INTRODUCTION
What is a Bank?
Bank is a Pipeline through which currency moves into and out
in a circulation. Bank is a dealer in money. It is an intermediate party
between borrower and lender.
History of Banking.
This has not been so far decided that how word “Bank” was
originated. Some authorities say that this has been derived from the words
“Bancus” or “Banqne” which means “Bench”. However there exist another
opinion regarding it that this word has derived from Greek word “Bank” that
means “Joint Stock of Fund”. Since it is not possible to decide which theory
is correct and holds the true validity. Banking infact is as ancient as human
society. As men came to realize the importance of money as a medium of
exchange, the necessity of a controlling and regulation agency or institution
was needed.
Perhaps there were Babylonians who developed Banking
system as early as 2000 B.C.
FORMAL DEFINATION
Banking is an institution transacting the business of accepting
for the purpose of money from public, repayable on demand or otherwise
draft, order and includes any post office saving bank”. There are following
types of banks:
 Central Bank
 Commercial Bank
 Industrial Bank
 Exchange Bank
 Saving Bank
 Mortgage Bank
COMMERCIAL BANKS:
Commercial
Banks
are
companies “Which transact business of banking in Pakistan. Commercial
banks have constituted the most important source of institutional credit in
the economy of Pakistan.
BANKING IN PAKISTAN.
Pakistan inherited a week banking system at the time of
independence in 1947. at that time there were 38 Scheduled
banks with 195 offices in “Pakistan”.
But by December
31,1973 there were 14 Scheduled Pakistani Commercial Banks
with 3,233 offices all over Pakistan and 74 offices in the foreign
countries. There were 19 foreign banks with the status of small
branch offices, which were engaged in export of crop from
Pakistan while there were only two Pakistani institutions, Habib
Bank and Australia Bank. Customers were unsatisfied due to
uncertain conditions. Reverse Bank of India was also not in the
favor of Government of Pakistan. However the Government of
Pakistan decided to establish a full-fledged bank. Consequently
the Governor General of Pakistan, Father of Nation Quaid-eAzam Muhammad Ali Jinah, inaugurated the “State Bank of
Pakistan” on July 1, 1984. Thus a land mark was made in the
history of banking. The state Bank of Pakistan helped the
Government in the establishment of other financial institutions
and banks.
The banking structure in Pakistan comprises of
following types.
1. State Bank of Pakistan.
2. Commercial Banks of Pakistan.
3. Saving Banks.
4. Co-operative Banks.
5. Specialized Financial Institutions.
The commercial banks were more effective. Up to December
31,1973 there were 14 Pakistani commercial banks which
functional all over the country. All these were nationalized
in January 1,1974 by the Government of Pakistan and were
merged and recognized into following five banks.
1. United bank Limited (UBL)
2. National Bank Limited (NBL)
3. Muslim Commercial Limited (MCB)
4. Habib Bank Limited (HBL)
5. Allied Bank Limited (ABL)
State Bank of Pakistan was the central bank. Separation of
Pakistan caused a lot of problems and difficulties in banking
sector of Pakistan.
Government of Pakistan, in late1990,
introduced the need for privatization.
The state Bank of
Pakistan issues the shares of these banks periodically. Bank
employees and ordinary people can also purchase the shares
and can earn profits. Throughout the period of bank in history,
the banks have been expanded rapidly and have achieved
desired goal of progress.
The
Government
approved
and
permitted
the
establishment of 10 new private banks in August 1991. hence
many new private banks have incorporated since then. Askari
Commercial Bank Limited is also one of newly established private
scheduled Banks. It is a branch of Army welfare organization.
(AWT).
AN
INTRODUCTION
TO
ASKARI
COMMERCIAL
BANK,
LIMITED
ASKARI COMMERCIAL BANK LIMITED was incorporated on October
09, 1991 as a Public Limited Company and is listed on Karachi, Lahore and
Islamabad Stock Exchanges. Its main Sponsors are Army Welfare Trust
(AWT). Army Welfare Trust (AWT) shareholding in bank are
approximately 45 %. Initial paid-up capital of Askari Bank was Rs.300M. It
went public on January14, 1992 with initial public offering (IPO) of Rs.
120M, which was over subscribed 16 times. The bank obtained its business
commencement certificate in February 23, 1962. Its core business is Foreign
Trade Financing. The bank, since its inception has achieved and sustained an
increasing trend of profitability and growth by focusing on the basis
essentials of banking. The Head Office of Askari commercial Bank Limited
is at AWT Rawalpindi. The Head office leads and supervises all the
branches scattered in the far off areas. The departmentalization of Head
office has been done on the basis of functions. In order to perform various
functions there are eight divisions of the Head office.
PRESIDENT SECRETARIAT
The president supervises all the working of the branches. He holds meeting
with the branch managers and makes the policies in coordination with Board
of Directors.
1. Audit Division.
The head is called Audit Chief. This division audits the various branches and
certifies that their working is flow less.
2. Credit Division
Credit Division supervises the credit department of different branches. It
sanctions the various credit advises sent to it by different branches and
monitors the loan.
3. corporate and planning division.
This division is responsible for the corporate affairs and the various planning
schemes of Askari Commercial Bank Ltd.
4. Financial Bank
The financial Division makes the financial statements and look after
monetary affairs of the bank.
5. Business Development Division
The international division is responsible for managing international relations
with other foreign banks. All sorts of internationals affairs are settled here.
HUMAN RESOURCE DIVISION
This department coordinates all the divisions. All the divisions are bridged
together through this department.
ACCOUNTS DEPARTMENT.
The Accounts Department checks the entire working of all the department of
the bank. Salary payment is also a job of this Department.
FUNCTIONS OF ACCOUNTS DEPARTMENT
1. PREPARATION OF DAILY BANK POSITION STATEMENT
Accounts Department has the job of preparing Bank’s daily position. What
actually happens is that at the end of the day is posted in the computer. The
next day is printouts are taken and given to Accounts Department. These
computer printouts are called “End of the Day.”
The “End of the Day” of previous day and two statements i.e UNIDOO 100
and UNIDDO 170 are consulted while making Bank position Statement.
UNIDOO 100
A statement that shows the assets and liabilities of the branch at the
particular data.
UNIDOO 170 (STATEMENT OF DEPOSITS)
This statement shows the details deposits in local and foreign currency.
After preparing the statement the in charge of the department signs it and
then it is countersigned by Operation Manager. Then it is faxed to Head
office.
2.CHECKING BANK’S DAILY ACTIVITY
The job of Accounts Department is to check the entire working of the
Branch. All the vouchers that have been posted in computers are scrutinized
in Accounts Department. The “End of the Day Statement” i.e the computer
printout of the whole day activities of previous day is taken. The vouchers of
that date are sorted out head wise. Then the vouchers are checked against the
entries in the statement. Any abnormally, if occurs, is immediately dealt
with. After checking of activity it is signed by department in charge and
operation Manager.
2. Payment of Salaries
One another function of Accounts Department is payment of salary. Head
office provides the Salary schedules to each branch. According to schedule
Salaries are given and Salary statement is prepared.
PAY/ SALARY STRUCTURE
There are three types of pay/ salary strucrure.
a) Basic Salary
b) Gross Salary
c) Net Salary
a) Basic Salary
It is a salary is provided in salary schedule.
b) Net Salary
When provided fund is deducted from Gross Salary, it becomes Net Salary.
Net Salary = Basic Salary + Allowances- Deductions.
At ASKARI COMMERCIAL BANK the pays are dispatched on 26th of
each month all over the country. The maintenance and record keeping of
Allowances is done by the Accounts Department.
ALLOWANCES
(i)
Medical Allowances.
Medical allowances is 10 % of basic salary.
(ii)
House Rent Allowances
It is 45 % of the basic salary.
(iii)
Electricity allowances
This allowances is 10 % of basic salary.
(iv)
Provided Fund
One basic salary in one year (Deducted from the employee’s salary).
One basic salary in one year (provided by Bank).
4.PREAPRATION OF STATEMENTS.
Accounts department prepares different statements and send them to
Head office. Some statements are:
 Statement of Expenditures
 Salary Statement.
 Petty cash Statement.
Accounts department also prepare statements that are sent to state Bank of
Pakistan(SBP) e.g.
MONTHLY STATEMENT OF SBP.
A monthly statement known as “statement of Assets and liabilities is
prepared as on 30th of month (last day of month) and send to SBP.”
HALF YEARLY STATEMENT TO SBP
A statement showing details of assets and liabilities on 30 th June and then on
31st December (i.e after half year) are prepared and send to SBP.
Some other statements like classification of deposits, advances, bills
purchased and discounted and classification of Investment in securities and
shares are prepared by Accounts dept.
VOUCHERING OF BANKS EXPENDITURES
Accounts department also deals with expenditure occurring in the branch.
Different kinds of bills are dealt with in Accounts Department. For example
if some examples occur on computer maintenance. Then the bill of bank is
brought to Account Department. A debit and credit vouchers are made here.
e.g.
Debit – Expense Account computer Stationary.
Credit- Bills payable pay slip issued.
Both vouchers are attached with the bill and are signed by both head of
accounts dept and Operation Manager.
5. CALCULATION OF DEPARTMENTATION
Depreciation on asset at Askari commercial Band Ltd Multan branch is
calculated through, “Straight-line Method”. Depreciation is calculated both
manually and on computer.
6.MAINTENANCE OF LEDGER.
Working at Accounts Dept. is computerized but some ledgers are also
maintained manually. For example,
 Leave Record Register.
 Furniture and Fixtures.
 Bank Vehicles Register.
 Computer Register.
 Office Supplies Register.
 Medical Allowance Register.
7. OPERATING THE LOCKER.
Accounts Dept. deals with lockers Askari Bank has also provided the facility
of lockers to its customers.
WHAT IS LOCKERS?
Locker is an individual safe that a customer has for his personal use. People
hesitate to keep their important things like sewellary, documents etc so the
bank gives the facility to use the lockers. These are assigned on individual
and joint basis and customers operate them without any hesitation or
problem rather in a safe manner.
TYPES OF LOCKERS
1. Large sized lockers.
2. Medium size lockers.
3. Small size lockers.
1. LARGE SIZE LOCKERS.
Large size lockers have more capacity. Customer having large size locker at
ACBL is charged 2500 per year for locker. The charges of extra large locker
is 3000. while of extra-extra large is 5000.
2. MEDIUM SIZE LOCKER
At Askari Commercial Bank charges for medium size locker is 1500 per
year.
3.SMALL SIZE LOCKER.
At ACBL charges for small size locker is 1000 per year. For key deposit
charges are 1000/locker while Breaking charges are 2000/locker while Late
payment charges are 50/locker.
KINDS OF LOCKERS
Two kinds of lockers are there at ACBL.
1. Single
2. Joint
1. Single.
Only an individual can operate this type of locker. No other person is
allowed. If person that own locker, dies then locker can be operated by
permission of the court.
2. Joint.
This kind of locker is opened on the basis of either or survivor. Any one f
the holders can operate the locker in this case.
HOW TO OBTAIN A LOCKER
For having the locker following requirements are fulfilled at ACBL Multan
Branch.
1. Account
The customer must have the account in the concerned bank.
2. ID-Card.
A photocopy of ID-Card is needed.
3. Application form for lockers
Application form containing all necessary in formations about the
customer is filled for have locker at bank.
4. Security.
The customer should deposit the security fee to the bank. This is
refundable and customer can get it when he/she closes his/ her locker in
bank.
OPERATING THE LOCKER
Accounts department deals with lockers. The head of accounts
department has keys to locker room. The person having with Accounts
Department manager during banking hours. The person is checked
personally by the manager and his/her. Signatures are also verified on
the locker register where other in formations are also recorded like
 Current data
 Time of opening
 Time of closing
After verifying signatures Accounts department manager gives keys of
locker to the customer and he/she can visit his/her locker in the locker room.
After visiting the locker keys are returned to the accounts department
manager.
CLOSING OF LOCKER
If customer want to close the locker then kept that is payable by the
customer is received by the bank. Key is also taken over and the security of
the locker is refunded to the customer and account on the locker register is
also closed.
AUDIT DEPARTMENT
Audit is done for checking whether the activities in the banking are going in
the right direction or not.
Audit Department in the bank checks whether everything in the bank is
according to rules and regulation or there is violation in performing the
activities according to rules and regulation. Therefore audit department tells
whether activities in the bank are going in right or wrong direction.
TYPE OF AUDITS
Two types of audits are there:
(i)
Pre Audit
(ii)
Post Audit
1. Pre Audit
This audit is normally done by the internal auditors of the bank. The purpose
of pre audit is to check the activities before they are completed. Pre audit is
done for completing the activities according to rules and regulation. Before
the activities are completed, they are checked that whether they are in right
or wrong direction. If they are not according to rules and regulations then
they are corrected.
The benefit of pre audit is to ensure that activities will complete in right
where correction and guidance is needed. Mostly the internal auditors in the
branch do pre audit so that to ensure the completion of activities in right way
before the external auditors audits the branch.
2. Post Audit
Post audit is done after completion of activities. Pre audit checks that
whether active
s. pre audit checks have been completed according to the rules or not.
Mostly Post Audit is done by the external auditors of the bank like State
Bank of Pakistan etc.
Post audit is done for knowing that whether activities are completed in right
or wrong direction. The activities not performed in right way are identified.
Post audit shows where correction is needed.
Normally for internal auditing every bank has its own policies, regulation
and instruction. For external auditing State Bank regulations i.e prudential
regulation are there.
In banks three types of Audit is there.
(i)
Internal audit
(ii)
State Bank audit
(iii)
Statuary audit
I. INTERNAL AUDIT
Internal audit is within the bank and is done by the bank. Internal audit is
done so that the weakness should be corrected before the external audit is
done. At Askari Commercial Bank Ltd Multan, branch Mr. Shafiq Khalid is
the internal auditors of the branch. He checks all the activities performed in
the branch. He checks that whether everything going on are according to
policies, regulations and instruction of the bank of not. He identify the place
where correction is needed and ensures that every activity will be completed
according to rules.
II. STATE BANK AUDIT
State Bank Audit can be done by State Bank of Pakistan at any time. State
Bank audit is in public is properly deled or not.
III. STATUARY AUDIT
Under the companies act every bank is bounded to have audit from chartered
Accountant firms/ agencies.
Statuary Audit is done at 31 December I-e at the end of the year.
The statuary Audit of Askari Commercial Bank Ltd is done by Taseer Hai
Khalid and co chartered Accounts.
Statuary Audit is done for checking
 Assets of banks
 Deposits of banks
 Liabilities of banks
 Investment etc of the banks.
The Auditor’s Report 2001 for Askari Commercial Bank Ltd shows that
the auditors (Taseer Hadi Khalid & co) have audited the balance sheet of
ACBL at 31st December 2001, related profit and loss accounts, cash flow
of changes in equity etc for the year ended. The auditors report in the
auditing report that
(a) Proper books of accounts have been kept by the bank as required by
companies ordinance 1984.
(b) The balance sheet and profit and loss accounts together with notes are
in accordance with Banking Companies Ordinance 1962 and the
companies ordinance 1984.
(c) The expenditure occurred during year was for the purpose of the
Bank’s business.
(d) The business conducted, investments made and the expenditure
incurred during the year were in accordance with the objectives of the
bank and the transactions of the bank have been within the powers of
the bank.
(e) The balance sheet, profit and loss account, cash flow statement and
statement of changes in equity together with the notes can form with
approved accounting standards as applicable in Pakistan and give the
information required by the Banking companies ordinance 1962 and
companies ordinance 1984 in manner so required fair view of the
Bank’s affairs as at 31 December 2001 and its true balance of profit,
its cash flows and changes in equity for the year ended.
(f) Zakat deductible at source under Zakat and user ordinance 1980 was
deducted by bank and deposited in the central Zakat Fund established
under Section 7 of that ordinance.
Some other types of Audits are Income tax audit and Excise audit etc.
The main purpose of each Audit to keep the activities of the bank on
right track and to ensure that everything is according to rules, policies
and regulations.
CASH DEPARTMENT
Cash department deals in cash and cheques. The cash department at
ASKARI COMMERCIAL BANK LTD MULTAN is being operated by six
persons. Mr. Bilal is the in charge of the department while other members
include Mr. Rahmat, Mr. Abid, Mr. Ali, Mr. Zahid and Miss Noreen.
As cash department deals in cash and cheque, so it is necessary to
understand what is cheque.
CHEEQUE
Cheque is a financial instrument. It is basically an order. Under section 6 of
Negotiable instruments Act 1881 cheque is defined as:
THE REQUIREMENTS OF A CHEQUE
 It should be in writing
 The drawer must not put any condition for the payment of the cheque.
 Drawn on a specified banker only
 Payable on demand.
 A certain sum of money
 Payable to a specified person
 Signed by the drawer.
TYPES OF CHEQUES:
There are two types of cheques.
(1) Open cheque.
(2) Cross cheque.
(1) OPENCHEEQUE
Open cheque is that cheque whose payment is through cash.
(2) COSS CHEQUE
Cross cheque is the cheque where the payment is not through cash but is
through account. Cross cheque has two types
a) Simple crossing.
b) Special crossing.
(a) SIMPLE CROSSING
In case of simple crossing any body who is the bearer / holder of the
cheque can get6 amount through his //her Account on simple crossing is
on the cheque. Crossing stamp is like this.
(b) SPECIAL CROSSING
In case of special crossing bearer is no more important. In special
crossing only payee or beneficiary can get amount through. His // her
account. In case of special crossing bea4rer is crossed and stamp of
payees A/C only is there on the face of the cheque.
PAYEES A/C ONLY.
BOOK KEEPING IN CASH DEPT.
In cash dept amount of cash is recorded through.
(I)
Receiving cashier’s Book
(II)
Paying cashier’s Book
(III) Daily cash position Book
(i) RECEIVING CASHIER’S BOOK
The receiving cashier’s book is used to write down the details of the
incoming cash. There are two receiving cashier’s book. One is for foreign
currency and other is for Pakistani Rupees.
(ii) PAYING CASHIER’S BOOK
The paying cashier’s book is used to note the details of the outgoing cash.
Paying cashier’s book is also of two types. One is for foreign currency while
other is for Pakistani Rupees.
(iii) DAILY CASH POSITION BOOK
The daily cash position book is used for recording the daily ending balance f
the cash on hand. Daily ash position books for foreign currency and for
Pakistani Rupees are separate.
Functions Of Cash Department
Cash Department performs following important functions
(i)
cash Deposit/ cash Receipt.
(ii)
Cash payment.
(iii)
Calculation of daily cash position.
(iv)
Cash management
(i)
Cash Deposit/cash Receipt.
When a customer comes to cash department for depositing cash in his/her
account then in cash department following procedure takes place.
(i). The customer fills the pay-in-ship. There are two types of pay-in –
slips, red and green. The cashier receives the pay-in-slip and cash.
(ii)
And check with the amount written on the pay-in-slip.
(iii)
Then cashier signs the pay-in-slip.
(iv)
Cashier writes the entries in the receiving cashier’s book i.e. serial
No, account type, A/c number, cheque number and amount.
The cashier puts the stamp of the “ Cash Received” on the pay-in-
(v)
slip.
(vi)
The pay-in-slip receipt is given to the customer and the amount is
posted in the computer.
Cash Payment
(ii)
When a customer comes to withdraw a certain amount from
his/her account, he/she brings a cheque with him/her. In this
case, the following steps are taken.
(1)
The cashier receives the cheque and checks it whether it is
posted or predated. Cheque can be cashed within Six months. There
fore the date on the cheque should be six month prior and not be of
the next day. A repeated cheque cannot be cashed.
(2) It is also checked that cheque is of the same branch or of any other.
(3) Type of cheque is also checked that whether it is bearer, order or
cross cheque.
(4) It should be checked that there is no over writing on cheque.
(5) The signatures are verified which are present one on the front of the
cheque and two on the back of the cheque in case of bearer cheque.
(6) The amount in figure and in words is also checked.
(7) After verification of signatures, date and other particulars, the cheque
is given a token number.
Customer receives the token against the
cheque.
(8) Now the cheque is forward to computer section for “posting”.
(9) In computer section, the balance within the account is checked. Other
instructions are also received e.g. blocked, frozen etc. in case balance
is present in the account, the account is debited by the account is
debited by the amount on the cheque and posted on the cheque and
posted cheque is handed over to cashier.
(10)
The signature of the drawer are verified from the signature
specimen cards already feeded in computer system.
(11)
The cashier counts the cash and the cash in paid to the person
and token is received back.
(12)
Cheque is stamped “Cash paid” immediately.
(13)
The entry is made in the paying cash book and the serial
number is written on the cheque.
(14)
In case of any invalid cheque, the officer in the computer
section returns the cheque to the customer along with a slip that
carries the reason that why the cheque is returned. This returned
cheque is also recorded in the “Cheque Return Register”
(iii)
Calculation of Ending Cash Balance.
The official time for receiving deposits and payments at ASKARI
COMMERCIAL BANK LTD Multan is till 1:35 p.m. however some
important customers are accommodated after wards. For calculation
of ending cash balance at the end of the day following steps are taken.
(1) The cash in hand is counted. It contains the cash at the counter
and cash in the strong room.
(2) The opening balance is taken i.e. the ending balance of the
previous day.
(3) The cash receipts are added.
(4) The cash payment is deducted.
(5) This daily cash position is written on the daily cash position
Bank. The cash position books for Pak Rupees and foreign
currency are Separate. Then these balances are matched with
the amounts on the computer. Cash in hand is calculated in
such a way.
Cash Receipt + Cash in hand (Of Last Day) – Cash paid = Cash in
Hand.
(iv)
Cash Management.
Cash management is a technique of managing cash according to
the requirements of the bank on daily basis. The operation
Manager, manages this aspect of cash. There is cyclic variation
in business in Multan city. The bank keeps more cash in cotton
season.
Bank during the rest of the year, normal level is
maintained.
Askari has accountant at state bank of Pakistan just like other
branches. A 5% total deposits are maintained at 5BP. So there
are two main sources of cash.
1.
State Bank of Pakistan.
2.
Head office.
If the branch borrows cash from Head office it has to pay
an interest of 13% on the other hand, if the cash is remitted
to head office, the branch gets profit at 12.75%.
vouchers are separated.
(5)
Cr
suspense A/C cash in transit
Dr
suspense A/C cash in transit
Cr
SBP A/C.
LIQUIDITY MAINTENANCE
the
Askari Commercial Bank Ltd has to maintain 35%
liquidity at state Bank of Pakistan. Every branch has
to maintain 5% of its deposits at local State Bank of
Pakistan. The other 30% is kept in form of approved
securities e.g. foreign investment bills and Treasury
Bills.
SWOT ANALYSIS
STRENGTHS
1- Askari Bank has achieved a lot of awards which shows that it is the
bank of first choice in the region.
1) Askari Commercial Bank Ltd. is declared as “Best Bank in Pakistan”
by “Euromony” magazine in 1995.
2) Asia money magazine is declared as “Commercial Bank of the year”
in Pakistan for 1994 and 1996.
3) Askari Bank is rated for A1+ for short term and at for long term by
Pakistan credit. Rating Agency (PACRA) which is affiliated to IBCA
Ltd. of U.K.
4) Askari Bank won 2nd prize for the best presented annual accounts of
1996 in the financial sector by the Sought Asian Federation of
accountants (SAFA).
5) Askari bank is declared as “Best Bank in Pakistan” by Global finance
in 2001.
2- Askari Bank Ltd. is one of the first private banks in Pakistan to offer
innovative products and services to its customers like 24 hour
telephone banking.
3- Askari Bank, being a leading bank of Pakistan has been quick to
introduce ATM (Automated Teller Machine) services to customers.
Electronic cash dispensing facilities are now available at major
centers like Karachi, Lahore and Rawalpindi. All these ATMs are
linked through a state of art satellite based communications system
offering read-time 24 hours service.
4- 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 to the government of
Pakistan for the financial sector deepening and intermediation project.
5- Askari Bank is operating with 36 branches locate through Pakistan.
most of the branches are connected through state of art, online
communications network, which gives the bank a competitive edge in
providing instant service to its clients. They also offer direct access to
the latest foreign exchange rates through their online communications
system.
6- Interest rate of Askari Bank is better than its competitors.
7- Askari Bank offers value plus A/C that have insurance and tide
facility. Privilege card is free with it.
8- Staff of ACBL is highly educated and trained. They work hard and
follow rules and regulations of bank.
WEAKNESSES
Some weaknesses of ACBL are:
i.
Online services are not free as compared to other banks like
Alfalah.
ii.
Number of branches of ACBL are limited.
iii.
Number of ATMs are limited and are not easily accessible to to
customers.
iv.
Mostly work load on employees increases and they remain in
office till 8-9 P.M. To decrease this load appropriate number of
employees should be there in each department.
OPPORTUNITIES
Technology is rapidly changing. It plays a pivotal role in enhancing
customer expectations, particularly with respect to speed and quality of
service. So ACBL may enjoy more customers. If they update their
technology with changing world. Because it will create more opportunities
of growth for them.
THREATS

Branch network of other competitors banks is spread not only
over the country but also in foreign countries. Askari bank has 36
branches all over the Pakistan and no branch outside the country
so it may create threat for future earnings.

Technology in banking sector is also changing so it is necessary
to update technology according to the changes taking place in
market for future growth. If steps are not taken accordingly, it may
threat in future.
SUGGESTIONS AND RECOMMENDATIONS
1) It is highly necessary to promote the bank through aggressive
advertising campaigns in order to capture considerable share in the
banking sector.
2) The bank should provide advances on easier conditions to attract more
and more customers, also sanctioning process should be made more
efficient and some authority should be given to the branch manager to
sanction loans within certain limits.
3) Number of branches should be increased.
4) ATM machines should be accessible to customers.
5) There should be marketing department.
6) Concept of front office and back office should be there.
7) Customer service counter should be there. The concept of greater
should be introduced in braches. Greater means receiving customer
and guiding them to concerned department.
8) The authorities of bank should take necessary actions to raise the
salaries of their employees giving bounces and other privileges to
them for motivating them to increase their efficiency.
9) Working hours of bank are from 9-00 A.M. to 5-00 P.M. but staff
members remain in office till 8 or 9 P.M. This is because of extra
burden of work on them and a desire to fulfill the goals of branch. For
avoiding this problem all departments should have appropriate staff
members.
AFS-1: FINANCIAL ANALYSIS
The importance of financial statement lines in their utility to satisfy the
question in the mind of different stakeholders. Different classes of people
are interested in the financial statement analysis with a view to assessing the
economic and financial position of any business or industrial concern in
terms of profitability, liquidity or solvency etc.
For example, the
commercial banks are mainly interested in short term liquidity and
profitability while prospective investors may be interested in long terms
profitability and solvency.
Financial statements, among other things, include balance sheet and income
statement. Balance Sheet presents assets & liabilities of the business at a
given date. Besides, showing the ability of the business to service the loans
on the strength of its financial structure and on the history of its profitability,
it helps in judging the impact of financial and fiscal support and in evolving
secured basis for extending such support. Likewise, apart from showing the
progress and profitability of a business, income statements disclose how the
business has been conducted and determines factors behind a rise or decline
in the net worth.
The purpose of analysis of Financial Statements (FS ) is to examine past and
current financial data so that a company’s performance and financial
position can be evaluated and future risk and potentials can be estimated.
The analysis can yield valuable information about trends and relationship,
the quality of a company earnings, and its financial strengths and
weaknesses.
The analysis would answer questions like:
Is the business expanding or contracting?
Is it more profitable than last year or less profitable?
How efficiently is the capital employed in the business being utilized?
Does the business has any financial problem?
And much more
To evaluate financial statements, an analyst must:
Be acquainted with business practices;
Understand the business and accounting terminology;
Be aware of accounting conventions and limitations of accounting;
Be acquainted with the tools of analysis of FS
TOOLS OF ANALYSIS
Financial summary and comparative review:
The analyst would like to compare the financial date of the company with
prior years results as well as with other companies in the same industry or
with the industry in which company operates.
Vertical Analysis
Another useful way of analyzing statement is to convert them ito common
size statement by expressing absolute rupee amounts into percentage of a
base figure. The income statement would thus exhibit expense as percentage
of sales and each asset/liability as a percentage of total assets and total
liabilities. Statements so prepared are called common size statements.
The analysis facilitates the comparison with prior periods and also highlights
the relative significance of each item. The analysis can be equally useful for
inter firm comparison.
Horizontal Analysis
The computation of percentage changes in the same items over time is
referred to as horizontal or trend analysis.
This spotlights trends and
establishes relationships between items that appear on the same row of a
comparative statement thereby disclosing changes on items in financial
statements over time.
Ratio Analysis:
The figures in financial statements, do not tell the whole truth. To obtain
meaningful information relationship between relevant figures must be
examined. For instance:
1.
Relationship which help find the liquidity of the business.
2.
Relationship which reflect the effectiveness of the
financial policies adopted and the potential fund raising
ability.
3.
Relationships which help evaluate the effectiveness of
operational policies.
To achieve the aim, we undertake Ratio Analysis. Ratios provide the means
of showing the relationship which exists between figures on the Balance
Sheets and Income Statements.
The analysis is undertaken to assess
important characteristics of business like liquidity, solvency and
profitability. A study on these aspects enables drawing conclusions as to
financial requirements and capabilities of business units.
Ratios may be classified in a number of ways to suit any particular purpose.
Different kinds of ratios are selected fro different types of situations.
Balance sheet ratios:
These ratios are also called financial ratios. The components for
computation of these ratios are drawn from the Balance Sheet.
Example, Current Ratio, Liquid Ratio, Debt Equity Ratio etc.
Profit & loss account ratios:
Theses ratios are also called operating ratios.
The items used for the
calculation of these ratios are usually taken out from the profit and loss
statement. Example Gross profit Ratio, Operating Ratio etc.
Inter-statement or combined ratios:
The information required for the computation of these ratios I normally
drawn from both the Balance Sheet and Profit & Loss Accounts. Examples:
Debtors Turnover Ratio, Stock Turnover Ratio, Net Profit to Fixed Ratio etc.
The bankers to arrive at a definite conclusion concerning liquidity and
solvency of the business club these ratios as follows:
Liquidity Ratios:
These ration are used to measure the ability of the business to
meet his maturing obligations or current liabilities. Example:
current ratio, Acid Test Ratio
1. LEVERAGE . RATIO:
These ratios help to measure the financial contribution of the
owners compared with that of the creditors, as also the risk of
debt financing. They are also know as capital structure ratio.
Example : Debt Equity Ratio, fixed Assets to net worth,
interest coverage ratio.
3 Turnover or Activity Ratio:
These ratios enable measurement of the effectiveness of the
resources at the command of the concern. Exemple : Fixed
Assets Turnover Ratio, Inventory Turnover etc.
4 Profitability ratio:
These ratios are intended to measure the end result of
business operations. Example Gross profit Ratio, Return on
Capital Employed, operating Ratio.
5 investor ratios.
These ratios helps prospective investors in making their
decision about purchase or sell of shares of a particular
company. Example per share, dividend per share. Price
earning ratio, yield per share, etc.
Formulas for calculating different ratios.
1. Current Ratio
=
2. Acid Test Ratio
Current liabilities
3. Working Capital
Assets-Inventory)
Turnover Ratio
=
4. Debtors Turnover
=
Current Assets
Liquid
Assets
(Current
Current liabilities
Net Sales
RATIO
Average
Accounts
Receivable
5. Creditors Turnover
Ratio
=
Credit Purchases
Average
Account
=
account
Payable
6. Average age of bills
receivable
365
x
Sales
7. Stock Turnover Ratio, it can be calculated by employing
any one of the following formulae.
A
cost of good sold
Average inventory at
B
Net sales
Average inventory at
C
number of units sold
Average number of
cost
cost
units in stocks
8.
Raw materials turn over ratio
consumed
Over Ratio
=
Material
=
Average Stocks
Of units in stocks
9. Finished Good Turn
Over
=
=
Cost of goods sold
Average stock of
=
Cost
=
Average
=
Total cash + cheque
=
Gross Profit
finished goods
10. Work in process Turn
work
Over
of
completed
work
in
process.
11. Cash Turnover Ratio
payments
12. Gross Profit Ratio
Net sales
x 100