Askari Bank Report
Company Profile |Products |Sell Offers |Buy Offers |Contact Details | |Askari Bank, one of the leading banks of Pakistan. The bank was founded in 1992, and in the 18 years since, our growth and success patterns have far outgrown industry standards. Askari Bank has expanded into a nationwide presence of 150 branches, and an offshore banking Unit in Bahrain. A shared network of over 1,100 online ATMs covering all major cities in Pakistan supports the delivery channels for customer service.
As on December 31, 2007, the bank had equity of PKR 12. 27 billion and total assets of PKR 182. 17 billion, with over 800,000 banking customers, serviced by 6,808 employees. We have reinforced our products with new deposit schemes bearing competitive rates of return and packed with excellent service of first choice. Our modern electronic banking services have been developed with hard work, feedback from stakeholders and research providing better banking solutions.
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Askaribank continuous growth over the years is based on service to communities and customers by friendly, professional and experienced bankers trained to deliver exceptional banking services. [pic] Corporate Information Askari Bank was incorporated in Pakistan on October 9, 1991, as a public limited company. It commenced operation on April 1, 1992, and is principally engaged in the business of banking, as defined in the Banking Companies Ordinance, 1962. The Bank is listed on Karachi, Lahore and Islamabad Stock Exchanges.
Since inception, the bank has concentrated on growth through improving service quality, investment in technology and people, utilizing its extensive branch network which includes Islamic and Agricultural banking. Corporate Social Responsibility is an integral part of the way we do business. In order to fulfill our CSR objectives, we attempt to promote public interest by encouraging community growth and development through sponsoring social service events, supporting education, sports, and environment and also contribute in socio-cultural activities. Awards and Achievements | | |» |“Best Retail Bank in Pakistan” by The Asian Banker. | | | | |» |”1st Consumer Choice Award” by the Consumer Association of Pakistan. 2004 | | | | |» |”Corporate Excellence Award” by the Management Association of Pakistan (MAP). 002, 2003 & 2004. | | | | |» |“The Best Bank in Pakistan” by Global Finance magazine. 2001 and 2002. | | | | |» |“Best Consumer Internet Bank” Global Finance magazine. 2002 and 2003. | | | | |» |”Euromoney and Asiamoney Awards” 1994, 1996 and 1997. | | | | |» |“Best Presented Annual Accounts” by (ICAP) and (ICAMP). 000, 2001and 2002. | | | | |» |“The Best Presented Annual Accounts” by South Asian Federation of Accountants (SAFA), in the SAARC region. | | | | |» |“The Best Consumer Banking Award 2006” by the Consumer Association of Pakistan. 007 | | | | |» |“The Best Retail Banking Award 2008” by Pakistan Guarantee Export Corporation Ltd. 2008 | | | | |» |”Best Corporate Report Award for the year 2008″ by ICAP & ICMAP. 008 | | | | | | | | | | | | | | | | | | | [p|Branch network | |ic]| | | | | [pic] | | | |» | |All Branches: | |202 | | | |[pic] | | | |» | |North Region: | |68 | | | |[pic] | | | |» | Center Region: | |66 | | | |[pic] | | | |» | |South Region: | |68 | | | |[pic] | | | [pic][pic][pic][pic] Top of Form [pic][pic] Bottom of Form • Home • Reports o Accounting o Management o Marketing • Articles • Internship • Presentations Askari Bank Internship Report
Posted by reports On September – 22 – 2010 Comments Off EXECUTIVE SUMMARY: The Department of Administrative Sciences offers Masters degree in Business Administration. They are giving the best education and are offering for specialization, financial management, marketing management, human resource management and computer application to business. An important program is six to eight weeks internship with any recognized institution. I decided to take up Askari Bank Limited for my internship because it is a competing Bank nowadays and gives a good training to the internees. So in order to learn more this was my choice.
This report is about my internship that I have undergone at Askari Bank Limited Multan Branch from 2nd June 2008 to 18th July 08. During my internship I am able to learn practical aspect of business, and get good working experience. On the very first day of my internship I reported to Operation Manager Mr. Noor ul Islam. He gave me small introduction of the Bank and introduced me to the staff of the Bank. Every internee is rotated among the Bank’s departments and so was I. This rotation is done in order to have general concept regarding Bank’s functions, operations and policies. In this rotation the stay in department is usually a week.
I have learned more about the Basic Banking, Credits and Foreign Trade department and have given below the caption of activities I was involved in during the period of six weeks. During my internship I found that Askari Bank is a best Bank in Multan because most of the Exports and Imports in Multan are done through this Bank. Multan is one of the cotton growing cities of Pakistan. Most of the businesses in Multan are directly or indirectly linked to cotton that is also the case with Askari Bank’s clients. Because Multan is an Agricultural City, and its major export is Cotton and Mango.
So its export is done on seasonal basis. In the season of cotton and Mango export Askari Bank get its target easily but difficult for it to get its target in the off season. Low profit rates used to be one of the major reasons for not meeting the deposit targets. The profit rates on Askari deposit schemes were quite low when compared with other Banks especially with the National Saving Centers, but now Askari Bank is giving a comparatively high profit rates to its customers. In today’s every customer is a rational customer, he knows the value of money and wants a best return on his money.
INTRODUCTION TO BANK: Askari Bank Limited (AKBL) works as a Unit of Army Welfare Trust was established for the Welfare of Army Officials. The office of Army Welfare Trust is situated at AWT Plaza, Rawalpindi. AWT offers the “AWT Saving Scheme” to the army officials only. AWT has its units as under: • Askari Associates. • Askari Leasing. • Askari General. • Private Business. • Textile Mills. • Cement Industry. • Askari Commercial Bank. Askari Bank Limited was incorporated on October 9, 1991, as a Public Limited Company, and is listed on Karachi, Lahore and Islamabad Stock Exchanges.
The Bank obtained business commencement certificate on February 26, 1992 and started operations form April 1, 1992. Askari Bank is scheduled Commercial Bank and is principally engaged in the business of Banking as defined in the Banking Companies Ordinance 1962. Askari Bank Limited continues to scale new heights in all areas of its operations. The safety and security of depositor’s funds, high productivity and optimum use of technology are the hallmarks of its corporate strength. In 1994, AKBL earned international recognition as Asia Money Award and the title of “Best Commercial Bank of
Pakistan” for the year 1994, while Euro money declared the Bank as best domestic Bank of Pakistan for the year 1995. ASKARI BANK LIMITED MULTAN Askari Bank Limited Multan was inaugurated on December 28,1994. It is located on Abdali Road Opposite to PIA Office. The location is connected to all the main trade centers in Multan. It is a prosperous branch streaming towards great achievements. At the time of its establishment the factored who were considered are as follows • Multan is zone covering a large population. • Multan City is linked to many big cities. Agro based area constituting growers and gainers • Army Offices & Fort Colony • Educational Institution DEPARTMENTS: The bank has following department: • Account Opening department • ATM Department • Credit Card Department • Account Department • Credit Department • Remittance Department • Foreign Trade Department • Cash Department ACCOUNT OPENING DEPARTMENT Borrowing funds from different sources has become an essential feature of today’s business enterprises. But in the case of a bank borrowing funds from outside parties is al l the more vital because the entire banking system is based on it.
The borrowed capital of a bank is much greater their own capital. Banks borrowing is mostly in the form of deposits. These deposits are lent out to different parties. Such deposit creation is done through opening an account in the Bank. In AKBL Multan Mr. Sheeraz Hassan is operating the account opening department along with performing some auxiliary functions of Check Book Issuing TYPES OF ACCOUNTS In AKBL, there are the following types of accounts: • Current account. • Saving Account. • Askari Special Deposit Account. (ASDA) • Basic Banking account • Term Deposit. CURRENT ACCOUNT
In current account there is no interest on it. It is for only transaction purposes. They are paid on demand. When a banker accepts a demand deposit, he incurs the obligation of the paying all cheques drawn against him to the extended of the balance in the account. As there is no profit paid on this account it is also called chequing account because cheques can be drawn on it. Current account is mostly opened for business. SAVING ACCOUNT The purpose of this account is to induce the habit of saving individuals in the neighborhood. The minimum deposit for opening the account is Rs. 1050/- (as obvious in the Annexure).
Though individuals open such accounts for saving purpose, persons belonging to Armed forces and different military institutions are free to use this account on current basis. ASKARI SPECIAL DEPOSIT ACCOUNTANT ASDA account is an interest bearing current account interest is paid. The payment of return is monthly, where as the rate of return with aspect to the amount of minimum deposit clear from deposit schedules in following table). It is also chequing account because cheques can be drawn on it. It is necessary for this account that the client must maintain a minimum balance of Rs. 0,000 at the end of the month. That’s why it is similar to current account. It is mostly opened by Business but individuals too open this account. Tax of 0. 3% would be deducted on ASDA if withdrawals are more than Rs. 25,000. TERM DEPOSITS A term deposit is a deposit that is made for a certain periods of time at the end of the specific period. the customer is allowed to with draw the principle amount . AKBLs Term deposits are of types clear in the deposit scheme in the table). One of them is “Askari” Advantage one month. The rate of return on this account is set by head office.
The term deposit account vary one month to 1 year for all following accounts (as clear from Deposit Scheme in the table). • The amount of profit is given to depositors in three ways: • By cash • By sending a bank Draft to depositors Home address or Officers or whichever is specified as mailing Address. • The amount is credited in any one of the checking Accounts of the depositor. ACCOUNT OPENING PROCEDURE Fro the chequing accounts (C/A, ASDA, SAVING), there are different types of account holders are required for all these types of account holders.
The operation /procedure requirement that is needed for ” Individual Account ” differ greatly from ” Joint account ” proprietorship “Partner ship “, “Limited Company” and “Club society or Association ” as explained below. INDIVIDUAL’S ACCOUNT When a single man or women opens an account in his/her own name and has the right to operate it is called individual Account. DOCUMENTATION REQUIREMENT For literate person copy of National Identity Card is required as a primary requirement. For illiterate person and Veiled Women, along with the copy of National Identity Card requirement he or she must come in person for opening the account.
OPERATION • The person place a “Check Mark ” in the type of account and type of operation required • He/She fills in part-I of the form , a fix his /her either two or four similar signature (or thumb expression in the signature space and get it introduced and signed by a person who already has an account with the bank and write his account no in the specific rows in a specific space. • The person fills in “next of Kin ” position where he/she father, mother, husband/wife or any other relative’s name, his /her address, phone no and affix his/her signature to certify this requirement.
This requirement is needed because in his/her absence bank can have correspondence with the specific person. • The person put her /his signature (” or thumb expression) on the signature Specimen Card (SS CARD) similar in the area on the form. One the back of S. S card mailing address, telephone no, Person to contact and introducer space is filled in. All these requirement are necessary for future • The person deposits the initial amount for opening account on to the cash counter. The person put his signature on form -A (check book requisition) on two places in “authorized signature” and fills in the “Title of Account space by writing his name. • If the person put his signature in Urdu or any language other than English, he signed a “Vernacular form” where under take that affixed signature are original and his own signature and two postal size photos are needed. • The next day is the opening of account. JOINT ACCOUNT When two or more persons, neither partners, nor trustees, open an in their name is called joint Account. Husband and wife or two persons of same sex can open joint account.
DOCUMENTATION For joint account copy of National Identity Card of all the persons is obtained other things remaining same as in individuals account. OPERATION • The person checks the type of amount and type of operation required in the respective box on the form. • The persons fill in the Part-I and part-II in the form. • Signatures of both persons are obtained on the form in the area specified for signature and S. S. Card. • In the title of account space names of all the persons are mentioned. • Accounts holder specified in the form that they will operate the form singly or jointly. PROPRIETORSHIP ACCOUNT
When an owner of a firm operating singly, opens an account in his firm name, this account is called a proprietorship Account the proper himself liable for all his acts. DOCUMENTATION REQUIRED For this kind of account, an application for opening the account on the firm letter -pad (having the firm name) is required along with the NIC Card of proprietor. OPERATION All operation remains the same except that the firm name is written in the “Title of the Account” area and signature of the proprietor are affixed in the S. S. Card and the area specified for signatures on the form. PARTNER SHIP ACCOUNT
The account is opened in the firm name and all partner designate one two persons to act on behalf of the partner ship firmer all acts on behalf of firm. The partners in the partnership firm are liable for the acts of the firm jointly and severely. Every partner has in a firm has an implied authority bind his co. partners by drawing and enclosed cheques. DOCUMENTATIONS • Copy of N. I. C card of all partners • Application to open the account on the firm letter pad. • Partner ship deed in case registered partnership firm. • Letter showing the implied Authority of one or more partners to act on behalf of the firm. In case of non -registered partnership firm, understanding on behalf of the firm to remain liable for all acts of the firm. • Name, address of all partners is written on the pad. OPERATION All other requirement remain same except that the form is dully signed by all partners cards are signed by all those partners who will act on behalf of the firm and along filling part-I , Part-Iv is also filled. LIMITED COMPANY ACCOUNT This account is for limited companies. In order to facilitate their transaction with outside parties, bank provides many facilities. DOCUMENTATION REQUIRED Memorandum of Association. • Articles of the Association • Resolution of the Board of Director. • Certificate of Incorporation. • Certificate of commencement of business • N-I-C OPERATION The persons authorized in the Resolution of the Board of Directors put their signatures on S. S Cards. Next of kin “requirement “is not need in case of a Limited Company. After completing each and every formality, introducer signature is verified by S. S card and is stamped “Verified” customer signatures are admitted by stamping “Admitting” near signature and again signatures on S.
S card are admitted in the same way. The same process of verification and admission of the signatures is repeated on Form-A and next of Kin area. After completing each and every formality, Accountant is open in the computer by writing name, address, A/C Number etc. LETTER OF THE THANKS At the start of the letter 2nd day, AKBL issues letter of thanks to “Account opener” and “account opener” and ” Account Introducer ” for the trust the have on AKBL. CHECK BOOK ISSUING Check books are issued only for checking account such as current Account, saving Account and ASDA Account.
They are not issued for other fixed and term deposits because of their Long term Accounts “nature. ” ISSUING PROCEDURE • Signatures on cheque – book requisition are verified by matching with signatures on SS. • Cheque – book leaves number, account number, account holder’s name are mentioned in the cheque- book is made by mentioning the and the total of sum of excise duty and provincial tax. • The name of A/c holder and date of cheque – book issuance is written on cheque – book requisition the account-opening officer puts his initials on requisition leave. A/c number is stamped over the leaves of cheque – book and finally authorized person affix his signature over the debit voucher and he voucher is attached from the cheque book and is handed over to the customer . RECEIVING INWARD CHEQUES Another responsibility and function of account Opening Department is to receive Inward cheques for collection of other Banks as well as of AKBL . Then these cheques are sent to clearing official who clears these checks at SBP from other banks. ACCOUNT CLOSING Account is closed on the written request of the customer AKBL free of cost.
But to surrender the cheque book yet if some leaves are yet to be write to the bank as a necessary requirements for closing the account. PROCEDURE • The customer for individuals account write an application to the manager of the bank an a simple paper about the closing of his account with the bank (In case of proprietor ship partnership and limited company account the application should be written an firm or company letter –head) • The individual or in case of other type- proprietor firm and company surrender the cheque book to the bank. The cheque book is then torn from one side and is attached with the application. • In case of Ltd. Company account resolution of the board of directors is also obtained to attach it with the application. • The account opening form of the account holder is taken from the account-opening file, and the application, cheque book, and resolution of board of directors in case of limited company account are attached with the form. • Lastly, it is written in “Red Ink on the form that account closed” and “Date of account closing. ” EVERYDAY POSTING Following transaction of cheque book is posted:-
Dr_____________ party A/c 50(for 10 leaves) Rs 5/leave. ATM- CARDS DEPARTMENT This department deals in issuing ATM-Card, term deposits and Askari Bachat Certificate. Mr. Sheeraz Hassan deals this department. ATM CARD ATM – Cards are only issue to Account Holder ISSUING PROCEDURE • The person, first open the account within the blank. • Then he fills the ATM application form in which name of account holder, Fathers name account number and N. I. Card number are mentioned. • A copy of N. I. card is also attached with the application form. After completing this process, the application package is sent to head office • ACBL head office takes a period of 3-4 weeks for preparing and processing of ATM – cards. First, list of card holder is issued and then after 15 days cards are send to ACBL’s issuing branch. The card and list are not sent simultaneously in order to avoid any mishandling. • ACBL takes Rs. 350/- for 1st time issuance as charges for a card • Biannually takes Rs 75. ACCOUNTING DEPARTMENT Accounts department is a department which deals and checks all the activity of all the department .
It also deals in expression of finance of the bank. Salary payment is also one function of the bank. CHECKING BANK’S DAILY ACTIVITY Accounts department deals and checks the entire working of the Branch; all the vouchers that have been posted at the computer are scrutinized in accounts department. The “End of Day” i. e. computer print is also received from the computer. The next day the activity is separated some statements from the “End of Day”. Then next day activity separated some statements from the “End of Day”. The vouchers are sorted out head wise.
The vouchers are matched with the entries in the statements. Any abnormality if occurs, is immediately dealt with. All the vouchers and instruction are checked individually are checked individually against the computer printouts. After checking they are signed by Mr. .Naeem Shehzad and the internal auditor Mr. Shafiq. OTHER ACTIVITIES • Preparation of daily bank positions statement • Payment of salaries • Preparation of the statements • Depreciation calculation • Lockers Issuance REMITTANCE DEPARTMENT: The need of remittance is commonly felt is commercial life particularly and in everyday life generally.
The main function of the remittance department is to transmit money from one place to another. By providing this service to the customer, Bank earns a lot of income. Also customer is able to meet its day to day financial requirements. Demand Draft: It is an instrument payable 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. If two Banks are involved then the DD is sent to other Bank but in other case it is handed over to the applicant. Issuance Procedure: A demand draft application is given to the customer, he fills in relevant information and signs it. • The officer checks the information form. • The Bank charges such as commission, excise duty is charged as per effective schedule of charges. If he fills the tax exemption form, tax is not charged. • In case of cash deposit, the cashier counts the amount and signs the DD application and enters it in the register. • Then the officer of remittance department signs it and operation manager counter signs it. • The entry is made in the DD issuing register, DD is given to the customer. Vouchers are prepared and posted. • DD advises are printed and mailed to the respective branch. Payment Procedure: • The Bank receives DD. • The DD credit advice is received through mail. The numbers are checked and signatures are verified. • An entry is made on the DD payable register and the vouchers are made. • DD credit is attached with the vouchers and given for posting to the computer. • When DD is received the test numbers are checked and the payment is made. • Vouchers are given for posting and the entry that was made in the register is closed i. e. DD payable is Nil.
Pay Order: It is an instrument issued for payment in same city. Pay order issued from on e branch can only be payable from the same branch. It is normally referred to as Banker’s cheque. It is also called confirmed cheque, because Bank issues this on it own guarantee. Issuance Procedure: • The standard form is given to the customer. He fills in the details and signs it. • The concerned officer checks the form. • Bank charges (or commission) as per the schedule of charges and the withholding tax of 0. 3% are applied. • The cash amount of the pay order is received. A cash memo is signed, stamped and handed over to the applicant as a receipt. • Then the pay order receipt is filled accordingly. • Counter foil is also filled. • An entry is made in the pay order issue register. • Then the authorized officer signs it after checking the pay order. • The order is then handed over to the applicant after obtaining his signature on the PO Form. • A voucher is also made and posted at the computer. Payment Procedure: • On presentation of the pay order receipt, two authorized officers of the branch sign the receipt. • PO entry is made in the PO issue register. Then the amount is credited to the account of the customer or pain in cash. • PO is posted at the computer. Outward Bills for Collection: The bills, which are received by the Bank and sent to other cities (branches) for the local clearing in that city, are called Outward Bills for Collection. Procedure: • The cheques that are of other cities are separated. • They are entered in the OBC Register and OBC numbers are given to them. • The OBC forwarding schedules are prepared for different branches. • The respective cheques are attached with the schedule. • The office copy is filled and original schedule is mailed. On clearing, the respective Banks send back the OBCs along with the IBCA (Inter Branch Credit Advice). • The OBC numbers are checked from the OBC register, after that entries are made. • Commission charges are deducted from the account. Inward Bills for Collection: The bills, which are received by the Bank from other branches out of the city for local clearing are called Inward Bills for Collection. Procedure: • The OBC of other branches will be the IBC of this branch. So an OBC forwarding schedule is received by mail. • The cheques are entered in the IBC register.
The IBC numbers are allotted to them. • The cheques are lodged for clearing. • After realization, an IBCA is prepared and mailed to the branch from where the cheque was received. • At the end of the day, two vouchers are prepared and posted. FOREIGN TRADE DEPARTMENT Foreign trade department deals in: • Foreign currency account • Exports • Imports FOREIGN CURRENCY ACCOUNT Mainly this account deals in individual, personal and companies account CRITERIA FOR OPENING FOREIGN CURRENCY ACCOUNT There are not hard and fast rules for becoming the Foreign Currency Account holder.
Bank wants only introduction of the Client and very little about the background. I. D card is also not necessary, if someone has; well and good, otherwise no restriction will be there for him. FEATURES OF FOREIGN CURRENCY ACCOUNTS • There will be legal protection for the account holders. • According to foreign exchange rules and regulation every citizen of Pakistan, either within the Pakistan or outside the Pakistan, can open the foreign currency account. • Resident firms and Resident Companies including investment Banks can open Foreign Currency Accounts. All foreign nationals and foreign Companies in Pakistan or abroad can open Foreign Currency Accounts. • Opening of Foreign Currency Accounts in the joint names of residents/non-residents is permissible. Foreign Currency can be deposited by: • Remittance received from abroad • Foreign Currency Notes • There will be no restriction and questioning to him about the currency, which he wants to deposit that from where he got that money. • No Zakat will be deducted on these accounts; no Income Tax deduction, no Wealth Tax deduction will be there. These incentives reinforce and motivated the people to invest in foreign currency accounts rather to keep the foreign currency idle. • Foreign currency accounts can easily be transferred from one person to another, one place to another, with in the ACBL Branches or in other Bank. • The account holder can transfer the funds freely, in any currency to any part of the world. • Foreign currency Accounts can be used for payment of purchases at Duty Free shops. FACILITIES This account provides following facilities: • Traveling quota • Out ward remittances • In ward remittances receiving To make remittances procedure flexible EXPORT Mainly export deals in: • Negotiation of documents • Sending the documents for collection • Pre-shipment financing • Post-shipment financing • Remittance against agent commission • Forward covered booking • Handling the documents for negotiation according to the UCP 500 (uniform custom and practices) • Handling the documents for collection according to URR (uniform rules for collection) • Submission of monthly returns to SBP regarding the export on form A-2/O-2 IMPORT • Opening the letter of credit Scrutinize the documents receive from flowing bank under letter of credit. Account to UCP 500 and extending the credit facility to the importer informs FIM (finance against imported merchandise) FATR (finance against trust receipt). • Arrange forward cover booking regarding import payments • Also arrange forward cover booking for letter of credit open other then ACBL • Submission of monthly returns to SBP regarding the import on form I SWOT ANALYSIS SWOT (Strength, Weaknesses, Opportunities & Threats) analysis of AKBL is described below: Strengths: AKBL has got a well-developed on-line system in most of its branches. Remittance Department is working very efficiently in transferring the funds of people due to this system. • The Bank has also started ATM facility in most of its branches. 24-hour Banking is new trend in Pakistan and AKBL has also taken apart in this trend. • One distinctive feature of the Bank is that it is the only Bank working for the welfare of army officers, which was established by Army Welfare Trust. • The productivity of the Bank is very good. Bank is providing a high quality service to its customers. AKBL have strength that most of the imports which are done in Multan are handle by AKBL Multan. Weaknesses: • AKBL has lesser number of branches as compared to many other branches. Due to this problem, army officers can not avail the benefits of their own Bank. • The human resource department is not performing the function of selection and recruitment very effectively. Selection process is not on merit due to which competent persons cannot be selected. • Bank should boost the product development and increase the range of facilities offered for customers. Bank is weak in its credit management. Bank should lend to very sound parties and increase its payment rate. Opportunities: • Govt. is taking very bold steps to promote IT in Pakistan. AKBL has an opportunity to improve in technology. • AKBL is surrounded by many competitors. It has an opportunity to do aggressive marketing to increase its business. • AKBL may increase its branches in competitive areas Threats: • AKBL has many competitors, which are continuously increasing its products and marketing aggressively. It may cause its customers to shift to competitors. Some other Banks have competent taskforce, which is also a threat for AKBL. Because human resource is the most valuable resource. • Due to the increased bad situation of Pakistan in which army is considered to be involved increase the frequency of withdrawals, which would decrease deposits. Financial Analysis: Financial Highlights The current year’s profit (2007) after taxation of the bank stood at Rs. 2,681,012 as compared to Rs. 2,249,974 for last year. The deposits decreased by 16. 49% to Rs. 11,197,424 as against Rs. 13,044,593 as on 31 Dec 2006. The loans and advances figure stood at R. 5,521,030 reflect on the improving market image of Askari Bank as a formidable financial institution. Ratio Analysis The information contained in the four basic financial statements is of major significance to various interested parties who regularly need to have relative measures of the company’s operating efficiency. Relative is the key word here, because the analysis of financial statements is based on the use of ratios or relative values. Ratio analysis involves methods of calculating and interpreting financial ratios to analyze and monitor the firm’s performance.
The basic inputs to ratio analysis are the firm’s income statement and balance sheet. |Ratios |2007 |2006 | |Current ratio |1. 03 |1. 04 | |Total asst turnover |0. 11 |0. 09 | |Debt ratio |0. 93 |0. 3 | |Gross Profit margin |0. 11 |0. 22 | |Operating profit margin |0. 21 |0. 12 | |Net profit margin |0. 22 |0. 26 | |ROA |0. 02 |0. 02 |
Earning asset to total assets Earning assets are the assets which are very important for any company for the bank earning assets are the assets on which bank can earn its profit which may includes loans, advances, operating fixed assets and other assets on the loans and advances bank can make profit by giving or investing in some where so Askari Bank has increased it’s earning assets in the year 2007 as compared to the previous year that show the good trend in the profitability of the Askari bank and the customer believe on the Bank.
Ratio tells that on what percentage earning assets contribute the total assets. Well bank also has increased it’s earning assets ratio shows the more profitability of the bank as it can be shown by the profit and loss account of the 2007 that shows the net mark up income more for the year as compared to the previous year so bank is going gradually to the more profitability by giving more advances and loans. Earning assets ASSETS |2007 | | | | |Cash |13356055 | |Balances with other banks |3497054 | |Lending |14444143 | |Investments |39431005 | |Advances |100780162 | |Operating fixed assets |5128428 | |Total earning Assets |176636847 | |Other assets |5535038 | | | | |TOTAL |182171885 | Total Earning Assets: Rs. 176636847 Formula: Earning Assets / Total Assets = 176636847 / 182171885 = 0. 969616 Return on earning asset This ratio indicates the how much of earning assets take part in making of the profit before taxation. This ratio is decreased during the year.
Why is it so it has different reasons these are as follows Profit before taxation was more in the previous year as compared to the year 2007 because bank has low expenses and less provision for the bad debts and also bank has small investments and limited loans and advances but in 2007 situation has changed and bank increased its loans and advances. Earning assets were also low in the previous year as compared to the 2007 so overall ratio has been decreased but shows the good trend for the making of long term planning Formula: Profit after tax / earning assets = 2,681,012 / 176636847 = . 015 Loan loss coverage ratio This important figure is a reserve account to cover unexpected defaults on loans by borrowers.
These are generally referred to as no performing loans. The higher the no performing loan and charge-off percentages, the higher the provision for loan losses should probably be. Consequently, this would reduce net income and earnings per share. Well in the year 2007 bank’s this ratio has been increased to a great extent due to different reasons theses are as follows. Profit before taxation is low for the 2007 due to more expenses because bank is in expanding mode that’s why its expenses are increasing day by day. Provisions and bad debts also increased in the year 2007 because bank also has invested more in this year and ad more also granted more loans. Formula:
Provision against non-performing loan and advances / profit (loss) before tax = 3,920,240 / 2,299,785 = 1. 70 Loan to deposit Well there is a concept that bank’s loans are its assets while its deposits are liabilities. But if a bank has low deposits then obviously it will give low loans because bank gives it’s loans by the deposits and earn on the loans then pay mark up on the deposits to the customers. Well bank has increased its loans to deposits ratio in the year 2007 showing its more deposits as well more loans and that is good for the bank to remain in the market and to penetrate in the market. But profit has not increased with the same ratio because
Bank has low mark up rates Bank has more capacity for provisions Formula: Loans / deposit = 14444143 / 11,197,424 = 1. 289 Current ratio This ratio indicates the liquidity of the bank. Well this ratio has been decreased but nt much decreased during the year to a small extent due to Bank has increased its deposits so liabilities have been increased. Bank has increased its assets as well to overcome the liabilities. So overall we can say bank is the liquid enough to pay its liabilities Formula : Current assets / current liabilities = 171508419 / 166214583 = 1. 03 Debt Ratio: Debt ratio remained the same in previous year it was . 93 and in 2007 its again 0. 93.
Bank has not decreased its debt ratio in 2007. Net Profit Margin: Net profit margin of a bank has been increased from 0. 12 to 0. 21. Horizontal and vertical analysis Comparing analytical data for a current period with similar computations for prior years affords some basis for judging whether the condition of the business is improving or worsening. This comparison of data over time is called as horizontal or trend analysis, to express the idea of reviewing data for a number of consecutive periods. It is distinguished from vertical analysis or static analysis which refers to the review of the financial information of only one accounting period. HORIZONTAL ANALYSIS Balance sheet accounts | |2007 | |2006 | |%age | |ASSETS | | | | | | | | | | | | | | | |Cash | |13356055 | |14879230 |-1523175 |-10. 2369 | |balances wid other banks | |3497054 | |7333002 |-3835948 |-52. 3107 | |Lendings | |14444143 | |8392950 |6051193 |72. 9852 | |Investments | |39431005 | |28625915 |10805090 |37. 74583 | |Advances | |100780162 | |99179372 |1600790 |1. 614035 | |o. fixd assets | |5128428 | |3810331 |1318097 |34. 59272 | |defferd tax assets | | | | | | | |other assets | |5535038 | |3812788 |1722250 |45. 7036 | | | | | | | | | |TOTAL | |182171885 | |166033588 |16138297 |9. 719899 | | | | | | | | | |LIABILITIES | | | | | | | | | | | | | | | |bills payable | |2627051 | |1839077 |787974 |42. 4617 | |Borrowings | |17553525 | |14964087 |2589438 |17. 30435 | |deposits&other acc | |143036707 | |131839283 |11197424 |8. 493238 | |sub-ord loans | |2997300 | |2998500 |-1200 |-0. 04002 | |liabl against assets | | | | | | | |deferred tax liab | |471519 | |736298 |-264779 |-35. 608 | |other liab | |3219796 | |2603113 |616683 |23. 69021 | | | | | | | | | |TOTAL | |169905898 | |154980358 |14925540 |9. 630601 | | | | | | | | | |Net assets | |12265987 | |11053230 |1212757 |10. 97197 | PROFIT and loss accounts |2007 | |2006 | |%age | | | | | | | | |interest earned |15143241 | |12596921 |2546320 |20. 21383 | |interest expensed |8685624 | |6977313 |1708311 |24. 48379 | | | | | | | | |net mark up/interest income |6457617 | |5619608 |838009 |14. 1223 | | | | | | | | |loans & advances |3920240 | |1128137 |2792103 |247. 4968 | |value of investment |1501 | |376 |1125 |299. 2021 | |bad debts written off | | | | | | | |3921741 | |1128513 |2793228 |247. 14 | | | | | | | | |interest income after provision |2535876 | |4491095 |-1955219 |-43. 5355 | |Non markup/interest income | | | | | | | | | | | | | |fee,comm,brockerage income |1072868 | |1013660 |59208 |5. 41012 | |dividends income |137079 | |109326 |27753 |25. 38554 | |income from dealing in for curr |655761 | |584344 |71417 |12. 22174 | |gain on sale of inv |2361251 | |112474 |2248777 |1999. 375 | |unleasing gain |1728 | |-2308 |4036 |-174. 87 | |other income |336809 | |321758 |15051 |4. 77739 | | | | | | | | |total non markup/interest income |4565496 | |2139254 |2426242 |113. 4153 | | | | | | | | | |7101372 | |6630349 |471023 |7. 104045 | |Non markup/interest expense | | | | | | |admin exp |4789536 | |3277353 |1512183 |46. 4038 | |other pro/write offs | | | | | | |other charges |12051 | |6141 |5910 |96. 2384 | | | | | | | | |total non markup/interest expense |4801587 | |3283494 |1518093 |46. 23407 | | | | | | | | | |2299785 | |3346855 |-1047070 |-31. 852 | | | | | | | | |Profit before taxation | | | | | | | | | | | | | |current yrs |98535 | |983875 |-885340 |-89. 985 | |prior yrs |-233950 | | | | | |Deferred |-245812 | |113006 |-358818 |-317. 21 | | | | | | | | | |-381227 | |1096881 |-1478108 |-134. 756 | |Profit after taxation |2681012 | |2249974 |431038 |19. 15747 | | | | | | | | |profit brought forward |1799979 | |1617597 |182382 |11. 7487 | | | | | | | | |profit available for appr. |4480991 | |3867571 |613420 |15. 8606 | VERTICAL ANALYSIS balance sheet accounts | | |2007 | |2006 | | |ASSETS | | | | | | | | | | | | | |cash | |13356055 |7. 331567657 |14879230 |8. 961578 | |balances wid other banks |3497054 |63. 8030698 |7333002 |4. 416577 | |lendings | |14444143 |7. 928854115 |8392950 |5. 054971 | |Investments |39431005 |21. 64494538 |28625915 |17. 24104 | |advances | |100780162 |55. 32146851 |99179372 |59. 73452 | |o. fixd assets |5128428 |2. 815158881 |3810331 |2. 294916 | |defferd tax assets | | | | | |other assets |5535038 |3. 038360173 |3812788 |2. 296396 | | | | | | | |TOTAL | |182171885 | |166033588 | | | | | | | | | |LIABILITIES | | | | | | | | | | | | |Bills payable |2627051 |1. 442072689 |1839077 |1. 107654 | |Borrowings |17553525 |9. 635693784 |14964087 |9. 012687 | |deposits&other acc |143036707 |78. 51744357 |131839283 |79. 40519 | |Sub-ord loans |2997300 |1. 645314259 |2998500 |1. 80596 | |liabl against assets | | | | | |deferred tax liab |471519 |0. 258831927 |736298 |0. 443463 | |other liab | |3219796 |1. 767449461 |2603113 |1. 67823 | | | | | | | | |TOTAL | |169905898 | |154980358 | | | | | | | | | |Net assets |12265987 | |11053230 | | Findings on the basis of analysis By the horizontal or comparative analysis in which base year is taken as 2006 certain changes are measured in the Bank’s performance. Cash with other banks and balances with other banks gradually increased in the time line showing the bank’s good performance and this indicate that bank can earn more by making balances with the other banks.
Lending to financial institutions not done in the last year due to more investments done by the bank and by giving more and more advances to the customers but this also has increased the bad debts and provisions of the bank as compared to the previous years. Operating assets has been decreased so that is in favor of the bank. On the liabilities side bank also has increased it’s bills payable that shows that bank has certain increased in the liabilities as well bank’s deposits also increased showing the great penetration in the market place as well customer’s believe on the bank to make deposits that’s why bank’s mark up expense has been increased. Equity also increased in the previous year but bank’s profit has been decreased because bank has invested so much and in the development process so increased in the expenses.
Overall bank’s financial position in the marketplace has been increased in terms of deposits and advances. All these reasons are favorable to the bank in year 2006 because at one side bank’s assets have been increased in the form of advances and at other side markup income increased due to deposits because bank can more invest it Balance Sheet’s one portion that is Assets shows certain changes during the year. e. g Cash & balances with treasury banks have been increased that shows the bank has fulfilled and improved SBP requirements because of maintenance of foreign currency as well as Pakistani currency with other banks due to this balances with the other banks whether outside the Pakistan or inside the Pakistan have been increased.
While investment have been decreased due to making balances with the other banks and so advances increased by giving more to the customers so earning power also increased. In 2007 bank not lend money to the financial institutions. Bank’s operating fixed assets have been decreased to a small extent due to this profit also is increased because bank is the service organization and for service organizations no need of more operating fixed assets. Bank’s deposits and other accounts have not been increased to the same extent as bank is giving advances. Well that shows a positive trend because bank expenses would be automatically decreased that are due to cash management.
Bank’s net assets have been decreased because of less operating fixed assets and also due to increase in liabilities. Balance Sheet shows the assets are more contributed by the Advances and liabilities are more contributed y the Deposits that are favorable for the Bank. Overall result is less profit for 2007 as compared to 2006. But this has certain different reasons these are as follows Increase cash and balances with the other banks More advances Increase in deposits All these reasons are favorable to the bank in year 2007 because at one side bank’s assets have been increased in the form of advances and at other side markup income increased due to deposits because bank can more invest it. Applications of Class Room Concept: In Accounts department there was an implementation of Financial Accounting in making balance sheets, income statements, calculation of depreciation etc • In credits department there was an implementation of different categories of loans like personal loans, corporate loans etc which was studied in Financial Management. Recommendations: Already the bank is having a good infrastructure not much recommendations are needed as a manager but few can work :- • Customers should be given some sort of facilities which can convince people for investment and go for Askari bank for Exports n Imports. • Fist floor of bank is much congested, there is needed to work on that. • There is not a proper environment of customer dealing on that floor that’s why customer feels difficulty in that. Accounts department was much congested, so area of that department should be extended. • After biannually closing of bank there should be a get together of all the employees of bank which can give them a healthy atmosphere to work. • Few of the employees used to interfere in others work so they should be strictly advised to perform their own duty well. Categories: Internship Comments are closed. Subscribe for Latest Updates Top of Form [pic] Your email: [pic] [pic] Bottom of Form • [pic][pic] Categories o Accounting o Articles o Internship o Management o Marketing o Presentations Usefull Links • [pic][pic] Usefull Links [pic][pic][pic][pic]Copyright © 2011 Reporties – Database of Free Internship Reports & Articles.
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