Internship Report on MCB Bank Ltd

Submitted by
Syed Usman Nisar
L1F11BCOM0013
Session 2011 - 2015

FACULTY OF COMMERCE
UNIVERSITY OF CENTRAL PUNJAB

1-A Khayaban-e-Jinnah Road, Johar Town Lahore,

PakistanInternship Report on MCB Bank Ltd

Submitted by
Syed Usman Nisar
L1F11BCOM0013
Session 2011 - 2015
Supervised by
Prof. Waqas Zaki

A Project submitted in partial fulfillment of the requirements for the degree of

Bachelors of Commerce

Faculty of Commerce
UNIVERSITY OF CENTRAL PUNJAB

Undertaking
I certify that the internship report titled Internship Report on MCB Bank is my own work.
The work has not been presented elsewhere for assessment.

Signature of Student: ________________________

Name of Student: ___________________________
Registration Number of Student: _______________

Internship Report Completion Certificate

It is certified that the work contained in this report titled Internship Report on MCB Bank
has been carried out and completed by Mr. Syed Usman Nisar, Registration No.
L1F11BCOM0013 under my supervision during his Bachelors of Commerce.

Grade Awarded

Internship In-charge

___________________
Examiners Signature

_________________
(Prof. Waqas Zaki)

_________________
Prof. Muhammad Azhar Ikram Ahmad
Dean
Faculty of Commerce
University of Central Punjab
Lahore

Acknowledgements
All thanks to ALLAH Almighty who give me insight and devotion to perform such creative
work. I am thankful to all those who helped me completing my Internship report. I am thankful
to my parents without their support my report could not be possible to complete. My appreciation
also goes for my friends and those who willingly helped me in my final report.

I would also like to thank Prof. Muhammad Azhar Ikram Ahmad, Dean Faculty of Commerce
for the opportunities he has created for us. I would also like to thank Prof. Ather Azim Khan,
Associate Dean Faculty of Commerce for the guideline he has created for us. I also pay my
gratitude to the whole faculty, who were there to guide us at every step of process, specially
Prof. Waqas Zaki in charge of internship program who helped us in entire internship program.

I also thank Mr. Raheel Shah (Manager of MCB consumer branch) who helped me in
completing my report by providing relevant information regarding MCB Bank and its policies.

Abstract
MCB is one of the eminent banks in Pakistan which has made truly a tremendous progress in a
moderately shorter timeframe. It was found in 1947 by Adamjee group which was later
privatized in mid 1970s. Following the time when then, the bank has seen gigantic
accomplishment in each aspect, from its exclusive expectations of hard working attitudes to
getting known nationwide to have most astounding consumer loyalty. The Bank is
unquestionably rendering perfect administrations which are the reason it has a client base of 4
million and the system of ATM machines around 650. It was some time ago known as Muslim
business bank; however its name was changed later.
The report covers all the significant parts of entry level position and the involvement with MCB.
It unequivocally expresses the general voyage there and the definite SWOT examination
combined with brief diagram of association's chain of importance and branch profile, and detail
of the assignments depended and done by the person.
The MCB Bank's development is lucky and the investigation of its money related explanation is
a demonstration of it. The Bank trusts in setting exclusive expectations in all parts of saving
money to yield results and innovativeness. It likewise develops abilities and trust in his workers
because of which it succeeds in accomplishing abnormal state of gainfulness. Passing by the
examination, it doesn't have much dependence on obligation, indicating how all around dealt
with the bank is and how proficiently it has adapted to obligation to keep a mind influence. This
report edifies about my adventure as an assistant and reveals insight into distinctive parts of it.

Table of Contents
Chapter 1..........................................................................................................................................1
Vision Statement:.........................................................................................................................1
Mission Statement:......................................................................................................................1
History of Bank...........................................................................................................................2
MCB Bank Today........................................................................................................................3
The Business............................................................................................................................4
Providing New Asset and Liability Products...........................................................................4
Overview..................................................................................................................................5
Organizational Hierarchy of MCB..............................................................................................7
Organizational Setup of MCB.................................................................................................7
Ceo, s Message........................................................................................................................8
Management Level..................................................................................................................9
Organizational Structure of MCB..........................................................................................10
Human Resource Functions.......................................................................................................11
Structure of the Marketing Department.....................................................................................14
Functions of the Marketing Department................................................................................14
Chapter 2:.......................................................................................................................................16
Strategic Analysis of Company:................................................................................................16
Macro Analysis:.....................................................................................................................16
Pest Analysis Overview:........................................................................................................16
Pest Analysis of MCB............................................................................................................20
Micro Analysis:......................................................................................................................22
Porter Five Forces Model......................................................................................................22
SWOT Analysis.....................................................................................................................24
SWOT Analysis Quadrant Combination (SWOT Matrix).....................................................30
Industry Analysis...................................................................................................................33
External Factor Evaluation (EFE) Matrix..............................................................................33
Competitive Profile Matrix:...................................................................................................35
Internal Factor Evaluation Matrix..........................................................................................36
SPACE Matrix:......................................................................................................................38
Quantitative Strategic Planning Matrix (QSPM)...................................................................41
Possible Alternative Strategies...............................................................................................42
7

Strategy Selected:..................................................................................................................42
Financial Analysis of MCB Limited..........................................................................................43
Total Assets:...........................................................................................................................43
Advances:...............................................................................................................................43
Non-performing Loans:.........................................................................................................43
Investments:...........................................................................................................................44
Deposits:................................................................................................................................44
Equity and Dividends.............................................................................................................44
Net Interest Margin................................................................................................................45
Non-Markup Income..............................................................................................................45
Operating Expenses...............................................................................................................46
Ratios:........................................................................................................................................47
Comparitive Analysis:...............................................................................................................47
Horizontal Analysis Description:...........................................................................................49
Trend Analysis:..........................................................................................................................51
Chapter 3:.......................................................................................................................................55
Recommendations:....................................................................................................................55
Internship Activities...................................................................................................................57
Conclusion:................................................................................................................................61

List of Tables
Table 1 SWOT Matrix...................................................................................................................32
Table 2 EFE Matrix........................................................................................................................34
Table 3 CPM Matrix......................................................................................................................35
Table 4 IFE Matrix.........................................................................................................................37
Table 5 SPACE Matrix...................................................................................................................38
Table 6 QSPM................................................................................................................................41

Chapter 1
A Commercial bank is a type of Bank / Financial Institution that provides services such as
accepting deposits, making business loans, and offering basic investment products.
Organizational Profile
MCB Bank Limited
Vision Statement:
To the leading financial services provider, Partnering with our customers for a more
prosperous and secure future.
Mission Statement:
We are a team of committed professionals, providing innovative and efficient financial
solutions to create and nurture long-term relationships with our customers. In doing so, we
ensure that our shareholders can invest with confidence in us.

I do internship in the consumer branch of MCB the activities of this so much different from
general banking branch there are 8 main consumer branches in 8 major cities in pakistan i.e.
Gujranwala, Faisalabad, Multan, Lahore, Karachi, Islamabad, Rawalpindi, Hyderabad.
Consumer branch deals 4 types of loans i.e.
1. Car4U
2. Home loan(pyara ghar)
3.Credit card
4.Personal loan

11

Before division of Indo Pak, the requirement for more Muslim banks was felt. Furthermore,
Muslims having solid money related limit were speculation to put resources into this part also.
This was the real trick which made ready for setting up MCB Bank Ltd known as MCB. This
was the third Muslim bank in the subcontinent.
History of Bank
This bank was incorporated under companies act 1913 on ninth July, 1947 (just before partition)
at Calcutta. However, because of changing situation of the locale, the certificate of incorporation
was issued on seventeenth August, 1948 with a deferral of right around 1 year; the authentication
was issued at Chitagong. The main Head office of the organization was Set up at Dacca and Mr.
G.M. Adamjee was designated its first executive. It was incorporated with an approved capital of
Rs.15 million.

After some time the office of the organization was moved to Karachi on August 23rd, 1956
through an exceptional determination, now as of late the Head office of MCB has been moved to
Islamabad in July, 1999 and now Head office is termed as Principle Office.

This organization was nationalized with other on January first, 1974. Around then it had 506
branches and deposits amounting up to Rs.1640 million. Despite the fact that. MCB has a
notoriety of a traditionalist bank yet nationalization additionally left its impacts on this
establishment also and by end of year 1991 in which it was privatized the aggregate number of
branches were 1.287 and deposits amounting up to as high as Rs.35,029 million

12

Privatization
At the point when privatization policy was declared in 1990, MCB was the first to be privatized
upon recommendations of World Bank and IMF. The purpose behind this decision was the better
productivity state of the association and less risky credit portfolio which made'' it a decent
decision for financial specialists. On April eighth, 1991, the administration control was given
over to National Group (the highest bidders). At first just 26% of shares were sold to private part
at Rs.56 per offer.

After Privatization
Ten years after privatization, MCB is now in a consolidation stage designed to lock in the
gains made in recent years and prepare the groundwork for future growth. The bank has
restructured its asset portfolio and rationalized the cost structure in order to remain a low cost
producer.
After privatization, the growth in every department of the bank has been observed. Following are
some key developments:

Launching of different deposit schemes to increase saving level.

Increased participation on foreign trade.

Betterment of branches and staff service level.

MCB Bank Today

MCB today, speaks to a bank that has developed with time, experience and Pakistan. A
noteworthy money related organization, in degree and size, it symbolizes a completely
developing tree evergreen, solid, and immovably established.

13

The Business
MCB is in its over 50 years of operation. It has a network of over 1,000 branches all over the
country with business establishments in Sri Lanka and Bahrain. The branch break-up province
wise is Punjab (57%), Sindh (21%), KPK (19%) and Baluchistan (3%) respectively.
MCB has an edge over other local banks, as it was the first privatized bank. The State Bank of
Pakistan has restricted the number of branches that can be opened by foreign banks, an
advantage that MCB capitalizes because of its extensive branch network.
Fourteen years after privatization, MCB is now in a consolidation stage designed to lock in the
gains made in recent years and prepare the groundwork for future growth. The bank has
restructured its asset portfolio and rationalized the cost structure in order to remain a low cost
producer.
MCB now focuses on three core businesses namely Corporate, Commercial and Consumer
Banking. Corporate clientele includes public sector companies as well as large local and
multinational concerns. MCB is also catering to the growing middle class by.
Providing New Asset and Liability Products
The Bank provides 24 hour banking convenience with the largest ATM network in Pakistan
covering 27 cities with over 151 ATM locations. The Banks Rupee Traveller Cheques have been
market leaders for the past six years and have recently launched their Gift Cheque Scheme.A
major achievement of MCB is that the state bank of Pakistan has issued a license to MCB to start
Islamic banking. Now MCB is setting up a 1st Islamic banking branch at 1st floor shaheen
complex, Karachi. This complex starts working from September 1, 2003

14

Overview
Core Values

1. Integrity
We are the trustees of public funds and serve our community with integrity. We believe in being
the best at always doing the right thing. We deliver on our responsibilities and commitments to
our customers as well as our colleagues.

2. Innovation
We encourage and reward people who challenge the status quo and think beyond the boundaries
of the conventional. Our teams work together for the smooth and efficient implementation of
ideas and initiatives.

3. Excellence
We take personal responsibility for our role as leaders in the pursuit of excellence. We are a
performance driven, result oriented organization where merit is the only criterion for reward.

4. Customer Centricity
Our customers are at the heart of everything we do. We thrive on the challenge of understanding
their needs and aspirations, both realized and unrealized. We make every effort to exceed
customer expectations through superior services and solutions.

15

5. Respect
We respect our customers values, beliefs, culture and history. We value the equality of gender
and diversity of experience and education that our employees bring with them. We create an
environment where each individual is enabled to succeed.

16

Organizational Hierarchy of MCB

Organizational Setup of MCB

PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT

EXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

OFFICERS GRADE
I II III

ASSISTANTS

CASHIER

PEONS

17

Ceo, s Message

We at MCB Bank Limited believe that every employee is unique and possesses
distinctive talents that we value and nurture. MCB Bank is home to an exclusive group of
committed and dedicated individuals who jointly, with their dedication, honesty, innovation and
teamwork, contribute towards our collective success. Our organization has a long and healthy
tradition of providing exceptional service and preserving strong relationships with both our
internal and external customers. Therefore, at MCB Bank, we inspire every individual to play a
significant role in our continued success by creating maximum economic value for our clients
and shareholders, while maintaining the highest human values and principles.
MCB Bank is one of the leading financial services providers in Pakistan and as one of the largest
and oldest banking entities in the country; we not only embrace and cherish our heritage and
traditions, we strive for growth and change as well. Our goal is to create and promote long term
relationships with our customers by catering to all their financial needs, including traditional
banking services, insurance and investment advisory, coupled with an exceptional level of
customer service.
Our objective at MCB is to ensure that we have motivated, professional and customer-centric
employees on board who help us deliver the promise of being the 'most credible bank' across the
industry.

President & CEO

MCB Bank Limited

18

Management Level
The organization chart within a department and in different offices is as follows:
Divisional Heads

Head Office

Regional Head (EVP)

Regional Offices

Zonal Head (VP)

Zonal Office

Branch Manager

Branch
(VP, AVP, GRADE 1, 2, 3)

19

Organizational Structure of MCB

As MCB is a banking company listed in stock exchange therefore it follows all the
legalities which are imposed by concerned statutes Mr. Muhammad Mansha is chairman & chief
executive of the company with a team of 10 directors and 1 vice chairman to help in the business
control and strategy making for the company.
Operational Management of the bank is being handled by a team of 10 professionals. This team
is also headed by Mr. Muhammad Mansha. The different operational departments are Consumer
Banking & IT div; Financial & Inter branch div; Banking operations div; HR & Legal div;
financial control & Audit div; Credit management div; Commercial Banking div; Corporate
Banking div; Treasury management & FX Group and lastly Special Assets Management (SAM)
Group.
For effective handling of branches, it has been categorized into three segments with different
people handling each category. These categories are:

a)

Corporate Banking

b)

Commercial Banking

c)

Consumer Banking

20

Human Resource Functions

The human resources department (HRD) supporter the importance of the individual while
thinking strategically .HR conveniences the establishment of an atmosphere in which people
have the incomes to continuously grow in motivated for carry on improvement for the
remunerations of all stakeholder.
Situated as strategic business unit within the commercial structure of the MCB ,the HRD ,s has
as its prime responsibility to give to the organizations efficiency by attractive its people and line
up the strategies and actions and system to the policy of the business .it is through this that the
HRD adds value to the institution.
The human resources department (HRD) conveniences and partner with its customers (mcb staff)
in applying the planned strategy through.

Capability grounded HR systems.

Policy and actions

Evolving abilities

Appearance organization

Clear and exposed statement

Remuneration and appreciation

Employee happiness

Variety

Agreement

21

human resources outlet is to assurance the important services, progresses and policies are in
place to succeed employee to accomplish at their finest, be safe and satisfied with their work and
be properly developed .human resources is also vital to settle that employees energy in an
atmosphere which is in unity with the departments values, the related legislative requirements
and public service values and best training

Human resources area office is liable for the administration of the human resources role for the
department of human services .this entail of responsibility for human resources systems, policy
and training through the branch. The branch is planned to importance on planned human resource
work, the supervision of departmental mangers and human resources staff in areas and divisions
Human resources have a number of areas of focus including:

Employee relation

Employee security

Managerial facilities

Arrangement and concert

Organizational capability

Organization growth and maintenance

The human resources branch managers a number of organization-wide schemes through the
department in the above areas, in association with human resources staff in area and programs.

22

The branch everything closely through manufacturing relation branch (situated within financial
and commercial facilities division) in evolving and applying enterprise negotiating agreements
and issue resolution with mergers covering the departments employees.

23

Structure of the Marketing Department

The marketing department of MCB bank is extremely coordinated. It is very much organized as
appeared in the various hierarchical chart. The marketing department is situated in head office. It
is comprised of very expert individuals .it is blend of those individuals who got advancement
from the deals What's more, some are enlisted from the expert business sector of saving money.
Functions of the Marketing Department
Policies are consistent and persistent due to unstable political Government and military
interventions. Every one or second year, new or amended policies are in place. In such a highly
unstable and unpredictable financial environment, the role and responsibility of marketing team
become very important.
Following are the functions of marketing team:
1. Every year, there is a corporate objective of MCB bank. It is both strategically as well as
financial. As per the objectives set the marketing team develops or design marketing strategies to
meet these commercial and strategic objectives.
2. The research conducted is analyzed and used to develop products
3. If there is a new situation as per the new need in financial sector the marketing team
Adds new line extension in the product or launches new products
4. Working is done to identify the brands, images, value, brand contract and position

24

5. New strategies are made increase the market share of consumer finance as well as commercial
finance.
6. New campaign on media, net and on branch are designed
7. New broachers are designed printed and circulated in the branches
8. As per the new situation due to the increasing interest rate, MCB has also increased interest
rate and its offerings on the saving accounts.

25

Chapter 2:
Strategic Analysis of Company:
Macro Analysis:
Pest Analysis Overview:
The PEST analysis is a useful tool for understanding market growth or decline, and as
such the position, potential and direction for a business. A PEST analysis is a business
measurement tool. PEST is an acronym for Political, Economic, Social and Technological
factors, which are used to assess the market for a business or organizational unit.
A PEST analysis is a business measurement tool. PEST is an acronym for Political, Economic,
Social and Technological factors, which are used to assess the market for a business or
organizational unit.
The PEST analysis headings are a framework for reviewing a situation, and can also, like SWOT
analysis, and Porter's Five Forces model, be used to review a strategy or position, direction of a
company, a marketing proposition, or idea. Completing a PEST analysis is very simple, and is a
good subject for workshop sessions. PEST analysis also works well in brainstorming meetings.
Use PEST analysis for business and strategic planning, marketing planning, business and product
development and research reports.
PEST analysis is one of the major tools that help in determining the external factor influence
upon the optimum performance of organization. PEST combines following external factors that
may have effects on business performance, whether externally or internally. PEST analysis
categorizes following these points

Political
Economical
Social
Technological
26

27

Political
Political factors are basically to what degree the government intervenes in the economy.
Specifically, political factors include areas such as tax policy, labor law, environmental law, trade
restrictions, tariffs, and political stability. Political factors may also include goods and services
which the government wants to provide or be provided (merit goods) and those that the
government does not want to be provided (demerit goods or merit bad). Furthermore,
governments have great influence on the health, education, and infrastructure of a nation.

Labor Laws
Consumer Protections Laws
Tax Regulations
Employment Laws
Environmental Laws

Economical
Economic factors include economic growth, interest rates, exchange rates and the
inflation rate. These factors have major impacts on how businesses operate and make decisions.
For example, interest rates affect a firm's cost of capital and therefore to what extent a business
grows and expands. Exchange rates affect the costs of exporting goods and the supply and price
of imported goods in an economy.
There are certain factors that sum up overall economic scenario for a firm to operate in.

Economic policies
Fluctuations in exchange rates
Effects of World Economies
International Businesses and Trade

Social
Social factors include the cultural aspects and include health consciousness, population
growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors
28

affect the demand for a company's products and how that company operates. For example, an
aging population may imply a smaller and less-willing workforce (thus increasing the cost of
labor). Furthermore, companies may change various management strategies to adapt to these
social trends (such as recruiting older workers).
Technological
Technological advancements are approaching to the highest frequencies now a day. An
organization lacking in technological advancement is highly vulnerable to threat of becoming an
obsolete amongst modern manufacturing and business concerns.
Technological advancements can be further classified in to following categories

Technological Advancements
Life cycle of Technology
Spending on technology
Training and Development

29

Pest Analysis of MCB

Political
Political instability within Pakistan can lead to changes in law and policies which can be
in favor or against the banking sector.
Banks are strongly affected by the political and legal considerations and this environment
composed regulatory agencies and government law that influence and limit various organizations
and individuals. Mostly these laws create new opportunities for business.
Business legislation has following main purpose.

To protect the banking companies from unfair competition.

To protect consumers from unfair business practices adopted by banking companies.
To protect the interest of the society from unbridled business behavior.
Economical
Economy of Pakistan is facing issues about employment, inflation, illiteracy, which

hinder business growth.

So the banking market requires better consumer market in volume along with higher borrowing
power. The available borrowing power depends on.

Saving rates
Consumption patrons
Rate of interest
Budget deficit
Exchange rates
Cost of living
Inflation
Social
Cultural issues can be there but still as there are a number of multinational companies

nearby, therefore, cultural issues are not prominent.

30

A society is shaped by beliefs, norms and values. Peoples in a society consciously and
unconsciously interact with.

Themselves
Others
Organization
Society
Technological
People are highly skilled and MCB can introduce new technology to increase

competencies.
Forces of technological advancement have played most dramatic role in shaping the lives of the
peoples. The rate of change of technology has greatly affected the rate of growth of economy.
New technology is creating deep rooted affects which could be observed in long run. The
improvement techniques involved in online banking. In brief PEST analysis affects overall
banking companies and provides us the information about the external macro condition.

31

Micro Analysis:
Porter Five Forces Model
1. Barriers to Entry:
The MCB is providing value added services to its customers. On the other hand market is getting
more saturated and other organizations are getting involved in the bank operations. For example,
Telenor is offering Easy Paisa, etc. At the beginning all the functions like money exchange,
currency converter, FOREX, money transfer, etc were relates to bank but now a day other
organizations are becoming more specialized in these and hence resulted in declining of profit
(commission income or service charges).
2. Bargaining Power of Supplier:
Because of concentrated competition and new entrance of foreign banks in the industry the
investors are becoming more conscious in providing the funds for deposits. The funds are
dispersed among the banks because every bank in the industry wants to capture these funds
(from potential investors) hence to increase its market share and to generate more and more
profit. It is the fact that suppliers funds are more critical to market success. Due to which the
bargaining power of supplier has been increased.
Financial statements of MCB reveal that deposits with the bank are decreased from 83% to 79%
during the last seven years.
3. Bargaining Power of Customers:
Customers can be powerful when the switching cost is very low and in the banking sector the
customers needs includes favorable profit on investment and getting banking services with low
cost. All the banks in Pakistan are competing for healthy market share so they are trying to
provide the better services from other banks by giving more incentives on their services as a

32

result of which the bargaining power of customers has been increased. Hence the MCB is facing
great difficulty in sustaining his competitive position in the market and this is done by providing
more are more value added services to its customers.
4. Availability of Substitute Product:
Substitute products are also available in the market like MobiCash services by Mobilink GSM,
Easy Paisa by Telenor Pakistan both are used for transfer of money between two customers.
There is also an example of PayPal, Alert Pay, etc are best alternatives for the transferring of
money all across the globe with minimum charges or service fee. All these substitute products
are creating a big hurdle in earning commission and generating revenue for the bank.
5. Rivalry among the Competitors:
The intensity of competition in an industry depends upon bulk of factors such as number of
competitors, the presence of exit barriers, degree of product differentiation and growth rate.
Taking only one factor in due consideration the degree of product differentiation it can be seen
that all the banks are providing same kind of services but with different names. It means that the
degree of differentiation for the products is near to zero and it is fact that when the degree of
product differentiation is less the competition is high because customers switching cost
eliminates. For example, NBP, UBL, Summit Bank, BOK etc are offering the services for
transfer of money with the help of Xpress Money. And some other banks like Bank Al-Habib,
Bank Alflah etc are using Money Gram for the same activity.

33

SWOT Analysis
SWOT analysis is a key measurement tool that helps in determining key factors, which
can make a difference between success and failure of a business concern.
Theoretically SWOT analysis may be defined in the following ways,
A SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) is a strategic
planning tool, useful for planning and decision-making at multiple levels within an
institution, organization or business.
SWOT analysis within an organization can be carried out on a single product, place or on the
whole industry. The main purpose of the SWOT analysis of an organization is to develop the
understanding regarding internal and external factors, whether these factors fits best with the
core competencies of the organization or not.

Figure 1 SWOT

34

Strengths (Internal)
The major distinguishing factors, that gives competitive edge over the others.

Political support

Funding available

Market experience

Strong leadership

Weakness (Internal)
The major factors that can lead towards diminishing performance of an organization,
With respect to other enterprises.

Project is very complex

Likely to be costly

May have environmental impact

Staff resources are already stretched

Opportunity (External)
All the possible events, which may go in the favors of organization.

Project may improve local economy

Will improve safety

Project will boost company's public image

35

Threats (External)
All such contributing factors, that ultimately leads to reduced performance.

Environmental constraints

Time delays

Opposition to change

36

Determination of Elements of SWOT

The first step towards SWOT analysis is to determine key elements of each sub part of
SWOT analysis. This means, all the possible sum of Strengths, Weaknesses, Opportunity and
Threats, which an organization possess are to be determined.
Strengths
The main strength of the bank lies in its services. The other fact that contributes is
approaching to each segment of society .another positive concern that becomes the strength of
the bank is its innovation some others are as follows

Bank reputation
Technical management skills
Customer satisfaction
Promotion effectiveness
Team based approach
Quest for quality
Employee respect and dignity
Large network of branches
Weaknesses
MCB has some weakness within the organization which is discuss under as follows.

Less productivity from staff

Overburdened staff
Late sitting trend
Lack of organization devotion
Attitude of seniors towards to juniors
Lack of leadership qualities
Opportunities
MCB bank may improve its Rupee Travellers Cheques (RTCs) sales by through for new

market positions. It can familiarize debt card system or may adapt the current ATM cards into a
whole debt card. House financing sector can be targeted to maximize the profit.
37

MCB bank enter into contract with other banks to use each other ,s ATMs which will result in an
increased accessibility to MCB customers and customers of other banks as well as all around the
world settlements money are strictly observed so as the money paid may not fall in hands of thus
termed extremists for that all predictable money filtering done HUNDIES have been still there is
an opportunity for MCB to spread its branch network to several countries highlighting mostly on
introducing electronic fund transfer services.
Different banking courses can be offered for improving of banking staff.

Management skills

Update courses

Foreign training

IT courses
Threats
Every organization has threats from internally and externally and MCB also have some

kind of threats.

Competitions are increasing day by day

Increasing interest rates

Instability of government policies

Entrance of foreign banks in local market

Weak economic condition of Pakistan

Unregistered business concern

38

39

SWOT Analysis Quadrant Combination (SWOT Matrix)

Strengths S

Weaknesses W

Bank reputation
Technical

Less productivity

management skills
Customer

satisfaction
Promotion

from staff
Overburdened staff
Late sitting trend
Lack of organization
devotion
Attitude of seniors

effectiveness
Team based

towards juniors
Lack of leadership

approach
Quest for quality
Employee respect

and dignity
Large network of

qualities

branches

Opportunities O

Management skills

Update courses

Foreign training

IT courses

SO Strategies

MCB should train

Less productive staff

their team by latest

can be trained and

management skills.
They should send

become effective

their employees for

WO Strategies

staff.
Leadership qualities

foreign training

can be developed by

and demos.
MCB should start a

foreign trainings.
Overburdening and

program for IT

late sitting trend can

40

courses for all

be changed by

employees.

management skills to
upper level
management.

Threats T

Competitions are

ST Strategies

increasing day by day

Increasing interest rates

Instability of
government policies

Entrance of foreign

Weak economic
condition of Pakistan

Unregistered business
concern

Rather than late

satisfaction and

shifts, management

team based

should introduce two

approach can

shifts for employee

minimize the fear

satisfaction and to

of competitors.
Large network of

minimize the threat

branches and

banks in local market

Customer

WT Strategies

of competitors.
By train the upper

skilled management

level management

can cater the Weak

their attitude can be

economy and

changed towards

instability threat.
Bank reputation

juniors which can

help them caters the

and customer
satisfaction can

threats collectively.
MCB should raise the

attract more

salary packages for

customers which

the middle level and

41

can reduce the

lower level

threat of low

management to

customers due to

increase their

increasing interest

devotion towards

rate.

organization, which
can help MCB to
minimize threats of
market and
competitors.

Table 1 SWOT Matrix

42

Industry Analysis
External Factor Evaluation (EFE) Matrix
External Factor Evaluation (EFE) matrix method is a strategic-management tool often
used for assessment of current business conditions. The EFE matrix is a good tool to visualize
and prioritize the opportunities and threats that a business is facing.
External factors assessed in the EFE matrix are the ones that are subjected to the will of social,
economic, political, legal, and other external forces.

Opportunities
All events that may be go in favour of the organization.

Threats
All events which would be leave negative impact on organization.

EFE MCB
Key External Factors

Weight

Rating

Wtd
Score

Opportunities
1. Govts help to up lift economy

0.15

0.30

2. Diversification towards Islamic banking

0.15

0.30

3. Micro Financing for Farmers

0.05

0.15

4. Expansion towards rural areas

0.05

0.10

5. Fast cash facility can capture Hundi market

0.10

0.30

Key External Factors

Weight

Rating

Wtd
Score

Threats
43

1. Banking activities influenced by Politics

0.15

0.30

2. Energy crisis hits the industry performance

0.05

0.05

3. Inflation Rates

0.10

0.20

4. Monetary policy and interest rates fixed by

0.05

0.05

5. Economy effected by law and order situation

0.15

0.15

Total

1.0

badly

SBP

1.9

Table 2 EFE Matrix

44

Competitive Profile Matrix:

ABL

CSFs (contd) Wt

MCB

Rating Wtd Rating Wtd

Financial

0.15 4

Score
0.60 4

Score
0.60

Position
Service

0.10 3

0.30

0.40

Quality
Customer

0.20 3

0.60

0.60

loyalty
Market Share
Work Force

0.10 3
0.15 3

0.30
0.45

3
4

0.30
0.60

Motivation
Online/ATM

0.15 4

0.60

0.60

Services
Advertisement 0.15 3
Total
1.00

0.45
3.3

0.60
3.7

Table 3 CPM Matrix

45

Internal Factor Evaluation Matrix

Internal Factor Evaluation (IFE) matrix is a strategic management tool for auditing or
evaluating major strengths and weaknesses in functional areas of a business.
The IFE Matrix together with the EFE matrix is a strategy-formulation tool that can be utilized to
evaluate how a company is performing in regards to identified internal strengths and
weaknesses of a company. The IFE matrix method conceptually relates to the Balanced
Scorecard method in some aspects.

IFE MCB
Key Internal Factors

Weight Rating

Wtd
Score

Strengths
1. Large online Branches Network

0.10

0.30

2. Large ATM network

0.15

0.45

3. Strong Lending ability

0.15

0.45

4. Market share

0.05

0.10

5. Owned and managed by employees

0.05

0.15

Key internal Factors

Weight

Rating

Wtd
Score

Weaknesses
1. Less Advertisement

0.10

0.20

46

2. Limiyed coverage of rural areas

0.15

0.30

3. High Non-performing Loans

0.05

0.10

4. Cost of funding increased

0.15

0.30

5. No entertainment facilities for employees

0.10

0.20

Total

1.00

2.55

Table 4 IFE Matrix

47

SPACE Matrix:

Internal Strategic Position

External Strategic Position

Competitive Advantage (CA)

Industry Strength (IS)

Market Share

-2

Growth Potential

Online networks/ATMs

-1

Resource Utilization

Technological Knowledge

-1

Financing Access/Stability

Customer Service

-2

Barriers to Entry

Customer Loyalty

-3

Profits Potential

Average:

-1.8

Average

Total X Axis Score = 2.2

Financial Strength (FS)

Environmental Stability (ES)

Return on Asset

Competitive Pressure

-3

Leverage/Debt

SBP Policy

-3

Net Income

Inflation Rates

-2

EPS

Technological Change

-2

Net Profit Margin

Barriers to entry

-2

Average:

4.4

Average:

-2.4

Total Y Axis Score = 2

Table 5 SPACE Matrix

48

Suggested Strategy Type:

Figure 2 SPACE Matrix

49

Figure 3 SPACE Matrix Quadrants

After listing all the factors and giving them rating accordingly the averages are mentioned above.
And after calculating directional vector points the line stretches in the first quadrant. Which
means the company needs aggressive strategies like:

Backward, forward or horizontal integration.

Market penetration.
Market development.
Product development.
Diversification related or unrelated.

50

Quantitative Strategic Planning Matrix (QSPM)

Strategy 1
Weight

As

Strategy 2

TAS

AS

TAS

Internal Factors
1.

Government

Intervention

in

Banks

0.12

0.48

0.36

2. High Growth Rate

0.14

0.56

0.42

3. Trained and Motivated Work Force

0.09

0.27

0.36

4. Strong Financial and Lending Capability

0.11

0.22

0.33

5. Largest online and ATM networks

0.10

0.40

0.20

1. SBP Monetary Policy and Regulations

0.08

0.24

0.16

2. High Inflation Rate

0.06

0.18

0.24

3. Power Crisis in the Country

0.10

0.40

0.30

4.Law and Order Situation

0.07

0.21

0.14

0.08

0.32

0.16

0.05

0.15

0.20

Matter

External Factors:

5.High

discount

Rates

and

lending

restrictions
6.Less Savings of the People

1.00

3.43

2.87

Table 6 QSPM

51

Possible Alternative Strategies

Strategy-I (Product Development)

Introduce new services within existing set up of the bank

Provide consumer Banking services
Take initiative of Islamic Banking
Fast and innovative & secure methods of Cash transfer
Diversify and enhance Bank A/C types and other services

Strategy-II (Market Development)

Expand banks operations geographically

Banking services may be provided in rural areas
Those customers must be identified and attracted who have capacity but never

used bank services

Focus on the areas which are still neglected.

Strategy Selected:

Strategy-I has 3.43 Total Attractiveness Score (TAS)

And Strategy-II has 2.87 TAS
So Strategy-I is recommended for the Bank according to QSPM
Strategy-I is the product development. Hence Bank should diversify its services
and introduce new innovative, secure and high tech methods of Financial

Transitions with the convenience of the customers

SME sector may be focused more for lending

52

Financial Analysis of MCB Limited

Total Assets:
The asset base of the Bank has registered a remarkable annualized growth of 13.28% over the
last 6 years growing from Rs. 509 billion as at December 31, 2009 to Rs. 935 billion as at
December 31, 2014. Prime contributors to the said increase have been advances and investments,
with investments growing annually by approximately 32% over recent years. The earning asset
mix of the Bank has been prudently managed to ensure maximization of returns to stakeholders.
Advances:
Credit off-take has been hampered on account of macro-economic instability and operational
challenges faced by the country. Lack of credit opportunities and intense competition for the
same pool of assets resulted in a moderate growth in gross advances base. However, in 2014,
steps taken in the right direction have paved way for advances growth for the industry, with
MCB taking the major share of the said growth. Despite the said growth in advances in 2014, the
ADR has dropped from 73.37% in 2009 to 46.83% in 2014.
Non-performing Loans:
Strengthened risk management policies coupled with aggressive provisioning approach has
enabled the Bank to keep a check on quality of its assets. The infection ratio of the Bank was
8.62% as at December 31, 2009 which has dropped to 6.80% as at December 31, 2014. The
quality of asset has been one of the prime focus areas of the Bank and the significant recoveries
posted in the last few years clearly spell out the efforts that have been directed in this achieving
this goal. After registering a decrease of Rs. 1.1 billion and Rs. 2.3 billion in 2012 & 2013
respectively, the NPL base has further contracted by Rs. 1.4 billion in 2014. Over the last six
years, NPLs of the Bank peaked in 2010 at Rs. 26.7 billion, following which a downward

53

trajectory can be observed in NPL base. The coverage ratio of the Bank has improved from
67.47% in 2009 to 82.84% in 2014. Moreover, the NPLs classified in loss category constitute
more than 90% of the NPLs base as at December 31, 2014, which specifies the adequacy of
provision held in the books of the Bank.
Investments:
During the past few years, the lack of credit opportunities resulted in banking sector money
deployed in Government Papers. With an average annual growth rate of 32% over the last six
years, the investment base of the Bank has grown from Rs. 167 billion in 2009 to Rs. 511 billion
in 2014.
Deposits:
The deposit base of the Bank has steadily grown over the last six years, with absolute numbers
increasing from Rs. 368B in 2009 to Rs. 688B in 2014. MCB Bank carries the competitive edge
of holding the highest CASA base, supporting its lower cost of deposits. The Bank has been
strategically tapering off its high cost deposit. .The CASA base has more than doubled in last 6
years, increasing from Rs. 305 billion in 2009 to Rs. 626 billion in 2014; MCB Bank has been
able to maintain its share in the domestic industry deposit pie at approximately 8%. This is made
possible by service excellence, strategically placed touch points for the customer and
transactional convenience provided through a variety of products.

Equity and Dividends

The paid-up capital of the Bank has grown from Rs. 6.9 billion in 2009 to Rs. 11.1

billion in 2014, meeting the statutory capital requirements set by the Central Bank.

54

In 2008, most affluence strategic partnership occurred in Pakistan where the largest Bank

of Malaysia, Maybank Berhad, acquired 20% holding in MCB Bank Limited. This brought
synergies in technology, human resource and trade business.

The equity base of the Bank is reflective of the outstanding financial results achieved

through consistent performance over years. The capital base of the Bank is rated as strong which
is substantiated by the reported CAR of 20.41% as at December 31, 2014 against the statutory
requirement of 10%. The Shareholders equity has grown significantly from Rs. 61 billion in
2009 to Rs. 107 billion in 2014.

The Bank has the highest cash dividend per share in the industry with regular interim

dividends and remains one of the prime stocks preferred in the Pakistani equity markets.
Net Interest Margin

The composition of markup income has seen a shift in the last six years on the back of

concentration shift in the earning asset base of the Bank. The contribution from markup income
earned on advances has reduced from 70.55% in 2009 to 37.43% in 2014 while markup income
from investments has increased to 61.91% (2009: 26.9%).

The regulatory revisions covering minimum deposit rate during the commentary period

has adversely affected the Banks net interest margin. The said impact was diluted by improving
the CASA base over period taking it to an all time high of 91% as at December 31, 2014.
Non-Markup Income

During last six years, fee, commission income and capital gains have been the major

drivers behind non-fund income. Fee, commission income was supplemented on the back of new
products and services added to themenu coupled with remote banking and branchless initiatives
taken by the Bank. The product development teams of the Bank have been tapping the unbanked
segment of the population and offering them tailored products to meet their specific financial
55

requirements. Different types of products have been offered in order to meet the needs of the
time like credit card, mobile banking, visa debit card, MCB Lite, prepaid cards, IBFT etc.

The fee, commission and brokerage block of the Bank has been constantly increasing

over the years with major contributions coming from commission earned on card business,
bancassurance business, remittances and intercity / intra-city cash transfers.

The equity investment base of the Bank has been providing outstanding dividend yields

with dividend income and capital gain proving to be the second highest contributor to
nonmarkup income. During the past 6 years, approximately Rs. 7 billion has been earned by way
of Capital Gains.
Operating Expenses

Owing to the strengthened risk management framework, the provision charge of the

Bank has been on a declining trend over years. The provision and write-off charge was reported
at Rs. 7.4billion for the year 2009 which was reduced substantially to Rs. 291M for the year
2012. For the year 2013 & 2014, the Bank reversed provisions to the tune of Rs. 2.9 billion and
Rs. 1.4 billion respectively based on the recoveries posted classified advances. It is pertinent to
add that the Bank carries an unencumbered general provision of around 0.1% of gross advances
and has not taken the benefit of FSV in provision calculation for the year 2014.

The growth in administrative block of the bank has been nominal considering the

inflationary patterns followed over the period of six years and falls within the budgetary limits
set. The management has been able to introduce cost effective techniques / methods to exercise
control over the administrative expenses. Centralization of various expense heads and imposition
of annual capping have been few of the key initiatives undertaken in this respect. This has
enabled the Bank to maintain one of the lowest cost to income ratios in the industry.

56

Ratios:

Comparitive Analysis:

Figure 4 Comparative Analysis of Balance Sheet

57

Figure 5 Comparative Analysis of Profit and Loss

58

Horizontal Analysis Description:

Asset base of the bank has increased considerably over the past 6 years; highest increase was
observed in 2012 where assets increased by 17%, mainly contributed by investments in terms of
volume. On an annualized basis, the asset base has recorded an increase of 13% over the last six
years. Highest increase in investment base was reported in 2011 of 49%, followed by 27%
increase reported for 2012.
The deposit base of the Bank has increased considerably over the years growing from Rs. 368
billion in 2009 to Rs. 688 billion in 2014 translating into an annual growth of 13% over past 6
years. Equity of the bank has also posted healthy increase due to higher profitability in past 6
years, translating into 14% average growth.
On to Profit and Loss side, gross markup earned has posted an average increase of 12% over a
span of six years.
Corresponding to the shift in asset mix, contribution from income on investments has increased
over the years. The increase in markup expense on deposits is on account of regulatory revisions
enacted by the Central Bank and volumetric increase in deposit base. Despite the regulatory
revisions enacted during the period, the cost of deposit was strategically managed
by reducing high cost deposits and increasing the CASA base of the Bank. However, the cost of
deposit of the Bank has increased by 20% over the six year period under coverage.
Non-Markup income block has shown steady growth of 15% over 6 years, whereas non-markup
expense has grown by an average of 17% which is justifiable on account of growing operational
infrastructure and inflationary patterns. Provision against advances and investments has been on
a declining trend with reversal to the tune of above Rs. 4 billion in last two years. Profit Before

59

Tax (PBT) and Profit After Tax (PAT) have increased by an average of 9% and 11%, respectively,
marking MCB as one of the most profitable bank in the industry.

60

Trend Analysis:

Figure 6 Total Assets Trend Analysis

Figure 7 Total Deposits Trend Analysis

61

Figure 8 Investments Trend Analysis

Figure 9 Gross Advances Trend Analysis

62

Figure 10 Fund Based Income Trend Analysis

Figure 11 Non Markup Income Trend Analysis

63

Figure 12 Profit after Tax Trend Analysis

Figure 13 Profit Before Tax Trend Analysis

64

Chapter 3:
Recommendations:

Efficient cost-control procedures may limit the growth of operating expenses leading to
higher operating profit margin. Banks poorly managed their operating expenses. Further

improvement may be necessary to enhance ROE development.

The bank should emphasis on the organization of effective training and development
programs for its new as well as existing employees so that these are gradually updated

regarding the recent developments in the field of banking.

In Agriculture loan Sector, MCB mainly serving in Punjab province. Agriculture loans

facility should be provided to all other provinces of Pakistan as well.

MCB should provide greater facilities to its employees, and give them bonuses for their
hard work and Promotions as well. 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 habit of the employees

The bank should keep on filling the gap between customer and the bank through
consumer friendly attitude and efficient services. They should work on building

relationship with the customers.

Employees inside the branches should change their attitude toward the customer. It has
been observed that customer do not get the same warm welcome and importance that he
wants and he is been provided by other emerging banks. They should start thinking about

changing their attitude from now.

Foreign branches should be opened in order to capture the international market and to

earn international repute for the bank.

Lending focus must be on private sector instead of public sector.
SME sector must be given priority in all financial matters.
Institutionalization of Human Resource Management (best man should be posted to best
assignment, refreshing courses, seminar on emerging banking and customer services.

65

Research and Development facilities (Domestic market research, economic analysis,

strategic insight of major economic and financial accords, international markets

knowledge, rigorous planning and development, loss & prevention mechanism)

There should be central compliant cell in MCB in order to reduce people complaints and

foster the ratios of productivity.

Scope of Investment Banking is very much high now in economy. Concrete efforts
should be made to initiate investment-banking operations.

66

Internship Activities

1. Auto's Pay Off

2. Auto's Partial Pay off
3. PG Pay Off
4. PG Partial Pay off
5. PL Pay off
6. PL Partial Pay off
7. Repayment Schedule of Car 4 U
8. Disbursal Letter OF Car 4 U
9. Repayment Schedule of PL
10. Disbursal Letter OF PL
11. Fresh Insurance Policy
12. Insurance Renewal
13. Insurance Refund
14. Complaints
15. Service Related
16. Staff Related
17. Insurance Co. Related
18. Collateral Documents
19. NOC
20. Excise file
21. Authority Letter
22. Handed Over Instruments (P L)
23. Misc Activites
24. Auto's Pay off Procedure
25. Auto's Partial Pay off Procedure
26. PG Pay Off Procedure
27. PG Partial Pay off Procedure
28. PL Pay off Procedure
29. PL Partial Pay off Procedure
30. Installment Refund
31. Insurance Claim Cheque (Theft/Stolen/Total Loss)
32. Issuance of ETO Lttr
33. History / Balance Certifcate
34. Correction on Insur.Policy
35. Balance Enquiry
36. Registration Book Copy
37. Duplicate Registration Book
38. Duplicate Spare Key
39. Pay order Delivery Status
40. Personal Loan Case status
41. Opening of New ISI A/c
42. Address Change
43. Collateral Documents reminders collections
67

44. Insurance Renewal /Fresh reminders collection

45. Acknowledgment of Documents of PG
46. List of document / legal documents of PG
47. Wrong Deductions / Wrong Mapping after Paid off
48. Revised Schedule not received
49. Application /case Status
50. Booking Status
51. A/c and Branch Address Information
52. Top Up Loan
53. Cancellation of PL Pay Order
54. Reissuance of Pay Order
55. Timely insurance of vehicle of not insured
56. Timely updation of Returned Insruances
57. Installment Related
58. Misplaced Dis/Rpt Sch
59. Delivery of Insurance Policy
60. Retain customer
61. Copy PO
62. Credit Card Inquiries
63. Available Balance (cash/ retail)
64. Account Statement Balance Billed Transactions.
65. Authorized Balance - Un posted Transactions
66. Card Payment info
67. Bill Generation date (Billing cycle)
68. Card payment due date
69. Installment details
70. I-Shop product info
71. Insurance info
72. Physical Verification of Customer for Credit Card Activation
73. Card Replacement (LOST, STLN, MNTD)
74. Card Reinstatement/Re-Issuance
75. Card Cancellation
76. Reversals
77. Limit Enhancement Request
78. Contact Details/ Address change/ Address Correction
79. Change/Correction in Customer Profile (DOB, MMN, CNIC)
80. Credit Card Delivery
81. Disputed Transaction Reporting
82. MNTD Block Removal
83. Credit Card Clearance Letter/ NOC
84. Credit Card Related Complaints
85. Insurance Related Complaints
86. Activation / Deactivation of SMS / Insurance
87. Activation / Deactivation of Auto Debit facility

68

Conclusion:
The banking system and particularly MCB as a whole, remains healthy despite the economy
going through a period of economic difficulty. MCB absorbed the build-up of non-performing
loans in the system while maintaining profitability and robust balance sheets. Much of the credit
for this must go to the SBP for the policies it has pursued over the last decade to ensure that
banks are adequately capitalized and adhere to prudent risk management.
The objectives were targeted towards customers, improved management policies, strong policy
framework, improved governance structure, strategic investment initiatives and implementation
of cost effective measure across bank. The group structure of the bank individually worked hard
in achieving the milestones under continuous monitoring and supervision of the senior
management and Board.
The bank displayed extraordinary results in both financial and non-financial terms. With the
banking industry recovering at a steady pace since the 2007 crisis, MCB ensured availing all
possible positive opportunities and delivered substantial profits ensuring sound asset growth
Financial year 2009 MCB stood up to the challenges and produced significant increases in major
areas of its business while maintaining higher profitability, stronger asset base with
corresponding increase in equity. The sector also made positive recoveries while heading towards
its actual position prior to 2007 and 2008 financial market crisis.
I found out that this a good bank as its working, management is concerned. First of all
the reason is that there is no directive style in the management of MCB and which shows that
there is decentralization in the Bank and every branch manager can take decision according to
the situation.

69

MCB is providing their customers with wide range of services including online banking, virtual
banking and some of their new products in the pipeline; include ATM network etc. shows that
MCB Bank is taking good care of their customers. MCB Bank made heavy investments, towards
enhancing its capabilities in the area of automation and technology. MCB is well positioned to
meet client needs, with improved competitive advantage.
From the financial statement analysis and its comparison with other banks I found that it is
somewhat better than others, and from the analysis of previous year I concluded that it is
improving and it is earning more profits as compare than the previous year. So I can say that
MCB Bank is performing very well.

70