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This case focuses on the liability management of a small Pakistani privately-owned bank in a competitive banking environment. Throughout the 1990s, Askari Commercial Bank Limited (Askari) maintained a good growth rate, as well as high profitability and a sound balance sheet footing. The key to this successful performance was the bank’s ability to control its costs, especially its interest costs. One reason for this was the special relationship the bank had with its depositors due to its strong association with the defence industry, and the public confidence that this linkage engendered. Deposit stability ensured that Askari would pass on the benefits of lower funding costs in the form of lower lending rates compared to its peer group. As a result, the bank has established a niche as a relatively conservative but profitable banking company in a highly volatile environment. |
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