Insurance and Risk Management

Table of Contents
Development of Banking in Pakistan: ................................................................................................... 4 Central Bank: ....................................................................................................................................... 5 Nationalized Banks: ............................................................................................................................. 5 Specialized Banks: ................................................................................................................................ 5 Privatized Banks:.................................................................................................................................. 5 Private Banks: ...................................................................................................................................... 5 Foreign Banks: ..................................................................................................................................... 6 Brief History:........................................................................................................................................ 7 Mission: ............................................................................................................................................... 7 Vision:.................................................................................................................................................. 7 Corporate Objectives ........................................................................................................................... 9 Strategic Planning ................................................................................................................................ 9 Registered / Head Office ........................................................................................................................ 12 Registrar and ..................................................................................................................................... 13 Share Transfer Office: ........................................................................................................................ 13 Entity Ratings: .................................................................................................................................... 13 PRODUCT LINES / Services Provided By ACBL : ....................................................................................... 13 PRODUCT AND SERVICES: .................................................................................................................. 13 DEPOSITS ........................................................................................................................................... 14 Local currency deposits ...................................................................................................................... 14 Current Account ................................................................................................................................ 14 Transaction fee .................................................................................................................................. 14 Saving Accounts ................................................................................................................................. 14 Transaction fees ................................................................................................................................ 15 ADVANCES ............................................................................................................................................. 15 Askari Mahana Bachat Account.............................................................................................................. 15 Askari Roshan Mustaqbil Deposit ........................................................................................................... 16 Askari Deposit Multiplier Account .......................................................................................................... 16 Value plus Deposits ............................................................................................................................... 17

Insurance and Risk Management ASKARI CARD ......................................................................................................................................... 17 Travelers Cheques ................................................................................................................................. 17 Smart Cash ............................................................................................................................................ 18 Personal Finance.................................................................................................................................... 18 Mortgage Finance .............................................................................................................................. 19 Business Finance ............................................................................................................................ 19 PRODUCTS: ........................................................................................................................................ 19 COMPETITORS: .................................................................................................................................. 20 Introduction of ALL DEPARTMENTs ........................................................................................................ 20 OPERATIONAL DEPARTMENT: ............................................................................................................ 20 Individual Account: ............................................................................................................................ 20 Joint account: .................................................................................................................................... 21 Partnership s Account: ....................................................................................................................... 21 Limited Company s ACCOUNT: ........................................................................................................... 21 Club, society or ASSOCIATION: ........................................................................................................... 22 Types Of Accounts: ............................................................................................................................ 22 Currency of deposit: .......................................................................................................................... 22 Current Account: ............................................................................................................................... 22 PLS Saving account : ........................................................................................................................... 22 Askari Special Deposit Account (ASDA) : ............................................................................................. 23 Financial Institution Special Deposit Account (FISDA): ........................................................................ 23 Other Term Deposits:......................................................................................................................... 23 correspondent Network: .................................................................................................................... 23 Branch Network: ................................................................................................................................ 24 Comments on the Organizational Structure ....................................................................................... 25 MANAGEMENT .................................................................................................................................. 25 MANAGEMENT STYLE ........................................................................................................................ 25 GOALS ............................................................................................................................................... 25 Hierarchy of Management ................................................................................................................. 26 Our Presence, in all corners of Pakistan, is more than just being there: .................................................. 27 Business and .......................................................................................................................................... 29 Operations Review: ............................................................................................................................... 29

Insurance and Risk Management Financial Review: ............................................................................................................................... 33 Profits: ............................................................................................................................................... 33 Non mark-up / non interest income: .................................................................................................. 33 Operating Expenses: .......................................................................................................................... 33 Shareholders funds: .......................................................................................................................... 33 Return on average assets: .................................................................................................................. 34 Earnings per share: ............................................................................................................................ 34 NPLs and provisions against NPLs:...................................................................................................... 34 Current, Savings and other deposits: .................................................................................................. 34 Capital adequacy: .............................................................................................................................. 34 SWOT ANALYSIS:.................................................................................................................................... 36 STRENGTHS:....................................................................................................................................... 36 WEAKNESSES: .................................................................................................................................... 37 OPPORTUNITIES:................................................................................................................................ 38 THREATS: ........................................................................................................................................... 40 SUGGESTIONS, IMPROVEMENTS AND RECOMMENDATIONS: ................................................................ 41 However, for further improvement I will suggest following points: .................................................... 42 CONCLUSION: ........................................................................................................................................ 43 ATM NETWORK:................................................................................................................................. 45

Insurance and Risk Management

A bank or a banker is a financial institution that acts as a payment agent of customers, and borrows and lends money. Banks act as payment agents by conducting accounts for customers, paying checks drawn by the customers on the bank and collecting checks deposited to the customer s current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer. Banks borrow money by accepting funds deposited on current account, accepting term deposits and by issuing debt securities such as bank notes and bonds. Banks lend money by making advances to customers on current account, by making installment loans and by investing in marketable debt securities and other forms of lending.

Development of Banking in Pakistan: Pakistan is one of the key emerging markets of South Asia with a total population of 140 million people. Pakistan s GDP is expected to grow at over 5% during the year 2003-2004. Macroeconomic stability in financial sector reform is targeted to have a positive, substantial impact on real economy. The financial sector of Pakistan comprises of Commercial banks, Development finance institutions (DFIs), Microfinance banks (MFBs), Non-banking Finance Companies (NBFCs) (Leasing Companies, Investment Banks, Discount Houses, Housing Finance Companies, Venture Capital Companies, Mutual Funds), Modarabas, Stock Exchange and Insurance Companies. Under the prevalent legislative structure the supervisory responsibilities in case of Banks, Development Finance institutions and Micro-finance banks falls within the legal ambit of State Bank of Pakistan while the rest of the financial institutions are monitored by other authorities such as Securities and Exchange Commission of Pakistan and controller of Insurance.

Banks in Pakistan:
4

Insurance and Risk Management

Following are the banks that are functioning in Pakistan: Central Bank: 1. State bank of Pakistan. Nationalized Banks: 1. First Woman Bank limited. 2. Khushhali Bank. 3. National Bank of Pakistan. 4. The Bank of Khyber. 5. The Bank of Punjab. Specialized Banks: 1. The Punjab Provincial Co-operative Bank Limited. 2. Zarai Taraqiati Bank Limited. 3. SME Bank of Pakistan. 4. Industrial Development Bank of Pakistan. Privatized Banks: 1. Allied Bank Limited. 2. Habib Bank Limited. 3. MCB Bank Limited. 4. United Bank Limited. Private Banks: 1. Askari Commercial Bank Limited. 2. Bank-Alfalah Limited. 3. Atlas Bank Limited. 4. Faysal Bank Limited. 5. Bank AL-Habib Limited. 6. Habib Metropolitan Bank Limited (Karachi). 7. KASB Commercial Bank Limited. 8. PICIC Commercial Bank Limited. 9. Soneri Bank Limited. 10. My Bank Limited.

Insurance and Risk Management

11. Meezan Bank Limited. 12. Saudi-Pak Commercial Bank Limited. 13. Crescent Commercial Bank Limited. 14. Bank-Islami Pakistan Limited. Foreign Banks: 1. ABN AMRO Bank. 2. Al Baraka Islamic Bank. 3. Citi Bank (Karachi). 4. Hong Kong & Shanghai Banking Corp. Limited (Karachi). 5. Oman International Bank (Karachi). 6. Dubai Islamic Bank.

The world is so diverse, full of interesting cultures, people and dreams, that we spend a great deal of time to learn how to serve to the changing demands of the changing world. 0ur business is about the people and their unique selves. When people think endless opportunities, we think the same. When they think growth,

we think multiplication. But it isn't as simple as it looks. It takes a whole lot of knowledge, creativity, innovation, strong relationships, resources, talent and dedication of people to the thoughts and dreams of our customers and clients. And most importantly the balance between them all at all levels. This is what art is and Askari is all about it, it's about balance and it's about the art of banking.

Insurance and Risk Management

Overview of the Organization:

Brief History: Askari Bank was incorporated in Pakistan on October 9, 1991, as a public limited company. It commenced operations on April 1, 1992, and is principally engaged in the business of banking, as defined in the Banking Companies Ordinance, 1962. The Bank is listed on Karachi, Lahore and Islamabad Stock Exchanges. The registered office of the bank is situated at AWT plaza, the Mall Rawalpindi.

Mission and Vision:

Mission: To be the leading Private sector bank in Pakistan with an international presence, delivering quality service through innovative technology and effective human resource management in a modern and progressive organizational culture of meritocracy, maintain high and professional standards, while providing enhanced value to all our stakeholders and contributing society. Vision: To be the Bank of first choice in the region.

Our Thinking:
Creating opportunities with innovation and technology.

Insurance and Risk Management

Our Values:
Commitment Integrity

Customers:
Passionate about our customers

Investors:
A distinctive investment,

Insurance and Risk Management Success, delighiting them with the Quality of our service. delivering outstanding, Performance anad value.

Teamwork

Our

Service

Values
Employees: Caring for our
People and helping them grow.

Communities: Dedication towards

Social Development in quality life.

Fairness

Regulators: Examplary
compliance and business ethics.

Corporate Objectives To achieve sustained growth and profitability in all areas of business. To build and sustain a high performance culture, with a continuous improvement focus. To develop a customer service oriented culture with special emphasis on customer care and convenience. To build an enabling environment, where employees are motivated to contribute to their full potential. To effectively manage and mitigate all kinds of risks inherent in the banking business. Strategic Planning To comprehensively plan for the future to ensure sustained growth and profitability.

Insurance and Risk Management

To facilitate alignment of the Vision, Mission, Corporate Objectives with the business goals and objectives. To provide strategic initiatives and solutions for projects, products, policies and procedures. To provide strategic solutions to strengthen weak areas and to counter threats to profits. To identify strategic initiatives and opportunities for profit. To create and leverage strategic assets and capabilities for competitive advantage.

Code of Ethics and Conduct

Askari Bank seeks to maintain high standards of service and ethics enabling it to be perceived as impartial, ethical and independent. In addition to the general guidelines, the following are the salient features of the Bank s code of ethics and conduct. Presence of a corporate culture that seeks to create an environment where all employees are treated equitably and with respect. Employees must carry out their responsibilities in a professional manner at all times. They must act in a prudent manner and must avoid situations that could reflect unfavorably on themselves, the Bank or its customers.

18 Years of Banking:
Askari Bank was incorporated in Pakistan on October 9, 1991,as a public limited company. It commenced operations on April 1, 1992, and is

10

Insurance and Risk Management

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. Askari Bank has expanded into a network of 226 branches / subbranches, including 31 dedicated Islamic banking branches, and wholesale bank branch in Bahrain. A shared network of 4,173 online ATMs covering all major cities in Pakistan supports the delivery channels for customer service. As at December 31, 2009, the Bank had equity of Rs. 14.95 billion and total assets of Rs. 254.33 billion, with 984,485 banking customers, serviced by our 6,159 employees. Askari Investment Management Limited and Askari Securities Limited are subsidiaries of Askari Bank engaged in managing mutual funds and shares brokerage, respectively.

Awards & Achievements:

Askari Bank continues its success in competition. Recently we have once again been given the Best Retail Bank in Pakistan by The Asian Banker for the 2nd consecutive year. Askari Bank has been given the 1st Consumer Choice Award 2004 for the Commercial Banking Category by the Consumer Association of Pakistan. We have also received the Corporate Excellence Award for the financial sector from the Management Association of Pakistan (MAP) for the years 2002, 2003 and 2004. We have been given The Best Bank in Pakistan award by Global Finance magazine twice i.e. for the years 2001 and 2002. We have been given the Best Consumer Internet Bank award by Global Finance magazine for the years 2002 and 2003. We won the Euro money and Asia money awards as early as 1994, 1996 and 1997.

Corporate Information:
y Board of Directors
y Lt. Gen. Javed Zia. (Chairman) y Lt. Gen. (R) Imtiaz Hussain.

11

Insurance and Risk Management

y y y y y y y y

Maj. Gen. (R) Saeed Ahmed Khan. Mr. Zafar Alam Khan Sumbal. Mr. Muhammad Riyazul Haque. Mr. Shahid Mahmud. Mr. Ali Noormahomed Rattansey, FCA. Dr. Bashir Ahmad Khan. Mr. Tariq Iqbal Khan, FCA. Mr. M. R. Mehkari. (President and chief executive)

Legal Advisors

y Audit Committee
y Dr. Bashir Ahmad Khan (Chairman) y Mr. Ali Noormahomed Rattansey, FCA y Mr. Tariq Iqbal Khan, FCA y Company Secretary y Mr. M. A. Ghazali Marghoob, FCA y Chief Financial Officer y Mr. Saleem Anwar, FCA y Auditors y F. Ferguson & Co (Chartered Accountants) y Legal Advisors y Rizvi, Isa, Afridi & Angell

y Shariah Advisor
y Dr. Muhammad Tahir MansooriIn

Registered / Head Office

AWT Plaza, The Mall, P.O. Box No. 1084 Rawalpindi- 46000, Pakistan. Tel: (92 51) 9063000 Fax: (92 51) 9272455

12

Insurance and Risk Management

E-mail: [email protected] Website: www.askaribank.com.pk Registrar and Share Transfer Office: THK Associates (Pvt) Limited Ground Floor, State Life Building No. 3, Dr. Ziauddin Ahmad Road, Karachi -75530 P.O. Box: 8533, Karachi. Tel: (92 21) 5689021, 5686658, 5685681 Fax: (92 21) 111 000 322 Entity Ratings: Long Term: AA Short Term: A1 + by PACRA

PRODUCT LINES / Services Provided By ACBL :

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.

13

Insurance and Risk Management

1. 2. 3. 4. 5.

Deposits Advances Products International banking services Agency services to customers

DEPOSITS One of the basic functions of commercial banking is to receive deposits. ACBL accepts deposits in both local & foreign currency. Local currency deposits y Current Account y PLS Saving Account y Term Deposit y Notice Deposit y Askari Faida Account y Askari Special Deposit Account y Value Plus Saving Account y 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 accounts 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 promotion. The habit of thrift among people, the bank impose certain restrictions on withdrawals from the saving accounts.

14

Insurance and Risk Management

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

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: y Funded facilities y Non- Funded facilities

Askari Mahana Bachat Account

Askari Mahana Bachat Account is a Term Deposit facility available to individual customer with the option of 1 and 3 Years tenure. It has been designed keeping in view savings needs of individual investors who don t want to block their funds for longer terms, with a competitive rate of return paid monthly on the 1st of every month. A financing facility up to 90% will be available for customers if required.

15

Insurance and Risk Management

Askari Roshan Mustaqbil Deposit

Askari Bank has launched the Askari Roshan Mustaqbil Deposit, a saving plan specially designed for individual investors who wish to invest now for a regular return at a later stage while keeping their principal amount intact. With Askari Roshan Mustaqbil Deposit you can double your investment in a time period of ten years. Invest now in the form of monthly deposits for five years and get paid back the same amount for the next five years while receiving your principal amount in full at the end of the tenure.

Askari Deposit Multiplier Account

Value of initial investment of Rs. 100,000/- will increase to Rs. 265,000/- at maturity! Aim higher with your investments with Askari Deposit Multiplier account. This account is for individual investors whose purpose is long term savings with high returns. With a tenure of 10 Years and a competitive rate of return on maturity this account is ideal for investors who wish to start saving for their future today.

16

Insurance and Risk Management

Value plus Deposits

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

ASKARI CARD
Askari Bank is committed to provide you innovative and competitive solutions to your banking needs in a more efficient and personalized manner. Your Bank enjoys a strategic competitive advantage over all domestic players by virtue of its leadership, large network and technological advancement. In line with our tradition of innovation, Askari Bank takes pride in announcing launch of Askari Bank's Debit Card.

Travelers Cheques
Askari Bank Limited has always remained at forefront in introducing innovative and unique products in banking sector. Our financial instruments provide greater financial freedom and security in an unmatched way to our valued customers.
.

17

Insurance and Risk Management

Smart Cash
This personal line of credit would be set up with a specified credit limit upto Rs. 500,000/-

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.

18

Insurance and Risk Management

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.

Business Finance
In pursuance of the National objectives to revive 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. Our valued customers can enjoy the convenience of getting financing on attractive terms with the minimum processing turnaround time.

PRODUCTS: y Askari Kissan Ever Green Finance y Askari Kissan Tractor Finance

19

Insurance and Risk Management

y y y y y

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

COMPETITORS: y National Bank of Pakistan y Habib Bank Limited y United Bank Limited y Muslim commercial Bank Limited y Allied Bank Limited y Meezan Bank

Introduction of ALL DEPARTMENTs

y OPERATIONAL DEPARTMENT y CREDIT DEPARTMENT y FOREIGN EXCHANGE DEPARTMENT

OPERATIONAL DEPARTMENT: Operational activities of the Askari Bank Akbar Chowk Branch includes opening of account, issuance of cheques, issuance of account statements, providing locker facility, cash given to the customers, receiving deposits from them, transfer funds through customers to customers and get collection outside the city etc. In order to perform all these activities, Individual Account: The individual must make a request to the bank for opening of A/C. y He / she must possess Computerized National Identity Card. y Specimen Signature Card y He / she must be a competent person that is

20

Insurance and Risk Management

y y y y

Must attain the age of 18 years Must need a guardian in case of minor Must be a person of sound mind Must be a solvent person

Joint account: In the case of joint account, besides the application, following information should be added and that is: y Signatures are made on all the cheques or orders by either/both or all of us. y However, account can be opened at the request of any one. y Enclosed documents are copies of C.N.I.C of all the applicants. y Specimen Signature Card

Partnerships Account: In case of Partnership s Account, besides application following are additional requirements: y y y y Partnership Deed Form A & C (If firm is registered) Copies of C.N.I.C of all the partners Specimen Signature Card

Limited Companys ACCOUNT: In case of Company s Account, besides application following are additional requirements: y y y y y y Memorandum of Association Articles of Association Certificate of Incorporation Certificate of commencement of business (in case of public limited company) Resolution of Board of Directors of Co. with embossed seal. List of Directors

21

Insurance and Risk Management

y Copies of N.I.Cs of signatories y Specimen Signature Card verified by CEO (chief executive officer) Club, society or ASSOCIATION: Club, society or association is a non-trading institution. So for opening this type of account, bank requires the under stated documents: y Copy of Resolution y Specimen Signature Card Types Of Accounts: Askari Bank offers following types deposits of its customers at attractive rates: y y y y y Current Account PLS Saving Account Askari Special Deposit Account (ASDA) Financial Institution Special Deposit Account (FISDA) Other Term Deposits

Currency of deposit: As far as the currency is concerned, bank offers the accounts and deposits in the following currencies, y y y y Pak Rupee (Pakistan) U.S. Dollar (United States) Pound (England) Euro

Current Account: Current account can be opened with minimum Rs.5000/- however, there is no maximum limit. There is no profit or loss on it and amount can be withdrawn at any time without any restriction. PLS Saving account : People who want to secure their savings are interested to open this account. Usually it is opened with Rs.2500/-. Rates of return are 0.5% to 4.0% and

22

Insurance and Risk Management

are calculated on minimum balance basis. Profit is given after six month and is calculated on minimum balance of the month. Askari Special Deposit Account (ASDA) : ASDA account can be opened with Rs. 50,000/-. Amount can be withdrawn at any time like current account. It is a mixture of Current and Saving Account. Rate is calculated on average balance during the month. That is profit is paid monthly. Profit rates and slabs are subject to change from time to time by ALCO. Rate of return is shown in table in appendix 3: Financial Institution Special Deposit Account (FISDA): All of its features are almost the same as ASDA except, profit rates. This product launched with effect from April 01, 2000 in lieu of ASDA. This product is particularly meant for financial institutions like DFI s, NBFI s. Shown in appendix 4. Other Term Deposits: Branded Rupee Deposit Product launched by Askari Commercial Bank with an idea to target middle & upper middle income group and cater them with better service quality.

correspondent Network: Askari Bank Limited has correspondent relationship with different major Banks in many countries. The complete table is given in the appendix 2. Askari Commercial Bank Limited has correspondent relationship with different major Banks in the following countries. Australia Armenia Austria Aruba Algeria Azerbaijan

23

Insurance and Risk Management

Bangladesh Bahamas Brunei Darus Salam Cayman Islands China Cyprus Egypt Fiji

Barbados Bahrain Bulgaria Channel Islands Cook Island Czech Republic Ecuador France

Belgium Brazil Canada Chile Croatia Denmark Finland Hungry

Branch Network: The system of Regional and Area offices has been introduced since 1999 for effective supervision and control of branches. The Bank's branch network has been divided into 4 regions:

North Region South Region

Central Region West Region

Under this system the Regional heads have the primary responsibility for business development, profitability, productivity, operational efficiency and credit quality. Words of President and Chief Executive - Kalim-ur-Rehman;

24

Insurance and Risk Management

Assets make things possible, People Make things happen.

Comments on the Organizational Structure This is the best structure which is used by Askari bank as compared to other organizations. Staff training and motivation is carried out on a continuous basis throughout the year, based on the assessed training needs, particularly in the areas of knowledge enhancement and skills. This organization structure and operations shows and ensure efficient recruitment, Employee s rotation, succession planning, career progression and development.

MANAGEMENT An Executive Board composed of Twelve Senior Executives of the Bank and the President who is also the Chief Executive supervises the affairs and business of the Bank. MANAGEMENT STYLE Management style at Askari Bank is quite participative in the sense that subordinates are free to discuss things and matters about their Job with managers. Managers have substantial confidence and trust in subordinates but still wish to keep control of decision making. Managers usually get ideas and opinions of subordinates and usually try to make constructive use of them. GOALS The management set for itself following major goals for improving the financial performance of the Bank: y To make the Bank customer focused y To plug the leakage of revenues and expenses

25

Insurance and Risk Management

y To correct the structural flaws in the Balance sheet y To ensure that internationally accepted accounting standards are followed in the Bank

Hierarchy of Management
PRESIDENT / CEO

SENIOR EXECUTIVE VICE PRESIDENT

EXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

MANAGER

ASSISTANT MANAGER

26

Insurance and Risk Management

GRADE I OFFICER

GRADE II OFFICER

GRADE III OFFICER

Our Presence, in all corners of Pakistan, is more than just being there:

27

Insurance and Risk Management

28

Insurance and Risk Management

Business and Operations Review:

The performance of Askari Bank during 2009 showed marked improvement over the previous year despite non-conducive business conditions prevalent during most of 2009. The Bank was able to prudently manage the risks and returns despite subdued credit demand and continued pressure on banking margins. Also, the growing non-performing loans demanded focused handling. In addition to the core commercial banking activities, the Bank was able to derive considerable gains through active management of money market, equity and debt management portfolios. Consolidation of business and operations was the key element of our strategies during 2009 greater focus was placed on strengthening policies, processes, controls and workflows. The technology transformation initiative that the Bank has embarked upon is in an advanced stage of implementation; the benefits are expected to emerge in near future in the form of improvement in service quality, customer offerings, process efficiencies, internal controls that will further strengthen our capabilities and readiness for future challenges.

Corporate and Investment Banking:

CIBG offerings aim towards the Bank s large corporate and institutional customers, including public sector entities. Such offerings range from products for meeting operational funding requirements, as well as a suite of structured finance products and services related to strategic expansions, divestments, syndications, project finance, underwriting, cash management, and trade finance related services. The Group operates through the Corporate Banking Division (CBD) and an Investment Banking Division (IBD) based upon a client-centric and distributionfocused business model, supported by a culture that prioritizes client relationships and economic returns through a structure that enables an integrated, multi-product services.

29

Insurance and Risk Management

Consumer banking Services:

Consumer Banking Services Division s products and services mostly comprise auto finance, personal finance, mortgage finance, Askari Credit Cards under the MasterCard brand, Askari Corporate Credit Cards and Zarai Credit Cards. The consumer finance segment adversely affected by the recent phenomena of inflation and changes in interest rates. The recent data suggests further decline to

30

Insurance and Risk Management

the already contracting market of this segment. In this situation, our consumer banking repositioned itself with focus on containing the growth of problem loans and improving recovery efforts and internal controls. Also, a very cautious and selective approach was adopted for fresh lending during the year. Such efforts have started yielding results and the key performance indicators for this business have started to register notable improvement. .

Islamic Banking:
Islamic banking activities of the Bank were initiated during 2006. Despite late starter, Islamic banking operation of the Bank is now amongst the top players in its peers i.e., 13 conventional banks with separate stand alone Islamic Banking branches. The branch network as on December 31, 2009 has increased to 31, including two sub-branches. During 2009, 11 new Islamic Banking Branches (IBBs) were opened including the first ever conversion of a conventional banking branch. Now IBBs of the Bank are present in 15 major cities. Despite the strain on profitability due to ongoing set up of new branches, the operating profit increased by 77%, which stood at Rs.153.17 Million compared to Rs. 85.74 Million in the previous year mainly attributable to 38% increase in net earning spread.

Agriculture Banking:
During 2009, Agriculture and Rural Business Division (ARBD) gained further strength with improved and efficient delivery and control mechanism for meeting increased demand for credit by the farmers in easy, accessible and affordable manner. Our innovative product range for this segment is best rated in the market. The Bank surpassed its allocated targets for agriculture financing by 102% during the financial year 2008-09. Aggregate disbursements increased by 43% and outstanding advances by 9% while the overall spread also registered improvement over previous period. During the year, while focusing in business development, this unit also achieved further refinement in back office processing

31

Insurance and Risk Management

including credit initiation, operations, risk management, in line with the business dynamics and regulatory framework. ARBD remains proactively engaged with its stakeholders for aggregation of services and improvinglife standard of farmers through its distribution network, currently extended to 89 branches across the country. Some of the milestones achieved by ARDB during the year include: Won first position in diversification of credit products from MINFAL (GOP) Received certificate of appreciation from SBP regarding development of SBP Crop Loan Insurance Framework. Contributed in developing SBP guidelines for Islamic agriculture financing, livestock financing, small farmer group financing. Coordinated with Federal Government for the development of Shaheed Benazir Bhutto Card, Asian Development Bank funded agribusiness development & diversification project. Our agriculture credit brand includes: Askari Kissan Evergreen Finance. Askari Kissan Tractor Finance. Askari Kissan Transport Finan Askari Kissan Livestock Development Finance. Askari Kissan Farm Mechanization Finance. Askari Kissan Aabpashi Finance. Green House & Tunnel Finance. Farm Storage Finance. Model Dairy Finance. Gold Fish Finance. White Pearl Finance. Murghban Finance. . Samar Bahisht Finance. Gulban Finance. Asan Mali Sahulat, Zarai Credit Card.

32

Insurance and Risk Management

Financial Review: Profits: The operating profit (i.e. profit before provisions and taxation) of the Bank stood at Rs.4.56 billion; almost at the same level as of last year (2008: Rs.4.53 billion). Pretax profit recorded growth of 256%, whereas profit after tax registered an increase of 187% compared to the corresponding year. The net interest income registered an increase of 17%, despite revenue suspensions owing to burgeoning NPLs. Non-interest income decreased by 6% while administrative expenses increased by 19%.

Non mark-up / non interest income: The non mark-up / non interest income, declined by 6%, mainly due to (a) a oneoff income recognized last year from dealing in foreign currencies and (b) overall subdued economic activity during the period under review. The fee, commission and brokerage income recorded marginal increase, 4% over last year. Gain on sale of investments registered increase owing to improvement in bourses. Operating Expenses: Administrative expenses have increased by 19% over the previous year. This rise is mainly due to 26 new branches opened during 2009, as well as 36 new branches opened in late 2008, beside persistent inflationary upsurge. Cost to income ratio recorded a negative trend, reflecting combined effect of disproportionate decline in revenues and rise in operating costs. Shareholders funds: Shareholders funds increased to Rs.14.95 billion at the end of December 31, 2009 from Rs.12.97 billion of last year, registering an increase of 15%. Net surplus on revaluation of assets including equities, increased by 93% due to improvements in bourses.

33

Insurance and Risk Management

Return on average assets: Return on average assets at the close of 2009 was 0.48% as against 0.20% last year, registering an increase of 28 bps due to 187% increase in profit for the year against increase in total assets of 23%. Earnings per share: Earnings per share (EPS) increased from Re.0.76 per share (restated for bonus shares issued during 2009) of last year to Rs.2.18 per share for the year 2009. The increase is mainly due to growth of 17% in net interest income and decline in provisions / write-offs by 28%; partly offset by increase of 19% in operating expenses. NPLs and provisions against NPLs: Non-performing loans (NPLs) increased by 52% during 2009, due to new classifications. Cumulative provision against NPLs increased by 14%, whereas provision charge for the year declined by 43% due to recognizing Rs.2.81 billion as the benefit of forced sale values (FSV), as allowed by the SBP. By year end 2009, NPLs as a percentage of total advances reached 12.01% compared to 8.36% at the end of 2008. The aggregate provisions covered 71% of the NPLs, compared to 94% last year mainly due to the recognition of the aforesaid FSV benefit. Current, Savings and other deposits: At the close of 2009, customer deposits had reached Rs.205.97 billion from Rs.167.68 billion at end 2008, an increase of 23% during the year. Both the local and foreign currency deposits grew almost at the same rate i.e. 23% - local currency deposits increased to Rs.174.28 billion from Rs.141.89 billion as of December 31, 2008, while the foreign currency deposits stood at Rs.31.69 billion as on December 31, 2009. The aggregate number of deposit accounts reached 692,821 at end 2009 an increase of 13% over last year. Capital adequacy: As of December 31, 2009, Bank s capital adequacy ratio (CAR) stood at a comfortable 11.75% (9.22% at end 2008), against the SBP s minimum requirement of 10%. The improvement in CAR is the result of certain measures

34

Insurance and Risk Management

initiated by the Bank during 2009, which include issue of Tier II capital i.e., an unsecured subordinated loan in the form of Term Finance Certificates (TFC-III) amounting to Rs.3 billion, aggressive risk profiling of assets and, increased emphasis on risk adjusted returns by all risk taking units.

35

Insurance and Risk Management

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. STRENGTHS:

y LEADING PRIVATE SECTOR BANK: Askari bank is the leading private sector bank. In the banking network in Pakistan with many of their online branches in major cities of the country. y 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. y ATM NETWORK: The bank has the largest ATM Network cross the country. The customers of AKBL access their funds any time at all the ATM Sites with ASKCASH Logo. y 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. y CUSTOMER ORIENTED BANKING: The priority of the bank is to offer unmatched services, where the customer receives highly privileged services in a highly elegant environment. It gives the

36

Insurance and Risk Management

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. y 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 AKBL is among those few banks who are already reaping the benefits of electronic transactions. y ELECTRONIC FUNDS TRANSFER: AKBL 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. y ETHICAL CONCERNS AND PUBLIC IMAGE: Organization showing concerns for the people, ethical issues, and environment. It enjoys good public reputation and is able to reap the benefits in the long run. AKBL management is quite sensitive to this issue.

WEAKNESSES: y NOT HIGHLY AUTOMATED: The bank has still some of the traditional ways of operations in this advanced technological environment. y MANUAL BOOK-KEEPING: Although the bank has computerized accounting system but, still the bankers make their entries in the accounting register. y LOW JOB SATISFACTION :

37

Insurance and Risk Management

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. AKBL seems not to be focusing on this highly critical issue as the job satisfaction level of the employees working at AKBL was quite low. y LACK OF SPECIALIZATION: 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.

y CENTRALIZATION: There is a high degree of centralization in the bank. Almost all the decision making is in the hands of the upper management. But centralization is effective up to a certain level otherwise it becomes inefficient and at times costly too. Delay occurs mostly in the operations of the employees only due to the fact that they did not have any instructions from the head office OPPORTUNITIES: y SUPPORT FROM THE ARMY: The bank has the support from the army and has good financial position in the market therefore having a good position to expand their business. y GROWTH IN BANKING SECTOR:

38

Insurance and Risk Management

There is potential to grow in banking sector. The use of advance banking techniques and technology has become an opportunity for the banks to be a leader in business sector.  Use of ATM as a Credit Card. It can be an opportunity for ACBL to introduce ATM also as a credit card which will invite a different segment and which will improve profitability. They can also cut costs in this way.

 TECHNOLOGICAL IMPROVEMENTS: Various technological improvements may lead to success for ACBL  If ACBL opens up its deposit box facility for customers it can heavily increase its profitability. If implemented this opportunity can be a competitive advantage as well.  ACBL can also implement the conversion facility for example if the ATM receives the request for payment of amount in dollars then it should pay the customer in Dollars.  They can make ATM more attractive and enjoyable place to come rather then a bossy, bore environment. To provide customer s with an enjoyable event whenever they visit the ATM they can change their machine styles, have variations in colors and add audio instructions following the transactions.  As Internet and World Wide Web usage continues to increase ACBL should extend it s exploitation of this market by acquiring and merging with companies with specialized technological expertise. Although this expansion is costly they should exploit this strategic niche and take advantage of this opportunity in external environment.  In order to increase their market share ACBL should expand its ATM network. By opening ATM sites where it can target new market sis essentially good for competition as well it is profitable. They can look out for any sick units that are not as profitable as the ones intended to be opened.  IMPROVING CUSTOMER FOCUS:

39

Insurance and Risk Management

ACBL s commitment to making substantial investment in technology (planned expenditure of USD 20-25 million over next three years) to provide customers with banking facilities of an international standard is an opportunity for making technological improvements in this business.  ILLITERATE PEOPLE: Illiterate people are also an opportunity for ACBL in regarding this service. ACBL can serve these people by giving instructions in Audio and in Urdu. They can also have instructions written in Urdu on card or even they can have a display in Urdu. They can increase their target market, market share and profitability THREATS: y 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 y 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. For example they are charging up to Rs. 275 for an online transaction and Prime and Standard Chartered are doing these services for free. Furthermore, 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 loss of market share or decrease in the charges resulting in lowering the bank s income. y 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.

40

Insurance and Risk Management

y COMPETITION : AKBL is currently facing strict competition from the other banks. y LESS EXPERIENCED STAFF: Owing to huge turnover of the employees, the number 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 that is the experienced staff.  ECONOMIC ENVIRONMENT: Economic environment is a major threat to ATM s success .For example in 2000 when the government embarked on an economic revival plan with a complete task of resource mobilization, GDP growth and poverty alleviation in a different economic environment with continued international sanctions. y POLITICAL/LEGAL ENVIRONMENT: Law and order situation has a direct impact on how frequently or how many people use ATM. Also legal obligations also hinder/pose threat to ATM availability. For example there is a rule that he two ATMs should be at least 3 kms away from each other. If there are strict regulations on this policy then it is a threat to ATM availability for example there is an ATM in Melody and also at Aabpara so it is important that legal environment is positive and firm enough to pose threat to Bank s activities.

SUGGESTIONS, IMPROVEMENTS AND RECOMMENDATIONS:

41

Insurance and Risk Management

After Visiting at a Branch of the Bank, we observed that, working environment equipments, furniture and staff dressing are according to modern banking style. The overall environment is very nice. The staff comprise of young and educated persons, especially they are very much cooperative and helpful. The bank is performing quite satisfactory in the financial market because of its effective marketing. It is also evident from its present review and financial analysis that it is making progress by leaps and bounds. Management control over operating expenses, considerably increase in deposits and after tax profit showing that AKBL has a very prosperous present and future. It is paying proper attention to up-grade customer services and trying to convert entire structure of bank according to international banking sector. Bank has good management for conducting special training and transfer from one seat to another and from one branch to another to cope with day-to-day changes in banking sector.

However, for further improvement I will suggest following points: y Bank should provide opportunities to new talent. So, it should advertise its new vacancies and selection should be done on competitive basis by test and interviews. More female candidates should be employed. Their pay scales should be revised. y There is a criticism on the banking management is that the salaries of the employees are decreasing in every succeeding year. And I think this will shake the confidence and working habit of the employees. y There is another recommendation about the bank that there is no proper timing of the bank and there is made an unnecessary delay in the banking transactions, which might not be a good sign for the bank from future prosperity point of view. y Most of the bank employees, are sticking to one seat only with the result that they become master of one particular job and lose their grip on other banking operation. In my opinion all the employees should have regular job experience. y The promotion policy should be adjusted.

42

Insurance and Risk Management

y Bank should give some more incentive to its employees in order to remove the conflict between lower and higher officers and should try to improve the working condition of the bank. y As such system should be designed that every employee who has some problems with his officers can communicate it to the higher management and some steps must be taken to improve that. y Proper attention should be paid to upgrade customer services. Recruitments should be strictly on merit basis and induction should be after proper and extensive training. y Old and lazy staff should be replaced by young, qualified and energetic staff. y Foreign branches should be opened in order to capture the international market and to earn international repute for the bank. y To fulfill the Training Needs of the more than 50 branches of ACBL, it needs to decentralize its Training Centers. y For time being to share the burden of Training, more instructors should be hired for the Training Wing. y New performance measurement approaches like, Management by Objectives (MBO) and Productivity Measurement & Evaluation System (ProMES) should be adopted to make the results more accurate as the bank is in growth stage. y If possible, bank should arrange externships for some employees in other reputable banks, to bring up new ideas and more accuracy in ACBL. y Mentoring program should be started to excel in the training of employees.

CONCLUSION:
Organizations exist when two or more people work towards achieving common goals .The task of gaining practical, hands-on experience truly illustrates the dimension of practice based on certain theoretical aspects of any learning discourse. The task I had undertaken is certainly the one which provides insights of an organization, its nature, organizational growth, expansion, strategies and human resource management. The task was daunting and I was somewhat

43

Insurance and Risk Management

perplexed on application of ideas, thoughts, various inspiring theories that I learnt in a cozy, comfortable environment in a complex, challenging surroundings. The idea during the whole discourse has been to learn and gain new knowledge resource, verify the theory verses practice and vice versa. The variety of assignments I have been engaged in has helped me in better understanding of the organization and its function. I also learned why it is necessary to complete assigned tasks in a timely manner, how to take responsibility and working in teams. It was a great experience in which I learnt a lot and I am thankful to all the people who supported me in this exercise. Training and development is therefore the first step towards success. Better the quality of the employees better the performance of the company.

44

Insurance and Risk Management

ATM NETWORK:

45