ABSTRACT

The history of interest-free banking can be divided into two parts. First, when it still
remained an idea; second, when it became a reality.

The literature of the period begins with evaluations and ends with attempts at finding
ways and means of correcting and overcoming the problems encountered by the
existing banks. During the last few decades interest-free banking attracted more
attention, partly because of the political interest it created in Pakistan and partly
because of the emergence of young Muslim economists.Meezan bank is the first
Islamic bank and is therefore recognized as one of the pioneer banks that promotes
Riba-free (interest free) banking activities all over the country.

The bank has developed an extraordinary research and development capability by

combining investment bankers, commercial bankers, Shariah scholars and legal
experts to develop innovative, viable, and competitive value propositions that not only
meet the requirements of todays complex financial world, but do so with the world-
class service excellence which customers demand, all within the bounds of Sharia.

Table of Contents

2
Acknowledgement.6

Executive Summary..7

Introduction.8

Shariah Board..9

Introduction to Meezan Bank.10

Vision & mission12

Staff (Gulgashat Branch Multan)..13

Organizational structure..14

Islamic banking15

Islamic mode of finance By Meezan bank..16

Accounts offered by Meezan Bank18

Three main departments of the branch.23

Personal banking department..25

Clearing.21
Remittance26

Cash Department.31

Investment certificate issued by meezan bank..32

Products by meezan bank ..33

Services by meezab bank .38

Financial services by meezan bank39

SWOT Analysis47

Conclusion52

3
 ACKNOWLEDGEMENT

I am thankful to ALLAH, Who has given the ability to show my skills. I am

thankful to the management and the staff of MEEZAN BANK Ltd, who provided
me valuable information during my internship and given me chance to take a step
towards the practical life. Moreover, I am thankful to commerce department who
provided me an opportunity to excel my skills. Special Thanks to Mr.Waqas Ahmad
Nizami (Area Manager), Mr. Behzad Karim Khan (Branch Manager) Mr.
Shafique Hussain (Operation Manager) for their unconditional support and help in
making me learn in a good environment, who also provided me valuable information
regarding my first fieldwork of management.

The last but not least, I would feel incomplete without thanking to my parents who
pray for my brilliant success and bright future.

THANK YOU ALL

4
 EXECUTIVE SUMMARY

In the first I have discussed about the introduction of the Meezan Bank,

Basic Functions of Meezan Bank and vision & mission of Meezan Bank Ltd. Then I

introduced Meezan Bank (Gulgashat Branch Multan). I have also mentioned the

Islamic modes of financing, products, packages, which the Meezan Bank Ltd. offers

to its customers and then I have given a brief overview of different accounts opened

and Investment Certificates issued by Meezan Bank Ltd and cheque clearing and

remittance, stop payment, financial services and ATM functions. And in the last I have

shown the conclusion of this report regarding my internship.

And in last I also mentioned some important references and web sights from

where I get the help during preparation of my report of internship.

5
 INTRODUCTION

Meezan Bank is publicly listed company, first incorporated on January 27, 1997. It
started operations as an Islamic investment bank in August of the same year, which
has been licensed by the State Bank of Pakistan to operate as an Islamic
Commercial bank on 31st January 2002.

State Bank of Pakistan granted the Nations first full-fleged commercial banking
license of Islamic Banking to Meezan bank Ltd. It was a new era in banking Sector
history in Pakistan that Meezan Bank Ltd adheres strictly to the principles of Islamic
Shariah with absolutely no compromise, and is recognized as Pakistans truly premier
Islamic Bank.

Meezan Bank is operating approximately more than 400+ branches in 100 plus
different cities. In addition, the State Bank of Pakistan itself governs the activities
of Meezan Bank and its Shareholders.

Meezan bank Ltd has a strong Balance sheet with excellent operating profitability,
including a capital adequacy ratio that has placed the Bank at the top of industry.

6
 INTRODUCTION TO MEEZAN BANK LTD

Meezan Bank

To be a premier Islamic bank offering a one-stop shop for innovative value-

added product and services to our customers within the bounds of Shariah, while
optimizing the stake holders value through an organizational culture based on
learning, fairness, respect for individual enterprises and performances .

1997:

Al Meezan Investment Bank is established with a mandate to pursue Islamic Banking.

Mr. Irfan Siddiqui appointed as first and founding Chief Executive Officer.

1999:

The Shariat Appellate Bench of supreme court of Pakistan reject the appeal and direct
all laws on interest banking to cease but the Government set in a high level
commission, task and committees to institute and promotes Islamic banking .

2001:

Muhammad Taqi Usmani as a chairmen established the shariah supervisory Board at

Al Meezan Investment Bank. State Bank of Pakistan set a criteria of Islamic
commercial bank in private sector and subsidiaries and stand alone branches by
existing commercial banks to conduct Islamic banking in the country.

2002:

7
Al Meezan convert itself in to a full fledge Islamic commercial bank. The first Islamic
banking license is issued to the bank and is renamed Meezan Bank. President general
Pervaz Musharraf.

2003-----2009:

Meezan Bank established itself a pioneer of Islamic Banking in Pakistan and

wide range of products are developed.
The state Bank establishes a dedicated Islamic banking development by
merging the Islamic economic division.
Meezan bank becomes the first customer of Islamic issuance by signing the
first memorandum of understanding MOU with Pak Kuwait Takafalcompany
ltd.
Meezan banks become the first Islamic bank to introduce 8am to 8pm banking
at selected branches in Karachi.
Meezan banks open up its 166 branches in 40 cities across Pakistan. Works
start on the construction of Meezan Banks new Head Office building

2010:

Meezan Bank and Indus Motors launch Toyota Cars Financing

Meezan Bank launches "Meezan Business Plus", a Mudarabah based Business
Account
Meezan Bank distributes gift bags to Hajjis
Meezan Bank establishes 150 ATMs across Pakistan!

2011:

This is the second consecutive year in which Meezan Bank has been awarded Best
Islamic Bank in Pakistan and Best Trade Finance Bank in Pakistan by Asset Triple A.
These awards highlight Meezan Banks continuous growth and successful year of
2011 in which Meezan Bank announced a growth of 106 % in its Profit-after-

8
tax (Dec-2011), a deposit figure of over Rs. 170 billion and held the 9th largest bank
branch network in Pakistan.

2012:

In May 2012, Meezan Bank - the premier Islamic Bank, completed 10 years of
Islamic Banking in Pakistan. The Bank has been consistently recognized as the Best
Islamic Bank in Pakistan by various local and international institutions over the past
several years:

2014:

Alhamdulillah continuously increasing branch network

Shariah Board

Meezan Bank has a very high-caliber Shariah Supervisory Board, comprises of

internationally renowned Islamic Scholars. The Shariah Supervisory Board
regularly reviews the banks activities and approves all new products. The bank also
has a resident Shariah advisor. Dr. Muhammad Imran Usmani, who monitors day-to-
day transactions of the bank. The Shariah Board comprises of the following members:

Justice (Retd.) Muhammad Taqi Usmani (Pakistan)-Chairman.

Dr. Abdul Sattar Abu Ghuddah (Saudi Arabia).

Sheikh Essam M. Ishaq (Bahrain).

Dr. Muhammad Imran Ashraf Usmani (Pakistan).

9
VISION AND MISSION STATEMENT

Our Vision

Establish Islamic banking as banking of first choice to facilitate the

implementation of an equitable economic system, providing a
strong foundation for establishing a fair and just society for
mankind.

Our Mission

To be a premier Islamic bank, offering a one-stop shop f or

innovative
value-added products and services to our customers within the

10
bounds of Shariah, while optimizing the stakeholders value through an organizational
culture based on learning, fairness, respect for individual enterprise and performance.

STAFF

(MEEZAN BANK LTD GULGASHAT BRANCH MULTAN)

Names Designations

Behzad Karim Khan Branch Manager

Shafique Hussain Operation Manager

Nadeem Ansari Cash Deposit Incharge

Muhammad Naveed Clearing & Remittance

Abdul Ghafoor Operation Officer

Waqas Hussain Personal Banking Officer

Saadat Hussain Officer

11
 Ahsan Usman Officer

Shahbaz Khan Quality Controller

Bahadur Ali Development Officer

Usman Mahmood Development Officer

Umair Abdullah Rider

Dildar Tea Boy

ORGANIZATIONAL STRUCTURE

As I already introduced Meezan bank Ltd (Main Branch Multan). So, this Branch is
comprises of a Branch Manager, who reports to the Area Manager about the work &
performance of the branch employees. A separate area has been set aside for
operations which are monitor by an Operation Manager, who reports to Branch
Manager about daily cash transactions, clearance, remittances & accounts opening.
There are also PBO (Personal Banking Officer) and BDOs (Business Development
Officers), who are directly related to Branch Manager and reports him about customer
relationship & services provided to them, and about deposits targets of concerned
bank.

Branch
Manager

Operation

Manager

Personal Liability
Chief Cash Accounts Banking Sales
Cash Deposit Opening
Officer
Officer Officer Officer

12
 BDOs

Cash Sorter
Officer

Clearing Remittance
Officer Officer

Islamic Banking

The interest free system envisages the gainful use of ones saving with other on the
basis of profit and loss sharing in a defined manner. Effective from Jan 01, 1981, the
Nationalized commercial banks and now all other commercial banks in Pakistan have
introduced the profit and loss sharing (PLS) Deposit Scheme features of which as
under .

PLS- Saving Accounts

PLS Term Deposit Accounts
Investment Of PLS Deposits

RIBA

The word Riba means excess, increase or addition, which correctly interpreted
according to Shariah terminology, implies any excess compensation without due
consideration .

(This definition of Riba is derived from Quran and is unanimously accepted by all
Islamic scholars)

.Islamic Mode of Finance

13
 1 ) Musharkah

It means a relationship established under a contract by the mutual consent of the

parties for sharing of profits & losses in the joint business. It is an agreement under
which the Islamic Bank provide the funds which are mixed with the funds of the
business enterprise & others. The profit is distributed among the partners in pre-
agreed ratios, while the loss is borne by each partner strictly in proportion to
respective capital contributions.

2) Mudarabah

Where one party provides the funds while the other provides expertise and
management. The latter is referred to as the Mudarib. Any profits accrued are shared
between the two parties on a pre-agreed basis, while loss is borne only by the provider
of the capital.

3) Murabaha

It means a sale on mutually agreed profit. It is a contract of sale in which the seller
declares his cost & profit. Islamic Banks have adopted this as a mode of financing. As
a financing technique, it involves a request by the client to the bank to purchase
certain goods for him.

4) Ijarah

Ijarah or leasing is the transfer of usufruct for a consideration which is rent in case of
hiring of assets or things and wages in case of hiring of persons.

5) Musawamah

14
 It is a general & regular kind of sale in which price of the commodity to be traded is
bargained between seller and the buyer without any reference to the price paid or cost
incurred by the former. It can be used where the seller is not in a position to ascertain
precisely the cost of commodities that he is offering to sell.

6) Istisna

It is a contractual agreement for manufacturing goods & commodities.Istisnaa can be

used for providing the facility of financing the manufacture or construction of
houses,plants,projects and buildings of bridges, roads and highways.

Accounts Offered by Meezan Bank Ltd on

Mudarabah basis

The Bank is the Manager (Mudarib) of the funds deposited by the customers. The
Customer is an Investor (Rab-ul-Mal), and the bank allocates the funds received from
the customers to a deposit pool.

These funds from the pool are utilized to provide financing to customers under
Islamic modes that include, but are not restricted to, Murabaha and Ijarah.

Profit Distribution Structure:

Source Investment Pool Investment/Financing

Murabah
Ijarah
Depositors Funds
Diminishing Musharakah

15
 Bank

Profits Profits

The Gross Income will be shared between the bank (as Mudarib) and Depositors
(Rab-ul-Mal) in a predetermined ratio (%) of the actual profit earned.

MEEZAN BANK LTD offers different types of Accounts on

Mudarabah Basis. These are as under:

1) Current Accounts

Currents Accounts are the business accounts offered to all types of business owners.
The bank doesnt earn any type of profit from these accounts but these are opened
only due to the facilitation of the customers. Current accounts can be opened jointly,
singly, company etc. Free online services from all branches. No restrictions on
number of transactions of withdrawals.

2) Saving Accounts

Saving accounts are opened due to the saving of money. The bank also provides profit
to the customers. That profit is calculated & paid on monthly basis. If during the
month average deposits falls below 1000/-, then no profit no Loss.

3) KMA (Karobari Munafa Accounts)

KMA accounts are offered specially to those customers who have valuable business
and earn 1 million each month. So, the bank facilitates them with free cheques book,
free ATM card, free Telephone Banking and free Internet Banking. The minimum

16
investment for this account is 1 million. And the bank provides them profit at different
rates.

4) MBA (Meezan Bachat Accounts)

This account required minimum investment of 25000. This account is opened for all
customers, who can operate it easily. In these accounts bank also provides profits to
the customers. These accounts also provide facility of withdraw of cash any time.

5) US Dollar Saving Accounts

These accounts are opened for those customers who are residents of Pakistan but
earning outside of the country anywhere so he deposits his amount in dollar or other
currency and our bank provides him more profit as compared to the local investors &
on monthly basis. The minimum investment for this account is $500.

These all current and saving accounts can be opened in any category of the
following types of accounts;

Individual Accounts
Joint Accounts

Minor Account

Sole Proprietorship Accounts

Illiterate Customer Account

Partnership Accounts

Staff Accounts.

1. Individual Accounts

Accounts of Individuals, who are resident or non-resident, are to be opened under

this category.

17
 2. Joint Accounts

Joint Account is an account in the names of two or more persons (other than Partners
or Trustees). In case of death, cheques signed by DECEASED Account Holder
presented for payment will not be entertained and therefore must be returned. When
the balance of Joint Account is repayable to either party or survivor, the Specimen
Signature Card should be marked to effect the arrangement.

3. Minor Account

A person who has not attained the age of 18 years is minor. However, incase Court
has appointed a Guardian for the property of a Minor, and then the period of his / her
maturity extends to the age of 21.

4. Sole Proprietorship Accounts

A formally stamped written request on the official Letter Head of the Business / Firm
of the Sole Proprietor in order to open a Sole Proprietor Account must be submitted
along with AOF (Accounts Opening Form).

Additional care must be taken while opening of sole proprietor account. Beside other
documents the customer should be ask to produce the original NTN (National Tax
Number) certificate issued to his name in the capacity as sole proprietor of said firm.

5. Illiterate Customer Accounts

These types of accounts are opened only for those persons who are illiterate. This
account is also known as PHOTO ACCOUNT, that during opening this account we
paste the current passport size photographs with AOF (Accounts Opening Form).

6. Partnership Accounts

18
Partnership is an association of two or more persons who have agreed to share profits
of a business carried on by all or by any one of them acting for all. The terms and
conditions must be spelled out in the Partnership Deed formally agreed upon among
Partners by incorporating the same in the Deed. The signing and delegation of powers
of those authorized to operate the account should be clearly stated on the AOF
documentation in accordance with Partnership Deed.

7. Staff Accounts

Staffs can open only one saving or current account singly or jointly with his / her
spouse at the time of appointment in the respective branch of Meezan Bank Limited.
The account will be opened for the purpose of salary disbursement (like salary, bonus,
increments, allowance or any form of reimbursement from Meezan Bank Limited
against services rendered by employee).

WEEKLY WORK

There are 3 main departments at the branch:

1. Personal Banking Department

2. Clearing & Remittances Department
3. Cash Department

1st and 2nd Week

PERSONAL BANKING DEPARTMENT

Account opening and closing is the function of customer services department. The
banks customers includes individuals (single or joint), firm
(partnership/proprietorship), Autonomous corporations, Limited companies,
Charitable Institutions, associations, Educational Institutions or local bodies

19
Basic for Account Opening

Account opening is the basic and first relationship, which is established between Bank
and the customer. In account opening extreme care has to be exercised in case of
completion of account opening documentation.

Whenever a client comes in the bank in order to open an account the first information
that is given to him/her about the types of accounts, which can be opened, so far this
purpose the client is given detailed information about the accounts and their
respective profit rates.

Documentation of Opening an Account.

1. Individual accounts:

Copy of CNIC.

Any proof of Income (salary slip/ NTN).

Any Utility Bill (for Address Verification).

2. Proprietorship Account:

Copy of CNIC.

Proof of proprietorship (NTN Certificate).

Account Opening Request & Proprietorship letter on Firms Letter Head.

Any Utility Bill (for Address Verification).

3. Minor Account:

Copy of CNIC of Guardian.

Copy of Birth Certificate.
CNIC copy of Guardian.

20
4. Partnership Accounts:

Registered Partnership Deed (Certified Copy).

Letter of Authority & Mandate.
Copies of CNICs of all partners.
Account opening Request Letter on firms Letter Head.

5. Limited Company:

Copy of Certificate of Incorporation.

List of Directors.
Memorandum & Articles of Association.
Board Resolution.
Certificate of Commencement of Business (for Public Ltd. Co.).
Copies of CNICs of all Directors/Signatories.
Latest copy of certified Form-29

6 . Joint Accounts:

National Identity card of all Applicants.

Signature of all Applicants.

Zakat Affidavit of all Applicants (Zakat Examption).

Operation of account clearly mentioned.

The options available to operate the account are:

Jointly

Either or Survivor

21
 Other(s)(Please specify)

.NOTE:

These all documents are required original, bank itself get the photocopy of these
documents.

Housewives/Students/Retired Personal: Documents as requested by branch.

Procedures For Account Opening

There are four steps which consist on it. These are

1) CIF
2) KYC
3) Accounts
4) CDD

First of all, after inquiring from the customer what type of account he/she wants to
open, the account opening form is got filled from the customer and signed it. Along
with the account opening form, the customer is also signed two Specimen Signatures
Cards. After fulfilling all the formalities of account opening, the computer generated
account number is given to the customer that is of special series depending on the
type of account.

Requisition Slip

A requisition slip is given to the customer to sign it so that the customer can get
cheque book. Chequebook is issued after one day of receiving the requisition slip.

Letter of Thanks

After opening the account A Letter Of Thanks is send to the customer in order to
thank the customer for opening an account in the Bank. This letter tells all the
information regarding his/her accounts, which are kept very confidential.

22
Account Opening Register

After an account is opened, an entry is made in the account opening register, which
has the following columns:

Date
Account Number
Name & Address
Telephone Number
Initial Deposit

Customer Services/Relation Officer enters the new account opened in computer and
the Specimen signature Cards are also scanned so that whenever a cheque of the
respective account comes for encashment, the signatures can be verified.

3rd and 4th Week

OPERATIONS DEPARTMENT

Functions Performed

Clearing
Remittance

Clearing & Remittance

It was performed as following

23
 1) Intercity:

Intercity function are performed by NIFT & state bank of Pakistan

Intercity Lodgment Process

Letter
Stamping(clearing,intercity,payee A\C credit

Bundle cover with packing envelope

System entry

When cheque is clear it is realized in system and adjustment entries are done in
system.

Charges

Lodgment Charges 150

FED 24

Total 174

2) OBC

Where NIFT & SBP is not OBC is performed functions.

All about lodgment process is same but when OBC is realized then dd\Po is received
which is lodged in local clearing.

OBC Charges

Lodgment Charge 150

Courier Charges 100
FED 40

24
Total 290

CLEARING

In clearing process, if the account holder of MBL receives the cheque of other bank
like City Bank, Habib Bank Limited etc, and he submits it in MBL branch to be
cashed. At the same time the clearing process starts. First the bank name, Cheque
number and the amount are written in the register. After this three kind of stamps are
required first bank name stamp, secondly clearing stamp of next date and If the
cheque is not local then the inter city clearing stamp is required.

Some cheques are local and some are outstation. The institution N.I.F.T. provides the
services in clearing the cheque. They send the different cheque to different banks..
The cheque of inter city is send through N.I.F.T. And where, the N.I.F.T service is not
available so the cheque is sent through T.C.S. The clearance of cheque is informed
through advice. Some cheque is not passed so they should return so Rs. 100 is
deducted and if the cheque is inter city then the postage charges is deducted.

Inward Clearing

In the morning, the bank receives its own cheques, which have been presented by the
customers in some other bank to be deposited in their account. NIFT provides the
facility of bringing cheques for inward and also takes the cheques of outward clearing
to other banks. The cheques received in inward clearing are the cheques drawn on
bank and the bank has to pay for them. For this purpose the bank makes clearing in
computer by checking the balances of the respective customer, if their balances are up
to the mark then that cheque is cleared and the respective customer account is debited
with the respective amount. If the balances are short then that cheque is bounced back
to the related bank.

Reasons for returning a cheque

All required stamps of Clearing, Crossing and Endorsement are not present on
cheques.
Cheque is post date.

25
 Refer to drawer

Effects not cleared, may be presented again

Amounts in words and figures differ.

If any of these reasons exists then that cheque is returned through NIFT and deducts
Rs. 300 from customer account as cheque returned charges. Then the report of
returning any cheque is sent through fax to the head office Karachi. After this put the
entry in Cheque return register showing the following columns:

Date
Title of account

Account number

Cheque number

Bank and Branch name

Reason to return

Outward Clearing

All the cheques of other banks which are deposited to MBL are presented in outward
clearing. This is said as outward clearing because they are presented on the very next
day after depositing a cheque.

Services Provided By Clearing Function

Transfer of amount
Telling account balances

Issuing cheques books

REMITTANCE

26
Another important department in MBL is Remittances Department. The remittances
department transfers the funds from one bank to other bank and from one place to
another place. In remittances department the collection take place. The MBL made
payment of only open cheques on the counter and prohibits the payment of crossed
cheques.

MBL transfers money from one place to another by the following means:

Pay order
Inward collection

Outward collection

A) Pay Order (Payable at any branch)

Pay order is an order to pay money but this payment is to be made within city and
other as well. Because MBL pay order is payable at any MBK branch in Pakistan

The original copy of the pay order is given to the customer and carbon copy is kept
with bank for office record.

B) Inward Collection

When the bank receives cheques of any other bank from its any branch situated in the
some other city, and then those have been dealt as inward collection

5th and 6th Week

CASH DEPARTMENT

The cash department is the most important department of the bank. It receives cash
from customers and then deposits it into the accounts of the customers and maintained
their balances. There are two basic functions performed by the cash department.
These are

27
 1. Receipts

An individual who has account in the Bank can deposit money in his account. For
deposit of the money the individual has to fill the deposit slip in which the account
holder writes his name, Account number, amount of the money both in figures and in
words.

After filling the deposit slip the Cash amount along with the deposit slip is submitted
with the cashier. The cashier collects the cash and counts it and after verification the
cashier stamps the deposit slip. One part of the deposit slip is given back to the
customer and the other part of the deposit slip remains with the bank for the record
purposes

The cashier also record the deposits made by the customers in credit sheets daily. The
deposits of all customers of the bank are controlled by mean of ledger account. Every
customer has its own ledger account and has separate ledger cards in which his / her
total record is kept.

2. Payments

First of all the customer presents his cheque to the cashier. The cashier records the
account number and the amount, which is to be drawn. Then the cashier check the
cheque number in the computer for the verification whether the account holder has
such amount in his account which he is demanding or not. If the computer passes the
cheque, the Passing officer signs the cheque and sent it to the cash counter then
cashier pays .

In cash department following books are maintained.

Scroll book
Paying book

Cash balance book

Scroll Book

28
When cash is received at the customer it is recorded in the scroll book.

Paying Cash Book

The cashier makes entry in the paying cashbook when cash is paid.

Cash Balance Book

The consolidated figure of receipt and payment of cash is entered in cash balance
book.

Investment Certificate Issued by Meezan Bank Ltd.

To facilitate the customer through opening accounts of different types, Meezan Bank
also issues some investment certificates through which they could benefit customer.
The customer could easily invest in different types of certificates of different
investments and could get profit at attractive rates. These certificates are as under:

1. Certificate of Islamic Investment-COII.

These certificate requires the minimum investment of 50,000/=. These certificates are
of three types one of them is for 3 months-5 years and the profit distribution of this
type certificate is at the maturity of payment. 2nd is for 1year-5 years and profit
distribution of this is quarterly and the 3rd and last which is for 5 years and profit
distribution is on monthly basis but its investment is minimum 200,000/= rupees.

2. Monthly Mudarabah Certificate-MMC.

The Monthly Mudarabah Certificate is the flexible investment product, which has
been designed to give customers a monthly return, which is purely halal. These
certificates require the investment of 100,000/= rupees, and the profit distribution is
on monthly basis. As the investment increases the distribution rate also increases.

29
 3. Meezan Aamdan Certificate-MAC.

Meezan Aamdan Certificate (MAC) is the long term investment with high monthly
profit especially designed for those individuals and corporations who are in need of
regular stream of monthly income. MAC is therefore, a monthly income (Mahana
Aamdani) certificate with a variety of free packaged benefits. The minimum
investment for this certificate is 1, 00,000/= rupees. These are issued for two different
tenures i.e. for 51/2 and 7 years. The 7 year certificate has more attractive profit
distribution as compared to 51/2.

4. Meezan Providence Certificate.

These certificates are issued only for institutions, registered or unregistered

Employee Provident / Gratuity / Pension Fund, Which wants invest in such reputed
and Islamic organization to earn totally Riba-free profit? The minimum investment
required for this type of certificate is 1 Million. This certificate bears different
tenures; it starts from 2 years to 7 years. As the tenure grows the rate of profit also
increases.

5. Dollar Mudarabah Certificate.

This Monthly Mudarabah Certificate is same as the above Monthly Mudarabah

Certificate, but the difference is this certificate requires investment in Dollars and that
is $ 10,000/=. And the profit is distributed in Dollars.

PRODUCTS OF MEEZAN BANK

1) Rupee Current Account

Meezan Current Account is a Rupee-based current account that provides you the
convenience of putting your money in a Riba-free account and accessing it without

30
any restrictions on withdrawal while enjoying a host of professional conveniences
from Meezan Bank.

Meezan Current Account can be opened by Individuals, Sole-Proprietorships,

Partnerships and Limited Companies.

Key Features:

Minimum investment required to open an account is Rs. 1000/-

No restriction on withdrawals or number of transactions
No deduction on low balance maintained

2) Rupee Saving Account

The Riba-free Rupee Saving Account is a basic banking account for every customer's
need. The account provides monthly returns along with a variety of free packaged
benefits.
Key Features:

Profit will be calculated on daily product basis

Profit will be paid on monthly basis
No restriction on withdrawals or number of transactions
Free Cheque books
Globally accepted Meezan VISA Debit Card
Free Online Banking services at our branch network nationwide
Free Internet Banking facility
Free bank balance certificates

3) Meezan Bachat Account

Meezan Bachat Account offers a higher expected rate of return with nearly the same
convenience and service of a regular savings account.Meezan Bachat Account can be
opened by Salaried or Self-employed, Housewives and Retired individuals.

31
Key features:

Minimum investment required to open an account is Rs. 50,000/-

Profit will be calculated on the minimum monthly balance maintained

during a month
Profit payment is made to your Meezan Bank account on a monthly basis.
Waiver of application fee for Car Ijarah & Easy Home for accounts with
minimum balance of Rs. 500,000

4) Labbaik Saving Aasaan (A Holy Journey with Comfort &

Convenience)

Meezan Labbaik Saving Aasaan is an ideal deposit product for you if you are an
individual saver and wish to save for your spouse, children, parents, etc.

Key Features:

Available for individuals, where customers can open a single / joint account
with family members
Labbaik Saving Plan is available for six (06) months to twenty (20) years
Labbaik Saving Account is a Pak Rupee account
It will be a Recurring Deposit Account, where customers will deposit monthly
contribution as per the deposit schedule plan
Labbaik Saving Account is a non-chequing account, where no cheque book or
VISA Debit Card will be issued

5) Meezan Business Plus (Serving you the perfect blend of

convenience and flexibility)

Meezan Business Plus Account can be opened by Individuals and businesses

including Sole Proprietorships, Partnerships and Limited Companies.

Key Features:

Minimum investment required to open an account is Rs. 100,000/-

There is no restriction on withdrawals or numbers of transactions

32
 There is no deduction of service charges if the balance maintained is low
You will have instant access to your account both through Internet Banking
and through Online Banking at all branches of Meezan Bank across Pakistan
Free Cheque books
Free Pay Orders
Free VISA Debit Card
Free Account Statements
Free Online Banking
Free Internet Banking
Free Hold Mail Facility
Free SMS Alert services
Free intercity clearing

6) Dollar Saving Account (A Truly Halal Dollar Saving Account)

The Meezan Dollar Saving Account can be opened by individuals and businesses
including Sole Proprietorships, Partnerships and Limited Companies.

Key Features:

Minimum investment required to open an account is $100

There is no deduction of service charges if the balance maintained is low
You will have instant access to your account through free Internet Banking
Profit will be paid a on monthly basis
Profit will be calculated on daily product basis, which ensures that you are
getting a return on your investment all the time
Foreign Remittances

7) Karobari Munafa Account

Karobari Munafa is a high profit savings account specifically tailored for large
Corporate or GoP-controlled entities. It allows customers to earn higher returns on

33
surplus cash balances, has no preset transaction limits and comes with a variety of
free packaged benefits

Key Features:

Minimum investment required to open an account is Rs. 10,00,000/-

Profit will be calculated on daily product basis
Profit will be paid on monthly basis
No restriction on withdrawals or number of transactions
Free Cheque books & Pay-orders
Dedicated Relationship Manager

SERVICES PROVIDING BY MEEZAN BANK

1) Online Banking

Our free On-line Banking facility allows all customers to access their account
and conduct banking transactions from any of Meezan bank's branches nationwide

Our free On-line Banking offers the following services:

Real-time cash withdrawal up to Rs. 5 million, giving you access to your

money from anywhere in the Country!
Transfer of funds between your Meezan Bank accounts
Deposit and collection of clearing Cheques drawn within the same city
Issuance of Pay-order from any Meezan Bank branch

2) Financial Services

Western Union

Ria Financial Services

1. Western Union & Meezan Bank:

34
This is a financial service by which money is transfer via online system.Translink is a
centralized payment processing system enabling to provide immediate support to the
branch in case if the customer have not personal account in MBL.

Maximum transfer amount limit:

Maximum transfer amount limit is 5 lakh.

Code:

It has 10 digits code

Detail:

Beneficiary / Receiver name

Remittance amount in PKR (Approx)

Beneficiary CNIC/passport no.

Beneficiary date of birth (DOB)

Beneficiary CNIC/passport issuance date

Expiry date

Address

Account number

Sender/remittance name

Sender city/country

Documents:

Remittance Payment Slip

RPS would be used for meeting the KYC requirement of Beneficiary &
receipt of remittance by beneficiary.

35
 Fax-online payment receipt:

This will be treated as profit that transaction has been completed at wo pos

& now cash can be paid to the beneficiary. Branch will take beneficiary
signature & authorize branches officer will sign on payment receipt..

.Photocopy of beneficiarys identityfication verification must be enclosed with

RPS.

Document Retention Period:

The time period applied on banks vouchers as per banks policy.

Adjusting Entries:

Western union payment settlement account dr

Cash on hand cr

2. Ria Financial Service

Meezan Bank, Pakistans first and largest Islamic Bank, has entered into a Money
Remittance Agreement with Ria Financial services, a wholly owned subsidiary of
Euronet Worldwide, Inc. Ria Financial Services was founded in 1987 and today is
recognized as the third largest money transfer company in the world, with a global
agent network of 100,000 locations in over 130 countries on five continents.

This new partnership will facilitate Pakistanis around the world in sending money to
their families and friends in Pakistan by simply visiting any Ria Financial Services
location worldwide. The amount remitted from abroad can be collected from any of
Meezan Banks 230 branches located in 63 cities across Pakistan, instantly and in
cash, even without having a bank account.

This is also a financial service which is used transfer money via online system.it has
13 digits code. all documents and apply and transfer procedure requirements are same.
36
 3. Home Remittance

Meezan Bank's Remittance services are simple and reliable. They are available at
your doorstep through a wide and efficient network of corresponding banks
worldwide. Only the leading global financial institutions form this network of
correspondent banks.

Advantages of Meezan Home Remittance:

Quick Remittance in major currencies i.e. USD, GBP, EUR, JPY, CHF, SGD, AUD

Instant online transfer within our branch network without any charges
Extensive branch network in all major cities of Pakistan
Meezan Visa Debit Card allows you to use your own money at more than 30
million outlets and 160 countries worldwide
Free Internet banking facility

4. Electronic Banking

If you wish to remit money to Pakistan, simply give instructions to your existing bank
for money transfer by providing the name of your preferred Meezan Bank branch and
beneficiary account number.

5. Meezan Visa Debit Card

Using your card is quicker than making a trip to the bank!

Meezan Bank offers a wide network of ATMs located at its branches as well as
prominent offsite locations. You do not need to carry cash anymore; simply go to the
ATM and withdraw cash anywhere, anytime. We also offer access to more than 2,000
ATM locations country-wide via 1Link and MNET Network.

Using your card is quicker and far more convenient than queuing at a cash dispenser
and safer than carrying cash.

37
 Use your own money at more than 30 million outlets and 160 countries
worldwide.
Use it to buy both big and small items, wherever you see the Visa symbol.
Each withdrawal taken directly from your Meezan Bank Linked Account.
A safe and convenient alternative to carrying cash.
You can call support 24 hours a day, 7 days a week with any queries. Simply
call 111-331-331 and 111-331-332
All shopping transactions on your card are signature based. Simply swipe and
sign!

Cards Withdrawals Shopping

Silver 30,000 50,000

Gold 50,000 100,000

Titanium 75,000 150,000

Platinum 100,000 300,000

Teens 15,000 25,000

Kids 10,000 20,000

6. Meezan Internet Banking

Meezan Internet Banking is the smarter way to bank, providing you global access to
your account 24 hours a day, 7 days a week.

Facilities

With Meezan Internet Banking, you can get secure and convenient access to the
following facilities:

Balance inquiry of multiple accounts

View account statement
Real time cheque status and stop payment request
Cheque book and pay-order request
Lodging and tracking status of complaints
Account activity alerts
38
 7. ATM Network

Meezan Bank offers a wide network of ATMs located at its branches as well as
prominent offsite locations. You do not need to carry cash anymore; simply go to the
ATM and withdraw cash anywhere, anytime. We also offer access to more than 2,000
ATM locations country-wide via 1Link and MNET Network.

Key Features:

Transfer funds between your own accounts in the same branch via ATM.
The cash withdrawal limit for Meezan Visa Debit Card per day is subject to
the funds present in your selected account.

8. Meezan SMS Alerts

Alerts:

Debit Alert: An instant SMS alert to inform you when any amount is deducted
from your Current or Savings account(s).
Credit Alert: An instant SMS alert to inform you when any amount is added
into your Current or Savings account(s).
Cheque Bounce: An instant SMS alert to inform you that your cheque has
been dishonoured.

Important:

SMS Alert service is applicable to all Current and Saving accounts (either or
survivor in case of joint accounts).
The service is currently for customers residing in Pakistan.
SMS Alert Service is not available on Mobile Network Portable (MNP)
numbers.

39
 9. 24/7 Call Center

With our Call Centre facility, you no longer have to take time out to visit your branch
for your everyday banking needs. By simply dialing 111-331-331/332 (dial 00-92-21-
111-331-331/332 from outside Pakistan)

Consumer Finance (Islamic Financing Solutions)

Car Ijarah is Pakistans first Interest Free car financing based on the Islamic
financing mode of Ijarah (Islamic leasing). This product is ideal for individuals
looking for car financing while avoiding an interest-based transaction.

Meezan Bank Car Ijarah is a car rental agreement, under which the Bank purchases
the car and rents it out to the customer for a period of 3 to 5 years, agreed at the time
of the contract. Upon completion of the lease period the customer gets ownership of
the car against his initial security deposit.

Islamic Home Financing

Easy Home is a Shariah-compliant Home Finance facility! One that is comprehensive,

affordable, and totally hassle-free. Meezan Bank is committed to meet our customers
needs in a truly Shariah-compliant manner coupled with dedicated service excellence.
Why not have the best of both worlds? Isn't that what you are working so hard for
anyway?

Certificate of Islamic Investment

Key Features:

Investment can be made for 3 months, 6 months, 1 year, 2 years, 3 years and 5
years
Profit payment options are monthly, quarterly or at maturity
Minimum investment required for quarterly and on-maturity payment is Rs.
50,000/
Minimum investment required for monthly profit payment is Rs. 200,000/

40
 Pre-mature withdrawal can be made as per approved schedule

Meezan Amdnan Certificate

Enjoy a range of valuable features including:

Minimum investment required is Rs. 100,000/

Minimum investment for widows and senior citizens is Rs. 50,000/-
Investment can be made for 5 1/2 years and 7 years
Profit payment is made to your Meezan Bank account on a monthly basis
Pre-mature withdrawal can be made as per approved schedule
Free first cheque book for customers who open an account for MAC issuance

Monthly Mudarabah Certificate

Key Feature:

Minimum Investment required is Rs. 100,000/-

Investment period is one month with re-investment option available on a
continuous basis
Monthly profit payment will be made to your Meezan Bank account
Pre-mature withdrawal can be made as per approved schedule

Dollar Mudarabah Certificate

The Dollar Mudarabah Certificate (DMC) is a deposit product through which you can
invest your US Dollars with Meezan Bank for periods ranging from 3 months to 3
years and earn six-monthly or at maturity profit payments on your investment.

Enjoy a range of valuable features including:

Minimum Investment required is USD 10,000/-

Investment tenures are 3 months, 6 months, 1 year and 3 years
Profit payment will be made either at maturity or on a six-monthly basis to
your Meezan Bank Dollar Saving Account

41
 Pre-mature withdrawal options available as per approved Early Redemption
Schedule

Strengths Weaknesses

SWOT
Analysis

Opportunities Threats

42
Strengths

Following are some of the strengths of Meezan bank which distinguish it from other
banks in market.

First exclusive Islamic bank.

The largest Islamic Bank in Pakistan with a network of over 400 branches in
100+ cities. And ending 2015 year they have increase his branches in Pakistan
to 500 branches.

Strong growth of its Islamic banking SBU.

The members of the Shariah Supervisory Board of Meezan Bank are

Internationally-renowned scholars, serving on the boards of many Islamic
banks operating in different countries.

Karachi, August 20, 2008: Meezan Bank, the largest Islamic Bank in Pakistan
has been conferred the Best Islamic Bank Award by Rawalpindi Chamber of
Commerce and Industry.

The Chief Minister of Punjab Mr. Shahbaz Sharif bestowed this award to Mr.
SaleemKhan Regional Manger - North, Meezan Bank at 21st RCCI
achievement awards ceremony held at the Convention Center in Islamabad.

Dedicated and professional staff

Weaknesses

Lack of promotions and advertising of their products and services.

Lengthy & extensive documentation

Weak marketing strategy

43
 Offering fewer services than the competitors

.Meezan Bank Limited has no Credit card facility

Restricted Shariah based policies

Opportunities

House financing sector can be targeted to maximize the profit.

Growing demand of Islamic financial product and services.

Venturing into Islamic groups out side the countries as opportunity to expand
business inUAE and Golf states. I-e financial institutions.

Coming up with. Products for the SME to targeting the medium level
customers.

Doing business with companies having Islamic mindset. I-e Islamic financial
Institutions.

Increase branch network within the country

Threats

New competitors setting up their Islamic banking sections and they have the
infrastructure, skill, ability, resources & attitude to capture the market more
than theMeezan bank.
High Interest Rate from SBP

SBP has not special policy regarding Islamic Banking.

44
 Govt. policies are mostly for conventional banking system not for specially
designed for Islamic banking.

Change in Government's attitude towards Islamic banking.

Fears on the credibility of Islamic banking ethical compliance and monitoring

systems

Financial Analysis

Ratio Analysis:

Ratio analysis is helpful to the management of the organization as well as for the
investors and creditors. Investor keeps an eye on the companys financial
statement and make decisions whether to invest funds in that company or not.
Similarly a creditor also analysis the financial statements and makes decisions
whether to grant loan or not.

Financial statements for the last three years from 2008 to 2010 are given
below:

Meezan bank Limited

Profit and Loss Account
As on 31st December
2008 Rs. 2009 Rs. 2010 Rs.
(000) (000) (000)
Profit / return on financings, investments and
placement 6,803,213 10,102,060 12,290,549

45
Return on deposit and other dues expensed 3.088,344 4,969,916 6,606,474
Net spread earned 3,714,879 5,132,144 5,684,075
Provision against non-performing financing (net) 428,436 1,430,536 1,330,057
Provision for diminution in value of investment and
impairment 288,884 88,640 46,862
Provision against off balance sheet obligations - - 37,682
Provision against amount due from financial
institutions - 12,625 81,875
Bad debts written off directly - - -
717,320 1,531,801 1,496,476
Net spread after provisions 2,997,559 3,600,343 4,187,599
OTHER INCOME
Fee, commission and brokerage income 431,725 529,260 615,752
Dividend income 243,585 189,973 321,898
Income from dealing in foreign currencies 304,692 752,904 1,381,044
Capital gain / (loss) on sale of investment net 47,001 76,160 97,155
Unrealized loss on held for trading investment (23,014) - -
Impairment on reclassification of securities from
held for trading to available for sale securities (362,751) - -
Other income 66,670 49,507 59,181
Total other income 707,908 1,597,804 2,475,030
6,662,629
3,705,467 5,198,147
OTHER EXPENSES
Administrative expenses 2,626,606 3,530,161 4,460,804
Other provision / write offs / (reversals) 86,263 (73,484) 18.306
Other charges 287 1,747 56,559
Total other expenses 2,713,156 3,458,424 4,535,669
992,311 1,739,723 2,126,960
Extraordinary / Unusual Items - - -
PROFIT BEFORE TAXATION 992,311 1,739,723 2,126,960
Taxation - current 314,790 1,440,374 1,025,135
- Prior years - - (332,808)
- Deferred 56,334 (726,002) (214,955)
371,124 714,372 477,372
PROFIT AFTER TAXATION 621,187 1,025,351 1,649,588
Un-appropriated profit brought forward 1,219,228 -
Profit before appropriations 1,840,415 -

Meezan Bank Limited

Balance Sheet
As on 31st December
2008 2009 2010
Rs.(000) Rs.(000) Rs.(000)
Assets:
Cash and balances with treasury banks 5,763,710 8,387,432 12,780,806
Balances with other banks 1,344,974 5,260,467 9,939,660
Due from financial institutions 18,108,000 34,486,875 10,511,855
Investments 14,526,699 23,290,309 54,966,907
Financings 39,528,731 41,709,656 54,195,163
Operating fixed assets 1,880,515 2,416,375 3,066,100
Deferred tax assets - 204,172 342,175

46
Other assets including inventories 4,123,441 8,413,810 8,949,759
Total Assets 85,276,070 124,169,096154,752,425

LIABILITIES:
Bills payable 1,057,017 1,249,210 1,767,370
Due to financial institutions 4,008,496 8,468,425 5,829,296
Deposits and other accounts 70,233,875 100,333,051 131,070,328
Sub-ordinated loan - - -
Liabilities against assets subject to finance leases - - -
Deferred tax liabilities 453,038 - -
Other liabilities 3,548,666 4,933,951 5,005,440
Total liabilities 79,301,092 114,984,637143,672,434

Net Assets 5,974,978 9,184,459 11,079,991

Represented By
Share capital 4,925,961 6,650,048 6,982,550
Reserves 845,022 1,050,092 1,380,010
Un-appropriated profit 570,114 1,390,395 2,377,563
Total equity 6,341,097 9,090,535 10,740,123
Surplus/ (Deficit) on revaluation of investment (366,119) 93,924 339,868
5,974,978 9,184,459 11,079,991

Liquidity Ratios

Liquidity ratios means to measure short term solvency of the company.

Ability of the company to payoff its short term debt. Following ratios are
calculated in order to measure the short term solvency of the company

Current Ratio
Acid Test Ratio
Working Capital

Current Ratio

Current Assets: Cash and balances with other treasury banks + Balance
with other banks + due from financial Institution + short term investment
+ short term financing + other assets

Current Liabilities: Bills payable + Due to financial institution + short

term deposit + other liabilities

Current Ratio = Current Assets / Current liabilities

Year 2008 Year 2009 Year 2010
112,151,079 /
52,367,722 / 58,123,087 93,974,134 / 86,338,599 105,272,728
=0.90 : 1 = 1.08 :1 = 1.06 : 1

47
Working
Year 2008
Current Assets = 5,763,710 + 1,344,974 + 18,108,000 + 1,542,473 +
21,499,732
+ 4,108,833
Current Assets = 52,367,722

Current Liabilities = 1,057,017 + 4,008,496 + 50,922,554 + 2,135,020

Current Liabilities = 58,123,087

Year 2009
Current Assets = 8,387,432 +5,260,467 +34,486,875 + 1 2,195,470 +
25,203,080
+ 8,413,810
Current Assets = 93,947,134

Current Liabilities = 1,249,210 + 8,468,425 + 73,548,063 + 3,072,901

Current Liabilities = 86,338,599

Year 2010
Current Assets = 12,780,806 + 9,939,660 + 10,511,855 + 37,873,600
+ 32,095,399
+ 8,949,759
Current Assets = 112,151,079

Current Liabilities = 1,767,370 + 5,829,296 + 94,789,739 + 2,886,323

Current Liabilities = 105,272,728

Interpretation

As the current ratio in the year 2008 is 0.90, in the year 2009 is 1.08 and
in the year 2010 it is 1.06 Which depicts that there is a slight increase in
the year 2009 as compare to year 2008 where as there is a negligible
decrease of 0.02 as compared to year 2009. Current ratio must be 2:1 in
accordance with the prudential regulations of State Bank of Pakistan as
well as international accounting standards but in case of Meezan Bank
current ratio seems to be unsatisfactory in all the three years which is not
a healthy sign so for as banks short term solvency to pay its short Debts
are concerned

Acid Test Ratio

Quick Assets = Current Assets (Inventories + prepayments)

Current liabilities: Bills payable + Due to Financial institution + short

term
Deposit + other liabilities

48
Acid Test Ratio = Current Assets - (inventories + prepayments) / current
liabilities
Year 2008 Year 2009 Year 2010
109,273,310 /
50,289,704 / 58,123,087 91,043,434 / 86,338,599 105,272,728
= 0.86 : 1 = 1.05 : 1 = 1.04 : 1

Working
Year 2008
Quick Assets = 52,367,722 (1,535,744 + 542,274)
Quick Assets = 50,289,704

Current Liabilities = 1,057,017 + 4,008,469 + 50,922,554 + 2,135,020

Current Liabilities = 58,123,087
Year 2009
Quick Assets = 93,947,134 (2,523,969 + 379,731)
Quick Assets = 91,043,434

Current Liabilities = 1,249,210 + 8,468,425 + 73,548,063 + 3,072,901

Current Liabilities = 86,338,599

Year 2010
Quick Assets = 112,151,079 - (2,461,097 + 416,672)
Quick Assets = 109,273,310

Current Liabilities = 1,767,370 + 5,829,296 + 94,789,739 + 2,886,323

Current Liabilities = 105,272,728

Interpretation:

The Quick Ratio for the year 2008 is 0.86 which is less than 0.14 as
compare to industrys ratios but in the year 2009 is 1.05 which is slight
more than the standard ratio. Similarly in the year 2010 the Quick ratio
1.04 which is also more than the industrys standard ratio. Quick Ratio in
the year 2008 is unsatisfactory where as in the years 2009 and 2010
Quick Ratio is quite satisfactory.

Leverage Ratios

Any ratio used to calculate the financial leverage of a company to get an

idea of the companys methods of financing or to measure its ability to
meet financial obligations. Following ratios are calculated in order to
measure the long term solvency of the firm:

Time Interest Earned

Debt Ratio
Debt / Equity Ratio
Debt to Tangible Net worth Ratio

49
 Total Capitalization Ratio

Time Interest Earned

Time Interest Earned = Earning Before Tax + interest expenses / interest

expenses

Note: It is an Islamic bank so this ratio cannot be calculated.

Debt Ratio

Total Debt = Bills payable + Due to financial institution + Deposits and

other
Accounts + sub-ordinates loan + liabilities against assets subject to
Finance leases + deferred tax liabilities + other liabilities

Total Assets = Cash and balances with treasury banks + balances with
other banks + due from financial institutions + investments + financings +
operating fixed assets + other assets

Debt Ratio= ( Total Debt / Total Assets )

Year 2008 Year 2009 Year 2010
(79,301,092 / 85,276,070) (114,984,637 / 124,169,096) (143,672,434 / 154,752,425)
= 0.9299 Times = 0.9260 Times = 0.9284 Times

Working
Year 2008

Total Debt = 1,057,017 + 4,008,469 + 70,233,875 + 0 + 0 + 453,038

+3,548,666
Total Debt =79,301,092

Total Assets = 5,763,710 + 1,344,974 + 18,108,000 +14,526,699 +

39,528,731
+ 1,880,515 +4,123,441
Total Assets = 85,276,070
Year 2009

Total Debt = 1,249,210 +8,468,425 +100,333,051 + 0 + 0 + 0 +

4,933,951
Total Debt = 114,984,637

Total Assets = 8,387,432 + 5,260,467 + 34,486,875 + 23,290,309 +

41,709,656 +
2,416,375 + 204,172 + 8,413,810
Total Assets = 124,169,096
Year 2010

Total Debt = 1,767,370 + 5,829,296 + 131,070,328 + 0 + 0 + 0 +

5,005,440
Total Debt = 143,672,434

50
Total Assets = 12,780,806 + 9,939,660 + 10,511,855 + 54,966,907 +
54,195,163 +
3,066,100 + 342,175 + 8,949,759
Total Assets = 154,752,425

Graphical Representation:
Interpretation:

Banks Debt ratio in the years 2008, 2009 and 2010 is 0.9299, 0.9260 and
0.9284. Debt Ratio indicates that banks Debt is on higher side in all the
three years as compare to its assets which indicates that the bank is
highly levered and its fixed financial cost is much higher which may
decrease the operating profit of the company with the result of decrease in
earning per share.

Debt / equity Ratio

Debt to Equity Ratio = Total Debt / Total Equity

Year 2008 Year 2009 Year 2010
79,301,092 / 6,341,097 114,984,637 / 9,090,535 143,672,434 / 10,740,123
= 0.125 Times = 0.1265 Times = 0.1337 Times

Total Equity = Share Capital + Reserves + Un-appropriated Profit

Working
Year 2008
Total Debt = 1,057,017 + 4,008,496 + 70,233,875 + 0 + 0 + 453,038 +
3,548,666
Total Debt = 79,301,092

Total Equity = 4,925,961 + 845,022 + 570,114

Total Equity = 6,341,097

Year 2009

Total Debt = 1,249,210 + 8,468,425 + 100,333,051 + 0 + 0 + 0 +

4,933,951
Total Debt = 114,984,637

Total Equity = 6,650,048 + 1,050,092 + 1,390,395

Total Equity = 9,090,535

Year 2010

Total Debt = 1,767,370 + 5,829,296 + 131,070,328 + 0 + 0 + 0 +

5,005,440
Total Debt = 143,672,434

Total Equity = 6,982,550 + 1,380,010 + 2,377,563

Total Equity = 10,740,123

Graphical Representation:

51
Interpretation:

According to prudential regulation of State Bank of Pakistan Debt ratio

must be 70:30 but here in the case of Meezan Bank Limited in all the
three years debt ratio is 0.125, 0.1265 and 0.1337 respectively which
indicates that Debt portion in the total financing is much lower but Equity
portion is to a reasonable extent in the total financing which shows that
bank has been financed with greater portion of equity instead of debt.

Debt to Tangible Net Worth

Debt to Tangible Net Worth = Total Debt / Tangible Net Worth

Year 2008 Year 2009 Year 2010
79,301,092 / 5,880,094 114,984,637 / 9,089,242 143,672,434 / 10,975,858
= 0.1348 Times = 0.1265 Times = 0.1309 Times

Tangible Net Worth = Total Assets Total Liabilities Intangible

Assets

Working
Year 2008

Tangible Net Worth = 85,276,070 79,301,092 94,884

Tangible Net Worth = 5,880,094

Year 2009

Tangible Net Worth = 124,169,096 114,984,637 95,217

Tangible Net Worth = 9,089,242
Year 2010

Tangible Net Worth = 154,752,425 - 143,672,434 104,133

Tangible Net Worth = 10,975,858

Interpretation:

In all the three years Debt as compare to total tangible assets is 0.1348,
0.1265 and 0.1309 respectively which indicates that Debt portion in the
total tangible assets is not on higher side which shows a healthy sign on
the financial position of the bank and bank will be a going concern for
indefinite period.
Total capitalization Ratio

Total Capitalization Ratio=

Long Term Debt / Long Term Debt +Shareholders Equity
Year 2008 Year 2009 Year 2010
21,178,005 /(21,178,005 + 28,646,038 / (28,646,038 + 38,399,706 / (38,399,706 +
6,341,097) 9,090,535) 10,740,123)
= 0.7695 Times = 0.7591 Times = 0.7814 Times

52
Long Term Debt = Deposit and other account + Sub- ordinates loans +
Liabilities against assets subject to finance lease + Deferred tax liabilities
+ other liabilities

Shareholders Equity = Share Capital + Reserves + Un-appropriated

profit

Working
Year 2008
Long Term Debt = 21,178,005

Shareholders Equity = 4,925,961 + 845,022 + 570,114

= 6,341,097

Year 2009
Long Term Debt = 28,646,038

Shareholders Equity = 6,650,048 + 1,050,092 + 1,390,395

= 9,090,535
Year 2010

Long Term Debt = 38,399,706

Shareholders Equity = 6,982,550 +1,380,010 + 2,377,563

= 10,740,123

Interpretation:

Long term debt of the company is in all the three years 0.7695, 0.7591
and 0.7814 respectively of Total Capitalization i.e. (Debt + equity) which
depicts that the banks long term solvency to pay out its long term debts
is not too much stable because of high degree of debt in the total capital
employed.

Profitability Ratios

Profitability ratios measure the earning ability of the firm. Following ratios
are calculated:

Net Profit Margin

Return on Assets
Dupont Return on Assets
Operating Income Margin
Return on operating Assets
Return on Total Equity
Gross Profit Margin

Net Profit Margin

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 Net Profit Margin = Net Profit / Total Revenue *100
Year 2008 Year 2009 Year 2010
621,187 / 6,803,213 * 100 1,025,351 / 10,102,060 * 100 1,649,588 / 12,290,549 * 100
= 9.13 % =10.14 % =13.42 %

Net Profit = profit after taxation

Total Revenue = Profit/return earned on financings, investments
and placements
Working
Year 2008
Net Profit = 621,187
Total Revenue = 6,803,213
Year 2009
Net Profit = 1,025,351
Total Revenue = 10,102,060

Year 2010
Net Profit = 1,649,588
Total Revenue = 12,290,549

Interpretation:

Net Profit margin in the Year 2008,2009 and 2010 is 9.13%, 10.14% and
13.42% respectively which shows an increasing trend as for as index
analysis is concerned. Net Profit Margin is to a reasonable extent i.e.
return on sales after payment of tax.

Return on Assets

Return on Assets =Earning Before Tax(EBT) / Total Assets * 100

Year 2008 Year 2009 Year 2010
992,311 / 85,276,070 * 100 1,739,723 / 124,169,096 * 100 = 2,126,960 / 154,752,425 * 100
= 1.16% 1.40% = 1.37%

Working

Year 2008
Profit before tax = 992,311
Total Assets = 85,276,070

Year 2009
Profit before Tax = 1,739,723
Total Assets = 124,169,096

Year 2010
Profit before tax = 2,126,960
Total Assets = 154,752,425

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Interpretation:

As for as Return on total Assets is concerned, in the year 2008 it is

1.16%, in the year 2009 is 1.40% and in the year 2010 is 1.37% which
depicts that return on total assets is much lesser as compare to banking
industrys standard. Although it has an increasing trend in the year 2009
and 2010 but as for as international accounting standards are concerned,
return on total assets is not worth while which shows that assets of the
bank are not being utilized properly.

Du Pont Return on Assets

Du-Pont ROA= (Net Income / Total Revenue) x (Total Revenue / Total

Assets )
Year 2008 Year 2009 Year 2010
(1,025,351 / 10,102,060) (1,649,588 / 12,290,549)
(621,187 / 6,803,213) x x (10,102,060 / x (12,290,549 /
(6,803,213 / 85,276,070) 124,169,096) 154,752,425)
= 0.7276% = 0.8244% = 1.06%
Working
Year 2008

= (621,187 / 6,803,213) x (6,803,213 / 85,276,070)

= (0.0913) x (0.0797)
= 0.7276%
Year 2009

= (1,025,351 / 10,102,060) x (10,102,060 / 124,169,096)

= (0.1014) x (0.0813)
= 0.8244%
Year 2010

= (1,649,588 / 12,290,549) x (12,290,549 / 154,752,425)

= (0.1342) x (0.0794)
=1.06%

Interpretation:

As for as Return on total Assets is concerned, in the year 2008 it is

0.7276, in the year 2009 is 0.8243 and in the year 2010 is 1.06 which
depicts that return on total assets is much lesser as compare to banking
industrys standard. Although it has an increasing trend in the year 2009
and 2010 it is pertinent to mention here that assets of the bank are not
used properly.

Operating Income Margin

Operating Income Margin

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 = Earning Before interest and tax (EBIT)(EBT) / Total Revenue
Year 2008 Year 2009 Year 2010
992,311 / 6,803,213 1,739,723 / 10,102,060 2,126,960 / 12,290,549
= 14.58% = 17.22% = 17.30%

Note: Islamic banking is Riba-Free so I use EBT for operating

income margin

Working

Year 2008
EBT = Earning Before tax = 992,311
Total Revenue = 6,803,213

Year 2009
EBT = Earning before tax = 1,739,723
Total Revenue = 10,102,060

Year 2010
EBT = Earning before tax = 2,126,960
Total Revenue = 12,290,549

Interpretation:

Operating income means income from operation i.e. earning before Tax
(EBT). Income from operation in the year 2008 is 14.58%, in the year
2009 is 17.22% and in the year 2010 is 17.30% which is to a reasonable
extent in all the three years.

Return on Operating Assets

Return on Operating Assets =

Earning before interest and tax (EBIT) (EBT) / Operating Assets
Year 2008 Year 2009 Year 2010
992,331 / 66,625,930 1,739,723 / 92,260,805 2,126,960 / 90,493,584
=1.49% =1.88% =2.35%
Note: Meezan Bank is Riba Free so I use Earning before Tax

Operating Assets = cash and balances with treasury banks + Balance

with other banks + due from financial institutions + financing + operating
fixed assets

Working
Year 2008
EBT = Earning before tax = 992,311
Operating Assets = 5,763,710 + 1,344,974 + 18,108,000 + 39,528,731
+ 1,880,515
Operation Assets = 66,625,930
Year 2009
EBT = Earning before tax = 1,739,723

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Operating Assets = 8,387,432 + 5,260,467 + 34,486,875 + 41,709,656
+ 2,416,375
Operating Assets = 92,260,805

Year 2010
EBT= Earning before tax = 2,126,960
Operating Assets = 12,780,806 + 9,939,660 + 10,511,855 +
54,195,163 + 3,066,100
Operating Assets = 90,493,584

Interpretation:

Return on operating assets in the years 2008, 2009 and 2010 is 1.49%,
1.88%, and 2.35% respectively. As for as index analysis is concerned,
return on operating assets has been an increasing trend from 2008 to
2010 but it is much below the standard of banking industry.

Return on Total Equity

Return on total Equity = (Net Income / Total Equity )*100

Year 2008 Year 2009 Year 2010
(621,187 / 6,341,097)*100 (1,025,351 / 9,090,535)*100 (1,649,588 / 10,740,123)*100
= 9.79% = 11.27% = 15.35%

Total Equity = Share Capital + Reserves + un-appropriated profit

Working

Year 2008

Net income = Profit after Tax = 621,187

Total Equity = 4,925,961 + 845,022 + 570,144

Total Equity= 6,341,097
Year 2009

Net income = Profit after tax = 1,025,351

Total Equity = 6,650,048 +1,050,092 + 1,390,395

Total Equity = 9,090,535
Year 2010

Net income = Earning after tax = 1,649,588

Total Equity = 6,982,550 + 1,380,010 + 2,377,563

Total Equity = 10,740,123
Graphical Representation:
Interpretation:

Return on Owners Equity in the year 2008 is 9.79%, in the year 2009 is
11.27% and in the year 2010 is 15.35% which shows an increasing trend

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 to a greater extent from year on year basis as well as it is also meeting
the standard of banking industry.

Gross Profit Margin

Gross Profit Margin = (Gross profit / Total Revenue )*100

Year 2008 Year 2009 Year 2010
(3,714,879 / 6,803,213)*100 (5,132,144 / 10,102,060)*100 (5,684,075 / 12,290,549)* 100
= 54.60% = 50.80% = 46.24%

Working
Year 2008
Gross profit = Net spread earned = 3,714,879
Total revenue = Return earned on financings, investments, placements
= 6,803,213

Year 2009
Gross profit = Net spread earned = 5,132,144
Total Revenue = Return earned financings, investments and placements
=10,102,060

Year 2010
Gross profit = Net Spread earned = 5,684,075
Total Revenue = Return on financings, investments and placements =
12,290,549

Interpretation

Gross profit margin on year to year basis is 54.60%, 50.80% and 46.24%
which is showing a much healthy sign because of high gross profit margin
on sales. It is much above the industry yard stick.

Activity Ratios

Activity ratios measure a firms ability to convert different accounts within

their balance sheets into cash or sales.

Total Assets Turnover

Fixed Assets Turnover

Total Assets Turnover

Total Assets Turnover = Total Revenue / Total Assets

Year 2008 Year 2009 Year 2010
6,803,213 / 85,276,070 10,102,060 / 124,169,096 12,290,549 / 154,752,425
= 0.079 Times = 0.081 Times = 0.079 Times

Working

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 Year 2008
Total Revenue = profit / return earned on financings, investments and
placements = 6,803,213
Total Assets = 85,276,070
Year 2009
Total Revenue = profit/return earned on financings, investments and
placements = 10,102,060
Total Assets = 124,169,096

Year 2010
Total Revenue = profit/return on financings, investments and
placements
= 12,290,549
Total Assets = 154,752,425

Interpretation:

Turnover means how many times we make the sales during the year as
compare to our total assets. It is in the year 2008 is 0.079, in 2009 is
0.081 and in 2010 is 0.079. Sale turnover is much lower keeping in view
the standard of banking industry.

Fixed Assets Turnover

Fixed Assets Turnover = Total Revenue / Fixed Assets

Year 2008 Year 2009 Year 2010
6,803,213 / 1,880,515 10,102,060 / 2,416,375 12,290,549 / 3,066,100
= 3.61 Times = 4.18 Times = 4.00 Times

Working
Year 2008
Total Revenue = return on financings, investments and placements =
6,803,213

Operating Fixed Assets = 1,880,515

Year 2009
Total Revenue = return on financings, investments and placements =
10,102,060

Fixed Assets = 2,416,375

Year 2010
Total Revenue = return on financings investments and placements =
12,290,549

Fixed Assets = 3,066,100

Interpretation:

From year on year basis fixed assets turnover has been an increasing
trend in the year 2009 but in the year 2010 it has again been decreased
which has not a uniform trend. Keeping in view the standard of the

59
banking industry, it is much below the standard which dose not shows a
healthy sign.

Market Ratios

Market ratios are commonly used by the investors to access the

performance of a business as an investment and also the cost of issuing
stock.

Dividend per share

Earning per Share
Price / Earning Ratio

Dividend per share

Dividend per share = Dividend paid / number of shares

Year 2008 Year 2009 Year 2010
Note: Meezan bank has not paid dividend so this ratio is not
calculated

Earning Per Share

Earning Per Share = Net income after tax / No. of Shares Outstanding
Year 2008 Rs.(000) Year 2009 Rs.(000) Year 2010 Rs. (000)
621,187 / 4,925,96.1 1,025,351 / 6,650,04.8 1,649,588 / 698,255
= 1.26 = 1.54 = 2.36

Working
Year 2008
Net Income = profit after tax = 621,187

No. of share outstanding = Share capital / par value

= 4,925,961 / 10
No. of share outstanding =4, 925, 96.1

Year 2009
Net Income = profit after tax = 1,025,351

No. of share outstanding = Share Capital / Par Value

= 6,650,048 / 10
No. of share outstanding = 6, 650, 04.8

Year 2010
Net income = profit after tax = 1,649,588

No. of share outstanding = Share Capital / Par Value

= 6,982,550 / 10
No. of share outstanding = 698,255

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Interpretation:

Earning per Share in the year 2008 is 1.26, in the year 2009 is 1.54 and in
the year 2010 is 2.36. On year to year basis earning per share is
increasing but it is not up to the mark as for as industry standard is

Price / Earning Ratio

Price Earning Ratio = Market price per share / Earning per share
Year 2008 Year 2009 Year 2010
21.48 / 1.26 15.74 / 1.54 16.90 / 2.36
= 17.04 = 10.22 = 7.16

Note : book value per share is given in annual report 2010.

Working

Year 2008
Market price per share = 21.48
Earning per share = 1.26

Year 2009
Market price per share = 15.74
Earning Per share = 1.54

Year 2010
Market price per share = 16.90
Earning per share = 2.36

Interpretation:

Price Earning ratios means how much the price of the share in the market
as compare to earning per share. P/E ratio in the year 2008 is 17.04, in
2009 is 10.22 and in 2010 is 7.16 which is decreasing on year to year
basis. Although P/E ratio is meeting the criterion of industry standard but
has a decreasing trend on year to year basis.

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