Annual Report for the year ended December 31, 2012 Cover Concept In today’s challenging environment, we face unprecedented uncertainties across a range of issues. Yet, we still believe that real success lies in always moving ahead; in the relentless pursuit of solutions. At Askari Bank, we believe in leading the way forward. Our fundamental aim is to integrate our offerings with the changing lifestyles of our valued customers – so that we can better assist in their banking needs and also help in shaping their future. On our cover this year, we express our long- standing conviction – of thinking ahead and banking forward. Annual Report of Askari Bank Limited for 2012 Contents 02 21 Years of Banking Unconsolidated Financial Consolidated Financial 04 Vision & Mission Statements of Askari Bank Statements of Askari Bank 06 Our Thinking 08 Products & Services Limited Limited and its Subsidiaries 12 Corporate Philosophy 16 Corporate Information 63 Statement of Compliance 131 Auditors’ Report to the 17 Entity Ratings 65 Review Report to the Members 18 Directors’ Profile Members 132 Consolidated Statement of Financial 22 Board Committees 66 Auditors’ Report to the Position 24 Management Committees Members 133 Consolidated Profit and Loss 26 Notice of 21st Annual General Meeting 68 Unconsolidated Statement of Financial Account 28 Management Position 134 Consolidated Statement of 69 Unconsolidated Profit and Loss Account Comprehensive Income 29 Organogram 70 Unconsolidated Statement of 135 Consolidated Cash Flow 30 Corporate Social Comprehensive Income Statement Responsibility 71 Unconsolidated Cash Flow 136 Consolidated Statement of Changes in 32 President’s Message Statement Equity 34 Value Added Statement 72 Unconsolidated Statement of Changes 137 Notes to the Consolidated Financial 35 Our Network in Equity Statements 36 Financial Review 73 Notes to the Unconsolidated Financial 189 Pattern of Shareholding 38 Financial Calendar Statements 190 Correspondent Network 39 Share & Debt Information 192 Statement of Financial Position in US 40 Horizontal & Vertical Analysis Dollars 44 Six Years’ Performance 193 Profit and Loss Account in US 46 Directors’ Report to the Shareholders Dollars 194 Glossary of Financial & Banking Terms 197 Form of Proxy 1 21 years of banking 2 Annual Report of Askari Bank Limited for 2012 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 261 branches / sub- branches, including 34 dedicated Islamic banking branches, and a wholesale bank branch in Bahrain. A shared network of 5,903 online ATMs covering all major cities in Pakistan supports the delivery channels for customer service. As at December 31, 2012, the Bank had equity of Rs. 19.7 billion and total assets of Rs. 353 billion, with 907,984 banking customers, serviced by our 5,597 employees. Askari Investment Management Limited and Askari Securities Limited are subsidiaries of Askari Bank engaged in managing mutual funds and share brokerage, respectively. 3 Vision & Mission 4 Annual Report of Askari Bank Limited for 2012 Our vision To be the bank of first choice in the region Our 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 5 Our thinking Commitment Integrity Fairness Customers Investors Regulators Passionate about our custom- A distinctive investment, Exemplary compliance, gov- ers’ success, delighting them delivering outstanding perfor- ernance and business ethics with the quality of our service mance, return and value Our vision to be the bank of first choice in and quality of service. We have fully Our values the region demands continuous strive for automated transaction–processing Integrity is the most valued standard in creation of business opportunities with systems for back–office support. Our whatever we do. We understand that our innovation while maintaining our core branch network is connected on–line commitment to satisfy customers’ needs values to meet our commitment to all our real–time and our customers have access must be fulfilled within a professional stakeholders. to off–site as well as on–site ATMs, all and ethical framework. We subscribe to over Pakistan and internationally. Our a culture of high ethical standards, based The range of our products aims to serve phone and internet banking facilities on the development of right attitudes. our diverse customer base that comprises allow customers to enjoy routine banking The intrinsic values, which are the corner of corporate, SMEs, individual savers, service from anywhere, anytime in the stones of our corporate behaviour, are: households and, farmers. At the same world. We also pioneered an e–commerce time, our people are constantly engaged venture in Pakistan. Our mobile ATMs are • Commitment in assessing customer needs and market the first in Pakistan. • Integrity dynamics to realign our products and • Fairness priorities to attain brand recognition and To further strengthen and enhance • Teamwork competitive edge. We are continuously our technology platform, the Bank is • Service reviewing and reshaping our portfolio of in final stages of replacing the existing businesses by investing in higher growth technology with a comprehensive state- areas, extending and developing our core of- the-art technology solutions. Upon competencies and moving out of weak complete implementation; will greatly and non–core segments. improve our product delivery and service abilities. Technology has played a pivotal role in meeting customer expectations, particularly with respect to speed 6 Annual Report of Askari Bank Limited for 2012 Teamwork Service Employees Communities Caring for our people and Dedication towards social de- helping them to grow velopment and improvement in quality of life Our customers Our regulators Our communities Knowing our customers and their needs We firmly believe in regulatory discipline We fully recognize our corporate social is the key to our business success. Our and harmony of our corporate objectives responsibility and our contributions to products and services are as diverse with regulatory framework. Our business different areas of the social sector are as our market segments. Our client methodologies are designed to ensure aimed to help improve the quality of life relationship managers are well equipped compliance with the directives of all our in our country. and well trained to provide the most regulators. efficient and personalized service to the customers. Askari Bank is proud of its Our employees pioneering role in providing the most modern and technologically advanced We strongly believe that the interests services to its 907,984 relationships. of the Bank and the employees are inseparable. At Askari we try to create a Our investors ‘we’ culture where there is mutual trust and respect for each other. We encourage We believe that the bottom line of any ownership behaviour so that everyone business is creating shareholder value. feels responsible for the performance To gain their trust and confidence, we and reputation of the Bank. We are believe in providing our investors timely, committed to develop and enhance each regular and reliable information on our employee’s skills and capabilities through activities, structure, financial situation, extensive in–house and external training and performance. programs and job rotations. In order to ensure meritocracy, our appraisal system is purely performance based. 7 Products & Services percent, Askari Mahana Bachat Account and security with matching flexibility. Branch Banking caters to customers saving needs without Now customers can open a “Value Plus Through a branch network in major blocking their funds for a longer duration. Account” while enjoying the features of a cities, towns and cantonments, made up normal checking account. of conventional, corporate, consumer, Paishgi Munafa Islamic, as well as agricultural banking Current Account service branches, we aim to provide our Askari Paishgi Munafa Account is a customers with a wide array of offerings unique term deposit designed to meet the Current accounts cater to the variety of catering to their banking needs. immediate financial needs of individual financial needs of our diverse customer investors / savers who want to invest base with added benefits of free ATM Mahana Bachat their funds for a medium term. The most card, cheque book, issue of demand significant feature of this product is that drafts / pay-orders and much more. Askari Mahana Bachat Account is a term the customer receives the entire profit These products include value plus deposit designed for individuals with upfront at the time of placing the deposit current accounts, basic account with no a short to medium term investment in a way that the investors / savers can minimum balance requirement. appetite. It offers customers the option fulfill their financial needs of today of investing for one and to three years without depleting their savings. Savings Account tenures and