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Supervisor:
PROJECT ON
STANDARD CHARTERED
AND
ASKARI BANK
SUBMITTED BY
IRFAN KHAN
SUBMTT TO
FIN619vuaccess
First of all I am thankful to Almighty Allah who gave me knowledge and power to make
me able to complete my Project successfully
I am also thankful to (Department of Administrative Sciences) virtual university of
Pakistan Lahore who provide me this opportunity to have an experience in a reputed
organization and groom myself for the future professional responsibilities.
Dear students, for the sake of writing good result, visit www.vuaccess.blogspot.com,
there are lot of information regarding to reports and projects, so for guideline purpose
you could visit this website and then write your report
EXECUTIVE SUMMARY
This project have better understanding and have information about certain condition of
both companies Standard Chartered and Askari Bank . In this project we could see both
companies strength and weakness and will make some forecasting to get pure finding of
both companies have take ratio analysis to reach the root of companies financial strength.
My project is enable to explore both companies under below aspects
A) Solvency-
1) Long term
2) Short term
3) Immediate
B) Stability
C) Profitability
D) Operational efficiency
E) Credit standing
F) Structural analysis
G) Effective utilization of resources
H) Leverage or external financing
So my study regarding to both companies financial ratios are very useful for
understanding both companies current position. Because my project help in
understanding the liquidity and short-term solvency of the firm, predominantly for trade
creditors and banks. You could see in the next page that I have take analysis through
both company financial ratio and then make some interruptions and comments over the
both companies. My project is also disclosing the internal structure of the both firms; it
shows the relationship between sales and each income statement account. Lets go to see
the project finding.
Answer. Many students often fail in the project proposal, because they could not
study properly given in LUMS or hands out, Proposal is a project work activities that
you are going to do research. I recommended you if you want to write really a good
proposal then visit under below blog or website, where you could find important
information about how to write a good Proposal,
http://wwwwww.vuaccess.blogspot.com
As I have told you, those students that are going to work on final projects, are
required to visit once time above site, this is good for final projects, and internship
reports, a lot of information are available on this site regarding to Final projects
Dear students your work is evaluated and necessary mistake are highlighted
TABLE OF CONTENT
Executive Summary.........................................................................................................7
Introduction ...................................................................................................................10
Background of the project:............................................................................................11
BANKING AND FINANCIAL SECTOR IN PAKISTAN..........................................12
The Banking Sector ......................................................................................................12
ESTABLISHING DIFFERENT INSTITUTIONS........................................................13
COMMMERCIAL BANK IN PAKISTAN..................................................................15
CURRENT SITUATION IN PAKISTAN....................................................................17
Company’s introduction................................................................................................18
introduction to standard chartered.................................................................................18
introduction to askari bank............................................................................................19
Objectives .....................................................................................................................20
Significance...................................................................................................................20
Processing and Analysis................................................................................................21
Data Collection .............................................................................................................21
Data collection instrument.............................................................................................22
Data Analysis.............................................................................................................22
Project Proceedings...................................................................................................22
Financial Statement analysis..........................................................................................23
BASED ON FUNCTION:.............................................................................................24
Ratio Analysis of both companies and interruption .....................................................26
Profitability Ratios:........................................................................................................41
Operating Assets of STANDARD CHARTERTED Limited........................................47
Market Ratio: ...................................................................................................................51
Dividend per Share – DPS:................................................................................................51
Dividend Yield:.............................................................................................................55
Vertical and Horizontal.................................................................................................59
Horizontal Analysis.......................................................................................................60
Vertical Analysis..........................................................................................................68
Review of Descriptive Information...............................................................................79
Dividend per Share – DPS.................................................................................................83
Dividend per Share – DPS.................................................................................................85
SUMMARY OF FINANCIAL POSITION OF Both companies .................................88
Conclusion / Findings and recommendation.................................................................89
Recommendation...........................................................................................................91
LIMITATIONS OF RATIO ANALYSIS.....................................................................92
BIBLIOGRAPHY..........................................................................................................94
INTRODUCTION
Financial statements are a report of a company past financial performance and current
financial position. They are designed to provide information on four primary business
activities planning, financing, investing and operating activities. Today advanced
technology increase the importance of expert financial statement analysis. Analyzing
financial statements helps us sort through and evaluate information, focusing attention on
reliable information most relevant to companies or business decisions. On the other hand
financial statement is broadly classified into two groups internal users, primarily the
mangers of the company, are involved in the making operating and strategic decision for
the business.
It is open crystal that financial statement analysis deals with the company financial
position. Its mean that establishing a meaningful relationship between various items of
two financial statement with each other, The main focus of the statement analysis to
observed to companies transaction and presenting them in such a way that external user
can understand the firm current position. The main them behind this topic is to
Assessment of the firms, past, present and future financial condition. The topic is related
to explore
We will go widely to say company companies and I will make clear who both companies
are performing. By managing flow of funds.
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According to my topic, my project major theme to analyze the both companies past,
present, and future performance. In this project I will try to company Ratio analysis, I
hope it will provide relative measure of the said firm’s position. On the other hand my
study aims to spell out the Horizontal analysis and vertical analysis of the firms. Because
Horizontal analysis is lead to valuate the company accounts over the year, and the
vertical analysis is also concern to company financial statement. My research wills
analysis the existing relation between sales and income statement of both. I will spell out
the in this study that financial statement and objects of analysis. Financial statement
reporting of financing and investing activities occurs at the point in time. I will make
clear after research of both companies the four primary finance pillars .e.g financial
statement e.g. balance sheet, income statement, the statement of shareholder (owners)
equity and statement of cash flows. This project will give you the major portion for
study whose Timing of cash flows and analysis, Risk of cash flows
Market condition of both companies e.g stock Price, Ration analysis,
We know that at a time of independence Pakistan faced very serous and stringent
circumstances. They were numerous problems including economic instability, scarcity of
resources, non-availability of trained personals and above all the settlement of thousand
of people who migrated to Pakistan, but as the time witnessed. By the Grace of Allah
and by massive hard work and effort we successfully overcame all these hurdles.
At the time of independence it was decided that Reserve bank of India would continue to
function as the central bank of both Pakistan and India. This decision was taken to smoothly
accomplish different crucial matters such as membership of IMF and WB division of assets,
coinage of new currency etc. The Reserve Bank order of 1947 States those Indian notes
will continue to be legal tender both in Pakistan and India. Bank of India would function as
central bank of Pakistan up till April 1948.
However Reserve Bank of India did not work fairly for Pakistan it refuse making advances
to the Govt: of Pakistan against adhoc securities. Further it withheld Pakistan share of
rupee Rs 750 million in the undivided Indian Government. Considering all this a committee
was setup to formulate a plan for establishment of a central bank. Later the SBP order was
promulgated by the Governor General of Pakistan on 12 May, 1948. The SBP started its
operation on 1st July 1948.
At that time there were only 2 Pakistani banks namely STANDARD CHARTERTED and
Australasia Bank. Rest of the bank either closes their business in Pakistan or greatly
curtailed the scale of their operations. The SBP then took immediate actions to cure the
STANDARD CHARTERTED in all areas. It also helped in the formation of many other
banks and institutions to support economic activities.
As already stated SBP did great work to provide sound financial base to newly born state.
NBP (National Bank of Pakistan) was established a representative of SBP in 1949. SBP
also played an important role in promoting stock and shares business in Pakistan. The first
stock and share market was established in Karachi. Further the SBP took necessary steps to
liquidate unsound and weak commercial banks in order to reduce likely disturbances.
A banking companies act was passed 1948, that empowered SBP to control operations of
banking companies. Afterwards SBP act 1956 was passed which gave even more powers to
it. It was all due to the massive effort of SBP that by the year 1958 Pakistan has 307 bank
offices as against 195 in 1948. Out of these 307 branches and bank offices, Pakistani banks
offices amounted to 232. The deposit that was just 881 million in July 1948 has risen to
2389 million by 1958. It was also pleasing that Pakistani banks held 60% of the total 2389
million deposits.
The progress continued as the time passed by. Now that we have completed 53 years of our
independence there is a right time to seek lesion from our past and to build plans for the
future.
On the whole our financial sector showed good signs of growth and development in the pas
half century. There are certain disappointments and failures too but these are mostly due to
our political and bureaucratic defaults the major events in the financial sector that took place
since beginning are listed below.
State Bank of Pakistan was set up and started functioning from 1st July 1948. Hence the
history of banking system in Pakistan started with the establishment of the State Bank of
Pakistan which was inaugurated by Quaid-e-Azam Mohammad Ali Jinah on 1st July, 1948.
Therefore three banks were established which include Muslim Commercial Bank Ltd.
formed in September 1948. Bank of Bhawalpur in October 1948 and National Bank of
Pakistan in 1949. STANDARD CHARTERTED also transferred its Head Office from
Bombay to Karachi due to partition in August 1947 and it was assisted by the State Bank to
finance domestic trade of the country.
Primary Functions
Secondary Functions
Role in economic Development
PRIMARY FUNCTIONS:
Primary functions include those which form the basis of commercial bank operations.
These functions are central in nature and are there core of the while operations of bank.
Primary functions include the following:
1. Acceptance of Deposits:
The fundamental function of a commercial bank is the acceptance of deposits. All other
functions of a commercial bank are based upon this function. Banks accepts deposits
from those who have surplus money in their hands but they are unable to use it in a
profitable way. The commercial bank provides an opportunity to general public to make
good use of their savings by depositing them in the bank. In order to attack general
public and to persuade people to deposit money in bank, three different types of accounts
are maintained by commercial banks.
Current Account
Saving accounts
Fixed deposits
2. Advancing loans:
o Overdraft
o Discounting Bills of exchange
o Loans
o Cash credit
CURRENT SITUATION IN PAKISTAN
According to Central bank of Pakistan a growing and dynamic banking sector is essential
for economic growth in Pakistan , as we know growth in the banking sector and the in the
real economy mutually reinforce each other. On the other hand the banking sector
constitutes the core of financial sector in Pakistan. Private sector investment and
consumption should be seen as the key drivers of the economy and must be supported by
growing financial intermediation and services, including not only banks but also non-
bank financial institutions, and the stock market. The growth in banking system has been
driven by rise in deposits to Rs 4.1 Trillion and advances to Rs 3.3 Trillion. Banks as
profitable ventures have attracted close to over $4 billion of foreign direct investment
during 2008-2008. Almost half the assests of banks are now owned prudent lending
supported by strong regulatory and supervisory framework have lowered net non
performing loans to historical lows.
Pakistan banking industry and the broader financial sector has enormous potential to
support faster economic growth and development. When compared with other emerging
market countries (EMCS) these sectors remain small in relation to the economy. In recent
years a wide range of important structural reforms already have taken place but more
remorse are needed for the banking sector to grow into its full potential for supporting
strong and sustained economic growth and development. The system remains relatively
small in relation to the economy, when compared with other emerging countries in Asia
and around the world. Given that a dynamic and growing financial system is central to a
growing economy, the small size of Pakistan’s financial sector implies that many
financing needs cannot be met and that much of the country’s economic potential
remains unfulfilled. A wide range of important structural reforms already have taken
place but many more remain to be defined and implemented, if the financial sector is to
meet its full potential for supporting strong and sustained economic growth and
development.
COMPANY’S INTRODUCTION
Standard Chartered PLC is listed on both the London Stock Exchange and the Hong
Kong Stock Exchange and is consistently ranked in the top 25 among FTSE-100
companies by market capitalization.
Standard Chartered has a history of over 150 years in banking and operates in many of
the world's fastest-growing markets with an extensive global network of over 1,400
branches (including subsidiaries, associates and joint ventures) in over 50 countries in the
Asia Pacific Region, South Asia, the Middle East, Africa, the United Kingdom and the
Americas.
As one of the world's most international banks, Standard Chartered employs 70,000
people, representing over 90 nationalities, worldwide. This diversity lies at the heart of
the Bank's values and supports the Bank's growth as the world increasingly becomes one
market.
With strong organic growth supported by strategic alliances and acquisitions and driven
by its strengths in the balance and diversity of its business, products, geography and
people, Standard Chartered is well positioned in the emerging trade corridors of Asia,
Africa and the Middle East.
Standard Chartered derives over 90 per cent of profits from Asia, Africa and the Middle
East. Serving both Consumer and Wholesale Banking customers worldwide, the Bank
combines deep local knowledge with global capability to offer a wide range of innovative
products and services as well as award-winning solutions.
Trusted across its network for its standard of governance and corporate responsibility,
Standard Chartered takes a long term view of the consequences of its actions to ensure
that the Bank builds a sustainable business through social inclusion, environmental
protection and good governance.
Standard Chartered is also committed to all its stakeholders by living its values in its
approach towards managing its people, exceeding expectations of its customers, making
a difference in communities and working with regulators.
Askari Bank Ltd (formerly Askari Commercial Bank) was incorporated in Pakistan on
October 9, 1991, as a Public Limited Company. It started its operations during April 1,
1992. The bank principally deals with banking, as defined in the Banking Companies
Ordinance, 1962. The Bank is listed on the Karachi, Lahore & Islamabad Stock
Exchanges and its shares are currently the highest quoted from among the new private
sector banks in Pakistan.
Askari Bank has expanded into a nationwide presence of 150 branches, and an offshore
banking Unit in Bahrain. A shared network of over 1,100 online ATMs covering all
major cities in Pakistan supports the delivery channels for customer service. As on
December 31, 2008, the bank had equity of PKR 12.27 billion and total assets of PKR
182.17 billion, with over 800,000 banking customers, serviced by our 6,808 employees.
Services
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The object of my project is analysis both companies past , current , and future
position.
My project aim is to standardize the financial information for comparisons
My project will bring out the efficiency of operations of both companies
Study will spell out the risk of operation of both companies
My study aim is to measure the relationship between resources and financial
flows of both companies
After study reader could easily understand the liquidity ration, leverage ratio,
operation ratio, profitability ratio, valuation ratio of both companies
Major Objective of my study is to show the financial stability of both companies
Significance
My study of both companies about financial analysis will able to read you about
two company’s financial condition
I am trying to elaborate the basic source for these ratios are the company's
financial statements that contain figures on assets, liabilities, profits, or losses.
Financial ratios are only meaningful when compared with other information.
Here I will try to dig out various financial data, e.g Ratio analysis, cash flow and
financial ratio.
Significance of my project stems from the very nature of the financial statements
i.e. they are typically lengthy, bulky documents which have a huge array of
numbers not gamely understandable.
The section is going to cover solid or existing foundations to the study. Quality and value
of the research report depends upon how specifically and accurately the data is collected,
processed, interpreted and analyzed so that fruitful conclusions may be drawn out of it. It
includes:
Data Collection
At the foundation of a research (Project), it canister be important to seem for
documentary sources. It is what some will call: “the review of papers ". And here, I use
the term documentary sources in the widest connotation of this expression certainly; the
goal is not to find only written sources. According to the subject I have chosen for my
project, the tool used for data collection is direct observation of the financial statements
of the banks.
Company profile forms
Company comparison forms
Stock exchange
Internet past articles
For the sake of further information I have used secondary sources for data collection for
my work, that contain internet and then I use stock exchange for data congregation as the
banks are planned in Lahore stock exchange.
Data collection instrument
DATA ANALYSIS
After getting data from different sources then the data will display on the excel and
following analysis will done
Those variables which will put a significant impact in my study will tested through t- test
so that my finding might be considered as more authentic. Scatter Diagram also will
clarify the important facts.
On the other hand we will use many tools to review a company, I will use of the largely
priceless method for Financial Ratios. Ratios are an analyst’s microscope; they allow us
get a better sight of the firm’s financial health than just looking at the raw financial
statements. Ratios are useful both to internal and outdoor analysts of the firm. For
internal purposes: ratios can be useful in planning for the future, setting goals, and
evaluating the performance of managers. External analysts use ratios to choose whether
to grant credit, to monitor financial performance, to estimate financial performance, and
To decide whether to advance in the company. I will utilize Microsoft Word and
Microsoft Excel work sheets to calculate the different ratios and analysis.
Project Proceedings
My project is covering the essential elements where I will make my finding true and will
make you easily understandable for you. My Project is going to pass through:
o Executive Summary
o Instruction
o Background of the Project
o Introduction to Organization business sector
o Introduction to Both companies
o Objectives and significance of the Project
o Data Process and Analysis
o Data collection sources
o Data collection Instruments
o Sampling
o Conclusion, recommendations and Limitation of the study
o Bibliography and Appendix
1. Current Ratio
2. Quick Ratio
3. Net working Capital Ratio
4. Sales to working Capital
BASED ON FUNCTION:
Ratios can also be confidential according to their functions in to liquidity ratios, leverage
ratios, activity ratios, profitability ratios & turnover ratios.
1] Liquidity ratios:
It shows the link connecting the current assets & current liabilities of the concern e.g.
liquid ratios & current ratios.
2] Leverage ratios:
It shows the relationship among proprietors funds & debts used in financing the assets of
the distress e.g. capital gearing ratios, debt equity ratios, & Proprietory ratios.
3] Activity ratios:
It shows relationship among the sales & the assets. It is also branded as Turnover ratios
& output ratios e.g. stock turnover ratios, debtors turnover ratios.
4] Profitability ratios:
a) It shows the relationship among profits & sales e.g. operating ratios, gross profit
ratios, operating net profit ratios, expenses ratios
b) It shows the relationship among profit & investment e.g. return on investment,
return on equity capital.
5] Coverage ratios:
It shows the relationship among the profit on the one hand & the claims of the outsiders
to be salaried out of such profit e.g. dividend payout ratios & debt service ratios.
BASED ON USER:
STANDARD CHARTERTED
AS AT 31ST DECEMBER
(Rupees in Thousands)
ASKARI BANK
AS AT 31ST DECEMBER
(Rupees in Thousands)
1) Current Ratio:
Current Ratio = Current Assets / Current Liabilities
A measure of the quantity to which current assets cover current liabilities (Current Assets
/ Current Liabilities). A high ratio indicates a good opportunity the enterprise can
withdraw current debts. A ratio of 2.0 or higher is a contented financial position for most
enterprises. Current Ratio of both companies and comparison are under below
STANDARD CHARTERTED
Year 2007 2008 2009
Current Assets 255,545,214 264,617,178 312,874,212
Current Liabilities 43,066,310 42,757,140 47,745,856
Current ratio 5.93 6.18 6.55
ASKARI BANK
Standard Chartered
According to given information and after calculating we could see that The current ratio
for the year 2007, 2008 & 2009 is 5.93, 6.18 & 6.55 correspondingly, compared to
standard ratio 6.55 this ratio is poorer which shows low short term liquidity competence
at the same time investment less than sufficient current assets indicate incompetent use of
possessions
Askari Bank
According to my finding and after calculating askari bank current ratio we could see that
ratios for the last 3 years are 0.808, 0.886& 0.78, shows lower standard of 0.078 which
means proficient use of resources but at the risk of little liquidity.
ASKARI BANK
Standard Chartered
According to analysis we could see that liquidity ratio for the years 2007, 2008 & 2009
is 0.38,0.85,1.57 times correspondingly, compared to standard ratio 1.57 this ratio is
poorer which shows low short term liquidity effectiveness at the similar time share less
than plenty current assets mean incompetent use of resources
Working Capital:
Working Capital = Current Assets – Current Liabilities
A calculate of both a company's capability and its short-term financial health. Optimistic
working capital resources that the company is talented to pay off its short-term
liabilities. Pessimistic working capital way that a company currently is powerless
to meet its short-term liabilities with its current assets (cash, accounts receivable
and inventory).
STANDARD CHARTERTED
ASKARI BANK
Standard Chartered
It is very patent from the above calculations that the working capital of the standard
chartered bank is steadily increasing above the years, which shows superior short term
liquidity competence
Askari Bank
This ratio enlarged to a great extent in 2008, almost double of the year 2008 but later on
in the year 2009 it went losing again.
b) Leverage Ratios:
On the other hand by using a mixture of assets, debt, and equity, and interest payments,
leverage ratios could be used to recognize a company's talent to gather it long term
financial obligations. Leverage ratios compute the degree of defense of suppliers of long
term funds. The level of leverage depends on a bunch of factors such as accessibility of
collateral, strength of operating cash flow and tax treatments. Thus, investors should be
vigilant about comparing financial leverage between companies from different industries.
The interest treatment ratio shows us how could merely a company is intelligent to
reimburse interest expenses associated to the debt they presently have. The ratio is
planned to understand the amount of interest due as a function of company’s earnings
before interest and taxes (EBIT). This ratio measures the level to which in use income
can rebuff before the firm is unable to meet its annual interest cost.
STANDARD CHARTERTED
ASKARI BANK
Year 2007 2008 2009
EBIT 17798831 21156515 22125914
Interest charges 15232886 16620963 20331194
TIE ratio 1.16 1.27 1.08
Standard Chartered
According to analysis we could see that company has sheltered their interest fixed cost
2.43 times in 2008, 1.79 times in 2008 and 1.8 times in 2009. So it makes clear that they
have performed well same in 2008 and 2009, on the other hand but has full a different
look in 2008. In 2008 company issued a small high number of long-term loans and does
not have good liquidity position, so their EBIT became tall thus making TIE a little high
as well
Askari Bank
According to above data we can see that, this company has roofed their interest expenses
1.16 times in 2008, 1.27 times in 2008 and 1.08 times in 2009. It means they haven’t
enhanced in the past years.
Debt Ratio:
Debt Ratio is a financial ratio that indicates the entitlement of a company’s assets is
provided via debt. It is the ratio of total debt (the sum of current liabilities and long-term
liabilities) and total assets (the sum of current assets, fixed assets, and other assets such
as 'goodwill').
STANDARD CHARTERTED
ASKARI BANK
Standard Chartered
We could see that Standard chartered company is highly leveraged
Askari Bank
We could see that Akari bank is also highly leveraged one
Debt to Equity Ratio:
The debt-to-equity ratio (D/E) is a financial ratio representative the relation quantity of
shareholders' fairness and debt used to finance a company's assets. Intimately connected
to leveraging, the ratio is also known as Risk, Gearing or Leverage. The two apparatus
are often taken from the firm's balance sheet or statement of financial position (so-called
book value), but the ratio may also be calculated using market morals for both, if the
company's debt and equity are openly traded, or using a amalgamation of book value for
debt and market value for equity.
STANDARD CHARTERTED
ASKARI BANK
Year 2007 2008 2009
Total debt 263443596 312675308 331946025
Total Equity 10572605 13766673 14608523
Debt To Equity Ratio 25.91 24.71 23.72
According to above data we could see that ratios incessantly lessening in the last three
years.
Askari Bank
After calculating debt ratio we could see that in 2008 ratio was 25.91 and in 2008 ratio
was 24.71 and in 2009 23.72 are the same ratio.
ASKARI BANK
We can observe from the above calculations that this ratios endlessly lessening in the last
three years. In 2009 it was 1.88, in 2009 it was 1.66 and in 2009
ASKARI BANK
Above date Analysis shows that this ratio was as high as 1.2 among three years.
However, it declined to 1.15 in the year 2008. In 2008 the ratio somewhat increased to
1.85.
The capitalization ratio procedures the debt constituent of a company's capital structure,
or capitalization (i.e., the sum of long-term debt liabilities and shareholders' equity) to
hold a company's operations and growth. Long-term debt is divided by the sum of long-
term debt and shareholders' equity. This ratio is careful to be one of the more meaningful
of the "debt" ratios - it delivers the key insight into a company's use of leverage.
STANDARD CHARTERTED
ASKARI BANK
Year .2007 2008 2008
Long Term debt 13537574 25831364 16469856
Long term debt + Equity 24110179 39598037 31078379
Capitalization Ratio 0.56 0.65 0.52
worth Ratio
ASKARI BANK
ASKARI BANK
Profitability Ratios:
ASKARI BANK
ASKARI BANK
According to above analysis the Net Profit Margin Askari bank in 2009 was 29.07%,
decrease to 19.97% in 2009 and then once more increased to 24.66% in 2009
STANDARD CHARTERTED
ASKARI BANK
Return on Assets:
Return on Assets (ROA) = Profit after Taxation / Average Total assets x 100
ASKARI BANK
Return on assets decreased in 2007 and 2008 and it was greatest in year 2008. This
may have occurred as rectangle used more debt financing in 2008 compared to 2007 and
2008 which resulted in more interest cost and brought the Net income down.
.
ASKARI BANK
Return on assets decreased regularly during the years.
STANDARD CHARTERTED
ASKARI BANK
STANDARD CHARTERTED
ASKARI BANK
ASKARI BANK
2008
Operating Assets:
Cash and balances with treasury banks 55487664
Balances with other banks 27020704
Operating fixed assets 14790555
98269620
2009
Operating Assets:
Cash and balances with treasury banks 56310378
Balances with other banks 35965048
Operating fixed assets 11954876
104230302
2008
Operating Assets:
Cash and balances with treasury banks 29436378
Balances with other banks 18380738
Operating fixed assets 11922324
59739440
2009
Operating Assets:
Cash and balances with treasury banks 32687335
Balances with other banks 21581043
Operating fixed assets 14883293
69151671
ASKARI BANK
STANDARD CHARTERTED
ASKARI BANK
Year 2007 2008 2009
Net Sales 21191470 25783871 31046583
Fixed Assets 10502990 11922324 13773293
Sales to Fixed Assets 2.017 times 2.16 times 2.25 times
Activity Ratios:
Activity ratio are occasionally are called competence ratios.
Activity ratios are concerned with how efficiency the assets
of the firm are managed. These ratios state association
flanked by stage of sales and the investment in various
assets inventories, receivables, fixed assets etc.
STANDARD CHARTERTED
ASKARI BANK
Year 2007 2008 2009
Total Sales 21191470 25783871 31046583
Total Assets 275685541 328895152 348990764
Total Asset Turnover 0.07 0.07 0.08
Market Ratio:
Market worth Ratios recount an apparent market value, the
stock price, to book principles obtained from the firm's
financial statements.
Dividend per Share – DPS:
Dividend per Share = Total amount of Dividend
Number of
outstanding shares
Per share capital = 10 per share
Or
No. of shares outstanding = share capital / 10
STANDARD CHARTERTED
Year 2007 2008 2009
Total amount of Dividend 691350 1381000 2730251
Number of Shares 690000 690000 759000
Dividend per Share 1.0019 2.0014 3.597
ASKARI BANK
STANDARD CHARTERTED
ASKARI BANK
Askari bank P/E ratio was 2.83 times in 2008 and lower a little
bit in 2009. However, in 2008 it amplified as much higher than
before to 6.14 times.
STANDARD CHARTERTED
ASKARI BANK
Dividend Yield:
Dividend Yield = Dividend per Share
Share Price
We know that financial ratio that indicates how much a
company pays out in dividends each year virtual to its share
price. In the nonexistence of any capital gains, the dividend
yield is the return on investment for a stock. A stock's
dividend yield is uttered as an yearly percentage and is
calculated as the company's annual cash dividend per share
divided by the current price of the stock. The dividend yield
is found in the stock quotes of dividend-paying companies.
Investors should reminder that stock quotation marks record
the per share dollar amount of a company's latest quarterly
confirmed dividend. This periodical dollar amount is
annualized and compared to the current stock price to
produce the per annum dividend yield, which represents an
expected return.
STANDARD CHARTERTED
ASKARI BANK
ASKARI BANK
STANDARD CHARTERTED
ASKARI BANK
STANDARD CHARTERTED
Year 2007 2008 2009
Operating Cash flow 17851517 56224065 18231677
Total Shares 690000 690000 759000
Operating Cash Flow per Share 25.87 81.48 24.02
ASKARI BANK
HORIZONTAL ANALYSIS
STANDARD CHARTERTED
BALANCE SHEET
AS ON DEC 31 2007, 2008 & 2009
(Rupees in ‘000’)
Horizontal Analysis
Shareholders Equity
Share capital 7590000 6900000 6900000 110 100
Reserves 24243254 19821455 17802584 136.18 111.3
Unappropriated
39447648 28341670 20 475,080 159.92 128
profit
Total equity
attributable to the
71280902 55063125 45177664 157.78 121.9
equity holders of
the Bank
Minority interest 890099 965642 913317 97.458 105.7
Surplus on
revaluation of 3009435 7208662 7352385 40.931 98.05
assets - net of tax
TOTAL EQUITY 75180436 63237429 53443366 140.67 118.3
HORIZONTAL ANALYSIS
STANDARD CHARTERTED
CONSOLIDATED PROFIT & LOSS ACCOUNT
AS ON DEC 31 2007, 2008 & 2009
2009 2008 2007 Horizontal Analy
(Rupees in ‘000’) 2009 2008
Mark-up / return /
63,305,033 50,481,021 43,685,740 144.91 115.6
interest earned
Mark-up / return /
26,525,556 19,153,957 13,204,037 200.89 145.1
interest expensed
Net mark-up /
36,779,477 31,327,064 30,481,703 120.66 102.8
interest income
Provision against
non-performing
6,904,919 8,238,227 2,863,207 241.16 287.7
loans and
advances - net
Charge / (reversal)
against off-
372,598 (54,626) (45,438) -820.01 120.2
balance sheet
obligations
Charge / (reversal)
of provision
against diminution 1,909,887 (84,310) (13,697) -13944 615.5
in the value of
investments
Bad debts written
---------- ---------- -------------
off directly
9,187,404 8,099,291 2,804,072
Net mark-up /
interest income 27,592,073 23,227,773 27,677,631 99.691 83.92
after provisions
Fee, commission
and brokerage 4,518,408 3,420,051 3,931,710 114.92 86.99
income
Income / gain on
2,369,233 2,472,663 1,219,623 194.26 202.7
investments
Income from
dealing in foreign 2,374,318 1,487,374 1,102,358 215.39 134.9
currencies
Gain on
investments in 4,000,330 ------- 0 0 0
associate
Other income 3,116,522 2,643,076 2,235,805 139.39 118.2
Total non-mark-up
16,378,811 10,023,164 8,489,496 192.93 118.1
/ interest income
43,970,884 33,250,937 36,167,127 121.58 91.94
Non mark-up /
interest expense
Administrative
21,348,016 18,297,279 15,425,461 138.39 118.6
expenses
Other provisions /
200,163 276,111 122,510 163.39 225.4
write offs - net
Other charges 64,751 85,152 54,898 117.95 155.1
Workers welfare
323,575
fund
Total non mark-up
21,936,505 18,106,32 15,602,869 140.59 0
/ interest expenses
Profit before
22,034,379 15,144,617 18,840,487 116.95 80.38
taxation
Taxation
- Current 8,661,15 7,220,717 7,144,846 0 101.1
- Prior years 233,100 1,668,562 (39,067) -596.67 -4271
- Deferred (2,473,891) (3,828,699) (965,607) 256.2 396.5
6,420,359 10,084,037 12,700,315 50.553 79.4
Profit after
15,614,020 10,084,037 12,700,315 122.94 79.4
taxation
Attributable to:
Equity holders of
15,535,011 10,000,231 12,630,259 123 79.18
the Bank
Minority interest 79,009 83,806 70,056 112.78 119.6
15,614,020 10,084,037 12,700,315 122.94 79.4
Basic and diluted
20.47 13.18 18.30 111.86 72.02
earnings per share
HORIZONTAL ANALYSIS
ASKARI BANK LIMITED
BALANCE SHEET
AS ON DEC 31 2007, 2008 & 2009
Years
Horizontal Analysis
(Rupees in ‘000’)
2007 2008 2009
ASSETS 2007 2008 2009
Cash and balances
with treasury 118.41 29436378 27859360 118.41 105.7 100
banks
Balances with
169.5 18380738 12731952 169.5 144.4 100
other banks
Lending to
financial 26.616 3452059 12456653 26.616 27.71 100
institutions
Investments 134.46 88491564 56502210 134.46 156.6 100
Advances 132.88 171198992 144999325 132.88 118.1 100
Operating fixed
131.14 11922324 10502990 131.14 113.5 100
assets
Deferred tax asset 0 0 0 0
Other assets 159.58 6013097 5633051 159.58 106.7 100
TOTAL
126.59 328895152 275685541 126.59 119.3 100
ASSETS
LIABILITIES 0
Bills payable 111.68 4138243 3091135 111.68 133.9 100
Borrowings
from financial 163.09 21230697 8394130 163.09 252.9 100
institutions
Deposits and
125.56 273173841 239509391 125.56 114.1 100
other accounts
Sub-ordinate
79.798 3220858 3222106 79.798 99.96 100
loans
Liabilities
against assets
0 0 0 0
subject to
finance lease
Deferred tax
10.85 1379809 1921338 10.85 71.82 100
liability
Other liabilities 154.56 9531860 7305496 154.56 130.5 100
TOTAL
126 312675308 263443596 126 118.7 100
LIABILITIES
NET ASSETS 139.23 16219844 12241945 139.23 132.5 100
REPRESENTED BY
SHAREHOLDERS EQUITY
Share capital 159.9 6500000 5000000 159.9 130 100
Reserves 115.15 2414833 2749533 115.15 87.83 100
Unappropriated
122.12 4851840 2823072 122.12 171.9 100
profit
138.17 13766673 10572605 138.17 130.2 100
Surplus on
revaluation of 145.94 2453171 1669340 145.94 147 100
assets - net of tax
TOTAL
139.23 16219844 12241945 139.23 132.5 100
EQUITY
HORIZONTAL
ANALYSIS
ASKARI BANK LIMITED
PROFIT & LOSS ACCOUNT
AS ON DEC 31 2009, 2008 & 2007
2009 2008 2007 Horizontal Analysis
(Rupees in ‘000’) 2009 2008 2007
Mark-up / return /
31046583 25783871 21191470 146.51 121.7 100
interest earned
Mark-up / return /
20331194 16620963 15232886 133.47 109.1 100
interest expensed
Net mark-up / interest
10715389 9162908 5958584 179.83 153.8 100
income
Provision against non-
performing loans and 2035997 2370867 697690 291.82 339.8 100
advances - net
Provision for
diminution in value of 1479062 0 0 0
investment
Bad debts written off
28298 5844 1537 1841.1 380.2 100
directly
3,543,357 2,376,711 699,227 506.75 339.9 100
Net mark-up / interest
income after 7,172,032 6,786,197 5,259,357 136.37 129 100
provisions
Non mark-up /
interest income
Fee, commission and
2,539,321 2,429,599 1,804,998 140.68 134.6 100
brokerage income
Dividend income 300,943 64,722 37,393 804.81 173.1 100
Income from dealing in
914,845 474,510 386,997 236.4 122.6 100
foreign currencies
Gain on sale of
424,220 2053192 180751 234.7 1136 100
securities
Unrealized loss on
revaluation of
181,571 21530 27599 657.89 78.01 100
investments classifies
as held for trading
Other income 1,247,669 1,031,372 842,099 148.16 122.5 100
Total non-mark-up /
5,245,427 6,038,466 3,224,639 162.67 187.3 100
interest income
12,417,459 12,824,663 8,483,996 146.36 151.2 100
Non mark-up /
interest expense
Administrative
10,741,399 8,272,587 5,874,745 182.84 140.8 100
expenses
Provisions against off-
balance sheet 28,582 6,959 0 0 0 0
obligations
Other charges 122,758 9,565 43,306 283.47 22.09 100
Total non mark-up /
10,622,739 8289111 5,918,051 179.5 0 100
interest expenses
Profit before taxation 1,794,720 4,535,552 2,565,945 69.944 176.8 100
Taxation 0 0 0
- Current 1730051 1726810 476226
- Prior years 221797 0 100874 219.88 0 100
- Deferred 1014835 321487 427902 237.17 75.13 100
493419 1405323 803254 61.428 175 100
Profit after taxation 1301301 3130229 1962691 66.302 159.5 100
Attributable to:
Unappropriated profit
4851840 2823072 1886845
brought forward
Transferred from
surplus on revaluation
24586 24585 26074 94.293 94.29 100
of fixed assets - net of
tax
Profit available for
6177727 5977886 3675610 168.07 162.6 100
appropriation
Vertical Analysis
VERTICAL ANALYSIS
STANDARD CHARTERTED
BALANCE SHEET
AS ON AS ON DEC 31 2007, 2008 & 2009
(Rupees in ‘000’)
Vertical Analysis
Shareholders Equity
VERTICAL ANALYSIS
STANDARD CHARTERTED
CONSOLIDATED PROFIT & LOSS
ACCOUNT
AS ON DEC 31 2007, 2008 & 2009
2009 2008 2007 Vertical Analysis
(Rupees in ‘000’) 2009 2008 2007
Mark-up / return / 63,305,033 50,481,021 43,685,740 100 100 100
interest earned
Mark-up / return / 26,525,556 19,153,957 13,204,037 41.901 37.94 30.225
interest expensed
Net mark-up / 36,779,477 31,327,064 30,481,703 58.099 62.06 69.775
interest income
Provision against 6,904,919 8,238,227 2,863,207 10.907 16.32 6.5541
non-performing
loans and
advances - net
Charge / (reversal) 372,598 (54,626) (45,438) 0.5886 -0.108 -0.104
against off-
balance sheet
obligations
Charge / (reversal) 1,909,887 (84,310) (13,697) 3.017 -0.167 -0.031
of provision
against diminution
in the value of
investments
Bad debts written ---------- ---------- ------------- 0 0 0
off directly
9,187,404 8,099,291 2,804,072 14.513 16.04 6.4187
Net mark-up / 27,592,073 23,227,773 27,677,631 43.586 46.01 63.356
interest income
after provisions
Fee, commission 4,518,408 3,420,051 3,931,710 7.1375 6.775 9
and brokerage
income
Income / gain on 2,369,233 2,472,663 1,219,623 3.7426 4.898 2.7918
investments
Income from 2,374,318 1,487,374 1,102,358 3.7506 2.946 2.5234
dealing in foreign
currencies
Gain on 4,000,330 ------- 0 6.3191 0.3162 0
investments in
associate
Other income 3,116,522 2,643,076 2,235,805 4.923 5.236 5.1179
Total non-mark- 16,378,811 10,023,164 8,489,496 25.873 19.86 19.433
up / interest
income
43,970,884 33,250,937 36,167,127 69.459 65.87 82.789
Non mark-up /
interest expense
Administrative 21,348,016 18,297,279 15,425,461 33.722 36.25 35.31
expenses
Other provisions / 200,163 276,111 122,510 0.3162 0.547 0.2804
write offs - net
Other charges 64,751 85,152 54,898 0.1023 0.169 0.1257
Workers welfare 323,575 0.5111 0 0
fund
Total non mark-up 21,936,505 18,106,32 15,602,869 34.652 0 35.716
/ interest expenses
Profit before 22,034,379 15,144,617 18,840,487 34.807 30 43.127
taxation
Taxation
- Current 8,661,15 7,220,717 7,144,846 0 14.3 16.355
- Prior years 233,100 1,668,562 (39,067) 0.3682 3.305 -0.089
- Deferred (2,473,891) (3,828,699) (965,607) -3.908 -7.584 -2.21
6,420,359 10,084,037 12,700,315 10.142 19.98 29.072
Profit after 15,614,020 10,084,037 12,700,315 24.665 19.98 29.072
taxation
Attributable to:
Equity holders of 15,535,011 10,000,231 12,630,259 24.54 19.81 28.912
the Bank
Minority interest 79,009 83,806 70,056 0.125 0.17 0.16
15,614,020 10,084,037 12,700,315 24.66 20 29.07
Basic and diluted 20.47 13.18 18.30 3.23 2.61 4.189
earnings per share
VERTICAL ANALYSIS
ASKARI BANK LIMITED
BALANCE SHEET
AS ON DEC 31 2008, 2008 & 2008
Years Vertical Analysis
(Rupees in ‘000’)
2009 2008 2007
ASSETS 2009 2008 2007
Cash and 32987335 29436378 27859360 9.4522 8.95 10.105
balances with
treasury banks
Balances with 21581043 18380738 12731952 6.1838 5.589 4.6183
other banks
Lending to 3315500 3452059 12456653 0.95 1.05 4.5184
financial
institutions
Investments 75973238 88491564 56502210 21.769 26.91 20.495
Advances 192671169 171198992 144999325 55.208 52.05 52.596
Operating 13773293 11922324 10502990 3.9466 3.625 3.8098
fixed assets
Other assets 8989186 6013097 5633051 2.5758 1.828 2.0433
TOTAL 348990764 328895152 275685541 100 100 100
ASSETS
LIABILITIES
Bills payable 3452031 4138243 3091135 0.9891 1.258 1.1213
Borrowings 13690222 21230697 8394130 3.9228 6.455 3.0448
from financial
institutions
Deposits and 300732858 273173841 239509391 86.172 83.06 86.878
other accounts
Sub-ordinate 2571169 3220858 3222106 0.7367 0.979 1.1688
loans
Liabilities
against assets
subject to
finance lease
Deferred tax 208465 1379809 1921338 0.0597 0.42 0.6969
liability
Other liabilities 11291280 9531860 7305496 3.2354 2.898 2.6499
TOTAL 331946025 312675308 263443596 95.116 95.07 95.559
LIABILITIES
Shareholders Equity
Share capital 7995000 6500000 5000000 2.291 1.98 1.814
Reserves 3166056 2414833 2749533 0.907 0.73 0.997
Unappropriated 3447467 4851840 2823072 0.988 1.48 1.024
profit
14608523 13766673 10572605 4.186 4.19 3.835
Surplus on 2436216 2453171 1669340 0.698 0.75 0.606
revaluation of
assets - net of tax
TOTAL 17044739 16219844 12241945 4.884 4.93 4.441
EQUITY
2007 2008 2009 Vertical Analysis
(Rupees in ‘000’) 2007 2008 2009
Mark-up / return / interest 31046583 25783871 21191470 100 100 100
earned
Mark-up / return / interest 20331194 16620963 15232886 65.486 64.46 71.882
expensed
Net mark-up / interest 10715389 9162908 5958584 34.514 35.54 41.23
income
Provision against non- 2035997 2370867 697690 6.55 9.195 3.2923
performing loans and
advances - net
Provision for diminution 1479062 4.76 0 0
in value of investment
Bad debts written off 28298 5844 1537 0.091 0.023 0.0073
directly
3,543,357 2,376,711 699,227 11.413 9.218 3.2996
Net mark-up / interest 7,172,032 6,786,197 5,259,357 23.101 26.32 24.818
income after provisions
Non mark-up / interest
income
Fee, commission and 2,539,321 2,429,599 1,804,998 8.1791 9.423 8.5176
brokerage income
Dividend income 300,943 64,722 37,393 0.9693 0.251 0.1765
Income from dealing in 914,845 474,510 386,997 2.9467 1.84 1.8262
foreign currencies
Gain on sale of securities 424,220 2053192 180751 1.3664 7.963 0.8529
Unrealized loss on 181,571 21530 27599 0.5848 0.084 0.1302
revaluation of investments
classifies as held for
trading
Other income 1,247,669 1,031,372 842,099 4.0187 4 3.9738
Total non-mark-up / 5,245,427 6,038,466 3,224,639 16.895 23.42 15.217
interest income
12,417,459 12,824,663 8,483,996 1357.3 2703 2192.3
Non mark-up / interest
expense
Administrative expenses 10,741,399 8,272,587 5,874,745 5915.8 38424 21286
Provisions against off- 28,582 6,959 0 2.2908 0.042 0
balance sheet obligations
Other charges 122,758 9,565 43,306 2.3403 0.058 1.343
Total non mark-up / 10,622,739 8289111 5,918,051 85.547 49.87 69.755
interest expenses
Profit before taxation 1,794,720 4,535,552 2,565,945 5.7807 27.29 12.108
Taxation 0 0 0
- Current 1730051 1726810 476226 5.5724 6.697
VERTICAL ANALYSIS
ASKARI BANK LIMITED
PROFIT & LOSS ACCOUNT
ASKARI BANK
4. Comparisons
Financial trend analysis is an applied, practical approach for
monitoring the financial condition of any company through
the use of financial indicators. I shall use technique to
compare previous three-year period data and observes how
they change. This would permit an assessment of the
current financial condition.
a) Trend Analysis
A firm's present ratio is compared with its past and expected
future ratios to determine whether the company's financial
condition is improving or deteriorating over time. Trend
analysis studies the financial history of a firm for
comparison. By looking at the trend of a particular ratio,
one sees whether the ratio is falling, rising, or remaining
relatively constant. This helps to detect problems or observe
good management.
TREND ANALYSIS
ASKARI BANK
LIMITED
FOR THE YEARS 2007, 2008 & 2009
TREND ANALYSIS
STANDARD CHARTARTED LIMITED
FOR THE YEARS 2007, 2008 & 2009
c) Profitability Ratios
c) Summary
Financial Statement Analysis is a method used by interested
parties such as investors, creditors, and management to
evaluate the past, current, and projected conditions and
performance of the firm. This report mainly deals with the
insight information of the two mentioned companies. In the
current picture where financial volatility is endemic and
financial intuitions are becoming popular, when it comes to
investing, the sound analysis of financial statements is one
of the most important elements in the fundamental analysis
process. At the same time, the massive amount of numbers
in a company's financial statements can be bewildering and
intimidating to many investors. However, through financial
ratio analysis, I tried to work with these numbers in an
organized fashion and presented them in a summarizing
form easily understandable to both the management and
interested investors.
It is required by law that all private and public limited
companies must prepare the financial statements like,
income statement, balance sheet and cash flow statement of
the particular accounting period. The management and
financial analyst of the company analyze the financial
statements for making any further financial and
administrative decisions for the betterment of the company.
Therefore, I select this topic, so that I have done some solid
financial analysis that will certainly help the management of
review their performance and also assist the interested
people like investors and creditors. That as a financial
analyst how can I make any important financial decision by
analyzing the financial statements of the company. Because,
it is the primary responsibility of the financial managers or
financial analyst to manage the financial matters of the
company by evaluating the financial statements. I am also
providing some important suggestions and opinions about
the financial matters of the business.
SUMMARY OF FINANCIAL
POSITION OF Both
companies
After study through different ratios, now I am
reached on the both companies financial conditions with
respect of my finding. In my point of view and according to
my observation or finding
Recommendation
In the base of my finding and comparative financial
statement analysis of two companies, I recommend for
Standard Chartered and Akari Bank the best option for
investment, the reason behind several considerations. First
both companies look like not bad overall results in the
financial statement analysis. Because the majority of the
company ratios provide the best comparative performance
in comparison to other company in the market. Now it is
time to say that one significant ratio that underlines our
recommendation is the result of the return on equity ratio.
Since this figure shows the efficiency of investment
investors in standard chartered and Askari Bank
LIMITATIONS OF RATIO
ANALYSIS
REFERENCE BOOKS –
FINANCIAL MANAGEMENT
Theory, Concepts & problems
R.P.RUSTAGI
FINANCIAL MANAGEMENT
Text and problems
MANAGEMENT ACCOUNTING
AINAPURE
FINANCIAL MANAGEMENT
L.N. CHOPDE
D.N. CHOUDHARI
S.L. CHOPDE
2007 to 2009