842

Investments 17,239,157 22,104,425

Advances 69,938,041 44,777,538

Other assets 1,459,716 1,425,986

Operating fixed assets 2,595,023 1,979,919

107,167,54

1 85,386,902

LIABILITIES:

Bills payable 1,227,093 973,703

Borrowing from financial institution 13,781,555 15,903,055

Deposits and other accounts 83,381,795 61,656,607

Sub-ordinated loans 1,000,000

Liabilities against assets subject to finance

lease 14,159 37,350

Other liabilities 1,282,981 962,592

Deferred Tax Liabilities 526,865 806,753

101,151,448 80,340,060

Net Assets 6,016,093 5,046,842

Represented by:

Head office capital accounts 1,255,848 1,141,680

Capital reserve 4,317,301 2,759,599

Un remitted profits

5,573,149 3,901,279

Surplus on revaluation of securities-net of tax 442,944 1,145,563

6,016,093 5,046,842

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ASKARI COMMERCIAL BANK LIMITED

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31ST

DECEMBER, 2004

2004 2003

(Rupees in

thousand)

Mark-up/return / interest earned

4,487,20

6 4,073,715

Mark-up/return / interest expensed

1,117,20

6 1,379,609

Net mark-up / interest income

3,370,00

0 2,694,106

Provision against non performing loans and

advances 277,398 308,528

Provision for diminution in the value of investments 38,066 -

Bad debts written off directly 7 -

315,471 308,528

Net mark-up / interest income after provisions

3,054,52

9 2,385,578

NON MARK- UP/ INTEREST INCOME

Fee, commission and brokerage income 649,988 524,775

Dividend income 26,318 37,658

Income from dealing foreign currencies 180,992 112,808

Other income 776,230 278,512

Total non mark-up / interest income

1,633,52

8 953,753

4,688,05

7 3,339,331

NON MARK-UP / INTEREST INCOME

Administrative expense

1,845,17

9 1,436,304

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Other provisions / write offs - -

Other charges 138 1,227

Total non mark-up / interest expense

1,845,31

7 1,437,531

2,842,74

0 1,901,800

Extra ordinary unusual items - -

PROFIT BEFORE TAXATION

2,842,74

0 1,901,800

Taxation – Current 876,089 873,639

Prior years - -

Deferred 43,611 (74,904)

919,700 798,735

Profit after Taxation

1,923,04

0 1,103,065

Inappropriate profit brought forward - -

Profit available for appropriation

1,923,04

0 1,103,065

APPROPRIATIONS:

Transfer to:

Statutory reserves 384,608 220,613

Capital reserves (reserves for the issue of bonus

shares) 251,170 114,168

Revenues Reserves

1,036,09

2 539,948

Proposed cash dividend 251,170 228,336

1,923,04

0 1,103,065

Un-appropriated profit carried forward - -

Basic earning per share - (Rupees) 15.31 8.78

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TREND ANALYSIS

(Horizontal Analysis)

FINANCIAL SUMMARY

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Trend Analysis, also called Horizontal Analysis of the financial

statements is one directional- upward or downward analysis and involves

the computation of the percentage relationship that each statement item

bears to the same item in the base year

2000 2001 2002 2003 2004

Profitability (Rs in million)

Total Income 3840 5047 5704 5028 6121

Interest income 3213 4251 4858 4074 4487

Interest exp 2274 2902 3017 1380 1117

Fee, comm.

Exch.Income506 677 299 638 831

Other income 122 119 247 317 802

Spread 939 1349 1841 2694 3370

Operating expenses 680 854 1093 1438 1845

Operating Profit 886 1291 1595 2210 3158

Non performing

assets134 283 351 308 315

Profit b/f tax 752 1008 1244 1902 2843

Taxation 436 458 557 799 920

Profit after taxation 316 551 687 1103 1923

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The operating expenses of the bank has been increased with sharp margin, the

ACBL is newly born bank of only 14 years old and is growing rapidly so, we can

say that the reason behind the rapid increase of its operating expenses may be

the expansion of business. In order to get handsome profit the expenses are

necessary as it is shown by the fact that if the bank’s operating expenses have

been increased then, there is also an increase in the profit before income tax

and profit after income tax.

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SHAREHOLDER’S FUNDS

TREND ANALYSIS

2000 2001 2002 2003 2004

Shareholder’s

Funds(Rs in million)

Total share

holders fund2155 2579 4173 5047 6016

Share capital 986 1036 1087 1142 1256

Reserves 1229 1521 1940 2760 4317

Surplus on ROA (60) 22 1146 1145 443

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The shareholder’s fund of the bank is continuously increasing, as the bank is

running on profit, therefore, the business take interest in this project and wish to

participate in it. The bank’s share capital and reserves are also increasing with

the expansion of business.

LIABILITIES

2000 2001 2002 2003 2004

Shareholder’s

Funds%AGE

Total share

holders fund100 119.6 193.6 234.2 279.2

Share capital 100 105.0 110.2 115.8 127.4

Reserves 100 123.7 157.8 224.6 351.2

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2000 2001 2002 2003 2004

Liabilities (Rs. in million)

Customers

deposits30360 41200 51732 61657 83319

Refinance

borrowings2882 3222 3392 7329 9777

Sub-ordinated

loans- - - - 1000

Otherliabilities

3058 3980 11016 11354 7055

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TREND ANALYSIS

New if we analyze the liability side of the bank we see that the bank’s deposits

are going on increasing since its birth which is a very healthy sign for the bank

as the bank’s basic business is to deal in money. The increase in deposits show

that the people have interest in the bank and deposit their fund in the bankwithout any hesitation. However it has not been mentioned here that how many

2000 2001 2002 2003 2004

LiabilitiesPERCENTAGE

Customers

deposits100 135.7 170.4 203.0 274.4

Refinance

borrowings100 111.7 117.7 254.3 340.0

Other

liabilities 100 130.1 360.2 371.3 230.7

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of the deposit are current and how many of them have fixed nature but we can

say that it is a very important source of the bank to earn profit. As the banks

usually earn through interest or mark ups imposed on the deposits they keep

with themselves.

ASSETS

Now we will discuss the assets side of the bank. The liquidity position is

essentially important for the bank, as it must have all the time sufficient funds to

meet the demands for the money that may be made on it. It is the protectionagainst the risk that losses may develop if banks are forced to sell or liquidate

2000 2001 2002 2003 2004

Assets (Rs. in million)

Advances 17893 23292 30035 44778 69938

Investments 8651 11706 26737 22104 17239

Cash, short funds and

statutory deposits with

SBP

10056 13436 10061 15099 15936

Operating fixed assets 641 723 1663 1980 2595

Other assets 1213 1824 1817 1426 1460

Total assets 38454 50980 70313 85387 107168

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creditworthy assets in an adverse market. The current liquidity position of the

bank has improved as indicated by the percentages shown in the table below.

TREND ANALYSIS

An upward trend in deposits accompanied by a upward trend in advances too,

and mark up revenues means in effective credit policies, efficient creditcollection resulting in healthy financial development.

The property plant and equipment is the kind of asset, which is required by the

service business only to increase its network therefore the ratio of the bank’s

plant and equipments as compared with the other important particulars of the

assets is high. But here one thing should be mentioned that it is the policy of the

bank not to start the business on the rented premises. The bank has mostly

2000 2001 2002 2003 2004

Assets (Rs. in million)

Advances 100 130.2 167.8 250.2 390.9

Investments 100 135.3 309.1 255.5 199.3



SBP

100 133.6 100.0 150.1 158.4

Operating fixed assets 100 112.7 259.4 308.9 404.8

Other assets 100 150.3 149.8 117.5 120.4

Total assets 100 132.5 182.8 222.0 278.7

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started business on its own premises. The other assets of the bank are also

showing a good amount that means that bank is in position to earn money from

every available source.

BUSINESS TRANSACTED

TREND ANALYSIS

2000 2001 2002 2003 2004

Business

Transacted(Rs. In billion)

Imports 26.2 32.0 40.2 48.7 75.2

Exports 30.6 38.8 47.3 56.8 70.1

Guarantees 4.8 6.2 14.2 14.4 25.3

2000 2001 2002 2003 2004

Business

Transacted(PERCENTAGE)

Imports 100 122.1 153.4 185.8 287.0

Exports 100 126.8 154.5 185.6 229.1

Guarantees 100 129.2 295.8 300.0 527.1

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Now we will discuss the business transacted opt the bank in terms of import and

exports we see that imports and exports through ACBL are continuously on

increase which is a very health sign for the banking business as the banks earn

major portion of their profit through imports and exports. It shows the efficiency

of the credit department. The reasons for this improvement may be

•Careful scrutinizing of all the documents

• Intelligent corresponding with the customer

• True 7 C’s analysis of the customer such as his business and moral

character

• Granting facility to selected customers who rate well on the selected

criteria for loan disbursement.

This improvement in imports and exports is extremely large if we compare it

with the figures of 2000.

COMMON SIZE ANALYSIS

(VERTICAL ANALYSIS)

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COMMON SIZE ANALYSIS

An analysis of percentage financial statements where all balance sheet items are

divided by total assets and all income statements items are divided by net sales

or revenues.

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In addition to other financial ratios over time, it is often useful to express

balance sheet items and income statement items as percentages. Common –size

Analysis, also called Vertical Analysis, or Component Percentage, or 100 percentStatements as each statement is reduced to the total of 100 and each individual

item is stated as a percentage of the total of 100.

2000 2001 2002 2003 2004

Profitability (Vertical Analysis)

Total Income 100 100 100 100 100

Interest income 83.6 84.2 85.2 81.0 73.3

Interest exp 59.2 57.5 52.9 27.4 18.2

Fee, comm.

Exch.Income13.2 13.4 5.24 12.7 13.6

Other income 3.18 3.94 4.33 6.30 13.1

Spread 24.4 26.7 32.3 53.6 55.0

Operating expenses 17.7 16.9 19.2 28.6 30.1

Operating Profit 23.1 25.6 27.9 43.9 51.6

Non performing

assets3.49 5.61 6.15 6.12 5.15

Profit b/f tax 19.6 19.9 21.8 37.8 46.4

Taxation 11.3 9.07 9.76 15.9 15.0

Profit after taxation 8.23 10.9 12.0 21.9 31.4

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INTERPRETATION

The most important component of any profit and loss account of a banking

concern is its mark up expenses it has to pay for servicing the depositors. The

foregoing data shows that the markup expenses absorb about 85% of the

revenues (a favorable position). This shows that the bank has been successful in

• Selling larger volumes of higher profit items.

• Increasing economy in procurement

• Adopting other effective and more profitable deposit raising policies at a

lower lost.

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The interest expense of the ACBL is 18.2% of the total revenue of the bank in

2004, which is remarkable as the bank is earning about 85% of the revenue as

interest income. We have handsome margin between the interest income and

the interest expense of the bank. The data shows that the bank’s other income

%age is not as much high rather it is very low which shows that the bank does

not rely on other sources for its profit but it earns major portion of its income

through its basic business.

The bank seems to have increased control over its operating expenses, i.e. non-

mark up expenses as these now absorb only 30% on average of the total

revenues, that is a very healthy sign for the bank. In the net shell, it would not

be wrong to say that the bank has improved its financial position and operating

efficiency over the last years.

The profit after tax is showing about 31.4% of the total revenues of the bank

although the margin of profit is not too much high but it is shown from the data

that the bank is going on increasing its profit after tax over the year.

LIABILITIES AND OWNER’S EQUITY (Vertical Analysis)

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INTERPRETATION

2000 2001 2002 2003 2004

(Vertical Analysis)

Total share

holders fund5.29 4.82 5.69 5.65 5.38

Share capital 2.42 1.93 1.48 1.28 1.12

Reserves 3.02 2.84 2.64 3.09 3.86

Customers

deposits74.6 76.9 70.5 69.0 74.5

Refinance

borrowings 7.08 6.02 4.62 8.21 8.74

Other liabilities 7.52 7.43 15.0 12.7 6.31

Total 100 100 100 100 100

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The liabilities and owner’s equity are side components of the bank

showing the relationship as compared with the total of the liabilities and owner’s

equity. The bank’s shareholders fund is showing percentage more than the share

capital, which shows that the bank own capital is lees than the shareholders

capital. However it is also evident from the data that the %age is decreasing of

the overall %age of the share capital over the last two or three years. But it is

also seen that the share capital %age as compared to the total liabilities of the

bank has also been decreased. So we can say that the same conditions are

prevailing regarding the share capital and the shareholders fund.

Among the assets of the bank the highest %age is of the customer deposits. The

bank’s management seems to have adopted a very effective marketing policy, as

the deposits of the bank constitute about 75% of the total assets of the bank. In

the last year, this figure stood at 69% of the total resource. This shows the high

level of products and associated services provided by the bank.

ASSETS

(Vertical Analysis)

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INTERPRETATION

On one hand Advances have also increased from 52% in the previous year to

65% in the current year which may indicate that the bank utilize the funds

raised in the other activities primarily lending to the financial institutions as it is

the most secure source of financing available in the economy.

Cash, short term funds and statutory deposits with SBP are also increasing. The

property plant and equipment of the bank is showing a little portion of the

bank’s total assets.

In the last the bank is over all showing a good financial health and is going on

healthy tracks in near future it has no risk of bankruptcy. Although the bank is

2000 2001 2002 2003 2004

Assets (Vertical Analysis)

Advances 46.5 45.7 42.7 52.4 65.2

Investments 22.4 22.9 38.0 25.8 16.1



SBP

26.1 26.3 14.3 17.6 14.8

Operating fixed assets 1.67 1.42 2.36 2.32 2.42

Other assets 3.15 3.57 2.58 1.67 1.36

Total assets 100 100 100 100 100

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showing good results but we can’t say that these are the best conditions

prevailing in the bank as we are unaware of the market conditions and can’t

compare it with other banks.

RATIO ANALYSIS

PROFITABILITY RATIOS

LIQUIDITY RATIOS

ASSET QUALITY RATIOS

PORTFOLIO MANAGEMENT

CAPITAL ADEQUACY RATIO

CAPITAL GEARING RATIOS

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PROFITABILITY RATIOS

The continued viability of any bank depends on its ability to earn anappropriate return on its assets and capital. Good earning performance

enables a bank to fund its operations, remain competitive in the market

and increase or decrease in market funds.

RETURN ON CAPITAL FUND

Formula = Net mark up Received

Capital Funds

2004 = 3370000 = 60.47%

5573149

2003 = 2694106 = 69.06%

3901279

2002 = 1638357 = 54.13%

3026550

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INTERPRETATION

This ratio relates the net profits to the amount of capital funds that have been

employed in making that profit.

The above given ratios suggest that the profitability of the bank has increased

very in the year 2003 indicating more profitable operations of the bank. While

discussing the trend analysis, we mentioned that the mark up charges have

increased in some proportion but the mark up earned by the bank resulting

increase in the profit available on the capital funds employed. This ratio showing

a very good financial position of the bank.

RETURN ON INVESTMENT

Formula = Net income after taxes

Total Assets

2004 = 3370000 = 1.79%

5573149

2003 = 1103065 = 1.29%

85386902

2002 = 686994 = 0.98%

70313073

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INTERPRETATION

This ratio indicates the profit earned by the bank on the resources employed. As

far as ACBL is concerned, we observe an increase in the utilization of the

resources. It has increased to 1.29 % in the year 2003 from 0.98 % in the year

2002, It has increased to 1.79 % in the year 2004 from 1.29 % in the year

2003, the reason behind the slight increase in the increase of profit may be due

to the efforts of the management.

RETURN ON RISK ASSETS

Formula = Net income after taxes

Total risk assets

2004 = 1923040 = 2.75%

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69938041

2003 = 1103065 = 2.46%

44777538

2002 = 550051 = 2.36%

23291367

INTERPRETATION

This ratio, with some fluctuation in 2003 came up from 2.46% in 2003 to2.75 %

in the year 2004. It is indicating active utilization in the form of advances. The

bank is finding it difficult to keep the level of its expenses less in proportion to

the advances it has disbursed. Lending, no doubt is the core function of a

banking concern. But the bank should find out effective ways of credit provisions

affecting less on profitability of the operations. Non-mark up revenues should

also be increased in the face of lower credit disbursements resulting in more.

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RETURN ON DEPOSITS

Formula = Net income before taxes

Total Deposits

2004 = 2842740 = 3.41%

83318795

2003 = 1901800 = 3.08%

61657000

2002 = 1244022 = 2.47%

41200166

INTERPRETATION

Interpret This ratio indicates to what extent deposits which represent funds

mobilization on the part of the bank contribute towards income generation.

Although the other ratios regarding the profitability are showing satisfactory

position of the bank but still bank need to increase its utilization of resources in

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order to increase its profitability because the banks have to pay heavy taxes on

their profit.

OPERATING EXPENSES TO NET REVENUE

Formula = Operating Expenses

Net Revenue

(Rs. In million)

2004 = 1845 = 30.1%

6121

2003 = 1438 = 28.6%

5028

2002 = 1093 = 19.2%

5704

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INTERPRETATION

This ratio signifies the proportion of the revenues that is used to cover the

operating expenses of the bank. The ratios calculated above gives a good picture

of the bank’s operations. This ratio is increasing from year 2002 to 2004 and

giving a bright picture of the profits for the bank. With respect to the banking

expansions this ratio is showing a very good picture as we know the expansions

required lot of expansions, although the operating expenses of the bank are

increasing as we have seen in the trend ratio but their proportion of increase is

not alarming.

In short, the bank in an attempt to maintain at a good level of liquidity, has a

low level of profitability but there is a continuous push in the profits and there

are chances that the bank will reach at a point of high liquidity and profitability.

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LIQUIDITY RATIOS

The liquidity position of a bank is like a reservoir. It may be adequate, although

nearly depleted, just before the start of the rainy season. Or it may be

inadequate, although three quarters full just before the summer drought.

Liquidity can be defined as:

“The bank’s ability not only to meet possible deposit withdrawals

but also to provide for the legitimate needs of the economy as well”

ADVANCES TO DEPOSITS RATIO

Formula = Advances

Total Deposits

2004 = 69938041 = 83.9%

83318795

2003 = 44778000 = 58.6%

61657000

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2002 = 30035484 = 72.62%

51731506

INTERPRETATION

It demonstrate the degree to which bank has already used up its available

resources to accommodate the credit needs of its customers.

This ratio, a comparison of funds generation and its funds mobilization, indicates

the total loans sanctioned by the bank in relation to total amount of money

deposited with the bank stands at 83.9% compared with the last year figure of

58.6%. This shows that the bank has greater potential to advance additional

loans. Total loan able funds roughly measured by the deposits are sufficient to

enable the bank to make additional loans without recourse to more or less

continuous borrowing. At present, the bank has got a relatively small amount of

advances as compared with its deposits raised. One reason for fewer advances is

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the cautious and selective approach on the part of the management while

deciding upon credit proposals.

DUE FROM BANKS TO TOTAL ASSETS

Formula = Due from banks

Total Assets

2004 = 2324839 = 2.17%

107167541

2003 = 5770842 = 6.75%

85386902

2002 = 3414470 = 4.86%

70313073

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INTERPRETATION

It is an indication of ACBL’s funds management policies. The funds allocation to

the financial institutions has increased to a great extent despite the fact that still

it holds a small proportion relevant to the total resources raised by the bank. It

is a positive indicator in the sense that the financing to the banks are the most

secure ways of lending. Considering the economic conditions of the country, it

seems to be the best alternative available to the bank. In the current year this

ratio has been reduced to the little extent. Although it is declining but the

situation might not be alarming.

DUE FROM BANKS TO DUE TO BANKS

Formula = Due from banks

Due to Banks

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2004 = 2324839 = 16.87%

13781555

2003 = 5770842 = 36.29%

15903055

2002 = 3414470 = 29.79%

11460394

INTERPRETATION

It shows the relationship between what the bank owes from other banks and

what is due to it. An unfavorable condition has been observed in this ratio in the

current year showing the fact that the bank has to seek fewer funds from the

financial institutions owing to the strong liquid financial position. This ratio is

going on increasing in last year but decreasing in current year, which involves a

slight risk. In the phase of economic instability, the bank’s management should

be efficient to access the risk involved in lending and they should control this

ratio.

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DUE TO BANKS TO TOTAL DEPOSITS

Formula = Due to banks

Total deposits

2004 = 13781555 = 16.54%

83318795

2003 = 15903055 = 25.79%

61656607

2002 = 11460394 = 22.15%

51732000

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INTERPRETATION

This ratio is an indicative of the proportion of the lending from the financial

institutions in relation to the total funds raised by the bank in the form of

deposits.

This ratio for ACBL is 16.54% in the year 2004. There has been a significant

decline in this ratio as previously the bank depended slightly more on the

borrowings from financial institutions. It shows that the bank is concentrating on

raising funds from depositors and trying to relies less on the borrowed funds.

• It is a favorable indication in the sense that the bank has large potential

to ask for borrowed funds in the phase of tight liquidity position.

• Further more, it shows the efficiency of the marketing department to have

created so much of deposits that the bank does not need to look at the

financial institutions for help in improving its liquid position.

• There is another favorable aspect of this declining tendency. The rate of

interest offered to the depositors is very low in comparison with the

interest to be paid to the financial institutions for their funds. A decline in

this ratio means less mark up burden on the bank resulting in less

financial risk for the bank.

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COVERAGE RATIO

Coverage ratio measures the capacity of the bank to cover its interest charges,

which are the main obligations on the bank.

INTEREST COVERAGE RATIO

Formula = Earning before int. & Tax

Interest Exp.

2004 = 4688057 = 2.54 times

1845317

2003 = 3339331 = 2.32 times

1437531

2002 = 2336537 = 2.13 times

1092515

INTERPRETATION

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It shows whether the bank is earning enough profit before mark up charges to

be paid to the financiers and the taxation obligations due to the government in

order to remain solvent.

The above figure shows the acceptable capacity on the part of the bank to cover

its interest payments. It has increased as compared with the last year. This

increase in the ratio is a sign of improvement for the bank. But this is a short-

term perspective of the bank’s financial position. In view of the long run financial

perspective, this ratio is good for the bank.

CAPITAL ADEQUACY RATIOS

CAPITAL FUNDS TO TOTAL ASSETS RATIO

Formula = Capital Funds

Total Assets

2004 = 5573149 = 5.20%

107167541

2003 = 3901279 = 4.57%

85386902

2002 = 3026550 = 4.30%

70313073

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INTERPRETATION

This ratio indicates the extent of the funds employed by the bank in the total

resources as shown in the balance sheet. This ratio has been decreased in the

current year with a very low margin.

Capital Fund to Risk Assets Ratio

Formula = Capital Fund

Risk Assets

2004 = 5573149 = 7.97%

69938041

2003 = 3901279 = 8.71%

44777538

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2002 = 3026550 = 10.07%

30035484

INTERPRETATION

This ratio take into account the difference between cash and marketable

securities & other kind of assets. Cash & marketable securities, which are risk

less items, are excluded to find out the true picture of the capital adequacy. In

case of ACBL the ratio is decreasing.

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GRAPHS OF STEADY GROWTH

THE GRAPHS OF GROWTH ARE SHOWN FOR THE LAST FIVE YEARS,

FROM 2000 TO 2004

PROFIT BEFORE TAX

(Rs. In million)

The above graph shows that the profit before tax of the Askari

Commercial Bank shows a trend of increase and continuous increase in

the profit before tax of the bank, it goes on increasing every year and its

ratio has not been fall since the last five years.

In 2004 the profit before tax increased with greater margin as compared to the

previous four years.

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DEPOSITS

(Rs. In million)

Askari Commercial Bank is known to be the leading bank in the private sector.

Customers’ shows a lot of loyalty to the bank, therefore, the deposits of the

bank go on increasing every year and its ratio has not been fall since the last

five years.

LOANS AND ADVANCES

(Rs. In million)

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The Askari Commercial Bank has adequate amount of money as result of

deposits it keeps with itself of their valuable customers. It keep a certain

percentage of money in order to meet the day to day transactions of the bank

and lend reaming amount as advances and loans which is very important source

of business for the bank. The graph shows that the capacity of the bank to lend

the advances and loans is going on increasing since the last five years and is

highest in the year 2004.

INVESTMENTS

(Rs. In million)

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The Askari Commercial Bank is showing a mix trend of increase and decrease in

the investments of the bank, it goes on increasing from year 2000 to 2002 and

its ratio is highest in 2002. From 2002 it starts declining.

TOTAL ASSETS

(Rs. In million)

Total Assets of the bank are increasing every year with the expansion in the

business .In 2004 the assets of the bank has been increased more than twined a

time as compared to the year 2000.which clearly shows the rapid expansion of

the bank.

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EARNING PER SHARE

(In Rupees)

The earning per share of the bank is also showing good position and is

enough to satisfy the shareholders of the bank, the number of the

shareholders fund has also been increased from the last five years. The

graph shows that the bank’s earning per share ratio is highest in the year

2004 and is lowest in the year 2000. STRATEGIC

MANAGEMENT

“The art and science of formulating, implementing and evaluating cross-

functional decisions that enable an organization to achieve its

objectives.”

STATEGIC MANAGEMENT PROCESS:

Develop

Vision &

Mission

PerformExternalAuditPerform

internal

audit

Establish

Long term

objectives

Generate

Evaluat

e, and

select

strategi

es

Implement

strategies

Manageme

nt Issues

Implemen

t

strategies

Marketing

, Finance,

MIS

Measure

and

evaluate

performa

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Stage1_________________Stage2___________________

Stage3

The strategic management process consist of three stages

1. Strategy Formulation2. Strategy Implementation3. Strategy Evaluation

STARTEGY FORMULATION STAGE:

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The strategy formulation stage includes the development of vision and mission,

identification of organization external opportunities, identification of the

organizational internal strengths and weaknesses, establishment of long term

objectives, generation of alternative strategies and selection of the pertinent

strategies to pursue in the long run. On the other hand, this stage also describes

about the selection of business, allocation of available resources, expansion of

operations, entering into the new markets and the conditions of mergers and

joint ventures.

STARTEGY IMPLEMENTATION STAGE:

This stage requires a firm to establish annual objectives, devise policies,

motivate employees and allocate resources so that formulated strategies

can be executed. As for the purpose of achieving long term objectives the

annual objectives are described and the policies are established for them.

By implementation of strategies, it is evident that employees and the

managers put the formulated strategies to action. That’s why this stage is

also called an action stage of strategic management.

STRATEGY EVALUATION STAGE:

It is the final stage in the strategic management process. The strategies, which

are implemented at the second stage, are now evaluated as hey are working in

accordance with the objectives or not. Besides it, all strategies are subject to

future modification because external and internal factors are constantly

changing.

EXTERNAL AUDIT :

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The purpose of an external audit is to develop a finite list of opportunities that

could benefit the organization and threats that should be avoided. There are lots

of factors, which are involved in determining the external environment, but

certain key variables are taken that offer actionable responses. The organization

should have to respond either offensively or defensively to the factors by

formulating strategies that take advantage of external opportunities or that

minimize the impact of potential threats.

KEY EXTERNAL FACTORS:

External forces/ factors can be divided into five broad categories

1. Economic forces

2. Social, Cultural, demographic and environmental forces

3. Political, Governmental and Legal forces

4. Technological forces

5. Competitive forces

OPPORTUNITIES FOR ASKARI COMMERCIAL BANK

These are positive external environmental factors effecting the organization.

• It deals in bulk business.

• A large amount of foreign investment is attracted.

• Strong potential for growth

• Steady increase in Customer Deposits

• Overseas Operations

• Branches In Remote Areas

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• Islamic Banking

• Sharp increase in imports and exports

THREATS FOR ASKARI COMMERCIAL BANK

• High Employees Turnover

• High charges

• Less attractive rate of return

• Stiff Competition

• Less Experienced Staff

EXTERNAL FACTOR EVALUATION MATRIX:

This Matrix summarizes and evaluates economic, social, culture, and

demographic, environmental, political, governmental, legal, technologicaland competitive information. It shows the opportunities and threats that

are faced by an organization.

Weights:

0.0 = Not Important

1.0 = Very Important

Rating:

1 = The Response Is Poor

2 = The Response Is Average

3 = The Response Is Above Average

4 = The Response Is Superior

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EXTERNAL FACTOR EVALUATION MATRIX

Key External Factors

Weights Rating Weighted

Score

Opportunities1 It deals in bulk business.

0.10 3 0.30

2. A large amount of foreign

investment is attracted 0.10 4 0.40

3. Strong potential for growth 0.05 2 0.10

4. Imports are increasing 0.05 4 0.20

5. Steady increase in Customer Deposits

0.15 3 0.45

6. Overseas Operations 0.03 3 0.09

7 Branches In Remote Areas 0.02 2 0.04

8 Islamic Banking 0.01 1 0.01

9. Sharp increase in imports and exports 0.04 3 0.12

Threats1. High Employees Turnover 0.05 2 0.10

2. High charges 0.05 2 0.10

3. Less attractive rate of return

0.15 3 0.45

4. Stiff Competition 0.10 3 0.30

5. Less Experienced Staff 0.10 2 0.20

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TOTAL 1.00 2.86

Explanation:

The above Matrix depicts the opportunities and threats that are faced by the

bank. The weighted score of EFE Matrix of the bank is 2.86 that is above

average (2.5). So it shows that the bank is responding to the existing

opportunities and threats in banking industry.

EXTERNAL AUDIT :

The purpose of an external audit is to develop a finite list of opportunities that

could benefit the organization and threats that should be avoided. There are lots

of factors, which are involved in determining the external environment, but

certain key variables are taken that offer actionable responses. The organization

should have to respond either offensively or defensively to the factors by

formulating strategies that take advantage of external opportunities or that

minimize the impact of potential threats.

KEY EXTERNAL FACTORS:

External forces/ factors can be divided into five broad categories

6. Economic forces

7. Social, Cultural, demographic and environmental forces

8. Political, Governmental and Legal forces

9. Technological forces

10. Competitive forces

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OPPORTUNITIES FOR ASKARI COMMERCIAL BANK



• A large amount of foreign investment is attracted.





• Islamic Banking


THREATS FOR ASKARI COMMERCIAL BANK

• High Employees Turnover

• High charges

• Less attractive rate of return

• Stiff Competition

• Less Experienced Staff

EXTERNAL FACTOR EVALUATION MATRIX:

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This Matrix summarizes and evaluates economic, social, culture, and

demographic, environmental, political, governmental, legal, technological

and competitive information. It shows the opportunities and threats that

are faced by an organization.

Weights:

0.0 = Not Important


Rating:

1 = The Response Is Poor

2 = The Response Is Average

3 = The Response Is Above Average

4 = The Response Is Superior

EXTERNAL FACTOR EVALUATION MATRIX

Key External Factors

Weights Rating Weighted

Score

Opportunities1 It deals in bulk business.

0.10 3 0.30

2. A large amount of foreign

investment is attracted 0.10 4 0.40

3. Strong potential for growth 0.05 2 0.10

4. Imports are increasing 0.05 4 0.20

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5. Steady increase in Customer Deposits

0.15 3 0.45

6. Overseas Operations 0.03 3 0.09

7 Branches In Remote Areas 0.02 2 0.04

8 Islamic Banking 0.01 1 0.01

9. Sharp increase in imports and exports 0.04 3 0.12

Threats1. High Employees Turnover 0.05 2 0.10

2. High charges 0.05 2 0.10

3. Less attractive rate of return

0.15 3 0.45

4. Stiff Competition 0.10 3 0.30

5. Less Experienced Staff 0.10 2 0.20

TOTAL 1.00 2.86

Explanation:

The above Matrix depicts the opportunities and threats that are faced by the

bank. The weighted score of EFE Matrix of the bank is 2.86 that is above

average (2.5). So it shows that the bank is responding to the existing

opportunities and threats in banking industry.

INTERNAL AUDIT All organizations have strengths and weaknesses in their functional areas of

business. For analyzing the internal situation of the organization with regard to

its management, marketing, finance, operations and research and development,

internal audit is performed. The internal audit is executed parallel to the external

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audit. This process provides more opportunity for the participants and the

managers to understand the key areas within an organization.

Key internal forces:

1. Marketing

2. Finance

3. Accounting

4. Management

5. Management Information System

6. Production/Operations

STRENGTHS OF ASKARI COMMERCIAL BANK

LEADING PRIVATE SECTOR BANK:

AUTOMATIC OPERATIONS:

FULL DAY BANKING

ATM NETWORK

CUSTOMIZED SOLUTIONS

CUSTOMER ORIENTED BANKING

ELECTRONIC BANKING

ELECTRONIC FUNDS TRANSFER

PHONE BANKING

ETHICAL CONCERNS AND PUBLIC IMAGE

WEAKNESSES OF ASKARI COMMERCIAL BANK

NOT HIGHLY AUTOMATED

MANUAL BOOK-KEEPING

LOW JOB SATISFACTION

LACK OF SPECIALISATION

CENTRALIZATION

LACK OF TRAINING FACILITIES

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INTERNAL FACTOR EVALUATION MATRIX:

This strategy-formulation tool summarizes and evaluates the major strengths

and weaknesses in the functional area of a business and it also provides a basis

for identifying and evaluating relationships among those areas. Intuitive

judgments are required in developing an IFE Matrix

Weights:

0.0 = Not Important

1.0 = All Important

Rating:

1 = Major Weakness

2 = Minor Weakness

3 = Minor Strength

4 = Major Strength

INTERNAL FACTOR EVALUATION MATRIX

Key Internal Factors

Weights

RatinWeighted

Score

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Internal Strength

1. LEADING PRIVATE SECTOR BANK 0.10 3 0.30

2. AUTOMATIC OPERATIONS 0.05 4 0.20

3 FULL DAY BANKING 0.06 4 0.24

4 ATM NETWORK 0.04 3 0.12

5. CUSTOMIZED SOLUTIONS 0.05 4 0.20

6.CUSTOMER ORIENTED BANKING 0.07 4 0.28

7. ELECTRONIC BANKING 0.04 3 0.12

8 ELECTRONIC FUNDS TRANSFER 0.05 4 0.20

9 PHONE BANKING 0.03 4 0.12

10 ETHICAL CONCERNS AND PUBLIC

IMAGE

0.05 4 0.20

Internal Weaknesses

1 NOT HIGHLY AUTOMATED 0.05 2 0.10

2 MANUAL BOOK-KEEPING 0.10 1 0.10

3 LOW JOB SATISFACTION 0.05 2 0.10

4. LACK OF SPECIALISATION 0.05 2 0.10

5. CENTRALIZATION 0.06 2 0.12

6. LACK OF TRAINING FACILITIES 0.15 2 0.30

Total 1.00 2.80

Explanation:

The above Matrix comprises the strengths and weaknesses of Bank Askari

Commercial Bank and the weighted score of the bank is 2.80 that is above

average (2.5) so it depicts that the bank has strong internal position

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THE COMPETITIVE PROFILE MATRIX:

The Competitive Profile Matrix (CPM) identifies a firm’s major competitors and its

particular strengths and weaknesses in relation to a sample firm’s strategic

position.

In CPM critical success factors are taken that include both internal and external

issues. In a CPM, the rating and total weighted score for rival firms can be

compared with the sample firm.

Weights:

0.0 = Not Important


Rating:

1 = Major Weakness

2 = Minor Weakness

3 = Minor Strength

4 = Major Strength

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COMPETITIVE PROFILE MATRIX

Askari

Bank

Bank

Alfalah

Critical

Success

Factors

Weight

Rating

Score Rating Score

Customer

satisfaction

0.16 3 0.48 2 0.32

Branch

network

0.12 2 0.24 3 0.36

Market share 0.09 4 0.36 4 0.36

Service quality 0.10 4 0.40 3 0.30

Advertising 0.05 2 0.10 3 0.15

Online facility 0.09 3 0.27 3 0.27

Full day

banking

0.12 3 0.36 2 0.24

Employee

satisfaction

0.15 3 0.45 3 0.45

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Financial

position

0.12 4 0.48 3 0.36

TOTAL 3.14 2.81

EXPLANATION:

In the above Matrix, the position of Askari bank is stronger as compared to its

rival Bank Alfalah. 3.14 is the total of average weighted score that reveal the

relative strength of the firm against its competitor. The total weighted score of

Bank Alfalah is 2.81 that show better position. But as compared to Askari Bank

it is slightly less.

STRATEGY-FORMULATION FRAMEWORK:

Strategy-Formulation Framework can be integrated into three-stage decision

making framework

THE INPUT STAGE:

External Factor Evaluation (EFE) Matrix

Competitive Profile Matrix (CPM)

Internal Factor Evaluation (IFE) Matrix

THE MATCHING STAGE:

Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix

Strategic Position and Action Evaluation (SPACE) Matrix

Boston Consulting Group (BCG) Matrix

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Internal-External (IF) Matrix

Grand Strategy Matrix

THE DECISION STAGE:

Quantitative Strategic Planning Matrix (QSPM)

THE STRATEGIC POSITION AND ACTION EVALUATION

(SPACE) MATRIX:

The SPACE Matrix is an important matching tool. It’s four-quadrant framework

indicates that whether aggressive, conservative, defensive, or competitive

strategies are most appropriated for a specific organization.

Internal dimensions [FS] and [CA]

External dimensions [ES] and [IS].

Assign a numerical value ranging from +1 (worst) to +6 (best) to each of the

variables that make up the FS and IS dimensions. Assign a numerical value

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ranging from –1 (best) to –6 (worst) to each of the variables that make up the

ES and CA dimensions.

Aggressive Strategic:

Market penetration, market development, product development, backward

integration, forward integration, horizontal integration, conglomerate

diversification, concentric diversification, horizontal diversification, or a

combination strategy.

Conservative strategies:

Are best options for the firm that lies in this quadrant. Most often include market

penetration, market development, product development, and concentric

diversification.

Defensive strategies:

Include retrenchment, divestiture, liquidation, and concentric

diversification.

Competitive strategies:

Include backward, forward, and horizontal integration; market penetration;market development; product development; and joint ventures.

SPACE MATRIX OF ASKARI BANK

FINANCIAL STRENGTH

Investment decreased +1

Strong Liquidity Position +6

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Strong Cash flow position +4

The Revenues increased +4

Net Income After Tax increased +4

Net Profit Margin increased +4

Return On Equity +2

+25

INDUSTRIAL STRENGTH

Strong potential for growth +6

Computerized Banking system +2

Potential for further increase in profits +6

Growth prospects for Islamic Banking +2

Electronic Banking

+18

ENVIROMENTAL STABILITY

High Inflation rate -1

Political Instability -3

Competition from Foreign and Local banks -2

Similar Products offered at higher rate by other banks -4

Changes in laws by government -3

Strict SBP regulations -4

-17

COMPETITIVE ADVANTAGE

High quality services -1

Customer oriented banking -2

Vast product variety -2

First ever free visa card -1

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Strong top management -1

-7

CONCLUSION

ES Average is –17/6 = -2.8 IS Average is +18/5 = +3.6

CA Average is –7/5 = -1.4 FS Average is +25/7 = +3.5

Directional Vector Coordinates: x-axis: (-1.4)+(+3.6) = +2.2

y-axis: (-2.8)+(+3.5) = +0.7

ES

CA IS

-1-1-2-3-4-5-6 +1 +2 +3 +4 +5

+3

+6

+5

+2

+1

+4

-1

-2

--4

-5

-6

(2.5,

Conservative Aggressive

Defensive Competitiv

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EXPLANATION:

Directional vector of the Bank is located in aggressive quadrant (upper-

right quadrant). It shows that the bank has excellent position to use its

strengths, take advantage of external opportunities, overcome internal

weaknesses, and avoid external threats. Therefore, market penetration,

market development, product development, backward integration,

forward integration, horizontal integration, conglomerate diversification,

concentric diversification, horizontal diversification, or a combination

strategy can be feasible according to specific circumstances.

THE BOSTON CONSULTING GROUP

(BCG) MATRIX:

The BCG Matrix graphically portrays differences among divisions in terms of

relative market share position and industry growth rare.

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Relative market share position is defined, as the ratio of a division’s own

market share in a particular industry to the market share held by the

largest rival firm in that industry.

QUESTION MARKS:

Division in Quadrant I have a low relative market share position, yet they

compete in a high-growth industry. Generally these firms’ cash needs are

high and their cash generation is low. These businesses are called

Question Marks because the organization must decide whether tostrengthen them by pursuing an intensive strategy (market penetration,

market development, or product development) or to sell them.

STARS:

Firm that lies in this Quadrant (often called Stars) represent the organization’s

best long-run opportunities for growth and profitability. Divisions with a high

relative market share and a high industry growth rate should receive substantial

investment or maintain or strengthen their dominant positions.

Forward, backward, and horizontal integration; market penetration; market

development; product development; and joint ventures are appropriate

strategies for these divisions to consider.

CASH COWS:

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The organization that lies in this Quadrant has a high relative market share

position but compete in a low- growth industry. Called Cash because they

generate cash in excess of their needs, they are often milked.

Product development or concentric diversification may be attractive strategies

for strong Cash Cows. However, as a Cash Cow division becomes weak,

retrenchment or divestiture can become appropriate.

DOGS:

The organization that lies in this Quadrant has a low relative market share

position and competes in a slow- or no- market-growth industry; they are

Dogs in the firm’s portfolio. Because of their weak internal and external

position, these businesses are often liquidated, divested, or trimmed down

through retrenchment. When a division first becomes a Dog,

retrenchment can be the best strategy to pursue because many Dogs

have bounced back, after strenuous asset and cost reduction, to become

viable, profitable divisions.

BCG MATRIX

Division Revenu

es (000)

Percent

Revenu

es

Profits

(000)

Percenta

ge

Percentage

MarketShare

Percentage

Growth

Rate

Car

Finance

2,167,2

52

33% 371,276 34% 45% +16

Credit

Card

2,758,3

21

42% 393,116 36% 58% +15

Islamic

Banking

656,743 10% 109,199 10% 8% -2

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Home

Loan

985,115 15% 218,398 20% 15% +16

Interpretation:

Car finance division and Islamic Banking have a low market share position, yet

they compete in a high growth industry. These businesses are called as Question

Marks, because the organization has to decide whether to strengthen them by

pursuing an intensive strategy (Market development, Market Penetration, Or

Product Development) or to sell them.

Credit Cards represents the organizations best long-run opportunities for

growth and profitability. Credit card division has a high market share

position and a high industry growth rate, therefore the bank should invest

more in this division to maintain or strengthen their dominant position.

Forward, Backward, and Horizontal Integration, Market Penetration,

Market Development, and Product Development are the appropriate

strategies for this Credit Card Division.

Home Loan division has a low Market Share Position and competes in a slow or

no market growth industry; they are dogs in the firm’s portfolio. Because of their

weak internal and external position, the businesses are often divested or

trimmed through retrenchment.

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GRAND MATRIX:

The Grand Matrix has become a popular tool for formulating alternative

strategies. All organizations can be positioned in one of the grand strategy

matrix’s four strategy quadrants. A firms division can be likewise

positioned. Grand Strategy matrix is based on two evaluative dimensions

Rapid Market Growth

Quadrant II

1. Market Development2. Market Penetration3. Product Development4. Horizontal Integration5. Divestiture6. Liquidation

Quadrant I

1. Market Development

2. Market Penetration

3. Product Development

4. Forward Integration

5. Backward Integration

6. Horizontal Integration

7. Concentric Diversification

Quadrant III

1. Retrenchment2. Concentric Diversification3. Horizontal Diversification4. Divestiture5. Liquidation

Quadrant IV

1. Concentric Diversification2. Horizontal Diversification3. Conglomerate

Diversification4. Joint Venture

Slow Market Growth

Interpretations:

Strong

Competitive

Weak

Competitive

Position

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Bank falls in the first quadrant of the Grand Strategy Matrix. The Bank is in

excellent strategic position. For the bank, continuous concentration on the

current market (Market Development, Market Penetration) and products

(Product Development) is an appropriate strategy. If the bank is highly

committed to a single product, then concentric diversification may reducethe risk associated with a narrow product line the bank can afford to take

advantage of the opportunities in several areas. It can take risk

aggressively when necessary.

Quantitative Strategic Planning Matrix

Strategic Alternatives

MP PD

Key Factors WeightAS TAS AS TAS

Opportunities

Advancement in Islamic Banking 0.05 2 0.10 1 0.05

Expand Branch Network 0.05 - - 1 0.05

Enhance Product Portfolio 0.05 2 0.10 3 0.15

Get Into E-Business 0.05 1 0.05 - -

Provide Financial Consultancy 0.10 2 0.20 1 0.10

Threats

Government Policies 0.10 1 0.10 - -

Strict SBP Regulations 0.20 1 0.20 3 0.60

2nd Hand Car Finance By City Bank 0.15 4 0.60 3 0.45

Cash Card Introduced By MCB 0.10 2 0.20 4 0.40

Branches of Nationalized Banks in all Cities

of Pakistan

0.05 2 0.10 1 0.05

1.0

Strengths

Bank Name 0.05 2 0.10 4 0.20

Credit Card 0.10 4 0.40 3 0.30

Strong Top Management 0.05 1 0.05 4 0.20

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Aggressive Banking 0.15 2 0.30 4 0.60

Bad Debt Ratio 0.05 2 0.10 1 0.05

Committed Workforce 0.05 1 0.05 3 0.15

Financial Ratios 0.05 2 0.10 3 0.15

Customer Satisfaction 0.05 4 0.20 3 0.15

Islamic Banking 0.05 3 0.15 4 0.20

Weaknesses

No International Branch Network 0.05 1 0.05 3 0.15

Weak IT Structure 0.05 2 0.10 1 0.05

Trade Through NOSTRO Accounts 0.05 2 0.10 1 0.05

Less Job Rotation 0.05 1 0.05 - -

ATM not available In Every Branch 0.10 4 0.40 3 0.30

No Marketing Department 0.10 4 0.40 3 0.30

Sum Total Attraction Score 1.0 4.10 4.70

AS = Attractiveness Score TAS = Total Attractiveness

Score

Attractiveness Score:

1 = not attractive 2 = somewhat attractive;

3 = reasonably attractive 4= Highly Attractive

MP= Market Penetration PD=Product

Development

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Interpretation:

The Bank must consider two alternative strategies i.e. Market Penetration,

and Product Development. The total attractiveness score of Market

Penetration is 4.10 and for Product Development is 4.70. Therefore thestrategy which the Bank must adopt is Product Development as the total

Attractiveness score of this strategy is the highest i.e. it appears to be the

most attractive and suitable for the bank.

TRAINING PROGRAMME

INTERNSHIP EXPERIENCES

DIFFICULTIES FACED…

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INTERNSHIP EXPERIENCES

One of the most important aims of the student life is to express himself /

herself correctly and adequately. This was the believe in my mind when I

first decided to go to Askari commercial Bank to complete my internship

program.

Determined, Confident and Persistent in the pursuit of knowledge and

learning, I was on my way to Askari Commercial Bank, Shahalam market

Branch in the early morning of July 1, 2005. Just a day before, I had

taken my class of 3rd semester. Normally I wanted rest and recreation

after the tiring class in June but this time I was anxiously waiting for the

start of my internship.

FIRST WEEK

I started my internship from "General Banking" in the first week. The General

banking is basically divided into the following sub departments, which are as

follows:

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• Account opening

• Bills and remittances

• Clearing

• Term deposit

• Cash department

The first day of exposure to the practical field was at the (sub department)

Account opening.

The relationship of customer starts with this department. every one is not

allowed to come and open an account in the bank, for this purpose there should

be an introducer who himself is the account holder in the same branch. He has

to introduce the new client by signing the opening account form and then his

signature are verified.

Applicant's fills the account opening form and provides it to the bank with

photocopy of I.D. card and signatures card.

Then the banker inquires the about the option of opening a joint account or

individual. If the customer wants to open joint account then either it is "either or

survivor" (i.e. Only one persons signature is sufficient) or jointly (i.e. Both

should sign the cheque).

Account opening:

Although the procedure of opening an account in a bank is a quite complicated

job but I am going to tell you only the basic necessities for opening the account,

which are as follows:

•

Introduction• National I.D. card

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• Personal data

• Details of dealing with other banks.

These are some of the basic requirements for opening the account.

Issuance of chequebook

Once the account is opened, ACBL issues the chequebooks to the customer so

that they could withdraw their money whenever they like. The producer of

issuance of the chequebook is as follows:

For the customer who already has an account with the bank, the lastly

consumed chequebook requisition slip with the help of which a new chequebook

is issued. And the person who is going to open a new account for the first time

gets the chequebook free without any requisition slip.

For the new depositors the cheque book is not issued at the time of opening of

account, rather it is issued after three days but, as the most of the customers

are from the armed forces so the usually get the cheque earlier. ACBL issues the

chequebooks for both the local and foreign currency accounts.

I remained there in the account-opening department for one week and daily I

learnt a new thing

I come to know about the details of the account opened by the banks, which I

have explained in previous portion of "Departments".

In the start I have stated the account opening procedure and issuance of cheque

book in a very comprehensive way, now let me tell u the further related detail of account opening

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• First of all a customer come and gets the information regarding the

opening of account. After getting the proper information he gets an

introducer and goes for opening an account of any kind whatever he

wants

• He fills the from regarding the opening of account which is in fact a

request.

• S.S card is filled which contains the signature that will be used in future in

order to identify that you are the same particular person who perfectly

eligible for receiving the benefits.

• The S.S card and the application form is verified and the verification

stamp is imposed on it.

• After verification the application forms are pasted in the file with the

serial, no which is actually the account no. Allocated to the respective

customers.

• The chequebook is issued to the customer after three days.

• A letter of thanks is posted to the customer as well as the introducer. The

introducer is thanked for the two perspectives. First he should be thanked

that because of him the bank get another customer and the second

reason behind sending the letter to him is that if the customer had

fraudulently get the signature of that person as an introducer then he

should come to know that some one has used his name as well as

signature for his personal benefit and without the consent of him

(introducer).

• The procedure for opening the account comes to an end after sending the

letter of thanks.

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than A/c number will be changed. While in other accounts the A/c can't be

opened under the same title even in other branch of the same Bank.

Profit calculation

The Head office determines the provisional rates of the Profit. Every bank has its

own interest rate; usually established banks have low interest rates then the

non-established banks as the have to attract the Customers.

There are different types of accounts, which are shown in provisional rates of

profit on “PLS deposit” and rate of return minimum balance, and maturity is also

shown in it. After every six months the rates are revised on PLS deposit

On fixed deposit the interest is given on the Principle amount only while on other

profit and loss deposits the interest is given on profit an principle amount

(provided that the interest has not been received in the given time). On fixed

deposits the month is started from the day from which you deposit the amount.

As the interest rates vary frequently you will calculate the interest on the rate

which is applicable during that particular duration. It happens that sometimes

the interest rate remains the same. But during the year 2004 the interest rateswere changed two times within six months. First of all the interest rates were

changed at the start of the year and then these rates were changed again in the

month of the February i.e. these were changed twice in the six months. The

changing in the interest rate depends upon the will of the Head office, which has

the power to change them at any time.

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For easy operations Customer prefer to give instruction that their interest should

be credited to their A/c otherwise a manual voucher will be made that will be

cashed on cash counter every time when you come to take the interest.

Record keeping

The record of the TDR is although feed in the computer but there is also a hard

copy of the record. The verified TDR forms are pasted with serial number of

receipt given to the customer (the receipt of the form regarding the deposit of

the amount).

Askari Bachat Certificates are attached or pasted in the file according to the

date. The date may be of any month and any year i.e if there is a card of the 8th

then on this card you will find the only 8th date of any month and any year in

which the card was issued.

THIRD WEEK

In the third week of my internship I was shifted to the Clearing section and Bills

for collection section as well. Three days I worked with the "Clearing" and then

with the "Bills for collection" section.

CLEARING

This is a "Inter-city clearing" i.e the cheques of Lahore city from different banks

like National Bank of Pakistan, Standard Chartered Bank, Muslim Commercial

Bank are deposited here. The deposited cheque is received carefully by checking

the title of cheque, date, amount, and signature on the cheque. All the cheques

go to the State Bank of Pakistan. Everyday NIFT receives all cheques and

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arranges them. By establishment of NIFT a lot of time, cost and labor is saved.

The cheques are stamped carefully. Two stamps are required on the cheques

• Clearing stamp

• Payee's account will be credited

If any stamp is missed or unclear, SBP returned one the cheque with reason.

When the cheques are deposited they enter all the cheques on the computer

with account number and these figures go to SBP.

There are four types of Balances in the computer

• Available balance

• Float amount

•

Block amount• Ledger balance

NIFT collects all the cheques at 2:00 pm. After that the computer department

give clearing sheet that is checked in clearing.

Same day clearing

All the cheques are cleared in coming day. But same day cheques are cleared

other same day when it is deposited. The same day cheque amount is 50,000

below this amount the cheque, can't be cleared in the same day.

Clearing house

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It is a p[lace where representatives of all scheduled banks sit together and

interchange their claim against cash other with the help of controlling staff of

"state Bank of Pakistan" where there is no branch of State Bank of Pakistan, the

designated branch of State of Pakistan.

So, system by which banks exchange cheques and other negotiable instruments

drawn on each other within specific area and there by secure payment for their

clients through the clearing house at specific time In an efficient way.

BILLS FOR COLLECTION

Two types of cheques are deposited here

• Outstation cheques

• Askari other branch cheques (local)

Outstation cheques mean different cities cheques are deposited and Local means

Askari's other Branches like cantt, circular road, defence, Gulberg etc. Are

deposited. All cheques account numbers on the computer and these figures go to

SBP.

The cheques are cleared in 5-6 days. Because "NIFT" receives and delivered to

SBP where these cheques are cleared in 3 days and deliver to the banks, which

mention on the cheques.

The cheques require three stamps

• Askari crossing stamp

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• OBC number

• Payee's account will be credited.

If the cheques are returned due to some reasons, a returned memo.

Random is filled and entries are recorded on the register.

FOURTH WEEK

In the fourth week of internship I was transferred to the "Remittances

department". I met there with a quite sophisticated personality, she tells me

about the issuance, procedure and the entries of the demand drafts and pay

orders.

DEMAND DRAFT

It is an instrument payable on demand for which value has been received, issued

by the branch of the bank drawn. Demand draft is payable at some other

branches of the same bank. But Askari Bank contract with MCB so ACBL's

demand draft is payable at MCB also. Demand draft is very useful because there

is no chance o fraud. The person deposit cash and get demand draft. It is usedfor outstation payment.

Issuance of demand draft

On the application form following particulars are given:

•

Name of beneficiary• Amount

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• Mode of payment

• The place where DD is drawn

• Signature

• Name and address of the beneficiary

Request shall be made on standard application form. The customer writes his

name, address, I.D number, and phone number on the backside of the

application form. Commission is charged as per schedule of charges. The

issuance of DD is computerized and the amount is automatically protect graphed

drawing printing for the avoidance of forgery.

The withholding tax and excise duty is deducted as per schedule. when the

customer depots cash in the cash department, he got voucher from the cash

department and gave it to the person who makes the DD.

Payment of DD

When a person brings DD (which have been drawn on you), you will check it

from your DD payable record and ask the customer to sign twice at the back of

the DD so that it could be confirmed that he is the eligible person for receiving

the benefit, along with this you obtain the ID of that person verify it and then

make the payment. After making the payment entry is made in the register that

this DD has been paid.

DD payable register

Every day you receive an IBCA from different banks and it contains a list of DDs,

which have been drawn on you. Banker records it in DD payable register. These

DD are those, which other branches have drawn on your bank.

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Payment of DD from Suspense A/c.

The payment of DD is made from the suspence account in the following cases:

• The amount of DD is paid from suspence a/c if advice is not received yet.

• If a DD is to be cancelled on the wish of the customer, in such a case the

payment will be made from suspence A/c.

Cancellation of DD

Following procedure is followed for the cancellation of the DD.

• Obtain the application in writing for the cancellation of DD along with the

original DD.

• Verify the signature of the applicant, which should tally, with the signature

on the application form (for opening the DD).

• Mark caution on DD issued register or on computerized entry.

• Make the payment from suspence account.

• Inform the Drawee bank regarding the cancellation and ask for IBCA.

Inter Branch Credit Advice is the advice regarding the payment (refund) of

the amount which Drawer bank have sent to them (which was deposited

by the customer against the demand draft).

• When a demand draft is made, an IBCA is sent to the Drawee bank

regarding the payment.

Types of DD

DD’s are of the following types:

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• Crossed DD: In the case of crossed DD the amount is deposited to the

A/c of the benificiary.

• Open DD: Incase of open DD the amount is handed over to the

benificiary at the cash counter.

TELEGARPH TRANSFTER

The transfer of funds from one branch to another branch of the same bank is

called telegraphic transfer. The bank apply test on telegraphic transfer. The

applicant receives Commission and charges, if the Applicant’s account is in ACBL,

he pays no charge above Rs. 100,000/-

If he has no account in the ACBL then he has to pay charges according to the

amount e.g. for Rs. 100,000/- the charges are Rs. 250/-

If the account of benificiary is in another bank, his bank will present The TT to

ACBL through for payment.

PAY ORDER

Pay order issued from one branch can only be payable from the same branch.

Pay order is used for same city payment. E.g. If ACBL (Main Branch) issued pay

order it is only payable for Main Branch of ACBL.

Procedure

• Applicant fill the application

• After paying charges he gets voucher and pay order is issued

• All pay orders shall be crossed "payee's A/c only".

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Cancellation

• The applicant give application for cancellation

• Charges are recovered from the applicant.

FIFTH WEEK

In the second last week of my internship I worked for two days in the "ATM

section" and then in the "Accounts section".

ACCOUNT SECTION

I worked three days in accounts department but as it is a confidential

department so they did not give me enough in formation regarding their

working. First day I sorted out the cheques of ACBL with the help of the serial

number and the nature of the account and arrange them in sequence. After that

i checked the activity which contains the title of the cheque, amount, date etc.

Accounts department maintains the record of expenses of all the departments, it

also maintain the record of all the employees regarding their basic salary,

increment, benefits etc. It is the backbone of ACBL

On the next day Is worked in the mail dispatch section, the person appointed

here asked me to arrange the letters and to write the mailing address on the

envelopes and then to put the letters into the envelops. It was an interesting job

but, the single thing which I learned from here was that, I learnt by heart the

addresses of many branches of the ACBL, which helped me to complete the

Marketing Mix portion of the same report where I have given the detail of the

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Place of the ACBL. On the following day I repeated the same job and did nothing

else.

ATM SECTION

I worked two days in ATM department. The countrywide network of automated

teller machine carrying the brand name "ASKCASH".

The branch network is corrected on-line real time and its customers have access

to off-sites as well as on-site atms all over Pakistan. Being a part of the first

inter-bank ATM switch in Pakistan with ABN AMRO and Habib bank, the customer

now here have access to about 90 atms through the country.

For ATM cards first the customer open account in the bank after that he/ she fills

the application form for the ATM. the Head office send a ATM cards in a ATM

department but pin codes are sent in other department. So in this way the

customer gates his/ her ATM cards.

ATM means "24 hours services" the customers get money at any time at any

place but during my period the function of ATM were held by the Head office for

three days. The branch has no authority to held the machine, if it is not working;

the Head office knows the reason for it.

On the whole, it is an excellent strategy of ACBL and to sign a strategic

partnership with ABN-AMRO for ATM sharing arrangement is first time in

Pakistan.S

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SIXTH WEEK

In the last week I was shifted to the "foreign exchange" department. For the first

three days I worked there but in the last three days I was shifted again to the

account-opening department due to the absence of one of the Account opening

officer. Therefore I was sent back to the account-opening department.

THE PROBLEMS I FACED

Doing the internship was a wonderful experience for me but as far as

preparation of the report is concerned it was the most difficult part of the

project. Preparing for report become most difficulty and tedious as most

of the information was not available not only on net but also from the

bank also. I was unable to get the following material.

History of the bank

Career ladder

Job description

I was fortunate to have a wonderful Annual report of the bank. Especially

it was rested according to the circular of the State Bank of Pakistan,

therefore, it was quite easy for me to analyse the income statements of

the bank. There are some other necessary requirements for doing the

financial analysis of the income statements i.e.,

Information about the trends prevailing in the market,

And information regarding the positions of the competitors of the

bank that is the reason that I was unable to depict the true picture

of the financial position of the bank.

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We are also unaware about the off balance sheet finance of the

bank so, can say nothing regarding the true liabilities of the bank

Anyhow, it was a very learning experience for me that I will never in my

entire life.

SWOT ANALYSIS

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SWOT ANALYSIS

An analysis indicating towards the organizations strengths, weaknesses,

opportunities and threat is termed as SWOT Analysis. Such an analysis is very

important for the management in retaining the strength, overcoming the

weaknesses, capitalizing over the emerging market opportunities, and carving

ways to successfully tackle with the threats and ultimately converting them in

the strengths for the organization.

During six weeks of my stay at Askari Commercial Bank, Shahalam Market

Lahore, I have come across the following SWOT analysis of the bank.

STRENGTHS

LEADING PRIVATE SECTOR BANK:

Askari commercial bank is the leading private sector bank in the banking

network in Pakistan with many of them online branches in major cities of the

country

AUTOMATIC OPERATIONS:

The operations performed by the bank are highly automated that result in

assurance for the customers that their transactions are completed

reliably, efficiently and securely.

FULL DAY BANKING

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One can avail the benefit of the services provided at the bank till 5:00

P.m. which is highly useful for those customers who find it difficult to

leave their officers in the morning..

ATM NETWORK

The bank has the largest ATM Network cross the country. The customers

of ACBL withdraw access their funds any time at all the ATM Sites with

ASKCASH Logo.

CUSTOMIZED SOLUTIONS

The management of the bank believes in customer focused banking rather

than the product oriented banking. The products and services designed by

the bank are specifically tailored to the individual needs of its customers.

CUSTOMER ORIENTED BANKING

The priority banking centres of the bank offer an unmatched where the

customer receives highly privileged services in a highly elegant

environment. It gives the chance of experiencing new standards in

banking. Designed specially for those who appreciate only the finest

things in life, Priority Banking offers the very highest levels of

personalized banking to match customer’s unique status.

ELECTRONIC BANKING

The revolution in the banking in the form of electronic banking operations have

opened avenues of excellent, efficient and quick services saving the time and

costs of the customers and fortunately ACBL is among those few banks who are

already reaping the benefits of electronic transactions.

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ELECTRONIC FUNDS TRANSFER

ACBL management is quite prepared to adopt the latest advancements in

technology resulting in revolution in the banking operations such as check

clearing process, computer based teller equipment, automatic teller machines,and electronic funds transfers among the others.

PHONE BANKING

Phone banking service is very attractive for those classes of customers who don’t

have time to personally come to the bank i.e. banking on the phone line thus

saving the precious time of the customers.

ETHICAL CONCERNS AND PUBLIC IMAGE

The organizations showing concern for the people, ethics, and environment

enjoy good public reputation and are able to reap the benefits in the long run.

ACBL management is quite sensitive to this issue.

WEAKNESSES

In my opinions these are the points that might be detrimental to the efficiencyand profitability of the bank.

NOT HIGHLY AUTOMATED

The bank has still some of the traditional ways of operations in this advanced

technological environment.

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MANUAL BOOK-KEEPING

Although the bank has computerized accounting system but, still the bankers

use to make their entries in the accounting register.

LOW JOB SATISFACTION

Understanding and the effective management of the human resources is the

most difficult challenge faced not only by the bank but by all the organizations.

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. ACBL seems to notfocusing on this highly critical issue as the job satisfaction level of the employees

working at ACBL, was quite low.

LACK OF SPECIALISATION

This famous and useful concept given by Adam Smith in 1776 seems to be

missing in the bank. The employees are constantly rotated from one job toanother job of totally different characteristic in the view of giving them the

know-how of the working in all the departments. But I think this is not a very

good tactics used by the management. Otherwise the situation might be like this

‘Jack of all and master of none.’

CENTRALIZATION

There is a high degree of centralisation in the bank. Almost all the decision-

making is in the hands of the upper management. But centralisation is effective

up to a certain level otherwise it becomes inefficient and at times costly too. I

personally observed that delay occurred in the operations of the employees only

due to the fact that they had not got any instructions from the head office.

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LACK OF TRAINING FACILITIES

Presently there is no specific training program arranged for the new recruiters.

They have to learn based on their observations and also their mistakes. It takes

a bit time for the fresh one to learn the banking the result is huge amount of blunders, mistakes etc. resulting in monetary and non-monetary losses for the

bank. There is pressure not only on the new learner but also on the person

placed upon with this responsibility.

OPPORTUNITIES

Apart from the ones discussed in External Factors Evaluation Matrix, the bank is

facing the following threats and opportunities currently:



•

A large amount of foreign investment is attracted.




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• Islamic Banking


THREATS

High Employees Turnover

As discussed above, the job satisfaction level of the employee is very low

resulting in high turnover, which is bad for any organization as there are huge

monetary and non-monetary costs involved in the fresh recruitments.

High charges

The schedules of charges indicate that the fees charged by the bank on the

various services it provides are extremely high. It may result in decrease in the

number of its exiting customers. Further more, this could be very alarming

situation for the bank in case some of the competitors grasped the opportunity

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and lowered its rates. The result would be either the lost of market share or

decrease in the charges resulting in lowering the bank’s income.

Less attractive rate of return

Commercial banks face considerable competition in attracting deposits

from individuals or small investors. In contrast, the Govt. of Pakistan

national saving scheme offers attractive rates of return (approx. 16 to 18

percent annually) on 10-15 year fixed accounts, which banks find difficult

to match.

Stiff Competition

SCB is currently facing strict competition from the foreign banks

especially the American who banks enjoy a good market position.

Collectively U.S. banks hold approximately 9 percent of all commercial

banks' assets. At present, three American banks are operating in

Pakistan: American Express Bank; Bank of America and Citibank.

Less Experienced Staff

Owing to huge turnover of the employees, the no. of experienced and well

trained staff is very low. Majority of the staff working in the bank

branches is quite young and inexperienced. If the bank failed to bring

down its high employees turnover, then it would be lacking the most

important resources of any organization i.e. the experienced staff.

CONCLUSIONS

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AND

RECOMMENDATIONS

After spending six weeks at different departments of the bank, interacting

with the employees, getting their views, observing the organizational

structure and design, I have come up with the following suggestions that

in my view, will definitely improve a few weaknesses observed in the bank

by me.

Flexible PoliciesThe bank should be adopt flexible policies, specially in the areas of the

recruitment, promotions, evaluation of the employees otherwise the high

turnover observed in the bank will continue to create problems for the

bank now and in the future.

Job security

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The employees in the organization should be insured job security so that

there is no pressure on the employees while performing their tasks.

Permanent HiringThe fresh hiring should be made permanent so that they are secured of

their future. Further the allowances and perquisites attached with the

permanent jobs will also increase the motivation level of the employees.

Job Training Programs

The bank should place emphasis on the organization of effective training

and development programs for its new as well as existing employees so

that these are gradually updated regarding the recent developments in

the field of banking.

Perquisites and Allowances

The number of allowances and perquisites for the employees should be

increased to ensure that they put their body and soul in the jobs assignedto them.

Revival of the Charges

The rates for the various charges provided by the bank should be brought

down a bit, as it would result in increase in the number of customers of

the bank.

Adoption of Effective technology

The current unibank system used by the bank is very slow in processing

so my view is that the bank should try to adopt some other but more

effective form of technology in order to provide comfort to the customers

as well as the staff.

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Decentralization

The higher authorities should form team-based management rather than

centralized management. It would result in improvement in uplifting the

morale of the employees. They will be more motivated and involved in all

their operations resulting in overall effectiveness of the organization.

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askari new

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