Askari Bank Ratios Analysis

--- ANALYSIS OF FINANCIAL STATMENTS ---

S# Titles Page No.

1 Table of contents 01

2 Acknowledgement 02

3 Introduction 03

4 Functions 04

5 Services 05

6 Balance Sheets 06

7 Income Statements 07

8 Income Statement Division 08

9 Ratio Analysis Of Askari Bank Limited 09

10 Ratio Analysis Of The Bank Industry 10

11 Graphical Explanation 11

12 Vertical Analysis 17

13 Horizontal Analysis 19

14 Description Of Vertical & Horizontal Analysis 21

15 Performa Statement 22

16 Projected Statements 23

17 Executive Summary 25

HAMDARD UNIVERSITY KARACHI [ISLAMABAD CAMPUS] 11


Acknowledgement

“IN THE NAME OF ALLAH, THE MOST GRACIOUS AND MERCIFUL, THE BENIFICANT”

First of all us thankful to Allah who blessed us the potential and ability

to accomplish this project. Then we deep it a great honor and privilege

to record sense for gratitude to the respected teacher for the

construction and exuberant stage of teaching. We great fully

acknowledge the encouragement, support receive from them. The

interest, commitment patience and valuable advice given by them

remained a source of inspiration and motivation throughout the process

of project.



INTRODUCTION

Askari Bank Ltd (formerly Askari Commercial Bank) was incorporated in Pakistan on

October 9, 1991, as a Public Limited Company. It started its operations during April 1,

1992. The bank principally deals with mainly banking, as defined in the Banking

Companies Ordinance, 1962. The Bank is listed on the Karachi, Lahore & Islamabad

Stock Exchanges and its shares are currently the highest quoted from among the new

private sector banks in Pakistan.

Askari Bank has expanded into a nation wide presence of 136 branches, and an offshore

banking Unit in Bahrain. A shared network of over 1,100 online ATMs covering all

major cities in Pakistan supports the delivery channels for customer service. As on

December 31, 2005, the bank had equity of PKR 8.6 billion and total assets of PKR 145.1

billion, with over 600,000 banking customers, serviced by our 2,754 employees.

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,

maintaining high ethical and professional standards, while providing enhanced value to

all our stake-holders, and contributing to society.



FUNCTIONS

Services

Askari Bank offers a wide range of services to its customers and recognizes the

importance of efficient business delivery and providing timely solutions.

Personal Banking

Mortgage Finance

Corporate & Investment Banking

Business Finance

ASKCAR - Car Finance

ASKCARD

Travelers Cheques

Ask Smart

Profit / Markup Rates on Retail Products

Internet banking

Askari Bank has also introduced online banking. Customers are able to view their

bank information and use their accounts for money transfer and use other features.



Services

Personal Finance

ASKCARDS:

Business Finance:

Auto Financing:

Travelers Cheques

Agriculture finance

Kissan Ever Green Finance

Kissan Tractor Finance



BALANCE SHEETSOF THE YEARS ENDED

(2004 – 2007)

assets Year 2004 Year 2005 Year 2006 Year 2007

current As-sets

cash and balances with trea-sury banks 8762866 11766925 14879230 13356055

balances with other banks 4847899 5550148 7333002 3497054

lending to financial institu-tions 2324839 10172242 8392950 14444143

Investments 17239156 25708194 28625915 39431005 Advances 69838392 85976895 99179372 100780162 fixed assets operating fixed Assets 2595023 3192862 3810331 5128428 deferred tax 0 0 0 0 other Assets 1559365 2732641 3812788 5535038 107167540 145099907 166033588 182171885Liabilities

Current Lia-bilities

Bills Payable 1227093 1315680 1839077 2627051

Borrowing 13781555 10562338 14964087 17553525 Deposits & other Accounts 83318795 118794690 131839283 143036707

Non-current Liabilities

sub-ordinate Loans 1000000 2999700 2998500 2997300

Liabilities against assets Sub-ject to finance lease 14159 1459 0 0

deferred tax liabilities 526866 567217 736298 471519 other liabilities 1282980 2271393 2603113 3219796 101151448 136512477 154980358 169905898Share holder’s Equity share capital 1255848 1507018 2004333 3006499 Reserves 4317301 5862074 5814754 6948336 inappropriate income 0 0 1799979 2144810

surplus on revaluation of as-sets 442943 1218338 1434164 166342



- net of tax 107167540 145099907 166033588 182171885

INCOME STATEMENTSOF THE YEARS ENDED

(2004 – 2007)

Year 2004 Year 2005 Year 2006 Year 2007SALES Mark-up/Return/Interest earned 4487206 8780698 12596921 15143241 COGS Mark-up/Return/Interest expensed 1117206 4278374 6977313 8685624

Provision against non-performing loansand advances-net 277398 638547 1128137 3920240

Provision /(Reversal) for diminution in the value of investment-net 38066 -36555 376 1501

Bad debts Written off directly 7 0 0 0 3054529 3900332 4491095 2535876Other In-come Non-mark-up/interest income Fee, commission, and brokerage income 708377 838561 1013660 1072868 Dividend income 26318 51143 109326 137079 Income from dealing in foreign currencies 180992 356218 584344 655761 Income from sale and Purchase of securities 540193 99825 112474 2361251

Unrealized loss on revaluation of invest-mentsclassified as held for trading-net 0 0 -2308 1728

Other Income 177648 206819 321758 336809 4688057 5452898 6630349 7101372Other Ex-penses Non-Mark Up/Interest Expenses Administrative expenses 1845179 2591985 3277353 4789536 provision against other assets-net 0 0 0 0 other charges 138 1832 6141 12051 Extra-ordinary/unusual items 0 0 0 0 2842740 2859081 3346855 2299785Gross Profit Profit Before Taxation 2842740 2859081 3346855 2299785Taxation Taxation-current 876089 828774 983875 98535 -prior years 0 -188247 0 -233950 -Deferred 43611 196558 113006 -245812 Net Profit Profit After Taxation 1923040 2021996 2249974 2681012




INCOME STATEMENT DIVISION

6120734

10333264

14736175

19708737

3277994

74741832

842740

2859081

3346855

2299785

919700

837085

1096881

1923040

2021996

2249974

2681012

174089521

1389320

-381227

-5000000

0

5000000

10000000

15000000

20000000

25000000

2004 2005 2006 2007

YEARS

TOTALREVENUES

TOTALEXPENSES

ProfitBeforeTaxation

TOTALTAXES

Profit AfterTaxation


RATIOS ANALYSISOF

ASKARI BANK LIMITED

2004 2005 2006 2007Liquidity Current ratios 0٫001 0٫001 0٫001 0٫001Quick ratios 0٫000 0٫000 0٫000 0٫000 Leverage Debt to Equity 0٫17 0٫01 0٫01 0٫01Debt to Total assets 0٫001 0٫001 0٫001 0٫001 Activity Ratio Receivable turnover 0٫001 0٫001 0٫001 0٫001Receivable turnover (in days) 583 654 456 432Total asset Turnover 0٫000 0٫000 0٫000 0٫000 Profitability Ratios Net profit margin 0٫000 0٫000 0٫000 0٫000Return on investments 0٫000 0٫000 0٫000 0٫000Return on equity 0٫000 0٫000 0٫000 0٫000Gross profit Margin 0٫001 0٫000 0٫000 0٫000 Equity Multiplier 0٫18 0٫17 0٫15 0٫15



RATIOS ANALYSISOF

THE BANK INDUSTRY

2004 2005 2006 2007Liquidity Current ratios 0٫001 0٫001 0٫001 0٫001Quick ratios 0٫000 0٫000 0٫000 0٫000 Leverage Debt to Equity 0٫16 0٫08 0٫07 0٫07Debt to Total assets 0٫001 0٫001 0٫001 0٫001 Activity Ratio Receivable turnover 0٫000 0٫001 0٫001 0٫003Receivable turnover (in days) 827 408 429 272Total asset Turnover 0٫000 0٫000 0٫000 0٫000 Profitability Ratios Net profit margin 0٫000 0٫000 0٫000 0٫000Return on investments 0٫000 0٫000 0٫000 0٫000Return on equity 0٫000 0٫000 0٫000 0٫000Gross profit Margin 0٫000 0٫001 0٫000 0٫000 Equity Multiplier 0٫17 0٫14 0٫13 0٫13



GRAPHICAL EXPLAINATIONOF

RATIO ANALYSIS

CURRENT RATIO:

The most common liquidity ratio is the current ratio, which is also the ratio of current asset to current liabilities. It is also expressed as how many times the assets can cover the liabilities.Askari Bank is a developed bank but the current ratio of the bank is less than the industry average as shown in diagram in 2004. In 2005-06-07 the bank has improved this deficiency. As there is no significant deviation in bank’s ratio and the industry average, the bank is being at better stage. Both the bank’s and the average ratios are in line and with in range suggesting that Bank’s liquidity policy is in compliance with the most of the other banks in industry.

Quick Ratio:

It is also a liquidity measure but it is conservative than the current ratio because it doesn’t involve the inventory in it. This ratio provides a more penetrating measure of the liquidity than the current ratio.If we see at the bank’s ratio, we find it worse and the bank being weak in position because the analyst and experts says that, this ratio must be greater than one. But if we


CURRENT RATIO

1.05

1.07 1.07

1.05

1.037

1.059

1.072

1.063

1.01

1.02

1.03

1.04

1.05

1.06

1.07

1.08

2004 2005 2006 2007

YEARS

RA

TIO

S

Bank Ratio

Ind. Average

QUICK RATIO

0.16

0.21 0.210.190.182

0.163

0.202

0.160

0.00

0.05

0.10

0.15

0.20

0.25

2004 2005 2006 2007

YEARS

RA

TIO

S

Bank Ratio

Ind. Average


compare it with the industry average, we find it in line with the industry and most of the other banks in the industry.

Debt to Equity Ratio:

DEBT TO EQUITY RATIO

0٫01 0٫01 0٫01

0٫16

0٫08 0٫07 0٫07

0٫000٫050٫100٫150٫20

2004 2005 2006 2007

YEARS

RA

TIO

S

Bank Ratio

Ind. Average

Creditors generally want this ratio to be lower than one because the lower the ratio, the higher the financing provided by the shareholders. If we see at the bank’s ratio it is in a worst condition especially in 2004 (2004 ratio 15.91). It means that the bank was provided with Rs.15.91 by creditors for financing against each Rs.1 of the shareholders. In 2005, 2006, and 2007 the creditors provide Rs.8.33, Rs.7.19, and Rs.7.49 respectively against each Rs.1 provided by the shareholders.Now by comparing the Bank’s ratios with the industry we find it as satisfactory in 2004, but have a bad position in the next three years. Most of the other banks in the industry have a good position in 2005-06-07, because they are provided with Rs.0.94, Rs.0.93, and Rs.0.93 respectively by the creditors against each Rs.1 of the shareholders. Thus we conclude that Askari bank is not good at this ratio.



Debt to Total Assets:

This ratios shows what percentage of total assets are the company’s long term debt and will the company will be able to pay their long term debt? As this value will be, the company will be in strong position for long term financing.The ratio again must be low because the higher ratio has a higher financial risk. In 2004 the Bank’s ratio is 0.941 which suggests that about 94.10% of the assets have been financed by the debts, which shows a high financial risk. Same is the case with 2005, 2006, and 2007 having assets financed with the debts are 92.9%, 91.5%, and 91.20% respectively.But if we compare it with the industry average we find them as in line with the most of the other bank’s in the industry and conclude the Askari bank is in good position at this ratio.

Receivable Turnover Ratio:

This ratio tells us that how many times the account receivable has been turned into cash. If we see at the Askari Bank ratio in 2004 that is 0.489-too low. This shows that the Bank is not a quality firm at its collection, but in 2005 it has improved it to 1.066 and again fall in 2006 to 0.854 in worsen the Bank’s position in the collection process but in 2007 it has improved it to 2.832 which suggests the Bank has improved its collection process.Now if we compare this ratio to the industry average we find the Bank to be better in 2004 and 2006 but in a bad position in 2005 and 2007. Although bank is individually in good position in 2005 and 2007 but the industry average told that bank is actually faster


DEBT TO TOTAL ASSETS RATIO

0.94 0.940.93 0.93

0.941

0.929

0.915 0.912

0.89

0.90

0.91

0.92

0.93

0.94

0.95

2004 2005 2006 2007

YEARS

RA

TIO

S

Bank Ratio

Ind. Average

RECEIVEABLE TURNOVER RATIO

0.560.84

1.066

2.832

0.800.630.854

0.489

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2004 2005 2006 2007

YEARS

RA

TIO

S

Bank Ratio

Ind. Average


in collection than the most of the banks in the industry in 2005-06-07, and is slower in 2004.

Receivable Turnover in Days:

This ratio told how many days the receivables are outstanding. In 2004, 2005, 2006, and 2007 they are outstanding for 827, 408, 429, and 272 days respectively. The credit standard in this regard decides that for how many days should the receivables outstanding.By comparing the Bank’s ratio to the industry average of 583, 653, 455, and 432 days in 2004, 2005, 2006, and 2007 respectively told that the bank is not in compliance with the most of the other banks in industry in 2004, 2005, and 2007. But in 2006 the bank is in line with the most of the other banks in the industry.

Total Assets Turnover:

The total assets turnover shows that how much sales do the total assets generates. If we see at the ratios we see that the bank is generating a mildly less sales than does the industry. See the diagram the blue bars are less than the brown ones because the blue bars shows the banks sales generated by the total assets.


RECEIVEABLE TURNOVER IN DAYS RATIO

583.45653.56

455.66 432.44

827

408 429

272

0.00

200.00

400.00

600.00

800.00

1000.00

2004 2005 2006 2007

YEARS

RA

TIO

S

Bank Ratio

Ind. Average

TOTAL ASSET TURNOVER RATIOS

0.04

0.080.08

0.08

0.037

0.0640.073 0.076

0.00

0.02

0.04

0.06

0.08

0.10

2004 2005 2006 2007

YEARS

RA

TIO

S

Bank Ratio

Ind. Average


Net Profit Margin:

It gives the firm net income per rupee of sales. In 2004 the bank’s NPM is less than the Industry average. It shows that the Bank’s has less level of sales profitability than most of the other firms or banks in the industry. But in the next three years the Bank NPM is more than the average ratios suggesting high level of profit from sales than most of the other Banks in the Industry.

Return on Investment:

It measures overall effectiveness in generating profit with the available assets. The Bank ratio is very low, it means that the bank is not good at this ratio and is producing fewer revenues by its assets. The Bank must improve it as it does in 2006 and 2007. It has improved it from 0.020 of 2005 to 0.022 in 2006 and 2007.But if we compare the bank ratio with the industry average we find it as good in 2004 and 2005 because the bank ratio is nearer to the industry average. The bank is best in 2004 because the bank is producing more revenues than all of the other banks in the industry. In the next three years the bank produces fewer revenues than the other banks in the industry.


NPM RATIOS

0.43

0.230.18 0.18

0.244

0.3480.302 0.283

0.00

0.10

0.20

0.30

0.40

0.50

2004 2005 2006 2007

YEARS

RA

TIO

S

Bank Ratio

Ind. Average

RETURN ON INVESTMENT RATIO

0.02

0.01 0.01 0.01

0.010

0.0200.022 0.022

0.00

0.01

0.01

0.02

0.02

0.03

2004 2005 2006 2007

YEARS

RA

TIO

S

Bank Ratio

Ind. Average


Return on Equity:

This ratio tells us the earning power on the shareholder’s equity. The higher ratio tells us the firm’s acceptance of strong investment opportunities and effective expense management. The Bank’s ratio are greater than the Industry average in all years showing that the Bank accepts more investments and has an effective expense management criteria than most of the other Banks in the Industry.

Gross Profit Margin:

This ratio tells us the profit of the firms relative to sales. It measures the efficiency of the firm’s pricing their products. In banks the pricing of loans etc is being seen in this ratio. In the first three years the Bank GPM is less than the Industry average which shows that Bank is not relatively effective at producing and selling of loans etc. above than their cost. In 2007 the Bank GPM exceeds the industry average suggesting that Bank produces and sell Products (loans etc.) more effectively than most of the other banks in the industry.


RETURN ON EQUITY RATIO

0.32

0.01 0.01 0.01

0.1680.203 0.186

0.166

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

2004 2005 2006 2007

YEARS

RA

TIO

S

Bank Ratio

Ind. Average

GPM RATIO

0.63

0.330.27

0.15

0.391

0.5160.457

0.368

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

2004 2005 2006 2007

YEARS

RA

TIO

S

Bank Ratio

Ind. Average


VERTICAL ANALYSISOF

BALANCE SHEETS(COMMON-SIZE)

2004 2005 2006 2007

cash and balances with treasury banks 0٫0008 0٫0008 0٫0009 0٫0007balances with other banks 0٫0005 0٫0004 0٫0004 0٫0002

lending to financial institutions 0٫0002 0٫0007 0٫0005 0٫0008investments 0٫0016 0٫0018 0٫0017 0٫0022Advances 0٫0065 0٫0059 0٫0060 0٫0055 operating fixed Assets 0٫0002 0٫0002 0٫0002 0٫0003deferred tax 0٫0000 0٫0000 0٫0000 0٫0000other Assets 0٫0001 0٫0002 0٫0002 0٫0003 100 100 100 100Bills Payable 0٫0001 0٫0001 0٫0001 0٫0001Borrowing 0٫0013 0٫0007 0٫0009 0٫0010Deposits & other Ac-counts 0٫0078 0٫0082 0٫0079 0٫0079

sub-ordinate Loans 0٫0001 0٫0002 0٫0002 0٫0002Liabilities against as-sets Subject to finance lease 0٫0000 0٫0000 0٫0000 0٫0000deferred tax liabilities 0٫0000 0٫0000 0٫0000 0٫0000other liabilities 0٫0001 0٫0002 0٫0002 0٫0002 0٫0094 0٫0094 0٫0093 0٫0093share capital 0٫0001 0٫0001 0٫0001 0٫0002Reserves 0٫0004 0٫0004 0٫0004 0٫0004inappropriate income 0٫0000 0٫0000 0٫0001 0٫0001

surplus on revaluation of assets- net of tax 0٫0000 0٫0001 0٫0001 0٫0000 100 100 100 100



VERTICAL ANALYSISOF

PROFIT & LOSS ACCOUNTS(COMMON-SIZE)

SALES 2004 2005 2006 2007 Mark-up/Return/Interest earned 100 100 100 100

CGS Mark-up/Return/Interest expensed 0٫025 0٫049 0٫055 0٫057

Provision against non-performing loansand advances-net 0٫006 0٫007 0٫009 0٫026

Provision /(Reversal) for diminution in the value of investment-net 0٫001 0٫000 0٫000 0٫000

Bad debts Written off directly 0٫000 0٫000 0٫000 0٫000 0٫068 0٫044 0٫036 0٫017

OtherIncome Non-mark-up/interest income Fee, commission, and brokerage income 0٫016 0٫010 0٫008 0٫007 Dividend income 0٫001 0٫001 0٫001 0٫001 Income from dealing in foreign currencies 0٫004 0٫004 0٫005 0٫004

Income from sale and Purchase of securities 0٫012 0٫001 0٫001 0٫016

Unrealized loss on revaluation of investments held for trading-net 0٫000 0٫000 0٫000 0٫000

Other Income 0٫004 0٫002 0٫003 0٫002 0٫104 0٫062 0٫053 0٫047Other Expenses Non-Mark Up/Interest Expenses Administrative expenses 0٫041 0٫030 0٫026 0٫032

provision against other assets-net 0٫000 0٫000 0٫000 0٫000 other charges 0٫000 0٫000 0٫000 0٫000 Extra-ordinary/unusual items 0٫063 0٫033 0٫027 0٫015Gross Profit Profit Before Taxation 0٫063 0٫033 0٫027 0٫015Taxation Taxation-current 0٫020 0٫009 0٫008 0٫001 -prior years 0٫000 -0٫002 0٫000 -0٫002 -Deferred 0٫001 0٫002 0٫001 -0٫002

Net Profit Profit After Taxation 0٫043 0٫023 0٫018 0٫018



HORIZONTAL ANALYSISOF

BALANCE SHEETS(INDEXED)

assets current Assets 2004 2005 2006 2007

cash and balances with treasury banks 100 1٫34 1٫70 1٫52

balances with other banks 100 1٫14 1٫51 0٫72

lending to financial institutions 100 4٫38 3٫61 6٫21

Investments 100 1٫49 1٫66 2٫29 Advances 100 1٫23 1٫42 1٫44 fixed assets operating fixed Assets 100 1٫23 1٫47 1٫98 deferred tax 0 0٫00 0٫00 0٫00 other Assets 100 1٫75 2٫45 3٫55 100 1٫35 1٫55 1٫70Liabilities

Current Liabili-ties

Bills Payable 100 1٫07 1٫50 2٫14 Borrowing 100 0٫77 1٫09 1٫27

Deposits & other Ac-counts 100 1٫43 1٫58 1٫72

Non-current Liabilities

sub-ordinate Loans 100 3٫00 3٫00 3٫00

Liabilities against assets Subject to finance lease 100 0٫10 0٫00 0٫00

deferred tax liabilities 100 1٫08 1٫40 0٫89 other liabilities 100 1٫77 2٫03 2٫51 100 1٫35 1٫53 1٫68 Equity share capital 100 1٫20 1٫60 2٫39 Reserves 100 1٫36 1٫35 1٫61 inappropriate income 0 0٫00 0٫00 0٫00

surplus on revaluation of assets- net of tax 100 2٫75 3٫24 0٫38

100 1٫35 1٫55 1٫70



HORIZONTAL ANALYSISOF

PROFIT & LOSS ACCOUNTS(INDEXED)

SALES 2004 2005 2006 2007 Mark-up/Return/Interest earned 100 1٫96 2٫81 3٫37

CGS Mark-up/Return/Interest expensed 100 3٫83 6٫25 7٫77

Provision against non-performing loansand advances-net 100 2٫30 4٫07 14٫13

Provision /(Reversal) for diminution in the value of investment-net 100 -0٫96 0٫01 0٫04

Bad debts Written off directly 100 0٫00 0٫00 0٫00 TOTAL CGS REMAINING REVENUES 100 1٫28 1٫47 0٫83

OtherIncome Non-mark-up/interest income Fee, commission, and brokerage income 100 1٫18 1٫43 1٫51 Dividend income 100 1٫94 4٫15 5٫21 Income from dealing in foreign currencies 100 1٫97 3٫23 3٫62

Income from sale and Purchase of securities 100 0٫18 0٫21 4٫37

Unrealized loss on revaluation of investments held for trading-net 0 0٫00 0٫00 0٫00

Other Income 100 1٫16 1٫81 1٫90 100 1٫16 1٫41 1٫51

Other Expenses Non-Mark Up/Interest Expenses

Administrative expenses 100 1٫40 1٫78 2٫60 provision against other assets-net 0 0٫00 0٫00 0٫00

other charges 100 13٫28 44٫50 87٫33 Extra-ordinary/unusual items 0 0٫00 0٫00 0٫00 100 1٫01 1٫18 0٫81Gross Profit Profit Before Taxation 100 1٫01 1٫18 0٫81Taxation Taxation-current 100 0٫95 1٫12 0٫11 -prior years 0 0٫00 0٫00 0٫00 -Deferred 100 4٫51 2٫59 -5٫64Net Profit Profit After Taxation 100 1٫05 1٫17 1٫39



HORIZONTAL AND VETICAL ANALYSIS OF THE FINANCIAL STATEMENTS

If we look at horizontally there are 96%, 181% and 237% increase in interest earned

(sales) in 2005, 2006 and 2007, respectively as compare to 2004. But if we look at there

interest expense, so, it increases almost 40% in 2005, 78% in 2006 and 160% in 2007.

If we look the net income horizontally so, there is increase of 05%, 17% and 93% in

2005, 2006 and 2007 respectively as compare to 2004. But if we look vertically so net

income decreases by 20% in 2005, 25% in 2006 and 2007 as compare to 2004. So we can

see and can say easily that the performance of Askari bank in 2007 was very good while

there is clear decrease in their performance in 2005 & 2006.

Now come to balance sheet, if we look horizontally to investments activities of Askari

bank, it is more than double in 2007 as compare to 2004, which means that they had a lot

of investment opportunities and they availed it too. As their debt to equity ratio is very

much high, which is not a good sign, so they are slowly and tenderly lowering their debt

portion in financing activities, which is showing in their vertical analysis.

While looking horizontally, the equity portion is gone more than double in 2007 as compare to that of 2004, while the debt portion is 70% increase in just 4 years.



PERFORMA STATMENT

Financial planning formulates the way financial goal are to be achieved. A financial is

thus a statement of what is to be done in the future. Most decisions have a long lead time,

which means they take a long time to implement. In an uncertain world, this requires that

decisions to be made far in advance of their implementation. If a firm wants to build a

company in 2010, for example, it might have to began lining up contractors and financing

in 2008, or even earlier.

There are two approaches to make the Performa statements, one, the balance sheet

approach and 2nd the percentage of sales approach.

To make the forecasted financial statements of Askari bank, I use the percentage of sales

approach. I increase the sales as well as the expenses and other income by 10%, which is

the inflation rate of Pakistan.



PERFORMA STATEMENT(PROFIT & LOSS ACCOUNT)

FOR THE YEAR ENDED 2008-2012

(Rupee in Thousands) 2008 2009 2010 2011 2012Assets Cash and Balances With Treasury Banks 16367153 18003868 19804255 21784681 23963149Balances With Other Banks 8066302.2 8872932.4 9760225.7 10736248 11809873Lending to Financial Institutions 9232245 10155470 11171016 12288118 13516930Investments 31488507 34637357 38101093 41911202 46102322Advances 109097309 120007040 132007744 145208519 159729370Operating Fixed Assets 4191364.1 4610500.5 5071550.6 5578705.6 6136576.2Deferred Tax Assets Other Assets 4194066.8 4613473.5 5074820.8 5582302.9 6140533.2 Total Assets 182636947 200900641 220990706 243089776 267398754Liabilities Bills Payment 2022984.7 2225283.2 2447811.5 2692592.6 2961851.9Borrowings 16460496 18106545 19917200 21908920 24099812Deposits and Other Accounts 145023211 159525532 175478086 193025894 212328484Sub-ordinate Loans 3298350 3628185 3991003.5 4390103.9 4829114.2Liabilities Against Assets Subject to Finance Lease Deferred Tax Liabilities 809927.8 890920.58 980012.64 1078013.9 1185815.3Other Liabilities 2863424.3 3149766.7 3464743.4 3811217.7 4192339.5Total Liabilities 170478394 187526233 206278856 226906742 249597416Net Assets 12158553 13374408 14711849 16183034 17801337Shared Capital 2204766.3 2425242.9 2667767.2 2934543.9 3227998.3Reserves 6396229.4 7035852.3 7739437.6 8513381.3 9364719.5Inappropriate Profit 1979976.9 2177974.6 2395772 2635349.3 2898884.2 10580973 11639070 12802977 14083275 15491602Surplus on Revaluation of Assets- Net of Tax 1577580.4 1735338.4 1908872.3 2099759.5 2309735.5Total Liabilities & Owner Equity 182636947 200900641 220990706 243089776 267398754



PERFORMA STATEMENT (BALANCE SHEETS)

FOR THE YEARS ENDED 2008-2012


(Rupee in Thousands) 2008 2009 2010 2011 2012Assets Cash and Balances With Treasury Banks 16367153 18003868 19804255 21784681 23963149Balances With Other Banks 8066302.2 8872932.4 9760225.7 10736248 11809873Lending to Financial Institutions 9232245 10155470 11171016 12288118 13516930Investments 31488507 34637357 38101093 41911202 46102322Advances 109097309 120007040 132007744 145208519 159729370Operating Fixed Assets 4191364.1 4610500.5 5071550.6 5578705.6 6136576.2Deferred Tax Assets Other Assets 4194066.8 4613473.5 5074820.8 5582302.9 6140533.2Total Assets 182636947 200900641 220990706 243089776 267398754Liabilities Bills Payment 2022984.7 2225283.2 2447811.5 2692592.6 2961851.9Borrowings 16460496 18106545 19917200 21908920 24099812Deposits and Other Accounts 145023211 159525532 175478086 193025894 212328484Sub-ordinate Loans 3298350 3628185 3991003.5 4390103.9 4829114.2Liabilities Against Assets Subject to Finance Lease Deferred Tax Liabilities 809927.8 890920.58 980012.64 1078013.9 1185815.3Other Liabilities 2863424.3 3149766.7 3464743.4 3811217.7 4192339.5Total Liabilities 170478394 187526233 206278856 226906742 249597416Net Assets 12158553 13374408 14711849 16183034 17801337Shared Capital 2204766.3 2425242.9 2667767.2 2934543.9 3227998.3Reserves 6396229.4 7035852.3 7739437.6 8513381.3 9364719.5Inappropriate Profit 1979976.9 2177974.6 2395772 2635349.3 2898884.2 10580973 11639070 12802977 14083275 15491602Surplus on Revaluation of Assets- Net of Tax 1577580.4 1735338.4 1908872.3 2099759.5 2309735.5Total Liabilities & Owner Equity 182636947 200900641 220990706 243089776 267398754


EXECUTIVE SUMMARY

Formerly known as Askari Commercial Bank Ltd The Group's principal activities are to

provide lending, depository and related financial services. Financial services include

credit risk management, foreign trade, treasury, corporate and merchant banking, retail

banking, electronic banking, credit cards, marketing and customer service. The Bank

operates through 150 branches.

If we look at horizontally there are 96%, 181% and 237% increase in interest earned

(sales) in 2005, 2006 and 2007, respectively as compare to 2004. But if we look at there

interest expense, so, it increases almost 40% in 2005, 78% in 2006 and 160% in 2007.

If we look the net income horizontally so, there is increase of 05%, 17% and 93% in

2005, 2006 and 2007 respectively as compare to 2004. But if we look vertically so net

income decreases by 20% in 2005, 25% in 2006 and 2007 as compare to 2004. So we can

see and can say easily that the performance of Askari bank in 2007 was very good while

there is clear decrease in their performance in 2005 & 2006.

Now come to balance sheet, if we look horizontally to investments activities of Askari

bank, it is more than double in 2007 as compare to 2004, which means that they had a lot

of investment opportunities and they availed it too. As their debt to equity ratio is very

much high, which is not a good sign, so they are slowly and tenderly lowering their debt

portion in financing activities, which is showing in their vertical analysis.

While looking horizontally, the equity portion is gone more than double in 2007 as compare to that of 2004, while the debt portion is 70% increase in just 4 years.



Financial planning formulates the way financial goal are to be achieved. A financial is

thus a statement of what is to be done in the future. Most decisions have a long lead time,

which means they take a long time to implement. In an uncertain world, this requires that

decisions to be made far in advance of their implementation. If a firm wants to build a

company in 2012, for example, it might have to began lining up contractors and financing

in 2010, or even earlier.

There are two approaches to make the Performa statements, one, the balance sheet

approach and 2nd the percentage of sales approach.

To make the forecasted financial statements of Askari bank, we use the percentage of

sales approach. We increase the sales as well as the expenses and other income by 10%,

which is the inflation rate of Pakistan.


Askari Bank Ratios Analysis

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