| Askari Commercial Bank Limited |
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| Annual
Report 1998 |
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| CONTENTS |
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| Corporate
Information |
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| A
Glimpse of Steady Growth |
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| Notice
of Annual General Meeting |
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| Directors'
Report |
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| Correspondent
Network |
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| Auditors'
Report to the Members |
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| Balance
Sheet |
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| Profit
& Loss account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
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| Pattern
of Shareholding |
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| Branch
Network |
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| CORPORATE
INFORMATION |
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| BOARD
OF DIRECTORS |
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| Lt.
Gen. Amjad Shuaib |
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| Chairman |
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| Lt.
Gen. (R) Mohammad Afsar |
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| Mr.
Shameem Ahmed |
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| President
& Chief Executive |
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| Brig.
(R) Sultan Mahmud |
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| Brig.
(R) Safdar Ali |
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| Brig.
(R) Muhammad Shiraz Baig |
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| Brig.
(R) Ikram-ul-Hasan |
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| Dr.
Safdar Ali Butt |
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| Mr.
Zafar Alam Khan Sumbal |
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| Secretary |
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| Mr.
Shahid Hafeez Azmi |
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| Mr.
Sultan Ahmed Abbasi |
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| Mr.
Razi-ur-Rahman Khan |
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| (NIT
Nominee) |
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| AUDITORS |
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| Taseer
Hadi Khalid & Co. |
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| Chartered
Accountants |
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| LEGAL
ADVISORS |
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| Afridi
Angell & Khan |
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| REGISTRAR
& SHARE |
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| TRANSFER
OFFICE |
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| Askari
Associates (pvt.) Limited, |
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| 6th
Floor, AWT Plaza, The Mall, |
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| P.O.
Box 678, Rawalpindi. |
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| Tel:
(051) 514370-71, 516108 |
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| Fax:
(051) 516109 |
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| REGISTERED
OFFICE/ |
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| HEAD OFFICE |
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| AWT
Plaza, The Mall, |
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| P.O.
Box No. 1084, |
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| Rawalpindi-Pakistan. |
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| Tel:
(051) 518117 |
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| Fax:
(051) 563704, 522215 |
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| Web
Site: www.askaribank.com.pk |
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| NOTICE
OF THE SEVENTH |
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| ANNUAL
GENERAL MEETING |
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| Notice
is hereby given that the seventh Annual General Meeting of Askari |
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| Commercial
Bank Limited will be held on Thursday, March 25, 1999 at 10:00 a.m. at |
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| Blue
Lagoon Complex, Masood Akhter Road (off The Mail) Rawalpindi Cantt. to
transact the following |
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| business:- |
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| Ordinary
Business: |
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| 1.
To confirm the minutes of the sixth Annual General Meeting held on March 21,
1998. |
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| 2.
To receive, consider and adopt the audited accounts together with Directors'
and Auditors' Reports thereon for |
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| the
year ended December 31, 1998. |
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| 3.
To approve, as recommended by the Board of Directors, the payment of cash
dividend at Rs. 2.00 per share i.e. 20% |
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| for
the year ended December 31, 1998. |
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| 4.
To appoint Auditors of the Bank for the year ending December 31, 1999 and to
fix their remuneration. |
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| 5.
To elect eleven directors as fixed by the Board in accordance with the
provisions of Rule 178(I)of the Companies Ordinance, |
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| 1984,
for a period of three years commencing March 25, 1999. The retiring directors
whose term of office expires on |
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| March
24, 1999 are: |
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| 1.
Lt. Gen. Amjad Shuaib |
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| 2.
Lt. Gen. (R) Mohammad Afsar |
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| 3.
Brig. (R) Sultan Mahmud |
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| 4.
Brig. (R) Safdar Ali |
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| 5.
Brig. (R) Muhammad Shiraz Baig |
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| 6.
Brig. (R)Ikram-ul-Hasan |
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| 7.
Dr. Safdar Ali Butt |
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| 8.
Mr. Zafar Alam Khan Sumbal |
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| 9.
Mr. Shahid Hafeez Azmi |
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| 10.
Mr. Sultan Ahmed Abbasi |
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| 11.
Mr. Razi-ur-Rahman Khan (NIT Nominee) |
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| Special
Business: |
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| 6.
To consider and approve the remuneration payable to the Chief Executive of
the Bank. |
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| 7.
To transact any other business with the permission of the chair. |
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By order of the Board |
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| Rawalpindi |
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|
Zafar Alam Khan Sumbal |
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| February
18, 1999 |
|
Secretary |
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| Notes |
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| 1.
The Share Transfer Books of the Bank will be closed from March 15, 1999 to
March 25, 1999 (both days inclusive) to determine |
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| Cash
Dividend (DW2). No transfer will be acceptable for registration in the name
of transferee during this period. |
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| 2.
Any person who seeks to contest an election to the office of the director
will file with the company not later than 14 days before |
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| the
date of the meeting, a notice of his/her intention to offer himself/herself
for election as Director. |
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| 3.
A member entitled to attend and vote at the meeting is entitled to appoint a
proxy to attend the meeting and vote for him / her. |
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| Proxies
in order to be effective must be received by the Bank at its Registered
Office not less than 48 hours before the meeting. |
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| 4.
Shareholders are requested to promptly notify the change of address, if any,
and also for the consolidation of folio numbers, if |
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| any
member holds more than one folio, to our Registrar, Askari Associates
(Private) Limited, 6th Floor, AWT Plaza, EO. Box. 678, |
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| The
Mall, Rawalpindi Cantt. |
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| 5.
As statement under section 160 of the Companies Ordinance, 1984 pertaining to
the Special Business is being sent to the |
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| shareholders
with this notice. |
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| STATEMENT
UNDER SECTION 160 |
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| OF
THE COMPANIES ORDINANCE, 1984 |
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| This
statement sets out material facts concerning the special business to be
transacted at the seventh annual general meeting of |
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| Askari
Commercial Bank Limited to be held on March 25, 1999. |
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| Remuneration
of the Chief Executive |
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| In
light of the requirements as contained in Section 200 of the Companies
Ordinance, 1984, approval of the shareholders of |
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| Askari
Commercial Bank Limited is sought for making payment(s), as remuneration, to
its Chief Executive in accordance with the |
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| terms
and conditions of his employment. For this purpose it is proposed that the
following resolution be passed as an Ordinary |
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| Resolution. |
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| Resolved
that: |
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| "The
shareholders hereby approve and authorise payments to the Chief Executive of
the Bank as remuneration consisting |
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| of
salary not exceeding Rs. 200,000 per month and allowances, perquisites and
other benefits of |
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| Rs.
150,000 per month. Bonus, retirement benefits, medical and leave facilities
will be in accordance with his terms |
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| of
employment." |
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| DIRECTORS'
REPORT |
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| We
take pleasure in presenting to you the seventh Annual Report of Askari
Commercial Bank Limited (the Bank) together with |
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| audited
accounts and Auditors' Report thereon for the year ended December 31, 1998. |
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| By
the grace of Almighty Allah, the Bank achieved satisfactory financial results
in all key areas of its operation in spite of the |
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| prevailing
uncertain economic conditions. |
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| State
of the Economy |
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| The
improved economic performance witnessed during the first half of 1998 was
marred |
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| by
the imposition of economic sanctions in the second half. The industrial
growth rate |
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| of
6.2 percent registered in the financial year 1997-98 slipped to 2.4 percent
in the |
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| second
half of 1998. The balance of payment situation remained precarious as the
trade |
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| volume
shrank and debt arrears accumulated. The foreign exchange reserves position |
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| remained
extremely critical. |
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| The
subdued economic activity, reduced trade volume meager foreign exchange
reserves |
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| and
reduced spending on development projects had a negative impact on the
business of the banking sector during 1998. The |
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| freezing
of foreign currency accounts and consequent erosion of deposit base added
further to the problems of the banking |
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| sector
as it resulted in intense competition for deposit mobilization thereby
raising deposit rates and reducing the spreads. |
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| Askari
Commercial Bank Limited in 1998 |
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| The
year 1998 was a difficult year for the banking sector. The general economic
and financial climate affected performance of |
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| all
financial institutions. However, we are pleased to inform you that Askari
Commercial Bank Limited managed to minimize |
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| the
impact of gloomy operating environment on its performance. |
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| With
the blessings of Almighty Allah, the Bank earned a Profit (pre-tax) of Rs.
854 million. an increase |
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| of
Ks. 99.0 million over 1997. A considerable rise in business volumes enabled
the Bank t~ post |
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| this
growth while absorbing the adverse impact of increase in cost of deposits and
fall in yield on |
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| Government
Securities. |
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| Total
assets reached Rs. 28.7 billion, a rise of about 19% compared with last year.
The investment |
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| portfolio
rose by 18% from Rs. 11.8 billion to Rs. 13.9 billion while advances grew by
7% from |
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| Rs.
9.5 billion to Rs. 10.1 billion. |
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| The
Bank's deposit portfolio increased by 20% |
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| to
Rs. 23.4 billion. In 1998 fierce competition |
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| was
witnessed in attracting deposits. The State |
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| Bank
of Pakistan, the country's monetary authority, |
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| took
several policy decisions to check the growth |
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| of
dollarization of the economy. In this regard |
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| Askari
Commercial Bank Limited took effective |
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| measures
to mobilize local currency deposits. A new product "Askari Faida"
was launched to attract foreign currency encashment |
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| proceeds.
The management's efforts resulted in substantial rise in local currency
deposits. |
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| During
the year under review, the Bank received AI+ rating for the short term which
is the highest in the category and A+ |
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| for
the long term, from the Pakistan Credit Rating Agency (Pvt) Ltd. (PACRA), an
affiliate of IBCA Ltd. UK. |
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| In
view of deteriorating operating environment, we slowed down the expansion
plan and added one branch in 1998 making the |
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| total
number of branches 27 as on December 31, 1998. |
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| The
Bank has strong equity base of Rs. 1.9 billion. The capital adequacy ratio
which is calculated on the basis of risk-weighted |
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| assets
is more than double of the minimum statutory requirement of 8%. This has a
built-in cushion for expansion in core activities |
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| of the Bank. |
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| Credit
Risk Management |
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| In
view of the prevailing market conditions, the Bank has further strengthened
its |
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| credit
appraisal, sanctioning and monitoring systems. A team of highly experienced |
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| professional
bankers monitors and controls credit risk exposure of the Bank to ensure |
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| that
advances portfolio is adequately secured and diversified among various
industries |
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| and
geographical centers. The most of advances are trade related, short term and |
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| are
secured by cash or readily cash-convertible securities and collateral's. |
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| Foreign
Trade |
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| Major
policy initiatives followed by Government of Pakistan during the year 1998
and imposition of sanctions by USA. European |
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| Union
and Japan drastically reduced country's ability to undertake foreign trade.
Consequently the national imports and exports |
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| declined
by 19.65% and 12.3% respectively during the 2nd half of 1998. However, as a
result of strenuous efforts of its team, |
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| Askari
Commercial Bank Limited registered a rise of about 33% and 16% in import and
export business respectively. |
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| The
integration of European Union economies into European Monetary Union and
introduction |
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| of
single currency Euro on January 01, 1999 pose considerable implications for
developing |
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| countries.
The need was felt to educate our stall-handling foreign trade transactions in
the branches |
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| and
in this connection a series of seminars were organized at various locations
on Euro currency. |
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| Further
such seminars on current issues having impact on foreign trade business are
planned |
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| for
1999 to enhance the professional skills of the employees. |
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| Askari
Commercial Bank Limited enjoys worldwide |
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| correspondent
network. In 1998 we further enhanced |
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| our
correspondent banking relationship to enable us to |
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| serve
the customers more efficiently. The success on this |
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| front
is reflected in enhanced volume of import and export |
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| business
transacted by the Bank. |
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|
| Treasury |
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| Our
Treasury remained active in money and foreign exchange markets. During 1998,
the Bank |
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| devised
a system through which the latest exchange rates could be flashed on-line to
the branches |
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| through
the latest communication system. This facility not only afforded an
opportunity to the |
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| customers
to buy and sell their foreign exchange at the best possible rates but has
also enabled |
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| the
Bank to capture enhanced foreign exchange business. |
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| The
money market operations also showed a significant rise in its portfolio. The
Treasury operates under a sophisticated risk |
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| management
and multiple control system. The communication and information processing
systems have further been modernized |
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| by
adding latest technology in all areas of treasury operations thus enabling
Treasury to execute and monitor its operations in |
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| a
most efficient and effective way. |
|
|
| Information
Technology |
|
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| We
at Askari Commercial Bank Limited believe that information technology will
play a decisive role |
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| in
achieving competitive edge in the market. The Bank endures to become the
symbol of excellence |
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| by
providing better customer services through the use of state of the art
technology. It is the consistent |
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| policy
of the Bank to make maximum use of technology and we are proud to say that in
view of this |
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| policy,
Askari Commercial Bank Limited is fully equipped to provide innovative and
highly sophisticated |
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| technology
based products and services. |
|
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| In
1998 the Bank further improved its on-line communication system by installing
the fault tolerant life keeper to ensure real |
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| time
communication link. We also formally introduced inter-branch on-line banking
system for the benefit and greater convenience |
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| of
our customers. |
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| The
ATM services have also been further expanded by installing more, ATMs. All of
our ATMs and |
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| major
branches are linked through state of the art communication system offering
real time 24 hours |
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| service.
During 1998 the Bank has also introduced deposit services through these ATMs. |
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|
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| We
would like to mention here that Askari Commercial Bank Limited has the
largest satellite based |
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| communication
network in the banking industry in Pakistan. This network has greatly helped
us in |
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| broadening
the customer base. |
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| In
order to make more intensive use of the existing on-line communication system
and to save the |
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| expenditure
incurred on conventional modes of |
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| communication,
a project is underway which would |
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| soon
be implemented after its successful testing. |
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| As
part of the strategy to make use of current |
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| technological
developments taking place in the global |
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| banking,
SWIFT, an electronic inter bank payment |
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| settlement
mechanism, is being introduced in Pakistan. Considerable work has been done
and the Bank is likely to become |
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| member
of SWIFT in 1999. |
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|
|
| Human
Resource Development |
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| Human
Resource Development and training Js an essential ingredient of our corporate
policy. |
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| In
1998 the Bank organized a number of courses on different subjects of banking.
Several |
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| senior
level seminars, conferences and meetings were also organized on current
issues like |
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| Euro,
Year 2000 compliance, information technology, financial sector reforms,
prudential |
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| regulations,
capital adequacy requirements, new reporting system mandating detailed
financial |
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| disclosures
etc. In addition to this, several executives were sent to courses offered by
various |
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| specialized
training organizations both in Pakistan and abroad to enhance their knowledge
of latest banking trends and practices. |
|
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| The
research arm of the Bank prepared several papers on the performance of the
economy and its impact on the Bank and |
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| published
a book on "Issues in Banking and Finance". In 1998 the Bank also
started publishing a Newsletter aimed at increasing |
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| interaction
and exchange of views between staff for better coordination and
communication. The employees are encouraged to |
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| contribute
articles for this newsletter which serves the dual purpose of staff
development and evolution of common corporate |
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| culture. |
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|
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| Year
2000 Compliance |
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| The
Bank embarked on Year 2000 (Y2K) compliance |
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| plan
in 1995 and has achieved the Y2K compliance of |
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| measures
to ensure Y2K compliance of all of its hardware |
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| and
software facilities. |
|
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| The
parent organization of the Bank has also taken |
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| necessary
steps to ensure Y2K compliance of its computer |
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| systems. |
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|
|
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| The
key hardware and software suppliers of the Bank |
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| have
achieved Y2K compliance and adequate steps have |
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| been
taken to convey the si3nilicancc of Y2K compliance |
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| to
other major suppliers, borrowers and customers. |
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| Acknowledgement |
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| We
are grateful to the State Bank of Pakistan for providing their continued
guidance in regard to |
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| various
regulatory and operational issues concerning management of the Bank. We are
also thankful |
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| to
our valued customers and shareholders for their continued support and
confidence. |
|
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| We
would like to place on record our deep appreciation for the hard-work and
dedication shown |
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| by
the staff in achieving the desired objectives of the Bank. |
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| Prospects
for 1999 |
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| The
general economic outlook has improved for |
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| 1999
due to an agreement with the IMF. |
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| Nevertheless,
it is premature to take an optimistic |
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| view
of the economic situation, as the agreement |
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| with
IMF involves conditionalities such as removal |
|
| of
subsidies, increase in the general sales tax from |
|
| 12.5%
to 15%, further liberalization of foreign |
|
| trade
regime, reduction in fiscal deficit and tight control over government bank
borrowing. However, the rescheduling of |
|
| multilateral
and bilateral debt will give Pakistan a breathing space. It is expected that
inflow of funds from International Financial |
|
| institutions
along with rescheduling of external debt will enable the country to undertake
development projects. |
|
|
| Askari
Commercial Bank Limited is better positioned than most of its peer banks to
deal with any |
|
| adverse
market trend. Nevertheless, the Bank cannot be expected to remain immune from
the general |
|
| economic
conditions. The liquid asset mix, sound capital adequacy, enhanced
technological resources, |
|
| image
of reliability and security it carries and aggressive fund mobilization
strategies to be pursued |
|
| by
us will, Inshallah, enable the Bank to achieve the best possible results. |
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|
|
On behalf of the Board |
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|
|
|
|
| Rawalpindi |
|
Lt. Gen. Amjad Shuaib |
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| February 11, 1999 |
|
Chairman |
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|
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| CORRESPONDENT
NETWORK |
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| 1. Australia |
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| Australia
& Newzealand |
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|
| Banking
Group (ANZ Bank) |
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|
|
| Bank
of America NT&SA |
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|
|
| Bank
of America Australia Ltd. |
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|
|
| Citibank NA |
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|
|
|
| Commonwealth
Bank of Australia |
|
|
| Hongkong
Bank of Australia |
|
|
| Standard
Chartered Bank |
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|
|
|
|
|
|
|
| 2. Austria |
|
|
|
| American
Express Bank ltd. |
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|
| Citibak NA |
|
|
|
|
| Creditanstalt
Bankverien |
|
|
|
|
|
| Oberosterreichische
Landesbank |
|
|
| Raiffeisen
Zentralbank Osterreich |
|
|
| Aktiengesellschaft
(RZB) |
|
|
|
|
|
|
|
|
| 3. Argentina |
|
|
|
| ABN
AMRO Bank Ltd. |
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|
|
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|
|
| Citibank NA |
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|
|
|
|
|
|
|
|
|
|
|
| 4. Algeria |
|
|
|
| Banque
de I'Agriculture et du |
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|
|
|
|
| Developpement
Rural |
|
|
|
|
|
|
|
|
|
| 5. Armenia |
|
|
|
|
|
| Midland
Armenia Bank Jsc |
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|
|
|
|
|
|
| 6.
Bangladesh |
|
|
|
|
|
| Al
Baraka Bank Bangladesh Ltd. |
|
|
| American
Express Bank Ltd. |
|
|
|
|
| ANZ
Grindlays Bank PIc |
|
|
|
|
|
| Habib
Bank Ltd. |
|
|
|
|
|
| Standard
Chartered Bank |
|
|
|
|
|
| United
Commercial Bank Ltd. |
|
|
|
|
|
| 7. Belgium |
|
| ABN
AMRO Bank (Belgium) NV |
|
| Bank
of America NT & SA |
|
| Banque
Bruxelles Lambert SA. |
|
| Cera Bank |
|
| Citibank NA |
|
| Generale
Bank |
|
| Habib
Bank ltd. |
|
| KBC Bank NV |
|
|
| 8. Bahamas |
|
| Bank
of America TR Banking Corporation |
|
| Citibank NA |
|
| Standard
Chartered Bank |
|
|
| 9. Bahrain |
|
| ABN
AMRO Bank NV |
|
| American
Express Bank Ltd. |
|
| Citibank NA |
|
| Grindlays
Bahrain Bank BSC |
|
| Habib
Bank Ltd. |
|
| Standard
Chartered Bank |
|
|
| 10. Brazil |
|
| ABN
AMRO Bank NV |
|
| American
Express Bank Ltd. |
|
| Citibank NA |
|
| Standard
Chartered Bank |
|
|
| 11.
Brunei Darus Salam |
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| Citibank NA |
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| Standard
Chartered Bank |
|
|
| 12. Bulgaria |
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| Commercial
Bank Biochim |
|
|
| 13. Canada |
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| American
Express Bank Ltd. |
|
| Bank
of America NT & SA |
|
| Canadian
Imperial Bank of Commerce |
|
| Citibank NA |
|
| National
Bank of Canada |
|
| Royal
Bank of Canada |
|
| Standard
Chartered Bank |
|
| Toronto
Dominion Bank (The) |
|
|
| 14.
Cayman Island |
|
| Bank
of America NT & SA |
|
|
| 15.
Channel Islands |
|
| ABN
AMRO Bank NV |
|
| ANZ
Bank (Guernsey) Limited |
|
| Bank
of America NT & SA |
|
|
| 16. Chile |
|
| American
Express Bank Ltd. |
|
| Bank
of America NT&SA |
|
| Citibank NA |
|
|
| 17. China |
|
| ABN
AMRO Bank NV |
|
| ANZ Bank |
|
| Bank
of China |
|
| Bank
of America NT&SA |
|
| China
Construction Bank |
|
| China
Merchants Bank |
|
| Hongkong
& Shanghai Banking |
|
| Corporation
Ltd. (The) |
|
| Standard
Chartered Bank |
|
|
| 18.
Cook Island |
|
| ANZ
Banking Group Ltd. |
|
|
| 19. Cyprus |
|
| Cyprus
Popular Bank Ltd. |
|
| HSBC
Investment Bank Cyprus |
|
|
| 20.
Czech Republic |
|
| ABN
AMRO Bank NV |
|
| Ceskoslovenska
Obchodni Banka AS |
|
| Citibank NA |
|
| Creditanstalt
AS |
|
| Raifeisenbank |
|
|
| 21. Denmark |
|
| ABN
AMRO Bank NV |
|
| Citibank NA |
|
| Den
Danske Bank A/S |
|
| Sparekassen
Nordiylland A/S, (SBN) |
|
| Unibank A/S |
|
|
| 22. Egypt |
|
|
|
|
|
|
|
| American
Express Bank |
|
|
|
|
|
|
|
| Bank
of Alexandria |
|
|
|
|
|
|
|
| Bank
of America NT&SA |
|
|
|
|
|
|
|
| Citibank NA |
|
|
|
|
|
|
|
|
| National
Bank of Pakistan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 23.
El Salvador |
|
|
|
|
|
|
|
| Citibank NA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 24. Finland |
|
|
|
|
|
| Leonia
Bank PIc, Helsinki |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 25. Fiji |
|
|
|
|
|
|
|
| ANZ Bank |
|
