INTRODUCTION

ACCORDING TO BANKING COMPANIES ORDINANCE 1962

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

deposits of money from the public, repayable on demand or otherwise, and
withdraw able by cheque, draft, order or otherwise.”

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

Pakistan.”

COMMERCIAL BANK

“The commercial bank receives surplus money from the public and lend to others
who needs funds. Bank collects cheque, bills of exchange etc from customers. It
transfers money from one place to another. It provides agency and general utility
services. Purpose of commercial bank is to earn profit.”

HISTORY OF ASKARI COMMERCIAL BANK

The banking sector has witnessed a dramatic change during the last ten
years with the development of Askari Bank, which is not only redefining priorities
and focus of the banks, but also threatening the domination of traditional
players.

The story begins with the incorporation of Askari Commercial Bank

limited in Pakistan on October 09, 1991, Askari Bank Commenced (begin)
to operations in April 1992, as a public limited company. The bank is
listed on the Karachi, Lahore and Islamabad Stock Exchanges and the
initial public offering was over subscribed by 16 times.
 While capturing the target market share amongst the view banks, Askari
has provided good value to its shareholders. Its share price has remained
approximately 12% higher than the average share price of quoted banks during
the last four years.

Askari Bank has expanded into a nation wide presence of 83

Branches, and an Offshore Banking Unit in Bahrain. A shared network of
over 800 online ATMs covering all major cities in Pakistan supports the
delivery channels for customer service. As on December 31, 2004, the
Bank had equity of Rs. 6.016 billion and total assets of Rs. 107.168
billion, with over 475,000 banking customers, serviced by a total staff of
2,118.

Askari Bank is the only bank with its operational head office in the twin
cities of Rawalpindi-Islamabad, which have relatively limited opportunities as
compared to Karachi and Lahore. This created its own challenges and
opportunities, and forced as to evolve an outward-looking strategy in terms of
Askari market emphasis. As a result, Askari developed a geographically
diversified assets base instead of a concentration and heavy reliance on business
in the major commercial centers of Karachi and Lahore, where most other banks
have their operational Head offices.

MOTIVATION OF ASKARI COMMERCIAL BANK

While successfully penetrating the key domestic markets through

strategic expansion and business diversification they remain alive to the
challenge emanating from the development in the global financial
markets; the opportunities and threats engendered by greater
deregulation and increased customer expectations. These provide them
the impetus (moment) to make the best use of available resources,
including modern technologies, to meet the challenges ahead.
Historically, Askari’s core marketing focus for its asset base has been the
middle and upper middle business houses (including wholesalers and
manufacturers) operating in the large urban centers of Pakistan, which are
primarily oriented towards foreign trade. This segment constitutes significant
revenues to the bank. The liability side remains focused on the middle and upper
middle class retired and serving government and armed forces personal and
mid-size business houses.

Their corporate banking division was established in April 1999 with the
primary focus on servicing large corporate and multi-national companies
(MNCs). Benefiting from the bank’s growing balance sheet size, this division B
now gaining momentum and their long-term aim D to develop it into an
independent.

Strategic business unit (SBU)… This would the bank to acquire, develop
and specialized abilities, and enhance their focus on serving the emerging needs
of the corporate clients.

With this branch network of 75 and further expected increase in

future, the ATM’s facility and internet Banking, Askari Bank’s reach is ever
increasing. In recognition of this reach, they have set up a retail-banking
group in July 2000, the mobile ATM’s facility is first time started by Askari
commercial bank in 2005 dedicated to serving the urban consumer
market; Askari is committed to aggressively market this segment. The
strategy is to provide their customers with a basket of innovative
products to meet their varying needs.

Askari Commercial Bank is the only Private Sector bank that has been approved
by the World Bank as a Participating Financial Institution for the US$ 200 million
Line of Credit sanctioned (authorized) to the Government of Pakistan for the
Financial Sector Deepening and Intermediation Project.
Askari's emphasis on further broadening its core foreign trade business
translated into handling a higher volume of Export and Import business of
Rs. 36 billion registering a growth of 42% over the pervious year. This
enhanced foreign trade business was secured due to excellent customer
services and efficient international settlement arrangements with our
correspondent banks.
Askari Bank is operating throughout Pakistan. Most of the branches are
connected through our State of the Art, On-line Communications Network, which
gives the bank a competitive edge in providing instant services to its clientele.
We also offer direct access to the latest Foreign Exchange Rates through our
Online Communications.

FIELD OF ACTIVITIES

THE BANK BASICALLY WORKS UNDER THREE GROUPS NAMED AS

1) Corporate banking and financial institutions group
2) Retail banking group
3) Operations and credit group.

1-CORPORATE BANKING AND FINANCIAL INSTITUTION

GROUP

This Group is responsible for serving the needs of large corporate clients in
public and private sector, managing correspondent banking relationships and
undertaking money market transactions. The Group is organized in three
divisions namely

 Corporate and Merchant Banking Division,

 International Division
 And Treasury.
CORPORATE AND MERCHANT BANKING DIVISION
This Division is engaged in provision of financing facilities to large corporate
clients including multinationals. Principal activities include syndicated loans,
guarantees, and working capital finance, underwriting and advisory services. The
Division has played an important role in providing development finance for the
modernization and expansion of the country's core industries. Credit risk is well
diversified with exposures in sectors like fuel & energy, chemicals, textiles and
fertilizers. Three units have been set-up at Karachi, Lahore and Rawalpindi for
sales and operations, which are supported by centralized marketing from the
Head Office.

INTERNATIONAL DIVISION

Mainly responsible for managing correspondent banking relationships and

planning overseas operations, the Division plays a vital role in extending foreign
trade transactions support to the branches. The Bank became a member of
SWIFT in the Year 2000 and is also a contributor to the equity of Pakistan Export
Finance Guarantee Agency Ltd With a network of 167 correspondents spread
over 95 countries worldwide, the Bank continued to reinforce its leadership
position in trade finance, transacting business of over Rs. 70 billion, during this
year. Through the concerted efforts of this Division, we are a participating Bank
under the "Pakistan Trade Enhancement.

Facility" of the International Finance Corporation, and our customers are entitled
to avail of the "Political Risk Guarantees Scheme" extended by the Asian
Development Bank.

TREASURY

Responsible for managing Bank’s liquidity and foreign exchange transactions,

our Treasury in one of the most active in the market. Through reported
transactions, purchase of Government paper and foreign exchange trading, the
Division adds substantially to the Bank's sustained earnings.
2-RETAIL BANKING GROUP

Retail banking group was formed in 2000, this group is responsible for serving
the needs of the retail market. Focusing on individual consumers and small and
medium size enterprises, for purpose of product differentiation, the group is
managed in three business arms.

 Investments products unit,

 Asset products unit,
 And the credit cards division.

INVESTMENT PRODUCTS UNIT

Responsible for developing and managing brands which serve the investment
needs of the consumer market, this unit focuses on deposit mobilization,
provision of value added services based on modern technology and undertaking
the centralized marketing and advertising for the Bank. This unit is also actively
involved in the acquisition business and has signed-up over 300 merchants
nation-wide which offers shopping discounts to the Bank's Privilege Card
members.

Askari Bank's Value Plus is a unique deposits account, which offers handsome
monthly profits, accidental insurance cover, partial liquidity on all time deposits
and free Privilege Card membership. The Unit is also administering the sales and
distribution, including arrangement for strategic partnership alliances for Askari-
i-Net Banking, the first internet banking in Pakistan, which allows routine
banking transactions from any where in the World, round the clock, over the
internet.

ASSET PRODUCTS UNIT

This Unit is engaged in the development and management of retail credit
schemes. The consumer market in Pakistan has not only grows exponentially
over the last decade or so, but the needs of this segment have become
extremely diverse. In order to sustain competition, it is but imperative to
continue offering innovative consumer credit schemes. With the launch of Askari
Bank's Personal Finance an Askar (auto-loans), this unit is emerging as a
significant contributor to the Bank's loan growth. The unit also administers the
first e-commerce banking solution in Pakistan, under the brand name ASK-IBL
online. This is a b2b automated credit transaction module, offering merchandise
credit to retailers on goods purchased form one of the largest distributors n the
country. Strong collection and prudent risk management policies have restricted
delinquencies to very low levels.

CREDIT CARDS DIVISION

This Division manages Askari Master Card brand and is headquartered at

Karachi. With a new fully automated transaction processing system, the brand
was re-launched in 2001, supported by an aggressive advertising campaign and
strong sales team network. The product now has portfolio of nearly 20,000
cards, in less than one year. The brand is accepted worldwide and over 3,000
locations in Pakistan.

3- OPERATIONS AND CREDIT GROUP

A support function group mainly responsible for development of systems and

procedures, process re-engineering, automation and credit management. The
group is organized in three divisions,
  System and operations division
 Electronic technology divisions
 And the credit division

SYSTEM AND OPERATIONS DIVISIONS

This group has been instrumental in development of procedures and manuals for
various operating requirements of the bank. After careful mapping of the
existing process flows, the division recommends automation and re-engineering
requirements. To improve transaction efficiencies. The division is active in
providing equipment procurement support and development of new branches.
The protection of fixed assets of the bank is also managed by the by this
division, as directs function. During year 2001, the division has proposed several
cost cutting initiatives based upon improvement of our existing procedures and
documentation reduction. Seven new branches have been opened during this
year. The division successfully implements the model branch concept during
2001, which has been proved to be a milestone towards improving our customer
service standards and achieving process uniformity with optimum resource
utilization.

ELECTRONIC TECHNOLOGY DIVISION

This division operates as the backbone for all operational functions in the bank.
Responsible primarily for the development of banking software and provision of
computer hardware to all business units, the division also engaged in the
development of technology based value added customer service products. The
division has helped the bank in playing the pioneering role in offering Internet
banking service e-commerce solution and on-line banking. The division provides
online real time branch connectivity and has full-automated transaction
processing support programmers in the place. The division is focusing on use of
data-warehousing technology to enhance the relationship management program
of the bank.

CREDIT DIVISION

Providing extensive support to branches for credit administration, control and

monitoring, the division has played a pivotal role in helping the bank achieve a
remarkable loan

Growth of 31%, with well diversified risk exposures. Most of the loans are of
shot -term trade financing on a secure and self-liquidating basis. The division
has a special assert management team, which is responsible for ensuring low
ratio of bad debts, effective monitoring of delinquent advances and close follow-
up of recoveries. Bank's head office credit committee, reviews the credit quality
and pricing on regular basis not only to ensure healthy credit growth but also the
management of bank's risk assets in almost prudent and profitable manner

Taking into account the expanding branch network and the increasing customer
base, credit administration was strengthened by decentralizing the delegation of
lending authorities at the regional and area management level.

The decentralization has benefited the bank and its customer tremendously as
the new arrangements now provide for faster credit delivery, focused credit
development, and more effective monitoring and controls. Further steps are
being taken to streamline credit appraisal procedures and training to credit
officers at all levels.

HUMAN RESOURCE DIVISION

Strategically, perhaps the most important division at the head office is

responsible for human resource management, including recruitment staff
training and evaluation. The division also handles matters relating to
administration. This division operates on future oriented strategy focusing on
employee’s personal and professional growth.

Staff development activities are geared to enhance their capabilities for applying
the knowledge and facts towards development of practical situations. Under our
human resource management policy, we develop and groom our management
personal for positions of greater responsibilities analytical, interpersonal,
conceptualized and specialized skills to enable them understand cause-and-effect
relationships and to think logically.

Staff is given on the-the -job as off-site training in diverse areas of banking and
management. Our hiring philosophy is based upon meritocracy and selecting the
right person for the right job. We lay greater emphasis on employee’s honesty
and integrity besides technical competence. Candidates are selected through
well defined and systematic selection procedure.

FINANCE DIVISION

Responsible for bookkeeping and accounts, this division at head office, prepare
all financial return and the MIS through its management-reporting wing. The
division is actively involved in preparing market comparative analysis,
consolidation of bank's budgets, its monitoring and constant review of various
financial indicators.

Finance division works as the backbone for the bank's operations. The division,
which reports directly to the president and chief executive of the bank, has been
instrumental in preparation of banks business plans and future strategies. The
budgetary performance are constantly reviewed and through a sophisticated "
monthly performance report” which is a computer based program, the division
provides feed back to the senior on strategic issue like reasons for budgetary
variance and methods to arrest negative performance factors.
Preparing the bank's annual accounts and coordinating external audit is also a
direct function of the finance division. Through the dedicated efforts of staff at
this division, the bank has been winning various awards foe the best
presentation of the annual accounts and also the management has also been
able to monitor and review the bank's performance in proactive manner.

AUDIT DIVISION

The audit division reports directly to the board through the executive committee,
which is also the audit committee. The audit division is completely independent
of the management and is responsible for checking and reporting on the
management compliance with the boards policies and directives, as also the
prudential regulations and other directives of the SBP. However their role is not
intended to just that of fault finding; but also guiding and assisting branches in
improving their operations.

The division is responsible for evaluating every aspect of the bank's operations
with the goal of improving the effectiveness of risk management and internal
control. There is also a regional audit function attached to each area office; the
nature of this business is of more quality assurance rather than strictly audit.
The regional audit report to the area manager, and assist them in ensuring that
there is proper compliance with all the relative directives, and also that customer
service standards are maintained and improved, at the branches in the area.

The system of regional and area offices has been introduced since 1999 for
effective supervision and control of branches. The scope of the system also
spans the development and management of bank's business and activities, on a
regional basis.
The bank's branch network has been divided into 6 regions:

1) North region
2) Comparison of Islamabad and Rawalpindi area and the north area.
3) Central region
4) Comprising of Lahore and East area.
5) South region: and
6) West region

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

authority and greater responsibility and accountability. Under this system the
regional heads have the primary responsibility for business development,
profitability productivity, operational efficiency and credit quality.

The system helps the customers through quick decision-making and fast product
delivery. It has now enabled the bank to further expand and diversify its
geographical reach and business activities.

THE MISSION, VISION

&

OBJECTIVE
THE MISSION STATEMENT:

To be the leading private sector bank in Pakistan

With an international presence,

Delivering quality services

Through innovative technology

An effective resource management

In a modern and progressive organization

Culture of meritocracy, maintain

High ethical and professional standards,

 With providing enhance value to all our stakeholders,

And contributing to society

VISION

To be the leading bank in the region...

CORE VALUES

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

• Commitment
• Integrity
• Fairness
• Team-work
• Service

OBJECTIVES OF THE ACBL

As Askari Bank looks ahead to the future by moving through the decade of
the 1990's its efforts are guided by a broad framework of corporate
objectives, which are as follows:

 Askari is committed to its identity of " security & trust " and will endure to
uphold this image at al the times.
 It will endure to provide its customers with as many creative financial
services and products, as is required. As today customer demands a
 package of services suited to his particular business, Askari plans to
develop different and new products to cater to the customer's demand.
Askari bank has they strength to be a market leader.
 Bank will keep standing and by and develop, its human capital base. It is
planning to provide all the required training to its staff towards achieving
a higher level of professionalism. Askari will continue striving to build a
strong, motivated and dedicated work force where total commitment will
be towards customer's satisfaction and wealthy growth of organization.
 Askari bank will endure to provide a competitive return to its shareholders
and will strive to maximize its share value. The enhancement in its capital
and returns will be a continuous process. Askari bank is interested in
being one of the most financially viable institutions. So it lays great
emphasis on gradual building up to a healthy deposit mix. In the years
ahead, the bank will enhance its focus on growth through operational
efficiency, creating strategic alliances developing well-structured
networking system innovating new products, enhancing marketing and
sales efforts improving customer service, achieving greater employee
motivation and providing the best value to its stakeholders - will make it a
leader in the corporate world.

HOW CHALLENGE BE DELIVERED

These objectives and guiding mission will be achieved through

• Focused objective
• Winning as a team
• Excellence in delivery
• Relentless quality
• Upward rising sales
 CODE OF BUSINESS PRINCIPLES

Askari code of business principles is to:

• Deliver solutions that meet customers financial need;

• Build and sustain a high performance culture;
• Build trusted relationships with all shareholders;
• Build and manage the bank’s portfolio of businesses to achieve strong and
sustainable shareholder returns; and
• Create and leverage strategic assets and capabilities for competitive
advantage.

CORPORATE PHILOSOPHY

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

From knowing Askari customers' requirements to understanding employee

needs, from utilizing modern technology to making responsible social
contributions, from enhancing stake-holders' value to practicing corporate
ethics, Askari is continuously and consistently striving to address newer
challenges with a single motivation - the power to inspire and be inspired.
Organizational goal and strategy define the purpose and competitive techniques
that set it apart from others organizations. Goals are often written down as an
enduring statement of company intent.

A strategy is the plan of action that describes the resource allocation and
activities for dealing with the environment and for reaching the organizational
goal. Goals and strategies define the scope of operations and the relationship
with employees, clients and competitors.

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

branch network, Askari Commercial Bank is committed to help the customer
succeed in every competitive environment. To keep pace with changing needs,
ACBL constantly review its comprehensive cash, trade and treasury products and
services, ensuring that a full range of flexible and innovative services is always
available for the customer wherever they trade.

CUSTOMER RELATIONSHIPS

"Before we discover, we must explore"

Knowing Askari customers and their needs is the key to Askari business
success. Askari products and services are structured to touch and improve the
quality of lives of all segments of society. Service quality standards are
designed and monitored to ensure a consistent and convenient customer
experience. Askari client relationship managers are well equipped and well
trained to provide most efficient and personalized service to each and every
customer. Askari products and services are as diverse as Askari market
segments. Askari have structured and syndicated financing arrangements,
working capital finance, Balancing-Modernization Replacement (BMR)
facilities, financing of international trade, consumer credit, small business
loans, credit cards and unparalleled investment products for the individual
saver. Askari Bank is proud of the pioneering role in providing the most
modern technological services to its customer base, which today exceeds
150,000 relationships.

EMPLOYEE RELATIONSHIPS

"Unusual effort on part of the employees who are apparently

ordinary workers is one of the key indications of a superior
enterprise"

Askari staff is Askari most valuable asset. The human resource

philosophy at Askari Bank focuses on multi-talent hiring, professional
grooming, requisite training and meritocracy based reward system. Askari
lays great emphasis on the development and nurturing of "Askari Culture", a
cohesive teamwork, where each relies on the strength of the other and
together they achieve common objectives.

Staff welfare has always been a priority. New initiatives like

hospitalization plan, car buy-back facility and home loan insurance have
added new dimensions to the staff-care policy and motivated them to out-
perform Askari competitors.

Employee productivity enhancement is organized through extensive in-

house and external training programs. Askari continue to offer opportunities
for people to develop their knowledge, skills and personalities, thus ensuring
greater self-fulfillment and progression in the organization.

TECHNOLOGICAL INNOVATION

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

Technology is rapidly changing the way Askari think, act and does
business. It has played a pivotal role in enhancing customer
expectations, particularly with respect to speed and quality of service.

Askari enjoy a strategic competitive advantage over all domestic players by

virtue of Askari leadership in technological innovations. Askari have fully
automated transaction-processing systems for back-office support. Askari
branch network is connected on-line real-time and Askari customers have
access to off-site as well as on-site ATMs, all over Pakistan.

Askari Phone Banking service and Internet Banking facility allows

customers to enjoy routine banking services from anywhere in the
world, 365 days a year, 24 hours a day. Askari have also pioneered
commerce venture in Pakistan through a major retail distributor.

Askari qualified and experienced technology team is now focusing on data

warehousing to enhance the Customer Relationship Management (CRM)
program

ETHICAL VALUES

"Professionalism without integrity is like a book without pages"

Because the right may not always be obvious, Askari must be guided in every
action by a set of well-defined values, governing Askari decisions. Askari
understand that its commitment to satisfy customers’ needs must be fulfilled
within a professional and ethical framework. Askari subscribe to a culture of
high ethical standards, based upon development of right attitudes.

The following primary core values provide the guiding principles for Askari
corporate behavior:

• Commitment
• Integrity
• Fairness
 • Team-work
• Service
As part of Askari internal communications program, these core values are
inculcated in Askari employees through internal memos, posters and most
importantly leading by example.

CORPORATE CITIZENSHIP

"The greatest of life's pleasures are shared"

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

the products and services they offer.
• Askari have made useful contributions in the areas of sports, culture,
poverty alleviation, health & medical sciences, education and scientific
research.
• Askari was one of the co-sponsors of the 9th South Asian Federation
Games, held at Islamabad in the Year 2003. Askari have also sponsored
various sports tournaments at both amateur and professional level.
• Askari contributions to the NGOs dedicated to the treatment and
welfare of the blind is a ray of hope in the darkness. Askari have made
donations to the drug-addiction control programs and Askari efforts to
help support Aids Awareness programs and contributions to the mental
and social welfare of women and children have won much acclaim.
• Askari participated in IUCN Water conservation initiative and have
helped in creating better understanding about the country on the
international platform by cosponsoring the first interactive encyclopedia
on Pakistan.

GROWTH

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

of resistance to change"
 Askari live in a moment of history where everything is changing so fast
that Askari begin to see the present only when it is already disappearing.

Askari customer needs are changing and their expectations are

growing. Technology is fast proliferating the distribution channels and now
banking services can be accessed from multiple contact points. Askari believe
that balanced growth is the key to survival in today's global banking
environment.

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

enjoy a network of 73 outlets in Pakistan, spread across the country. A
network of self-service ATMs supports these outlets.

Askari total assets now exceed Rs.50.9 billion and Askari have over 17
products and services to match Askari customers' individual needs. Bank's
equity base stands at Rs. 2.58 billion with 20% growth over the last 5 years.
The human resource capital of the bank today exceeds 1,200 employees. As
part of Askari growth strategy Askari is now extending Askari banking
services to the remote and rural areas.

CORPORATE ACHIEVEMENT

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

Amidst tough competition, Askari efforts to go an extra mile in

providing superior services to Askari customers have been acknowledged at
the national as well as international levels. These acknowledgements serve as
a great source of encouragement and appreciation at one hand and inspire
ACBL to perform even better, on the other.

The Global Finance Magazine has honored Askari with the “The Best
Bank in Pakistan” award. Askari won the Euro money and Asia money awards
as early as 1994, 1995 and 1996. Askari have Al+, the highest possible credit
rating, for the short-term obligations, and Askari long-term rating stands at
AA. Askari won the prestigious "Best Presented Annual Accounts" award from
the Institute of Chartered Accountants in Pakistan, and The Institute of Cost
and Management Accountants, Pakistan, for the services sector, for 2000.
Askari have also received prizes during the last four years from the South
Asian Federation of Accountants (SAFA) for the "Best Presented Annual
Accounts" for the financial sector, in the SAARC region.

Askari was the first bank in Pakistan to offer Internet Banking

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

MANAGEMENT SYSTEM
CORPORATE INFORMATION
MANGERIAL POLICIES

ORGANOGRAM
 BOARD OF DIRECTORS

Executive
Internal Audit
Committee

President and
Chief Executive

Corp. Banking Retail

Operating and
& Fin. Inst. Banking Credit Cards
credit group Regions
Group Group

Rawalpin Planning and

di/Islama Asset Corporate
International Credit
bad Products affairs

Electronic Investment Human

North
Treasury Technology products Resource

Corporate and
Systems and
Merchant
Operations Lahore Finance
Banking

Data Reporting East

Legal Affairs South I

South II

West
 MANGERIAL POLICIES
A. Financial policies
B. Procurement policies
C. Marketing policies
D. Promotional policies
E. Lending policies
F. Personal policies

FINANCIAL POLICIES

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

• Source of funds
• Use of funds

SOURCE OF FUNDS:

The bank finance policy is acquiring funds from the following sources:

• Deposits of account holders.

• Interest on advances and loans granted to the borrowers.
• Income and commission from the services provided by the bank.
• Bank open various types of accounts for its customers Services are
provided for earning.
• Interest income and commission bank providing the services to its
customer.

USE OF FUNDS:

After the acquisition of the funds their acquisition become necessary. The
bank seeks the best way for making investment to got more profit with the
 maximum security. The bank has an investment portfolio in which it allocate
its funds for crediting to borrowers, investment in the stock market,
investment in the real estate property etc. for allocation of funds a bank has
to follow some banking policies and the prudential regulations of SBP these
are:

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

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

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

Before granting a loan the bank analyze and observe the borrower and conduct a
complete ratio analysis. Bank prepare credit line for this purpose the major thing
is granting an advance is the security offered by the borrower and its actual
market value.

PROCUREMENT POLICIES

Procurement policies are more concerned with manufacturing

organizations. In bank industry that is service industry procurement means
the procurement of funds from various sources such as deposits. It
involves attracting and holding the funds of the depositors. After the
acquisition of funds, the bank invest the acquire funds. One alternative is
to lend its money and earned interest markup or invest in govt. securities
etc. as already mentioned in the above paragraph the major sources of
funds for a bank are the deposit of the general and the other sources of
income includes interest or markup charges received for various services
offered by the bank to its clients.
A bank tries to attract maximum no. Of accounts so that it can increase it’s
deposits and these lending ability. In order to get maximum no. of accounts the
staff of the bank must be efficient as compared to the other banks and the
manager of the branch must take personal interest in attracting deposits. Good
quality of the service is the key to success.

MARKETING POLICIES

Marketing policies are also one of the most important policies because they are
related to the growth of the organization. Marketing for a bank would mean:

1. Creation of new product and services.

2. The bank marketing must be consumer oriented.

Following are the marketing policies of the ACBL.

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

incorporating the latest and most modern equipment to make the
banking procedures simple and easy for the customers.
b. Development of products for the customers.
c. Giving good services and maintaining good relations with the
customers.

These policies can be implemented by providing the right product and service to
the customer at the right place, at the right time, at the right price.

It is necessary for the managers to keep in touch with consumers, observe their
needs and develop products, which meet their needs.

PROMOTIONAL POLICIES
Public relation and advertising has assumed a great importance in the modern
banking business. As for as promotional activities are concerned, the main
objective of the bank is to inform the existing clients and other people about its
new products or change in the existing services. ACBL establishes its purpose
through:

1. Direct contact with customers.

2. Relation with business organizations.
3. Community relations.

LENDING POLICIES

Every bank has its own lending policies except for those, which are common for
all the banks, i.e. the policies, which are imposed on all the commercial banks by
the SBP, are known as prudential regulations. The lending policies of ACBL are
as follows:

1. The bank only invests in those sound and viable projects, which have
good rate of return.
2. Bank prefers to advance loan to their account holders.
3. Loan is given to reliable person only.
4. No political loan is sanctioned by bank.
5. Any account holder can apply for running finance or demand finance. The
manger apprises the past record of account holder and his credit
worthiness. If he finds any thing wrong he can refuse to sanction the
amount.
6. The bank while taking security prefers govt. Securities to shares.
7. It also advances working capital loans.

PERSONAL POLICIES
Personal policies have an important role in the success of an any organization.
ACBL have its proper personal policies. Good personal policies motivate the
employees towards hardworking.

Following are the main personal policies of ACBL:

1. Selection of employees on merit

2. Selection of capable employees.
3. Attractive salary package for motivation of employees.
4. To train and develop the future management of the bank.
5. Every employee must have certain set of clearly defined duties
6. Effective communication at al levels of the organization.

DEPARTMENTS

 GENERAL BANKING DEPARTMENT

 CREDIT DEPARTMENT
 FOREIGN EXCHANGE DEPARTMENT
 Banking procedures are divided between various departments.
Different departments do their jobs in occurrence with the bank policies.
In ACBL each branch is divided into various departments. Head of
department manages each department & officials of the branch follow
procedures.

The departments working within a branch are as:

GENERAL BANKING DEPARTMENT

 Account opening department
 Remittances department
 Cash department
  Clearing department

PRIVILEGE BANKING DEPARTMENT

 Online banking
 Lockers

CREDIT DEPARTMENT

FOREX DEPARTMENT

 Import department
 Export department
 Foreign currency department

ACCOUNTS DEPARTMENT

IT- DEPARTMENT

ACCOUNT OPENING DEPARTMENT

Account Opening In-

charge

Officer Office
r
Functions of Account Opening Department

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

• Guide the customer about the requirements of the account opening and
form filling,
• Check the forms whether they are correctly completed or not,
• Preparing checklist,
• Stamping on the form,
• Maintaining account opening register,
• Pasting of forms in register after release from general banking in charge,
• Issuance of cheque books,
• Issuance of accounts maintenance certificate,
• Closure of account
• Verification of signature in case of cheque presented before releasing of
account opening from SS card is not yet scanned

IMPORTANCE OF INTRODUCTION
FOR A\C OPENING

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

bank, the banker customer relationship is established. In such situation
this is advisable the banker should not open new accounts of unknown
persons unless references regarding the integrity and responsibility of the
purposed persons are obtained from respectable parties.
Failure to exercise this care may result in serious consequences not only
for the banker concerned but also for the other bankers and general
public. It is not sufficient to obtain the reference but its genuineness must
also be verified. Omission of this may have serious consequences.
In practice we see that there is tough competition among bankers for
procurement of deposits, so to press a prospective new customer to find
the desired reference may offend him, yet he is to be welcomed by the
banker as a source of fresh deposits. But these practical difficulties have
to be handled tactfully because the risk involved to carry out this
requirement partially or wholly may lead to undesirable results.

PRECAUTIONS TO AVOID FRAUD

If preliminary necessary inquiries mentioned above are not made and account is
opened, it is possible that an undesirable person is provided with a chequebook
to defraud innocent people or the person being an undercharged bankrupt may
put the banker in difficult situation.

1. SAFEGUARD AGAINST UNINTENTIONAL OVERDRAFT

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

overdrawn or the credit entry of customer is placed into the account of another
person by mistake who happens to have withdrawn that amount. in all such cases
the amount can only be realized if the person is man of integrity.

2. INQURIES ABOUT CUSTOMERS

Have all necessary information with him regarding his Generally a banker
is asked by another banker to give his opinion about his customer’s
financial position. Therefore, it is beneficial for the both that the banker
should customers.

3. PROOFS FOR REASONABLE CARE AND INQUIRY

Under section 131 of negotiable instrument act, 1881 a collecting banker
is protected provided he collects the cheques of his customers in good
faith and without negligence. But if the banker fails to make preliminary
inquiries he may be deprived of statutory protection, being guilty of
negligence.

ACCOUNT OPENING PROCEDURE &PRECAUTIONS:-

KNOW YOUR CUSTOMERS

The objective of knowing a customer is to have a fair idea about the identity,
financial resources, and general information about the customer at the time
when the relationship is established. A banker must have following information
about the customer:

 Customer name:
Enter complete name as mentioned in original ID card /other business
documents.

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

employer name. If the customer is a businessman, trader, sole proprietor, enter
the business name, for example “Jamil Traders”etc.also enter the customer’s
title/position and address of the business/employer. Address with P.O.BOX is not
acceptable. Similarly remarks like

“Private service”, “business” are not acceptable, rather specify what type of
company/business the customer is associated with for example Manager Philips
Electrical Company.

 Address:
Enter the complete business/residential address. With in the brackets you may
also provide prominent address identification marks for ease of physically
locating the address.
  Contact Numbers:
Enter home, official, mobile, fax number and e-mail address (if available).
Banker can verify the number by giving the customer a courtesy call or by
sending him a e-mail.

 Other/ secondary/ mailing address:

Some customer may volunteer their parents or siblings’ addressor second home
address or a mailing address other than a permanent address.

 Special instructions:
Clear-cut special instructions must be obtained from customers. If the
customer has not given any special instruction specified column must be
cancelled by drawing a line, as this column must not be left blank in any
circumstance.

 Existing/other bankers:
Almost most all the bankers usually have a banking relationship with another
bank. In case of customer who does not have an existing banking relationship,
or does not want to disclose the existing relationship, then it is strongly
recommended that at least for some time this particular account must be kept
under observation.

TYPES OF ACCOUNTS

1) ACCOUNTS OF GENERAL CUSTOMERS

• Minor account
 • Illiterate person account
• Joint account

2) ACCOUNT OF SPECIAL PERSONS

• Proprietorship account
• Partnership account
• Limited company’s account
• Accounts of club societies and associations
• Agent’s accounts
• Trust account
• Liquidator’s account executer’s and administrator’s account

REMITTANCE DEPARTMENT

Functions of remittances department

The functions of remittance departments is to handle with the following

instruments:

• Pay Order
• Demand Draft
• Pay slip
• Telegraphic Transfer
• Payment of Remittances
• Cancellation of pay order & demand draft
The remittance department deals with the transfer of money from one place to
another.

This department deals with the local currency transfer only. ACBL provides these
services to both customers & non-customers

Remittance can be made through:

1) Instrument transfer
2) Electronic transfer
3) Mail transfer

Instruments of the Remittances Departments

PAY ORDER

Pay order issued from one branch only be payable from the same branch. It is
normally issued for payment in the same city. It is normally referred as banker's
cheque

 Get the application form.

 Issue pay order after recovering cheques.
 Do necessary vouchering.
 Make entry in PO issue register.
 All pay order shall be crossed" payees account only".
Charges on issue of Pay Order

Amount (Rs) Charges (Rs)

Less then 100,000 50

Above 100,000 Nil

Duplicate Pay Order:

 Check the record to insure that payment has not been effected.
 Get application for issuing of duplicate PO.
 Recover charges.
 Issue duplicate pay order.

DEMAND DRAFT

It is an instrument on demand for which value has been received, issued by the
branch of the bank drawn i.e. payable at some other place(branch) of the same
bank. In case of agency arrangement- demand draft can also be issued by one
branch of the bank payable to other branch of the other bank e.g. DD issued by
ACBL payable by MCB.

Charges on issue of Demand Draft

Amount (Rs) Charges (Rs)

1 - 10,000 25

10,000 – 100,000 50 or .1%

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

Over 1000,00 1000 or .05%

PAY SLIP

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

• No excise duty
• No commission

CASH DEPARTMENT

All physical movement of cash in the bank is made through the cash
department. Normally cash department performs following functions

 Receipt
 Payments
 Act according to any standing instructions
  Transfer of funds from one account to another
 Handling of ATM
 Verification of signatures
 Posting
 Handling of prize bond

Cash receipt section

In this section the cashier in following manner receives cash:

Process of
deposits
Deposited on
Fill- up Receipt
deposit slip Customer

Cashier counts the amounts Cashier counts the

and fulfills other amount and fulfills
requirement other requirements
Cash payment section

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

Process of
payment

Cheque is presented Cheque is recorded

at token counter & token # is allotted

Cashier counts Cancellation officer

the amount & cancels cheque
payment is made

Two signatures on
back of the cheque
by customer Posting is made
 CLEARING DEPARTMENT

MEANING OF CLEARING

The word clearing has been derived from the word “Clear” and is defined
as “ a system by which banks exchange cheques and other negotiable
instruments drawn on each other within a specific area and thereby
secure payment for their clients through the Clearing House At specified
time” in an efficient way”.

1. Since clearing does not involve any cash etc. and all the transaction take
place through book entries , the number of transaction can be unlimited.

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

pilferage are totally eliminated.

3. As major payments are made through clearing, the banks came manage
cash payments at the counters with a minimum amount of cash in vaults.

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

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

service charges or costs, more and more people are inclined and attracted
towards banking.

CLEARING HOUSE

It is a place where representatives of all banks sit together and interchange their
claims against each other with the help of controlling staff of State Bank of
Pakistan And where there is no branch of State Bank of Pakistan the designated
branch of National Bank of Pakistan act as controlling member instead of State
Bank of Pakistan

MEMBERSHIP CEASES

 It ceases to be a scheduled Bank.

 It is not able to meet its liabilities.
 State Bank of Pakistan or Central Govt. prohibits it to receive fresh
deposits.

RULES AND REGULATIONS HAVE CLEARING HOUSE:

  Timing:(Monday through Saturday)
i. 1st Clearing at 10:00 a.m.

ii. 2nd Clearing at 2.30 p.m.

 Each bank will send competent representative to exchange the cheques.

 Each bank is required to insure that all cheques and other negotiable
instruments are properly stamped and suitably discharged
 An objection memo must accompany each and every cheque when return
unpaid duly initialed.
 Each bank is required to maintain sufficient funds in the principal account
with SBP to meet the payment obligations.
 The State Bank of Pakistan debit the account of each member of the
clearinghouse with the proportionate working expenses incurred on the
operation of clearing house. These expenses are very nominal.

OUTWARD CLEARING AT THE BRANCH:

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

accepted at the counter to be presented in outward clearing:

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

 It should be stale or post dated or without date.
 Amount in words and figures does not differ.
 Signature of the drawer appears on the face of the instrument.
 Instrument is not mutilated.
 There should be no material alteration ,if so, it should be properly
authenticated.
 If order instrument suitably indorsed and the last endorsee’s account
being credited.
  Endorsement is in accordance with the crossing if any.
 The amount of the instrument is same as mentioned on the paying-in-
slip and counterfoil.
 The title of the account on the paying-in-slip is that of payee or
endorsee (with the exception of bearer cheque).

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

across the face of the instrument. Clearing stamp is affixed on the face of the
instruments, paying-in-slip and counterfoil (The stamp is affixed in such a
manner that half appears on counterfoil and paying-in-slip). The instrument is
suitably discharged, where a bearer cheque does not require any discharge and
also an instrument in favor a bank not need be discharged.

The instrument along with pay-in-slip is retained while the counterfoil is given to
the customer duly signed. Then the following steps are to be taken:

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

2. Serial no. Is given to each voucher.

3. The register is balanced; the credit vouchers are balanced from the
instruments and are released to the respective departments against
acknowledgement in the register.

4. The instruments are arranged bank wise.

5. The schedules are prepared in triplicate, two copies which are attached
with the relevant instrument and the third is kept as office copy.

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

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

8. The grand total of the house page is taken and agreed with that of the
outward clearing register.
 9. The instrument along with duplicate schedule and house page are sent to
the main office.

However the amount is kept in float till final status of various instruments is
known from respective paying banks in second dealing.

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

Register. If the instrument is not to be presented again in clearing then a
covering memo is prepared. The covering memo along with returned instrument
and objection memo is sent to the customer who sent the same to his account.

INWARD CLEARING OF THE BRANCH:

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

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

3. The entry is made in the inward clearing register (serial no. Instrument
no. Account no. Is written).

4. The instruments are sent top the respective departments

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

OUTWARD CHEQUES RETURNED UNPAID:

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

INWARD CHEQUES RETAINED UNPAID:

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

Outward Clearing.
RETURN OF CHEQUES AFTER CLEARING HOUSE:

Suppose all cheques received in the inward clearing are passed and later on it is
found that a cheque should have been returned, in such cases, we contact the
collecting branch and request them not to make payment against the proceeds
of the cheque which was not returned unpaid by us in due time. the cheque with
objection memo along with a covering letter is sent to the collecting branch,
making request to issue a payment order in favour to balance the Cash-cum-day
book we may debit suspense account sundry debtors with the approval of the
manager. When the payment order is received, it is lodged in clearing and
suspense account, sundry debtors is adjusted accordingly.

SPECIAL CLEARING:

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

agreed to hold an extra clearing at the clearing house on the particular day and
time which is known as “special clearing” it is arranged due to the rush of work
arising out of say, more Holidays declared by the Central Govt. at a time, but
normally special clearing is he4ld on last working day of our half yearly and
yearly closing i.e. 30th June and 31st Dec. every year.

ONLINE BANKING
Online banking means that the customer of ACBL can deposit / withdraw funds
in / from other branches of ACBL. Askari bank provides online facility to all its
branches.
 ONLINE CHARGES

Amount of Deposits Charges ( Rs)

25,000 or below 50

25,000 - 200,000 100

200,001 - 500,000 250

500,001 - 2000,000 500

Above 2000,000 750

LOKERS

Askari bank offers facility of lockers to its customers.

There are three sizes of lockers available:

CHARGES

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

Large 2500

Medium 1500

Small 1000
 CREDIT DEPARTMENT

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

way in which our economic system operates, we must recall this point
that most exchange transactions in this system are carried on today
without the use of actual money, i.e. Those are carried on by means of
credit and credit instruments rather than money. While money still forms
the basis of credit and deferred payments, it is necessary to examine the
nature of credit operations, and the instruments and institutions trough,
which these operations are carried on, in considerable detail.

THE NATURE OF CREDIT

On the surface, credit operation appears to be of many kinds, but they all have a
fundamental similarity. In credit transactions, one party to the transaction, the
creditor, turns over to the debtor a certain amount of money, commodities or
services at the present time and relies on the debtor to repay an equivalent
amount, usually the money in the future plus interest at some future time.

THE BASIS OF CREDIT

There has been much discussion, concerning the essential basis of credit or
borrowing operation. Some writers on the subject have stoutly insisted that
confidence is the basis of all grants of credit, that if one did not have confidence
that the borrower would repay a loan one would never thinks of making the
loan, save on grounds of friendship of philanthropy. Others have held property,
rather than confidence is the basis of all genuine credit transactions. Some insist
that character is the essential factor, while still other writers have indulged in a
propensity of alliteration by sating that the bases of credit are character, capital
and capacity; or the man and the means; or reliability and resources.
TYPES OF CREDIT

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

status of eh debtor, according to the status of the creditor, according to the time
for which the credit is granted, and so on; but the most fruitful classification
usually indicates the use to which the credit is put.

1.Public and Private Credit:

In the first place, a distinction is usually made between public and private credit.
Public credit comprises the promises to pay off governmental bodies, that is,
their acquisition of goods in the present in return for promises to pay in future;
and private credit refers to the promises to pay all non-government debtors.
Among the sub-classes of private credit, the most significant are band credit,
commercial credit and consumption credit.

2. Band Credit:
In Comprehends all kinds of promises to pay off banking institutions, including
demand deposits, time deposits, notes, bankers, acceptances, cash, letters of
credit, debentures, and bonded obligations. Frequently, the term bank credit is
restricted in use to refer only to the demand deposit liabilities of the commercial
banks, and one must constantly be on guard to recognize the employment of the
term in this restricted sense. As a sub-class of bank credit, central bank credit is
of outstanding importance in modern monetary system it includes the central
bank's circulating notes and its deposit liabilities, the better consisting chiefly of
the reserve balances of the commercial banks.

3. Investment Credit.

The credit structure, business if found upon examination to consist very largely
of two forms of credit. Investment credit is extended through loans, the
proceeds of which are put into the fixed assets of a business enterprise. If the
owners of business cannot themselves furnish all of the capital necessary for
investments in land, buildings and equipment. Obviously what they need is loans
of capital running over a considerable period of years.

4. Commercial credit

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

business periodically ask for credit in the form of short term loans. Commercial
credit is business supplier for current business operations, such as
manufacturing and marketing of goods. It often take more business capital than
business can themselves supply to pay for raw materials, to make the outlays
for wages and to carry inventories of finished goods until they can be converted
into cash. To help finance such operations short-term loans usually running from
thirty days to six months are negotiated. Commercial loans like investment loan
must ultimately be paid out of accumulated earnings of a business. But if the
business earnings are of immediate future, such loans can be safely made and
promptly paid. Commercial loans are base done quick assets, such as raw
material and finished goods, which are in constant process of liquidation and
thereby provide the cash with to extinguish loans.

5. Consumers credit and producers’ credit

Consumers credit involves advance of purchasing power for economic goods to

consumers for consumption purposes. Its distinguish characteristic lies in the
factor that the things acquired by the debtors as result of the loans are not
supposed to furnish them with the means of repaying the loans the loan must be
repaid out of the income of the borrowers.

TYPES OF CREDIT INSTRUMENTS

There are various types of credit instruments. The more important credit
instruments are as follows:

Bills of exchange:

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

writing, containing an unconditional order, signed by the maker, directing a
certain person, to pay certain sum of money, only to or to the order of a certain
person, or to the bearer the instrument".

Cheque:

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

expresses to be payable otherwise than on demand."

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

Bearer cheque

Order cheque

Open cheque

Crossed cheque

Marked cheque

Drafts:

These are bills of exchange issued by a banker on his branch office. Banks draft
like bills of exchange, are of great importance in the financing of trade,
especially foreign trade

Promissory note:
It is an instrument in writing containing an unconditional undertaking, signed by
the maker, to pay the certain sum of money only to or to the order of a certain
person to the bearer of the instrument. a promissory note in order to be the so,
must fulfill all conditions.

Letter of credit:

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

requesting the letter to pay any amount of money up to a certain limit to the
person write a letter named in the letter or in whose favor the letter is written.
In this letter generally a date is fixed upto only the addressee should make
which advances. Thus a letter of credit remains in force upto a certain date only.
Generally banks grant this letter of credit.

FOREIGN EXCHANGE DEPARTMENT

The term "foreign exchange" is used to denote either a foreign currency or the
rate at which one currency is converted into another or the means & methods by
which one currency is exchanged for another.

Functions of Foreign Currency Account Department

Foreign exchange department performs following functions:

• Foreign Bills for collection (FBC)

• Foreign telegraphic transfer (FTT)
• Foreign Demand Draft (FDD)
• TDR
• Issuance of Proceed realization certificate
 • Inward remittances
• Daily Reporting

Requirement of Funds Transfer

For transfer of fund in foreign currency, a person must have his account in
foreign exchange in the bank.

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

$500.

Types of currency Interest p.a.

Dollar .25%

Pound sterling 2%

Euro 1%

THE CORPORATE AND INVESTMENT BANKING

DIVISIONS

CBD & IBD are strongly positioned across priority markets with a distinct
strategy for developing corporate business. Our strategic framework generates
sustainable returns based on strong market presence and financial solutions
ranging from debt and equity market transactions to syndicate finance, and from
transaction banking to corporate finance advisory services.

2004 was challenging year due to historic lows in interest rates, particularly for
corporate business. The Corporate Banking Division (CBD) undertook a number
of dept re-pricing swap transactions, aimed at reducing the financial burden of
its key client portfolios and also managed advisory and loan arrangement
activities. The major new relationships cover telecommunications, oil and gas,
and chemicals sectors. CBD has dedicated marketing and support units
functioning at Karachi and Lahore. In order to enhance focus on relationship
management, and service quality, more dedicated staff is being assigned.

The investment banking activity mainly covers, debt / capital markets, advisory
services and trading (both equities and derivatives).After the initial start-up
phase, the capital market desk, based at Karachi, increased the volume of
capital market related transactions.

The corporate and investment banking will continue to play a major role in loan
syndications, structured financing and debt / capital raising transactions with the
objective of providing entire range of corporate and investment banking
solutions to its valued clients under one umbrella.

AWARD AND ACHIEVEMENTS

In 1994, 1996 and 1997 the bank received Euro money and Asia money awards.
Askari has A1+ rating for short-term obligations the highest possible for the
category, while the long-term rating stands
at AA. Askari Bank Won the prestigious “Best
presented Annual Accounts” awards for 2000
and 2001 from the institute of cost and Management Accountants of Pakistan,
for the services sector.

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

'The Best Retail Bank of Pakistan 2004'

For the past four years, the Bank has received prizes from the South Asian
Federalism of Accountants for “The Best presented Annual Accounts” for the
financial sector, in the SAARC region.

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

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

basis.
ii) First bank with a nation-wide ATM network
First bank to offer Internet Banking services

First Bank to offer e-commerce solutions.

The Askari Commercial Bank Limited has been declared “The Best Bank in
Pakistan” by the Global finance, an international financial magazine of high
repute as a result of their latest study of Banks in the Emerging Markets. This is
the 2nd consecutive year that the magazine has selected their bank for this
prestigious Award.

The award will be presented to the Bank on the occasion of the World
Bank IMF meetings in Washington this autumn. While the magazine will be
formally announcing the names of the award winning Banks in its May 2002
issue, they have already issued press information for the international media,
giving names of the award winning banks, including the Askari commercial Bank
limited.

Over the years, we have received several awards for the quality of our
banking service to individuals and corporate.
These Include:

 Best Commercial Bank Consumer Choice award 2005 by The Consumers

Association of Pakistan
 Best Retail Bank in Pakistan award 2004 & 2005 by The Asian Banker
 Best Corporate Report 1st prize awarded for 2000, 01, 03 & 04 by
Institute of Chartered Accountants of Pakistan (ICAP) and institute of Cost
& Management of Accountants of Pakistan (ICMAP)
 Corporate Excellence awards for 2002 & 03 The Management
Association of Pakistan (MAP)
 Best Corporate / Institutional Internet Bank in Pakistan award for
2004 by Global Finance magazine
 Best Consumer Internet Bank in Pakistan
award for 2002, 03 & 04 by Global Finance magazine
 The Best Bank in Pakistan
award for 2001 & 02 by Global Finance Magazine
 Best Presented Accounts
Ranking prizes awarded from 1997 to 2002 by South Asian Federation of
Accountants (SAFA)
 Commercial Bank of the Year
award for 1994 & 96 by Asia money magazine
 Best Domestic Bank in Pakistan
award for 1995 by Euro money

PRODUCTS AND SERVICES

 PRODUCT AND SERVICES

The product & services of askari commercial bank limited are developed
keeping in view the customers needs & wants, & the expectation that the
customer attaches with its financial institutions.

A product ACBL includes all those services which customer normally required for
effectively managing his business.
ACBL offers the following financial services to its customers.

1) Deposits
2) Advances
3) Products
4) International banking services
5) Agency services to customers

1) DEPOSITS

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

accepts deposits in both local & foreign currency.

Local currency deposits

• Current Account
• PLS Saving Account
 • Term Deposit
• Notice Deposit
• Askari Faida Account
• Askari Special Deposit Account
• Value Plus Saving Account
• Askari Advantage

Current Account

A current account is a running & active account, which may be operated

upon any number of transactions during a working day. The banker
undertakes to repay these on demand & therefore theses account are
called demand deposits.

Transaction fee

The bank charges no transaction fees if the minimum balance

requirement is met. However, if the average balance falls below the min.
balance then the fees is charged at the rate of Rs. 10 per transaction.

Saving Accounts

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

that they can meet their future contingencies, as the objective of such
account is to promoting the habit of thrift among people, the bank impose
certain restrictions on withdrawals from the saving accounts.

Transaction fees

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

2. ADVANCES

Advances are major sources of earning of income for commercial banks. Banks attracts surplus balances
from the customers at low interest rates & makes advances at higher interest rates to the individuals or
business firms.

ACBL offer these facilities in two forms:

• Funded facilities
• Non- Funded facilities

Funded facilities

In funded facilities the bank actually advance money against further repayment.
These facilities are known as cash credits.

Non- Funded facilities

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

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

These facilities includes:

1. Guarantee
2. Latter of credit
 Irrevocable letter of credit
 Revocable letter of credit
 Sight letter of credit
 Usance letter of credit

3.PRODUCTS

PERSONAL FINANCE

Personal Finance is a parameter driven product for catering to the needs of the
general public belonging to different segments. One can avail unlimited
opportunities through Askari Bank's Personal Finance. With unmatched finance
features in terms of loan amount, payback period and most affordable monthly
installments, Askari Bank's Personal Finance makes sure that one gets the most
out of his/her loan. Once a good credit history is established, the door to
opportunity opens much wider.

MORTGAGE FINANCE
Askari "Mortgage Finance" offers the convenience of owning a house of
choice, while living in it at its rental value. The installment plan has
carefully designed to suit both the budget & accommodation
requirements. It has been designed for enhancing financing facility
initially for employees of corporate companies for purchase/ construction/
renovation of house. The maximum financing amount is Rs. 10 million
with a repayment tenure upto 20 years.

BUSINESS FINANCE

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

ACBL is providing loans to small and medium size business enterprises under
Askari Bank's Business Finance Scheme. Our goal is to offer a loan, which
enables business community to receive the financing required by them based on
their cash flows. Ore valued customers can enjoy the convenience of getting
financing on attractive terms with the minimum processing turnaround time.

ASKCAR (Car Finance)

Yet another of our products, Askar offers the most convenient and
affordable vehicle- financing scheme, which provides our valuable
customers an opportunity to own a brand new vehicle of their choice.
With minimum down payment, lowest insurance rates and widest range of
available car makes and models, Askcar offers the best value to our
esteemed customers.

ASKCARD
ASKCARD means freedom, comfort, convenience and security, so that you can
have retail transactions with complete peace of mind. ASKCARD is your new
shopping companion which enhances your quality of life by letting you do
shopping, dine at restaurants, pay your utility bills, transfer funds, withdraw and
deposit cash through ATM anywhere, anytime.

TRAVELLER CHEQUES

The range of our products and value added services enhances with
introduction of Rupee Travellers Cheques (RTCs) launched in March 2002.
In spite of our constraint on issuing higher denomination of RTCs against
restrictions imposed by the Central Bank of Pakistan we have been
striving to attain our shares with sizeable portfolio. Total volume handled
by the department during the year 2004 is Rs. 798 Million.

ASKPOWER

Askpower represents a useful tool with which to make secure payments

without the need to have any account, a debit or credit card. This card
comes with a number of unique features and diversified usage capabilities
like cash withdrawal from ATMs, payment of utility bills through ATMs and
internet Banking, transfer of balance to another card and refill option. The
prepaid card is enjoying a great success all over the country.

VALUE PLUS
The first liability product launched by this unit is showing a remarkable
acceptability in the market. The growth of this product is witnessed by its share,
which has presently reached at Rs. 1,079 Million even after lowering down the
profit rates due to sufficient liquidity in the market.

ASKARI MASTER CARD

NO JOINING FEE

When you successfully apply for an Askari MasterCard, we will not charge you
any Joining Fee. It’s almost like you are getting it for FREE!

GLOBAL ACCEPTABILITY

Your card provides you with service at thousands of locations in Pakistan, and at
over 23 million establishments worldwide. As an added convenience, you will
have the benefit of receiving your monthly billing in Pak Rupees, regardless of
the currency of purchase.

Think of the freedom this gives you!

24-HOUR CUSTOMER SERVICE

With Askari MasterCard, you are always a phone call away from the assistance
you need. To speak to one of our friendly Customer Service representatives,
please call our UAN 111-000-787 for Karachi, Lahore or Rawalpindi/ Islamabad.

LOW SERVICE CHARGES

Your Askari MasterCard provides you the experience of revolving your spending
at comparatively low service charges. In addition, the same rate also applies to
cash advance obtained on your Askari MasterCard.

ZERO LOSS LIABILITY

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

Customer Services UAN 111-000-787 for Karachi, Lahore and
Rawalpindi/Islamabad. Once you have registered the loss of your credit card,
your liability against its fraudulent use will be limited and we will send a
replacement card within 48 hours of reporting.

SUPPLEMENTARY CARDS FOR YOUR LOVED ONES

Save yourself the inconvenience of applying for a separate Askari MasterCard

for your loved ones by requesting supplementary cards when you apply for your
own card. You will receive a consolidated monthly account statement, which
covers all the cards. This offer is available for your loved ones over 18 years of
age.

CASH ADVANCE FACILITY

Cash advance facility is available for Askari MasterCard holders. You can get up
to 80% of your sanctioned credit limit as cash advance in Pakistan or anywhere
else in the world. The facility is available at all ATMs displaying the Cirrus logo
around the world and in Pakistan. You may also avail this facility at designated
branches of Askari Commercial Bank, during banking hours.

BALANCE TRANSFER FACILITY

With Askari MasterCard, you can avail an incredible offer of a Balance Transfer
at the exclusive rate of just 1.5%* per month.

A special privilege exclusively for Askari MasterCard members

FREE TRAVEL INSURANCE

Just purchase your travel tickets on Askari MasterCard and you are automatically
covered under our Travel Insurance Plan (in case of personal accident resulting
in death or permanent disablement) for up to Rs.8,000,000/- on a Gold Card and
Rs.4,000,000/- on a Silver Card.

STRESS FREE TRAVELLING

When you purchase your airline tickets for international travel on Askari
MasterCard you get:

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

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

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

(*Certain conditions apply)

COMPLIMENTARY CIP & RAWAL LOUNGE FACILITIES

The next time you travel internationally, be a privileged guest at the CIP lounge
of Quaid-e-Azam International Airport, Karachi and RAWAL Lounge of Islamabad
International Airport. Your Askari MasterCard entitles you to a host of
Complimentary services like;

· Snacks and Beverages

· Free Internet, phone and fax facilities

· Newspapers and magazines

· Flight details information

· Cellular phone charger connections

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

DISCOUNT AT AVARI HOTELS

Your Askari MasterCard entitles you to the following exciting discounts*

at Avari Hotel in Karachi, Lahore and Dubai:
· 60% on Room Rack Rates

· 10% on Restaurants

· 15% on Hall Rentals

· 15% on Family Health Club membership only

· 15% at the Business Center

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

with Hall Rentals

· 10% at Beauty Saloon

· 10% on Rent a Car

 *(Where available. Certain conditions apply)

AGRICULTURE BANKING

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

diverse geographical and climatic conditions the country has tremendous
potential for growth and development in agriculture. However, adequate and
timely financial assistance to the farmers will improve production potential of
agriculture sector in the country. The modern concept of agricultural credit
envisages establishment of an efficient institutional credit system to serve as a
package of credit, supplies and knowledge for the overall strength of the farmers
who at present suffer from low productivity and financial insecurity. A successful
credit evaluation system, therefore, should have the basic ingredients to provide
adequate amount at the right time and in the right form to help farmers in
making a productive use of loan funds.

ASKARI KISSAN AGRICULTURE FINANCE PROGRAM

The Askari Kissan Agriculture Finance Program (AKAFP) has been designed to
meet ON FARM / OFF FARM credit requirements of farmers on the most
convenient, flexible, easy terms and conditions. The program features:

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

Repay and borrow at your convenience on revolving credit basis at lowest mark-
up rates renewal able after three years.

Convenient repayment terms based on cash flow abilities.

Availability of leased Tractors / Transport without Land / Collateral.

NO HIDDEN COST.

Availability of interest free package for inputs and tractors etc.

No Pre-adjustment penalties.

Earn prompt payment Bonuses and reduce financial costs.

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

borrowers.

PRODUCTS

 Askari Kissan Ever Green Finance

 Askari Kissan Tractor Finance
 Askari Kissan Aabpashi Finance
 Askari Kissan Livestock Development Finance
 Askari Kissan Farm Mechanization Finance
 Askari Kissan Farm Transport Finance
 Ask Card

OBJECTIVES OF FINANCIAL STSEMENTS

“Financial statements are like a firm perfume – to be sniffed but not to

swallowed.” “Abraham Brillof”

The firm itself and outside providers of capital – creditors, and investors – all take
benefit from the firm’s financial statements. The type of analysis varies according to
the specific interest of the party involved. Similarly objectives of the financial
statements analysis vary from person to person.
Trade creditors are primarily interested in the liquidity of the firm. Their claims
are short terms, and the ability of the firm to pay their claims quickly is best
judged by an analysis of the firm’s liquidity.

Bondholders are more interested in the cash flow ability of the firm to service a
debt over a long period of time. They may evaluate their ability by analyzing the
capital statement of the firm.

Investors usually focus on the profitability of the firm. They would be concerned
with the financial conditions insofar as it’s affects the ability of the firm to pay
dividends and avoid bankruptcy.

Management employees financial analysis for the purpose of internal control and
to better provide what capital suppliers seek in financial conditions and
performance from the firm

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

control effectively.

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

Finally, financial statement analysis deals with the outcomes of the past
decisions and leads to the future planning.

STAFF RETIREMENT BENEFITS

DEFINED BENEFIT PLAN

The Bank operates an approved funded gratuity scheme for all its permanent
employees. Contributions are made in accordance with the actuarial
recommendation. The actuarial valuation is carried out periodically using
“Projected Unit Credit Actuarial Cost Method”. The actuarial gains/losses of one
accounting period are recognized in the following accounting period.
DEFINED CONTRIBUTION PLAN

The Bank operates a recognized provident funds scheme for all its permanent
employees for which equal monthly contributions are made both by the Bank
and by the employees to the fund at the rate of 8.33% of basic salaries of the
employees.

COMPENSATED ABSENCES

The bank grants compensated absence of 15 days per annum to all its
permanent employees. Annual provision for liabilities towards vested
compensated absences is made on the basis of 1st drawn basic salary.

FOREIGN CURRENCIES

Foreign currencies are translated into Rupees at exchange rats on the date of
transaction. Assets and liabilities in foreign currencies are translated into Pak
Rupees at the rates of exchange approximating those ruling at the Balance
Sheet date except those covered by forward exchange contracts, which are
converted at contracted rates. Exchange gains and losses are taken to the profit
and loss account.

PROVISION OF CONTINGENCIES

Provision for guarantee claims and other off balance sheet obligations is
recognized when intimated and reasonable certainty exists for the Bank to settle
the obligations. Debating the customer’s account recognizes expected
recoveries. Charge to profit and loss account is stated net off expected
recoveries.
OFF-SETTING

Financial assets and financial liabilities are only offset and the net amount is
reported in the financial statements when there is a legally enforceable right to
set-off the recognized amount and the bank intend either to settle on a net
basis, or to realize the assets and to settle the liabilities simultaneously.

BALANCE SHEET
AND
INCOME STATMENT
 BALANCE SHEET AS ON
DEC.31 2004 2004 2003
ASSETS:

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

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

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

Investments 17,239,157 22,104,425

Advances 69,938,041 44,777,538

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

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

107,167,54
1 85,386,902

LIABILITIES:

Bills payable 1,227,093 973,703

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

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

Sub-ordinated loans 1,000,000

Liabilities against assets subject to finance

lease 14,159 37,350

Other liabilities 1,282,981 962,592

Deferred Tax Liabilities 526,865 806,753

101,151,448 80,340,060

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

Represented by:

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

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

Un remitted profits

5,573,149 3,901,279

Surplus on revaluation of securities-net of

tax 442,944 1,145,563

6,016,093 5,046,842
ASKARI COMMERCIAL BANK LIMITED
PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31ST DECEMBER, 2004

2004 2003

(Rupees in
thousand)

4,487,20
Mark-up/return / interest earned 6 4,073,715

1,117,20
Mark-up/return / interest expensed 6 1,379,609

3,370,00
Net mark-up / interest income 0 2,694,106

Provision against non performing loans and

advances 277,398 308,528

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

Bad debts written off directly 7 -

315,471 308,528

3,054,52
Net mark-up / interest income after provisions 9 2,385,578

NON MARK- UP/ INTEREST INCOME

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

Dividend income 26,318 37,658

Income from dealing foreign currencies 180,992 112,808

Other income 776,230 278,512

1,633,52
Total non mark-up / interest income 8 953,753

4,688,05
7 3,339,331

NON MARK-UP / INTEREST INCOME

1,845,17
Administrative expense 9 1,436,304
Other provisions / write offs - -

Other charges 138 1,227

1,845,31
Total non mark-up / interest expense 7 1,437,531

2,842,74
0 1,901,800

Extra ordinary unusual items - -

2,842,74
PROFIT BEFORE TAXATION 0 1,901,800

Taxation – Current 876,089 873,639

Prior years - -

Deferred 43,611 (74,904)

919,700 798,735

1,923,04
Profit after Taxation 0 1,103,065

Inappropriate profit brought forward - -

1,923,04
Profit available for appropriation 0 1,103,065

APPROPRIATIONS:

Transfer to:

Statutory reserves 384,608 220,613

Capital reserves (reserves for the issue of bonus

shares) 251,170 114,168

1,036,09
Revenues Reserves 2 539,948

Proposed cash dividend 251,170 228,336

1,923,04
0 1,103,065

Un-appropriated profit carried forward - -

Basic earning per share - (Rupees) 15.31 8.78

TREND ANALYSIS
(Horizontal Analysis)

FINANCIAL SUMMARY
Trend Analysis, also called Horizontal Analysis of the financial
statements is one directional- upward or downward analysis and involves
the computation of the percentage relationship that each statement item
bears to the same item in the base year

2000 2001 2002 2003 2004

Profitability (Rs in million)

Total Income 3840 5047 5704 5028 6121

Interest income 3213 4251 4858 4074 4487

Interest exp 2274 2902 3017 1380 1117

Fee, comm.
506 677 299 638 831
Exch.Income

Other income 122 119 247 317 802

Spread 939 1349 1841 2694 3370

Operating expenses 680 854 1093 1438 1845

Operating Profit 886 1291 1595 2210 3158

Non performing
134 283 351 308 315
assets

Profit b/f tax 752 1008 1244 1902 2843

Taxation 436 458 557 799 920

Profit after taxation 316 551 687 1103 1923

The operating expenses of the bank has been increased with sharp margin, the
ACBL is newly born bank of only 14 years old and is growing rapidly so, we can
say that the reason behind the rapid increase of its operating expenses may be
the expansion of business. In order to get handsome profit the expenses are
necessary as it is shown by the fact that if the bank’s operating expenses have
been increased then, there is also an increase in the profit before income tax
and profit after income tax.
 SHAREHOLDER’S FUNDS

2000 2001 2002 2003 2004

Shareholder’s
(Rs in million)
Funds

Total share
2155 2579 4173 5047 6016
holders fund

Share capital 986 1036 1087 1142 1256

Reserves 1229 1521 1940 2760 4317

Surplus on ROA (60) 22 1146 1145 443

TREND ANALYSIS
 2000 2001 2002 2003 2004

Shareholder’s
%AGE
Funds

Total share
100 119.6 193.6 234.2 279.2
holders fund

Share capital 100 105.0 110.2 115.8 127.4

Reserves 100 123.7 157.8 224.6 351.2

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

running on profit, therefore, the business take interest in this project and wish to
participate in it. The bank’s share capital and reserves are also increasing with
the expansion of business.

LIABILITIES
 2000 2001 2002 2003 2004

Liabilities (Rs. in million)

Customers
30360 41200 51732 61657 83319
deposits

Refinance
2882 3222 3392 7329 9777
borrowings

Sub-ordinated
- - - - 1000
loans

Other
3058 3980 11016 11354 7055
liabilities
TREND ANALYSIS
2000 2001 2002 2003 2004

Liabilities PERCENTAGE

Customers
100 135.7 170.4 203.0 274.4
deposits

Refinance
100 111.7 117.7 254.3 340.0
borrowings

Other
100 130.1 360.2 371.3 230.7
liabilities

New if we analyze the liability side of the bank we see that the bank’s deposits
are going on increasing since its birth which is a very healthy sign for the bank
as the bank’s basic business is to deal in money. The increase in deposits show
that the people have interest in the bank and deposit their fund in the bank
without any hesitation. However it has not been mentioned here that how many
of the deposit are current and how many of them have fixed nature but we can
say that it is a very important source of the bank to earn profit. As the banks
usually earn through interest or mark ups imposed on the deposits they keep
with themselves.

ASSETS

2000 2001 2002 2003 2004

Assets (Rs. in million)

Advances 17893 23292 30035 44778 69938

Investments 8651 11706 26737 22104 17239

Cash, short funds and

statutory deposits with 10056 13436 10061 15099 15936
SBP

Operating fixed assets 641 723 1663 1980 2595

Other assets 1213 1824 1817 1426 1460

Total assets 38454 50980 70313 85387 107168

Now we will discuss the assets side of the bank. The liquidity position is
essentially important for the bank, as it must have all the time sufficient funds to
meet the demands for the money that may be made on it. It is the protection
against the risk that losses may develop if banks are forced to sell or liquidate
creditworthy assets in an adverse market. The current liquidity position of the
bank has improved as indicated by the percentages shown in the table below.

TREND ANALYSIS

2000 2001 2002 2003 2004

Assets (Rs. in million)

Advances 100 130.2 167.8 250.2 390.9

Investments 100 135.3 309.1 255.5 199.3

Cash, short funds and

statutory deposits with 100 133.6 100.0 150.1 158.4
SBP

Operating fixed assets 100 112.7 259.4 308.9 404.8

Other assets 100 150.3 149.8 117.5 120.4

Total assets 100 132.5 182.8 222.0 278.7

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

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

The property plant and equipment is the kind of asset, which is required by the
service business only to increase its network therefore the ratio of the bank’s
plant and equipments as compared with the other important particulars of the
assets is high. But here one thing should be mentioned that it is the policy of the
bank not to start the business on the rented premises. The bank has mostly
started business on its own premises. The other assets of the bank are also
showing a good amount that means that bank is in position to earn money from
every available source.

BUSINESS TRANSACTED

2000 2001 2002 2003 2004

Business
(Rs. In billion)
Transacted

Imports 26.2 32.0 40.2 48.7 75.2

Exports 30.6 38.8 47.3 56.8 70.1

Guarantees 4.8 6.2 14.2 14.4 25.3

TREND ANALYSIS

2000 2001 2002 2003 2004

Business
(PERCENTAGE)
Transacted

Imports 100 122.1 153.4 185.8 287.0

Exports 100 126.8 154.5 185.6 229.1

Guarantees 100 129.2 295.8 300.0 527.1

Now we will discuss the business transacted opt the bank in terms of import and
exports we see that imports and exports through ACBL are continuously on
increase which is a very health sign for the banking business as the banks earn
major portion of their profit through imports and exports. It shows the efficiency
of the credit department. The reasons for this improvement may be

• Careful scrutinizing of all the documents

• Intelligent corresponding with the customer
• True 7 C’s analysis of the customer such as his business and moral
character
• Granting facility to selected customers who rate well on the selected
criteria for loan disbursement.
This improvement in imports and exports is extremely large if we compare it
with the figures of 2000.

COMMON SIZE ANALYSIS

(VERTICAL ANALYSIS)
 COMMON SIZE ANALYSIS

An analysis of percentage financial statements where all balance sheet items are
divided by total assets and all income statements items are divided by net sales
or revenues.
 In addition to other financial ratios over time, it is often useful to express
balance sheet items and income statement items as percentages. Common –size
Analysis, also called Vertical Analysis, or Component Percentage, or 100 percent
Statements as each statement is reduced to the total of 100 and each individual
item is stated as a percentage of the total of 100.

2000 2001 2002 2003 2004

Profitability (Vertical Analysis)

Total Income 100 100 100 100 100

Interest income 83.6 84.2 85.2 81.0 73.3

Interest exp 59.2 57.5 52.9 27.4 18.2

Fee, comm.
13.2 13.4 5.24 12.7 13.6
Exch.Income

Other income 3.18 3.94 4.33 6.30 13.1

Spread 24.4 26.7 32.3 53.6 55.0

Operating expenses 17.7 16.9 19.2 28.6 30.1

Operating Profit 23.1 25.6 27.9 43.9 51.6

Non performing
3.49 5.61 6.15 6.12 5.15
assets

Profit b/f tax 19.6 19.9 21.8 37.8 46.4

Taxation 11.3 9.07 9.76 15.9 15.0

Profit after taxation 8.23 10.9 12.0 21.9 31.4

 INTERPRETATION

The most important component of any profit and loss account of a banking
concern is its mark up expenses it has to pay for servicing the depositors. The
foregoing data shows that the markup expenses absorb about 85% of the
revenues (a favorable position). This shows that the bank has been successful in

• Selling larger volumes of higher profit items.

• Increasing economy in procurement
• Adopting other effective and more profitable deposit raising policies at a
lower lost.
The interest expense of the ACBL is 18.2% of the total revenue of the bank in
2004, which is remarkable as the bank is earning about 85% of the revenue as
interest income. We have handsome margin between the interest income and
the interest expense of the bank. The data shows that the bank’s other income
%age is not as much high rather it is very low which shows that the bank does
not rely on other sources for its profit but it earns major portion of its income
through its basic business.

The bank seems to have increased control over its operating expenses, i.e. non-
mark up expenses as these now absorb only 30% on average of the total
revenues, that is a very healthy sign for the bank. In the net shell, it would not
be wrong to say that the bank has improved its financial position and operating
efficiency over the last years.

The profit after tax is showing about 31.4% of the total revenues of the bank
although the margin of profit is not too much high but it is shown from the data
that the bank is going on increasing its profit after tax over the year.

LIABILITIES AND OWNER’S EQUITY

(Vertical Analysis)
 2000 2001 2002 2003 2004

(Vertical Analysis)

Total share
5.29 4.82 5.69 5.65 5.38
holders fund

Share capital 2.42 1.93 1.48 1.28 1.12

Reserves 3.02 2.84 2.64 3.09 3.86

Customers
74.6 76.9 70.5 69.0 74.5
deposits

Refinance
7.08 6.02 4.62 8.21 8.74
borrowings

Other liabilities 7.52 7.43 15.0 12.7 6.31

Total 100 100 100 100 100

INTERPRETATION
 The liabilities and owner’s equity are side components of the bank
showing the relationship as compared with the total of the liabilities and owner’s
equity. The bank’s shareholders fund is showing percentage more than the share
capital, which shows that the bank own capital is lees than the shareholders
capital. However it is also evident from the data that the %age is decreasing of
the overall %age of the share capital over the last two or three years. But it is
also seen that the share capital %age as compared to the total liabilities of the
bank has also been decreased. So we can say that the same conditions are
prevailing regarding the share capital and the shareholders fund.

Among the assets of the bank the highest %age is of the customer deposits. The
bank’s management seems to have adopted a very effective marketing policy, as
the deposits of the bank constitute about 75% of the total assets of the bank. In
the last year, this figure stood at 69% of the total resource. This shows the high
level of products and associated services provided by the bank.

ASSETS
(Vertical Analysis)
 2000 2001 2002 2003 2004

Assets (Vertical Analysis)

Advances 46.5 45.7 42.7 52.4 65.2

Investments 22.4 22.9 38.0 25.8 16.1

Cash, short funds and

statutory deposits with 26.1 26.3 14.3 17.6 14.8
SBP

Operating fixed assets 1.67 1.42 2.36 2.32 2.42

Other assets 3.15 3.57 2.58 1.67 1.36

Total assets 100 100 100 100 100

INTERPRETATION

On one hand Advances have also increased from 52% in the previous year to
65% in the current year which may indicate that the bank utilize the funds
raised in the other activities primarily lending to the financial institutions as it is
the most secure source of financing available in the economy.

Cash, short term funds and statutory deposits with SBP are also increasing. The
property plant and equipment of the bank is showing a little portion of the
bank’s total assets.

In the last the bank is over all showing a good financial health and is going on
healthy tracks in near future it has no risk of bankruptcy. Although the bank is
showing good results but we can’t say that these are the best conditions
prevailing in the bank as we are unaware of the market conditions and can’t
compare it with other banks.

RATIO ANALYSIS

 PROFITABILITY RATIOS
 LIQUIDITY RATIOS
 ASSET QUALITY RATIOS
 PORTFOLIO MANAGEMENT
 CAPITAL ADEQUACY RATIO
 CAPITAL GEARING RATIOS
 PROFITABILITY RATIOS

The continued viability of any bank depends on its ability to earn an

appropriate return on its assets and capital. Good earning performance
enables a bank to fund its operations, remain competitive in the market
and increase or decrease in market funds.

RETURN ON CAPITAL FUND

Formula = Net mark up Received

Capital Funds

2004 = 3370000 = 60.47%

5573149

2003 = 2694106 = 69.06%

3901279

2002 = 1638357 = 54.13%

3026550
INTERPRETATION

This ratio relates the net profits to the amount of capital funds that have been
employed in making that profit.

The above given ratios suggest that the profitability of the bank has increased
very in the year 2003 indicating more profitable operations of the bank. While
discussing the trend analysis, we mentioned that the mark up charges have
increased in some proportion but the mark up earned by the bank resulting
increase in the profit available on the capital funds employed. This ratio showing
a very good financial position of the bank.

RETURN ON INVESTMENT

Formula = Net income after taxes

Total Assets

2004 = 3370000 = 1.79%

5573149

2003 = 1103065 = 1.29%

85386902

2002 = 686994 = 0.98%

70313073
INTERPRETATION

This ratio indicates the profit earned by the bank on the resources employed. As
far as ACBL is concerned, we observe an increase in the utilization of the
resources. It has increased to 1.29 % in the year 2003 from 0.98 % in the year
2002, It has increased to 1.79 % in the year 2004 from 1.29 % in the year
2003, the reason behind the slight increase in the increase of profit may be due
to the efforts of the management.

RETURN ON RISK ASSETS

Formula = Net income after taxes

Total risk assets

2004 = 1923040 = 2.75%

 69938041

2003 = 1103065 = 2.46%

44777538

2002 = 550051 = 2.36%

23291367

INTERPRETATION

This ratio, with some fluctuation in 2003 came up from 2.46% in 2003 to2.75 %
in the year 2004. It is indicating active utilization in the form of advances. The
bank is finding it difficult to keep the level of its expenses less in proportion to
the advances it has disbursed. Lending, no doubt is the core function of a
banking concern. But the bank should find out effective ways of credit provisions
affecting less on profitability of the operations. Non-mark up revenues should
also be increased in the face of lower credit disbursements resulting in more.
RETURN ON DEPOSITS

Formula = Net income before taxes

Total Deposits

2004 = 2842740 = 3.41%

83318795

2003 = 1901800 = 3.08%

61657000

2002 = 1244022 = 2.47%

41200166

INTERPRETATION

Interpret This ratio indicates to what extent deposits which represent funds
mobilization on the part of the bank contribute towards income generation.
Although the other ratios regarding the profitability are showing satisfactory
position of the bank but still bank need to increase its utilization of resources in
order to increase its profitability because the banks have to pay heavy taxes on
their profit.

OPERATING EXPENSES TO NET REVENUE

Formula = Operating Expenses

Net Revenue

(Rs. In million)

2004 = 1845 = 30.1%

6121

2003 = 1438 = 28.6%

5028

2002 = 1093 = 19.2%

5704
INTERPRETATION

This ratio signifies the proportion of the revenues that is used to cover the
operating expenses of the bank. The ratios calculated above gives a good picture
of the bank’s operations. This ratio is increasing from year 2002 to 2004 and
giving a bright picture of the profits for the bank. With respect to the banking
expansions this ratio is showing a very good picture as we know the expansions
required lot of expansions, although the operating expenses of the bank are
increasing as we have seen in the trend ratio but their proportion of increase is
not alarming.

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

low level of profitability but there is a continuous push in the profits and there
are chances that the bank will reach at a point of high liquidity and profitability.
 LIQUIDITY RATIOS

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

nearly depleted, just before the start of the rainy season. Or it may be
inadequate, although three quarters full just before the summer drought.

Liquidity can be defined as:

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

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

ADVANCES TO DEPOSITS RATIO

Formula = Advances

Total Deposits

2004 = 69938041 = 83.9%

83318795

2003 = 44778000 = 58.6%

61657000
2002 = 30035484 = 72.62%

51731506

INTERPRETATION

It demonstrate the degree to which bank has already used up its available
resources to accommodate the credit needs of its customers.

This ratio, a comparison of funds generation and its funds mobilization, indicates
the total loans sanctioned by the bank in relation to total amount of money
deposited with the bank stands at 83.9% compared with the last year figure of
58.6%. This shows that the bank has greater potential to advance additional
loans. Total loan able funds roughly measured by the deposits are sufficient to
enable the bank to make additional loans without recourse to more or less
continuous borrowing. At present, the bank has got a relatively small amount of
advances as compared with its deposits raised. One reason for fewer advances is
the cautious and selective approach on the part of the management while
deciding upon credit proposals.

DUE FROM BANKS TO TOTAL ASSETS

Formula = Due from banks

Total Assets

2004 = 2324839 = 2.17%

107167541

2003 = 5770842 = 6.75%

85386902

2002 = 3414470 = 4.86%

70313073
INTERPRETATION

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

the financial institutions has increased to a great extent despite the fact that still
it holds a small proportion relevant to the total resources raised by the bank. It
is a positive indicator in the sense that the financing to the banks are the most
secure ways of lending. Considering the economic conditions of the country, it
seems to be the best alternative available to the bank. In the current year this
ratio has been reduced to the little extent. Although it is declining but the
situation might not be alarming.

DUE FROM BANKS TO DUE TO BANKS

Formula = Due from banks

Due to Banks
2004 = 2324839 = 16.87%

13781555

2003 = 5770842 = 36.29%

15903055

2002 = 3414470 = 29.79%

11460394

INTERPRETATION

It shows the relationship between what the bank owes from other banks and
what is due to it. An unfavorable condition has been observed in this ratio in the
current year showing the fact that the bank has to seek fewer funds from the
financial institutions owing to the strong liquid financial position. This ratio is
going on increasing in last year but decreasing in current year, which involves a
slight risk. In the phase of economic instability, the bank’s management should
be efficient to access the risk involved in lending and they should control this
ratio.
DUE TO BANKS TO TOTAL DEPOSITS

Formula = Due to banks

Total deposits

2004 = 13781555 = 16.54%

83318795

2003 = 15903055 = 25.79%

61656607

2002 = 11460394 = 22.15%

51732000
INTERPRETATION

This ratio is an indicative of the proportion of the lending from the financial
institutions in relation to the total funds raised by the bank in the form of
deposits.

This ratio for ACBL is 16.54% in the year 2004. There has been a significant
decline in this ratio as previously the bank depended slightly more on the
borrowings from financial institutions. It shows that the bank is concentrating on
raising funds from depositors and trying to relies less on the borrowed funds.

• It is a favorable indication in the sense that the bank has large potential
to ask for borrowed funds in the phase of tight liquidity position.
• Further more, it shows the efficiency of the marketing department to have
created so much of deposits that the bank does not need to look at the
financial institutions for help in improving its liquid position.
• There is another favorable aspect of this declining tendency. The rate of
interest offered to the depositors is very low in comparison with the
interest to be paid to the financial institutions for their funds. A decline in
this ratio means less mark up burden on the bank resulting in less
financial risk for the bank.
COVERAGE RATIO

Coverage ratio measures the capacity of the bank to cover its interest charges,
which are the main obligations on the bank.

INTEREST COVERAGE RATIO

Formula = Earning before int. & Tax

Interest Exp.

2004 = 4688057 = 2.54 times

1845317

2003 = 3339331 = 2.32 times

1437531

2002 = 2336537 = 2.13 times

1092515

INTERPRETATION
It shows whether the bank is earning enough profit before mark up charges to
be paid to the financiers and the taxation obligations due to the government in
order to remain solvent.

The above figure shows the acceptable capacity on the part of the bank to cover
its interest payments. It has increased as compared with the last year. This
increase in the ratio is a sign of improvement for the bank. But this is a short-
term perspective of the bank’s financial position. In view of the long run financial
perspective, this ratio is good for the bank.

CAPITAL ADEQUACY RATIOS

CAPITAL FUNDS TO TOTAL ASSETS RATIO

Formula = Capital Funds

Total Assets

2004 = 5573149 = 5.20%

107167541

2003 = 3901279 = 4.57%

85386902

2002 = 3026550 = 4.30%

70313073
INTERPRETATION

This ratio indicates the extent of the funds employed by the bank in the total
resources as shown in the balance sheet. This ratio has been decreased in the
current year with a very low margin.

Capital Fund to Risk Assets Ratio

Formula = Capital Fund

Risk Assets

2004 = 5573149 = 7.97%

69938041

2003 = 3901279 = 8.71%

44777538
2002 = 3026550 = 10.07%

30035484

INTERPRETATION

This ratio take into account the difference between cash and marketable
securities & other kind of assets. Cash & marketable securities, which are risk
less items, are excluded to find out the true picture of the capital adequacy. In
case of ACBL the ratio is decreasing.
 GRAPHS OF STEADY GROWTH

THE GRAPHS OF GROWTH ARE SHOWN FOR THE LAST FIVE YEARS,
FROM 2000 TO 2004

PROFIT BEFORE TAX

(Rs. In million)

The above graph shows that the profit before tax of the Askari
Commercial Bank shows a trend of increase and continuous increase in
the profit before tax of the bank, it goes on increasing every year and its
ratio has not been fall since the last five years.
In 2004 the profit before tax increased with greater margin as compared to the
previous four years.
 DEPOSITS

(Rs. In million)

Askari Commercial Bank is known to be the leading bank in the private sector.
Customers’ shows a lot of loyalty to the bank, therefore, the deposits of the
bank go on increasing every year and its ratio has not been fall since the last
five years.

LOANS AND ADVANCES

(Rs. In million)
The Askari Commercial Bank has adequate amount of money as result of
deposits it keeps with itself of their valuable customers. It keep a certain
percentage of money in order to meet the day to day transactions of the bank
and lend reaming amount as advances and loans which is very important source
of business for the bank. The graph shows that the capacity of the bank to lend
the advances and loans is going on increasing since the last five years and is
highest in the year 2004.

INVESTMENTS

(Rs. In million)
The Askari Commercial Bank is showing a mix trend of increase and decrease in
the investments of the bank, it goes on increasing from year 2000 to 2002 and
its ratio is highest in 2002. From 2002 it starts declining.

TOTAL ASSETS

(Rs. In million)

Total Assets of the bank are increasing every year with the expansion in the
business .In 2004 the assets of the bank has been increased more than twined a
time as compared to the year 2000.which clearly shows the rapid expansion of
the bank.
 EARNING PER SHARE
( In Rupees)

The earning per share of the bank is also showing good position and is
enough to satisfy the shareholders of the bank, the number of the
shareholders fund has also been increased from the last five years. The
graph shows that the bank’s earning per share ratio is highest in the year

2004 and is lowest in the year 2000. STRATEGIC

MANAGEMENT

“The art and science of formulating, implementing and evaluating cross-

functional decisions that enable an organization to achieve its
objectives.”

STATEGIC MANAGEMENT PROCESS:

Generat
Implemen
Perform e
External t
Evaluat
Develop Audit Establish Implement strategies Measure
Perform e, and
Vision & Long term strategies Marketing and
internal select
Mission objectives Manageme , Finance, evaluate
audit strategi
nt Issues MIS performa
es
 Stage1_________________Stage2___________________
Stage3

The strategic management process consist of three stages

1. Strategy Formulation
2. Strategy Implementation
3. Strategy Evaluation

STARTEGY FORMULATION STAGE:

The strategy formulation stage includes the development of vision and mission,
identification of organization external opportunities, identification of the
organizational internal strengths and weaknesses, establishment of long term
objectives, generation of alternative strategies and selection of the pertinent
strategies to pursue in the long run. On the other hand, this stage also describes
about the selection of business, allocation of available resources, expansion of
operations, entering into the new markets and the conditions of mergers and
joint ventures.

STARTEGY IMPLEMENTATION STAGE:

This stage requires a firm to establish annual objectives, devise policies,

motivate employees and allocate resources so that formulated strategies
can be executed. As for the purpose of achieving long term objectives the
annual objectives are described and the policies are established for them.
By implementation of strategies, it is evident that employees and the
managers put the formulated strategies to action. That’s why this stage is
also called an action stage of strategic management.

STRATEGY EVALUATION STAGE:

It is the final stage in the strategic management process. The strategies, which
are implemented at the second stage, are now evaluated as hey are working in
accordance with the objectives or not. Besides it, all strategies are subject to
future modification because external and internal factors are constantly
changing.

EXTERNAL AUDIT:
The purpose of an external audit is to develop a finite list of opportunities that
could benefit the organization and threats that should be avoided. There are lots
of factors, which are involved in determining the external environment, but
certain key variables are taken that offer actionable responses. The organization
should have to respond either offensively or defensively to the factors by
formulating strategies that take advantage of external opportunities or that
minimize the impact of potential threats.

KEY EXTERNAL FACTORS:

External forces/ factors can be divided into five broad categories

1. Economic forces
2. Social, Cultural, demographic and environmental forces
3. Political, Governmental and Legal forces
4. Technological forces
5. Competitive forces

OPPORTUNITIES FOR ASKARI COMMERCIAL BANK

These are positive external environmental factors effecting the organization.

• It deals in bulk business.

• A large amount of foreign investment is attracted.
• Strong potential for growth

• Steady increase in Customer Deposits

• Overseas Operations
• Branches In Remote Areas
• Islamic Banking
• Sharp increase in imports and exports

THREATS FOR ASKARI COMMERCIAL BANK

• High Employees Turnover

• High charges
• Less attractive rate of return
• Stiff Competition
• Less Experienced Staff

EXTERNAL FACTOR EVALUATION MATRIX:

This Matrix summarizes and evaluates economic, social, culture, and

demographic, environmental, political, governmental, legal, technological
and competitive information. It shows the opportunities and threats that
are faced by an organization.

Weights:

0.0 = Not Important

1.0 = Very Important

Rating:

1 = The Response Is Poor

2 = The Response Is Average

3 = The Response Is Above Average

4 = The Response Is Superior

EXTERNAL FACTOR EVALUATION MATRIX

Weights Rating Weighted

Score
Key External Factors

Opportunities
1 It deals in bulk business.

0.10 3 0.30

2. A large amount of foreign

investment is attracted
0.10 4 0.40

3. Strong potential for growth 0.05 2 0.10

4. Imports are increasing 0.05 4 0.20

5. Steady increase in Customer Deposits

0.15 3 0.45

6. Overseas Operations 0.03 3 0.09

7 Branches In Remote Areas 0.02 2 0.04

8 Islamic Banking 0.01 1 0.01

9. Sharp increase in imports and exports 0.04 3 0.12

Threats
1. High Employees Turnover 0.05 2 0.10

2. High charges 0.05 2 0.10

3. Less attractive rate of return

0.15 3 0.45

4. Stiff Competition 0.10 3 0.30

5. Less Experienced Staff 0.10 2 0.20

 TOTAL 1.00 2.86

Explanation:

The above Matrix depicts the opportunities and threats that are faced by the
bank. The weighted score of EFE Matrix of the bank is 2.86 that is above
average (2.5). So it shows that the bank is responding to the existing
opportunities and threats in banking industry.

EXTERNAL AUDIT:

The purpose of an external audit is to develop a finite list of opportunities that

could benefit the organization and threats that should be avoided. There are lots
of factors, which are involved in determining the external environment, but
certain key variables are taken that offer actionable responses. The organization
should have to respond either offensively or defensively to the factors by
formulating strategies that take advantage of external opportunities or that
minimize the impact of potential threats.

KEY EXTERNAL FACTORS:

External forces/ factors can be divided into five broad categories

6. Economic forces
7. Social, Cultural, demographic and environmental forces
8. Political, Governmental and Legal forces
9. Technological forces
10. Competitive forces
OPPORTUNITIES FOR ASKARI COMMERCIAL BANK

These are positive external environmental factors effecting the organization.

• It deals in bulk business.

• A large amount of foreign investment is attracted.
• Strong potential for growth

• Steady increase in Customer Deposits

• Overseas Operations
• Branches In Remote Areas
• Islamic Banking
• Sharp increase in imports and exports

THREATS FOR ASKARI COMMERCIAL BANK

• High Employees Turnover

• High charges
• Less attractive rate of return
• Stiff Competition
• Less Experienced Staff

EXTERNAL FACTOR EVALUATION MATRIX:

This Matrix summarizes and evaluates economic, social, culture, and
demographic, environmental, political, governmental, legal, technological
and competitive information. It shows the opportunities and threats that
are faced by an organization.

Weights:

0.0 = Not Important

1.0 = Very Important

Rating:

1 = The Response Is Poor

2 = The Response Is Average

3 = The Response Is Above Average

4 = The Response Is Superior

EXTERNAL FACTOR EVALUATION MATRIX

Weights Rating Weighted

Score
Key External Factors

Opportunities
1 It deals in bulk business.

0.10 3 0.30

2. A large amount of foreign

investment is attracted
0.10 4 0.40

3. Strong potential for growth 0.05 2 0.10

4. Imports are increasing 0.05 4 0.20

5. Steady increase in Customer Deposits

0.15 3 0.45

6. Overseas Operations 0.03 3 0.09

7 Branches In Remote Areas 0.02 2 0.04

8 Islamic Banking 0.01 1 0.01

9. Sharp increase in imports and exports 0.04 3 0.12

Threats
1. High Employees Turnover 0.05 2 0.10

2. High charges 0.05 2 0.10

3. Less attractive rate of return

0.15 3 0.45

4. Stiff Competition 0.10 3 0.30

5. Less Experienced Staff 0.10 2 0.20

TOTAL 1.00 2.86

Explanation:

The above Matrix depicts the opportunities and threats that are faced by the
bank. The weighted score of EFE Matrix of the bank is 2.86 that is above
average (2.5). So it shows that the bank is responding to the existing
opportunities and threats in banking industry.

INTERNAL AUDIT
All organizations have strengths and weaknesses in their functional areas of
business. For analyzing the internal situation of the organization with regard to
its management, marketing, finance, operations and research and development,
internal audit is performed. The internal audit is executed parallel to the external
audit. This process provides more opportunity for the participants and the
managers to understand the key areas within an organization.

Key internal forces:

1. Marketing
2. Finance
3. Accounting
4. Management
5. Management Information System
6. Production/Operations

STRENGTHS OF ASKARI COMMERCIAL BANK

LEADING PRIVATE SECTOR BANK:
 AUTOMATIC OPERATIONS:
 FULL DAY BANKING
 ATM NETWORK
 CUSTOMIZED SOLUTIONS
 CUSTOMER ORIENTED BANKING
 ELECTRONIC BANKING
 ELECTRONIC FUNDS TRANSFER
 PHONE BANKING
 ETHICAL CONCERNS AND PUBLIC IMAGE

WEAKNESSES OF ASKARI COMMERCIAL BANK

NOT HIGHLY AUTOMATED

MANUAL BOOK-KEEPING
LOW JOB SATISFACTION
LACK OF SPECIALISATION
CENTRALIZATION
LACK OF TRAINING FACILITIES
INTERNAL FACTOR EVALUATION MATRIX:

This strategy-formulation tool summarizes and evaluates the major strengths

and weaknesses in the functional area of a business and it also provides a basis
for identifying and evaluating relationships among those areas. Intuitive
judgments are required in developing an IFE Matrix

Weights:

0.0 = Not Important

1.0 = All Important

Rating:

1 = Major Weakness
2 = Minor Weakness

3 = Minor Strength

4 = Major Strength

INTERNAL FACTOR EVALUATION MATRIX

Key Internal Factors Weighted

Ratin
Weights Score
Internal Strength
1. LEADING PRIVATE SECTOR BANK 0.10 3 0.30

2. AUTOMATIC OPERATIONS 0.05 4 0.20

3 FULL DAY BANKING 0.06 4 0.24

4 ATM NETWORK 0.04 3 0.12

5. CUSTOMIZED SOLUTIONS 0.05 4 0.20

6.CUSTOMER ORIENTED BANKING 0.07 4 0.28

7. ELECTRONIC BANKING 0.04 3 0.12

8 ELECTRONIC FUNDS TRANSFER 0.05 4 0.20

9 PHONE BANKING 0.03 4 0.12

10 ETHICAL CONCERNS AND PUBLIC 0.05 4 0.20

IMAGE

Internal Weaknesses
1 NOT HIGHLY AUTOMATED 0.05 2 0.10

2 MANUAL BOOK-KEEPING 0.10 1 0.10

3 LOW JOB SATISFACTION 0.05 2 0.10

4. LACK OF SPECIALISATION 0.05 2 0.10

5. CENTRALIZATION 0.06 2 0.12

6. LACK OF TRAINING FACILITIES 0.15 2 0.30

Total 1.00 2.80

Explanation:

The above Matrix comprises the strengths and weaknesses of Bank Askari
Commercial Bank and the weighted score of the bank is 2.80 that is above
average (2.5) so it depicts that the bank has strong internal position
 THE COMPETITIVE PROFILE MATRIX:

The Competitive Profile Matrix (CPM) identifies a firm’s major competitors and its
particular strengths and weaknesses in relation to a sample firm’s strategic
position.

In CPM critical success factors are taken that include both internal and external
issues. In a CPM, the rating and total weighted score for rival firms can be
compared with the sample firm.

Weights:

0.0 = Not Important

1.0 = Very Important

Rating:

1 = Major Weakness

2 = Minor Weakness

3 = Minor Strength
4 = Major Strength
 COMPETITIVE PROFILE MATRIX

Askari Bank

Bank Alfalah

Critical Weight Score Rating Score

Success Rating
Factors

Customer 0.16 3 0.48 2 0.32

satisfaction

Branch 0.12 2 0.24 3 0.36

network

Market share 0.09 4 0.36 4 0.36

Service quality 0.10 4 0.40 3 0.30

Advertising 0.05 2 0.10 3 0.15

Online facility 0.09 3 0.27 3 0.27

Full day 0.12 3 0.36 2 0.24

banking

Employee 0.15 3 0.45 3 0.45

satisfaction
 Financial 0.12 4 0.48 3 0.36
position

TOTAL 3.14 2.81

EXPLANATION:

In the above Matrix, the position of Askari bank is stronger as compared to its
rival Bank Alfalah. 3.14 is the total of average weighted score that reveal the
relative strength of the firm against its competitor. The total weighted score of
Bank Alfalah is 2.81 that show better position. But as compared to Askari Bank
it is slightly less.

STRATEGY-FORMULATION FRAMEWORK:

Strategy-Formulation Framework can be integrated into three-stage decision

making framework

THE INPUT STAGE:

 External Factor Evaluation (EFE) Matrix

 Competitive Profile Matrix (CPM)
 Internal Factor Evaluation (IFE) Matrix

THE MATCHING STAGE:

 Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix

 Strategic Position and Action Evaluation (SPACE) Matrix
 Boston Consulting Group (BCG) Matrix
  Internal-External (IF) Matrix
 Grand Strategy Matrix

THE DECISION STAGE:

 Quantitative Strategic Planning Matrix (QSPM)

THE STRATEGIC POSITION AND ACTION EVALUATION

(SPACE) MATRIX:

The SPACE Matrix is an important matching tool. It’s four-quadrant framework

indicates that whether aggressive, conservative, defensive, or competitive
strategies are most appropriated for a specific organization.

Internal dimensions [FS] and [CA]

External dimensions [ES] and [IS].

Assign a numerical value ranging from +1 (worst) to +6 (best) to each of the

variables that make up the FS and IS dimensions. Assign a numerical value
ranging from –1 (best) to –6 (worst) to each of the variables that make up the
ES and CA dimensions.

Aggressive Strategic:

Market penetration, market development, product development, backward

integration, forward integration, horizontal integration, conglomerate
diversification, concentric diversification, horizontal diversification, or a
combination strategy.

Conservative strategies:

Are best options for the firm that lies in this quadrant. Most often include market
penetration, market development, product development, and concentric
diversification.

Defensive strategies:

Include retrenchment, divestiture, liquidation, and concentric

diversification.

Competitive strategies:

Include backward, forward, and horizontal integration; market penetration;

market development; product development; and joint ventures.

SPACE MATRIX OF ASKARI BANK

FINANCIAL STRENGTH

Investment decreased +1

Strong Liquidity Position +6

Strong Cash flow position +4

The Revenues increased +4

Net Income After Tax increased +4

Net Profit Margin increased +4

Return On Equity +2

+25

INDUSTRIAL STRENGTH

Strong potential for growth +6

Computerized Banking system +2

Potential for further increase in profits +6

Growth prospects for Islamic Banking +2

Electronic Banking

+18

ENVIROMENTAL STABILITY

High Inflation rate -1

Political Instability -3

Competition from Foreign and Local banks -2

Similar Products offered at higher rate by other banks -4

Changes in laws by government -3

Strict SBP regulations -4

-17

COMPETITIVE ADVANTAGE

High quality services -1

Customer oriented banking -2

Vast product variety -2

First ever free visa card -1

Strong top management -1

-7

CONCLUSION
ES Average is –17/6 = -2.8 IS Average is +18/5 = +3.6

CA Average is –7/5 = -1.4 FS Average is +25/7 = +3.5

Directional Vector Coordinates: x-axis: (-1.4)+(+3.6) = +2.2

y-axis: (-2.8)+(+3.5) = +0.7

Conservative +6 Aggressive
+5
+4
+3
+2
+1
(2.5,
0.75)
CA IS
-6 -5 -4 -3 -2 -1
-1 +1 +2 +3 +4 +5
-1 +6
-2
-
3-4
-5
Defensive -6 Competitiv
e
ES
EXPLANATION:

Directional vector of the Bank is located in aggressive quadrant (upper-

right quadrant). It shows that the bank has excellent position to use its
strengths, take advantage of external opportunities, overcome internal
weaknesses, and avoid external threats. Therefore, market penetration,
market development, product development, backward integration,
forward integration, horizontal integration, conglomerate diversification,
concentric diversification, horizontal diversification, or a combination
strategy can be feasible according to specific circumstances.

THE BOSTON CONSULTING GROUP

(BCG) MATRIX:

The BCG Matrix graphically portrays differences among divisions in terms of

relative market share position and industry growth rare.
Relative market share position is defined, as the ratio of a division’s own
market share in a particular industry to the market share held by the
largest rival firm in that industry.

QUESTION MARKS:

Division in Quadrant I have a low relative market share position, yet they
compete in a high-growth industry. Generally these firms’ cash needs are
high and their cash generation is low. These businesses are called
Question Marks because the organization must decide whether to
strengthen them by pursuing an intensive strategy (market penetration,
market development, or product development) or to sell them.

STARS:

Firm that lies in this Quadrant (often called Stars) represent the organization’s
best long-run opportunities for growth and profitability. Divisions with a high
relative market share and a high industry growth rate should receive substantial
investment or maintain or strengthen their dominant positions.

Forward, backward, and horizontal integration; market penetration; market

development; product development; and joint ventures are appropriate
strategies for these divisions to consider.

CASH COWS:
The organization that lies in this Quadrant has a high relative market share
position but compete in a low- growth industry. Called Cash because they
generate cash in excess of their needs, they are often milked.

Product development or concentric diversification may be attractive strategies

for strong Cash Cows. However, as a Cash Cow division becomes weak,
retrenchment or divestiture can become appropriate.

DOGS:

The organization that lies in this Quadrant has a low relative market share
position and competes in a slow- or no- market-growth industry; they are
Dogs in the firm’s portfolio. Because of their weak internal and external
position, these businesses are often liquidated, divested, or trimmed down
through retrenchment. When a division first becomes a Dog,
retrenchment can be the best strategy to pursue because many Dogs
have bounced back, after strenuous asset and cost reduction, to become
viable, profitable divisions.

BCG MATRIX

Division Revenu Percent Profits Percenta Percentage Percentage

es (000) Revenu (000) ge Growth
Market
es Rate
Share

Car 2,167,2 33% 371,276 34% 45% +16

Finance 52

Credit 2,758,3 42% 393,116 36% 58% +15

Card 21

Islamic 656,743 10% 109,199 10% 8% -2

Banking
Home 985,115 15% 218,398 20% 15% +16
Loan

Interpretation:

Car finance division and Islamic Banking have a low market share position, yet
they compete in a high growth industry. These businesses are called as Question
Marks, because the organization has to decide whether to strengthen them by
pursuing an intensive strategy (Market development, Market Penetration, Or
Product Development) or to sell them.

Credit Cards represents the organizations best long-run opportunities for

growth and profitability. Credit card division has a high market share
position and a high industry growth rate, therefore the bank should invest
more in this division to maintain or strengthen their dominant position.
Forward, Backward, and Horizontal Integration, Market Penetration,
Market Development, and Product Development are the appropriate
strategies for this Credit Card Division.
Home Loan division has a low Market Share Position and competes in a slow or
no market growth industry; they are dogs in the firm’s portfolio. Because of their
weak internal and external position, the businesses are often divested or
trimmed through retrenchment.
 GRAND MATRIX:

The Grand Matrix has become a popular tool for formulating alternative
strategies. All organizations can be positioned in one of the grand strategy
matrix’s four strategy quadrants. A firms division can be likewise
positioned. Grand Strategy matrix is based on two evaluative dimensions

Rapid Market Growth

Quadrant II Quadrant I

1. Market Development 1. Market Development

2. Market Penetration 2. Market Penetration
3. Product Development 3. Product Development
4. Horizontal Integration 4. Forward Integration
5. Divestiture
5. Backward Integration
6. Liquidation
6. Horizontal Integration
Weak
Strong 7. Concentric Diversification
Competitive
Competitive
Position

Quadrant III Quadrant IV

1. Retrenchment 1. Concentric Diversification

2. Concentric Diversification 2. Horizontal Diversification
3. Horizontal Diversification 3. Conglomerate
4. Divestiture Diversification
5. Liquidation 4. Joint Venture

Slow Market Growth

Interpretations:
Bank falls in the first quadrant of the Grand Strategy Matrix. The Bank is in
excellent strategic position. For the bank, continuous concentration on the
current market (Market Development, Market Penetration) and products
(Product Development) is an appropriate strategy. If the bank is highly
committed to a single product, then concentric diversification may reduce
the risk associated with a narrow product line the bank can afford to take
advantage of the opportunities in several areas. It can take risk
aggressively when necessary.

Quantitative Strategic Planning Matrix

Strategic Alternatives

MP PD

Key Factors WeightAS TAS AS TAS

Opportunities
Advancement in Islamic Banking 0.05 2 0.10 1 0.05

Expand Branch Network 0.05 - - 1 0.05

Enhance Product Portfolio 0.05 2 0.10 3 0.15

Get Into E-Business 0.05 1 0.05 - -

Provide Financial Consultancy 0.10 2 0.20 1 0.10

Threats

Government Policies 0.10 1 0.10 - -

Strict SBP Regulations 0.20 1 0.20 3 0.60

2nd Hand Car Finance By City Bank 0.15 4 0.60 3 0.45

Cash Card Introduced By MCB 0.10 2 0.20 4 0.40

Branches of Nationalized Banks in all Cities

0.05 2 0.10 1 0.05
of Pakistan

1.0

Strengths

Bank Name 0.05 2 0.10 4 0.20

Credit Card 0.10 4 0.40 3 0.30

Strong Top Management 0.05 1 0.05 4 0.20

 Aggressive Banking 0.15 2 0.30 4 0.60

Bad Debt Ratio 0.05 2 0.10 1 0.05

Committed Workforce 0.05 1 0.05 3 0.15

Financial Ratios 0.05 2 0.10 3 0.15

Customer Satisfaction 0.05 4 0.20 3 0.15

Islamic Banking 0.05 3 0.15 4 0.20

Weaknesses

No International Branch Network 0.05 1 0.05 3 0.15

Weak IT Structure 0.05 2 0.10 1 0.05

Trade Through NOSTRO Accounts 0.05 2 0.10 1 0.05

Less Job Rotation 0.05 1 0.05 - -

ATM not available In Every Branch 0.10 4 0.40 3 0.30

No Marketing Department 0.10 4 0.40 3 0.30

Sum Total Attraction Score 1.0 4.10 4.70

AS = Attractiveness Score TAS = Total Attractiveness

Score

Attractiveness Score:

1 = not attractive 2 = somewhat attractive;

3 = reasonably attractive 4= Highly Attractive

MP= Market Penetration PD=Product

Development
Interpretation:

The Bank must consider two alternative strategies i.e. Market Penetration,
and Product Development. The total attractiveness score of Market
Penetration is 4.10 and for Product Development is 4.70. Therefore the
strategy which the Bank must adopt is Product Development as the total
Attractiveness score of this strategy is the highest i.e. it appears to be the
most attractive and suitable for the bank.

TRAINING PROGRAMME

 INTERNSHIP EXPERIENCES

 DIFFICULTIES FACED…
 INTERNSHIP EXPERIENCES

One of the most important aims of the student life is to express himself /
herself correctly and adequately. This was the believe in my mind when I
first decided to go to Askari commercial Bank to complete my internship
program.

Determined, Confident and Persistent in the pursuit of knowledge and

learning, I was on my way to Askari Commercial Bank, Shahalam market
Branch in the early morning of July 1, 2005. Just a day before, I had
taken my class of 3rd semester. Normally I wanted rest and recreation
after the tiring class in June but this time I was anxiously waiting for the
start of my internship.

FIRST WEEK

I started my internship from "General Banking" in the first week. The General
banking is basically divided into the following sub departments, which are as
follows:
• Account opening
• Bills and remittances
• Clearing
• Term deposit
• Cash department

The first day of exposure to the practical field was at the (sub department)
Account opening.

The relationship of customer starts with this department. every one is not
allowed to come and open an account in the bank, for this purpose there should
be an introducer who himself is the account holder in the same branch. He has
to introduce the new client by signing the opening account form and then his
signature are verified.

Applicant's fills the account opening form and provides it to the bank with
photocopy of I.D. card and signatures card.

Then the banker inquires the about the option of opening a joint account or
individual. If the customer wants to open joint account then either it is "either or
survivor" (i.e. Only one persons signature is sufficient) or jointly (i.e. Both
should sign the cheque).

Account opening:

Although the procedure of opening an account in a bank is a quite complicated

job but I am going to tell you only the basic necessities for opening the account,
which are as follows:

• Introduction
• National I.D. card
• Personal data
• Details of dealing with other banks.

These are some of the basic requirements for opening the account.

Issuance of chequebook

Once the account is opened, ACBL issues the chequebooks to the customer so
that they could withdraw their money whenever they like. The producer of
issuance of the chequebook is as follows:

For the customer who already has an account with the bank, the lastly
consumed chequebook requisition slip with the help of which a new chequebook
is issued. And the person who is going to open a new account for the first time
gets the chequebook free without any requisition slip.

For the new depositors the cheque book is not issued at the time of opening of
account, rather it is issued after three days but, as the most of the customers
are from the armed forces so the usually get the cheque earlier. ACBL issues the
chequebooks for both the local and foreign currency accounts.

I remained there in the account-opening department for one week and daily I
learnt a new thing

I come to know about the details of the account opened by the banks, which I
have explained in previous portion of "Departments".

In the start I have stated the account opening procedure and issuance of cheque
book in a very comprehensive way, now let me tell u the further related detail of
account opening
• First of all a customer come and gets the information regarding the
opening of account. After getting the proper information he gets an
introducer and goes for opening an account of any kind whatever he
wants
• He fills the from regarding the opening of account which is in fact a
request.
• S.S card is filled which contains the signature that will be used in future in
order to identify that you are the same particular person who perfectly
eligible for receiving the benefits.
• The S.S card and the application form is verified and the verification
stamp is imposed on it.
• After verification the application forms are pasted in the file with the
serial, no which is actually the account no. Allocated to the respective
customers.
• The chequebook is issued to the customer after three days.
• A letter of thanks is posted to the customer as well as the introducer. The
introducer is thanked for the two perspectives. First he should be thanked
that because of him the bank get another customer and the second
reason behind sending the letter to him is that if the customer had
fraudulently get the signature of that person as an introducer then he
should come to know that some one has used his name as well as
signature for his personal benefit and without the consent of him
(introducer).
• The procedure for opening the account comes to an end after sending the
letter of thanks.
Active and inactive Account

The account becomes Inactive if there is no debit transaction. Account becomes

active if there is credit transaction.

SECOND WEEK

In the second week I was shifted to the TDR (Term Depots Receipts)
department. It was again a good experience to work with the officer here. First
of all he told me about the basics of the TDR.

Deposit is lifeblood of a commercial bank. The main function of a commercial

bank is to channelize the saving from the savers to the ultimate users of the
funds. This process of collecting saving is called "deposit mobilization".

Deposits are of two types one is the demand deposit and the other one is time
deposit (these have been explained in detail in the "department" portion). As the
name signifies the demand deposit is payable on demand so no interest or
benefit is given on such deposits but the time deposit is a kind of deposit, which
gives you a benefit in terms of cash. Most of the people who have surplus money
with them especially the landlords deposit their money in such accounts.

Term deposits are payable on demand with certain maturity. Different

percentages of profit are given in the time deposit (the detail is given in the
Marketing Mix)

These are called fixed deposit because they are fixed and no transaction is
allowed till maturity. In fix deposit you can open an A/c of the same title only
than A/c number will be changed. While in other accounts the A/c can't be
opened under the same title even in other branch of the same Bank.

Profit calculation

The Head office determines the provisional rates of the Profit. Every bank has its
own interest rate; usually established banks have low interest rates then the
non-established banks as the have to attract the Customers.

There are different types of accounts, which are shown in provisional rates of
profit on “PLS deposit” and rate of return minimum balance, and maturity is also
shown in it. After every six months the rates are revised on PLS deposit

On fixed deposit the interest is given on the Principle amount only while on other
profit and loss deposits the interest is given on profit an principle amount
(provided that the interest has not been received in the given time). On fixed
deposits the month is started from the day from which you deposit the amount.

As the interest rates vary frequently you will calculate the interest on the rate
which is applicable during that particular duration. It happens that sometimes
the interest rate remains the same. But during the year 2004 the interest rates
were changed two times within six months. First of all the interest rates were
changed at the start of the year and then these rates were changed again in the
month of the February i.e. these were changed twice in the six months. The
changing in the interest rate depends upon the will of the Head office, which has
the power to change them at any time.
Zakat is deducted on the first of Ramdan. However, the Bank can't deduct the
Zakat if you have given Affidavit (declaration regarding not to deduct Zakat on
Stamp paper).

Tax is deducted which is known as withholding tax only at the time of deposit
e.g. When you will deposit Rs.100,000 you will have to give additional money of
Rs. 300/- as the withholding tax. (The rate of withholding tax is 0.3%). If you
have National Tax Number NTN then 0.3% withholding tax is exempt.

The rate of withholding tax on profit is 10% i.e. if you are going to get a benefit
of Rs. 10,000 then you will receive the cash of Rs. 9,000 as the remaining
amount will be deducted as the tax.

For non-residents the tax and Zakat is exempt (visa is required as the proof that
the particular person is really a non-resident).similarly Christians has not to pay
the tax, they have to pay the tax only.

Askari Bachat Certificates are tax-free.

The calculation of interest is done manually on the card and then you feed
(debit) it in the bank's account (Profit Saving Account) and will be credited in the
customer's account. A computerized voucher is prepared which will be used as
the record.

If there is any mistake in the Debit Credit that will be checked out through Daily
Balance Sheet of the Particular department.
For easy operations Customer prefer to give instruction that their interest should
be credited to their A/c otherwise a manual voucher will be made that will be
cashed on cash counter every time when you come to take the interest.

Record keeping

The record of the TDR is although feed in the computer but there is also a hard
copy of the record. The verified TDR forms are pasted with serial number of
receipt given to the customer (the receipt of the form regarding the deposit of
the amount).

Askari Bachat Certificates are attached or pasted in the file according to the
date. The date may be of any month and any year i.e if there is a card of the 8th
then on this card you will find the only 8th date of any month and any year in
which the card was issued.

THIRD WEEK

In the third week of my internship I was shifted to the Clearing section and Bills
for collection section as well. Three days I worked with the "Clearing" and then
with the "Bills for collection" section.

CLEARING

This is a "Inter-city clearing" i.e the cheques of Lahore city from different banks
like National Bank of Pakistan, Standard Chartered Bank, Muslim Commercial
Bank are deposited here. The deposited cheque is received carefully by checking
the title of cheque, date, amount, and signature on the cheque. All the cheques
go to the State Bank of Pakistan. Everyday NIFT receives all cheques and
arranges them. By establishment of NIFT a lot of time, cost and labor is saved.
The cheques are stamped carefully. Two stamps are required on the cheques

• Clearing stamp
• Payee's account will be credited

If any stamp is missed or unclear, SBP returned one the cheque with reason.

When the cheques are deposited they enter all the cheques on the computer
with account number and these figures go to SBP.

There are four types of Balances in the computer

• Available balance
• Float amount
• Block amount
• Ledger balance

NIFT collects all the cheques at 2:00 pm. After that the computer department
give clearing sheet that is checked in clearing.

Same day clearing

All the cheques are cleared in coming day. But same day cheques are cleared
other same day when it is deposited. The same day cheque amount is 50,000
below this amount the cheque, can't be cleared in the same day.

Clearing house
It is a p[lace where representatives of all scheduled banks sit together and
interchange their claim against cash other with the help of controlling staff of
"state Bank of Pakistan" where there is no branch of State Bank of Pakistan, the
designated branch of State of Pakistan.

So, system by which banks exchange cheques and other negotiable instruments
drawn on each other within specific area and there by secure payment for their
clients through the clearing house at specific time In an efficient way.

BILLS FOR COLLECTION

Two types of cheques are deposited here

• Outstation cheques
• Askari other branch cheques (local)

Outstation cheques mean different cities cheques are deposited and Local means
Askari's other Branches like cantt, circular road, defence, Gulberg etc. Are
deposited. All cheques account numbers on the computer and these figures go to
SBP.

The cheques are cleared in 5-6 days. Because "NIFT" receives and delivered to
SBP where these cheques are cleared in 3 days and deliver to the banks, which
mention on the cheques.

The cheques require three stamps

• Askari crossing stamp

• OBC number
• Payee's account will be credited.

If the cheques are returned due to some reasons, a returned memo.

Random is filled and entries are recorded on the register.

FOURTH WEEK

In the fourth week of internship I was transferred to the "Remittances

department". I met there with a quite sophisticated personality, she tells me
about the issuance, procedure and the entries of the demand drafts and pay
orders.

DEMAND DRAFT

It is an instrument payable on demand for which value has been received, issued
by the branch of the bank drawn. Demand draft is payable at some other
branches of the same bank. But Askari Bank contract with MCB so ACBL's
demand draft is payable at MCB also. Demand draft is very useful because there
is no chance o fraud. The person deposit cash and get demand draft. It is used
for outstation payment.

Issuance of demand draft

On the application form following particulars are given:

• Name of beneficiary
• Amount
• Mode of payment
• The place where DD is drawn
• Signature
• Name and address of the beneficiary

Request shall be made on standard application form. The customer writes his
name, address, I.D number, and phone number on the backside of the
application form. Commission is charged as per schedule of charges. The
issuance of DD is computerized and the amount is automatically protect graphed
drawing printing for the avoidance of forgery.

The withholding tax and excise duty is deducted as per schedule. when the
customer depots cash in the cash department, he got voucher from the cash
department and gave it to the person who makes the DD.

Payment of DD

When a person brings DD (which have been drawn on you), you will check it
from your DD payable record and ask the customer to sign twice at the back of
the DD so that it could be confirmed that he is the eligible person for receiving
the benefit, along with this you obtain the ID of that person verify it and then
make the payment. After making the payment entry is made in the register that
this DD has been paid.

DD payable register

Every day you receive an IBCA from different banks and it contains a list of DDs,
which have been drawn on you. Banker records it in DD payable register. These
DD are those, which other branches have drawn on your bank.
Payment of DD from Suspense A/c.

The payment of DD is made from the suspence account in the following cases:

• The amount of DD is paid from suspence a/c if advice is not received yet.
• If a DD is to be cancelled on the wish of the customer, in such a case the
payment will be made from suspence A/c.

Cancellation of DD

Following procedure is followed for the cancellation of the DD.

• Obtain the application in writing for the cancellation of DD along with the
original DD.
• Verify the signature of the applicant, which should tally, with the signature
on the application form (for opening the DD).
• Mark caution on DD issued register or on computerized entry.
• Make the payment from suspence account.
• Inform the Drawee bank regarding the cancellation and ask for IBCA.
Inter Branch Credit Advice is the advice regarding the payment (refund) of
the amount which Drawer bank have sent to them (which was deposited
by the customer against the demand draft).
• When a demand draft is made, an IBCA is sent to the Drawee bank
regarding the payment.

Types of DD

DD’s are of the following types:

• Crossed DD: In the case of crossed DD the amount is deposited to the
A/c of the benificiary.
• Open DD: Incase of open DD the amount is handed over to the
benificiary at the cash counter.

TELEGARPH TRANSFTER

The transfer of funds from one branch to another branch of the same bank is
called telegraphic transfer. The bank apply test on telegraphic transfer. The
applicant receives Commission and charges, if the Applicant’s account is in ACBL,
he pays no charge above Rs. 100,000/-

If he has no account in the ACBL then he has to pay charges according to the
amount e.g. for Rs. 100,000/- the charges are Rs. 250/-

If the account of benificiary is in another bank, his bank will present The TT to
ACBL through for payment.

PAY ORDER

Pay order issued from one branch can only be payable from the same branch.
Pay order is used for same city payment. E.g. If ACBL (Main Branch) issued pay
order it is only payable for Main Branch of ACBL.

Procedure

• Applicant fill the application

• After paying charges he gets voucher and pay order is issued
• All pay orders shall be crossed "payee's A/c only".
Cancellation

• The applicant give application for cancellation

• Charges are recovered from the applicant.

FIFTH WEEK

In the second last week of my internship I worked for two days in the "ATM
section" and then in the "Accounts section".

ACCOUNT SECTION

I worked three days in accounts department but as it is a confidential

department so they did not give me enough in formation regarding their
working. First day I sorted out the cheques of ACBL with the help of the serial
number and the nature of the account and arrange them in sequence. After that
i checked the activity which contains the title of the cheque, amount, date etc.
Accounts department maintains the record of expenses of all the departments, it
also maintain the record of all the employees regarding their basic salary,
increment, benefits etc. It is the backbone of ACBL

On the next day Is worked in the mail dispatch section, the person appointed
here asked me to arrange the letters and to write the mailing address on the
envelopes and then to put the letters into the envelops. It was an interesting job
but, the single thing which I learned from here was that, I learnt by heart the
addresses of many branches of the ACBL, which helped me to complete the
Marketing Mix portion of the same report where I have given the detail of the
Place of the ACBL. On the following day I repeated the same job and did nothing
else.

ATM SECTION

I worked two days in ATM department. The countrywide network of automated

teller machine carrying the brand name "ASKCASH".

The branch network is corrected on-line real time and its customers have access
to off-sites as well as on-site atms all over Pakistan. Being a part of the first
inter-bank ATM switch in Pakistan with ABN AMRO and Habib bank, the customer
now here have access to about 90 atms through the country.

For ATM cards first the customer open account in the bank after that he/ she fills
the application form for the ATM. the Head office send a ATM cards in a ATM
department but pin codes are sent in other department. So in this way the
customer gates his/ her ATM cards.

ATM means "24 hours services" the customers get money at any time at any
place but during my period the function of ATM were held by the Head office for
three days. The branch has no authority to held the machine, if it is not working;
the Head office knows the reason for it.

On the whole, it is an excellent strategy of ACBL and to sign a strategic

partnership with ABN-AMRO for ATM sharing arrangement is first time in
Pakistan.S
SIXTH WEEK

In the last week I was shifted to the "foreign exchange" department. For the first
three days I worked there but in the last three days I was shifted again to the
account-opening department due to the absence of one of the Account opening
officer. Therefore I was sent back to the account-opening department.

THE PROBLEMS I FACED

Doing the internship was a wonderful experience for me but as far as

preparation of the report is concerned it was the most difficult part of the
project. Preparing for report become most difficulty and tedious as most
of the information was not available not only on net but also from the
bank also. I was unable to get the following material.

 History of the bank

 Career ladder
 Job description

I was fortunate to have a wonderful Annual report of the bank. Especially

it was rested according to the circular of the State Bank of Pakistan,
therefore, it was quite easy for me to analyse the income statements of
the bank. There are some other necessary requirements for doing the
financial analysis of the income statements i.e.,

 Information about the trends prevailing in the market,

 And information regarding the positions of the competitors of the
bank that is the reason that I was unable to depict the true picture
of the financial position of the bank.
  We are also unaware about the off balance sheet finance of the
bank so, can say nothing regarding the true liabilities of the bank

Anyhow, it was a very learning experience for me that I will never in my

entire life.

SWOT ANALYSIS
 SWOT ANALYSIS

An analysis indicating towards the organizations strengths, weaknesses,

opportunities and threat is termed as SWOT Analysis. Such an analysis is very
important for the management in retaining the strength, overcoming the
weaknesses, capitalizing over the emerging market opportunities, and carving
ways to successfully tackle with the threats and ultimately converting them in
the strengths for the organization.

During six weeks of my stay at Askari Commercial Bank, Shahalam Market

Lahore, I have come across the following SWOT analysis of the bank.

STRENGTHS

LEADING PRIVATE SECTOR BANK:

Askari commercial bank is the leading private sector bank in the banking
network in Pakistan with many of them online branches in major cities of the
country

AUTOMATIC OPERATIONS:
The operations performed by the bank are highly automated that result in
assurance for the customers that their transactions are completed
reliably, efficiently and securely.

FULL DAY BANKING

One can avail the benefit of the services provided at the bank till 5:00
P.m. which is highly useful for those customers who find it difficult to
leave their officers in the morning..

ATM NETWORK
The bank has the largest ATM Network cross the country. The customers
of ACBL withdraw access their funds any time at all the ATM Sites with
ASKCASH Logo.

CUSTOMIZED SOLUTIONS
The management of the bank believes in customer focused banking rather
than the product oriented banking. The products and services designed by
the bank are specifically tailored to the individual needs of its customers.

CUSTOMER ORIENTED BANKING

The priority banking centres of the bank offer an unmatched where the
customer receives highly privileged services in a highly elegant
environment. It gives the chance of experiencing new standards in
banking. Designed specially for those who appreciate only the finest
things in life, Priority Banking offers the very highest levels of
personalized banking to match customer’s unique status.

ELECTRONIC BANKING
The revolution in the banking in the form of electronic banking operations have
opened avenues of excellent, efficient and quick services saving the time and
costs of the customers and fortunately ACBL is among those few banks who are
already reaping the benefits of electronic transactions.
ELECTRONIC FUNDS TRANSFER
ACBL management is quite prepared to adopt the latest advancements in
technology resulting in revolution in the banking operations such as check
clearing process, computer based teller equipment, automatic teller machines,
and electronic funds transfers among the others.

PHONE BANKING
Phone banking service is very attractive for those classes of customers who don’t
have time to personally come to the bank i.e. banking on the phone line thus
saving the precious time of the customers.

ETHICAL CONCERNS AND PUBLIC IMAGE

The organizations showing concern for the people, ethics, and environment
enjoy good public reputation and are able to reap the benefits in the long run.
ACBL management is quite sensitive to this issue.

WEAKNESSES

In my opinions these are the points that might be detrimental to the efficiency
and profitability of the bank.

NOT HIGHLY AUTOMATED

The bank has still some of the traditional ways of operations in this advanced
technological environment.
MANUAL BOOK-KEEPING
Although the bank has computerized accounting system but, still the bankers
use to make their entries in the accounting register.

LOW JOB SATISFACTION

Understanding and the effective management of the human resources is the
most difficult challenge faced not only by the bank but by all the organizations.
Even though the people have been sacrificed in the new organizational
developments, it is becoming clear that the true lasting competitive advantage
comes through human resources and how they are managed. ACBL seems to not
focusing on this highly critical issue as the job satisfaction level of the employees
working at ACBL, was quite low.

LACK OF SPECIALISATION
This famous and useful concept given by Adam Smith in 1776 seems to be
missing in the bank. The employees are constantly rotated from one job to
another job of totally different characteristic in the view of giving them the
know-how of the working in all the departments. But I think this is not a very
good tactics used by the management. Otherwise the situation might be like this
‘Jack of all and master of none.’

CENTRALIZATION
There is a high degree of centralisation in the bank. Almost all the decision-
making is in the hands of the upper management. But centralisation is effective
up to a certain level otherwise it becomes inefficient and at times costly too. I
personally observed that delay occurred in the operations of the employees only
due to the fact that they had not got any instructions from the head office.
LACK OF TRAINING FACILITIES
Presently there is no specific training program arranged for the new recruiters.
They have to learn based on their observations and also their mistakes. It takes
a bit time for the fresh one to learn the banking the result is huge amount of
blunders, mistakes etc. resulting in monetary and non-monetary losses for the
bank. There is pressure not only on the new learner but also on the person
placed upon with this responsibility.

OPPORTUNITIES

Apart from the ones discussed in External Factors Evaluation Matrix, the bank is
facing the following threats and opportunities currently:

These are positive external environmental factors effecting the organization.

• It deals in bulk business.

• A large amount of foreign investment is attracted.

• Strong potential for growth

• Steady increase in Customer Deposits

• Overseas Operations
• Branches In Remote Areas

• Islamic Banking

• Sharp increase in imports and exports

THREATS

High Employees Turnover

As discussed above, the job satisfaction level of the employee is very low
resulting in high turnover, which is bad for any organization as there are huge
monetary and non-monetary costs involved in the fresh recruitments.

High charges

The schedules of charges indicate that the fees charged by the bank on the
various services it provides are extremely high. It may result in decrease in the
number of its exiting customers. Further more, this could be very alarming
situation for the bank in case some of the competitors grasped the opportunity
and lowered its rates. The result would be either the lost of market share or
decrease in the charges resulting in lowering the bank’s income.

Less attractive rate of return

Commercial banks face considerable competition in attracting deposits

from individuals or small investors. In contrast, the Govt. of Pakistan
national saving scheme offers attractive rates of return (approx. 16 to 18
percent annually) on 10-15 year fixed accounts, which banks find difficult
to match.

Stiff Competition
SCB is currently facing strict competition from the foreign banks
especially the American who banks enjoy a good market position.
Collectively U.S. banks hold approximately 9 percent of all commercial
banks' assets. At present, three American banks are operating in
Pakistan: American Express Bank; Bank of America and Citibank.

Less Experienced Staff

Owing to huge turnover of the employees, the no. of experienced and well
trained staff is very low. Majority of the staff working in the bank
branches is quite young and inexperienced. If the bank failed to bring
down its high employees turnover, then it would be lacking the most
important resources of any organization i.e. the experienced staff.

CONCLUSIONS
 AND

RECOMMENDATIONS

After spending six weeks at different departments of the bank, interacting

with the employees, getting their views, observing the organizational
structure and design, I have come up with the following suggestions that
in my view, will definitely improve a few weaknesses observed in the bank
by me.

Flexible Policies
The bank should be adopt flexible policies, specially in the areas of the
recruitment, promotions, evaluation of the employees otherwise the high
turnover observed in the bank will continue to create problems for the
bank now and in the future.

Job security
The employees in the organization should be insured job security so that
there is no pressure on the employees while performing their tasks.

Permanent Hiring
The fresh hiring should be made permanent so that they are secured of
their future. Further the allowances and perquisites attached with the
permanent jobs will also increase the motivation level of the employees.

Job Training Programs

The bank should place emphasis on the organization of effective training
and development programs for its new as well as existing employees so
that these are gradually updated regarding the recent developments in
the field of banking.

Perquisites and Allowances

The number of allowances and perquisites for the employees should be
increased to ensure that they put their body and soul in the jobs assigned
to them.

Revival of the Charges

The rates for the various charges provided by the bank should be brought
down a bit, as it would result in increase in the number of customers of
the bank.

Adoption of Effective technology

The current unibank system used by the bank is very slow in processing
so my view is that the bank should try to adopt some other but more
effective form of technology in order to provide comfort to the customers
as well as the staff.
Decentralization
The higher authorities should form team-based management rather than
centralized management. It would result in improvement in uplifting the
morale of the employees. They will be more motivated and involved in all
their operations resulting in overall effectiveness of the organization.