MUSLIM

COMMERCIAL
BANK LIMITED
INTERACTIVE
SESSION
OVERVIEW
 DEFINITION OF BANK

A “bank” is a financial institution

which accepts deposits from the
public and, in turn, advance
loans by creating credit.
SERVICES OFFERED BY BANKS.

o Liabilities Based Services

o Assets Based Services
o Technology Based Services
o Misc. Services
LIABILITITES BASED SERVICES:

o Current Deposits
o Saving Deposits
o Special Saving Deposits Accounts
o Notice Deposits
o Term Deposits
 ASSETS BASED SERVICES

o Fund Based Financing

o Non-Fund Based Financing
o Consumer Products
FUND BASED FINANCING

o Running Finance.
o Cash Finance.
o Demand/ Project Finance.
o Agricultural Finance.
o Finance on Commodity Operations.
o Consortium Finance.
o Export Finance
o Import Finance
NON FUND BASED FINANCING

o Issuance of letter of Credit

o Issuance Of Guarantees
o Bid Bond
o Shipping Guarantees
o Indemnities Bonds
CONSUMER PRODUCTS

o Issuance of Credit Card.

o Car Finance.
o Salary Finance.
o Running Finance.
o Mortgage Finance.
o Balance Transfer Facility
TECHNOLOGY BASED SERVICES

o On-Line fund Transfers

o ATMs.
o Credit Cards
o Debit Cards
o Call Centre/ Telephone Banking
o Internet Banking
MISC. SERVICES

o Remittance Services
o Travellers Cheques
o Collection of Cheques/ Documents.
o Collection of Utility Bills
o Lockers etc.
 HISTORY

MCB is not an overnight success story. The bank

started corporate life in Calcutta on July 9, 1947.
This was third Muslim bank in the sub-continent.
After the partition of the Indo-Pak Subcontinent, the
bank moved to Dhaka from where it commenced
business in August 1948, Mr. M. Adamjee was
appointed its first chairman. It was incorporated with
an authorized capital of Rs. 15 million. In 1956, the
Bank transferred it Registered office to Karachi,
where the Principal Office is presently located.
 NATIONALIZATION

MCB was nationalized with other banks on

1st January, 1974 following the banks
(nationalization) Act, 1074. (At that time it
has 506 branches and deposits
amounting to Rs. 1640 million).
 PRIVATIZATION

In April 1991, MCB became Pakistan’s first

privatized bank. The government of Pakistan
transferred the management of the Bank to
National Group, a group of leading industrialists of
the country by selling 26% shares of the bank. In
term of agreement between the government of
Pakistan and the National group, the Group,
making their holding 50% has purchased
additional 24% shares.
 MCB TODAY

Today MCB has a network of over 900

branches all over the country with business
establishments in Sri Lanka and Bahrain.
The branch break-up province wise is
Punjab (57%), Sindh (21%), NWFP (19%)
and Baluchistan (3%) respectively.
 MCB TODAY

MCB now focuses on three core businesses

namely Corporate, Commercial and Consumer
Banking. MCB is also catering to the growing
middle class by providing new asset and liability
products. The Bank provides 24 hour banking
convenience with the largest ATM network in
Pakistan covering 30 cities with over 197 ATM
locations. The Bank’s Rupee Traveller Cheques
have been market leaders for the past six years.
 MCB Awards
In a continuous winning streak,
MCB takes pride in being
conferred with Euromoney's
prestigious award of excellence,
for being the "Best Bank in
Pakistan" for the four times in
the last five years, i.e. 2004,
2003, 2001, 2000.
 MISSION STATEMENT

To become the preferred provider of

quality financial services in the
country with profitability and
responsibility and to be the best
place to work.
Board of Directors

Mian Mohammad Mansha Chairman

S. M. Muneer Vice Chairman
Tariq Rafi Director
Sheikh Mukhtar Ahmed Director
Mohammad Arshad Director
Shahzad Saleem Director
Sarmad Amin Director
Mian Umer Mansha Director
Aftab Ahmad Khan Director
Mohammad Aftab Manzoor President & CEO
PRINCIPLES OF PERFORMANCE

o Customer Focus
o Quest For Quality
o Employees Request
o Team Based Approach
o Good Corporate Citizenship
STRUCTURE OF BRANCH
MANAGEMENT
Chief Manager/
Manager

Manager Manager Manager

operation credit foreign
exchange

Incharge / Incharge/office
officer credit r credit
marketing operation
 Manager foreign
exchange

Incharge/ Incharge/ Incharge/

officer F.C & officer export officer import
remittances

Manager operation

Incharge/ Incharge Incharge/ Officer CD

officer / officer officer Dept.
clearing A/C remittance Cash
Dept. Dept. Dept. officer1
Cash
officer2
Cash
officer3
PRODUCT CATALOGUE
Cash management services for
corporate customers. Helps
customers substantially reduce
their receivable collection time
frame, improve cash flow and
business management.
The Largest network of over 269 on-
line branches in the country and
growing. Providing customers with
24x7 real time on-line transaction
facilities.
ATMs and growing. Get 24 hour The
nation's largest network of over 197
convenience of cash withdrawal, mini
statement, bill payment and funds
transfer services.
Call now for answer to your queries,
banking services, ATM services,
mobile banking services, RTC
services, tele-banking services and
MCB product information.
A deposit account for customers with
substantial balance offering profit on
a daily product basis with the facility
of unlimited withdrawals.
Cash withdrawal facility at over
630,000 ATMs worldwide.
Convenience of shopping at over 5
million POS locations globally.
A secure instrument of pyment,
offering CASH FREE convienence.
It is the most powerful Debit and
ATM Card providing 24 hour direct
access to your bank account.
Islamic banking services through
exclusive units / branches offering a
range of liability and asset based
Sharia compliant products like
Musharika, Murabaha, Ijara and
Istasana.
Banking at your fingertips. Dial in
anytime to get information regarding
balance and mini statements.
MCB Network for Electronic
Transactions is an electronis hub for
ATM sharing plus other touch
points.The nation's largest operating
switch with the highest transaction
volume.
Flexible and competitive home
financing facility with options of
home purchase, construction and
renovation.
One of the most popular deposit
accounts offered by MCB.
Get a loan in an instant at any MCB
branch. Offering same day financing
facility against liquid collateral at
competitive pricing.
Fastest to Pakistan, anywhere in
Pakistan. International remitances
with a two-way messaging facility
delivered at your doorstep within
24 to 72 hours.
A local Point of Sale acquiring
network facilitating acceptance of
all major card brands.
Car financing and leasing at
competitive rates with flexible options.
Car4u finances both semi-commercial
and non-commercial vehicles for
personal and business use.
The most widely accepted way to pay
cash for travel related purposes. A
safe and secure way to make
payments nationwide.
Personal loans for salaried
individuals of reputed local and
foreign companies at rates tailored
to customer's repayment capacity.
Providing access to diversified
financing options including working
capital loans, term loans, trade
finance services and investment
banking.
MCB, the leader in banking
technology, now provides the
convenience of banking on the
internet. You can now access your
account anytime and anywhere.
The best protection for your
valuables. Lockers of different
capacities are available
nationwide.
RATIO ANALYSIS
 RATIO ANALYSIS
Ratio analysis is an important and age-old technique of
financial analysis. Ratios are important and helpful in
the reference that:

These simplify the comprehension of financial

statement and tell the whole story of changes in the
financial conditions of the business.

These provide data for inter-firm comparison. The

ratios highlight the factors associated with successful
and unsuccessful firms, also reveal strong and weak
firms.
These help in planning and forecasting. These can
assist management in its basic functions of
forecasting, planning, coordination and control.

These help in investment decisions In case of

investor and lending decision in case of bankers.

However, the ratios are only indicators; they

cannot be taken as final regarding good or bad
financial position of the business.
FINANCIAL
RATIOS
1.Return on 1999 2000 2001 2002 2003
equity

N.P.A.T x100 568950 734729 1108176 1738594 2230145

Share holders 3914155 4483670 4986060 6313957 7726164
equity
=14.53% =16.38% =22.22% =27.53% =28.86%

2.Return on
assets

N.P.A.T x 100 568950 734729 1108176 1738594 2230145

Total assets 158584818 163680586 187053515 235138567 272323619

=0.358% =0.448% =0.592% =0.739% =0.818%

3.Earning per
share
N.P.A.T 568950 734729 1108176 1738594 2227132
No of outstanding 182100 220300 242300 266545 306527
shares

=3.12 =3.33 =4.57 =6.52 =7.27

 1999 2000 2001 2002 2003

4.Return on 568950 734729 1108176 1738594 25356261

deposit 130325036 135990147 154544451 182705716 211511393
N.P.A.T x 100
Total deposit =0.439% =0.540% =0.717% =0.951% =11.98%

5.Cash/
21273371 17328837 24285589 20055460 25356261
deposit
130325036 135990147 154544451 182705716 211511393
ratio
Cash x 100 =16.32% =12.74% =15.71% =10.97% =11.98%
Deposit

6.Total 130325036 135990147 154544451 182705776 211511393

deposit / net 3914155 4483670 4986060 6313957 7726164
worth ratio
Total deposit =33.29 =30.33 =30.99 =28.93 =27.37
Net worth Times times times times times
 1999 2000 2001 2002 2003

7.Interestexpenc/ 9351947 7223950 7544897 6074682 2932693

Total Exp. ratio 16821736 15565853 17132674 14875007 11288881

Interest exp x100 =55.59% =46.40% =44% =40.83% =25.97%

Total exp.

8.Int.income/ 15755990 14126332 17033225 15385869 10369994

Total income ratio 18032275 16887648 19233850 17976027 14901805

Int. income x 100 =87.37% =83.64% =88.55% =85.59% =69.58%

Total income

9.Net profit margin 568950 734729 1108176 1738594 2230145

18032275 16887648 19233850 17976027 14901805
N.P.A.T x 100
Total income =3.15% =4.35% =5.76% =9.67% =14.96%
 1999 2000 2001 2002 2003

10-Cost of lending 15755990 14126332 17033225 15385869 10369994

67399328 86312721 76584120 78923737 97200179
ratio
=23.37% =16.36% =22.24% =19.49% =10.66%
Interest income x 100
Total advances

11.Loan to advances 8780541 5856198 8946624 23587824 34227311

ratio 67399328 86312721 76584120 78923737 97200179

=13.02% =6.78% =11.68% =29.8% =35.21%

Total loan x 100
Total advances

12.Total debt ratio 8780541 5856198 8946624 23587824 34227311

158584818 163680586 187053515 235138567 272323619
Total debt x 100
=5.53% =3.57% =4.78% =10.03% =12.56%
Total assets
 1999 2000 2001 2002 2003

13.Debt equity ratio

8780541 5856198 8946624 23587824 34227311
Total external debt 3914155 4483670 4986060 6313957 7726164
Total internal debt
=2.24 =1.30 =1.79 =3.73 =4.43

14.Proprietory ratio
3914155 4483670 4986060 6313957 7726164
Share holders fund
158584818 163680586 187053515 235138567 272323619
Total assets
=2.46% =2.73% =2.66% =2.68% =2.83%

15.Current ratio

Current assets 66882668 53809750 79717824 109632002 153633103

5292910 7803443 8097178 6261957 8396320
Current liabilities
=12.63 =6.89 =9.84 =17.50 =18.29
 1999 2000 2001 2002 2003

16.Average profit 568950 734729 1108176 1738594 2230145

per branch 1215 1210 1061 1045 986
Net profit
=468.27 =607.21 =1044.46 =1663.7 =2261.8
No of branches

17.Cost of 9351947 7223950 7544897 6074682 2932693

borrowing 130325036 135990147 154544451 182705716 211511393
Mark up paid x 100
deposits =7.17% =5.31% =4.88% =3.32% =1.38%

18.Long term debt

8780541 5856198 8946624 23587824 34227311
to fixed assets 3479458 3482950 3659646 3825045 4582823
long term debt x 100
fixed assets =2.52% =1.68% =2.44% =6.16% =7.46%
 GRAPHICAL
REPRISENTATION OF
RATIOS
1-RETURN ON EQUITY

This ratio is more meaningful for shareholders who are

interested to know the profit earned by a bank because the
dividend is paid from available profit. Higher ratio means factor
of production is fully utilized and shows good position. Here
return on equity has increasing trend which is good.
30.00%
25.00%
N.P.A.T x100
20.00% Share holders equity
15.00%
10.00%
5.00%
0.00%
1999 2000 2001 2002 2003
2-RETURN ON ASSETS

This ratio shows that the return is greater in 2003 as compared to

return on assets in the year 2002, 2001, 2000 and 1999 (gradual
increase). It means the assets of business are fully utilized in more
and efficient way and also shows the favorable trend of business.

1.00%

0.80%

0.60%
N.P.A.T x 100
0.40% Total assets

0.20%

0.00%
1999 2000 2001 2002 2003
3-EARNING PER SHARE

This ratio really improves as it has gone with the increase in

profit. Earning per share is a good measure of profitability when
compared with similar other business. Here increasing EPS, which
will surely increase share price. This ratio has same trend as the
return on the assets. It is improving in every succeeding year.

8
7
6
5
4 Earning per share
3 N.P.A.T
2
1
0
1999 2000 2001 2002 2003
4-RETURN ON DEPOSIT

Return on deposit has increasing trend which is favorable. This

ratio shows that with increase of deposit , profit margin also
increases. Increase in return on deposit is positive sign.

1.20%
1.00%
0.80%
0.60% N.P.A.T x 100
Total deposit
0.40%
0.20%
0.00%
1999 2000 2001 2002 2003
5-CASH TO DEPOSIT RATIO

This ratio shows that how much cash is available to meet the
demand liabilities of the depositors. The bank should have
reasonable cash balance to meet the customer requirements
against their deposits in the bank. In this case bank ratio has
increased in 2003 as compared to 2002 which is a good sign from
the bank point of view.
20.00%

15.00%
Cash x 100
10.00% Deposit

5.00%

0.00%
1999 2000 2001 2002 2003
6-TOTAL DEPOSIT / NET WORTH

This ratio has decreasing trend but this decrease is due to

increase in net worth. It will provide benefit to the bank in long
run and in coming years.

35
30
25
20 Total deposit
15 Net worth
10
5
0
1999 2000 2001 2002 2003
7-INTEREST EXPENSE TO TOTAL EXPENSE RATIO

This ratio shows a decreasing trend. This decrease in the interest

expense is due to the decrease in borrowings of the bank, or it
might be due to decrease in the payable interest rate to the
lenders.

60.00%
50.00%
40.00%
30.00% Interest exp x100
Total exp.
20.00%
10.00%
0.00%
1999 2000 2001 2002 2003
8-INTEREST INCOME TO TOTAL INCOME RATIO

A decreasing figure shows that rate of mark up has come down and
it is bad for earnings of bank. It shows that interest income as
compared to the total income of the bank is decreasing and it
might be due to increase in other income of the bank.

100.00%

80.00%
Int. income x 100
60.00%
Total income
40.00%

20.00%

0.00%
1999 2000 2001 2002 2003
9-NET PROFIT MARGIN

This ratio has increasing trend and ultimately its result is

increase in the net profit of the bank. So bank has improving
trend from the point of view of income and will be improving in
coming years.

16.00%
14.00%
12.00%
10.00% N.P.A.T x 100
8.00% Total income
6.00%
4.00%
2.00%
0.00%
1999 2000 2001 2002 2003
10-COST OF LENDING RATIO

Here we can analyze very interesting situation, as there is

decrease in interest income in 2003 and the ratio has also
decreased, reason is that interest income has decreased but
amount of advances has increased resulting in decrease in cost
of lending that shows the cost bear by the bank while lending the
money. Higher the ratio is not good for institution. So, situation
is good in 2003 as compared to 2002, 2001, 2000 and 1999.
25.00%

20.00%
Interest income x 100
15.00% Total advances
10.00%

5.00%

0.00%
1999 2000 2001 2002 2003
11-LOAN TO ADVANCE RATIO

Analysis shows an increase in loan and also an increase in the

advances. As rate of increase of loans is greater than that of
advances, therefore, it has resulted in an overall increase in the
ratio. Before giving loans to bank institutions have an eye on
such ratio. The increase in ratio shows that bank loans are
increasing as compared to their advance which is not beneficial
both from lender and banker point of view.
40.00%
35.00%
30.00%
25.00%
Total loan x 100
20.00%
Total advances
15.00%
10.00%
5.00%
0.00%
1999 2000 2001 2002 2003
12-TOTAL DEBT RATIO

Total assets to the bank increased in 2003 as compared to last

three years which has resulted in an increase in loan. Therefore,
the net result is increase in the loan to assets ratio. As lower this
ratio is more beneficial to the bank so performance is not good
in 2003 because bank has purchased most of its assets on loan.
14.00%
12.00%
10.00%
8.00% Total debt x 100
Total assets
6.00%
4.00%
2.00%
0.00%
1999 2000 2001 2002 2003
13-DEBT EQUITY RATIO

This ratio depicts the relation between equity and debt financing.
Lower the ratio creditors feel more comfortable. In the year 2003,
ratio shows an increase. Because lesser is the equity financing,
lesser will be the soundness of the bank. The reason behind this
increase is an increase in external borrowings and increase in
internal debt also, but rate of increase in internal borrowings is
lesser. It is necessary to keep the bank fund up to 40% as reserve.
5

3 Total external debt

Total internal debt
2

0
1999 2000 2001 2002 2003
14 - PROPRIATORY RATIO

Higher the ratio is more beneficial for the business so good

performance is in view currently. This ratio explains that
participation in the assets by the shareholder’s fund is limited by
outsider’s fund but when we take year under review (2003) we
see that the ratio has increased in 2003 as compared to the year
2002. Reason behind this is that the increase in assets is financed
by outsider’s fund rather than the fund provided by the
shareholders.
2.90%
2.80%
Share holders fund
2.70%
Total assets
2.60%
2.50%
2.40%
2.30%
2.20%
1999 2000 2001 2002 2003
15-CURRENT RATIO

Should not be less than 2. This indicates that the current assets
are twice than current liabilities. Care should be taken that
current assets are not unduly inflated by over valuation
Here in this case the current ratio of MCB is greater than
standard of 2:1 which is a good sign and shows good liquidity
position of the bank.
20

15
Current assets
10 Current liabilities

0
1999 2000 2001 2002 2003
16-AVERAGE PROFIT PER BRANCH

The average profit per branch is increasing rapidly every year. It

is healthy, good and encouraging for bank.

2500

2000

1500 Net profit

1000 No of branches

500

0
1999 2000 2001 2002 2003
17-COST OF BORROWING

Calculation made on the base of data available shows that cost of

borrowing has decreased in 2003, which is a healthy sign for the
bank. Overall ratio is also decreased over 5 years. This is mainly
due to decrease in advances.
8.00%
7.00%
6.00%
5.00% Mark up paid x 100
4.00% deposits
3.00%
2.00%
1.00%
0.00%
1999 2000 2001 2002 2003
18-LONG TERM DEBT TO FIXED ASSETS RATIO

This ratio explains that participation in the fixed assets by the

debts of long term nature. It was established that fixed assets
should be purchased out long term debts. The standard ratio is
1:1.But when we take year under review (2003) we see that the
ratio has increased the standard in 2003, 2002, 2001, 2000 and
1999. Also a gradual increase is happened in the ratios which
mean bank is acquiring its fixed assets by utilizing long term
debts efficiently.
8.00%
7.00%
6.00%
5.00%
long term debt x 100
4.00%
fixed assets
3.00%
2.00%
1.00%
0.00%
1999 2000 2001 20002 2003
 Return on Equity Return on Deposits Int. Exp. To T. Expense
30.00% 1.20% 60.00%
25.00% 1.00% 50.00%
20.00% 0.80% 40.00%
15.00% 0.60% 30.00%
10.00% 0.40% 20.00%
5.00% 0.20% 10.00%
0.00% 0.00% 0.00%
1999 2000 2001 2002 2003 1999 2000 2001 2002 2003 1999 2000 2001 2002 2003

Return on Assets Cash To Deposit Ratio Int. Income To T. Income

1.00% 20.00% 100.00%

0.80% 80.00%
15.00%
0.60% 60.00%
10.00%
0.40% 40.00%
5.00%
0.20%
20.00%
0.00% 0.00%
0.00%
1999 2000 2001 2002 2003 1999 2000 2001 2002 2003
1999 2000 2001 2002 2003

Earning Per Share T. Deposit / Net Worth Net Profit Margin

16.00%
8 35
14.00%
7 30
6 12.00%
25
5 10.00%
20 8.00%
4
15 6.00%
3
2 10 4.00%
1 5 2.00%
0 0 0.00%
1999 2000 2001 2002 2003 1999 2000 2001 2002 2003 1999 2000 2001 2002 2003
 Cost of Landing Ratio Debt Equity Ratio Avg. Profit Per Branch
25.00% 5 2500

20.00% 4 2000

15.00% 3 1500

10.00% 2 1000

5.00% 1 500

0.00% 0 0
1999 2000 2001 2002 2003 1999 2000 2001 2002 2003 1999 2000 2001 2002 2003

Loan To Advance Ratio Proprietary Ratio Cost of Borrowing

40.00% 2.90% 8.00%
35.00% 2.80% 7.00%
30.00% 2.70% 6.00%
25.00% 5.00%
2.60%
20.00% 4.00%
2.50%
15.00% 3.00%
10.00% 2.40% 2.00%
5.00% 2.30% 1.00%
0.00% 2.20% 0.00%
1999 2000 2001 2002 2003 1999 2000 2001 2002 2003 1999 2000 2001 2002 2003

Total Debt Ratio Current Ratio Long Term Debt to Fixed Asset
8.00%
14.00% 20
7.00%
12.00%
15 6.00%
10.00% 5.00%
8.00% 10 4.00%
6.00% 3.00%
4.00% 5 2.00%
1.00%
2.00%
0 0.00%
0.00% 1999 2000 2001 20002 2003
1999 2000 2001 2002 2003
1999 2000 2001 2002 2003
STRENGTHS

o Customer Loyalty
o Businessman Friendly Management
o Long Standing in the Market
o Strict Implementation of PRs
THREATS

o Increasing number of foreign banks

in country.
o Privatization of domestic banks.
o Specialized services provided by the
other banks.
o Inconsistency in Government policies
in business and economic sector.
o Growing technology.
o Strict regulations of government over
credit facility.
RECOMMENDATIONS

o Staff Strength
o Working Extra Hours
o Training of Staff
o Revision of Pay Structure
o Non – rotation of Staff
o Increase in Foreign Branches
RECOMMENDATIONS

o Upgrading of Customer Services

o Adoption of Global Banking Structure
o Attention to Social Issues
o Foreign Training of Employees
o Refresher Courses
QUESTIONS
ANSWERS