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1. Overview of the Organization 1.1 Brief History of the Organization 1.1.1.

History: Askari Commercial Bank Ltd was incorporated in Pakistan on October 09, 1991, as a PAskari Bankic Limited Company. It commenced operations on April 1, 1992 and is principally engaged in the business of banking, as defined in the Banking Companies Ordinance, 1962. The Bank is listed on the Karachi, Lahore & Islamabad Stock Exchanges and its shares are currently the highest quoted from among the new private sector banks in Pakistan. Askari Bank has expanded into a nation wide presence of 87 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, 2006, 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. 1.1.2. Askari Bank Limited Today Askari Commercial Bank limited continues to scale new heights in all areas of its operations. The safety and security of depositors funds, high productivity and optimum use of technology are the hallmarks of its corporate strength. While capturing the largest market share amongst the new banks, Askari has provided good value to its shareholders. Share price of ACBL has remained approximately 12% higher than the average share price of quoted banks during the last four years. 1.1.3 Awards & Achievements Best Retail Bank in Pakistan by The Asian Banker 1st Consumer Choice Award" by the Consumer Association of Pakistan. 2006 Corporate Excellence Award" by the Management Association of Pakistan (MAP). 2002, 2003 & 2006 The Best Bank in Pakistan by Global Finance magazine. 2001 and 2002 Best Consumer Internet Bank Global Finance magazine. 2002 and 2003. Euro money and Asia money Awards" 1994, 1996 and 1997. Best Presented Annual Accounts by (ICAP) and (ICAMP). 2000, 2001and 2002.

The Best Presented Annual Accounts by South Asian Federation of Accountants (SAFA), in the SAARC region The Best Consumer Banking Award 2007 by the Consumer Association of Pakistan. 2008 The Best Retail Banking Award 2010 by Pakistan Guarantee Export Corporation Ltd. 2010 "Best Corporate Report Award for the year 2010" by ICAP & ICMAP. 2010. Over the years, Askari Bank has proved its strength as a leading banking sector entity, by achieving the following firsts in Pakistani 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 III. First Bank to offer Internet Banking services IV. First Bank to offer E-Commerce solutions 1.1.4. Corporate Information of Askari Bank Ltd. Board of DirectorsDirectorss 1.Lt.Gen.javed zia Chairman 2.Lt. Gen. (R) Imtiaz Hussain 3.Maj. Gen. (R) Saeed Ahmed Khan 4.Mr. Zafar Alam Khan Sumbal 5.Mr. Muhammad Riyazul Haque 6.Mr. Shahid Mahmud 7.Mr. Ali Noormahomed Rattansey, FCA 8.Dr. Bashir Ahmad Khan 9.Mr. Tariq Iqbal Khan, FCA President & Chief Executive 1. Mr. M. R. Mehkari 1.1.5. Branches detail North Region Islamabad Rawalpindi I Rawalpindi II Peshawar 15 16 11 13

Azad Kashmir Corporate Islamic Banking Central Region Lahore I Lahore II Sahiwal Faisalabad Gujranwala Multan Corporate Islamic Banking South Region Karachi I Karachi II Karachi III Karachi IV Hyderabad Quetta Corporate Islamic Banking Wholesale Bank Branch (Bahrain) 10 11 11 12 7 8

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Askari Bank Limited Type Industry Founded Headquarters Key people Products Revenue Net income Total assets Employees Private Money Center Banks October 09, 1991 Rawalpindi, Pakistan Lt. Gen. Waseem Ahmed Ashraf, Chairman & CEO M. R. Mehkari Banking Rs 1.10 billion PKR (2010)[1] Rs 9.03 billion PKR (2010)[1] Rs. 254,32 billion PKR (2010)[1] 7,279 (2010)[1]

Registered & Head Office AWT Plaza, The Mall, P.O. Box No. 1084 Rawalpindi- 46000, Pakistan.

Tel: (92 51) 9063000 Fax: (92 51) 9272455 Website: E-mail: 1.2 Nature of the Organization Askari Commercial Bank Ltd was incorporated in Pakistan on October 09, 1991, as a PAskari Bankic Limited Company. It commenced operations on April 1, 1992 and is principally engaged in the business of banking, as defined in the Banking Companies Ordinance, 1962. The Bank is listed on the Karachi, Lahore & Islamabad Stock Exchanges and its shares are currently the highest quoted from among the new private sector banks in Pakistan. Askari Bank has expanded into a nation wide presence of 87 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, 2006, 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. During the last seventeen years the bank has concentrated on growth through improving service quality, investment in technology and people, utilizing its extensive branch network, developing a large and stable deposit base and managing its non-performing loans via improved risk management process. Askari Bank Limited is a listed company under the Banking Ordinance, 1962 and Securities and Exchange Commission of Pakistan. The bank is listed on all the stock exchanges in Pakistan i.e. Karachi Stock Exchange (KSE), Lahore Stock Exchange (LSE), Islamabad Stock Exchange ISE). The groups working under MCB head office are as follows: Credit Administration Group Consumer Banking Group Forex, Securities & Investment Division Strategic Planning and Investment Group Finance Division Audit Department Human Resource Group www.askaribank.com.pk webmaster@askaribank.com.pk

Islamic Banking Group Information Technology Group

Under the President an Executive Committee and a Credit Committee works. All the matters of the bank joins to the board of directors are presented to the executive committee which is responsible for the daily operations of the bank. The request for credit exceeding the General manager Power is approved by the Credit Committee. Under the area executive is the General Manager who is the in charge of the circle office. Under the General Manager are the Zonal Manager and then the Branch Manager. After privatization, the growth in every department of the bank has been observed. Following are some key developments: 1) Launching of different deposit schemes to increase saving level. 2) Increased participation on foreign trade. 3) Betterment of branches and staff service level. 4) Introduction of Rupee Traveler Cheques & Photo Credit Card for the first time in Pakistan. 5) Establishment of Online Branch Banking, Internet Banking and Tele Banking facilities for the worthy customers. 6) Askari Bank has expanded into a network of 226 branches, including 31 dedicated Islamic banking branches, and a wholesale bank branch in Bahrain. A shared network of 4,173 online ATMs covering all major cities in Pakistan supports the delivery channels for customer service. Askari Bank achieved planned growth in business and operations during 2010. The total assets of the Bank amounted to Rs.254 billion as at December 31, 2010, registering an increase of 23 percent over December 31, 2009.Customer deposits reached Rs.206 billion by December 31, 2010, an increase of 23 percent over December 31, 2009. 1.3 Business Volume 1.3.1. Revenue:
Rupees in 000 Fee, commission and brokerage income Dividend Income Income from foreign currencies Gain on sale of securities Unrealised (Loss)/gain on revaluation of investments Other Income 2010 1,307,699 162,537 538,445 143,717 -1,918 404,221 2009 1257584 173621 873512 36743 22384 343156 2008 1072868 137079 655761 2361251 1728 336809 2007 1,013,660 109,326 584,344 112,474 -2,308 321,758 2006 838,561 51,143 356,218 99,825 19872 206,819

TOTAL

2,554,701

2707000

4565496

2,139,254

1,552,566

Year 2010 has been an outstanding year with the bank recording the highest earnings in its history. The wide range of products offering, large branch network and committed workforce are some of the fundamental strengths that enabled the bank to achieve exceptional results in a very competitive market. The above figures of the revenue portion of the profit and loss account shows that markup / return earned increased up to Rs.40.04 billion in 2010 as compared to the financial year 2006 while fee, commission, brokerage and FX income increased to Rs.4.54 billion in 2010 as compared to 2006. Dividend and capital gains figure was at Rs.1.36 billions in 2010 which was at Rs.1.18 billion in 2006. 1.3.2. Deposits: Customers Fixed deposits Saving deposits Current account -non-remunerative Special exporters account Margin account Other Financial Institutions Remunerative deposits Non-Remunerative deposits TOTAL particulars of deposits In local Currency In foreign currency TOTAL 2010 47689401 110297787 44340561 21743 1853597 268063 2009 39675699 80428214 43245593 30562 1983653 257099 2008 29997574 81605907 28465592 90474 1640800 415904 2007 40,349,941 64,698,318 23,925,338 24,306 1,375,381 290,634 2006 37,999,587 57,854,949 20,089,228 304,924 1,076,511 125,010

1494658 268063 206233873

2047388 818132 1,175,365 1,344,481 8364 2324 167676572 143036707 131,839,283 118,794,690

174,277,597 141885129 123505671 110,008,367 98,378,918 31,692,630 25791443 19531036 21,830,916 20,415,772 205,970,227 167676572 143036707 131,839,283 118,794,690

As shown in the above portion of deposits from the balance sheets of last five years the deposits has the increasing trend throughout the period from 2006 to 2010. Total deposits from customer come to Rs.321.15 billions in 2010 from Rs.219.48 billion of 2006. This was due to healthy campaigns for funds generation from customers by offering attractive and profitable products of various types like deposit accounts for different terms, profit

availability on monthly basis etc. Deposits from customers include fixed and saving deposits, current accounts, margin accounts and others. Deposit from financial institutions is two types remunerative and non-remunerative deposits and they have also increasing trend throughout the period. The figure was at Rs.330.28 billions in 2010 as compared to 2006 where it was at Rs.221.07 billions which shows the healthy position of the bank. 1.3.3.Advances

Rupees

in

000

2010 125,995,317 2,106,040 128,101,357 1,635,158 281,514 9,582,481 8,027,833 17,610,314 147,628,343 147,628,343 -11,658,161 -585,642 -350,041 -12,593,844 135,034,499 139,014,592 8,613,751 147,628,343 119,371,026 28,257,317 147,628,343

2009 120,029,501 2,993,878 123,023,379 2,092,884 5,737,310 8,865,648 14,602,958 139,719,221 111,752 139,830,973 -10,025,157 -585,642 -414,184 -11,012,731 128,818,242 130,774,111 9,056,862 139,830,973 111,043,245 28,787,728 139,830,973

Loans, cash credits, running finances, etc. In Pakistan Outside Pakistan Ijarah Financing - In Pakistan Net book value of assets / investments in Ijarah under IFAS 2 in Pakistan Bills discounted and purchased (excluding treasury bills) Payable in Pakistan Payable outside Pakistan

Financing in respect of continuous funding system Advances - gross Provision against non performing advances Specific provision General provision General provision against consumer financing Advances - net of provision Particulars of advances In local currency In foreign currencies Short term ( for upto one year) Long term ( for over one year) TOTAL

The total advances net of provisions shows the figure of Rs.147.628 billions in 2010 and these were at Rs.137.32 billions in 2006, an increase of Rs.125.19 billions was seen in this portion of balance sheet. It generates the healthy mark-up / interest income for the bank which added value of the revenues of the bank in the corresponding periods.

1.4. Number of Employees 1.4.1 Board of DirectorsDirectorss 1.Lt.Gen.javed zia Chairman 2.Lt. Gen. (R) Imtiaz Hussain 3.Maj. Gen. (R) Saeed Ahmed Khan 4.Mr. Zafar Alam Khan Sumbal 5.Mr. Muhammad Riyazul Haque 6.Mr. Shahid Mahmud 7.Mr. Ali Noormahomed Rattansey, FCA 8.Dr. Bashir Ahmad Khan 9.Mr. Tariq Iqbal Khan, FCA President & Chief Executive 1. Mr. M. R. Mehkari 1.4.2. Staff Strength:
STAFF STRENGTH Permanent Temporary / on contractual basis Daily wagers Commission based Banks own staff strength at the end of the year Outsourced Total staff strength at the end of the year 2010 4,393 1,646 1 120 6,159 1,111 7,270 2009 4,252 1,703 541 6,496 1,064 7,560 2008 3,834 1,273 789 5,896 912 12,704 2007 3,241 687 657 4,585 641 9,811 2006 2,754

2,754

1.4.3. Mediocre Level Management:


The organizational chart within a department and in different offices is as follows: Divisional Heads Regional Head (EVP) Zonal Head (VP) Branch Manager (VP, AVP, Grade 1,2,3) Head Office Regional Office Zonal Office Branch

1.4.4. Management Hierarchy:

Grades of Bank
SEVP EVP VP

AVP
GRADE-1 GRADE-2 GRADE-3 ASSISTANT Clerical staff Cashier Technical Staff Non-clerical staff Messenger Dispatch Rider

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1.4.5. Reporting Lines As shown above in the management hierarchy the Askari Bank Ltd. has following reporting lines: The main head of the bank is Senior Executive Vice President (SEVP) or President who manage the all matters of the bank through at higher level like investment at national and international level, corporate affaires etc. He is also the member of the Board of Directors (BoD) of the bank. He is the major person who has the direct liaison with the management of the bank and higher level employees. Executive Vice President (EVP) reports to the SEVP for his duties and responsibilities assign to him. He has the liaison with the SEVP and SVPs. EVPs handles various matters of their concerned departments. Senior Vice Presidents mostly work at divisional level and they received the report and data from the different branches under their divisions. The numbers of branches are varied in the different divisions. Vice Presidents and Assistant Vice Presidents normally are the branch managers and they work at branch level. In the far areas the branch manager are AVPs and in the urban areas the VPs. All the other staff works in their different job responsibilities and report to their heads for their duties. In a branch all the staffs are reportable to the branch manager for their job descriptions. Although in the big branches there are different departs and they have their heads like accounts, audit, remittances, clearance, credit and many others, here the reporting style has change but the branch manager is responsible for all others. 1.5. Product Lines Askari bank offers a full range of banking products and services to its customers across the country. The elegantly designed product centers at its branches offer to the customers the ease and convenience of conducting banking transactions in full confidentiality & privacy in a first class way, the personalized and professional services of dedicated relationship managers, committed to meeting all financial needs of the customers not only help the customers in their investment plans but also save them from the hassle of waiting in queues.

1.5.1 Product lines

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1.5.1-I Consumer Banking 1. Askari 4 car 2. Personal finance 3. Mortgage finance 4. Visa debit card 5. Credit card 6. Master card 1.5.1-II Branch Banking 1. Askari Deposit Multiplier Account 2. Askari Mahana Bachat Account: 3. Askari Paishgi Munafa Account 4. Value Plus Deposit Account 5. Investment Certificates 6. Askari Rupee Traveler Cheques 7. Askari Roshan Mustaqbil Deposit 8. Askari Paishgi Munafa 1.5.1-III Agriculture Banking 1. Kissan ever green finance 2. Kissan tractor finance 3. Kissan livestock development finance 4. Kissan farm mechanization finance 5. Kissan aabpashi finance 1.5.1-IV Islamic Banking 1. Ijarah Bi Sayyarah 2. Home Musharakah 3. Deposit Schemes 1.5.1-V CORPORATE BANKING 1. Corporate Banking Division

Facilities

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Working Capital Facilities Term Loans Structured Trade Finance Facilities Letters of Guarantee Letters of Credit Fund Transfers / Remittances Bill Discounting Export Financing Receivable Discounting 1.5.1-VI Investment Banking Division Services 2 3 4 5 6 7 Electronic banking Electronic Bill Payment Service Cash management services Internet banking services Call center ATM network

1.5.1-VII CONSUMER BANKING

Alternative term for retail banking.( Savings accounts, consumer loans, credit cards, etc., and other such services provided to individuals. Also called consumer banking. See also corporate banking and wholesale banking. Our consumer finance is focused on expanding target market and enhancing our portfolio through new and improved initiatives and products. Special attention is being given to business opportunities involving strategic alliances to earn sustainable returns, with greater emphasis on secured form of consumer lending and an aim to increase product offerings while improving and maintaining a quality of its risk asset portfolio. ASK 4 CAR

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The Askari bank also provided the service of Ask 4 car Features Product Type: Mark-up: Down Payment: Charges: Insurance: Mark-up: Down Payment: Charges: Insurance: Makes: Details Financing for New & Used Vehicles 18% p.a for 3 Year, 19% p.a for 4 Year & 20% p.a for 5 Year Minimum 15% & Maximum 60% As Per "Schedule of Bank Charges" Built in Insurance 20% p.a for 3 Year, 21% p.a for 4 Year Minimum 30% & Maximum 60% As Per "Schedule of Bank Charges" Built in Insurance Suzuki, Honda, Toyota & Hyundai (Please note 800 CC used vehicles are not allowed) Year of manufacturing not older than 5 years at the time of Vehicle Age: Ownership Status: loan Third Registration in the name of AKBL (Registration in the cities where Askari Branches are located) Personal Finance One can avail unlimited opportunities through Askari Banks Personal Finance. With unmatched financing features in terms of loan amount, payback period and most affordable monthly installments, Askari Banks Personal Finance makes sure that you get the most out of your loan. No matter what your need is, Askari Bank has more ways to serve you than ever before.

Features pplicant/ Borrower: Age: Salary/ Income:

Detail Pakistani Resident (SEB/SEP cases are not entertained currently) Salaried: 21-61 years (maturity of loan at 61 yrs.) Rs. 30,000/-per month

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Employment Status: Debt Burden: Credit Limit: Tenor: Mark up : Secured Mark up : Unsecured Reference: Processing Charges: / Others

1 Year Maximum 50% of the net disposable income Upto Maximum of Rs. 500,000/- (Subject to maximum of 50% DBR & Industry benchmark is maximum Rs. 1.000 M) 1 - 5 years Salaried: 19% p.a Salaried: 21% p.a & Contract Employees 24.2% p.a Two (2) references with complete details (one should be relative) As per "Schedule of Bank Charges"

Mortgage Finance

Ever since the inception of life, shelter has been rated among the primary needs of mankind. Owning a home for oneself still remains an exclusive dream for many. Askari Bank has made the realization of your dream to have a house of your very own possible. Whether you plan to build a house, tailor made to your requirements or buy a constructed house, Askari mortgage finance enables you to pursue your goal without any problems. Mortgage is a premium home financing product for customers aged between 23 65 years belonging to the upper, upper middle and middle income groups, residing in the urban areas of Pakistan Build a Home: Buy a Home Buy a Plot and Construct: Renovation Balance transfer facility
Feature Detail

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Age

Primary Borrowers age Salaried Minimum age: 23 Years Maximum age: 60 Years at maturity

SEB/P Co-borrower

Minimum age: 23 Years Maximum age: 65 Years at maturity Only Son and Spouse are allowed as Co-borrower. However, a blood relative is allowed in case of joint ownership in property:

Minimum age: 18 Years Maximum age: 65 years

Askari Debit Card

Askari Bank is committed to provide you innovative and competitive solutions to your banking needs in a more efficient and personalized manner. Your Bank enjoys a strategic competitive advantage over all domestic players by virtue of its leadership, large network and technological advancement. In line with our tradition of innovation, Askari Bank takes pride in announcing launch of Askari Bank's Debit Card. Askari Debit Card means freedom, comfort, convenience and security, so that you can have retail transactions with complete peace of mind. Askari Debit Card 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. CREDIT CARD Features Details Eligibility: Resident Pakistanis Perm. A 30,000/B 30,000/C 35,000/NAC 40,000/-

Cont. 35,000/35,000/38,000/45,000/-

Perm. 50,000/50,000/55,000/60,000/-

Cont. 60,000/60,000/70,000/80,500/-

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Avg. SEB/SEP Basic/Supply Balance Transfer 1.5.1-VIII

Bal.

Rs.

30,000/(For last 6 months bank statement) per per

119,999/- (For last 6 mth. Avg. Bal. Rs. 120,000/- 400,000/statement) 3.2% per 3.45% month 2.15% month month per 2.15% month

BRANCH BANKING

Engaging in banking activities such as accepting deposits or making loans at facilities


away from a bank's home office. Branch banking has gone through significant changes since the 1980s in response to a more competitive nationwide financial services market. Financial innovation such as internet banking will greatly influence the future of branch banking by potentially reducing the need to maintain extensive branch networks to service consumers.

.Askari Deposit Multiplier Account

Aim higher with the Askari Deposit Multiplier account. This account is especially designed for individual investors whose aim is to invest their funds for a longer term with higher returns. This Term Deposit has a 10 years tenure and offers a competitive rate of return paid on maturity. It is an ideal option for investors who wish to start saving for their future today. Mentioned Below are some of the Salient Features of the account.
Features Product Type: Eligibility: Details Term Deposit Pakistani Resident (Individuals Only)

Balance Requirement: Tenure: Profit payment: Profit Rates:

Minimum Rs. 50,000/- & Maximum Upto Rs. 10,000,000/10 Years On Maturity Competitive

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Servicing: Financing Limits:

Available at all Askari Bank branches Upto 90% of the principal amount.

Askari Mahana Bachat Account

Askari Mahana Bachat Account is a Term Deposit designed for individual customer with a short to medium term investment appetite. It offers customers the option of investing for 1 or 3 Year tenures and has been designed keeping in view savings needs of customers who want profit on a monthly basis. With competitive rates of return paid monthly on the 1st of every month and the option of getting a financing facility up to 90% the Askari Mahana Bachat Account caters to your saving needs without blocking your funds for a longer duration. Some of the salient features of the account are mentioned below:-

Features Product Type: Eligibility: Balance Requirement: Tenure:

Details Term Deposit Pakistani Resident (Individuals Only) Minimum Rs. 50,000/- & Maximum Up to Rs.10,000,000/(In multiples of Rs. 25,000/-) 1+3 Years Earn Rs. 842/- per month on investment of every Rs. 100,000/- for one year!" Earn Rs. 917/- per month on investment of every Rs.

Profit Amount: Profit payment: Profit Rates: Servicing:

100,000/- for three years! Monthly - 1st of every month Competitive Available at all Askari Bank branches

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Financing Limits:

Up to 90% of the principal amount

Askari Paishgi Munafa Account

Askari Paishgi Munafa Account is a unique term deposit designed to meet the immediate financial needs of Individual investors who want to invest funds for a medium term. Now you dont have to wait the entire term to receive your profit. The most significant feature of this product is that the customer receives the entire profit upfront at the time of placement. So you can fulfill your financial needs today without depleting your savings. Salient features of the account are mentioned below:

Features Product Type: Eligibility: Minimum Amount: Profit Amount: Tenure:

Details Term Deposit Pakistani Resident (Individuals) Rs. 100,000/- or in multiples of Rs. 100,000/Rs. 12,000/- on a deposit amount of Rs.100,000/15 Months 1. Financing Facility up to 80% of Principal amount. 2. Free Visa Debit Card issuance.

Remarks

3. No Minimum Balance requirement in checking account. 4. 2 Free Pay Orders in a month. (Withholding Tax and other Government charges will be applicable as per Law) Benefits: 5. No maximum limit for investment.

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Value Plus Deposit Account

Askari Bank leads the way, yet again with the introduction of Askari Value Plus Rupee Deposit Accounts, which promise greater financial freedom and security, in an unmatched way.Now you can open a "Value Plus Account" while enjoying the flexibility of a normal checking account

Features Details Types of Value Plus Account: Why Askari Value Plus Account? 3. Free ATM Cash Withdrawal insurance 4. Free online funds transfer facility 5. Free internet banking services 6. Free of cost 24 hours global accidental insurance coverage up to Rs. 2 million 7. Facility of Supplementary Debit Cards 8. Monthly returns on saving deposits Value Plus Current, Saving & Time Deposits 1. Free issuance of Debit Card 2. Free global accidental insurance coverage against debit card irrespective of balance in the account or age of the cardholder

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9. Partial encashment facility for time deposits 10. Automatic roll over facility for time deposits 11. Our un-matched service quality Investment Certificates

Askari Bank's Investment Certificates not only provide the added security, investment and monthly return to the customers. These certificates are negotiable and can be transferred to third party. Investment Certificates can be issued for a period of 3 months and profit is payable on monthly basis through pre-printed tear-off coupons

Features Details Facility: Investment Certificates Important 1. Free issuance and free encashment Features: 2. Account relationship with Askari Bank is not mandatory 3. No penalty on pre-mature encashment 4. Negotiable and payable in Pakistan in Pak rupees only 5. No purchasing limit 6. Valid until encashed 7. Encashable at all Askari Bank Branches 8. Profit is payable on monthly basis through pre-printed coupons 9. In case of loss / theft or damage, there is replacement / refund to the original purchaser 10. Encashment by third party 11. There is no penalty on pre-mature redemption, except that profit coupon shall be valid only for completed month

Askari Rupee Traveler Cheques

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Askari Bank Limited has always remained at forefront in introducing innovative and unique products in banking sector. Our financial instruments provide greater financial freedom and security in an unmatched way to our valued customers. Askari Bank offers you its "Rupee Traveler Cheques" eliminating all financial risks while traveling. So avoid risk of carrying cash through Askari Bank's Rupee Traveler Cheques

Features Eligibility: Denominations Validity

Details Any Literate individual customer (Account is not mandatory) Rs. 10,000/Until encashed Issuance Desirous customer will submit the Application Form (duly filled/ signed) in any branch of Askari Bank Limited. After verification, branch will forward the form to Investment Products Unit. IPU will keep the record of the customer and system will automatically update that customers transaction. Encashment Original purchaser will approach the nearest branch. Purchaser will sign RTC on the face and branch will verify his signatures with the

Processing Charges

signature mentioned on CNIC before encashment of the same. Refund processing charges are Rs. 1,000/- and Issuance/Encashment are free.

Commission Rs. 30 per RTC on holding the same for 30 days or more With Holding Tax 0.3% on Issuance & Encashment in excess of Rs. 25,000/ Askari Roshan Mustaqbil Deposit

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The Askari Roshan Mustaqbil Deposit is a saving plan created for individual investors who wish to invest now for a regular return at a later stage while keeping their principal amount intact. Now you can invest a substantial amount without having to block your entire savings like a regular Term Deposits. With Askari Roshan Mustaqbil Deposit you can invest in the form of monthly deposits for a period of five years and get paid back the same monthly deposit amount every month for the next five years while receiving their principal amount in full at the end of the tenure. With Askari Roshan Mustaqbil Deposit you can doAskari Banke your investment in a time period of ten years. An ideal account for customers who wish to plan for their retirement.
Features Product Type: Eligibility: Balance Requirement: Tenure: Profit payment: Profit Rates: Profit Rates: Servicing: Financing Limits: Details Term Deposit Pakistani Resident (Individuals Only) Minimum Rs. 5,000/- & Maximum Upto Rs. 50,000/- (In multiples of Rs. 5,000/-) 10 Years (5 + 5) Monthly on completion of first 5 years Monthly - 1st of every month Competitive Available at all Askari Bank branches Upto 90% of the principal amount after completion of first 5 years

1.5.1-IX

AGRICULTURE BANKING

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The production of food through the raising of crops and/or animals. The development of agriculture approximately 9,000 years ago is considered to be one of the most important revolutions in human thinking, one that made civilization possible. The trade of agricultural products, such as wheat or coffee, gave rise to the first exchanges. Even now, agricultural products are among the most important commodities that are traded. Agriculture Finance Solutions 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. KISSAN EVER GREEN FINANCE

Askari Bank has launched this program with the sole motive to provide dignity, prosperity and freedom to the tiller of the land. The program is designed to help small, medium and large farmers in meeting their short-term input requirements against one time sanction and automatically renewable up to 3 years subject to its stipulated utilization/periodical adjustment. The credit line is sanctioned in the light of available cash flows and input requirements i.e. Seeds, Fertilizer & Pesticides etc. Features Product Type: Eligibility: Security: Profit Details Profit Earning Account Pakistani Resident (Individuals) Mortgaged charge on agri land through Zari Pass Book. Profit on credit balances will be paid on half yearly basis as declared by

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Amount: Tenor: Markup:

the bank on PLS savings accounts. Yearly Basis The mark-up is charged for the actual days the finance is utilized. 1. A special cheque book is issued to the farmer. 2. Automatic renewal upon adjustment of entire principal amount with mark-up once in a year. 3. The account is farmer friendly which benefits the farmers both ways. If the account is in credit, it earns profit, otherwise it provides instant

Benefits: finance, to the farmer for his agriculture needs. KISSAN TRACTOR FINANCE

Traditional modes of cultivation viz Bullocks, Camels, horses etc can no longer keep pace with the demands of present times due to manifold increase in the population. Power in the form of modern technology is therefore the need of the hour. To meet this emergent requirement, Askari Bank has launched a Askari Kissan Tractor Finance to bring power to the fields. Feature Product Type Eligibility: Tenure: Details Profit Earning Account Pakistani Resident (Owner as well as non-owner farmers.) 5 Year. The farmer will have privilege of availing non-funded facility at a reduced cost under this program on account of more equity participation. Good farmer bonus will be available to the borrower in case the loan is repaid as per terms of sanction. The farmers life & tractor will be insured against contingencies, which will provide comfort and piece of mind. Priority in delivery of tractor will be given by manufacturer as per arrangements with the bank.

Benefits

KISSAN LIVESTOCK DEVELOPMENT FINANCE

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In order to supplement the income of the farmer, Askari Bank has launched a program enabling the farmer to purchase Milch Animals, Goats, Sheep, Poultry and Fisheries without incurring extra expenditure because of availablility at his farm. He will be able to get milk, meat and eggs etc., which normally do not form part of his diet. This program has the added advantage that besides fulfilling his own familys consumption needs he will be able to market the surplus and earn additional income. This will further improve their cash flows to repay their other Loans / Revolving Credit on due date. eatures Product Details To purchase Milch Animals, Goats, Sheep, Poultry and Fisheries without incurring Type: extra expenditure because of availability at his farm Eligibility: Pakistani Resident (Owner Farmers) Benefits: The program will provide regular day to day income to the farmer to meet his own consumption and surplus to be marketed. This will revive / accelerate and supplement the income generating capacity. It will enhance the repayment capacity of the farmer. KISSAN FARM MECHANIZATION FINANCE

Beside Power at the farm i.e. Tractor, the benefits / advantages of power are maximized with the use of Mechanical Support i.e. modern and improved equipments which essentially complement one another due to their cost effectiveness and time efficiency. Askari Bank has launched an Askari Kissan Farm Mechanization Finance for the assistance of the small farmers and provide finance for farm equipment, trailer, thresher, drills & rotavators etc. Features Product Type Eligibility: Benefits: Details Finance for farm equipment, trailer, thresher, drills & rotavators etc. Pakistani Resident (Individuals) Under this program the farmer will get benefit of use of modern agricultural tools, implements and equipments which are cost and time effective.

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Improves per acre yield of agri crops and quality of agriculture produce to get good price in the market. Helps to match / compete with international standards for exportable agriculture produce.

KISSAN AABPASHI FINANCE

Agriculture farming is impossible without adequate water. We can combat the prevalent water scarcity by harnessing more natural resources. Increased use of mechanical means thus provides a ready alternative. Keeping in view the scarcity of water, which is the lifeblood of arable lands, Askari Bank has started a program for farmers, to finance installation of Tube-Wells (electric, diesel and solar energy units) water management equipments and water channel development etc., which will help farmers to make optimum use of limited water resources. Product To finance installation of Tube-Wells (electric, diesel and solar energy units) water

Type management equipments and water channel development etc., Eligibility: Pakistani Resident (owner of farmers) 1. Help farmers to make optimum use of limited water resources. 2. To facilitate the farmer, to overcome the scarcity of water. 3. To develop mechanical water resources, sprinkler and drip system etc. 4. To avoid traditional / inefficient modes of irrigation and waste of available water. Benefits: 5. To manage natural / available resources through water management practices. 1.5.1-X ISLAMIC BANKING

Islamic Banking Services

Islamic Banking was launched under the brand 'Askari Islamic Banking', by opening 6 dedicated Islamic Banking branches in major

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cities of the country. Further expansion is planned with improved capabilities for offering products conforming to the Shariah principles. Askari Islamic Banking opens the doors for Halal banking solutions. Our objective is to put in place an efficient banking system suuportive to economic justice and welfare of society in line with Shariah standards. A comprehensive range of Islamic Banking products and services is bieng offered, in order to meet customer's demand of Shariah Compliant Banking, in the following areas:

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

Islamic Banking products have been approved by the Bank's Shariah Advisor. As per Shariah requirements, funds and products of Islamic Banking are managed seperately from the Conventional Banking side. All funds obtained, invested and shared in Halal modes & investments, under supervision of the Shariah Advisor. Ijarah Bi Sayyarah((IJARAH CAR FINANCING)) Ijarah is a rental agreement, under which the usufructs of an asset is transferred to the client on pre-agreed terms and conditions. It is a Shariah Compliant mode of finance, adopted by Askari Islamic Banking to meet the Car Financing needs of its valued customers. Shariah Compliant and market competitive. Askari Islamic Banking deals in all kinds of new, locally assembled, as well as imported vehicles. Terms and conditions we offer are most flexible, with prompt processing time. Moreover, in order to enhance, customers convenience, we offer family income evaluation plan, where our valued clients can also avail Ijarah Bis Sayyarah facility for more than one vehicle. Home Musharakah Everyone wants to live in the best place that is comfortably affordable. This means being able to cope with other financial commitment, while still having money left over for extras and unexpected expenses. Askari Islamic Banking is pleased to offer Shariah Compliant Home Financing. We facilitate you to Purchase, Construct, Improve and Transfer of the property through Diminishing Musharakah

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Deposit Schemes Askari Bank are also provided the deposit schemes .In Islamic country may of people are to take the definite for this deposit scheme. Islamic Banking Services Askari Bank Limited - Islamic Banking opens the doors for Halal banking solutions. Our objective is to put in place an efficient banking system supportive to economic justice and welfare of society in line with Shariah standards. The Bank has expanded its Islamic Banking network to 29 branches and 02 sub-branches in the major cities of Pakistan, covering the Capital and the four provinces. Further expansion is planned with improved capabilities for offering products conforming to Shariah principles. All Islamic Banking Products are approved by the Shariah Advisor of the Bank. As per Shariah Requirements, funds and products of Islamic Banking are managed separately from the Conventional banking side. All funds obtained, invested and shared in Halal Most& investment. 1.5.1-XI CORPORATE BANKING

CORPORATE & INVESTMENT BANKING GROUP At Askari Bank, we understand the unique business requirements of our corporate and institutional clients, and accordingly the Corporate and Investment Banking Group (CIBG) strives to meet their expectations through provision of customized and relationship based banking approach. CIBG approach to provision of Askari Banks comprehensive and integrated, multi-product services is based upon a client-centric and distribution-focused business model, supported by a culture that prioritizes client relationships and economic returns. CIBG is specifically structured to provide dedicated banking services and products to its corporate customers through two key divisions. CORPORATE BANKING DIVISION The Corporate Banking Division (CBD) works on a long-term relationship based business model to provide a single point within the bank for meeting all business requirements of

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its corporate and institutional customers, including pAskari Bankic sector enterprises, with the primary objective of enhancing customer service. Askari Banks Corporate Banking Division, we remain committed to providing you with innovative and integrated financial solutions to all your day to day and one time financing needs, as well as offering various products and services to maximize returns on your investments.. SERVICES Working Capital Facilities Term Loans Structured Trade Finance Facilities Letters of Guarantee Letters of Credit Fund Transfers / Remittances Bill Discounting Export Financing Receivable Discounting INVESTMENT BANKING DIVISION The Investment Banking Division (IBD) at Askari focuses on origination and execution of a full range of financial advisory and capital raising services to corporate and institutional clients as well as actively managing the banks proprietary investments in the local equity and debt capital markets. Whether your company is seeking to access the local or cross border syndications and debt capital markets, project financing needs, advisory services related to M&A or the local equity capital markets for raising capital, we are well positioned to provide due assistance. We can create and tailor the right structured solutions for your business needs in order to enhance shareholders wealth and your market competitiveness Our investment banking team consists of highly qualified and experienced individuals from the local and international financial markets, ably supported by over 30 relationship managers out of 3 regions in the country, with well established execution experience and distribution capability.

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Services InternetBankingServices In pursuance of our quest to provide the most modern service to our customers, we offer banking through internet. Askari Bank is the first bank in Pakistan to provide such service to its valued customers which is absolutely FREE. Electronic Bill Payment Service The way of electronic bill payment is in which include through ATM card and I-NET banking Cash Management Services Askari Cash Management Services, aimed to effectively manage the accounts receivable portfolio of medium and large corporate entities. While this service helps the corporate entities to improve their liquidity, due to our well diversified branch network. The service primarily aims at providing clearing, collection and cash / transfer facility to corporate, under one resource center, which will handle the process through the branches and provide adequate reporting to the corporate clients, on various aspects of their accounts receivable portfolio, every month InternetBankingServices In pursuance of our quest to provide the most modern service to our customers, we offer banking through internet. Askari Bank is the first bank in Pakistan to provide such service to its valued customers which is absolutely FREE.

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Facility

Important Features Call Center

I-net (Internet Banking Services) 1. Balance enquiry 2. Funds transfer 3. Statement of accounts 4. Change of password 5. Free payment of utility bills 6. Payment of school fee

askari Bank has been one of the leading banks in the country for over a number of years now and has constantly come up with new services for its valued customers; being one of the first to start ATM and Internet Banking services. Striving for further customer satisfaction Askari Bank launched its Call Centre which became an efficient and effective medium to put information at their customer's fingertips. The Call Center provides a single point of contact for all of its customers, yet offer unique and individualized services on real time information for its time-conscious customers, as it will be available anytime-day or night. Following are the services available at Call Center: 1. Accounts or Cards that the customers choose themselves. 2. Balance Inquiries, Account Statements (read out and fax), Complaint Handling for all sorts of complaints related to the bank. 3. Funds transfer from one account to the other. 4. Utility Bill payments for all utility companies listed with the Bank. 5. Cheque statuses and the facility to block or cancel a card (Debit or Pre-Paid) at any time; to name a few. Atm Network Automatic Teller Machine Askari Bank Are Use The 233 Total Machine In All Pakistan. With The Help Of This Machine We Are Transfer The Money Withdraw The Money More The Deposit The Money

1.6. ORGANIZATIONAL

STRUCTURE
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Head Office

Provincial Head Quarters

Zonal Office

Hub Branches

Branches
This branch has highest deposits and advances as compare to other banks working in lahore. This branch gets the trophy of highest business for the month of July 2008 as compare to all the branches of Askari Commercial Bank working in Pakistan. It is located on M.A johar Town 473,block G111 lahore. The location is connected to all the main biggest hospital of Lahore and new concentration area are here. It is a prosperous branch streaming towards great achievements. At the time of its establishment the factored that were considered are as following Lahore is zone covering a large population. Lahore City is linked to many big cities. Agro based area constituting growers and gainers Army Offices & PIA Colony Educational Institution Hospitals Different Offices, Under developing Area

1.6.1 CREDIT DEPARTMENT

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To give credit is to finance directly or indirectly the expenditure of others against future payment. Lending or financing is one of the basic functions of banks of all categories, through which they gain major part of their profits. A bank accepts deposits of money and repays cash to its depositors on demand. But this is not to say that; bank gives this service for nothing. Bank borrows money at a lesser rate of interest and lends to the borrower at higher rate of interest. And the difference between these two is the profit of the bank. Credit department deals with all the activities related to giving credit to customers. CREDIT MANAGEMENT CYCLE Credit Management is composed of six steps: 1. Proposal 2. Processing 3. Decision 4. Documentation 5. Disbursement 1.7. DEPOSITS DEPARTMENT

Deposit is the functional unit of a Commercial Bank. No bank can run its operations without deposits. Main function of a commercial bank is to channelize saving from the savers to the ultimate users of funds. The process of collecting saving is called Deposit Mobilization. Two board categories of deposits with reference to time period are: Demand Deposit These are payable on demand. They include current account, sundry deposit (e.g. margin account) and call deposit receipt. No profit is given on demand deposits. Time Deposit: Payable on demand with certain maturity. Attracts profit with respect to time.

1.7.1

TYPE OF ACCOUNTS:

PLS Saving Bank Account:

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Saving deposits were introduction to inculcate and encourage the of saving among people of small means in order to achieves of Islamisation of the banking system in the country, the government authorized the banks to accept Saving Deposit on profit and loss sharing basis. Deposits received under this scheme are invested in non-interest bearing advances and other avenue so as to eliminate the element of interest. Current Account: A current account is a running account, which is continuously in operation, by the customer on all working days of the bank. The customer deposits without the current deposits without previous notice to the bank. PLS Term Deposit: Fixed or term deposits are the major source of funds of a commercial bank. Term deposits, as the name implies, are deposits kept with a bank for a certain period of time. They are not payable on demand like the current deposit. The depositor can only withdraw them after the specified period of time. The persons or firms trust, religious bodies, which have surplus keep the money in fixed deposits with bank.. Individual's Account When a single man or women opens an account in his/her own name and has the right to operate it is called individual Account. Joint Account When two or more persons, neither partners, nor trustees, opens account in their name is called joint Account. Husband and wife or two persons of same sex can open joint account. Proprietorship Account When an owner of a firm operating singly, opens an account in his firm name, this account is called a proprietorship Account the proprietor himself liable for all his acts Partnership Account The account is opened in the firm name and all partner designate one two persons to act on behalf of the partnership firm all acts on behalf of firm. The partners in the partnership firm are liable for the acts of the firm jointly. Every partner has in a firms has an implied authority behalf of his co-partners by drawing and enclosed cheques. The following documents are required for the partnership account. Copy of National Identity Card of all partners

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Application to open the account on the firm letter pad. Partnership deed in case registered partnership firm. Letter showing the implied Authority of one or more partners to act on behalf of the firm. In case of non -registered partnership firm, understanding on behalf of the firm to remain liable for all acts of the firm. Name, address of all partners is written on the pad. Limited Company Account This account is for limited companies. In order to facilitate their transaction with outside parties, bank provides many facilities. Required Documents Memorandum of Association. Articles of the Association Resolution of the Board of Director. Certificate of Incorporation. Certificate of commencement of business N-I-C Letter Of The Thanks ASKARI BANK LIMITED issue letter of thanks to "Account Opener" and "Account Introducer" for the trust they have on ASKARI BANK LIMITED. 1.7.1. REMITTANCES DEPARTMENT Through the remittance department customer of the bank is able to meet its day to day financial requirements. And by providing this service to the customer bank also earns a lot of income. The need of remittance is commonly felt is commercial life particularly and in everyday life generally. The main function of the remittance department is to transmit money from one place to another. Modes of Remittances Demand Draft(DD) Pay Order(PO) Telegraphic Transfer (TT) Demand Draft

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Demand Draft is an instrument issued to pay certain amount to the certain person. There are three parities involved: Drawer: Issuing bank Drawee: The bank in which the draft is drawn. Payee: The name of person to whom the payment is to be made. Issuance Procedure A demand draft application (Annexure--) to given to the customer, he fills in a relevant information and signs it. The Officer in charge then checks the information form. The charges such as commission, postage is charged as per effective schedule of charges. Tax is exempted if he is taxpayer & knows his No. In case of cash deposit the cashier counts the amounts & signs the DD application and enters it in the register. The cash received equals the amount of remittance 275 charges would also be get by the customer on cash as commission. Then the officer of the bills & remittance department signs it and operation manager counter or attorney signs it. The entry is made in the DD issuing register. It is given to the customer. Vouchers are passed. Commission charges Cr

The vouchers and the DD form given for posting at the computer. The DD advises are printed at the computer and mailed to the respective branch. Payment Order A banker payment order is an instrument drawn by a banker in him self implicit in a payment order is an undertaking on the part of banker to pay a certain sum of money on the presentation of the instrument. The payment order generally issues: For sake of inland and foreign remittance in case where the beneficiaries do not maintain account with the bank.

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For all local payments under instruction of the customer for sundry purpose like payment of insurance premium, payment to the third party and club bills etc. To facilitate all locally payable expenses on account of a bank for the reason that such payments are not executed through cheques. Issuance The standard form is given to the customer; he fills in the detail and signs it. The concerned staff checks the form. Charges as per effective schedule are applied. The cash of the pay order is received. A cash memo is signed, stamped and handed over to the applicant as a receipt. Then the pay order receipt is filled accordingly. Counter foil is also filled. An entry is made in the pay order issued register Then the authorized office after checking the pay order signs it. The pay order is then handed over to the application after obtaining his signature on the P.O form. A voucher is also made and posted at the computer Cr bills payable account P.O issued. Payment On representation of the pay two authorized officers of the branch sign order receipt the receipt. The P.O entry is made in the P.O issued register. Then the amount is credited to the account of the customer or paid in cash. The P.O is posted at the computer.

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1.8.

BRANCH HIERARCHY
Central Office Lahore
Controlled by President Regional Office (South) Regional Office (North)

Sindh Branches

Baluchistan Branches

Northern Area Branches

Punjab Branches

Azad Kashmir Branches

Islamabad Branches

N.W.F.P Branches

1.8.1. ELEGRAPHIC TRANSFER A fastest & safest way to transfer money is telegraphic transfer. The message is fixed. It is the quickest way of transfer of funds from one place (Branch) to other place (Branch) of the same bank. Generally, a mail transfer advice reaches the drawer branch the next day through courier services. But sometimes, a customer demands that his funds should be transferred through the quickest means. In such cases, transfer of funds message is passed through telephone or telegramThis is the mode of transfer before the Online system. Online system is very effective for this purpose now-a- days. In Askari Commercial Bank online system is used. 1.8.2. BILLS DEPARTMENT This department basically deals in bills which come in bank for collection. The bills are cheques, call deposit, draft and pay order. These bills are form outstation branches of

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ASKARI BANK or of other banks. This department provides services to customer at low charges to get their amounts from the nearest branch. There are two main heads of the bills i.e. Outwards Bills for Collection (OBC) Inward Bills for Collection (IBC) 1.8.3. ACCOUNT DEPARTMENT ACCOUNTING SYSTEM OF THE ORGANIZATION Account is an art of recording classifying summarizing business transaction and making the information available to the business user. Askari Bank is following the doAskari Banke entry system of accounting. This system is helpful in maintaining the proper books of accounts according to prudential accounting system. It segregates the entries according to their proper allocated account heads. The accounts department of Askari Bank is performing its function computerized. Through computer software different books of accounts relating with other departments are maintained. With the help of these books of accounts, accountant prepares daily, weekly, monthly, quarterly, semi-annually and yearly financial statements. Report Preparation Reports are prepared for financial reporting purpose and for the internal control in the account department. There are many different types of reports. These reports vary from each other depending upon the information reported and the period for which these reports are prepared. These reports are prepared by using the general Ledger that is updated by the system during the EOD (end of day) process. Some of the reports are as follows: DAILY REPORTS: Summary Sheet: This report is sent to the reconciliation unit. It summarize the all the heads that have been credited to the Central Branch Control (CBC) Account. It is prepared on branch wise basis

Balance Sheet:

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This report also summarizes the balance sheet heads of the bank up to the last working day. Daily Position: This report summarizes the daily position of all the main heads of the bank Advances: This report summarizes the figures of the deposit accounts as well as the loan accounts of the customer with the bank. Statement of Financing: This report summarizes the amount of financing extended to the customers. Detailed trial balance This report summarizes all the balances in the different heads in the income, expenses, deposits, financing and other related heads. Daily Expense Vouchers: This report summarizes the daily expenses. e. different deposits, TDR/NDR, cash etc Reconciliation Reports: This is prepared in order to reconcile any outstanding and exceptional entry reported by the other branches through the reconciliation unit made by any of the functional department of the bank. Treasury Reporting: This report summarizes the exchange deals made for the foreign currency with the customer and the head office for reporting the head office the stock of such currencies and the balances of the Nostro and vostro accounts. SBP Reconciliation Statement: This report is used in order to report the balance of the ASKARI BANK with the SBP in the current account with SBP. As the banks have to keep liquid cash with the SBP so this report list any increase/decrease of the balance with the SBP. .WEEKLY REPORTS: Daily Statement of Deposits:

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It states the retail deposits (current account, margin account, and foreign deposits), hot deposits (deposits of security on loaning in big amount in current account), and cash in hand in both local and foreign currency Deposit Comparative Position: This report summarizes the comparative position of the different deposit accounts category, TDR/NDR, and foreign currency accounts. Balance sheet: The balance sheet is prepared on the basis of the whole week activity by using the General Ledger of the weekend. Trial Balance: This is same as of the daily trial balance but is prepared with the span of one week by using the General Ledger of the weekend. Deposit Comparative Position: This report summarizes the comparative position of the different deposit accounts category, TDR/NDR, and foreign currency accounts. Risk Assets Liabilities Statement: This statement summarizes the status of liabilities of the bank, status of risk assets ( short term and long term), status of risk assets ( consumer finance) like net lease value, net deposit, net financing amount, financing against FE 25 and SBP refinance position. .MONTHLY STATEMENTS Profit and loss statement: This statement is the income statement prepared for the month summarizing the revenue generated and the expenses incurred during the month. General Ledger: This ledger has the detailed information of all the heads in deposit, financing, TDR/NDR, expenses, income and other related accounts.

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Reconciliations Reconciliation of Inter Branch is done by matching ledger entries to the statement entries. When an entry is properly matched, the date under which it is appearing in the ledger is noted against the entry in the statement and ledger or vice versa. The matching, investigation, and reconcilement of all accounts entries are done as frequently as the statement is received. VOUCHERS Each and every transaction in the bank is made through vouchers; the final place is accounts department for recording these vouchers. Officer in the accounts departments arranges these vouchers according to heads of accounts. These vouchers are of two types: Debit Vouchers Credit Voucher Cash Voucher Clearing Voucher Transfer Vouch

These two vouchers are again classified into three following types of vouchers:

All the daily transaction in cash, transfer and clearing is done through these vouchers. A sheet is prepared on which all the vouchers, passed during any one working day are consolidated and summarized. This sheet is called supplementary sheet. It provides help in preparing Cash Book. There are two types of supplementary sheets: Debit Supplementary Sheet: In which all debit Cash Voucher, Clearing Voucher, Transfer Voucher are included. Credit Supplementary Sheet: In which all credit Cash Voucher, Clearing Voucher, Transfer Voucher are included. Cash Book It is maintained to keep the record of daily receipts and daily paid vouchers. Cashbook is consisted on the opening balance and the closing balance of the day. For correct balance of the cash book there is a need to arrange all the vouchers.

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Ledger For Term Deposits One of the functions of accounts department is to maintain and update the term deposit ledgers and books manually. Term deposit receipt or TDR ledger is updated after every month for estimation of profit on customer accounts. Accountant has to prepare different ledger for all schemes of term deposit. With the help of TDR the accountant prepares provisional ledger/Summary ledger and also statement of provisional expenses. The profit after every six-month will be the expense of the branch. UPDATING GENERAL LEDGER When vouchers are recorded in cashbook then the balance of each head of account is posted to its ledger account. There are two main heads of the general ledgers, Income account & Expenditure account. All the accounts fall under one of these two main heads. Separate ledger is maintained for every head of account. In Askari Bank all the daily transactions in deposits, cash, clearing, transfer remittance, foreign exchange; advances are performed through these daily computerized ledgers. Accounts department Maintains and prepares the following ledgers and books of accounts: Daily General Ledger Expenses Daily General Ledger Incomes/Receipts Monthly General Ledger Assets Monthly General Ledger Liability Daily General Ledger Zonal Expenses Daily General Ledger Inspection expenses. Daily General Ledger Regional Expenses

1.8.4.

ON LINE TRANSACTION
Askari Bank has provided the facility of on line transaction. In this case the

accounts and their details in the other branches of ACBL can be displayed on computer which is connected through server to the computer at the other end. Commission is charged on providing this service this is beneficial as it takes very little time in the

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transference of funds. This facility is available all the branches of Askari Bank except Bhai Pheru Branch. Following charges are deducted in online transaction: Table 1

Amounts
Up to Rs. 25001 Rs. 200001 Rs. 500001 Rs. 25000/Rs. 200000/Rs. 500000/Rs. 2000000/-

Charges
Rs. 50/Rs.100/Rs. 250/Rs. 500/Rs.750/-

Rs. 2000001 Above

ATM Automated Teller Machine (ATM) is facility provided by the Askari Commercial Bank Limited at Model town Branch Lahore Branch. There are certain requirements, which are to be fulfilled, buy the person before he can have ATM card. There is a need of primary account number and then the secondary account number. The primary account number is the regular account number as maintained with the bank of the person and the bank on which the card is issued gives the secondary account number. Apart from this there is Personal Identification Number (PIN) without which ATM cannot be operated. The person can change the PIN from time to time so that there is no chance of fraud in his account. If someone gets to know the PIN of the ATM of a certain person he can operate that easily so the PIN should not be disclosed to anyone. In case the card of a person is damaged or the person loses his card, then charges of Rs.100/- are taken and a new card is issued by the Head Office. In case of replacement, the charges are Rs.100/- and in case of faulty card means when the card is inserted in machine and on the screen the caption faulty card is written then no charges are taken by the bank for the issuance of new card. This branch has issued almost three thousand five hundred cards. This beneficial because if a person wants to draw some amount he can easily do it after banking hours.

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1.8.5.

CLEARING:

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 draw on each other within a specified area and thereby secure payment for their client through the clearing house at specified time in an efficient way. Advantages of Clearing: Since clearing does not involve any cash etc and all the transaction take place through book entries, the number of transactions can be unlimited. No cash is needed as such the risks of robbery, embezzlements and pilferage are totally eliminated. As major payments are made through clearing, the banks can manage cash payment at the counters with a minimum amount of cash in vaults. A lot of time, cost and labor are saved. Since it provides an extra service to the customers of banks without any service charger or costs, more and more people are inclined and attracted towards banking. Clearing House: It is a place where representatives of all scheduled banks sit together and interchange their claims against each other with the help of controlling staff of State Bank of Pakistan. But now with the mutual collaboration of private banks a clearing house firm was established as a name of NIFT which collects cheques and DDs and clears in one day time period. Working of clearing house: All the bank which are the member of clearing house maintain accounts with State Bank of Pakistan by debit and credit to which the clearing settlements are made. If on a particular day, a bank delivers cheques and other negotiable instruments worth more than the total amount of Cheque received by it that banks accounts with State Bank of Pakistan will be credited with the differential amount. If on the other hand the total amount of cheques and other negotiable instruments draw on a certain bank by other bank is more

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than the total amount receivable by it from other banks, then this banks account will be debited on that day. The cheque delivered to the representatives of other banks for clearing are called outward clearing, whereas cheques received from the representatives of other banks for payment are called inward clearing. Same case with NIFT. 1.8.6. PROCEDURE OF SETTLEMENT: Presume that ACBL got the cheques which are drawn on HBL, NBP and MCB for amounts Rs. 50,000/-, Rs. 15,000/- respectively, its total being amounts Rs.95,000/-, it means that this amount is to be credited to ACBL A/C with S.B.P. on the other hand the cheques drawn on ACBL are from HBL, NBP and MCB of Rs.15,000/-, Rs.75,000/- and Rs.30,000/- respectively, its total being Rs.1,20,000/-, it means that this amount is to be debited from ACBL account. The difference between Rs.95,000/- credit and debit Rs.1,20,000/- debit is Rs.25,000/- debit which means the house is against ACBL for Rs.25,000/-. If we separately show it them. 1. ACBL has to receive Rs.50,000/- from HBL and to pay Rs.15,000/- to HBL so difference is Rs.35,000/- credit. 2. ACBL has to receive Rs.30,000/- from NBP and to pay Rs.75,000/- to NBP so difference is Rs.45,000/- debit. 3. ACBL has to receive from MCB Rs.15,000/- and to pay Rs.30,000/- to MCB so difference is Rs.15,000/- debit. GRAND TOTAL: 35000-45000-15000 = -25000 i.e. Rs.25000 debit. Hence ACBL A/C with State Bank of Pakistan will be debited with Rs.25,000/- and the contra will be other banks accounts respectively. This called as Debit and Credit Rule. 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 on It should not be stale or post dated or without date

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Amount in words and figures does not differ Signature of the drawer appears on the face of instrument Instruments is not mutilated There should be no material alteration if so, it should be properly authenticated If order instrument, suitably endorsed and last endorsees account being credited Endorsement is in accordance with the crossings if any The amount of the instrument is same as mentioned on the paying-in-slip and counterfoil The title of account on the paying-in-slip is that of payee or endorsee (with the exception of bearer cheque. If an instrument is in order then out banks special crossing stamp is affixed across the face of the instrument. Clearing stamps 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 paying-in-slip and half on counterfoil). The instrument is suitably discharged, where a bearer cheque does not required any discharge and also an instrument in favor of a bank need not be discharged. The instrument along with paying-in-slip is retained while the counterfoil is given to the customer duly signed. Then the following steps are to be taken: The particulars of the instruments and the and the pay-in-slip or credit vouchers are entered in the Outward Clearing Register. Serial number is given to each voucher The register is balanced, the credit voucher are separated form the instrument and are released to respective departments against instrument and are released to respective departments against acknowledgement in the register The schedules are arranged bank-wise The schedules are prepared in triplicate, two copies of which are attached with the relevant instrument and the third is kept as office copy The house page is prepared from schedules in triplicate The schedules and house pages are signed by the officer incharge with branch stamp

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The grand total of the house page is taken and agreed with that of the outward clearing register The instruments along with duplicate and house page are sent to the Main Office. Inward clearing of the branch: The particulars of the instruments are compared with the list The instruments are detached and sort out department wise The entry is made in the Inward Clearing Register (serial number, instrument number, account number, amount of the instrument is written). The instruments are sent to the respective departments against acknowledgement in the Inward Clearing Register. The instruments are scrutinized in each respect before honoring the same 1. 8.7. FOREIGN CURRENCY ACCOUNTS: A depositor can open account in US Dollar, Pond, Japanese Yen and Euro with nominated branches. For opening of account a Form is provided to the person/party, introduction of the new account holder or by the Officer of the Bank. Procedure of opening foreign currency accounts is same as other accounts. No Zakat is deducted on these accounts, no income tax deductions, no wealth tax deduction will be there, these incentives reinforce and motivate the people to invest in foreign currency accounts rather to keep foreign currency idle. Foreign Remittance: Bank also operates in Foreign Currency accounts. In accordance with instructions of SBP, foreign currency accounts are opened in these currencies: US Dollar, Pond, Japanese Yen, Euro. Funds are transferred abroad by Foreign Telegraphic Transfer Swift MT-100 is used for this transfer. Askari Commercial Bank has its agency arrangements in those countries, where its own branches are not established. Its agency arrangements with Citi Bank, American Express, ABN Amro, Standard Chartered Bank. 1.8.8. SUBMISSION OF MONTHLY RETURNS: It includes reporting of Form-M and Form-E to SBP. Reporting of Form-E: Every Exporter is required to submit a declaration to custom authorities for goods exported. This declaration is submitted on prescribed Form-E in quadruplicate, which is

49

certified by authorized dealer. Four copies of Form-E are maintained. Form-E is reported to SBP at the end of the month, in which the amount is realized. There is a prescribed Performa used for the reporting of Form-E. It includes the reporting period, currency, Serial No. of Form-E, amount, Code No. of country and commodity. Reporting of Form-M: Every foreign bank deducts some charges form the value of goods. It is for miscellaneous purposes like foreign bank charges or foreign agent commission. Form-M is used to declare this outflow of foreign currency. At the end of the month of realization of the amount, Form-M is reported. It includes the list of Serial No. amount and purposes of every Form-M.

1.9. AGRICULTURE DEPARTMENT


It is very unfortunate that this profession does not provide much to the farmers and cultivators to meet even their basic necessities of life. The uneconomic holding, primitive method of cultivation, natural calamities such as floods and drought, illiteracy of the cultivators and lack of infrastructure including organized ware-housing have adversely affected the repaying capacity of the agriculturists. Therefore financing of agriculture is much more complex as compared to commercial lending and industrial financing. ASKARI BANK LIMITED agricultural loans on easy terms and conditions to small-scale land owning farmers boost the country's economy and yield greener harvests. ASKARI BANK LIMITED enables farmers to buy good quality seeds, fertilizers and pesticides. Kinds of Loans: Farmers generally need three types of Loans: Short-term Loans Medium-term Loans Long-term Loans Short-Term Loans Short-term loans are normally taken at the most for one crop period, and are fully recoverable from the proceeds of same crop after its harvest. These loans are needed for seeds, pesticides, fertilizers and wages of hired labor, which are meant for input for a particular crop.

50

Medium-Term Loans Medium term loans are usually taken for a maximum period of three years, and they are usually taken for the purchase of tractors, tube-wells, agricultural implements, cattle and live-stocks, dairy farming and poultry farming etc. Long-Term Loans Long-term loans are generally taken for the period above three years, and amount is used for buying land, constructing embankment, improvement of land or for arranging damages etc. The only security farmer can offer is the charge on agricultural land and hypothecation of his stocks.

1.10. STRUCTURE

AND

FUNCTIONS

OF

THE

ACCOUNTS / FINANCE DEPARTMENT


Organizational Chart of the Finance Department President Vice President Treasurer Cash Manager Controller

Tax Manager

Credit Manager

Financial Accounting Manager

Capital Expenditure Manager Portfolio Manager

Data Processing Manager

Cost Accounting Manager

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1.10.1 FINANCE & ACCOUNTING OPERATIONS: Every branch has its own Accounts Department which is responsible to record and process each & every business transaction taking place during the working day. This Department consolidates the position of the branch at the day end in the shape of Assets, Liabilities, Revenues and Expenses This position is daily sent to the Finance Department of Head Office which consolidates all these Statement of Affairs bank wise. This position is sent to the State Bank of Pakistan (SBP) and SBP pAskari Bankishes on weekly basis overall consolidated Statement of banks in business news papers like Business Recorder (BR). The main function of Finance Department of Head Office is to maintain smooth liquidity of bank by arranging funds from SBP and other banks if required. This Department is also responsible for making physical investment on behalf of bank into government securities and other corporate securities. 1.10.2 THE ROLE OF FINANCIAL MANAGER: Financial Manager: The pserson which manages the financial resources of a business is called financial Manager 1.10.3 STRUCTURE OF FINANCE DEPARTMENT (BRANCH LEVEL) Regional Manager Assistant Manager OG-111 Operational Staff 1 2 4 8

ROLE & DUTIES OF FINANCIAL MANAGER: The duties of financial managers vary with their specific titles, which include controller,

52

treasurer or finance officer, credit manager, cash manager, and risk and insurance manager. Controllers direct the preparation of financial reports that summarize and forecast the organizations financial position, such as income statements, balance sheets, and analyses of future earnings or expenses. Controllers also are in charge of preparing special reports required by regulatory authorities. Often, controllers oversee the accounting, audit, and budget departments. Treasurers and finance officers direct the organizations financial goals, objectives, and budgets. They oversee the investment of funds, manage associated risks, supervise cash management activities, execute capitalraising strategies to support a firms expansion, and deal with mergers and acquisitions. Credit managers oversee the firms issuance of credit, establishing credit-rating criteria, determining credit ceilings, and monitoring the collections of past-due accounts. Managers specializing in international finance develop financial and accounting systems for the banking transactions of multinational organizations. Branch Managers: of financial institutions administer and manage all of the functions of a branch office, which may include hiring personnel, approving loans and lines of credit, establishing a rapport with the community to attract business, and assisting customers with account problems. The trend is for branch mangers to become more oriented toward sales and marketing. It is important that they have substantial knowledge about all types of products that the bank sells. Financial managers who work for financial institutions must keep abreast of the rapidly growing array of financial services and products. Accounting Operations It is said that accounts department is the backbone of the bank. It plays a vital role in performing different banking functions. The accounts department of Askari bank is performing its function computerized. The working in accounts department mainly depends upon voucher system 1.10.4. USE OF ELECTRONIC DATA IN DECISION MAKING In todays banking new devices have been introduced for efficient & courteous service tothe client. Like Online Banking, Net Banking, Mobile Banking, Auto Teller Machines(ATMs) & Electronic Cashiers.

53

There is a special designed software, which fulfill the entire accounting requirement of the Askari Bank according to international standard. The network used by the Askari Bank is LAN (Local area network) while other branches are also using WAN (wide area network). In addition to this signature verification software is there, online report browser is there, exchange server software etc. All the transactions occur through this system. 1.10.5 SOURCES & GENERATION OF FUNDS: Without Funds it is impossible to carry out any business. Funds are remain necessary for the business of the banking sector and also the main element for carrying out the operations business concern. The following are the main sources of funds for Askari Bank. Main sources and generation of funds for the bank are as under 1.10.6 MAJOR SOURCES OF FUNDS 1. DEPOSIT ACCOUNTS TRANSACTION DEPOSITS SAVINGS DEPOSITS TIME DEPOSITS MONEY MARKET DEPOSITS 2. BORROWED FUNDS 3. FED FUNDS FEDERAL RESERVE BORROWING REPOS EURODOLLAR BORROWING BONDS BANK CAPIT

LONG-TERM CAPITAL

1.10.6. Deposits from Customers


DEPOSITS Rupees in 000 Customers Fixed deposits Saving deposits Current account -nonremunerative

2010 47689401 110297787 44340561

2009 39675699 80428214 43245593

2008 29997574 81605907 28465592

2007 40,349,941 64,698,318 23,925,338

2006 37,999,587 57,854,949 20,089,228

54

Specialexporters account Margin account Other Total

21743 1853597 268063 204471152

30562 1983653 257099 165620820

90474 1640800 415904 142216251

24,306 1,375,381 290,634 130,373,284

304,924 1,076,511 125,010 117,450,209

1.11. Borrowings from financial institutions


1. 2. Cash Loans - main use 3. 4. 5. 6. 7. Repos Eurodollar loans Fixed assets Working capital loans Term loans Line of credit Revolving credit loan Consumer loans Highly leveraged transact. Real estate loans Direct lease loans Loan participations Treasuries Agencies Tax exempts Corporate bonds

Securities investments

Fed funds sold

1.11.2 MOBILIZATION OF FUNDS The commercial banks are the most efficient organs of the economy in the mobilization of resources and making a profitable pool of these resources. Taking the money from the savers and lending it to the investors is the most prominent job of the bank. Askari Bank limited mobilize its funds through Bonds

55

Shares Deposits Borrowings

Assets
Advances net Investments

2006
85,977 25,708 27,489

2007
99,179 28,62 30,605 3,810 3,813 166,034 3,656 3,546

2008
100,780 39,431 31,297 5,128 5,535 182,172 6,908 7,409

2009
128,818 35,678 24,464 8,266 8,965 206,191 11,689 11,013

2010
135,034 67,046 32,364 9,846 10,036 254,327 17,725 12,594

Cash, short term funds and statutory deposits with SBP Operating fixed assets 3,193 Other assets 2,733 Total assets 145,100 Non-performing loans 2,373 Provisions for non-performing loans 2,419

Critical analysis of the theoretical concepts relating to practical experience During my internship period I have tried to fully commit myself in the learning process. I kept critically observing the things that I could analyze and the result of the exercise is presented as below. 1.11.3 Organizational The workload is not equally distributed Coordination level among divisions/departments and employees are poor, particularly speaking of between the top and lower levels of management. Due to overlapping nature of duties and jobs there exists chaos and confusion in branches. 1.11.4 Departments During my internship period in ASKARI BANK LIMITED in various departments, I noticed following departmental problems 1.11.5 Cash Department

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Counting mistakes occur due to overcrowding particularly during the collection of utility bills. Manual counting system also affects efficiency of the bank. Counting mistakes occur due to overcrowding particularly during the collection of utility bills. Manual counting system also affects efficiency of the bank. SOWFTWERE HAVE ONE OF THE OLD VERSION

1.11.6 Clearing Department Wrong endorsement and stamping causes loss to the customers and extra efforts for the bank to repeat the procedures. Reasons for the return of the cheques at times are not mentioned on the return memos. At times due to lack of training wrong stamps are applied on instruments 1.11.7 Credit Department Timelines in cash disbursement is very important which is compromised due to lengthy processing and documentation requirements The credit proposal and other documents at times are not properly and sufficiently prepared before taking approval. Filing and record maintenance of credit related documents are not done efficiently. Lack of infrastructure for carrying out computerized financial analysis of borrowers business. 1.11.8 Bills Department Bills are sent to other cities; therefore, extra care should be exercised in making entries and stamp affixing. Proper scrutiny at times is not carried out and it causes loss to the bank or increase procedural timings. Employees at times mismanage their time and fail to forward bills promptly 1.11.9 Foreign Exchange Department Problems of bills and remittances departments equally apply to foreign exchange department. There is overlapping of functions and complete separation of function has not been achieved thus leading to a state of confusion and conflict among employees.

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1.12. FINANCIAL ANALYSIS


1.12.1. BALANCE SHEET

ASSETS Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Performing Non-performing - net of provision Operating fixed assets Deferred tax asset net Other assets

2010 61,160,678 5,407,470 23,162,130 136,145,524 342,663,339 11,428,374 354,091,713 21,925,669 608,876 17,241,991 619,744,051

2009 50,069,965

2008 57,526,451

2007 48,939,840 14,034,476 29,572,070 67,260,338 243,237,819 4,072,07 4 247,309,893 5,234,463 906,661 10,062,466 423,320,207 .

2006 34,074,786 12,717,100 17,867,552 63,026,944 201,152,095 3,658,375 204,810,470 4,449,324 2,273,005 7,829,770 347,048,951

7,497,174 4,191,128 22,805,341 24,781,723 116,328,288 115,585,646 361,863,689 293,373,007 9,275,986 5,981,729 371,139,675 299,354,736 18,021,445 16,943,950 2,055,609 17,154,985 11,740,697 605,072,482 530,124,331

1.12.2. LIABILITIES Bills payable Borrowings from financial institution Deposits and other accounts Sub-ordinated loans - unsecured Deferred tax liability net Other liabilities NET ASSETS 1.12.3 REPRESENTED BY: Share capital Reserves Unappropriated profit Surplus on revaluation of assets net of deferred tax 5,147,259 35,144,823 492,036,103 11,989,800 14,489,343 558,807,328 60,936,723 5,194,449 44,195,886 6,079,341 59,103,350

4,560,649 38,544,920 335,077,873 5,998,344 9,275,034 393,456,820 29,863,387

4,159,964 21,790,480 289,226,299 3,999,192 6,204,746 325,380,681 21,668,270

483,560,062 400,974,539 11,993,848 5,996,696 2,232,344 16,265,478 13,316,657 561,209,723 487,702,927 43,862,759 42,421,404

11,128,907 18,959,537 22,187,802 52,276,246 8,660,477 60,936,723

10,117,188 15,501,513 16,604,076 42,222,777 1,639,982 43,862,759

8,093,750 10,261,958 15,653,703 34,009,411 8,411,993 42,421,404

6,475,000 8,298,873 12,429,853 27,203,726 2,659,661 29,863,387

5,180,000 6,225,461 7,350,813 18,756,274 2,911,996 21,668,270

1.13. PROFIT AND LOSS ACCOUNT

58

2010

2009

2008

2007

2006

59

Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against loans and advances net Provision against lending to financial institutions Provision for diminution in value of investments - net Bad debts written off directly Net mark-up / return / interest income after provisions Non Mark-up / Interest Income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities Unrealized loss on revaluation of investments classified as held for trading Other income Total non mark-up / return / interest income

60,857,035 28,163,787 32,693,248 9,623,204 560,852 945,342 1,485,976 12,615,374 20,077,874

51,919,229 24,061,790 27,857,439 4,509,956 2,219,815 1,367,514 8,097,285 19,760,154

41,045,543 16,936,187 24,109,356 1,689,467

32,991,603 12,126,809 20,864,794 1,972,936

20,158,860 6,045,948 14,112,912 1,277,002

(6,303) 935,123 928,820 23,180,536

74,573 269,349 343,922 20,520,872

112,666 38,140 1,427,808 12,685,104

5,925,082 606,347 1,213,881 629,418 (3,006.00)

6,249,015 587,989 1,795,319 200,804 (19,547.00)

5,165,066 548,782 827,328 849,367 (15,755)

4,435,465 837,338 659,726 280,864 (3,335)

2,543,739 202,343 675,109 382,419 (780)

3,297,839 11,669,561 31,747,435

1,866,034 10,679,614 30,439,768

1,617,563 8,992,351 32,172,887

738,330 6,948,388 27,469,260

1,210,202 5,013,032 17,698,136

Non Mark-up / Interest Expenses Administrative expenses Other provisions / write offs - net Workers' welfare fund Other charges Total non mark-up / interest expenses Profit before taxation Taxation - Current - Prior years - Deferred Profit after taxation 16,608,561 642,274 397,547 64,552 17,712,934 14,034,501 6,930,585 76,328 (2,165,099) 4,841,814 9,192,687 15,519,634 450,390 336,999 258,321 16,565,344 13,874,424 6,090,351 435,072 (984,119) 5,541,304 8,333,120 13,420,977 236,281 17,430 13,674,688 18,498,199 5,075,600 442,667 (915,884) 4,602,383 13,895,816 10,952,275 226,313 25,980 11,204,568 16,264,692 3,412,791 45,225 1,365,508 4,823,524 11,441,168 7,874,013 335,409 7,066 8,216,488 9,481,648 498,748 78,614 2,955,254 3,532,616 5,949,032

60

Unappropriated profit brought forward Profit available for appropriation Earnings per share basic and diluted

16,604,076 25,796,763 26,049,777 8.26

15,653,703 23,986,823 24,239,841 8.26

12,429,853 26,325,669 26,388,697 10.38 11,441,168 11,535,622 14.62

3,274,439 9,223,471 9,317,619 9.19

1.14. Financial Ratio


Formulas EARNINGS RATIOS
Return on Assets (%) Return on Deposits (%)

2006
1.71% 2.06%

2007
2.24% 2.83%

2008
1.59% 2.10%

2009
1.38% 1.72%

2010
1.48% 1.88%

Return on Equity (%)

27.46%

31.71%

19.81%

19.00%

14.09%

Total assets have grown this year by Rs.20 billion (up 3%) to Rs.640 billion over the corresponding period last year, with investments increasing by 20% to Rs.138 billion. Askari Bank was able to maintain the return on average assets of 1.5%, the same level as of last year. Deposits grew by 2% to Rs.504 billion. Whereas low cost deposits increased by 14%, this was offset by a 12% reduction in expensive deposits. Profit after taxation increased by 14% to Rs.9.488 billion resulting in an increase in return on deposits from 1.72% in FY08 to 1.88% in FY09. Equity of the bank has risen by more than 50% to Rs.67.318 billion in FY09. There was a huge increase in surplus on revaluation of assets from Rs.1.64 billion in FY08 to Rs.9.12 billion in FY09. This resulted in a decrease in return on equity from 19% in FY08 to 14% in FY09. Over the years, Askari Bank 's yield on earning assets has been increasing but at the same time the cost of funding them has also risen. Yield on earning assets improved from 10.24% in FY08 to 12.04% in FY09. The cost of funding earning assets increased from 4.73% in FY08 to 5.55% in FY09.

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Formulas ASSETS QUALITY RATIOS


NPL to Advances Provision to NPL Non Performing Loans NPL Growth NPL to Advances -

2006

2007

2008

2009

2010

The bank's non-performing loans in FY09 exceeded the level of NPLs in FY08. It grew from Rs.27.839 billion in FY08 to Rs.39.101 billion in FY09. There has been a major increase in NPLs in the consumer and commercial business and this factor can affect the future profitability of the bank. Askari Bank 's rising NPLs are in line with the banking industry trend. NPLs have risen mainly in the agriculture and consumer sectors. Managing credit risk is the main challenge faced by Askari Bank. Consumers have 21% and the textile sector 16% of total advances of the bank. Tight monetary policy, rising inflation are decreasing the debt serving ability of the consumers while the textile sector's performance has been dismal. Non-performing loans to advances ratio increased from 7.5% to 10.8% over the year. Provisions to NPLs also increased from 16.2% to 24.7%. Formulas DEBT MANAGEMENT RATIOS
Debt to equity Debt to asset Deposit times capital

2006
15.02% 0.94% 13.31%

2007
13.18% 0.93% 12.11%

2008
11.50% 0.92% 10.18%

2009
12.79% 0.93% 10.25%

2010
8.51% 0.89% 8.88%

Askari Bank had successfully stabilized its debt to equity ratio until FY05. It had fallen after that due to rise in equity base. It then increased during FY08 due to a 15% increase in the total liabilities of the company with a less than proportionate increase (3.4%) in the equity base of the bank. However, it again decreased from 12.79 to 8.51 in FY09. This decrease is a result of increase in equity by 38% over the previous year with only an increase of 2% in total liabilities. Deposits time capital decreased from 10.25 to 8.88 due to the increase in assets by 6%. Debt to asset also decreased from 0.93 to 0.89 as a result of increased assets. Formulas 2006 2007 2008 2009 2010

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LIQUIDITY RATIOS
Advance to Deposit Yield on earning assets Earning assets to assets

67.17% 7.15% 81.27%

72.42% 9.70% 80.33%

74.27% 9.33% 82.95%

75.80% 10.24% 84.33%

74.26% 12.04% 79.73%

Liquidity of the bank has slightly decreased as compared to last year. About 80% of the total assets of the bank are comprised of its earning assets (lending to financial institutions, investments and performing advances) as compared to 83% in FY08. Performing advances forming a major chunk of the earning assets showed a 3% declined from last year to Rs.349.715 billion. Total deposits increased marginally by 2% to Rs.504 billion primarily due to the bank's conscious strategy of shedding expensive deposits. Expensive deposits decreased by Rs.27 billion to Rs.197 billion at year-end 2010. As a result, the proportion of current and savings account deposits in total deposits (CASA) increased to 67% (Domestic CASA at 75%) at year-end 2010 from 59% at 2009. Deposits this year saw a change in mix relying more on low-cost deposits to form the deposit base. Domestic low-cost deposit mix improved from 60% in 2009 to 66% in 2010. As a result of shedding domestic high cost fixed deposits by 12%, market share decreased from 9.6% in December 2009 to 8.8% in December 2010. Advances were rationalized during the year leading to a reduction in fresh lending to stand at Rs.362 billion, lower by 4% as compared to the corresponding period last year. Lending in the consumer and corporate portfolio was controlled as a result of liquidity constraints, attributing to this decrease. The market share concurrently dropped from 9.2% in December 2009 to 8.8% in December 2010. The advances to deposits ratio decreased from 77% in December 2009 to 72% in December 2010. Formulas SOLVENCY RATIO
Equity to assets Equity to Deposits Earning assets to deposits (%) 6.24% 7.51% 97.52% 7.05% 8.25% 101.49% 8.00% 9.82% 182.83% 7.25% 9.75% 180.36% 10.51% 11.26% 101.35%

2006

2007

2008

2009

2010

The solvency position of ASKARI BANK improved in FY07. Equity to asset ratio and equity to deposit ratio increased in 2008 because the equity of the bank increased as

63

161.875 million ordinary shares were issued, raising the share capital of the bank from Rs.6.5 billion in FY06 to Rs.8.1 billion in FY07. Along with the share capital, the reserves of the bank increased to Rs.10.3 billion. The earning assets to deposits ratio had increased because the earning asset (excluding non performing advances) of the bank has been growing at a faster pace than the deposits. During FY08, the equity to deposit and equity to asset ratios were more or less maintained, however, the earning assets to deposit ratio decreased because the deposit base increased by a major 21% while earning assets experienced a less than proportionate increase of 16% because of a decrease in investments. For FY09, equity to assets showed a major jump from 7.25% to 10.51%. Equity of the bank increased from Rs.49.4 billion to Rs.67.3 billion mainly due to the increase in unappropriated profits and reserves. Equity to deposits also increased from 9.75% in FY08 to 10.51% in FY09. The deposit base increased by 4% while equity increased by 38%. Earning assets to deposits showed a major decline back to the level of FY06 due to the decrease in performing advances, which forms a major part of the earning assets.

Formulas DIVIDEND PAYOUT RATIOS


Dividend yield Dividend cover

2006
2.92% 3.68

2007
2.11% 4.87

2008
1.84% 2.77

2009
2.31% 8.31

2010
3.90% 3.42

Board of Directors recommended a cash dividend of Rs.2.50 per share i.e 25% and bonus issue of 10% for the year ended December 31, 2010. The cash dividend in FY08 was Re 1 per share ie 10%. This resulted in an increase in dividend yield from 2.31% in FY08 to 3.90% in FY09. Dividend cover reduced from 8.31 to 3.42 times due to the higher DPS in FY09.

Formulas MARKET VALUE RATIOS


Price to Earnings Market Value to

2006

2007
13.00 3.70

2008
18.40 3.40

2009
5.80 1.00

2010
7.5 1.1

64

Book Value

Price-to-earnings ratio increased by 29% from 5.80 in FY08 to 7.50 in FY09. This was due to the increase in share price from Rs.43.3 to Rs.64.1. Market to book ratio increased from 1.00 to 1.10 over the year.

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Financial Highlights Macro economic vulnerabilities continued in 2010, with the first half of the year witnessing high inflation and interest rates, liquidity pressures and loss of business confidence. However, gradual signs of stability have emerged with most key indicators reflecting positive trends including reduction in inflation, contained government borrowings, contraction in external imbalances and easing of the monetary policy stance. Despite this fragile operating environment, ASKARI BANK has achieved profit after tax of Rs.9.5 billion, which is 12% higher than the corresponding period last year translating into earnings per share of Rs.8.56 (December 2009: Rs.7.51). The Board of Directors is pleased to recommend a cash dividend of Rs.2.50/- per share i.e. 25% and bonus issue of 10% for the year ended December 31, 2010 Strong top line performance Net interest income before provisions grew by 16% to Rs.33.2 billion from the same period last year reflecting an increase in Net Interest Margins of 40 basis points to 6.5% in 2010 and 8% increase in average interest-earning assets. The increase in benchmark rates and asset yields was partially offset by the full year impact of 5% minimum rate of return on savings deposits. Net provisions at Rs.13.5 billion are up by 64% from the corresponding period last year primarily due to higher provisioning on the corporate and international portfolios. Net provisions also include Rs.1.1 billion impairment losses booked on equities. However, the key point to note is the declining trend in NPL formation and an increase in coverage ratio from 68% to 71% in the subsequent quarters from June 2010. Non-interest income continued its steady growth by 18% to Rs. 13.0 billion which is a testament to ASKARI BANK's diverse income streams. Even though fee and exchange income declined year on year, this was offset by strong growth in capital gains and derivatives income.

66

Fee and commission income decreased by 7% to Rs.6.7 billion due to reduction in consumer and corporate lending, however, this was partially compensated by higher commodity commission and income from increased trade activity. Exchange income declined from Rs.1.7 billion to Rs.1.3 billion as we were able to capitalize on the significant exchange rate volatility in 2009. This year our emphasis has been more on servicing existing clientele where spreads have reduced due to aggressive competition. Capital gain increased to Rs.697 million reflecting the strong performance of the stock market in 2010 which was up 63% on a yoy basis. In addition, derivative income contributed a healthy Rs.1.7 billion to the non interest income. Strong grip on costs and efficiency With a strong focus on cost efficiencies, we have restricted the increase in administrative expenses to only 7% over the corresponding period last year. This is in spite of significant inflationary pressures with average 2010 inflation coming in at 13.9%. Nearly half of this increase is attributed to increases in premises expenses due to higher utilities and insurance expenses across our branch network. Personnel costs are only up 12% which was a result of headcount reduction by 979 (6%) to 14,254 due to efficiency improvements, process restructuring initiatives and reduction in consumer lending. International operating expenses are flat yoy in dollar terms. However, the impact of rupee devaluation accounts for nearly half of the increase in our overall administration expenses. Given this backdrop, we have managed to achieve considerable cost efficiency during the year.

67

Sustained business drivers Total assets have grown this year by Rs.20 billion (up 3%) to Rs.640 billion over the corresponding period last year, with investments increasing by 20% to Rs.138 billion. Deposits grew by 2% to Rs.504 billion. Whereas low cost deposits increased by 14%, this was offset by a 12% reduction in expensive deposits. Advances have been rationalized by 4% to Rs.362 billion. We were successful in maintaining a return on average assets (ROAA) of 1.5%. Spread analysis & Key Ratios Spreads and key operating ratios for the bank are shown below:

Focus on Liability Management Total deposits increased marginally by 2% to Rs.504 billion primarily due to the Bank's conscious strategy of shedding expensive deposits. Expensive deposits decreased by Rs.27 billion to Rs.197 billion at year-end 2010. As a result, the proportion of current and savings account deposits in total deposits (CASA) increased to 67% (Domestic CASA at 75%) at year-end 2010 from 59% at 2009. Deposits this year saw a change in mix relying more on low cost deposits to form the deposit base. Domestic low cost deposit mix improved from 60% in 2009 to 66% in 2010. As a result of shedding

68

domestic high cost fixed deposits by 12%, our market share decreased from 9.6% in December 2009 to 8.8% in December 2010. Advances were rationalized during the year leading to a reduction in fresh lending to stand at Rs.362 billion, lower by 4% as compared to the corresponding period last year. Lending in the consumer and corporate portfolio was controlled as a result of liquidity constraints, attributing to this decrease. The market share concurrently dropped from 9.2% in December 2009 to 8.8% in December 2010. The advances to deposits ratio decreased from 77% in December 2009 to 72% in December 2010.

69

HORIZONTAL COMMON SIZE (%) ANALYSIS OF BALANCE SHEET

ASSETS Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Performing Nonperforming - net of provision Operating fixed assets Deferred tax assetnet Other assets

2010 61,160,678 5,407,470 23,162,130 136,145,524

2009 50,069,965 7,497,174 22,805,341 116,328,288

2008 57,526,451 4,191,128 24,781,723 115,585,646

2007 48,939,840 14,034,476 29,572,070 67,260,338

2006 34,074,786 12,717,100 17,867,552 63,026,944

2010 18.13 -38.64 1.54 14.56

2009 -14.89 44.10 -8.676 0.648

2008 14.93 -234.86 -19.33 41.81

2007 30.37 9.39 39.58 6.29

342,663,339 11,428,374 354,091,713 21,925,669 608,876 17,241,991 619,744,051

361,863,689 9,275,986 371,139,675 18,021,445 2,055,609 17,154,985 605,072,482

293,373,007 5,981,729 299,354,736 16,943,950 11,740,697 530,124,331

243,237,819 4,072,074 247,309,893 5,234,463 906,661 10,062,466 423,320,207

201,152,095 3,658,375 204,810,470 4,449,324 2,273,005 7,829,770 347,048,951 -4.81 17.81 -237.61 0.50 -228.53 19.34 5.99 0.00 31.56 78.06 17.39 69.11 0.00 14.29 -96.67 17.19 14.10 -150.70 22.19 -10.69

LIABILITIES Bills payable Borrowings from financial institution Deposits and other accounts Sub-ordinated loans-unsecured Deferred tax liability net Other liabilities 5,147,259 35,144,823 492,036,103 11,989,800 14,489,343 558,807,328 NET ASSETS 60,936,723 5,194,449 44,195,886 483,560,062 11,993,848 16,265,478 561,209,723 43,862,759 6,079,341 59,103,350 400,974,539 5,996,696 2,232,344 13,316,657 487,702,927 42,421,404

. 4,560,649 38,544,920 335,077,873 5,998,344 9,275,034 393,456,820 29,863,387 4,159,964 21,790,480 289,226,299 3,999,192 6,204,746 325,380,681 21,668,270 -0.92 -25.75 1.72 -0.03 0.00 -12.26 -37.24 -17.04 -33.73 17.08 50.00 0.00 18.13 34.44 24.98 34.78 16.43 -0.03 100.00 30.35 206.52 8.79 43.47 13.68 33.33 0 33.10 132.37

Share capital Reserves Unappropriated profit Surplus on revaluation of assets - net of deferred tax

11,128,907 18,959,537 22,187,802 52,276,246 8,660,477 60,936,723

10,117,188 15,501,513 16,604,076 42,222,777 1,639,982 43,862,759

8,093,750 10,261,958 15,653,703 34,009,411 8,411,993 42,421,404

6,475,000 8,298,873 12,429,853 27,203,726 2,659,661 29,863,387

5,180,000 6,225,461 7,350,813 18,756,274 2,911,996 21,668,270

9.09 18.24 25.17 52.50

20.00 33.80 5.72 59.52

20.00 19.13 20.59 59.72

20.00 24.98 40.86 85.85

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HORIZONTAL COMMON SIZE (%) ANALYSIS OF PROFIT AND LOSS ACCOUNT


Particulars Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against loans and advances - net Provision against lending to financial institutions Provision for diminution in value of investments net Bad debts written off directly Net mark-up / return / interest income after 20,077,874 19,760,154 17,687,310 18,547,936 12,685,104 -130 35,259 (353) (563) provisions Non Mark-up / Interest Income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities Unrealized loss on revaluation of investments classified as held for trading Other income Total non mark-up / return / interest income 3,297,839 11,669,561 31,747,435 1,866,034 10,679,614 30,439,768 1,617,563 8,992,351 26,679,661 738,330 6,948,388 25,496,324 1,210,202 5,013,032 17,698,136 176.730 771.109 641 115 708 35,967 219 1,301 948 61 1,248 685 5,925,082 606,347 1,213,881 629,418 6,249,015 587,989 1,795,319 200,804 5,165,066 548,782 827,328 849,367 4,435,465 837,338 659,726 280,864 2,543,739 202,343 675,109 382,419 94.816 103.122 67.614 313.449 121 107 217 24 116 66 125 302 174 414 98 73 945,342 2,219,815 (6,303) 74,573 112,666 42.587 (35,218) (8) 66 2010 2009 2008 2007 2006 2010 2009 2008 2007

60,857,035 28,163,787 32,693,248 9,623,204

51,919,229 24,061,790 27,857,439 4,509,956

41,045,543 16,936,187 24,109,356 5,493,226

32,991,603 12,126,809 20,864,794 1,972,936

20,158,860 6,045,948 14,112,912 1,277,002

117.215 117.048 234.263 213.377

126 142 269 82

124 140 264 278

164 201 364 154

560,852

1,485,976 12,615,374

1,367,514 8,097,285

935,123 6,422,046

269,349 2,316,858

38,140 1,427,808

108.663 364.626

146 (34,990)

347 617

706 927

(3,006.00)

(19,547.00)

(15,755)

(3,335)

(780)

15.378

124

472

428

Non Mark-up / Interest Expenses Administrative expenses Other provisions / write offs - net Workers' welfare fund 16,608,561 642,274 397,547 15,519,634 450,390 336,999 13,420,977 236,281 10,952,275 226,313 7,874,013 335,409 107.016 142.604 117.967 116 191 123 104 139 67 -

71

Other charges Total non mark-up / interest expenses Profit before taxation Taxation - Current - Prior years - Deferred

64,552 17,712,934 14,034,501 6,930,585 76,328 (2,165,099) 4,841,814

258,321 16,565,344 13,874,424 6,090,351 435,072 (984,119) 5,541,304 8,333,120 15,653,703 23,986,823 24,239,841 8.26

17,430 13,674,688 13,004,973 5,075,600 442,667 (915,884) 4,602,383 8,402,590 12,429,853 20,832,443 20,895,471 10.38

25,980 11,204,568 14,291,756 3,412,791 45,225 1,365,508 4,823,524 9,468,232

7,066 8,216,488 9,481,648 498,748 78,614 2,955,254 3,532,616 5,949,032 3,274,439

24.989 392.576 248 113.796 17.544 220.004 351.344 -103 106.071 2.897 103

1,482 1,788 34,179 120 98 107 326 33,853 65 33,918 34,319

67 294 654 149 979 (67) 1,060 (406) 60 (347) (280)

368 574 111 684 58 46 788 (677) (677) (577)

Profit after taxation Unappropriated profit brought forward Profit available for appropriation Earnings per share basic and diluted

9,192,687 16,604,076 25,796,763 26,049,777 8.26

9,468,232 9,562,686 14.62

9,223,471 9,317,619 9.19

72

1.15 VERTICAL COMMON SIZE (%)

ANALYSIS OF BALANCE SHEET


ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Performing Nonperforming - net of provision Operating fixed assets Deferred tax asset net Other assets LIABILITIES Bills payable Borrowings from financial institution Deposits and other accounts Sub-ordinated loans unsecured Deferred tax liability net Other liabilities NET ASSETS 5,147,259 35,144,823 492,036,103 11,989,800 14,489,343 558,807,328 60,936,723 5,194,449 44,195,886 483,560,062 11,993,848 16,265,478 561,209,723 43,862,759 6,079,341 59,103,350 400,974,539 5,996,696 2,232,344 13,316,657 487,702,927 42,421,404 342,663,339 11,428,374 354,091,713 21,925,669 608,876 17,241,991 619,744,051 361,863,689 9,275,986 371,139,675 18,021,445 2,055,609 17,154,985 605,072,482 293,373,007 5,981,729 299,354,736 16,943,950 11,740,697 530,124,331 243,237,819 4,072,074 247,309,893 5,234,463 906,661 10,062,466 423,320,207 . 4,560,649 38,544,920 335,077,873 5,998,344 9,275,034 393,456,820 29,863,387 201,152,095 3,658,375 204,810,470 4,449,324 2,273,005 7,829,770 347,048,951 4,159,964 21,790,480 289,226,299 3,999,192 6,204,746 325,380,681 21,668,270 57.135 3.538 0.098 2.782 100.000 0.921 6.289 88.051 2.146 2.593 100.000 61.34 2.98 0.34 2.84 100.00 0.93 7.88 86.16 2.14 2.90 100.00 56.47 3.20 2.21 100.00 1.25 12.12 82.22 1.23 0.46 2.73 100.00 58.42 1.24 0.21 2.38 100.00 1.16 9.80 85.16 1.52 2.36 100.00 59.01 1.28 0.65 2.26 100.00 1.28 6.70 88.89 1.23 1.91 100.00 2010 61,160,678 5,407,470 23,162,130 136,145,524 2009 50,069,965 7,497,174 22,805,341 116,328,288 2008 57,526,451 4,191,128 24,781,723 115,585,646 2007 48,939,840 14,034,476 29,572,070 67,260,338 2006 34,074,786 12,717,100 17,867,552 63,026,944 2010 9.869 0.873 3.737 21.968 2009 8.28 1.24 3.77 19.23 2008 10.85 0.79 4.67 21.80 2007 11.56 3.32 6.99 15.89 2006 9.82 3.66 5.15 18.16

REPRESENTED BY: Share capital Reserves Unappropriated profit Surplus on revaluation of assets net of deferred tax 11,128,907 18,959,537 22,187,802 52,276,246 10,117,188 15,501,513 16,604,076 42,222,777 8,093,750 10,261,958 15,653,703 34,009,411 6,475,000 8,298,873 12,429,853 27,203,726 5,180,000 6,225,461 7,350,813 18,756,274 21.289 36.268 42.443 100.000 23.96 36.71 39.32 100.00 23.80 30.17 46.03 100.00 23.80 30.51 45.69 100.00 27.62 33.19 39.19 100.00

8,660,477

1,639,982

8,411,993

2,659,661

2,911,996

60,936,723

43,862,759

42,421,404

29,863,387

21,668,270

73

VERTICAL COMMON SIZE (%) ANALYSIS OF PROFIT AND LOSS ACCOUNT


2010 Mark-up / return / interest earned Mark-up / return / interest expensed Net markup / interest income Provision against loans and advances - net Provision against lending to financial institutions Provision for diminution in value of investments net Bad debts written off directly Net markup / return / interest income after provisions 2009 2008

2007
32,991,603

2006
20,158,860

2010

2009

2008

2007

2006

60,857,035

51,919,229

41,045,543

186.146

186.375

170.247

158.12

142.84

28,163,787

24,061,790

16,936,187

12,126,809

6,045,948

86.146

86.375

70.247

58.12

42.84

32,693,248

27,857,439

24,109,356

20,864,794

14,112,912

272.291

272.749

240.495

216.24

185.68

9,623,204

4,509,956

5,493,226

1,972,936

1,277,002

76.282

55.697

85.537

85.16

89.44

560,852

4.446

945,342

2,219,815

(6,303)

74,573

112,666

7.494

27.414

(0.098)

3.22

7.89

1,485,976 12,615,374

1,367,514 8,097,285

935,123 6,422,046

269,349 2,316,858

38,140 1,427,808

11.779 100.000

16.889 100.000

14.561 100.000

11.63 100.00

2.67 100.00

20,077,874

19,760,154

17,687,310

18,547,936

12,685,104

Non Mark-up / Interest Income Fee, commission 5,925,082 and brokerage income Dividend 606,347 income Income from dealing in 1,213,881 foreign currencies Gain on sale of 629,418 securities Unrealized loss on revaluation of investments (3,006.00) classified as held for trading 6,249,015 587,989 1,795,319 200,804 5,165,066 548,782 827,328 849,367

4,435,465 837,338 659,726 280,864

2,543,739 202,343 675,109 382,419

50.774 5.196 10.402 5.394

58.513 5.506 16.811 1.880

57.438 6.103 9.200 9.445

63.83 12.05 9.50 4.04

50.74 4.04 13.47 7.63

(19,547.00)

(15,755)

(3,335)

(780)

(0.026)

(0.183)

(0.175)

(0.05)

(0.02)

74

Other income Total non mark-up / return / interest income Non Markup / Interest Expenses Administrati ve expenses Other provisions / write offs net Workers' welfare fund Other charges Total non mark-up / interest expenses Profit before taxation Taxation Current Prior years Deferred Profit after taxation Unappropriat ed profit brought forward

3,297,839

1,866,034

1,617,563

738,330

1,210,202

28.260

17.473

17.988

10.63

24.14

11,669,561

10,679,614

8,992,351

6,948,388

5,013,032

100.000

100.000

100.000

100.00

100.00

31,747,435

30,439,768

26,679,661

25,496,324

17,698,136

16,608,561 642,274 397,547 64,552 17,712,934 14,034,501 6,930,585 76,328 (2,165,099) 4,841,814 9,192,687 16,604,076 25,796,763

15,519,634 450,390 336,999 258,321 16,565,344 13,874,424 6,090,351 435,072 (984,119) 5,541,304 8,333,120 15,653,703 23,986,823

13,420,977 236,281 17,430 13,674,688 13,004,973 5,075,600 442,667 (915,884) 4,602,383 8,402,590 12,429,853 20,832,443

10,952,275 226,313

7,874,013 335,409

93.765 3.626 2.244

93.687 2.719 2.034 1.559 100.000

98.145 1.728 0.127 100.000

97.748 2.020 0.232 100.000

95.83 4.08 0.09 100.00

25,980 11,204,568 14,291,756 3,412,791 45,225 1,365,508 4,823,524 9,468,232

7,066 8,216,488 9,481,648 498,748 78,614 2,955,254 3,532,616 5,949,032 3,274,439

0.364 100.000

143.140 1.576 (44.717) 100.000 35.635 64.365 100.000

109.908 7.851 (17.760) 100.000 34.740 65.260 100.000

110.282 9.618 (19.900) 100.000 40.334 59.666 100.000

70.753 0.938 28.309 100.000 100.000 100.000

14.12 2.23 83.66 100.00 64.50 35.50 100.00

9,468,232

9,223,471 94,454

253,014 Profit available for appropriatio n Earnings per share - basic and diluted 26,049,777 24,239,841 20,895,471

9,562,68 6 14.62

9,317,619 9.19

8.26

8.26

10.38

75

ORGANIZATIONAL ANALYSIS WITH INDUSTRY


Growth Rates Profits After Tax Advances Deposits Investments Net Interest Income Non Interest Income Return on Assets ASKARI BANK 2009 2010 -1% 14% 24% -4% 21% 2% 1% 18% 17% 18% 16% 18% -13.11% 7.57% Industry Averages 2009 2010 -4.37% 26.07% 22.89% 4.75% 12.98% 10.03% -8.69% 33.53% 15.98% 19.69% 75.05% 21.12% -13.72% 4.02%

As seen from the table, the growth rates for almost all of the components have been lower than their industry averages for FY09. On the contrary, ASKARI BANK outperformed the industry averages in FY08. VERTICAL COMMON SIZE (%) BALANCE SHEETS VERTICAL ANALYSIS

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Analytical Remarks: In this section of Investments include certain approved / government securities which are held by the Bank to comply with the Statutory Liquidity Requirement determined on the basis of the Bank's demand and time liabilities as set out under section 29 of the Banking Companies Ordinance, 1962. In this segment Available for sale" Market Treasury Bills and Pakistan Investment Bonds are eligible for rediscounting with the State Bank of Pakistan (SBP). The market value of Pakistan Investment Bonds and Market Treasury Bills classified as 'held to maturity' as at December 31, 2010 amounted to Rs. 1,659.166 million and Rs. 1,436.673 million (2008: Market Treasury Bills Rs. 237.70 and Pakistan Investment Bonds Rs. 1,990.67 million) respectively. Investment of the Bank in Adamjee Insurance Company Limited is carried at cost amounting to Rs. 943.600million (2008: Rs. 943.600million) as at December 31, 2010 in accordance with the treatment specified in International Accounting Standard (IAS) 28 "Accounting for Investments in Associates". The market value of the investment in Adamjee Insurance Company Limited as at December 31, 2010 amounted to Rs. 3,032.786 million (2008: Rs. 10,671.631 million). The Karachi Stock Exchange (Guarantee) Limited (KSE) placed a Floor Mechanism on the market value of securities based on the closing prices of securities prevailing as on August 27, 2010. Under the Floor Mechanism, the individual security price of equity

77

securities could vary within normal circuit breaker limit, but not below the floor price level. The mechanism was effective from August 28, 2010 and remained in place until December 15, 2010. Consequent to the introduction of Floor Mechanism by KSE, the market volume declined significantly during the period from August 27, 2010 to December 15, 2010. There were lower floors on a number of securities at December 31, 2010. The equity securities have been valued at prices quoted on the KSE on December 31, 2010 without any adjustment as allowed by the State Bank of Pakistan (SBP) BSD Circular Letter No. 2 dated January 27, 2010. Furthermore, SBP BSD Circular No. 4 dated February 13, 2010 has allowed to follow Securities and Exchange Commission of Pakistan (SECP) notification vide SRO 150 (1)/2010 dated February 13, 2010 allowing that the impairment loss, if any, recognized as on December 31, 2010 due to valuation of listed equity investments held as Available for Sale to quoted market prices may be shown under the equity. The amount taken to equity including any adjustment/effect for price movements shall be taken to Profit and Loss Account on quarterly basis during the year ending December 31, 2010. The amount taken to equity at December 31, 2010 shall be treated as a charge to Profit and Loss Account for the purposes of distribution as dividend. The impairment loss based on market values as at December 31, 2010 has been determined at Rs 4,893.731 million. In view of the Floor Mechanism as explained above and current economic conditions in the country, the management believes that these are rare circumstances and the plunge in equity markets cannot be considered to be a fair reflection of equity values. Accordingly, the management on the basis of their estimates and prudence has made a provision of Rs. 2,591.635 million against the above amount. Therefore, full recognition of impairment for Available for Sale equity securities through Profit and Loss account will not reflect the correct financial performance of the Bank. At December 31, 2010 market value of quoted investments was Rs. 83,847.918 million (2008: Rs. 113,041.129 million) while the book value of unquoted investments was Rs. 13,959.421 million (2008: Rs. 9,391.098 million). Investments include Pakistan Investment Bonds amounting to Rs. 232.60 million (2008: Rs. 232.60 million) earmarked by the SBP and National Bank of Pakistan against TT / DD discounting facilities and demand note facilities sanctioned to the Bank. In addition,

78

Pakistan Investment Bonds amounting to Rs. 5 million (2008: Rs. 5 million) have been pledged with the Controller of Military Accounts on account of Regimental Fund account. Certain approved / Government securities are kept with the SBP to meet statutory liquidity requirements calculated on the basis of domestic demand and time liabilities. Comments on Horizontal Analysis of Last Five Years Balance Sheet: Comments with Respect to Assets side of Balance Sheet: The horizontal analyses of the balance sheet show that the total assets of the bank have increasing trend through out the period from 2006 to 2010. The above figures are obtained by considering the 2006 as base year and these were 15%, 32%, 58% and 71% in 2006, 2007, 2008 and 2010. Now we see that what assets items conclude these figures and on what basis in the following interpretation: Cash and bank balances with treasury banks increase in 2007 and 2008 by 36 and 67% but stable in 2010 with the figure of 66%. This head includes the cash and bank balances in hand in local and foreign currency, with State Bank of Pakistan, with other central banks, with National Banks and in shape of prize bonds. The movements in these accounts conclude changes in the net figures and net cash and bank balances increased 66% for the period. Lending to financial institutions calculations shows that they have the decreasing tendency in the period and were at (9%) in 2006, 92% in 2007, (90%) and (63%) in 2008 and 2010. In this period banks gains a big share of market so that the lending to financial intuitions head have the declining trend. Investment was at 3% in 2006 as compared to 2006 and at (6%) after declining in 2007. The figure was at 68% in 2008 after increase of 74% and in 2010 it decrease to 43%. The major reasons for change are movements in investment in federal government securities, term finance certificates, debentures, bonds and participation term certificates and other investments. The change in advance shows that they increased 60% up to 2010 from 2006 and according to horizontal analyses the figures were 31%, 44%, 59% and 91% from the 2006 to 2010 respectively. This change was due to change in loans, cash credits, running finance etc. in and outside Pakistan, net investment in finance lease and bills discounted and purchased payable in and outside Pakistan.

79

Operating fixed assets also have the increasing trend according to horizontal analyses and figure jumped to 91% in 2010 from 2% in 2006 due increasing network of branches of the bank throughout the country with advanced technological equipments. Other assets also increased and were at 222% in 2010 as compared to 2006 which was base year. The great change occurred due to movements in income / mark-up accrued on advances and investments, advance, deposits, advance rent and other prepayments, unrealized gain on derivative financial instruments and receivable from pension fund. The above observation by horizontal analyses concluded the final figures of the movements in the total assets of the organization for the period and they are in good and strong position. This was the reason that bank awarded the Bank of the Year award in 2010. Comments with Respect to Liabilities side of the Balance Sheet: The horizontal analyses of liabilities side of the balance sheet shows that the increasing tendency through out the period. In 2006 total liabilities were 12% and jumped to 57% up to 2010 while the figure were at 23% in 2007 and 45% in 2008 during the period. The following discussion will help us to understand the reasons which conclude these figures. Bills payable increased in the period and were at 39% in 2010 after the difference of 26% from 2006 to 2010.from 2006 to 2010. These bills were payable in and outside Pakistan. Borrowings figure were at 261% in 2006 as compared to 2006 through horizontal analyses. It decreased (46%) in 2007 and was at 215% due to change in borrowing form State Bank of Pakistan because of increase in deposits. 204% increase seen in 2008 as compared to previous year and figure was at 419% after change. Again decrease of (220%) seen in 2010 as deposits increased and SBP lower the discounting rate. 45% increase is seen in deposits as they were at 49% in 2010 and at 4% in 2006 of the total liabilities. This increase was due to increase in fixed and saving deposits, current accounts and margin accounts. The breakup shows that they were increased in 2006 by 16% and in 2007 by 32% as compared to base year of 2006. Other liabilities include markup / return / interest payable in local currency and foreign currency, accrued expenses and unrealized loss on derivative financial instruments etc. Other liabilities were at 226% after increase of 200% in 2010 and have the increasing trend through out the period from 2006 to 2010 as compared to the base year of 2003.

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These were the reasons which cause to conclude the final figure of total liabilities by making comparisons through the techniques of horizontal analyses. Comments with Respect to Total Share Capital: (Owners Equity) Share capital or owners equity includes the share capital, reserves and unappropriated profit. Total figure of share capital was at 302% in 2010 as it was at 63% in 2006 as compared to 2006. The reasons for this gape for the period are change in share capital which was at 27% in 2006 and at 86% in 2008 and 2010. This increase occurred due issuance of bonus shares and right shares to the shareholders of the bank. Reserves analyses show that there was increase of 489% from 2006 to 2010 as compare to 2006. They were at 60%, 336%, 501% and 549 % in 2006, 2007, 2008 and 2010 respectively. These changes were occurred due to movement in share premium, exchange translation reserves, statutory reserves and general reserves. Unappropriated profit also increases during the period and there is increase of 2544% from 2006 to 2010. The reasons for this change are the high profit earnings after deducting all expenses and taxation amounts. Surplus on revaluation of assets figure was at 16% in 2010 as compared to 2006 where it was at 1% only. These were reasons which observed through horizontal analyses of the balance sheet for the last five years. The detailed discussion helped to understand the financial position of the organization and to fulfill the requirement of the university. Comments on Horizontal Analysis of Last Five Years Profit & Loss Account: Horizontal analysis of last five year profit and loss account shows that there are major changes in the all the sectors of the statement of income. The overview shows that markup / return / interest earned reached at 341% after changes as compared to base year 2006 while profit after taxation comes to 674% after healthy movements as compared to the base year. The following discussion elaborates the movements in the earnings and expenses of the organization to understand its position in the market. In 2006 the mark-up / return / interest earned at 95% as compared to 2006 and with the positive change of 89% comes to at 184% in 2007. 66% increase as compare to previous year lead the figure to 250% in 2008 and further increase of 91% in 2010 show the figure of 341% as compare to 2006. All changes represent the high fluctuations in the interest rates of the industry which affect the profits of the bank. These changes were due to

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mark-up / interest earned on loans and advance to customers and financial institutions, on investments for sale securities. Mark-up / return / interest expenses shows that they were at 35% in 2006, 120% in 2007, 382% in 2008 and 462% in 2010. There are gradual changes in the last five years period but abnormal movements in 2008 and 2010 which shows the high interest rates in the market which bank paid on its borrowing from financial institutions and on the deposits from customers in different ways. On the other hand to meet the liquidity shortage the banks increase their debts and paid high mark-up rates. Net mark-up / interest income obtained by subtracting mark-up / return / interest expenses from mark-up / return / interest earned for the periods so the movements are the same as in the mark-up incomes and mark-up expenses. There is an increasing trend seen in the figure for the five years and figures were 305%, 240%, 202% and 113% in 2010, 2008, 2007 and 2006 respectively. Non mark-up / interest income is at 36% in 2006 and comes to at 18% in 2007. An increase of 34% is seen in 2008 as compared to previous year but it decreases in 2010 and figure was 37%. These movements were due to changes in fee, commission and brokerage income which was at 23% in 2006 and comes to 44% in 2010 as compared to 2003 base year. Dividend income was at 27% in 2006 and high increase in seen in 2007 when it reached to 114%. It was at 67% and 63% in 2008 and 2010 respectively after affects of the financials crises. Income from dealing in foreign currencies was at 8% in 2006 and 48% in 2010 which shows the healthy increasing trend in figures for the period. Other income is the combination of rent of lockers, net profit on sale of property, import income on sales purchase of bills and recovery of bad debts. It was at 64% in 2010 by decreasing from 147% in 2006 as compared to 2003 base year. Non mark-up / interest expenses at 13% in 2010 but the figure was in minus in 2006 which is (12%). The breakup shows the administrative expense decrease (11%) in the both 2006 and 2007 and further decreased in (25%) in 2008 but an increase of 4% is seen in 2010. Other charges include the penalties of SBP, workers welfare fund and VAT Sri lanka and others. They also increased for the period. These changes concluded the final figures for non mark-up / interest expenses as compared to base year of 2006. Another important figure of horizontal analyses shows that profit before taxation was increase by 517% in 2010 as compared to 2006. It was at 267%, 422% and 501% in 2006,

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2007 and 2008 as compared to 2006. The changes show the increase in the earnings of the bank due to the good performance of the management even in the bad situation of crises. As the income increase the taxes also increased with the same proportion. The same case is here and taxation increased through out the period from 2006 to 2010. The figures were 268%, 472%, 443% and 484% in 2006, 2007, 2008 and 2010 respectively. The investigative eye is always seen on the figures of profit after taxation from the investors side. The reason is the calculation of different ratios like EPS etc. The bank has the healthy figures in this respect and horizontal analyses shows the figure of 532% in the financial year of 2010 as compared to 2006 base year. The figure was at 267% in 2006, 399% in 2007 and 528% in 2008. The net change of 265% for the period is seen this was the reason market price of the share of the MCB jumped to more than 425% in the last five years. This position also attractive for the foreign investors and May Bank of Malaysia purchased the 5% shares of the bank in 2010. The bank also obtained the award of The best bank of Pakistan in this period through positive and strong investment policies. At the end of the statement of incomes the profit available for appropriation showed in the above analyses. The profit available for appropriation was at 674% in 2010 but it was at 684% in 2008 which was highest in the last five years. 246% was in 2006 as compared to 2006 base year and jumped to 547% in 2007. A high growth in the figures is seen for period as there is increasing trend in the figures. The above all discussion on the figures obtained through horizontal analyses of the profit and loss account of the MCB bank for the last five years in which we analyze the source of earnings and ways of expenses of the bank in the different periods. Although these analyses are not final criteria to examine the financial statements but a way to understand the different movements and changes in the different periods.

Comments on Vertical Analysis of Last Five Years Balance Sheet: The vertical analyses of last five years balance sheet from 2006 to 2010 show that total assets come to at Rs.443.615 million in 2010 from Rs.259.174 million which in 2006. Total liabilities figure was Rs.224.621 million in 2006 and comes to Rs.385.180 million in 2010. The share capital, reserves and unappropriate profit also increasing trend and

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total equity was 52.245 million in 2010 while it was 9.198 in 2006. In nutshell an increasing tendency is seen in the whole period of five years analyses. Now we will discuss the changes for this increase in detail as follows: Comments with Respect to Total Assets: The bank total assets includes cash and bank balances with treasury banks, balance with other banks, lending to financial institutions, investments, advances, fixed asset and other assets. The major change is seen in investments which were at 25.93% and comes to 21.70% in the year of 2010 with the decreasing change of (4.23%) but the interesting thing is that they have the increasing trend from 2006 to 2008 and figure was 27.55% in 2008. The reason for decrease in 2010 is the bad capital market conditions that market was at floor rates from August 2010 to December 2010 so the values of investments (securities, bonds etc.) decreased. Advances were at 59.18% in 2010 with the net increase of 6.2% from 2006 which was at 52.98%. Advances increased in 2006 up to 60.35%, and 57.95% & 53.34% in 2007 & 2008. This shows the trust of customer on bank which cause to get the award of best performance in 2010. This increase is due to increase in the all heads of assets which are loans, cash credits, running finance in and outside Pakistan and net investment in finance lease. The particular change is seen in these head of advances which concludes the final figure at the end of year of 2010. The non-current assets also increased as the new branches opened through out the country and figure comes to at 3.89% in 2010 from 3.09% of 2006. Other assets also show the increasing movements for the period of five years and figure comes to at 4.47% in 2010 from 2.37% of 2006 with the change of 2.10%. Increase in mark-up accrued in local and foreign currencies is the reason of this change. Comments with Respect to Total Liabilities: The vertical analyses of the five years balance sheets shows that the portion of liabilities has the decreasing trend from 2006 to 2008 and was stable in 2010. The figures were 94.38%, 92.06%, 88.06% and 86.57% from 2006 to 2008 respectively and 86.83% in the year 2010. (7.55%) net change is seen for the period. The reason for this change is decrease in bill payable, deposits, other accounts and subordinated loans. Bills payable figure was 2.92% in 2006 and 2.38% in 2010 with the change of (0.54%). The figure of borrowings shows that this was increased in 2006 up to

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9.16% and 2008 up to 9.60% but decreased in 2007 was at 7.00% and in 2010 at 5.11%. Deposits and other accounts also decreased in the period from 2006 to 2008and come to 71.16% with the change of (14.14%) but an increase of (3.29%) is seen in 2010 as compare to previous year. The other liabilities are increased in the period and were at 2.52% in 2006, but come to 4.79% in 2010 with the change of 2.27%. Increase in markup / interest payable in local currencies, accrued expenses, unclaimed dividend, unrealized loss on derivative financial instruments and security deposit received in respect of finance lease are the reasons for change in this portion of the balance sheet. Comments with Respect to Owners Equity or Share Capital: Owners equity or share capital consists of share capital, reserves and unappropriated profit. In the vertical analyses of this portion and increasing trend is seen from 2006 to 2010 and figures were 3.55%, 6.13%, 10.42%, 11.06% and 11.78% respectively. This increase is due increase in reserves and unappropriated profit of the organization. The reserves were at 2.18% in 2006 and come to 8.29% in the year 2010 with the increase of 6.11% in this period. Same trend is in the figures of unappropriated profit of the bank. We can analyze the position of organization from these vertical analyses of this portion of balance sheet which is in strong position. Comments on Vertical Analysis of Last Five Years Profit & Loss Account: The comparison of vertical analyses of the last five years profit and loss account shows that the following changes occurred during this period. Comments with Respect to Profit Available for Appropriation: The figures of profit available for appropriation show the increasing tendency from the year 2006 to 2008. In the financial year 2010 a decrease is seen which is due to crises in the financial sector. 24.17% is the figure for year 2006 and it increased to 46.83% in the year 2006 due to healthy increase in profit after taxation amount. 68.49% relates to the financial year 2007 which is due to the increase in the last year profit brought forward and small decrease in transfer from surplus on revaluation of fixed assets. An increase of 7.72% is seen in the financial year 2008 and figure comes to 76.21% and finally in the year 2010 the figure was 67.84% with a decrease of (8.37%). This was due to major decrease in the profit after taxation. Now we analyze that what changes / reasons in the other items of profit and loss account result the figures of profit available for

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appropriation. The first item of profit and loss account is mark-up / returns / interest earned shows the figure of 82.73% in the financial year 2006 which increases to 90.67% in 2006. With the increase of 12.19% the figure was at 102.86% in 2007 which indicate to the boom of banking sector / industry in Pakistan. In 2008 the figure was at 116.42% with an increase of 13.56% and was at 132.35% in 2010 with an increase of 15.93%. The all above figures shows the strong market position of the bank and its strong investment strategies by its management.The second item of profit and loss account is mark-up / returns / interest expense shows the figure of 18.74% in 2006 which comes to 14.20% in the year 2006 which shows the decrease in mark-up rates in the said period. In 2007 the figure was 18.06% with the increase of 3.86% due to the stability in the mark-up rates almost. In 2008 when the financial crises were going to start the interest rate jumped and the figure was 28.81% with the increase of 10.75%. The financial year 2010 suffer the great depression period and an increase of 9.40% is seen in the mark-up / return / interest expenses of MCB Bank and figure goes to 38.21%. This shows the effects of financial crises. Net mark-up / interest income was 63.99% in the year 2006 and it jump to 76.46% in the year 2006 when there was boom in the financial industry of Pakistan. It increased in 2007 and was 84.80%. Further increased in 2008 and was 87.61% and after an increase of 6.53% it was at 94.14% in 2010 the reasons were same as shown above. Net mark-up / return / interest income after provisions figure was 61.45% in 2006 but it increased in 2006 and 2007 which is 70.62% and 80.08%. In 2008 and 2010 the figures were 76.38% and 80.86% which show the increasing trend in 2008 but stability in 2010. This was due to increase in provision for diminution in value of investments and provision against loans and advances. The values of investments decreased due to bad condition of capital markets. Non mark-up / interest income has the decreasing trend and it gradually decreased from 2006 to 2010. The figures were 38.55%, 29.38%, 19.92%, 23.62% and 19.14% respectively. This income includes the income from fee, commission and brokerage income, dividend income, income from dealing in foreign currencies, gain on sale of securities and other income. All the heads have decreasing movements as shown in the analyses chart of vertical analyses give above.

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Administrative expenses, other provisions and other charges conclude the non mark-up / interest expense of the profit and loss account. The figure was 67.72% in 2006 and it comes to 27.72% in 2010 and (40.00%) decrease is seen in the said period. It shows that management of the bank takes the cost effective decision and more strong internal control in the organization. Profit before taxation figure increased from 2006 to 2008 (2006:66.47%, 2007:73.82%, 2008:78.04% in 2006 (66.47%) as compared to 2006 where the figure was 32.28%. in 2010 a (5.74%) decrease is seen. This was due to increase in administrative expenses of the bank. The important and analytical point for the investor is the figure of profit after taxation. In MCB Bank the profit after taxation has the increasing tendency from 2006 to 2008 and figures were 22.15%, 45.56%, 48.45% and 55.91%. We can observe that in this period the Bank has strong position and it capture the large share of market and made the sound investments in the healthy securities. This was the reason that the market value of the MCB Bank share is cross the figure of 400. The bank also sold the 5% shares to May Bank of Malaysia which made investment due to its sound position in the market. As the world financial crises hit all over the world the MCB bank also effected and net profit after taxation also decreased and figure was 50.82% in the year 2010. All the sources of income effected due to these crises which cause to decrease in the figure of profit after taxation. The above observations and results shows that bank has the sound position in the market although the financial crises effected its performance but the internal and external controls through good decision making of management can stable the growth even in this bad situation.

4.2. Organizational Analysis: (Comparison with Other Banks) Askari Comparison with HBL, ASKARI BANK and ABL: Askari Sr. # Particulars BANK -----------------------------(Rupees 000)-----------------------------HBL ASKARI ABL in

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1 2

Deposits Investments

330,274,155 96,256,874 262,510,470 15,374,600 24.47 1,047 14,077

597,090,545 138,145,692 456,355,507 15,614,020 20.47 1,508 14,123

483,560,062 116,328,288 371,139,675 8,333,120 8.24 1,119 15,043

297,475,321 82,631,118 212,972,008 4,156,686 6.43 766 8,325

3 Advances 4 Net Profit After Tax 5 Earning Per Share 6 Branches* 7 Employees* *Figures in Numbers.

The above figure shows the comparison of MCB with HBL, ASKARI BANK and ABL. We observe that HBL is a big banking group as compare to others. Deposit wise HBL is in front of MCB, ASKARI BANK and ABL. Although MCB is in good position as compare to ABL in deposit situation but ASKARI BANK deposit figure is more than MCB. HBL and ASKARI BANK again ahead in case of advances portfolio as compare to MCB and ABL. The advances figure also greater in the column of HBL and ASKARI BANK and MCB again back in this segment. In fourth level of comparison of net profit after tax provide the lead to MCB and MCB is on front of all at fist glance in 2010. The Earning Per Share (EPS) also greater as compare to al others and it is Rs. 24.47 in 2010. Branches and number of employees of HBL are greater than MCB, ASKARI BANK and ABL. In this respect the MCB is stand in 3rd number. MCB has greater number of employees as compared ABL. These figures show that HBL and ASKARI BANK are in much better position than MCB. After the privatization business of MCB took high growth. The Bank's long term and short term ratings are AA + and A1+ as assigned by the PACRA which support its stable outlook and denotes good credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. The short-term rating is A1+, which denotes the highest certainty of timely payment. Shortterm liquidity, including internal operating factors and / or access to alternative sources of funds, is outstanding and safety is just below risk free Government of Pakistan's shortterm obligations. The risk management within MCB bank collectively ensures that the banks risk profile is actively monitored and adjusted according to the banks strategy and the operating environment in a manner which ensures protection to the depositor and value to the share holder.

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The bank is increasing resource mobilization through regular deposit campaigns and accelerating the process of recovery of outstanding advances and non-performing assets. The Bank is making every effort to meet the up-coming challenges through strategic planning and making the best use of the resources at its command. These financial figures and improving condition of the bank shows that MCB is among the leading commercial banks of Pakistan. FUTURE PROSPECTS OF THE ORGANIZATION Askari Bank will be the leading private sector bank in Pakistan with and effective human resource management . Askari Bank have passion for its customer , service and ambitious strategic intentions not only in Pakistan but also in the whole region. Askari Bank expects its strong customer focus to drive the banks future business strategy On the domestic side bank has already launched its consumer banking business. Increased investment is targeted in developing resources; Infrastructure and internal system support the aggressive consumer initiative and explorations of new avenue generation. Furthermore Askari bank has plans to introduce a full suit of innovative consumer finance products designed to capture a significant share of the local consumer financing market and tap into the current growth in demand of such financing an international presence delivering quality service through innovative technology

SHORT-FALLS/WEAKNESSES OF THE FINANCE DEPARTMENT 1- SWOT ANALYSIS The SWOT analysis consists of analyzing organizational strengths and weaknesses, and its environmental opportunities and threat. It helps to identify a strategic niche that the organization might exploit. SWOT analysis of ABL is as follows. STRENGTH Over the years Askari bank has proved its strength as a leading banking sector entity

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by achieving the following firsts in Pakistani banking. One distinctive feature of the bank is that it is the only bank working for the welfare of army officers, which was established by Army Welfare Trust. The productivity of the bank is very good. Bank is providing a high quality service to its customers. ABL have strength that most of the imports & exports which are done in Model town Branch Lahore are handle by ABL Model town Branch Lahore. First Pakistani bank to offer on- line real -time banking in a countrywide basis. First bank in Pakistan with a nation -wide ATM network. First bank in Pakistan to offer internet banking services . First bank in Pakistan to offer e- commerce solutions. First bank in Pakistan to start mobile ATM service.. Remittance department is working very efficiently in transferring the funds to peoples due to this system Bank is providing quick credit services to all the customers at all branches. Because the credit manager cooperates with the borrowers while making a loan request to the bank. Management is well organized. Services provided by the branches are very good. The bank has stable growth in deposits Askari bank has financial strength as they are gaining profit from the advances that they provide to the organizations. Because of its quality management, marketing, innovation in products and services they have established a good reputation in the banking sector. In the bank working environment is very good. Every employee comes there and works with zeal & heartily. WEAKNESSES ABL has lesser number of branches as compared to many other branches. Due to this problem, army officers can not avail the benefits of their own bank.

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The human resource department is not performing the function of selection and recruitment very effectively. Selection process is not on merit due to which competent persons cannot be selected. Bank is not introducing new products and new saying schemes. Bank should boost the product development and increase the range of facilities offered for customers. Bank is under staff so absence of members create problem The majority of people are not well aware about the products of Askari Bank It is due to their very low services of promotional activity. Askari Bank Management has adopted reactive approach they respond to the market very slow and are reluctant to take initiative before the problem arise. OPPORTUNITIES Govt. is taking very bold steps to promote IT in Pakistan. ABL has an opportunity to improve in technology. Stock exchange is very volatile and takes immediate effect. So, in the time of crises, conservative investors return to saving deposits ABL is surrounded by many competitors. It has an opportunity to do aggressive marketing to increaseits business. As the Askari Bank offer to on line real time banking on a country wide basis so management has an opportunity to increase its business. There is an opportunity for bank to promote there business because it the first bank that offer internet banking services in Pakistan. An external opportunity exists in efforts to improve the social environment of local communities and society in general by offering innovative, community involvement programs THREATS ABL has many competitors, which are continuously increasing its products and marketing aggressively . It may cause its customers to shift to competitors

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Pakistan India relations often create a war danger. This chance of war may cause army officer and their families to increase the frequency of withdrawals, which would decrease deposits. Continuously increasing products and marketing aggressively by other banks may cause to shift the customer of Askari bank to its competitors As old banks have started changes and many new banks are emerging as a strong entity so Askari Bank will face a strong threat from this competition unless adopt pro active approach to handle these threats. The political conditions of the country affect the banks performance

Conclusion
The analysis of strengths, weaknesses, opportunities and threat as narrated above tells us about the present vital concern. The internship of Askari Bank given me as exposure to the accounting atmosphere. It helped me greatly in understanding the financial system. The experience I got during the internship will help me in understanding the decision-making and how to solve daily problems

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encountered during the practical working environment. 7.1 - ANALYSIS, SUGGESTIONS & RECMMNDTIONS During my internship at the Askari Bank I find out week areas that require improvements for long-term benefit of the organization. As such there is no need of any improvement as Askari Commercial Bank is one of the leading bank of the country and upholds its name but still I have a few suggestions in my mind which I think my duty to mention. First of all, in order to make the working environment of the bank better some recommendations are given. In any organization we have to work like a group as a whole. The attitude of the one employee can cause tension in the whole environment so it is suggested that they should work as a team and co-operate with each other as well as with internees for better working environment. For this purpose they should either make a schedule for the internees or the rotation time period be reduced in those department, which have less work for internees. Because during the internship the internees come her to learn and know about the working of the organization. They should try to tell as much to the internees as possible. So that they can learn how they have to work in an organization when they get the job. Even if they get job in any other organization they know how working in the organization goes on. Askari Model Town Branch do good progress in Lahore. But the most problem they face is Connection of Internet. All the employees have a computer system. So that this branch must improve the internet connection so that employees can work more efficiently The another important problem ABL Model Town Branch face is the number of employees working in the bank. The number of employees are very low due to this problem the distribution of work is also not right. Some person has more burden of work while some have less burden. So the overall working efficiency of the bank is not good. So the ABL Model Town Branch have need of good, honest, skilled young employees who can increase the efficiency of the bank.

Annexure
Business volume

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300 200 100 0 2009 2008 2007 2006 2005 Deposits Advences Total Assets

HIERARCHAL STRUCTURE OF ASKARI BANK AT HEAD OFFICE LEVEL Board of directors

Executive committee

Treasury & C.M

Corporate

Investment Group

Banking Marketing IT Dept Dept

Consumer Banking

H H.R.M

Audit & Inspection

Service & Quality

Agriculture Loans

Commercial Loans

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HIERARCHAL STRUCTURE OF ASKARI BANK AT BRANCH LEVEL

Foreign Exchange

Branch Manager, Area Operational Manager

Customer Deposit Cash & Clearing


I IT

Bills & Remitt

Marketin g

Advance

Accounts

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STRUCTURE OF THE FINANCE DEPARTMENT

OG- 111

Group Chief Financial Officer Country Head Regional Manager Regional Manager

Regional Manager Assistant Manager OG-111

Regional Manager Assistant Manager OG-111

Regional Manager M Assistant Manager OG-111

Assistant Manager OG-111

Assistant Manager

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8. References: Following the references and sources from where the data gathered for this report are mentioned herewith for your kind interest. Organization:

Annual Reports of Askari Bank Limited (2010). http://www.askaribank.com.pk.


Web Portals:

http://www.sbp.com.pk. http://www.ibp.org. http://www.thebankers.com. http://www.pacra.com.pk. http://www.gulfeconomist.com.pk. http://www.privatisation.gov.pk. http://www.finance.gov.pk.


Books:

Fundamentals of Financial Management by James C. Van Horne & John M.


Wachowicz, JR

Principles of Corporate Finance, by Franlin Allen, Stewart C. Myers & Richar A.


Brealey, Eighth Edition. Printed by B.I. Printers, Rawalpindi.

Practice and Law of Banking in Pakistan by Dr. Asrar H. Siddiqui.

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9. Annexes: Organ grams: Management of A Typical Branch

Manager/ Chief Manager

Manager Credits

Manager Operations

Manager Foreign Exchange

Second Officer

Second Officer

Second Officer

Procession officer

Administration Officer

Import Incharge/Officer

Distribution Officer

Internal Working Officer

Export Incharge/Officer

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Correspondence Officer

Internal Working Officer

List of Illustrations Words Auto Teller Machines Branch Manager Certificate of Deposit Chief Executive Officer Chief Financial Officer Commercial Banking Continuous Funding System Corporate Banking Group Credit Administration Department Credit Analyst Reporting System Credit Application Credit Information Bureau Customer Relationship Manager Development Financial Institution Disbursement Authorization Certificate End Service Benefits Financial Institution Financial Manager Habib Bank Limited Head Office Information Technology Group Investment Banking Group Islamic Banking Group Karachi Interbank Offered Rate Management Information System Net Take Home Salary Officer For Financial and Assets Management Services Personal Digital Assistant Abbreviation ATM BM COD CEO CFO CB CFS CBG CAD CARS CA CIB CRM DFI DAC ESB FI FM HBL HO ITG IBG IBG KIBOR MIS NTHS OFAMS PDA

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