financial statements ( askari bank limited report )
TRANSCRIPT
Introduction to Business Finance
Submitted to: Mr. Iqbal Niyani
Submitted by:
Rija Sohail (1728)
Muhammad Moiz Khan (0315)
FINANCIAL STATEMENTS
Askari Bank Limited
FINANCIAL STATEMENTS
2 | P a g e
ASKARI BANK
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DEC 31 2014
FINANCIAL STATEMENTS
3 | P a g e
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.
FINANCIAL STATEMENTS
4 | P a g e
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.
FINANCIAL STATEMENTS
5 | P a g e
Visited Askari Bank Gulshan Branch,
With:
Mr. Syed Ashraf Zaki
Manager Operations
FINANCIAL STATEMENTS
6 | P a g e
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
FINANCIAL STATEMENTS
7 | P a g e
» "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.
FINANCIAL STATEMENTS
8 | P a g e
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)
Non-Executive Director
FINANCIAL STATEMENTS
9 | P a g e
Mr. Qaiser Javed
Non-Executive Director
Dr. Nadeem Inayat
Non-Executive Director
Mr. Manzoor Ahmed
Non-Executive Director – NIT Nominee
Mr. Asif Reza Sana
Independent Director
Mr. Zaffar Ahmad Khan
Independent Director
Mr. Tariq Hafeez Malik
Independent Director
Mr. Muhammad Ghous
Independent Director
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
FINANCIAL STATEMENTS
10 | P a g e
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
FINANCIAL STATEMENTS
11 | P a g e
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
FINANCIAL STATEMENTS
12 | P a g e
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
FINANCIAL STATEMENTS
13 | P a g e
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)
FINANCIAL STATEMENTS
14 | P a g e
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
FINANCIAL STATEMENTS
15 | P a g e
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
FINANCIAL STATEMENTS
16 | P a g e
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
FINANCIAL STATEMENTS
17 | P a g e
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
FINANCIAL STATEMENTS
18 | P a g e
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
FINANCIAL STATEMENTS
19 | P a g e
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
FINANCIAL STATEMENTS
20 | P a g e
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
FINANCIAL STATEMENTS
21 | P a g e
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
FINANCIAL STATEMENTS
22 | P a g e
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
FINANCIAL STATEMENTS
23 | P a g e
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
FINANCIAL STATEMENTS
24 | P a g e
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
FINANCIAL STATEMENTS
25 | P a g e
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