Financial Statements ( Askari Bank Limited report )

Introduction to Business Finance

Submitted to: Mr. Iqbal Niyani

Submitted by:

Rija Sohail (1728)

Muhammad Moiz Khan (0315)

FINANCIAL STATEMENTS

Askari Bank Limited


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ASKARI BANK


FOR THE YEAR ENDED DEC 31 2014


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TABLE OF CONTENTS

BOARD OF DIRECTORS ....................................................................................................................

BOARD OF COMMITTEES: ...............................................................................................................

ABOUT ASKARI BANK LTD. ............................................................................................................

AWARDS AND ACHIVEMENTS OF ASKARI BANK: .......................................................................

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2014................

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2014 .

CASH FLOW STATEMENT ................................................................................................................

COMMOM SIZE BALANCE SHEET ...................................................................................................

ANALYSIS OF FINANCIAL STATEMENTS ......................................................................................

1. LIQUIDITY RATIOS:...............................................................................................................

a. CURRENT RATIO: Error! Bookmark not defined.

b. QUICK RATIO: Error! Bookmark not defined.

c. NET WORKING CAPITAL: Error! Bookmark not defined.

2. ANALYSIS OF ASSET MANAGEMENT RATIOS: ..................................................................

TOTAL ASSET TURNOVER: Error! Bookmark not defined.

3. ANALYSIS OF PROFITABILITY RATIOS: .............................................................................

GROSS PROFIT MARGIN: Error! Bookmark not defined.

RETURN ON ASSETS: Error! Bookmark not defined.

RETURN ON EQUITY: Error! Bookmark not defined.

4. ANALYSIS OF INVESTMENT RATIOS: .................................................................................

a. EARNINGS PER SHARE: Error! Bookmark not defined.


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LETTER OF ACKNOWLEDGEMENT:

April 29, 2015

Dear readers,

We would first like to thank the Al-mighty ALLAH for giving us the strength and

endowing us with the privilege of completing our report.

We are also extremely thankful to our teacher and mentor Mr. Iqbal Nayyani for his

constant support, encouragement and guidance, without which we could not have

successfully achieved our task.

We would also like to thank Mr. Ashraf Zaki (Operation Manager) of Askari Bank

LTD. and our course fellows who spared their valuable time to help us and provided

us the guidance to finally come up with this report. We will seek your continous

assistance and support in future. Insha’Allah.


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Visited Askari Bank Gulshan Branch,

With:

Mr. Syed Ashraf Zaki

Manager Operations


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INTRODUCTION:

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. Askari Bank has

since expanded into a network of 321 branches / sub-branches, including 53

dedicated Islamic banking branches / sub-branch, and a wholesale bank branch in

Bahrain. A shared network of over 9,000 online ATMs covering all major cities in

Pakistan supports the delivery channels for customer service. As at December 31,

2014, the Bank had equity of Rs. 23.7 billion and total assets of Rs. 447 billion, with

955,156 banking customers, serviced by our 5,894 employees. Askari Investment

Management Limited and Askari Securities Limited are subsidiaries of Askari Bank

engaged in the business of managing mutual funds and share brokerage, respectively

AWARDS AND ACHIEVEMENTS

» “The Best Annual Report Award for the year 2012 - 2nd Runner-up“ by

ICAP & ICMAP. » “The Best Annual Report Award for the year 2011“ by ICAP & ICMAP.

»

“Best Presented Annual Report Award and SAARC Anniversary Awards

for Corporate Governance Disclosures 2011“ " by South Asian Federation of

Accountants.

» “Best Retail Bank in Pakistan” by The Asian Banker.

» "1st Consumer Choice Award" by the Consumer Association of Pakistan. 2004


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» "Corporate Excellence Award" by the Management Association of Pakistan

(MAP). 2002, 2003 & 2004. » “The Best Bank in Pakistan” by Global Finance magazine. 2001 and 2002.

» “Best Consumer Internet Bank” Global Finance magazine. 2002 and 2003.

» "Euromoney and Asiamoney Awards" 1994, 1996 and 1997.

» “Best Presented Annual Accounts” by (ICAP) and (ICAMP). 2000,

2001and 2002.

» “The Best Presented Annual Accounts” by South Asian Federation of Accountants (SAFA), in the SAARC region.

» “The Best Consumer Banking Award 2006” by the Consumer Association of Pakistan. 2007

» “The Best Retail Banking Award 2008” by Pakistan Guarantee Export

Corporation Ltd. 2008

» "Best Corporate Report Award for the year 2008" by ICAP & ICMAP. 2008

» "The Best Annual Report Award for the year 2010" by ICAP & ICMAP.

» "The Best Presented Accounts Award 2010 - 2nd Runner Up-Joint" by

South Asian Federation of Accountants.


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VISION:

To be the bank of first choice in the region.

MISSION:

To be the leading 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 stakeholders, and contributing to society.

CORE VALUES:

Commitment: Passionate about our customer’s success and delighting them

with quality of our services.

Integrity: A distinctive investment, delivering outstanding performance,

return and value.

Fairness: Exemplary compliance, governess and ethics.

Teamwork: Caring for our people and helping them to grow.

Service: Dedication towards social development and improvement in quality

of life.

BOARD OF DIRECTORS:

Lt Gen Khalid Nawaz Khan, HI (M), Sitara-i-Esar (Retd)

Chairman – Non-Executive Director

Lt Gen Naeem Khalid Lodhi, HI (M) (Retd)

Non-Executive Director

Lt Gen Muhammad Haroon Aslam, HI (M), S Bt (Retd)



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Mr. Qaiser Javed


Dr. Nadeem Inayat


Mr. Manzoor Ahmed

Non-Executive Director – NIT Nominee

Mr. Asif Reza Sana

Independent Director

Mr. Zaffar Ahmad Khan


Mr. Tariq Hafeez Malik


Mr. Muhammad Ghous


Syed M. Husaini

President & Chief Executive

CHIEF FINANCIAL OFFICER:

Mr. Saleem Anwar, FCA

COMPANY SECRETARY:

Mr. Umar Shahzad, FCIS

AUDITORS:

KPMG Taseer Hadi & Co

Chartered Accountant


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LEGAL ADVISORS:

RIAA Law

Advocates & Corporate counselors

SHARIAH ADVISOR:

Dr. Muhammd Tahir Mansoori

REGISTERED HEAD OFFICE:

AWT Plaza, The Mall

Rawalpindi, Pakistan.

REGISTRAR & SHARE TRANSFER OFFICE:

THK Associates (pvt) limited

Ground floor, State Life Building no. 3

Karachi, Pakistan.

(92 21) 111 000 322

WEBSITE:

www.askaribank.com.pk

http://www.askaribank.com.pk/


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KEY FINANCIAL HIGHLIGHTS:

Rupees in million 2014 2013 Growth % Total Assets

447,083

394,827

13.2

Deposits

387,587

335,241

15.6

Advances- net

170,496

163,557

4.2

Investments

217,214

165,863

31.0

Shareholder’s equity

23,707

18,729

26.6

Operating profit

6,103

2,663

129.2 Profit/(loss) before taxation

5,781

(8,441)

168.5

Profit/(loss) after taxation

4,015

(5,480)

173.3

Capital adequacy ratio- percent

13.03

10.39

~ Cash dividend per share- rupees

2.0

-

-

Market value per share- rupees

23.1

14.0

64.8

Net book value per share-rupees

18.8

\ 14.9

26.6


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ABOUT THE AUDIT REPORT:

The management of Askari Bank is pleased to present its annual reports and financial

statements of the company. This report presents the financial, operating and

corporate responsibility performance of the company, and highlights key business

achievements and challenges faced during the year 2014. This report compares the

financial position in 2013 and 2014.

BALANCE SHEET 2014 2013

Rupees in Million

ASSETS

Cash and balances with treasury banks 19,130,113 26,104,835

Balances with other banks 7,121,128 9,124,531 Lending’s to financial institutions- net 3,427,753 2,503,206

Investments- net 217,213,560 165,897,833 Advances-net 170,501,323 163,560,629

Operating fixed assets 8,350,849 8,623,409 Assets held for sale 201,582 -

Deferred tax assets- net 897,746 2,999,526 Other assets 20,767,647 16,282,792

TOTAL ASSETS 447,611,701 395,096,761

LIABILITIES Bills payable 6,855,020 5,687,542

Borrowings from financial institutions 13,742,030 24,545,879 Deposits and other accounts 387,534,873 335,173,378

Sub ordinate loans 7,992,800 3,994,400

Liabilities against assets subject to finance lease - - Deferred tax liabilities - -

Other liabilities 7,460,863 6,724,053

TOTAL LIABILITIES 423,585,586 376,125,252

NET ASSETS 24,026,115 18,971,509

REPRESENTED BY

Share capital 12,602,602 12,602,602 Reserves 4,823,093 5,612,416

Inappropriate profit 2,150,715 (1,370,719) 19,576,410 16,844,299

Non-controlling interest 32,134 31,359

19,608,544 16,875,658

Surplus on revaluation of Assets- net

4,417,571

2,095,851

24,026,115 18,971,509


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ASKARI BANK

PROFIT & LOSS ACCOUNT

FOR THE YEAR ENDED DECEMBER 31 2014

Rupees in Million 2014 2013 Mark-up / return / interest earned 34,621,111 27,961,790 Less: Mark-up / return / interest expensed 22,712,353 19,363,025 Net mark-up / interest income 11,908,758 8,598,765 Less: Provision against non-performing loans and advances – net (83,198) 9,853,603 Impairment loss on available for sale investment 207,669 158,541 Provision for diminution in the value of investments 197,507 833,406 Provision against reverse repo - - Reversal of provision against purchase under resale agreement - (34,578)

Impairment loss on immovable assets - 199,898

Bad debts written off directly - -

321,978 11,010,870

Net mark-up / interest income after provisions 11,586,780 2,412,105 Add: Non mark-up/interest income Fee, commission and brokerage income 1,476,535 1,198,513 Dividend income 350,810 508,748 Income from dealing in foreign currencies 985,323 559,463 Gain on sale of investments – net 1,812,023 825,043 Less: Unrealized gain on revaluation of investments classified as held for trading – net 19,123 7,150 Other income 883,089 674,723 Total non-markup / interest income 5,526,903 3,773,640

17,113,683 1,361,535

Less: Non mark-up/interest expenses Administrative expenses 11,117,035 9,566,692 Other Provisions/ write offs 46,956 119,609

Other charges 125,696 22,571 Total non-markup / interest expenses 11,289,687 9,708,872

5,823,996 (8,347,337)

Share of profit of associate 45,095 24,006 Extra ordinary / unusual items - - Profit before taxation 5,869,091 (8,323,331)

Taxation – current (1,022,549) (95,286) Taxation – prior years’ - - Taxation – deferred (752,818) 3,041,377 (1,775,367) 2,946,091

Profit after taxation 4,093,724 (5,377,240)


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ASKARI BANK

CASH FLOW STATEMENT

FOR THE YEAR ENDED DECEMBER 31 2014

DECEMBER

31, 2014

DECEMBER

31, 2013

Cash flow from Operating Activities

Profit before taxation

5,869,091 (8,323,331)

Less: Dividend Income (350,810) (508,748)

5,518,281 (8,832,079)

Adjustment for:

Depreciation/ Amortization

Provision against non-performing loans and advances - net Impairment loss on available for sale investments Provision for diminution in value of investments Reversal of provision against purchase under resale arrangement Provision against other assets Provision against operating fixed assets Unrealized gain on revaluation of investments classified as held for trading – net Impairment loss on immovable assets Gain on sale of operating fixed assets Share of profit of associate

723,884 (83,198) 207,669 197,507 - 1,279 45,677 (19,123) - (305,781) (45,095)

784,159

9,853,603 158,541 833,406 (34,578) 108,502 - (7,150) 199,898 (47,256) (24,006)

722,819 11,825,119

6,241,100 2,993,040

(Increase) / decrease in operating assets

Lending’s to financial institutions

Investments – held for trading

Advances

Other assets

(496,794) (72,459) (6,631,925) (4,561,230)

4,850,845 104,323 (29,306,307) (562,603)

(11,762,408) (24,913,742)

Increase / (decrease) in operating liabilities

Bills payable

Borrowings

Deposits and other accounts

Other liabilities

1,167,478 (10,803,849) 52,361,495 583,851

1,987,386 16,169,139 28,243,649 (393,650)

43,308,975 46,006,524


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Cash flow before tax 37,787,667 24,085,822

Income tax paid – net (1,179,212) (1,137,530)

NET CASH FLOW FROM OPERATING ACTIVITIES 36,608,455 22,948,292

Cash flow from Investing Activities

Net investments in available for sale securities Net investments in held to maturity securities Dividend income Investments in operating fixed assets - net of adjustment Sale proceeds of operating fixed assets - disposed off

(47,871,071) 76,107 359,656 (1,219,626) 753,901

(23,767,254) 2,074,962 482,558 (386,708) 60,638

NET CASH FLOWS USED IN INVESTING ACTIVITIES (47,901,033) (21,535,804)

Cash flow from Financing Activities

Receipt / (payments) of sub-ordinated loans Proceeds against issue of shares Lease obligations – net Dividend paid

3,998,400 - - (1,246,511)

(2,992,900) 4,471,891 (1,018) (170)

NET CASH FLOWS USED IN FINANCING ACTIVITIES 2,751,889 1,477,803

Exchange difference on translation of net investment in Wholesale Bank Branch

(9,683) 16,350

Increase in cash and cash equivalents (8,550,372) 2,906,641

Cash and cash equivalents at beginning of the year 36,229,366 33,322,725

Cash and cash equivalents at end of the year 27,678,994 36,229,366


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COMMON SIZE BALANCE SHEET 2014 2013

Rupees in Million Amount % age Amount % age

ASSETS

Cash and balances with treasury banks 19,130,113 4 26,104,835 6 Balances with other banks 7,121,128 2 9,124,531 3 Lending’s to financial institutions- net 3,427,753 0 2,503,206 2 Investments- net 217,213,560 48 165,897,833 46 Advances-net 170,501,323 38 163,560,629 32 Operating fixed assets 8,350,849 3 8,623,409 1 Assets held for sale 201,582 0 - 0 Deferred tax assets- net 897,746 0 2,999,526 2 Other assets 20,767,647 4 16,282,792 8 TOTAL ASSETS 447,611,701 100 395,096,761 100

LIABILITIES Bills payable 6,855,020 1 5,687,542 1 Borrowings from financial institutions 13,742,030 6 24,545,879 6 Deposits and other accounts 387,534,873 82 335,173,378 82 Sub ordinate loans 7,992,800 - 3,994,400 0 Liabilities against assets subject to finance lease

- -

- -

Deferred tax liabilities - 0 - - Other liabilities 7,460,863 2 6,724,053 2 TOTAL LIABILITIES 423,585,586 91 376,125,252 92

NET ASSETS 24,026,115 18,971,509

REPRESENTED BY Share capital 12,602,602 2 12,602,602 1 Reserves 4,823,093 2 5,612,416 3 Inappropriate profit 2,150,715 5 (1,370,719) 4 19,576,410 0 16,844,299 0 Non-controlling interest 32,134 9 31,359 8

19,608,544 16,875,658

Surplus on revaluation of Assets- net

4,417,571

2,095,851

24,026,115 100 18,971,509 100


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ANALYSIS FINANCIAL STATMENTS:

1. Liquidity Ratio: Liquidity means short term obligations. There are three types of

ratios included in liquidity: Current Ratio, Quick Ratio, and Interest Coverage Ratio.

a. Current Ratio:

Current Ratio 2014 = Current Assets /Current Liabilities= 417393877/416124723=1.003

times

Current Ratio 2013= Current Assets /Current Liabilities=367191034/369401199=0.994

times

COMMENTS:

This ratio shows how many times current assets cover current liabilities and the strength

of the company to pay immediate liabilities.

By comparing both the year (2013 &2014) data we found that in both the year the firm has

enough ability to hide its current liabilities with its current assets but present year (2014)

has higher current ratio then previous year (2013)

0.988

0.99

0.992

0.994

0.996

0.998

1

1.002

1.004

2014 2013

Current Ratio

Current Ratio


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b. Quick Ratio:

Quick ratio 2014= Quick assets/Current liabilities=200180317/416124723=0.481

times

Quick ratio 2013= Quick assets/Current liabilities=201293101/369401199=0.544

times

COMMENTS:

The Quick Assets are basically those Assets which are easily convertible in to cash

when needed. In 2013 the Bank has assets of Rs 0.544 for the payment of Rs1 current

liabilities whereas in 2014 the Quick ratio is less than the previous year.

0.44

0.45

0.46

0.47

0.48

0.49

0.5

0.51

0.52

0.53

0.54

0.55

2014 2013

Quick Ratio

Quick Ratio


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c. Net Working Capital:

Net Working Capital 2014= Current Assets- Current Liabilities=417393877-

416124723=1269154

Net Working Capital 2013= Current Assets- Current Liabilities=367191034-

366401199= 789835

COMMENTS:

This ratio includes that whether the company has enough short term assets to cover its short

term debts. In 2014 and 2013 the firm current assets are more than its current liabilities but if we

compare 2013 with 2014. NWC of 2014 is more than 2013 which mean that in 2014 the firm

current assets increased from the previous year.

0

200000

400000

600000

800000

1000000

1200000

1400000

2014 2013

Net Working capital

Net Working capital


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2. Analysis of Asset Management Ratio:

Total Asset Turnover:

Asset Turnover Ratio 2014= Net Markup / Total Assets*100=11586780 /

447611701*100=2.58 times

Asset Turnover Ratio 2013= Net Markup / Total Assets*100= 2412105/395096761*100=

0.61 times

COMMENTS:

The total asset turnover ratio measures the ability of a company to use its assets to

efficiently generate sales. In 2013 the TATR of Askari Bank was 0.61and in 2014 it was 2.58.

Which shows as compared to the last year the bank used its total assets more effectively.

0

0.5

1

1.5

2

2.5

3

2014 2013

Asset Turnover Ratio

Asset Turnover Ratio


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3. Cash and Balances with Banks:

=Cash and balances with other banks / total assets

2014: 19130113 / 447611701= 4.2%

2013: 26104835 / 395096761= 6.6%

COMMENTS:

This ratio expresses the percentage of total assets available in the form of highly liquid assets.

In 2013 Askari bank has more highly liquid assets as compared to 2014.

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

2014 2013

Cash and balances with other banks

Cash and balances with other

banks


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4. Analysis of Profitability Ratio:

a. Gross Profit Margin:

GPM 2014=Interest Income after provision/Interest Income before

provision*100=11586780 /11908758*100=97.29

GPM 2013=Interest Income after provision/Interest Income before

provision*100=2412105/8598765*100=82.05

COMMENTS:

Gross profit margin measures how efficiently the bank is using its money. If we see in 2013

the GPM of Askari Bank was 82.05 and in 2014 it was 97.29. So we can say that the Askari Bank

is making use of its money efficiently.

70

75

80

85

90

95

100

2014 2013

Gross Profit Margin

Gross Profit Margin


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b. Return on Assets:

Return on Assets = Net Income x 100 / Total Assets

Given:

2014: 1.0%

2013: 1.5%

COMMENTS:

The return on assets formula measures how well an organization has regenerate all of its

resources into profit. In 2013 the ROA is 1.5% but if we look on 2014 the ROA is 1.0% which

means that the ROA is decreased in 2014. This means the bank needs to make efficient use of its

assets.

0%

0%

0%

1%

1%

1%

1%

1%

2%

2014 2013

Return on Assets

Return on Assets


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c. Return on Equity:

Return on Equity = Net Income x100/Share Holders’ Equity

Given:

2014: 22.4%

2013:23.1%

COMMENTS:

The purpose of this ratio is to spot the speed of return earned on the shareholders’ equity.

The return on equity ratio shows an eternal decreasing trend of firm. Such as on the investment of

Rs: 100 of stockholders’ equity. HBL is earning 23.1% in 2013 and 22.4% in 2014. In 2014 the

return of equity is less than 2013 which is not a good sign for the firm. As a result its EPS is also

decreased in 2014.

22.00%

22.20%

22.40%

22.60%

22.80%

23.00%

23.20%

2014 2013

Return on Equity

Return on Equity


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Earnings per Share:

EPS 2014 = Net Income/No. Of Shares = Already given = Rs. 3.2

EPS 2013 = Net Income/No. Of Shares = Already given = Rs. 5.9

COMMENTS:

The EPS ratio is especially helpful for investors that show the earnings of company

by examination EPS of current and past years and from base year it shows the expansion of

company. The rise in earnings per share was engaging for the investors to invest in the firm. In

2013 the EPS is 5.9 but in 2014 the EPS is 3.2 so in 2014 the investor will not attract to purchase

the share of the firm.

0

1

2

3

4

5

6

7

2014 2013

Earnings per Share

Earnings per Share

Financial Statements ( Askari Bank Limited report )

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Transcript of Financial Statements ( Askari Bank Limited report )