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Table of Contents

Acknowledgement ----------------------- Error! Bookmark not defined.

List of Acronyms --------------------------------------------------------------- 4
List of Tables ------------------------------------------------------------------- 5
Executive Summary ----------------------------------------------------------- 6
CHAPTER 1 -------------------------------------------------------------------- 8
INTRODUCTION ------------------------------------------------------------- 8
Introduction to Chapter ----------------------------------------------------- 8
1.1 Background of the Study ---------------------------------------------- 8
1.2 Purpose ------------------------------------------------------------------- 8
1.3 Limitation ---------------------------------------------------------------- 9
1.4 Objectives ---------------------------------------------------------------- 9
1.5 Methodology ------------------------------------------------------------ 9
1.6 Scheme of the Report ------------------------------------------------ 10
Summary of Chapter ------------------------------------------------------ 11
CHAPTER 2 ------------------------------------------------------------------ 12
REVIEW OF ORGANIZATION ------------------------------------------ 12
Introduction to Chapter --------------------------------------------------- 12
2.1 Definition of Bank ---------------------------------------------------- 12
2.2 History of MCB Bank ------------------------------------------------ 16
2.3 Vision Statement ------------------------------------------------------ 18
2.4 Mission Statement ---------------------------------------------------- 18
2.5 Values of MCB Bank ------------------------------------------------ 19
2.6 MCBs Performance Overview ------------------------------------- 21
2.7 Nature of the Organization ------------------------------------------ 22
2.8 Management and Departments Of MCB Bank ------------------- 23

2.9 Main Departments and Their Jobs---------------------------------- 24
2.10 Divisions of MCB Bank -------------------------------------------- 31
Summary of the Chapter ------------------------------------------------- 32

CHAPTER 3 ------------------------------------------------------------------ 33
PRODUCTS AND SERVICES OF MCB Bank ------------------------- 33
Introduction to Chapter --------------------------------------------------- 33
3.1 MCB Salary Club ----------------------------------------------------- 33
3.2 Current Account------------------------------------------------------- 33
3.3 Savings Account ------------------------------------------------------ 34
3.4 MCB Advisory Services --------------------------------------------- 34
3.5 MCB Islamic Banking ----------------------------------------------- 34
3.6 MCB Agri Products -------------------------------------------------- 35
3.7 MCB Home Remittance --------------------------------------------- 35
3.8 MCB Corporate Financing ------------------------------------------ 35
3.9 MCB Channel Financing -------------------------------------------- 35
3.10 MCB Local Correspondent Banking ----------------------------- 36
3.11 MCB Rupee Traveler Cheque ------------------------------------- 36
3.12 MCB Investment Services ----------------------------------------- 36
3.13 MCB Visa Credit Card --------------------------------------------- 37
3.14 Mahnama Khushali Scheme --------------------------------------- 37
3.15 MCB Khushali Bachat Account ----------------------------------- 38
3.16 MCB Investment services ------------------------------------------ 38
3.17 Capital Growth Certificate Scheme ------------------------------- 38
3.18 Fund Management Scheme ---------------------------------------- 38
3.19 Consultancy Services ----------------------------------------------- 39
3.20 Self Supporting Scheme -------------------------------------------- 39
3.21 MCB Mobile Banking ---------------------------------------------- 39
3.22 MCB Car 4 U -------------------------------------------------------- 40
3.23 MCB Master Card --------------------------------------------------- 40

3.24 MCB Smart Card ---------------------------------------------------- 41
3.25 Remit Express-------------------------------------------------------- 41
3.26 MCB Pyara Ghar ---------------------------------------------------- 42
3.27 MCB Virtual --------------------------------------------------------- 42
Summary of the Chapter ------------------------------------------------- 43
CHAPTER 4 ------------------------------------------------------------------ 44
ANALYSIS OF MCB Bank ------------------------------------------------ 44
Introduction to Chapter --------------------------------------------------- 44
4.1 Ratio Analysis --------------------------------------------------------- 44
4.2 Financial Ratio of MCB Bank -------------------------------------- 46
4.3 SWOT ANALYSIS -------------------------------------------------- 54
4.4 PEST Analysis -------------------------------------------------------- 56
Summary of the Chapter ------------------------------------------------- 58
CHAPTER 5 ------------------------------------------------------------------ 59
FINDING AND RECOMMENDATIONS ------------------------------- 59
Introduction to chapter ---------------------------------------------------- 59
5.1 Findings ---------------------------------------------------------------- 59
5.2 Recommendations: --------------------------------------------------- 62
Summary of the chapter -------------------------------------------------- 64

List of Acronyms

ATM Automatic Teller Machine

FED Federal Excise Duty

WHT with Holding Tax

TDR Term Deposit Receipts

CDR Call Deposit Receipts

PBA Personal Banking Advisor

BBA Basic Banking Account

PLS Profit and Loss A/C

TD Term Deposit

AOF Account opening Foam

AMO Account maintenance officer

KYC Know your customers

SSC Specimen Signature card

GBO General banking officer

LC Letter of credit

List of Tables

Table No Table name Page No

Table no 2.1 Board of Directors 25

Table no 4.1 Assets turnover ratio 48

Table no 4.2 Current ratio 49

Table no 4.3 Debt to equity ratio 50

Table no 4.4 Interest earned ratio 51

Table no 4.5 Net profit margin ratio 52

Table no 4.6 Debt to total assets ratio

Table no 4.7 Return on equity ratio 54

Executive Summary
MCB Bank Limited (Formerly Muslim Commercial Bank Limited) has
a solid foundation of over 60 years in Pakistan, with a network of over
1165 branches, over 850 of which are Automated Branches, over MCB
690 ATMs in 41 cities nationwide and a network of over 12 banks on
the MNET ATM Switch.

MCB Bank operations continued to be streamlined with focus on

rationalization of expenses, re-alignment of back-end processing to
increase productivity, enhancement of customer service standards,
process efficiency and controls. The Bank has taken the lead in
introducing the innovative concept of centralizing Trade Services in
the country by providing centralized foreign trade services to branches
with a view to improve efficiency, expertise and reduce delivery cost.

During the course of internship I learned about different functions

performed by Remittances, Advances, account opening and Customer
Service Office department and bank as a whole. I also learned banks
correspondence with their customers and within branches. I learned
about documentation requirements and record keeping for different
activities and processes, especially the documentation requirement for
different kinds of financing facilities.

MCB Bank offers different products and services to its customers .The
main types of accounts are the current and savings accounts, the loan
schemes offers by MCB Bank are also much attractive with less
Markup rates and also with easy terms and conditions. Besides these
MCB Bank offers different types of services to their customers just
like MCB home remittance, MCB rupee traveller cheque etc.

Some of the finding or problems of MCB Bank Limited are given

Report Findings are as follows:

Asset turnover ratio has been increased from 2010 to 2012

High trend of debt to equity shows that the firm is relying on
They are utilizing their resources very well
Communication gap between different levels of management

Some of the recommendations are:

MCB Bank introduce easy and cheap way for home remittance.

MCB Bank should introduce Islamic banking for agricultural


MCB Bank should keep enough cash in order to meet daily

customer demand.

They should tale more deposits and less borrowing.

Shift from Interest based income to Fee-based Income


Introduction to Chapter
In this chapter general introduction of the report is discussed, which
includes background of the study , scope of the study .More over the
chapter tells regarding the purpose of study foe which I conducted the
study ,methodology of study that how data was acquired ,and at the
end scheme of study is discussed.

1.1 Background of the Study

Internship training program during Bachelor in Business
administration Program is necessary for the partial fulfillment of the
completion of Degree of bachelor in Business Administration. It is
necessary for me to complete an internship session of about 8 weeks in
some manufacturing or service industry relevant to my area of interest
and specialization. So, I choose the Banking field because I have the
interest in this sector because my study background is related with this

1.2 Purpose
Internship is the capstone experience that provides me with hands-on,
real-world experience in a work setting. Ideally, internship will enable
interns to:

(a) Integrate and use my knowledge and skills from the classroom.

(b) Discover where further competence is needed.

(c) Take steps to gain that competence under educational supervision.

(d) Become better acquainted with the types of work settings in which
such competence can be applied.

1.3 Limitation
The study is done with the sole purpose of doing the best work but
there were certain limitation faced during the internship period. The
most important limitation from which the study suffers are:

The non-availability of information in a manner required for

analysis and the secrecy of the bank.

Time and space constraint.

1.4 Objectives
I worked as an internee in MCB Bank Ashraf Road branch Peshawar.
The main objectives to study in MCB Bank were:

To get some experience in working with well reputed

To gain knowledge about the professional environment of
the bank.
To know about the technology utilized in the banks.
To deal and manage with the situation of stress.

1.5 Methodology
There are mainly two methods that are used for the collection of data.

Primary Data

Observation of functions of Branch operations on the spot.

Observation of different processes of Branch on the spot.

Secondary Data

Internet is very helpful for me to study more about banking

sector of Pakistan.
Different type of booklets of the Bank.
Annual reports

1.6 Scheme of the Report

My internship report consists of five chapters which are:

Chapter 1
Chapter 1 is introduction to report which encompasses the background
of the study. It also looks into the purpose, scope, limitation,
objectives, methodology and scheme of the study.

Chapter 2
Chapter 2 is review of the organization which consist of brief
introduction of overall banking sector, the banking sector in Pakistan.
This chapter further elaborate about the history of MCB Bank and their
overall functions across the country and also brief introduction about
the management and hierarchal structure of MCB bank.

Chapter 3
Chapter 3 consists of different products and services offered by MCB
bank. The different types of accounts offered by MCB bank, the
different types of loan schemes offered the credit cards and master
cards etc.

Chapter 4
Chapter 4 consists of the analysis of MCB bank which contains the
SWOT analysis their strength, weaknesses, opportunities and threats,
and also the financial analysis of MCB bank through different types of
ratio analysis like the current ratio, debt to equity ratio and so on.

Chapter 5
Chapter 5 consists of the findings through the different types of
analysis based and then according to these findings I have given the

Summary of Chapter
It is sufficed to say that this chapter is about the background, and
importantly the purpose of the study which is that to learn about the
banking work and also to analyze the financial position of the
organization. Similarly this chapter also tells regarding the
methodology of the study that what the source of data is. Now in the
coming chapter the history and importance of banking is discussed
,this chapter also includes the history of banking in further
elaborates about the historical background of MCB bank, their overall
performance and their present status .It will also discuss about the
management and about different departments of MCB bank.



Introduction to Chapter
First chapter was about the introduction of the report. This chapter
consists of brief introduction of overall banking sector, the banking
sector in Pakistan. This chapter further elaborate about the history of
MCB Bank and their overall functions across the country and also brief
introduction about the management and hierarchal structure of MCB

2.1 Definition of Bank

Bank is derived from Bancus or Banque it is Italian word. History of
Banking is traced to 2000 B.C in Greece. Priests and goldsmiths acted
as financial agents by keeping money and valuables of people in
temples in strong safes. Thus the first stage in the development of
modern banking thus was accepting of deposits of cash from those who
had surplus money with them.

Different authors define the term bank in different terms some are:

According to Sir John Paget

No one and no body corporate and otherwise can be a banker who

does not (i) take deposit accounts (ii) take current accounts (iii) issue
and pay Cheques drawn upon himself (iv) collect Cheques crossed and
uncrossed for his customer (Siddiqui 2004).

According to Timothy j. Gallagher 2003

Commercial banks are the financial institutions that exist primarily to

lend money to businesses, banks also lends to individual , government
and other entities but the bulk of their profit comes from businesses

2.1.1 Importance of banking

Banks play very important role in the economic life of a nation. The
growth of the economy is dependent upon the soundness of its banking
system. Although banks so not create new wealth but borrow,
exchange and consume. These make generation of wealth. In this way
they become most effective partners in the development of that
country. To encourage the habit of saving and to mobilize these
savings is its basic purpose. Banks deposit surplus from the public and
then advances the surpluses in the form of loans to the industrialists,
agriculturists, businessmen and unemployed people under different
schemes so that they setup their own business. Thus banks help in
capital formation.

If there are no banks, then there would be concentration of wealth in

few hands great portion of wealth of a country would be idle. In the
fewer developing countries rate of saving is very low and due to this
rate of investment and rate of growth is very low. Banks provide
transfer of payment facility, which is cheaper, quicker and safe. Many
difficulties in the international payment have been overcome and
volume of transactions has been increased. These facilities are very
much helpful for the development of trade and commerce.

2.1.2 Overall Respective Sector In Pakistan
Banking is one of the most sensitive businesses all over the world.
Banks play very important role in the economy of a country and
Pakistan is no exemption. Banks are custodian to the assets of the
general masses. The banking sector plays a significant role in a
contemporary world of money and economy. It influences and
facilitates many different but integrated economic activities like
resources mobilization, poverty elimination, production and
distribution of public finance

2.1.3 History of Banking in Pakistan

At the time of independence, commercial banking facilities were
provided fairly well here. There were 487 offices of schedule banks in
the territories now constituting Pakistan. An Expert committee was
appointed. The committee recommended that the reserves bank of
India should continue their function in Pakistan until 30 September.
1948, and Pakistan would take over the management of public debt and
exchange control from reserve bank of India on April 1948 and that
Indian notes would continue to be legal tender in Pakistan until 30
September 1948. Moreover the banks including those having their
registered office in Pakistan transferred them to India in order to bring
a collapse of a new state. By 30 June 1948 the number of the offices of
scheduled banks in Pakistan declined from 487 to only 195.In order to
make necessary arrangement for the assumption of control and expert
committee was appointed to recommend necessary steps, including the
required legislation to establish a central bank for Pakistan. The
governor-general of Pakistan Quaid-i-Azam Muhammad Ali Jinnah
inaugurated the State Bank of Pakistan order was promulgated on May
12, 1948. The first Pakistani notes were issued in October 1948 in the
State Bank of Pakistan withdrew the reserves Bank of India notes of

the value of Rs. 125.02 crores with the help the Pakistan notes
( Faheem, 2010).

On 1st January, 1974 all Pakistani banks were nationalized through

Nationalization Act 1974. Under this law all Pakistani Banks become a
public property. All small banks were merged in bigger banks to create
five major Pakistani banks. These banks were to control by Pakistani
Banking Council. There are still controversies about this act of Govt.
as whether it contributed in success of failure of banks. However the
major changes after Nationalization were as follows:

Working of banks was extended to under-developed areas.

Market expansion for credit and deposits.
Decrease in service level of bank officers.
Decrease in profitability as well.

In 1990 the govt. decided to denationalize all the nationalized

institutions. Same was also suggested in banking sector. For this
purpose, amendments were made to Nationalization Act 1974 and two
nationalized banks were privatized. Along with this a permission to
open banks in private sector was also granted. The rules regarding
establishment of new banks and for incoming foreign banks were also
relaxed. The two privatized banks are: MCB Bank taken up by a
private group in April, 1991 & ABL taken up by its own employees in
September, 1991. After these changes a large number of private and
foreign banks started their operation in Pakistan (Faheem, 2010)

Now, Pakistan has a well-developed banking system, which consists of

a wide variety of institutions ranging from a central bank to
commercial banks and to specialized agencies to cater for special
requirements of specific sectors. The country started without any
worthwhile banking network in 1947 but witnessed phenomenal

growth in the first two decades. By 1970, it had acquired a flourishing
banking sector.

2.2 History of MCB Bank

MCB Bank Limited formerly known as Muslim Commercial Bank
Limited was incorporated by the Adam Jee Group on July 9, 1947 in
Kolkata in Bengal, under the Indian Companies Act, VII of 1913 as a
limited company`. But due to changing scenario of the region, the
certificate of incorporation was issued on 17 August, 1948 with a delay
of almost 1 year; the certificate was issued at Chittagong. The first
Head office of the company was established at Dacca and Mr. G.M.
Adam Jee was appointed its first chairman. It was incorporated
with an authorized capital of Rs. 15 million. The Bank transferred its
registered/Head office from Dhaka to Karachi on August 23, 1956
through a special Resolution (MCB bank, 2012).

The bank was established with a view to provide banking facilities to

the business community of the South Asia. The bank was nationalized
in 1974 during the government of Zulfiqar Ali Bhutto. This was the
first bank to be privatized in 1991 and the bank was purchased by a
consortium of Pakistani corporate groups led by Nishat Group.

MCB is Pakistans fourth largest bank by assets having an asset base of

770,283 million, and the largest by market capitalization having a
market capitalization of PKRS 192,950 million. The Bank has a
customer base of approximately 4 million and a nationwide
distribution network of 1,165 branches, including 22 Islamic banking
branches, and over 690 ATMs, in a market with a population of 160
million (MCB bank, 2012).

In 2008 the head office of MCB was shifted from Karachi to Lahore in
a newly constructed building, namely MCB House located at Sharia
Ghous-ul-Azam, commonly known as Jail Road. (MCB bank, 2012).

2.2.1 Nationalization
In January 1974, the government of Pakistan nationalized MCB
following the banks (Nationalization) Act 1974, subsequently, in June
1974, Premier Bank limited merged with MCB.

2.2.2 Privatization
A wave of economic reforms swept Pakistan in the late 1990s
introducing the need for privatization of state owned banks and
companies in April 1991, MCB because Pakistans first privatized
Bank, the government of Pakistan transferred the management of the
Bank to Nishat Group group of leading industrialists of the country
by selling 26% shares of the Bank. With a view to broaden equity
holding the government sold 25% of the paid up capital to the general
public. In terms of agreement between the government of Pakistan and
the Nishat Group additional 24% shares have been purchased by the
group making their holding 50%.

2.2.3 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


Increased participation on foreign trade.

Betterment of branches and staff service level.

Introduction of Rupee Traveler Cheques & Photo Credit Card
for the first time in Pakistan.

2.2.4 Overall Organization and Functions of MCB Bank Limited

MCB bank is one of the leading banks of Pakistan with a deposit base
of about Rs. 280 billion and total assets of around Rs. 770,283 million
Incorporated in 1947, MCB soon earned the reputation of a solid and
conservative financial institution managed by expatriate executives. In
1974, MCB bank 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 1,165 branches and over 690
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. (MCB bank, 2012).

2.3 Vision Statement

To be the leading financial services provider, partnering with our
customers for a more prosperous and secure future. (MCB bank, 2012).

2.4 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. (MCB bank, 2012).

Providing innovative

Efficient financial solutions

Long-term relationships with our customers

Shareholders invest with confidence

2.5 Values of MCB Bank
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.
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.
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.
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.
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.

Employee Respect & Dignity
We treat each of our employees with fairness, which
includes giving constructive feedback for their
development. We celebrate diversity and seek
suggestions from all employees for improvement. We
ensure that responsibility & fairness in all our decision-
Team Based Approach
We work towards achievement of our vision & mission
as a combines group. We encourage inter & intra-
departmental communications. We treat our colleagues
as our internal customers & ensure that the requirements
of internal customer focus are always met.
Quest For Quality
We ensure that each moment of our time is spent on
value adding activity. We always seek ways for
exceeding expectations of customers & colleagues. We
also ensure that we do things right, first time every time
(MCB Bank, 2012).

2.6 MCB Banks Performance Overview
MCB is Pakistans fourth largest bank by assets having an asset base of
770,283 million as at December , 2012, and the largest by market
capitalization having a market capitalization recorded at USD 1.2
billion at year end 2012 which was comparatively lower than USD 1.8
billion the year before, mainly on account of lower market value.

The Bank has a customer base of approximately 4 million and a

nationwide distribution network of 1,165 branches including 22
Islamic banking branches (December 31, 2011) within Pakistan and 8)
branches outside the country (December 31, 2011 including the
Karachi Export Processing Zone Branch), , and over 650 ATMs in 110
cities, in a market with a population of over 190 million. In 2011,
MCB reported a profit after tax of PKR 19.4 billion (appx.USD 205
million) and generated a return on average equity of 26.23% and a
return on assets of 3.18% (2010: 3.13%).

The Banks asset quality is strong with a gross NPL ratio of 8.64%.
During the last two decades, 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 and managing its non-performing loans via
improved risk management processes .MCB Bank has 1165 branches
(December 31, 2011) including local branches, and business
establishments in Sri Lanka and Bahrain including newly established
Rep. Office in Dubai, UAE. The Bank has also formed a private
company in Hong Kong (fully owned subsidiary of MCB) in
partnership with Standard Chartered Bank, handling trade transactions
of select countries in the Asia-Pacific region. MCB has been successful
in turning around its operations since its privatization and is moving
forward to set high performance standards with the continuous support

of its customers and leadership in banking technology. To further
strengthen its financial services base, MCB has also incorporated an
Asset Management Company in the year 2005 known as MCB Asset
Management Company. MCB has also incorporated a leasing company
in Azerbaijan in 2009. (MCB bank, 2012).

Awards: Year 2012

The Asset Triple A: Best Domestic Bank - Pakistan

Euro money: Best Bank in Pakistan

NFEH: CSR Business Excellence Award Best Media Coverage

ICAP and ICMAP: 2nd Best Corporate Report Award 2011- Banking

World Finance: Best Commercial Bank Pakistan

Pakistan Centre for Philanthropy: PCP Corporate Philanthropy Award

(MCB bank, 2012).

2.7 Nature of the Organization

MCB Bank Limited is a banking company incorporated in Pakistan
and is engaged in Commercial banking and related services. The
Banks ordinary shares are listed on all the stock Exchanges in
Pakistan. MCB Bank Limited is a Pakistan-based Public limited
company. The Bank operates in four business segments:

1 Corporate finance

2 Trading and sales

3 Retail and consumer banking

4 Commercial banking

2.7.1 Corporate Finance
Corporate finance includes underwriting, securitization, investment
banking, syndications; initial public offerings (IPO) related activities
(excluding investments) and secondary private placements.

2.7.2 Trading & Sales

Trading & sales segment includes fixed income, equity, foreign
exchange commodities, lendings to financial institutions and
brokerage debt.

2.7.3 Retail & Consumer Banking

Retail & consumer banking includes retail lending and deposits,
banking services, private lending and deposits, banking services and
retail offered to its retail customers and small and medium enterprises.

2.7.4 Commercial Banking

Commercial banking segment includes project finance, export finance,
trade finance, leasing, lending, guarantees and bills of exchange
relating to its corporate customers.

2.8 Management and Departments of MCB Bank

2.8.1 Organization Structure
As MCB Bank is a banking company listed in stock exchange
therefore it follows all the legalities, which are imposed by concerned
statutes. MR. Mian Mohammed 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.

A team of 10 professionals is handling operational management of the

bank. MR. Mian Mohammed Mansha also heads this team.

Table 2.1 Board of directors

1. Mian Mohammad Mansha Chairman

2. S. M. Muneer Vice Chairman

3. Tariq Rafi Director

4. Shahzad Saleem Director

5. Sarmad Amin Director

6. Mian Raza Mansha Director

7. Aftab Ahmad Khan Director

8. Mian Umer Mansha Director

9. Dato' Seri Ismail Shahudin Director

10. Datuk Abdul Farid Director

11. Ahmad Alman Aslam Director

Source MCB bank 2012

2.9 Main Departments and Their Jobs

There are three main departments in any branch of MCB Bank

General banking
Foreign exchange

2.9.1 General Banking

General banking deals with following services: Remittance
It is transfer of funds. Funds can be transferred in shape of pay orders,
demand draft, mail telegram and telegraph transfer. Payments of fees
of different organizations, fulfillment of tenders, and collection of

funds are the main functions of remittance. Maximum part of general
banking depends on this department. Issuance Of Different Kinds Of Remittance:

Pay Order

Pay order is the property of person/company that has to take the benefit
of the amount being pay ordered by the concerned person. Pay orders
are made for the payment of fees, tender or issued for the payments of
dealings. These are required for the proof of payments made between
the bank and the customer in the favor of beneficiary. These are noted
in printed block letters and yearly serial numbers are issued from
computerized system. Demand Draft

Demand drafts are made for the beneficiary for payments, funds etc,
these are made for outstation branches of the concerned banks. An
advice is also made for the confirmation of the draft send. These are
also approved and safe way of sending amount to the beneficiary.

These are also noted by computerized system and a serial number is

issued from the computer system.

Mail Transfer

Mail Transfer is made with in the city for transfer of amount. An

advice is also made for the confirmation of the draft send. These are
also approved and safe way of sending amount to the beneficiary.
These are also noted by computerized system and a serial number is
issued from the computer system.

Payment Of Pay-Order And Demand Draft

Pay-Order and Demand Draft both could be paid in shape of physical

payment of cash and in case transfer of amounts; the amount could be

transferred in the beneficiary account. In case of physical payment
authorized signature of beneficiary are taken for the proof of amount
being paid to him and in case of transferring of amount authorized
signature of the beneficiary are checked and verified for reducing risks.

Cancellation of Pay-Order and Demand Draft

Any type of Pay-Order / Demand Draft is cancelled by the permission

and instructions made by the beneficiary. The customer could only
cancel the pay order/ demand draft as the verified signatures of
beneficiary are present on the advice. Vouchers

Vouchers are made for records and they should be completed in all
respects, the amount, date, its head, particulars, amount in words,
authorized signatures and contra advice or voucher should be present.
Vouchers are advice either debit or credit slips. They are contra of each
other. If any voucher of debit is passed its contra credit voucher should
also be passed for the balancing of accounts, their respective sheets. Inward Clearing

It depends on those checks that are cleared inter branch and with in the
city. As the concerned branch receive any type of clearing check first
of all physical checking is taken place. For clearing procedure there
should be two days margin. These cheques have their vouchers and the
amount of the cheque and voucher should be identical. Than these
cheques are stamped and noted on receiving sheet as well as feed in to
the computerized system. Outward Clearing

It depends on those cheques that are cleared outside the city. For
outward clearing cheques are send because the home branch has their

accounts but checks are of other banks. Contras of these cheques are
vouchers that are recorded in the home branch. Issuance of Cheque Books

Any account holder that has opened the account he/she could credit
his/her account and for this purpose there should be a cheque book, so
he/she could be able to credit the needed amount whatever he/she
wishes. For the issuance of the cheque book a person is advised to fill a
requisite slip with his/her full names and the account number with two
verified signatures. These signatures are checked and then another
requisite slip prepared by the bank staff send to the NIFT, and it issues
the printed cheque books after completion of the procedure in two or
three days.

Account holder can take it by singing on the issuance register or if the

absence of the account holder another person could also take the
cheque book only if he/she has authorized signature of the account
holder. When the cheque books are issued they are feed in the
computer system from the requisite slip so when the cheques are given
for the credit/transfer of amount they could checked. In this way
neither the cheques could be repeated nor could the invalid cheques be
claimed. Issuance of ATM Cards

Head office issues ATM (Auto Teller Machine) cards with their PIN
(Personal Identification Number) codes and when the customer claims
for their ATM card they are checked from the list that is also issued
from the head office, and the claim is checked from the list and if the
name is found than the cards are issued by taking a signature and their
PIN codes are given to them by taking signatures on their ATM card
forms. The ATM card has been activated by the number provided at or
with the specific card.

2.9.2 Foreign Exchange Lcs Establishment

Any company can provide its documents containing e-form, bill of

lading, short shipment notice in case of short shipment, packaging list
etc. the information provided from the documents is recorded in the LC
establishment portion or section in the computer.

Payment or Retirement

When the transactions have been completed then approved documents

from the concerned bank are sent to the home bank for the payment or
retirement of the LC.

These transactions have recorded in the payment or retirement section

of the computer. Foreign Currency Deposits

The Foreign Currency Deposit relates with the foreign currency

accounts, cash deposit or credit and foreign remittances.

Foreign Remittances

In this we received the messages through SWIFT for foreign

remittances, which we record in their respective accounts, if these are
relates with Pak rupees than it was transferred in Pak rupees with the
latest rate and if this relates to the foreign currency than it is dealt with
accordingly. The amount has been credited to the respective account
and the head office has been debited against it. After crediting the
amount to the respective account. All the subsequent entries have been
made in the registers and also in the computer record as the system
now have been upgraded on computers. As we are reporting daily to
the head office, so an annexure has been maintained and faxed to the
head office.

2.9.3 Advances / Credit
This department deals with the approval of different kinds of loans to
different business entities. The loans, which are being approved by the
department, are kept with some securities such as bonds, properties and
any other type of asset, which is equally valuable or more than this as a
guarantee. Every branch has its own limit, if the amount of loans is
within the limit of the branch then it is being approved by the branch
but if the amount of loan is exceeding the limit then it has to make it
approved by the head office. In this case the branch stored all the
required papers and sent them to the head office for necessary action.
If the head office approved the loan then mostly the period contains a
year. And if the party requires more loan than after a year the loan has
been re-approved required that they should have the limit. In case if the
head office do not approve the loans then the return letter came back
with the reasons of not approval of loan and if the reasons have been
made approved by the concerned party then it could be sent again for
approval. This whole process is recorded in the back remain with the
bank until the party has not refunded all the amount of loan and bank
has the authority to liquidate those assets for preventing it from loss.

Types Of Advances

MCB Bank provides advances, which are of two types. These are as

1. Fund Based Advances

2. Non Fund Based Advances

Fund Based Advances

Funds are given to customer according to their requirement against

securities. These loans are given specially to traders, business, small
industrial units, including cottage industries, agriculturists, thus

ensuring an equitable distribution of bank credit among various sectors
of the countrys economy.

There are following types of advances, which are given to customer on

fund basis.

1) Industrial loan

2) Commercial loan

3) Agricultural loan Industrial Loan

Loans are given to industrial units including cottage industries up to or

less than RS. 20 million. Loans and advances shall not exceed amount
specified by marginal restriction on the type of securities offered.
Industrial loans are granted to the manufacturing section of the
economy including finance for fixed investments and working capital
requirements of small industries. Commercial Loan

Total principal amount of loans to a single enterprise/borrower shall

not exceed RS. 0.5 million. Maximum maturity is 3 years, depending
upon the nature and type of advances, decided upon case to case basis. Agricultural Loan

Bank provides the agriculture advances in order to enhance and

support the agriculture sector of the country. Banks Agriculture
division deals with the agriculture advances (MCB Bank, 2012).

2.10 Divisions of MCB Bank
2.10.1 Agriculture Division
Agriculture division deals with the loans and development of
agriculture sector. It has the responsibility to manage all the affairs
related to agriculture sector. This division works for the development
of agriculture in the country.

2.10.2 Audit Division

Audit Division is responsible for the inspection of financial affairs. It
also keeps a check over the irregularities in different branches. They
are delegated enough authority from the Board of Directors so that it
works without pressure. It appoints the audit teams and all the
irregularities pointed out are reported to this division.

2.10.3 Business Development And Marketing Division

This division works under the Head Office (H.O). Its main concern is
to develop the business of the bank related to the introduction of new
products. Changes in the existing schemes in favor of the bank and
customer is also the responsibility of this division.

2.10.4 Central Accounts Division

Central Accounts Division takes care of the accounts of branches and

records all inter branch transactions and transaction of branches with
HO. Calculation of profit on the account of branches maintained with
HO is also the responsibility of this division.

2.10.5 Corporate Affairs Division

Corporate affairs division deals with the affairs related to public
limited companies. It includes financing of large and specialized
corporations projects. In short it manages the corporate financing. It

also directly controls all those branches, which are designed as
corporate branches.

2.10.6 Credit Management Division

This division has the duty to make and alter the credit rules and
regulations in accordance with the prudential rules and regulations
formed by SBP. It deals with all credit proposals submitted by
advances department of different branches and designs their limit of
loans. This division also carries out marketing activities.

2.10.7 Finance and Treasury Division

It manages all the assets of MCB Bank. Management of income tax
and central excise duty is the function of this division. The most
important function is to announce the profit rates on different schemes
from time to time. Source: MCB Bank Ltd (2012)

Summary of the Chapter

In the nutshell the chapter includes the definition of bank and the
importance of banking in a country economy. It further elaborates
about the history of banking in Pakistan, how the banking emerged
their pre nationalization and post nationalization era, and also a brief
history of MCB bank is given. This chapter briefly explains about the
management of MCB bank and also about the different departments of
MCB bank .In the next chapter different .In the next chapter different
products and services that are offered by MCB bank are discussed
briefly. (MCB bank, 2012).



Introduction to Chapter
In the previous chapter a brief introduction/history and different types
of MCB departments are discussed this chapter consists of different
products and services offered by MCB bank. The different types of
accounts offered by MCB bank, the different types of loan schemes
offered the credit cards and master cards etc.

3.1 MCB Salary Club

A payroll solution designed to make life easy; it simplifies all the
monthly payroll related banking needs of employers and opens the
door to a world of special offers for employees. Salary Club provides
the convenience of having an extensive range of financial services
available to employees at their place of work.

3.2 Current Account

MCB Bank offers a variety of current accounts to cater the everyday
transactional needs of various customers. These accounts ensure ease
and freedom to bank from any of the 1100+ branches across the
country. The different accounts include: the Basic Banking Account
that has no minimum balance requirement; Business Account offering
free online transactions, Demand Drafts, Pay Orders and lots more to
meet the day-to-day business requirements; Current Life Account that
offers the security of life insurance free of cost; and for all others, the
conventional Current Account.

3.3 Savings Account
MCB Bank offers a wide array of savings products that suit short-term
growth and transactional needs. Our savings accounts offer attractive
profit rates as well as flexibility to transact. Savings Extra is targeted
for customers having Rs. 5 million + deposit and 365 Gold offers profit
rates on daily balances with no minimum balance requirements. In
addition, two unique products, i.e. Smart Savings and Savings
Maximizer, are special saving accounts run solely via debit cards and
other remote banking channels, offering a very competitive rate to both
high and low-end savers

3.4 MCB Advisory Services

Financial and Capital Raising Advisory provides our clients with
financial advisory services, commercial structuring support and access
to capital resources to help companies successfully finance their

3.5 MCB Islamic Banking

MCB-Islamic Banking Group provides Shariah-compliant products
and services both on the liability and asset sides to various customers
of all demographic segments to cater a wide range of Working Capital,
Capital Expenditures, Trade Business and Consumer requirements. In
addition to existing Shariah-compliant IB products, Islamic Banking
Group also provides customized solutions to its valued customers for
execution of complex financial transactions. Furthermore, Islamic
Banking Group also provides Shariah advisory services in structuring
of various syndicated transactions for its valued customers. To
facilitate its valued clients, MCB-Islamic Banking has also increased
outreach of its dedicated Islamic Banking branches to the tune of 27 in
14 cities across the country.

3.6 MCB Agri Products
MCB is committed to the farming community to support their national
objectives of self-sufficiency and food security to the people of
Pakistan. Dedicated and specialized staff, supervised by the Agri
Credit Division, is posted in lending branches to cater for strong
business relationships and facilitation. The banks extensive branch
network in all the provinces and diversified product range extends our
reach of agri credit facilities to encompass both crop and non-crop

3.7 MCB Home Remittance

MCB Home Remittances offers unmatched services for overseas
Pakistanis to send money home FAST and FREE at no cost across
Pakistan through MCBs large network of over 1100 branches. Money
can be sent FREE & INSTANT through our international send agents
like MoneyGram, Xpress Money and many others. We also offer
facility to Overseas Pakistanis to open accounts in their home country
through our Motherland account. This is designed to allow
transferring of funds to your family & loved ones through your own
personal account back home.

3.8 MCB Corporate Financing

MCB Corporate Financing provides access to diversified financing
options, including working capital loans, term loans, trade finance
services and investment banking

3.9 MCB Channel Financing

MCB Channel financing provides working capital facilities to dealers
and vendors of selected companies under a structured product
programme. This product enables our customers dealers to leverage

themselves and increase their business capacity with their respective
business partners.

3.10 MCB Local Correspondent Banking

Transaction Banking Department at MCB Bank provides Local Rupee
Drawing Arrangement, a product for small banks and financial
institutions to use our vast branch network platform to make payments
in areas where their own branch network does not exist, thus extending
their reach nationwide.

3.11 MCB Rupee Traveler Cheque

MCB Rupee Travelers Cheques are as good as cash, in fact better.
Better because with Rupee Travelers Cheques you have the power to
purchase and a feeling of security that should you lose them, you will
get a refund.

MCB Rupee Travelers Cheques are accepted at major shops, travel

agents, hotels, business establishments and MCB Bank branches all
over Pakistan. You don't have to be an MCB Bank account holder to
buy the Rupee Traveler Cheques. Anybody can purchase them. It's a
safe and convenient way to conduct everyday business. At a time when
thefts and robberies are on the increase, you are better off carrying
Travelers Cheques rather than money.

3.12 MCB Investment Services

Investment Services operate with the aim to help you make the most of
your wealth with investment opportunities that match your unique
financial aspirations. MCB Bank Investment Services offers
distribution of mutual funds managed by the leading fund managers of
Pakistan. We can suggest the products most suited for your needs, or
work with you to create a personalized solution completely focused on
your expectations of the capital markets.

3.13 MCB Visa Credit Card
MCB offers a complete suite of Classic, Gold and Platinum Visa
Credit Cards focusing on providing superior services, travel privileges
and shopping pleasures. It also offers comprehensive insurance and
instalment plans, reward points and SMS alerts that give a different
feel to the world of credit cards. These unique features include i-
revolve, which makes variable mark-up rates available to customers
allowing them to repay at affordable rates

3.14 Mahnama Khushali Scheme

A 5- year fixed Deposit Scheme, targeted to persons with small savings
who would desire a regular monthly return on their investment.

Salient Features

Minimum amount of investment shall be Rs.0.010m and the

maximum amount of investment would be Rs. 1.000m.

Khushali Certificates can be purchased by individuals (singly

or jointly) or by the Proprietorship/Partnership concerns or
Companies, etc. in their name

The Khushali Certificate will be of five years maturity.

The interim rate of profit offered will be minimum 1% per

month. If the profit declared by the bank is higher, additional
profit will be paid.

Zakat will be deducted wherever applicable on yearly basis

whether you will be receiving your profit or in cashing your

As per Government Directions, tax on the profit / return is to be

deducted by MCB branches at the time of payment.

3.15 MCB Khushali Bachat Account
Salient Features

8% rate of return per annum.

Returns calculated on daily.

Average balance and paid half yearly.

Introduced first time in Pakistan.

The facility of helping account holders pays utility bills

(electricity, telephone and gas) through their account. No
queues. No delays

3.16 MCB Investment services

Investment Services operate with the aim to help you make the
most of your wealth with investment opportunities that match your
unique financial aspirations. MCB Investment Services offers
distribution of mutual funds managed by the leading fund
managers of Pakistan. We can suggest the products most suited
for your needs, or work with you to create a personalized solution
completely focused on your expectations of the capital markets.

3.17 Capital Growth Certificate Scheme

For long term depositors under which the amount deposited almost
double at the end of 5 years. For the scheme, the minimum amount of
deposits is Rs. 10000 while there is no maximum limit. In case of
premature encashment of the certificate, the depositor will profit at the
same rates as that of PL Saving Account.

3.18 Fund Management Scheme

This scheme is offered to corporate and customers and aimed at
providing better rate of return up to 15% per annum. One of the

objectives of the scheme is to develop secondary market for
Government Securities.

3.19 Consultancy Services

In the process of privatization of public sector units, prospective
buyers need professional assistance and MCB Bank, with its expertise,
offer to them specialize service for valuation of the market value of the
industrial unit, preparing bid documents and arranging finance for the
purchase of the unit.

3.20 Self Supporting Scheme

For the benefits of genuine worker/borrowers who are poor and needy
and for small entrepreneur the bank as evolved a self-supporting
scheme: maximum amount of loan Rs.25000 and minimum Rs.5000
per individual. Loan will be totally free of mark-up.

Fax Press

This product was first of its kind introduced by using modem

technology of The Fax Machine. It facilitates speedy transfer of funds
within Pakistan. The service guarantees transfer of from one city to
another, within an hour.

3.21 MCB Mobile Banking

At the forefront of technological excellence, MCB Bank proudly
introduces MCB Mobile Banking. The convenience of accessing
account balance information and mini statements whenever want or
wherever may need them, with comfort and peace of mind.

MCB Mobile Banking service is available to all MCB ATM

cardholders, 24 hours - 365 days.

3.22 MCB Car 4 U
MCB car 4 u auto finance is a power move that gets you not only a car
of your own choice but leads you best in life. It is affordable with
competitive markup, flexible conditioning and easy processing and
above all no hidden cost.

3.23 MCB Master Card

Since the beginning of time, people have tried to find more convenient
ways to pay, from gold to paper money and checks. Today, money is
moving away from distinct hard currencies and towards universal
payment products that transcend national borders, time zones, and,
with the Internet, even physical space.

Plastic or "virtual" money, credit, debit, and electronic cash products,

inevitably will displace cash and checks as the money of the future.

MasterCard International has expanded globally in more locations in

the world than any other card. The card was introduced by MCB Bank
Limited in 1995 and now offers card members over 15 million outlets
in 232 countries.

Photo security- The first bank in Pakistan to introduce the

enhanced feature of photograph on the card limiting fraud in
case of card loss.

Welcomed at over 3, 000 outlets in Pakistan.

Provides up-to 45 days Free Credit.

Joining and Annual Fees to suit you.

24 Hour Customer Services- Call 111-700-700 and you can get

information from our customer services representatives

On new card application or have your queries resolved anytime of the


Cash Advance Facilities

Available in Pakistan and worldwide with a network of over

1,000 branches and a team of dedicated professionals, MCB is
Pakistans largest private sector commercial bank.

Our Consumer Banking provides customers with innovative saving

schemes, products and services. Our ATM network is the largest in
Pakistan and our Pak Rupee Travelers Cheques are market leaders. We
were the first to introduce the photo card with the introduction of the
MasterCard. When it comes to banking practices, you can depend on
us. Weve been around for over fifty years.

3.24 MCB Smart Card

MCB now brings you MCB Smartcard a secure and convenient
instrument of payment with unmatched functionalities. It provides 24-
hour direct access to your bank account. The convenience and
flexibility of MCB Smartcard will help live a smarter life. It not only
helps you manage your expenses, but also avoids undue interest on
your day to day credit card transactions. Your balance is always within
your reach and you spend accordingly. MCB bank is the only bank to
introduce a debit card that gives the option to choose from domestic
and international card for local and global usage respectively

3.25 Remit Express

The fastest way of getting your money across to Pakistan. Remit
Express offers low cost remittance from U.A.E. and Saudi Arabia.
Your relatives, friends or business associates receive drafts within 72
hours. MCB Remit Express has been specifically designed to meet the
needs of the expatriate Pakistani community residing in the Gulf

3.26 MCB Pyara Ghar
MCB gives dream home at the lowest and best possible mark-up rates.
You can choose either one of our two mark-up rate options- fixed or
variable. Early repayment option tailor-made to allow making partial
prepayments at dates that suit.

Who Can Apply

Anyone who fulfills the following criteria is eligible to apply:

Pakistani national residing in the city and area where the

product is launched.

25 years old or above when you apply and under 60 at the time
of maturity of the applied financing period.

Salaried person, self-employed professional or a businessman

with a verifiable monthly income stream.

Net take -Home income not less than Rs. 25,000 per month.

Have 5 years or more of business or professional experience.

Employed with the present employer for 2 years with a total

employment history of 5 years.

Home Purchase Home Renovation Home Construction

Tenure 3 years to 15 years 2 years to 5 years 3 years to 15 years

3.27 MCB Virtual

MCB Virtual provides the continence of banking on internet. Whether
at office or home or traveling. Log on at and enjoy
24 hours access of all your accounts for the largest array of service.
(MCB bank, 2012).

Summary of the Chapter
It is suffice to say that this chapter elaborate about the different
products and services offered by MCB bank .just like the different
types of accounts their minimum balance, their procedure and criteria
and their silent features .This chapter further discussed the different
types of loans offered by MCB bank, their markup rate ,their advance
payment and criteria etc. further this chapter includes about the
different schemes offered by MCB for home and car etc. This chapter
also includes about the different types of credit cards offered by MCB
bank .In the proceeding chapter I have done the analysis of MCB bank
through different methods just like financial analysis ,SWOT analysis
and pest analysis



Introduction to Chapter
In the previous chapter different types of products and services offered
by MCB bank are briefly discussed. This chapter consists of the
analysis of MCB bank which contains the SWOT analysis their
strength, weaknesses, opportunities and threats, and also the financial
analysis of MCB bank through different types of ratio analysis like the
current ratio, debt to equity ratio tec. This chapter further elaborates
about the PEST analysis of MCB bank.

4.1 Ratio Analysis

An index that relates two accounting numbers and is obtained by
dividing one number by other Gallagher 2003

Ratio Analysis is an important and age-old technique of financial

analysis. It simplifies the comprehension of financial statements.
Ratios tell the whole story of changes in the financial condition of
business. It provides data from inter firm comparison. They also reveal
strong firms and weak firms, over- valued and undervalued firms.

Ratio analysis also makes possible comparison of the performance of

different divisions of the firm. The ratios are helpful in decision about
their efficiency of otherwise in the past and likely performance in
future. Ratios also help in Investment decisions in the investors and
lending decisions in the case of bankers etc.

Following are the main types of ratios that I am going to calculate in

this report to compare and highlight the financial performance of MCB
in 2010, 2011 and 2012.

The various stakeholders of business are all interested in the analysis
of financial statements. But the focus of interest of all is not the same.
For example creditors and credit reporting agencies are interested in
finding out the credit worthiness of the firm to which they have
extended credit or intend to extend credit. Short term creditors are
interested in the short term liquidity of the business and long term
creditors are interested in the long run cash flow which the firm can
generate over the long period of time. Investors are interested in the
firms ability to sustain profitability over a period of time. Government
agencies analyze financial data for tax purposes. The internal users of
financial statement like management also analyze financial data for
planning and control.

The financial data of MCB is analyzed in the two following ways:

1. Time Series Analysis.

2. Ratio Analysis

Index and common size analyses are used to measure a firms

performance over time in relation to itself. Such analysis is called time
series analysis.

4.1.1 Common Size Analysis

Common size analysis is an analysis of financial statements where total

assets divide all balance sheet items and all income statement items are
divided by net sales or revenues. Common size statements can be
extremely helpful to highlight changes over time in the financial
performance and financial condition of a company. However, growth
or decline in various items of balance sheet and income statement
cannot be detected from the common size percentage only changes in
the data relative to a total for a particular date or period can be
determined. A statement item that has increased in rupee amount will

show a decrease percentage if the total has increased at a greater rate
than the individual item or vice versa. .

4.2 Financial Ratio of MCB BANK

A financial ratio is an index that relates two accounting numbers and
is obtained by dividing one number by the other. Gallagher 2003

One may ponder that why there is a need to mingle with these ratios
and not take the actual figures straightforwardly. Among various
reasons one cogent reason can be put forward that ratios help in
comparison. When ratio analysts are to compare the internal
performance of the organization in relation to time, only ratios are the
viable option for them. Similarly, comparison with the other
competitors in the same industry can only be carried out with the help
of financial ratios.

The number of financial ratios the might be created is virtually

limitless. But there are certain basic ratios that are frequently used,
these ratios are as:

4.2.1 Assets Turnover Ratio
Net sale (advances + investment)

Total Assets

This shows revenues generated per rupee investment in total assets.

This ratio is calculated by dividing net sales (advances and investment)
by total assets.

Table no. 4.1 (Rs in Millions)

2010 2011 2012

Sales 467613 544231.74 641652.21

Total assets 567553 631225.3 742160.53

ATR 0.82 0.862 0.87 approx.

Assets turnover ratio for, 2010, 2011 and 2012

Source: Internees Analysis

This shows revenue generated per rupee investment in total assets. The
Ratio increased from 2010 to 2012.The graph shows a high increase
from 2010 to 2011as 0.82 to 0.862 and then grows slowly to 2012. So
we can interpret that MCB is effectively utilizes its resources.

4.2.2 Current Ratio
Current Assets

Current Liabilities

Its shows the firms ability to meet its short term obligations. The
higher the ratio, the greater is the companys ability to meet its short
term obligation as the come due. Current ratio is calculated by dividing
current assets by current liabilities

Table no. 4.2 (Rs in Millions)

2010 2011 2012

Current assets 546607 631225.3 742160.532

Current liabilities 483415 558135.855 655006.1

Current ratio 1.12 1.130 1.133

Current Ratios for 2010, 2011, 2012

Source: Internees Analysis

Current Ratio of MCB for the last three years shows an increasing
trend. In the year 2010 it was 1.12 and then it increased to 1.130 in the
year 2011 mainly due to an increase in current assets of the bank. But
in the year 2012 it just increased from 1.130 to 1.134. .This rise in the
current ratio of MCB shows the defensive approach of MCB towards
working capital. This surely improves profitability as the percentage of
current assets.

4.2.3 Debt To Equity Ratio

Total Debt

Shareholder Equity

The Ratio shows extend to which the firm is financed by debt.

Table no. 4.3 (Rs in Millions)

2010 2011 2012

Total debt 488349 564431 664148

Shareholder equity 79204 88802 101751

Debt Ratio 6.16 6.35 6.52

Debt to Equity Ratio for .2010, 2011, 2012

Source: Internees Analysis


MCBs High ward trend of Debt to Equity ratio shows that the bank is
relying in debt financing for the purpose of expansion of businesses
and investments. The ratio of 2012 as compared to 2010 has increased.

4.2.4 Interest Earned Ratio:

Earnings before interest & Taxes

Interest Expense

This ratio shows that number of time a company can cover or meet its
financial charges or obligation.

Table no. 4.4 (Rs in Millions)

2010 2011 2012

EBIT 26254 31,483.179 32,053.744

Interest expense 17988 23,620.274 27,500.019

Interest earned ratio 1.45 1.33 1.16

Coverage Ratios for 2010, 2011, 2012

Source: Internees Analysis

The interest coverage ratio of MCB serves as one measure of the firms
ability to meet interest payments and thus avoid bankruptcy. In general
the higher the ratio, the greater the likelihood that the company cover
its interest payment without difficulty. The interest coverage ratio of
MCB has shown a decrease over the period of three years. In the year
2012, the ratio is 1.16 which show that the income in 2012 cover only
1.16 times the interest expense.

4.2.5 Net Profit Margin Ratio

Net Profit after Taxes X 100

Net sale

It is measure of the firm profitability of sale after taking account of all

expense and income taxes.

Table no. 4.5 (Rs in Millions)

2010 2011 2012

Net profit after tax 16873 19425 20941

Sales 467613 544231 641652

Net profit margin 3.60% 3.56% 3.26%

Net Profit Margin for .2010, 2011, 2012

Source: Internees Analysis


Net profit margin of MCB has shown a fluctuating trend in the year
2010 it was 3.60% but in the year 2011 it was decreased to 3.56% and
again slightly dropped to 3.26% in the year 2012. This means that
through the selling price has increased the other expenses of the bank
like operating, general administration or selling expenses has shown a
slight decrease.

4.2.6 Debt to Total Asset Ratio

Total Debt

Total Assets

Debt ratio shows the fraction of the companys assets that is financed
by debt. The ratio is derived by dividing a firms total debt by its total

Table no. 4.6 (Rs in Millions)

2010 2011 2012

Total debt 488349 564431 664148

Total assets 567553 653233 765899

Debt Ratio 0.860 0.864 0.867

Debt to total Asset Ratio for the year2010, 2011, 2012.

Source: Internees Analysis


This ratio highlights the relative importance of debt financing to the

firm by showing the percentage of the firms assets that is supported by
debt financing. Here in our case of MCB this ratio is decreasing from
last three years, the higher the debt-to-total assets ratio greater the
financial risk, the lower this ratio the lower the financial risk. So we
can interpret that MCB is taking continuous steps to lower its debt
financing and thus lower its risks.

4.2.7 Return On Equity Ratio

Net Profit X 100

Total Equity

This ratio shows that residual profit as a proportion of the bank

value of common shareholder equity.

Table no. 4.7 (Rs in Millions)

2010 2011 2012

Net profit after tax 16873 19425 20941

Shareholder equity 79204 88802 101751

ROE 21.30% 21.90% 20.60%

Return On Equity for 2010, 2011, 2012

Source: Internees Analysis


The ROE of MCB has shown a mix trend. In the year 2010 the ROI is
21.30% but increased in the year 2011 to 21.90% but in 2012 it comes
to 20.60%. This decrease in ROE is due to un improvement in Net
Profit Margin.

SWOT is an acronym for organization, strengths, weaknesses,
opportunities and threats. SWOT analysis consists of sizing up a firms
internal strengths and weaknesses and its external opportunities and
threats .It is a tool to get a quick overview of firms strategic situation.

Kotler 2001

Following are the SWOT analysis of MCB of Pakistan.

4.3.1 Strengths
i. MCB bank has the ability to cope with pressure of competition
ii. MCB RTCs (Rupee Traveler Cheques) are widely accepted
iii. Maximum rate of Debt Recovery.
iv. Maximum use of latest technology in banking that is
v. Having the strongest Equity Base.
vi. MCB has the most developed (Information Technology) IT
Division among the other banks in the country.

vii. It adopted latest technology like online banking system and

SWIFT technology.

viii. Asset turnover Ratio is also increasing that shows that MCB is
utilizing its resources effectively

ix. Current ratio of MCB is increasing from the previous 3 years

4.3.2 Weaknesses
i. Employees are lacking motivation.
ii. The borrowings has shown a tremendous increase from
Rs.25685 Million to Rs.78951 Million in just 3 years which is
not a good sign. Shows its relying on borrowings.
iii. Communication gap between different levels of management.

iv. Debt to Equity Ratio is increasing

v. Lack of the branches in marketable areas..

vi. MCB bank advances decrease bank of its high interest rate

vii. MCB bank deposit decrease because of inflation.

4.3.3 Opportunities
i. By giving them attractive schemes. The bank can easily make a
remarkable growth in the Mobile banking industry and also
Remittance share it can increase which can increase its fee-
based income as trend is shifting towards that.
ii. The bank can also take advantage of the potential hydal power
of the province Now that the government has decided to build
small dams in the province the bank can invest in this field .It
will not only boost the agriculture sector in the country, but
also provide a great source of electricity which is the basic
requirement for development.
iii. As a result of the different steps taken by the Government
regarding the betterment of the economy, small borrowers are
attracted to get the financing and start small businesses. So
MCB has an opportunity to attract the customers

4.3.4 Threats
i. Global technological advancement.
ii. Weak Political and economic situation of the country.
iii. Reduction in the business activities in the country because of
electricity shortage and terrorism.
iv. Reduction the rate of saving in different segments of people
this is because of inflation in the country. People prefer to hold
property and gold in place of saving in the bank
v. The political interference in the bank regarding the decision of
loan and advances, promotion and appointment is a great threat
for the bank in its long-term existence.

4.4 PEST Analysis

4.4.1 Political
i. Employment practices are expected to change.

ii. Unions, Associations are being allowed to work effectively

which can affect the performance of the company both
positively or negatively.

iii. Political interference regarding policies is expected to increase

as current government is in race of power gain.

iv. Due to lack of confidence on government investor is reluctant

so mobilization of funds is going to decrease.

4.4.2 Economical
i. Inflation is very high which will decrease the demand as
purchasing power is decreasing.

ii. Staff cost is increasing as basic wage rate has increased and
inflation has compelled to will compel to increase salaries.

iii. Operating costs are increasing due to inflation.

iv. Interest rate is increasing so loan taking has decreased.

v. Value of rupee is decreasing which is pressurizing the economy.

4.4.3 Social and Cultural

i. Lack of experts is in our country regarding management hence
innovative activities are slow and conventional methods are

ii. Cultural strain to savings is the reason due to which investment

remains low.

iii. Declining work ethics is also our problem which is mainly due
to poverty, lack of training.

iv. Inadequate Accountability, lack of good governance and lack of

good infrastructure helps creditor to cheat and heavy bad debts
occur. Same situation is hoped to prevail.

v. Inadequate Empowerment is also a usual problem in our

organization as every person want to get more power hence
there is less delegation of authority and decision making.

4.4.4 Technical
i. Shortage of electricity is a big problem,
ii. Employees of each organization need IT training and
organization has this trend. MCB Bank will have to follow it.

Summary of the Chapter
A s we know that financial analysis is the backbone of any finance
students internship report so in this chapter I have done the financial
analysis of MCB bank through different financial ratios just like the
current ratio, debt to equity ratio ,asset turnover ratio, net profit margin
ratio, gross profit margin ratio etc. so that to analyze the financial
position of MCB bank and to judge their financial performance. This
chapter further elaborates about the SWOT analysis of MCB bank and
after this the PEST analysis of MCB bank is discussed on this chapter
.In the next chapter the finding of this chapter are discussed and
according to the finding I have given the concern recommendations.



Introduction to chapter
In the previous chapter analysis of MCB bank are done through
different methods .this chapter consists of the findings through the
different types of analysis based and then according to these findings I
have given the concerned recommendations.

From the quantum of the profit and its financial data it can easily judge
the after privatization Muslim Commercial Bank is performing well.
Its deposits are growing day-by-day and so its profitability. The
controlling body is responsible for the productive performance of the
bank. Following is my observations and suggestion to improve the
efficiency for the development of the bank

5.1 Findings
First of all I will discuss some of the financial findings that I have find
from the financial analysis.

Asset turnover ratio has been increased from 2010 to 2012 i.e.
from 0.82 to 0.87, this shows that MCB bank is effectively
utilizing its resources.

Current ratio of MCB increase from 2010 to 2012 i.e. from 1.12
to 1.34,this rise shows the defensive approach of MCB towards
working capital.

High trend of debt to equity shows that the firm is relying on

debt for financing and for expansion for business operations.

The decreasing trend of interest earned ratio shows that MCB
Bank has low operating income to pay for its interest which
shows insufficiency.

Net profit margin of MCB Bank shows a decreasing trend from

2010 to 2012 i.e. from 3.60% to 3.26% which means that MCB
Bank net profit /dollar is decreased.

Debt to total asset ratio of MCB Bank shows a decreasing

trend, if this ratio is high financial risk will be high, so MCB
Bank is taking steps to lower its financial risks.

Besides the financial findings there are also some general findings
from the SWOT and PEST analysis of MCB bank which are:

MCB bank lakes employee motivation, employees are not

properly motivated, so thats why their efficiencies are effected.

Communication gap between different levels of management

,mean that there is no common communication channel through
which the low level employees convey message to upper level
management and vice versa

MCB Bank has shown a remarkable growth in mobile banking

from the time of launch 2007 to 2012.At the year end of 2007
there were only 57 thousand customers but in 2012 it increased
to 253 thousands customers showing an increase of 15 percent

There in MCB Bank by asking the Branch Manager about the

job rotation he told me that now there is a proper job rotation
and an employee has to change his job place and duties after 3
year. The rules and regulations have been changed and the
employees has not to remain on the same post for more than 3

There were all latest computers in the branch. The advance
computers were increasing the efficiency of the branch and
members because all the works were completed in proper time
with no delay.

As the employee finishes his training he is induced in a

specified field since he does not have knowledge about the
specific job assigned to him thus he feel difficulty to perform
his job. There is no special training given to the employees for
motivating customers.

In the bank the officers come across many customers daily.

Customers are the backbone of every bank and a pool for
deposits because banks run on deposits and through that they
make advances. So there is a direct relationship between
customer satisfaction and deposits. Customer services and
relationship of Branch members with them was satisfactory and
MCB bank ltd is giving much focus on that.

Political unions are found in MCB Bank, which is I think a

barrier to the effectiveness of the work.

5.2 Recommendations:
5.2.1 Increase Deposits and decrease Borrowings
If we look at the balance sheet of the financial years 2010 to 2012,the
increase in deposits are relatively low to increase in the borrowings.
MCB bank should develop strategy, employee policies and emphasize
to increase the deposits reserves that will enable to reduce borrowings
because its not a sign of healthy speculations

5.2.2 MCB Islamic Banking and Agri loans

Growing concerns about interest and realization of people that interest
cannot be made base of a healthy economy MCB Islamic Banking
needs a research, which should be engaged in evaluating and
interpreting the ways in which the bank can flourish more and more
.MCB should also focus on Agri loans because Pakistan is an
agricultural country and their lies an opportunity for MCB to make a
share to this market despite of a strong competitor ZTBL.It can cope
with this problem through its wide spread network of branches.

5.2.3 Shift from Interest based income to Fee-based Income

MCB has basically Lending Branches and pooling branches. The

Lending branches mainly has to deal with the borrowers as it makes
advances and pooling branches are related to the deposits. In short they
operate on the interest based income. But now the state bank of
Pakistan has decreased the pool rate to 9% that is not enough to cover
the expenses of employees and banks thus the bank should now focus
on the Fee-based Income i.e. online Cheque book issuances, ATMs etc.

5.2.4 On-Line Banking

MCB should start online banking throughout the country as they are
the pioneers in it, still they do not have all the branches online. They
should try to improve this area and to diminish the entire book keeping

methods. Online banking is impossible without the modern IT
technology. Also, in a branch having one computer, there is a lot of
work to do with it, needs more and modern computers to handle the
situations, along with the trained staff. MCB Bank is moving towards
that and is using new and advanced software but still it has to make
abrupt changes.

5.2.5 Bottom-top Communication

The down ward communication is important but the upward
communication is very important. The downward communication is
efficient and strong but there is a lack of upward communication. The
Management style is dictatorship as I observed by discussion of any
problem or issue with the officers was treated as disrespect by higher it should be improved.

Flow of information, decisions and other instructions and policies in

efficient and effective manner will enhance the overall productivity
and image of the organization.

5.2.6 Sound Management of Return on Equity

A strong ROE is a solid signal that management is doing a good job of
generating returns for shareholders' investments. This value also
slightly decreased in last three years. MCB Bank should invest in those
projects which create maximum return in order to diversify risk. This is
done by engaging both in markup and non-markup interest bearing
activities. MCB Bank should introduce new products for maximizing
return on equity. The bank should decrease their non-markup expense.

5.2.7 Emphasize on Non-markup Income

The bank should increase its non-interest income like fees, commission
or investment in foreign currencies. This is now a trend that bank is not
only to accept deposit and advance loan but also provide other

specialize services so MCB Bank can get maximum benefit from it in
order to increase net profit margin.

5.2.8 Primary Focus on Return on Asset

As from finding this value decrease gradually because of decrease in
net profit margin so MCB Bank should focus on those area where
maximum profit can be generated. The MCB Bank should increase its
investment and advances.

5.2.9 Focus on Islamic Banking

Growing concerns about interest and realization of people that interest
cannot be made base of a healthy economy. Islamic banking is an
emerging market with growth rate of about 10% so MCB Bank can get
maximum benefit from it. MCB Bank Islamic Banking needs a
research, which should be engaged in evaluating and interpreting the
ways in which the bank can flourish more and more.

Summary of the chapter

This chapter consists of the financial findings and then the SWOT and
PEST analysis findings and then I have given the concern
recommendations according to the findings just like MCB Bank online
Banking, MCB Bank has to decrease its borrowings etc.


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Annexure 1:
Organization Hierarchy of MCB Bank

Source: MCB Bank Ltd (2012)

Annexure 2:
Income Statement of MCB
For the period ended 2010, 2011, and 2012
(Rs in million) 2010 2011 2012
54821 68,147 68,356
Mark-up/return/interest earned
Mark-up/return/interest expensed 17988 23,620 27,500
Net mark-up/ interest income 36833 44,526 40,856
Provision for diminution in the 444 778.526 (23.4)
value of invest
Provision against loan and 3101 2,846.52 481
Bad debts written off directly 52 28.565 21
Total Provision 3597 3,654 478
Net mark-up/interest income after 33236 40,873 40,378
Non-mark-up / interest income:
Fee, commission & brokerage 4130 5,117.2 5,934.5
Dividend income 544 1,003.272 1,197.7
Income from dealing in foreign 632.3 921.262 822.9
Gain on sale of securities-net 411.8 735.639 824.6
Other income-net 547.7 334.8 373.89
Total non-mark-up/interest 6285 8,112 9,153
Non-mark-up / interest expenses
Administrative expenses 12174 15,585 17,065
(reversal) other provision-net 88.26 514.65 (187.31)
Other charges 966.440 1,402.38 599.974
Total non-markup / interest 13249 17,502 17,478
Profit before taxation 26253 31,483 32,054
Taxation-current year 8027 9,724 9,601
Taxation-prior years - 1,038 117
Taxation-deferred 1352 1,296 1,396
Subtotal Tax 9380 12,058 11,113
Profit after taxation 16,874 19,425 20,941

Source: MCB Bank Ltd (2012

Annexure 3:

Balance Sheet Of MCB

2010 2011 2012

Assets (Rs in million)
Cash and balance with treasury 45407 53123 57420
Balance with other Banks 1479 2281 1192
Lending to institutions 4402 955 1551
Investment 213061 316652 402069
Advances 254552 227580 239583
Other Assets-net 27706 30635 40345
Total current Assets 546607 631226 742161
Operating fixed assets 20948 22008 23738
Total Assets 567555 653234 765899
Bills payable 10266 9467 9896
Borrowings 25685 39101 78951
Deposits and other accounts 431372 491189 545061
Sub-ordinate loan - - -
Other liabilities 16092 18380 21098
Total current liabilities 483415 558136 655006
Deferred tax liabilities-net 4934 6295 9142
Total liabilities 488349 564431 664148
Share capital 7602 8362 9199
Reserves 40163 42186 44253
Inappropriate profit 21416 28366 34705
Total 69181 78916 88157
Surplus on revaluation of assets 10023 9887 13594
Total 79204 88803 101751
Total Liabilities 567553 653233 765899
& Owner Equity

Source: MCB Bank Ltd (2012)

Annexure 4:
Pattern of Share Holdings

Description Shareholding Percentage

Directors, CEO & Children 98,928,007 10.7547
Associated Companies 197,310,846 21.4501
NIT & ICP 486,497 0.0529
Banks, DFI & NBFI 3,175,647 0.3452
Insurance Companies 60,756,081 6.6049
Modarabas & Mutual Funds 1,153,092 0.1254
Public Sector COS. & CORP. 27,079,155 2.9438
General Public (Local) 135,480,447 14.7284
General Public (Foreign) 2,541,784 0.2763
Foreign Companies 333,904,991 36.2995
Others 59,043,576 6.4188
Company Total 919,860,123 100.0000

Source: MCB Bank Ltd (2012)

Annexure 5:


0.88 0.87
0.87 0.862
2010 2011 2012

Source: Internees Analysis

Annexure :6




2010 2011 2012

Source: Internees Analysis

Annexure 7:


6.4 6.35
2010 2011 2012

Source: Internees Analysis

Annexure 8:


1.6 1.45 1.33
1.4 1.16
2010 2011 2012

Source: Internees Analysis

Annexure 9:


3.60% 3.56%


RATIO 3.30%



2010 2011 2012

Source: Internees Analysis

Annexure 10:


0.868 0.867

RATIO 0.862
2010 2011 2012

Source: Internees Analysis

Annexure 11:


21.00% 20.60%


2010 2011 2012

Source: Internees Analysis

Branch Network Of MCB Bank Limited

Annexure 12:

Principal Office

Area Office Area Office Overseas Branches

North South

Sindh Baluchista
Punjab NWFP

5 Circles 1 Circle

2 Circles
10 Circles

7 Regions 2 Regions
Regions 12 Regions

710 Branches 262
Branches Branches 38 Branches

Source: MCB Bank, (2012)