Muhammad Zeeshan Khaliq

mc080404687MBA

Finance

Internship ReportMuslim Commercial Bank

(MCB Bank Limited)

Brief Introduction of MCB BANK

• MCB is one of the leading banks of Pakistan with a deposit base of Rs. 368 billion and total asset turnover Rs. 500 billion. Incorporated in 1947, MCB soon earned the reputation of a solid and conservative financial institution managed by expatriate executives. In 1974, MCB was nationalized along with all other private sector banks.

  The Bank has a customer base of approximately 4 million, a nationwide

distribution network of over 1,000 branches and over 450 ATMs in the market.

  During the last fifteen years, the Bank has concentrated on growth through

improving service quality, investment in technology and people, utilizing its extensive branch network, developing a large and stable deposit base.

.

Business volume of MCB Bank Limited

Competitors

Local Private Banks

My Bank Limited

Bank Al-Falah Limited

Bank Al Habib Limited

Askari Bank

Faysal Bank

Soneri Bank Limited

Allied Bank of

Atlas Bank

CompetitorsForeign Banks

ABN Amro Bank

Al Baraka Islamic Bank

American Express

CITI Bank

Mashreq Bank PJSC

Standard Chartered Bank

Silk Bank

HSBC Bank

Training Program

During my internship I learned about different segments which are as follow

Opening of different Accounts of different customers.

Recording the Inward Dak of the bank.

Record the Outward Dak of the bank.

Clearance of cheques in different.

Worked as Customer Service Officer (CSO)

Learnt about the procedure of opening of the Letter of Credit.

Drawing of Demand Drafts, Pay Order and Call Deposit Receipt.

Making of Outward Bills for Collection. (OBC)

Inward Dak of the Bank

Inward Dak is the Dak that is received in the bank

There is a register that is called inward dak register. In

this register every inward dak is registered and

recorded.

Recording:

Serial Number

Reference Number

Separation and Disbursement Department wise

Disburse Dak as quickly as it is received

Outward Dak of the BankOutward dak of the bank is the opposite to inward dak of the bank. In outward dak we send to the outsiders.

There is a register that is called outward dak register. In this register all those daks that will be sent out from the bank are recorded.

Recording:

Recording of Address

Serial Number

Then these daks are handed over to the courier services with which the bank has the agreement like MCB Muree Road branch has the agreement with OCS couriers.

Acknowledgement Receipt by Courier Service Correspondent

When the dak is handed over to the person he

gives the receipt against each dak this receipt

contains the acknowledgement of receipt of dak

and the serial number this serial number is

recorded in the outward register for proof. If any

dak is misplaced, we can confirm them from the

couriers by this number for our dak.

Customer Service Officer (CSO)

Customer Service Officer is the person whose primary function is to facilitate and entertain the customers’ needs.

As CSO I performed the following functions: Issuing of cheque book request form Issuing of the deposit slips Issuing of ATM Cards form Issuing of form for online funds transfer, DD

form, and PO form. Issuing of Bank Statements Entertain the Balancing inquiry of the

customers.

Inward Clearing

Inward clearing means those cheques that are drawn on us but they are presented for payment at any other branch of any bank and are sent by that bank to us through NIFT for clearance.

NIFT (NATIONAL INSTITUTIONAL FACILITATION TECHNOLOGY)

The institution that has the network all over the Pakistan of collecting the cheques from different banks branches and then allocates the cheques to the relevant banks for clearance.

This institution acts as clearing house which was previously performed by the State Bank of Pakistan and if there is no branch of SBP then this function was performed by the National Bank of Pakistan. Now this institution performs this function.

Procedure of Inward Clearing

Scrutiny of Cheques

Signature Verification

Balance Verification

Debiting the account

Return/Dishonor of cheque

Advice preparation

Notification to NIFT

Scrutiny of ChequesScrutiny of cheque means verifying the cheques’ validity in different angles.

Signature Verification

Once the scrutiny of cheque is done next stage comes to verify the signature of person on the cheque with the signature that is stored in the bank computer system.

Balance Verification

Here each customer’s balance inquiry is made for honoring the cheques. This balance verification is mandatory.

Debiting the Account

If there is sufficient balance in the account then the customer’s account is debited. It means the amount is deducted from the account of the customer.

Dishonor/Return of Cheque: we divide this point in two sub categories, i.e. Dishonor and Return.

Dishonor of chequeIf there are insufficient funds in the account of customer then cheque is dishonored and a cheque return memo is also attached with it and bank charges the fee named as bank charges.

Return of ChequeHere other than insufficient balance bank can return the cheque for several different reasons

Advices Preparation

Advice is a document that is directed to the regional head quarter of bank notifying about the clearing of the cheques.

Notification to NIFT

As we send the advice to our regional head quarter similarly we

send a notification to the NIFT not the advice. NIFT then hands over

this notice to the banks. On receiving this information the banks that

had sent the cheques to us will credit the accounts of the customers

if the cheques are honored by us otherwise the bank will hand over

the cheque to the customer along with the cheque return memo.

Outward ClearingOutward clearing is the opposite of the inward clearing

These cheques are collected throughout the banking hours

In this section bank only hands over the cheques to the NIFT and NIFT separates the cheques with respect to branch names

Here only number of instruments are counted and handed over to the NIFT

Features of Outward Clearing

In outward clearing the person must be the account holder of the bank

The cheque must relate to different branch of different bank

person giving the cheque for collection must first fill in the slip and then present the cheque to the clearing officer

Clearing officer signs and stamps the deposit slip and handover the counter slip to the person and keeps the cheque

The cheques that were received after 3:00 PM are also collected but they are sent for clearing next day for clearing and remaining part of the deposit slip

Steps involved in Outward ClearingFirst we differentiate the cheques with respect to the bank on whom they are drawn

Different stamps are pasted on the face and back of the cheque

Stamps Used in Outward Clearing

Clearing Stamp: This stamp is pasted on front of the cheque for clearing

Payees Account will be credited on Realization: This is used to stamp on the back of cheques. This stamp is normally used when the cheque is in the name of the customer

Received Payment for MCB: This stamp is used where the cheque is in the name of the MCB Bank. This stamp is also pasted on the back of the cheque.

Outward Bills for Collection (OBC)

Outward bill for collection is a procedure by which

cheques are collected (realized) by the bank.

The need for the OBC occurs when there is no facility

of NIFT

Procedure for Issuing the OBC

OBC Form

This OBC form is in duplicate containing the name of

the bank on whom the cheque is drawn

OBC Register

In OBC register first we write the OBC number which is written on

the OBC form

On OBC form OBC number is taken from this registers

Next column we write the name of the account holder who has the

account in our bank

In next column the amount that is written on cheque is recorded

Realization of OBC

If there are sufficient funds in the account of the customer they make

a demand draft in the favor of our bank and deliver to us. This

demand draft is ultimately transferred to the account of the customer.

Demand Draft, Pay Orders and Call Deposit Receipt

Demand Draft

A method used by individuals to make transfer payments from one bank account to another. Demand drafts are marketed as a relatively secure method for cashing checks.

Demand drafts are made for the beneficiary for payments, funds transfers etc... These are made for outstation branches of the concerned banks

Pay Orders

Pay orders are issued by the bank that are paid or realized within the city of issuing bank. It means MCB of Muree road branch Rawalpindi will issue the pay order in the favor of any branch of MCB that is located in only in Rawalpindi

Procedure for the issue of DD

1. Customer request for fund transfer form is filled.

2. Credit and Debit vouchers are made

we divide it in two shapes

• Debit and Credit vouchers against cash paymentCash account Dr.

DD Payable Cr.

• Debit and Credit vouchers against amount drawn from the account

Customer Account Dr.

DD Payable Cr.

Advice Preparation

Advice is prepared if the value of the DD is less than the Rs.

100,000

If the value exceeds the Rs.100,000 then the amount is transferred

by online funds transfer method.

After doing all the documentation the DD is issued

Account Opening

The process of opening an account is very simple and

anybody who would like to open his account can do it

easily without any difficulty

Types of Accounts CURRENT ACCOUNT

SAVING ACCOUNT

TERM DEPOSITS ACCOUNT

Procedure for Account Opening

Application Form

Green color-coded Application Form is available for each type of accountForm is given to the customer to fill in for opening a related account.

Signature Specimen Card (SS)

“SIGNATURE SPECIMEN CARD” is the card is compulsory for opening the account.Without getting the signature of the customers you cannot open the accountThese are the signatures that verify the cheque because these cheques are kept by the bankThis card contains:

four signatures of an applicant applicant account numberaccount type

Branch codetitle of account

Banker uses this card at the time when he receives the cheque; he compares customer’s signature with the signature on the cheque for avoiding fraud

Account Opening Register

The person who is opening the account of the persons records the necessary details into this register and allots an account number from this account opening register This register is maintained for each type of account and the account numbers are allotted serially

Cheque Book

Cheque book is issued to the customer when the bank accepts the account opening application form

Letter of Thanks

Bank prepares two ‘LETTER OF THANKS’ one for the new customer and

the other for his introducer. This act promotes good will among the

customer and the introducer.

Letter of Credit

“A letter of credit is a written instrument issued by a

bank authorizing the seller to draw in accordance with

certain terms and stipulations legal forms, that all such

bill will be honored”.

Parties involved in Letter of Credit

Account partyIssuing partyExporterPaying or negotiating bank

Operation of a letter of credit

1. The importer or buyer contacts the seller in foreign

country for the purchase of a particular good or goods.

2. He settles with the seller the quantity and quality of the

goods to be imported.

3. The sale contract also includes the method of payment.

4. The importer then submits an application to his bank for

the issuing of an individual letter of credit.

5. The form on which the importer employees for a letter of

credit is supplied by the bank.

6. This form contains all the necessary details discussed between

the importer and exporter for the shipment of goods which include

the description of merchandise, port of shipment, port of

unloading, the documents against which the bank is to honor the

draft, the total value of the goods etc.

7. If the documents supplied by the seller conform to the terms of contract

the exporter will be paid.

8. The issuing bank will not be responsible if there is any fraud or the

merchandise does not conform to the sales contract.

9. The obligation of the buyers bank is,

To issue letter of credit on agreed terms and condition with the

buyer.

To have a proper examination of the documents.

Structure of Finance Department

Functions of Finance Department

Finance Department performs following functions

Borrowing from State Bank of Pakistan.

Lending to Commercial Banks

Lending to Investors.

Lending to General Public for multi-business.

USE OF ELECTRONIC DATA IN DECISION MAKING

Making crucial, timely, strategic decisions is a must

to stay a head in today’s competitive environment

Up to date information enabling the banks to make

timely and prudent decisions

Banks strength in the area of information technology

based services has always been an edge in the

competition

Technology support provides an alternate service delivery channels

higher customer satisfaction levels

MCB customer care center – e dedicated customer call center, was

formally inaugurated during 2004

During 2005 MCB achieved a successful launch of mobile ATM

solutions for banks valued customers

SOURCES OF FUNDSSOURCES OF FUNDS

2009 2008

DEPOSITS AND OTHER ACCOUNTS (Rupees in ‘000)

Customers

Fixed deposits 62,651,531 61,680,332

Saving deposits 173,797,078 150,927,938

Current accounts 123,898,324 105,310,862

Margin accounts 2,910,655 3,137,434

Others 767 563

Total 363,258,355 321,057,129

Financial Institutions

Remunerative deposits 2,258,295 5,197,969

Non-remunerative deposits 2,088,061 3,926,526

4,346,356 9,124,495

367,604,711 330,181,624

Particular of deposits

In local currency 336,180,581 312,829,233

In foreign currency 31,424,130 17,352,391

Total 367,604,711 330,181,624

BILLS PAYABLE

In Pakistan 8,131,031 10,522,565

Outside Pakistan 70,059 28,903

Total 8,201,090 10,551,468

BORROWINGS

In 43,658,408 17,742,776

Outside 1,003,680 4,921,064

Total 44,662,088 22,663,840

ALLOCATION OF RESOURCESDeposits and Other AccountsCustomer 2009 2008

Fixed deposits 62,651,531 61,680,332

Saving deposits 173,797,078 150,927,938

Current accounts 123,898,324 105,310,862

Marginal accounts 2,910,655 3,137,434

Others 767 563

Total 363,258,355 321,057,129

Financial Institutions

Remunerative deposits 2,258,295 5,197,969

Non-remunerative deposits 2,088,061 3,926,526

4,346,356 330,181,624

367,604,711 330,181,624

Assets

Cash and balances with treasury banks 38,774,871 39,631,172

Balances with other banks 6,009,993 4,043,100

Lending to financial instructions 3,000,000 4,100,079

Investments 167,134,465 96,631,874

Advances 253,249,407 262,135,470

Operating fixed assets 18,014,896 17,263,733

Deferred tax assets - -

Other assets 23,040,095 19,810,476

Total 509,223,727 443,615,904

Investment

Held by bank Given as collateral Total Held by bank Given as collateral Total

Held for trading securities

– Shares in listed companies - - - 177786 - 177786

Market Treasury Bills - - - 19588 - 19588

Total - - - 197374 - 197375

Available–for–sale securities

Market Treasury Bills 108,056,249 31,513,525 139,569,774 64,205,902 6,287,636 70,493,538

Investment Bonds 5,454,941 - 5,454,94 2,370,664 - 2,370,664

Shares in listed companies 7,133,214 - 7,133,214 8,189,828 - 8,189,828

Units in open ended mutual fund 442,981 - 442,981 661,909 - 661,909

Shares in unlisted companies 513,843 - 513,843 515,724 - 515,724

NIT units 5,253 - 5,253 5,253 - 5,253

Sukuk bonds 400,000 - 400,000 400,000 - 400,000

Listed Term Finance Certificates

(TFCs)

1,831,777 - 1,831,777 1,172,384 - 1,172,384

123,838,258 31,513,525 155,351,783 77,521,664 6,287,636 83,809,300

Held–to–maturity securities

Market Treasury Bills 3,251,110 136,038 3,387,148 1,321,816 - 1,321,816

Investment Bonds 2,244,383 - 2,244,383 2,312,812 - 2,312,812

Federal Government Securities 171,583 - 171,583 392,216 - 392,216

Provincial Government Securities 118 - 118 118 - 118

Government Compensation Bonds 286,557 - 286,557 870,771 - 870,771

Sukuk Bonds 2,753,929 - 2,753,929 2,776,260 - 2,776,260

Euro Bonds 684,810 - 684,810 4,969,516 - 4,969,516

TFCs, Debentures, Bonds and Participation - - - - - -

Term Certificates (PTCs) 4,250,714 - 4,250,714 4,259,037 - 4,259,037

Certificates of Investment - - - 250,000 - 250,000

Total 13,643,204 136,038 13,779,242 17,152,546 - 17,152,546

Subsidiaries

MNET Services (Private) Limited 49,975 - 49,975 49,975 - 49,975

MCB Trade Services Limited 77 - 77 77 - 77

MCB Asset Management Company Limited 299,980 - 299,980 299,980 - 299,980

MCB Leasing” Closed Joint Stock Company 394 - 394 - - -

MCB Financial Services Limited ( Formerly Muslim - - - - - -

Commercial Financial Services (Private) Limited) 27,500 - 27,500 27,500 - 27,500

377,926 - 377,926 377,532 - 377,532

Associates

Adamjee Insurance Company Limited 943,600 - 943,600 943,600 - 943,600

First Women Bank Limited 63,300 - 63,300 63,300 - 63,300

Total 1,006,900 - 1,006,900 1,006,900 - 1,006,900

Investments at cost 138,866,288 31,649,563 170,515,851 96,256,016 6,287,636 102,543,652

Less: Provision for diminution in

value of investments (3,686,520) (3,686,520) (3,044,962) (3,044,962)

Surplus / (deficit) on revaluation of available for sale securities 331,588 (26,454) 305,134 (2,761,998) (1,620) (2,763,618)

Deficit on revaluation of ‘held for Trading’ securities – – – (103,198) – (103,198)

Investments at revalued amounts – net of provisions 135,511,356 31,623,109 167,134,465 90,345,858 6,286,016 96,631,874

Critical Analysis of MCB BANK Limited

Ratio Analysis

a) Liquidity Ratios

b) Leverage Ratio

c) Profitability Ratios

d) Activity Ratios

e) Market Ratios

f) Statements of Cash Flow

Liquidity Ratios

Current Ratio = Current Assets / Current Liabilities

2009 = 226,656,076 / 420467889 = 0.54:1 2008 = 204,801,921 / 363396932 = 0.56:1 2007 = 198,525,463 / 342463187 = 0.58:1

Quick Ratio = Current Assets – Investment / Current Liabilities

2009 = 468,160,736 – 167,134,465 / 420,467,889 = 0.72: 1

2008 = 406,541,695 – 96,631,874 / 363,396,932 = 0.85: 1

2007 = 376,592,633 – 113,089,261 / 342,463,187 = 0.77: 1

Sales to Working Capital = Revenue earned / Working Capital

2009 = 51,616,007 / 47,700,847 = 1.08

2008 = 40,043,824 / 43,144,763 = 0.93

2007 = 31,786,595 / 34,129,446 = 0.93

Working Capital = Current Assets – Current Liabilities

2009 = 47,700,847

2008 = 43,144,763

2007 = 34,129,446

Leverage Ratio

Time Interest Earned Ratio = EBIT / FIXED INTERST CHARGES

2009 = 38,519,581 / 15,364,636 = 2.51

2008 = 32,764,741 / 10,843,175 = 3.01

2007 = 28,769,732 / 7,461,697 = 3.86

Debt Ratio = TOTAL LIABILITIES / TOTAL ASSETS

2009 = 439,483,714 / 509,223,727 = 0.86 2008 = 385,179,850 / 443,615,904 = 0.87 2007 = 355,365,842 / 410,485,517 = 0.87

Debt to Equity Ratio = TOTAL LIABILITIES/ SHAREHOLDERS EQUITY

2009 = 439,483,714 / 61,075,932 = 7.20

2008 = 385,179,850 / 52,244,865 = 7.37

2007 = 355,365,842 / 45,414,156 = 7.83

Debt to tangible net worth = total liabilities / net worth – net intangible assets

2009 = 439,483,714 / 69,740,013 = 6.30

2008 = 385,179,850 / 58,436,054 = 6.59

2007 = 355,365,842 / 55,119,675 = 6.45

Total Capitalization Ratio = Long term debts / capital employed2009 = 19,015,825 / 80,091,757 = 0.24

2008 = 21,782,918 / 74,027,783 = 0.29

2007 = 12,902,655 / 46,704,422 = 0.28

Shows the proportion of company’s debt in capital structure supported by company’s operation.

Fixed Asset Ratio / Equity Ratio = (Fixed asset/ total assets) / (shareholder’s equity / total assts)

2009 = (282,567,651 / 509,223,727) / (61,075,932 / 509,223,727) = 0.55/ .12 = 4.6

2008 = (238,813,983 / 443,615,904) / (52,244,865 / 443,615,904) = 0.54 / 0.12 = 4.5

2007 = (211,960,054 / 410,485,517) /(454,141,456 / 410,485,517) = 0.52 /0.11 = 4.7

Long term assets versus long term debts = Long term assets / long term debts

2009 = 41,054,991 / 19,015,825 = 2.16

2008 = 37,074,209 / 21,782,918 = 1.70

2007 = 33,892,884 / 12,902,655 = 2.63

Profitability RatiosNet Profit Margin = Net Profit / Mark up Interest Earned * 100

2009 = 15,495,297 /51,616,007 * 100 = 30.02 %

008 = 15,374,600 / 40,043,824 * 100 = 38.39 %

2007 = 15,265,562 / 31,786,595 * 100 = 48.03 %

RETURN ON ASSETS = NET INCOME/ TOTAL ASSETS

2009 = 15,495,297 / 509,223,727 = 0.03

2008 = 15,374,600 / 443,615,904 = 0.03

2007 = 15,265,562 / 410,485,517 = 0.04

2009 = 15,495,297 / 509,223,727 = 0.03

2008 = 15,374,600 / 44,361,5904 = 0.03

2007 = 15,265,562 / 4,104,855 = 0.04

DuPont Return on Assets = Net income / Total Assets

Operating Assets Turnover = net mark up / operating assets

2009 = 51,616,007 / 1,926,183,632 = 0.03

2008 = 40,043,824 / 423,805,428 = 0.09

2007 = 31,786,595 / 392,616,756 = 0.08

Return on Operating Assets = Net income / operating assets

2009 = 15,495,297 / 196,183,632 = 0.01

2008 = 15,374,600 / 423,805,428 = 0.04

2007 = 15,265,562 / 392,616,756 = 0.04

Return on Total Equity = Net income after Tax / Shareholder Equity

2009 = 15,495,297 / 61,075,932 = 0.34

2008 = 15,374,600 / 52,244,865 = 0.29

2007 = 15,265,562 / 45,414,156 = 0.25

Indicates how much return in %age is earned by investing amount equal to equity

Operating Income Margin = Operating Income / Mark up interest earned * 100

2009 = 3,154,945 / 51,616,007 * 100 = 44.86 %

2008 = 21,867,566 / 40,043,824 * 100 = 54.61 %

2007 = 21,308,035 / 31,786,595 * 100 = 67.03 %

Gross Profit Margin = Net mark up / mark up interest earned * 100

2009 = 35,774,544 / 51,616,007 * 100 = 69.31 %

2008 = 28,483,084 / 40,043,824 * 100 = 71.13 %

2007 = 23,921,062 / 31,786,595 * 100 = 75.25 %

Return on Investment = Net profit after tax/Total assets

2009 = 15,495,297 / 50,9223,727 = 0.03

2008 = 15,374,600 / 443,615,904 = 0.03

2007 = 15,265,562 / 410,485,517 = 0.04

Asset turnover Ratio = mark up interest earned / Total Assets

2009 = 51,616,007 / 509,223,727 = 0.10

2008 = 40,043,824 / 443,615,904 = 0.09

2007 = 31,786,595 / 410,485,517 = 0.08

Activity RatiosTotal asset turnover = markup interest earned / total assets

2009 = 51,616,007 / 509,223,727 = 0.10

2008 = 40,043,824 / 443,615,904 = 0.09

2007 = 31,786,595 / 410,485,517 = 0.08

Fixed asset Turnover = markup interest earned / fixed assets

2009 = 51,616,007 / 41,054,991 = 1.26

2008 = 40,043,824 / 37,074,209 = 1.08

2007 = 31,786,595 / 33,892,884 = 0.94

Dividend per share = dividend / number of shares

2009 = 6,735,510,000 / 691,104,527 = 9.75 2008 = 9,834,175,000 / 628,276,843 = 15.65

2007 =4,728,496,000/ 628,276,843 = 7.53

Earning per share = net income / number of shares

2009 = 15,495,297,000 / 691,104,527 = 22.42

2008 = 15,374,600,000 / 628,276,843 = 24.47

2007 = 15,265,562,000 / 628,276,843 = 24.30

Price earning ratio = market value per share / earning per share

2009 = 244 / 22.42 =10.88

2008 = 494.8 / 24.47 = 20.22

2007 = 434.6 / 24.30 = 17.88

Percentage of earning retained = Net income – All dividend / Net Income

2009 = 15495297-6735510/ 15495297 = 8759787 / 15495297 = 0.57

2008 = 15374600 - 9834175 / 15374600 = 5540425 / 15374600 = 0.36

2007 = 15265562 – 4728496 / 15265562 = 10537066 / 15265562 = 0.67

Dividend payout ratio = dividend per share / earning per share * 100

2009 = 11.36 /22.42 * 100 = 50.67 % 2008 = 13.20 / 24.47 * 100 = 53.94 %

2007 = 13.67 / 24.30 * 100 = 56.26 %

Dividend yield ratio = dividend per share / market price per share * 100

2009 = 11.36 / 244 *100 = 4.66 %

2008 = 13.20 / 494.80 * 100 = 2.67 %

2007 = 13.67 /434.6 *100 = 3.15 %

Book value per share = share holders’ equity / number of shares

2009 = 61,075,932 / 619,104,527 = 0.04

2008 = 52,244,865 / 628,276,843 = 0.08

2007 = 45,414,156 / 628,276,843 = 0.07

Statements of Cash Flow

Operating cash flow to debt = operating cash flow / total debts

2009 = 78,148,082 / 4,394,83714 = 0.18

2008 = 2,031,538/ 385,179,850 = 0.005

2007 = 61,899,299 / 355,365,842 = 0.174

2009 = 78,148,082 /619,104,527 = 0.11

2008 = 2,031,538 / 628,276,843 =0.003

2007 = 61,899,299 / 628,276,843 = 0.10

Operating cash flow to shares = operating cash flow / number of share issued

Operating cash flow to cash dividend = operating cash flow / cash dividend

2009 = 78,148,082 / 2,418,865,845 = 0.032

2008 = 2,031,538 / 1,570,692,108 = 0.001

2007 = 61,899,299 / 3,141,384,215 = 0.02

Horizontal Analysis:2009 09 Vs 08 2008 08 Vs 07 2007 07Vs 06

Rs M % Rs M % Rs M %

Balance Sheet

Assets

Cash and balances with treasury banks 38,775 -2% 39,631 0% 39,684 22%

Balances with other banks 6,010 49% 4,043 6% 3,808 -42%

Landings to financial institutions 3,000 -27% 4,100 290% 1,051 -95%

Investments - net 167,134 73% 96,632 -15% 113,089 78%

Advances - net 253,249 -3% 262,135 20% 218,961 10%

Operating fixed assets 18,015 4% 17,264 8% 16,024 77%

Deferred tax assets - net - - - - - -100%

Other assets - net 23,040 16% 19,810 11% 17,869 62%

509,224 15% 443,616 8% 410,486 20%

Liabilities

Bills payable 8,201 -22% 10,551 1% 10,479 48%

Borrowings 44,662 97% 22,664 -42% 39,407 65%

Deposits and other

accounts

367,605 11% 330,182 13% 292,098 13%

Sub-ordinate loan - - - -100% 479 -70%

Deferred tax liabilities -

net

3,198 632% 437 -63% 1,180 100%

Other liabilities 15,818 -26% 21,346 82% 11,722 5%

439,484 14% 385,180 8% 355,366 18%

Net assets 69,740 19% 58,436 6% 55,120 35%

Represented by

Share capital 6,911 10% 6,283 0% 6,283 15%

Reserves 38,386 4% 36,769 8% 34,001 38%

Unappropriated profit 15,779 72% 9,193 79% 5,131 -7%

Surplus on revaluation of

assets - net of tax

8,664 40% 6,191 -36% 9,706 87%

69,740 19% 58,436 6% 55,120 35%

Profit & Loss Account

Mark-up / return / interest earned 51,616 29% 40,044 26% 31,787 23%

Mark-up / return / interest

expensed

(15,841) 37% (11,561) 47% (7,866) 74%

Net mark-up / interest income 35,775 26% 28,483 19% 23,921 13%

Provisions & write off (7,465) 85% (4,042) 32% (3,061) 156%

Net mark-up / interest income

after provisions

28,309 16% 24,441 17% 20,860 4%

Non-mark-up / interest income 5,643 -3% 5,791 -10% 6,448 29%

Non-mark-up / interest expenses 10,797 29% (8,365) 39% (6,000) -8%

Profit before taxation 23,155 6% 21,868 3% 21,308 15%

Taxation (7,660) 18% (6,493) 7% (6,042) -5%

Profit after taxation 15,495 1% 15,375 1% 15,266 26%

2009 2008 2007

Rs M % Rs M % Rs M %

Balance sheet

Assets

Cash and balance with treasury

banks

38,775 8% 39631 9% 39,684 10%

Balance with other banks 6,010 1% 4,043 1% 3,808 1%

Lending to financial institutions 3,000 1% 4,100 1% 1,051 0%

Investment 167,134 33% 96,632 22% 113,089 28%

Advances 253,294 50% 262,135 59% 218,961 53%

Operating fixed assets 18,015 4% 17,264 4% 16,024 4%

Deferred tax assets - - - - - -

Other assets 23,040 5% 19,810 4% 17,869 4%

Total 509,224 100% 443,616 100% 410,486 100%

Vertical Analysis:

Liabilities

Bills payable 8,201 2% 10,551 2% 10,479 3%

Borrowings 44,662 9% 22,664 5% 39,407 10%

Deposits and other accounts 367,605 72% 330,182 74% 292,098 71%

Deferred tax liabilities - - - - 479 0%

Other liabilities 15,819 3% 21,346 5% 11,722 3%

Total 439,484 86% 385,180 87% 355,366 87%

Net assets 69,740 14% 58,436 13% 55,120 13%

Represented by

Share capital 6,911 1% 6,283 1% 6,283 2%

Reserves 38,386 8% 36,769 8% 34,001 8%

Inappropriate profit 15,779 3% 9,193 2% 5,131 1%

Surplus on revaluation of

assets

8,664 2% 6,191 1% 9,706 2%

Total 69,740 14% 58,436 13% 55,120 13%

Profit & Loss Account Rs.(m) 2009 Rs. (m) 2008 Rs. (m) 2007

Mark-up / return / interest earned 51,616 100% 40,044 100% 31,787 100%

Mark-up / return / interest expensed (15,841) -31% (11,561) -29% (7,866) -25%

Net mark-up interest income 35,775 69% 28,483 71% 23,921 75%

Provision % Write off (7,465) -14% (4,042) -10% (3,061) -10%

Net mark-up / interest income after provisions 28,309 55% 24,441 61%

20,860 65%

Non-mark-up interest income 5,643 11% 5,719 14% 6,448 20%

Not-mark-up interest expense (10,797) -21% (8,365) -21% (6,000) -19%

Profit before taxation 23,156 45% 21,868 54% 21,308 66%

Taxation (7,660) -15% (6,493) -16% (6,042) -19%

Profit after Taxation 15,495 30% 15,375 38% 15,266 47%

SWOT analysis of MCB Bank LimitedSWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis of MCB is as under

StrengthsOne of the main strength of MCB that I think is the faster banking services and more prominent in banking industry especially in operations and Foreign Exchange. Speedy services and reasonable services charges are attracting the people to do their business with MCB.

MCB has fully computerized control on its banking system due to this facility the MCB is in the list of highly automated bank.

Internal control and monitoring of the MCB Bank is very effective Quality Control Expert visits twice a week at bank branches which helps the employees to improve their work.

Due to fast banking services, prominent banking services and fully computerized computer system resulted in joining of experienced people, advanced management, advance setup and facilities gave MCB an edge over its competitors.

STRENGTHS

Most private banks have still not online all of their branches in Pakistan

but the MCB has all its branches online. They have wide area network in

all over the Pakistan, so that they cover a lot of portion of cash

transactions and make customer satisfied

The Bank has very strict rules and regulations about the customer's complaints. The customers are treated as very special persons in the Bank.

MCB has got the Strongest Bank in Pakistan Award 2010.

MCB also got the Leadership Achievement Award 2010.

MCB has been awarded as Euro money Award 2008 for the “Best Bank in Asia.

Best Bank In Pakistan Award: MCB has been awarded the best bank in Pakistan since 2000, 2001, 2003, 2004, and 2006

WeaknessesMCB offers different types of products to the customers therefore majority of people are not well aware about the products of MCB. For examples if a person wants to open an account with MCB say it is current but he does not know what type of Current Account he should open does not know this the major weakness for the MCB.

No entertainment facilities are available in the bank when customer visits Bank and wait for at longer time. These facilities can be the Newspaper. Magazines, etc.

Out look of the MCB branches is not attractive to the people.

In this era of competition most of the banks advertising their different products and services but no commercial I have seen on any channel regarding their products and services.

Weaknesses

Equality should be observed throughout banking system. There

should no discrimination among the customers. As I observed at

the branch where I worked wealthy customers were given the

more entertaining services while the customers who have low

investment with the bank waited for long for their turn.

At private local banks there is normally transfer of employees

after a normal period of one and a half years or two years while at

MCB branch where I did my internship most of the employees are

working more than three years. Job Rotation help the employees

to learn about different segments of the business which I think is

missing at MCB.

 Opportunities

MCB has got the Strongest Bank in Pakistan Award 2010. MCB also got the Leadership Achievement Award 2010. MCB has been awarded as Euro money Award 2008 for the “Best Bank in Asia.Best Bank in Pakistan Award: MCB has been awarded the best bank in Pakistan since 2000, 2001, 2003, 2004, and 2006.These awards create an edge in the mind of people to invest and borrow from this bank. Before privatization people were not satisfied with the services of the bank. After the privatization people have different alternatives to invest and borrow from. The MCB due to its over 10 years performance it has the opportunities to attract the customers

THE PRIMARY FUNCTION OF THE GOVERNMENT IS TO UPLIFT THE ECONOMY AND THEN IT DEPENDS ON THE BANKS HOW THEY UTILIZE THE POLICIES ANNOUNCED BY THE GOVERNMENT AND THE MCB IS WELL AWARE OF IT. THAT IS THE MAIN REASON THAT MCB HAS BEEN AWARDED THE BEST IN PAKISTAN IN 2000, 2001, 2003, 2004, AND 2006.

THEY HAVE WIDE AREA NETWORK IN ALL OVER THE PAKISTAN- IF MCB CAN MAKE IT POSSIBLE THE FAST DELIVERY OF FUND FROM ABROAD THROUGH ONLINE BANKING, IT CAN COVER THE MAJOR MARKET OF PAKISTAN WHICH STILL IS CAPTURING BY “BILLS OF EXCHANGE”. 

 Opportunities

ThreatsThe decreased purchasing power of consumer in the current economic situation of the country affecting the business activity speed too much and the result is the low investment from the investors in new projects can create problem for the hank because it is working a lot in trade.The Competition has become severe by the entrants of so many banks. So to exist one will have to prove himself in its services through excellent management and will have to satisfy its shareholders. Otherwise it will he out the marketNew Privates Bank coped with emerging new Technology of IT. This ease of entry in the market is the threat to the MCB bank.Change in government policies has affected the banking business. Still banks have to wait to get permission from the State Bank of Pakistan. The freezing of foreign currency accounts is a vital example of letting people not to trust on banks.

ConclusionThe profits of MCB have grown considerable during the last few years and

this trend is expected to continue into the future.

Continuously change in the economic conditions of the country has

affected the business of the MCB. No doubt the profit of the business is

increasing but it is not increasing as such rate as the inflation rate is

increasing.

The other major drawback at MCB bank is the dissatisfaction of the

employees

Currently the MCB is the leading bank in ASIA but the advertisement

campaign of the bank is not so much satisfactory if they do their

advertisement campaign as other banks are conducting they can be in the

better position in the world.

Therefore, we conclude the MCB has a very prosperous present and

future, which assures the shareholders of wealth maximization.

Recommendations for improvement at MUSLIME COMERCIAL BANK LIMITED

MCB Bank can improve its Marketing strategies to acquire more promotion and mass media publicity by the use of effective channels of promotions like TV, Newspaper Advertisements. It can also improve its magazine publication that it releases each month.

There is a criticism on the banking management that the salaries of the employees are decreasing in every succeeding year. And I think this will shake the confidence and working of the employees.

Staff turnover particularly of trained staff result in financial and other losses. The amount spent by the bank on employment, induction and training of outgoing officers constitutes to beat till another officer should ready prove this work. The exodus of bank officer in the past has worsened the situation.

The bank should try to give more loans to the small borrows as the past history shows that most of the loans given to the corporate borrowers have converted into bad debts.

Sitting arrangement, air conditioning and new furniture should be facilitated

RecommendationsCurrently the MCB has launched the Mobile banking which provides the loyalty to the customers, where you can check your statements, check the balances and you can pay your bills and many more but there is no effective advertisement in this regard the bank must provide the all the information in this area to all the customers.

Where I did my internship there were no parking facilities. Any one has to park his/her vehicle on the road. Parking area for the bank must be specified or it must be hired from some property owner.

All Branches of the Bank must be online

For improvement of internal control the system of compliance wing and surprise inspection system should work more effectively.

I done internship, I recommend that security level in the bank should be enhanced especially where I got internship and operation of Mobile phones must not be allowed inside the Bank.Working environment, equipment, furniture, and staff dressing should be according to the modern banking style.

Thank You