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Askari Commercial Bank Limited (Askari Bank) was incorporated in Pakistan on October 9, 1991 as a public limited company, under the Companies Ordinance, 1984. Askari Bank commenced banking operations from April 1, 1992 and is listed on all three stock exchanges in the country.
The Board of the bank is a blend of retired army officers, bankers and professionals. The bank continues to enjoy "AA+" (Double A Plus) credit rating for long term and "A1+" (A One Plus) rating for short term, assigned by Pacra. Askari Bank operates total 99 branches (2005: 99 branches), 98 in Pakistan and AJ&K, one Offshore Banking Unit in Bahrain and four Islamic Banking Branches (December 31, 2005: Nil). Army Welfare Trust directly and indirectly holds nearly 47% of the bank's paid up capital.
Askari Investment Management Limited (AIML), a fully owned subsidiary of Askari Bank, was incorporated on May 30, 2005 as a public limited company. AIML, a Non-Banking Finance Company licensed by the SECP, is to undertake asset management and investment advisory services as prescribed under the NBFC (E&R) Rules, 2003. AIML manages and operates Askari Income Fund, an open-ended mutual fund. The Overview hereunder, however, is that of Askari Bank alone, without consolidation with AIML.
Askari Bank saw 4% increase in its Total Assets to Rs 151 billion as on June 30, 2006 compared to Rs 145 billion on December 31, 2005. Small increases are seen in Investments and Advances.
This increase in Total Assets has been managed largely through increase in Deposits and retention of profits. Of the total, Askari Bank has 79% investments in Available for Sale Securities (2005: 72%).
The paid up capital of the bank as on June 30, 2006 was Rs 2.004 billion. It is presumed that the stakeholders might be taking steps to raise the paid up capital by December 31, 2006 to Rs 3 billion, the minimum capital requirement prescribed by the State Bank of Pakistan. Commensurate with the expansion of its operations, it is expected that the equity of the bank might also be increased. Equity as percentage of Total Assets on June 30, 2006 was 5.6% (December 31, 2005: 5.1%).
Askari Bank's Advances as on June 30, 2006 are at Rs 90 billion (60% of Total Assets) compared to Rs 86 billion (59% of TA) as on December 31, 2005. As on June 30, 2006, gross NPLs are Rs 2.991 billion (December 31, 2005: Rs 2.373 billion). In percentage terms gross NPLs on June 30, 2006 are 3% of gross Advances (2005: 3% of GA). On Net basis, NPLs are 1% of Advances (2005: 1% of Advances).
Very low level of NPLs as shown above could be the result of Askari Bank's prudent strategy to lend to the right type of customers. However, as some doubtful loans have the tendency to stay under cover for sometime due to different reasons, a prudent policy for Askari Bank would be that the management remains extra vigilant in the appraisal and monitoring of all loans.
Total mark up income of Askari Bank for the first six months of 2006 increased by 64% to Rs 5.835 billion compared to Rs 3.549 billion for the corresponding six months of the previous year. Net mark up income (after mark up expensed and provisions) for the six months period under review increased by 20% to Rs 2.018 billion (corresponding six months of 2005: Rs 1.688 billion). Total mark up-interest expense represented 55 % of total mark up income for six months ended June 30, 2006, compared to 41% for the corresponding six months of 2005. The average payout to the Depositors has slightly improved but is still considered on the low side.
Non-mark up income of the bank for the six months ending June 30, 2006 was 40% higher at Rs 1.048 billion as against Rs 0.750 billion for the corresponding six months of 2005. The six months under review were closed with After-tax Profit at Rs 1.118 billion (corresponding six months of 2005: Rs 0.864 billion), registering an increase of 29%. ROE for the six months at 13.2% (corresponding six months of 2005: 11.7%) is attractive. Askari Bank shares these days are trading on KSE at around Rs 103.50 per share, at 2.44 times of the book value of Rs 42.35 per share as on June 30, 2006. Performance statistics are given below.
The Directors in their Review state that the bank continues to pursue strategic expansion and that development work continues on some locations. According to them, the bank's infrastructure, policies and plans are geared towards promoting speedy service to all its customers.



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Performance Statistics (Un-audited) (Rs, million)
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Balance Sheet As June 30, As Dec. 31,
2006 2005
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Total Assets: 150,827 145,100
Cash, balances with banks: 15,652 17,317
Lending to financial institutions: 10,219 10,172
Investments-Net: 28,152 25,708
Advances-Net: 89,811 85,977
Borrowing from fin. Institutions: 10,860 10,562
Deposits, other accounts: 122,543 118,795
Total Liabilities: 140,922 136,513
Net Assets: 9,905 8,587
Share Capital: 2,004 1,507
Reserves & Un-app. Profit: 6,483 5,862
Sub total- Equity: 8,487 7,369
Surplus on Revalue, Assets: 1,418 1,218
Equity incl. Revalue Surplus: 9,905 8,587
Subordinated Loan: 2,999 3,000
Equity & Sub. Loans: 12,904 11,587
Advances-Gross: 92,818 88,396
Gross NPLs: 2,991 2,373
Total Provision: 3,007 2,419
Conting. & Commitments: 90,933 104,718
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Ratios:
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Cash & bank/Total Assets: 10% 12%
Investments/Total Assets: 19% 18%
Advance-Net/Total Assets: 60% 59%
Gross NPLs/Advances-Gross: 3% 3%
Net NPLs/Advances-Net: 1% 1%
Gross NPLs/Total Equity: 35% 32%
Provision/Advances-Gross: 3% 3%
Deposits/Total Assets: 81% 82%
Total Liabilities/Total Assets: 93% 94%
Total Equity/Total Assets: 5.6% 5.1%
Equity, R-Surplus & S-Loans/TA: 8.6% 8.0%
Deposits/Equity-Times: 14.4 16.1
Advances/Deposits (ADR): 73% 72%
Investments/Deposits: 23% 22%
Conting.& Comm./Equity-X: 10.71 14.21
Book Value Per Share: 42.35 48.90
Quoted Price (18-10-06) - Rs: 103.50 -
Price/Book Value Ratio: 2.44 -
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Income Statement (six months) 2006 2005
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Markup- interest earned: 5,835 3,549
Markup- interest expensed: 3,227 1,472
Net Markup- interest income: 2,608 2,077
Provisions and write offs: 590 394
Net mark up income (aft. Prov.): 2,018 1,683
Total non-markup income: 1,048 750
Income bef. Admn. Exp.: 3,066 2,433
Admin Expenses, etc: 1,546 1,121
Profit before Taxation: 1,520 1,312
Current & deferred tax: 402 448
Profit after taxation: 1,118 864
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Ratios: (6-Month Basis)
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Markup earned/Total Assets: 3.9% 2.4%
Net Markup Income/TA: 1.7% 1.4%
Net markup (aft. Prov.)/TA: 1.3% 1.2%
Non-Markup Income/TA: 0.7% 0.5%
Income before AE/TA: 2.0% 1.7%
Admin Expenses/TA: 1.0% 0.8%
Profit before Taxation/TA: 1.0% 0.9%
Profit after taxation/TA: 0.7% 0.6%
Profit after tax/Total Equity: 13.2% 11.7%
EPS- (Period-end paid up) - Rs: 5.58 5.73
Price/Earnings Ratio: 18.55 -
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Cash flow Summary (6 months) 2006 2005
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Net Cash flow, Operations: -374 9,507
Net Cash flow, Investing: -2,398 -5,667
Net Cash flow, financing: -223 236
Change in Net Liquidity: -2,995 4,076
Net Liquidity at beginning: 19,297 13,611
Net Liquidity at end: 16,302 17,687
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COMPANY INFORMATION: Chairman: Lieutenant General Waseem Ahmed Ashraf; Chairman Executive Committee: Lieutenant General Zarrar Azim (R); President & CEO: Shaharyar Ahmad; Director: Muhammad Afzal Munif, FCA; Company Secretary: Saleem Anwar, FCA; Auditors: A. F. Ferguson & Co, Chartered Accountants; Legal Advisors: Rizvi, Isa, Afridi & Angell; Registered/Head Office: AWT Plaza, The Mall, Rawalpindi Web Address: www.askaribank.com.pk
Copyright Business Recorder, 2006

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