Professional Documents
Culture Documents
Banking sector owes a pivotal importance in the economy of any country through its variant
functions. This basic motivator that stressed me to join any bank for Internship Training.
Moreover, the experience and practice learned during this tenure also prove very helpful and
facilitating in the forthcoming professional life.
This report is the result of 6 week Internship in Muslim Commercial bank, Fatimah Jinnah
Road Branch Sargodha. The motive behind selecting this bank is that it is one of the Top 10
Asia, Bank‘s. The fact remains that Muslim Commercial bank, posses an excel/cut and historical
importance being the most senior and leading in terms fluids and services to Pakistan at all ages
of life.
I had with the strong belief that this report will guide and facilitate the readers to understand the
functioning of banking system and more importantly have good knowledge about Muslim
Commercial bank. My utmost efforts to elaborate this report wit, material read, listened and
observed. Yet, I feel that this period was not long enough to learn and understand the complex
and widespread functioning of banking sector.
I am really thankful to the entire staff members of the aforesaid branch for the friendly and
cooperative behavior during my internship.
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I also want to show my gratitude to my loving parents and humble teachers who
make me able to be at this position.
I also thankful to all the staff members at MCB Fatimah Jinnah Road Branch
especially Mr. Muhammad Farooq Ali Khan (Manager).
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I dedicate whole of my education along with my life to my beloved parents and respected
teachers, who were always kind to me.
May God Bless Them (Aamin).
Muhammad Nasir Khan
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TABLE OF CONTENT
Sr. No. Title Page No.
1 Preface 1
2 Acknowledgement 2
3 Dedication 3
4 Table of Content 4
5 Executive Summery 6
6 History of Organization 7
7 History of MCB 10
8 Vision 12
9 Mission 12
10 Organization Structure 13
11 Core Values 14
12 Awards of MCB 15
13 Product and Services of MCB 17
14 Commercial Banking 17
15 Loan Products 18
16 Corporate Banking 20
17 Online services 20
18 Islamic Banking 22
19 Main Departments 23
20 General Banking Department 23
21 Advance/ Load Department 27
22 Exchange Department 27
23 Work as an internee 30
24 Analysis 32
25 SWOT analysis 32
26 Financial Analysis 34
27 Balance Sheet (From 2007-2009) 34
28 Profit & Loss Account (From 2007-2009) 35
29 Common size Analysis 36
29 Vertical Analysis of Balance Sheet 36
30 Vertical Analysis of Income Statement 37
31 Comments on Vertical Analysis 37
32 Horizontal Analysis of Balance Sheet 39
33 Horizontal Analysis of Income Statement 39
34 Comments on Horizontal Analysis 40
36 Ratio Analysis 41
37 Current Ratio 41
38 Quick Ratio 42
39 Working Capital 44
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40 Cash Ratio 45
40 Debt to Equity Ratio 46
41 Debt Ratio 47
42 Return on Investment 48
43 Interest Coverage Ratio 49
44 Return on Assets 50
45 Income/Expense Ratio 51
46 Earning Per Share 52
47 Price/Earning Ratio 53
48 Dividend Payout Ratio 54
49 Dividend Yield Ratio 55
50 Comments on Ratio Analysis 56
51 Conclusion 58
52 Recommendation 59
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EXECUTIVE SUMMARY
MCB Bank Limited (Formerly Muslim Commercial Bank Limited) has a solid
foundation in Pakistan, with a network of over 1081 branches, with 9397 permanent employees
over 900 of which are Automated Branches, over 495 MCB ATMs in 55 cities nationwide and a
network of over 12 banks on the MNET ATM Switch.
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At the time of independence, commercial banking facilities were provided fairly well
here. There were 487 offices of schedule banks in the territories now constituting Pakistan. An
Expert committee was appointed. The committee recommended that the reserves bank of India
should continue their function in Pakistan until 30 September. 1948, and Pakistan would take
over the management of public debt and exchange control from reserve bank of India on April
1948 and that Indian notes would continue to be legal tender in Pakistan until 30 September
1948. Moreover the banks including those having their registered office in Pakistan transferred
them to India in order to bring a collapse of a new state. By 30 June 1948 the number of the
offices of scheduled banks in Pakistan declined from 487 to only 195.In order to make necessary
arrangement for the assumption of control and expert committee was appointed to recommend
necessary steps, including the required legislation to establish a central bank for Pakistan. The
governor-general of Pakistan Quaid-i-Azam Muhammad Ali Jinnah inaugurated the State Bank
of Pakistan order was promulgated on May 12, 1948. The first Pakistani notes were issued in
October 1948 in the State Bank of Pakistan withdrew the reserves Bank of India notes of the
value of Rs. 125.02 crores with the help the Pakistan notes.
On 1st January, 1947 all Pakistani banks were nationalized through Nationalization Act
1974. Under this law all Pakistani Banks become a pubic property. All small banks were merged
in bigger banks to create five major Pakistani banks. These banks were to control by Pakistani
Banking Council. There are still controversies about this act of Govt. as whether it contributed in
success of failure of banks. However the major changes after Nationalization were as follows:
Working of banks was extended to under-developed areas.
Market expansion for credit and deposits.
Decrease in service level of bank officers.
Decrease in profitability as well.
In 1990 the govt. decided to denationalize all the nationalized institutions. Same was also
suggested in banking sector. For this purpose, amendments were made to Nationalization Act
1974 and two nationalized banks were privatized. Along with this a permission to open banks in
private sector was also granted. The rules regarding establishment of new banks and for
incoming foreign banks were also relaxed. The two privatized banks are: MCB taken up by a
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private group in April, 1991 & ABL taken up by its own employees in September, 1991. After
these changes a large number of private and foreign banks started their operation in Pakistan
Now, Pakistan has a well-developed banking system, which consists of a wide variety of
institutions ranging from a central bank to commercial banks and to specialized agencies to cater
for special requirements of specific sectors. The country started without any worthwhile banking
network in 1947 but witnessed phenomenal growth in the first two decades. By 1970, it had
acquired a flourishing banking sector.
Pakistan's banking sector has remained remarkably strong and resilient during the world
financial crisis in 2008–09, a feature which has served to attract a substantial amount of FDI in
the sector. Stress tests conducted on June 2008 data indicate that the large banks are relatively
robust, with the medium and small-sized banks positioning themselves in niche markets.
Banking sector turned profitable in 2002. Their profits continued to rise for the next five years
and peaked to Rs 84.1 ($1.1 billion) billion in 2006.
During the fiscal year of 2008-2009, total assets of all the scheduled banks increased by Rs
574.7 billion. Total assets grew by 6.4 percent from Rs 8861 billion in June 2008 to Rs 9436
billion in June 2009. During the fiscal year of 2008-09, there was also an increase of Rs 248
billion in the net advances of the scheduled banks. Net advances grew by 8.67 percent from Rs
2873 billion in June 2008 to Rs 3128 billion in June 2009.
Commercial Banks:
The banks in any country speeded over with an objective to get the excessive money Form the
public in the form of deposits and providing finance to the investors. These Banks are in the
ground for profit earning motive and in competition with each other. These banks are providing
the basic services to the customers in the form of deposits, Advances, remittances and others.
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NATIOINALIZATION:
In January 1974, the government of Pakistan nationalized MCB following the banks
(Nationalization) Act 1974, subsequently, in June 1974, Premier Bank limited merged with
MCB.
PRIVATIZATION:
A wave of economic reforms swept Pakistan in the late 1990’s introducing the need for
privatization of state owned banks and companies in April 1991, MCB because Pakistan’s first
privatized Bank, the government of Pakistan transferred the management of the Bank to Nishat
Group– group of leading industrialists of the country by selling 26% shares of the Bank. With a
view to broaden equity holding the government sold 25% of the paid up capital to the general
public. In terms of agreement between the government of Pakistan and the Nishat Group
additional 24% shares have been purchased by the group making their holding 50%. As of June
2008, the Nishat Group owns a majority stake in the bank. 25% was retained by the government.
Now it is fully privatized.
Mian Mohammad Mansha is the Chairman of the group (and also MCB) and has
played instrumental role in its success. In recognition of Mr. Mansha’s contribution, the
Government of Pakistan has conferred him with "Sitara-e-Imtiaz", one of the most prestigious
civil awards of the country.
MCB is Pakistan’s fourth largest bank by assets having an asset base of US$6.7 billion,
and the largest by market capitalization having a market capitalization of US$4.1 billion. The
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Bank has a customer base of approximately 4 million and a nationwide distribution network of
1,026 branches, including 8 Islamic banking branches, and over 300 ATMs, in a market with a
population of 160 million.
PRESENT STATUS
Over the years Muslim Commercial bank fostered strong bonds with its customers. MCB
understands them; their needs. They feel comfortable with MCB; its their bank; it responds to
them; listens to them; partners with them; grows with them. That is why it is one of the leading
commercial banks of the country, providing a wide range of modem banking services. At
present, the banking network consists of over 1000 branches along with – controlling offices
known as Area Head offices and Regional Head offices. These controlling offices are responsible
for the smooth operation of the bank on National & international levels. The entire financial and
operational objectives are achieved with the Human Resources strength over 12000 employees.
The bank is known as the major credit provider, best place of working and paymaster in the
financial (money market) of the country. Over the past few years, MCB's profits have been hit by
the need to increase provisions coverage and restructuring costs associated with the downsizing
of the workforce and branch network, whilst there is some need to boost provisions, these
charges (necessary to bring the bank back into shape) are largely over. It has also slowly
received permission from the SBP to shut down a number of unprofitable branches.
In 1999 EURO MONEY recognized MCB as the best domestic bank in Pakistan. The banking
sector has been worst hit by the external account crisis that engulfed the country following the
nuclear tests. Due to the nature of banks as a medium for debt transactions the country's technical
default and subsequent rating downgrade impacted them the most. Those core concerns are still
not fully alleviated in the view of the investors. The closest that investors have come to positive
expectations regarding external account sustainability and a possible re-rating was back in the
fourth quarter of the year 1999, and this led to MCB climbing to Pakistani rupees 56 per share.
Resumption of the IMF funding and a possible rescheduling of bilateral debt will positively
impact the banking sector and especially MCB.
State Bank of Pakistan continued the process of Banking Reforms, which included strengthen of
Prudential Regulations and focus on recovery of defaulted loans. In 1999 return on Government
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Savings Scheme and Treasury Bills was reduced, which led to a lowering of lending rates,
resulting in erosion of margins for banks but it is likely to give a boost to economic activity.
MCB Rupee travelers Cheques continued to maintain their leadership position in the industry
and sales registered a 45% growth over last year. MCB successfully introduced the Rs.100, 000
denomination cheque countrywide and introduced RTC dialup tele-verification facility from
Lahore city as well.
Mainly there are three types of Banking in MCB. These are:
“To be the leading financial services provider, partnering with our customers for a
more prosperous and secure future.”
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ORGANIZATIONAL STRUCTURE
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Core Values
INTEGRITY
We are the trustees of public funds and serve our community with integrity. We believe
in being the best at always doing the right thing. We deliver on our responsibilities and
commitments to our customers as well as our colleagues.
RESPECT
We respect our customer’s values, beliefs, culture and history. We value the equality of
gender and diversity of experience and education that our employees bring with them.
We create an environment where each individual is enabled to succeed.
EXCELLENCE
We take personal responsibility for our role as leaders in the pursuit of excellence. We
are a performance driven, result oriented organization where merit is the only criterion
for reward.
CUSTOMER CENTRICITY
Our customers are at the heart of everything we do. We thrive on the challenge of
understanding their needs and aspirations, both realized and unrealized. We make every
effort to exceed customer expectations through superior services and solutions.
INNOVATION
We encourage and reward people who challenge the status quo and think beyond the
boundaries of the conventional. Our teams work together for the smooth and efficient
implementation of ideas and initiatives.
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Awards of MCB:
MCB has become the only bank to receive the Euromoney award for the seventh time and
Asiamoney award for fifth time in the last ten years.
MCB won “Best Bank in Asia” award in 2008. MCB also won the "Best Bank in
Pakistan".
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PRINCIPLES OF PERFORMANE
Customer Focus:
Over the years MCB has developed strong relationships with its customers by understanding
their needs and treating them with respect, dignity and importance. The driving force behind its
commitment and services is its focus on customers, ensuring that it not only meets, but exceeds
their expectations.
Employees Respect:
MCB encourages diversity and treat each of our employees with fairness. MCB gives
constructive feedback for their continuous development and seek suggestions from all employees
for further improvement. The bank ensures that quality performance is acknowledged and
rewarded and exercise utmost responsibility in decision-making with regards to our employees.
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MCB Business Sarmaya and thus improve your business, avail lucrative opportunities and
expand your business, with absolute satisfaction of cash flows.
MCB Rupee Traveler's Checks were first introduced in 1993 as safe cash for traveling
and travel related purposes. The product has been extremely popular and is preferred over cash
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by customers while traveling and in all walks of life. MCB Rupee Traveler's Checks- The safest
way to carry Cash.
CORPORATE BANKING
Cash Management Services:
MCB’s network of over 1700 branches in Pakistan enables it to collect and disburse
payments efficiently with its cash management services. This also enables it to offer you a choice
of paper based or electronic fund transfer solutions including collection amounts, cross branch
on-line transactions etc.
Working Capital Loans:
Based on the customer’s specific needs, the Corporate Bank offers a number of different
working capital financing facilities including Running Finance, Cash Finance, Export Refinance,
Pre-shipment and Post- shipment etc. Tailor- made solutions are developed keeping in view the
unique requirements of your business.
Term Loans:
MCB offers Short to Medium Term Finance to meet capital expenditure and short term
working capital requirements of our customers. The loans are structured on the basis of
underlying project characteristics and cash flows of the business.
Trade Finance Services:
Under Corporate Banking MCB offers trade finance services that include an entire range
of import and export activities including issuing Letters of Credit (L/Cs), purchasing export
documents, providing guarantees and other support services.
ONLINE SERVICES
MCB ATM SERVICES
With a solid foundation of over 50 years in Pakistan, with more than 750 automated
branches, 269 online branches, over 222 MCB ATMs in 41 cities nationwide and a network of
over 12 banks on the MNET ATM switch, MCB is positioned at the forefront of the banking
industry in Pakistan. This success has been possible because of a never-ending drive to achieve
higher levels of excellence, constantly striving to raise the level of performance.
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Virtual Banking:
MCB Virtual Internet Banking offers you the convenience to manage and control your
banking and finances – when you want to, where you want to. MCB’s Virtual Internet
Banking facility is simple and secure. And it is free of cost. With MCB Virtual Internet Banking
you can access any of the banking services, 24 hours a day, 7 days a week and throughout the
year.
MCB Virtual Internet Banking offers a wide range of online services which makes your banking
accessible anytime and from anywhere.
Detailed Account Summary of all listed accounts.
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Mini-statements of each of the listed accounts showing recent transaction history for that
account(s).
Statement-by-Period of each of the listed accounts, based on the period specified.
Immediate or Scheduled Transfer of Funds between your own accounts, as well as to
third-party accounts setup as beneficiaries, maintaining accounts with MCB.
Scheduling of ‘One-Time’ as well as ‘Recurring’ Funds Transfers.
Payment of utility bills for registered Utility Companies.
Immediate or Scheduled Bills Payment. Scheduling of ‘One-Time’ as well as ‘Recurring’
bill payments. Option for ‘Full’ or ‘Partial’ payment based on the payment conditions
specified by a particular Utility Company.
Bulk Salary Transfer for Corporate Customers, to facilitate them in paying salary to the
corporate employees, who maintain accounts with MCB.
Bulk Funds Transfer for Corporate Customers.
Check Book Request for any of your listed accounts.
Payment/Transfer Alerts for reminding, in advance, prior to the processing of specified
payments and transfers.
Personal Alerts for reminding of pre-specified events and occasions.
ISLAMIC BANKING
Deposit Schemes:
For customers who are looking for a deposit opportunity where they can purse their funds and
reap halal returns on it, we offer the following products:
Al-Makhraj Saving Account
Al-Makhraj Ianat Account
Al-Makhraj Term Deposit
Fund Based Facilities
Ijarah Products
MCB’s Islamic Ijarah, analogous to the English term 'leasing’, is based on the ‘Ijarah wa
Iqtina’ concept which means the sale of the asset to the lessee after the Ijarah has matured. Under
this scheme, MCB will be the owner of the asset, and the customer (lessee) will be given the
asset to use for a certain period of time in return for monthly rental payments. MCB will give a
separate unilateral undertaking that it will offer to sell the asset to the customer (lessee) at the
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maturity of the Ijarah agreement at a price that may be equal to the security deposit amount,
hence the term ‘Wa Iqtina’.
Types of Ijarah:
1. Car Ijarah
2. Equipment Ijarah
GENERAL BANKING
General banking deals with following services:
REMITTANCE
It is transfer of funds. Funds can be transferred in shape of pay orders, demand draft, mail
telegram and telegraph transfer. Payments of fees of different organizations, fulfillment of
tenders, and collection of funds are the main functions of remittance. Maximum part of general
banking depends on this department.
Issuance of different kinds of remittance:
PAY ORDER
Pay order is the property of person/company that has to take the benefit of the amount
being pay ordered by the concerned person. Pay orders are made for the payment of fees, tender
or issued for the payments of dealings. These are required for the proof of payments made
between the bank and the customer in the favor of beneficiary. These are noted in printed block
letters and yearly serial numbers are issued from computerized system.
DEMAND DRAFT
Demand drafts are made for the beneficiary for payments, funds etc, these are made for
outstation branches of the concerned banks. An advice is also made for the confirmation of the
draft send. These are also approved and safe way of sending amount to the beneficiary.
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These are also noted by computerized system and a serial number is issued from the
computer system.
MAIL TRANSFER
Mail Transfer is made with in the city for transfer of amount. An advice is also made for
the confirmation of the draft send. These are also approved and safe way of sending amount to
the beneficiary. These are also noted by computerized system and a serial number is issued from
the computer system.
TELEGRAPHIC TRANSFER
Telegraph Transfer is telegram message for transferring the amount from one branch to
other branch. A message advice and a confirmation advice both are made with TT numbers that
are issued for TEST. TEST depends on two steps:
1. First TEST is on Day, Date and Code Number of branch.
2. Second TEST is on Currency, whether Pak rupees or foreign currency, amount and TT
number issued from manual registers and confirmed from computerized system.
VOUCHERS
Vouchers are made for records and they should be completed in all respects, the amount,
date, its head, particulars, amount in words, authorized signatures and contra advice or voucher
should be present. Vouchers are advice either debit or credit slips. They are contra of each other.
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If any voucher of debit is passed its contra credit voucher should also be passed for the balancing
of accounts, their respective sheets.
INWARD CLEARING
It depends on those checks that are cleared inter branch and with in the city. As the
concerned branch receive any type of clearing check first of all physical checking is taken place.
For clearing procedure there should be two days margin. These cheques have their vouchers and
the amount of the cheque and voucher should be identical. Than these cheques are stamped and
noted on receiving sheet as well as feed in to the computerized system.
OUTWARD CLEANING
It depends on those cheques that are cleared out side the city. For outward clearing
cheques are send because the home branch has there accounts but checks are of other banks.
Contras of these cheques are vouchers that are recorded in the home branch.
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list and if the name is found than the cards are issued by taking a signature and their PIN codes
are given to them by taking signatures on their ATM card forms. The ATM card has been
activated by the number provided at or with the specific card.
CALL DEPOSIT
It is highly liquid instrument; it can be cashed at any time when needed. This instrument
bears no profit on it. It is mostly used for the purpose of tenders.
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FOREIGN EXCHANGE
LC’S ESTABLISHMENT
Any company can provide its documents containing e-form, bill of lading, short shipment
notice in case of short shipment, packaging list etc. the information provided from the documents
is recorded in the LC establishment portion or section in the computer.
PAYMENT OR RETIREMENT
When the transactions have been completed then approved documents from the
concerned bank are sent to the home bank for the payment or retirement of the LC.
These transactions have recorded in the payment or retirement section of the computer.
FOREIGN REMITTANCES
In this we received the messages through SWIFT for foreign remittances, which we
record in their respective accounts, if these are relates with Pak rupees than it was transferred in
Pak rupees with the latest rate and if this relates to the foreign currency than it is dealt with
accordingly. The amount has been credited to the respective account and the head office has been
debited against it. After crediting the amount to the respective account. All the subsequent entries
have been made in the registers and also in the computer record as the system now have been
upgraded on computers. As we are reporting daily to the head office, so an annexure has been
maintained and faxed to the head office.
ADVANCES / CREDIT
This department deals with the approval of different kinds of loans to different business
entities. The loans, which are being approved by the department, are kept with some securities
such as bonds, properties and any other type of asset, which is equally valuable or more than this
as a guarantee. Every branch has its own limit, if the amount of loans is with in the limit of the
branch then it is being approved by the branch but if the amount of loan is exceeding the limit
then it has to make it approved by the head office. In this case the branch stored all the required
papers and sent them to the head office for necessary action. If the head office approved the loan
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then mostly the period contains a year. And if the party requires more loan than after a year the
loan has been re-approved required that they should have the limit. In case if the head office do
not approve the loans then the return letter came back with the reasons of not approval of loan
and if the reasons have been made approved by the concerned party then it could be sent again
for approval. This whole process is recorded in the back remain with the bank until the party has
not refunded all the amount of loan and bank has the authority to liquidate those assets for
preventing it from loss.
Types of Advances
MCB provides advances, which are of two types. These are as following:
These loan are given specially to traders, business, small industrial units, including cottage
industries, agriculturists, thus ensuring an equitable distribution of bank credit among various
sectors of the country’s economy.
There are following types of advances, which are given to customer on fund basis.
1) Industrial loan
2) Commercial loan
3) Agricultural loan
Industrial Loan
Loans are given to industrial units including cottage industries up to or less than RS. 20 million.
Loans and advances shall not exceed amount specified by marginal restriction on the type of
securities offered. Industrial loans are granted to the manufacturing section of the economy
including finance for fixed investments and working capital requirements of small industries.
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Loan Period
Loans are allowed for a maximum period of 5 years including a maximum grace period of 1
year. In special case up to 10 years also, depending upon the merit of the case.
Commercial Loan
Total principal amount of loans to a single enterprise/borrower shall not exceed RS. 0.5 million.
Maximum maturity is 3 years, depending upon the nature and type of advances, decided upon
case to case basis.
Mark-up
Both for commercial and industrial loan, mark-up will be charges as per existing rate, subject to
changes from time to time. Presently it is 0.51 RS per day per RS. 1000/-.
Mode of Repayment
Equal monthly, quarterly or half-yearly, repayment of principal and interest or as per term of
approval.
Agricultural Loan
Bank provides the agriculture advances in order to enhance and support the agriculture sector of
the country. Bank’s Agriculture division deals with the agriculture advances. These advances are
of following types:
1) Farm Credit
Farm Credit
These are the credits provided by the MCB or purchases of inputs for development of agriculture
sector. Following are two main Sub classes of Farm credit:
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Production Finance
These are short term loans. These loans are provided to farmers for purchases of different types
of input, for example seeds, fertilizer, and pesticides.
I joined Muslim Commercial Bank, Fatimah Jinnah road Branch, Sargodha 26th June 2010. First
day I reached there at 9’O clock and reported to manager who introduced me about the
functioning of the branch and its staff. During these six weeks I worked in different sections of
the branch to learn the maximum practices of banking system.
GENERAL BANKING
First of all, I was asked to work in different sections of General Banking. Here I was attached
Mr. Ayaz Ahmad who has good command on this section. Here we dealt with new customers
who wanted to get information about the branch and will to deal with the branch. This is a very
interesting department because here we met people of different types and deal with them
accordingly.
In this section, I observed the following functions:
CHEQUE AT COUNTER.:
A cheque is presented on the counter with the two signatures of the bearer on the back of the
cheque. Operation’s manager verifies the following points:
The cheque number
Cheque Date
The cheque signature with the signature specimen card position in the officer signature
received at the time of opening the customer’s account in the presence of the officer
Cheque amount in figure and words
Branch stamp in the front of the cheque
Check the nature of cheque, bearer cheque, cross cheque etc.
CHEQUE PAYMENT PROCEDURE.
Receiving and scrutinizing the cheque
Fixing the stamp
Scripting and receipt by the authorized officer
ISSUANCE OF DEMAND DRAFT
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A demand draft is provided to the client in whom he has to specify that on which bank it is
drawn. The amount both in words and figures is written on the demand draft.
DEPOSIT DEPARTMENT:
Deposit department deals with current, saving fixed accounts for a long period.
In current account the bank does not offer any interest you can deposit or withdraw any amount
during banking hours. In PLS account we can only withdraw up to Rs. 25OOO/ without notice if
you want to withdraw more than a notification must he given to the bank. In Fixed account
people normally of old age are more interested because they get a lump sum amount every month
as a markup or interest. These accounts are normally for two to five years.
CLEARING DEPARTMENT:
In clearing department we deal with cheques of our clients drawn on different banks. Here I also
watched the working of clearing house up to 12.00 pm all the branches send their cheques to
main branch. Where they stored and presented in the State Bank of Pakistan.
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ANALYSIS
SWOT ANALYSIS
STRENGTHS
MCB is Successive and Market oriented.
MCB investing huge sums on HR development and training.
Customer default rate is lower as compared to other banks.
MCB has the largest ATM network in the country.
Meeting the challenges of latest Technology by introducing Smart card remit express, mobile banking
etc.
One of the major strengths of MCB is that it has very stable deposit base.
MCB is largest private bank in Pakistan with around 1000 branches, which cover almost every part of
Pakistan.
The bank enjoys competitive advantage over other banks in Pakistan.
The bank enjoys competitive profitability in the industry.
MCB has captured majority of potential customers in Pakistan.
MCB has the accounts of big organizations like OGDCL, PTCL, EFU, PTC etc.
WEAKNESSES:
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THREATS
Other private commercial bank with sound profitability is also a threat to MCB e.g. UBL,
Alfalah, HBL etc.
For the last of many years, Pakistan is facing economic and political instability which is a big
threat.
Afghan war and Iraq war has a deep effect on the economy of Pakistan, which may affect MCB.
Foreign banks are flourishing in field of consumer financing.
People don’t prefer banking culture. They mostly prefer cash transactions
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FINANCIAL ANALYSIS
Balance Sheet Of MCB (From 2007 to2009)
(Rupee in ‘000)
2007 2008 2009
Assets
Cash and balances with treasury 39,683,883 39,631,172 38,774,871
banks
Balances with other banks 3,807,519 4,043,100 6,009,993
Lending to financial intuitions 1,051,372 4,100,079 3,000,000
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Analysis
2007 2008 2009 2007 2008 2009
Assets
Cash and balances 39,683,883 39,631,172 38,774,871 10% 9% 8%
with treasury banks
Balances with other 3,807,519 4,043,100 6,009,993 1% 1% 1%
banks
Lending to financial 1,051,372 4,100,079 3,000,000 0% 1% 1%
intuitions
Investments 113,089,261 96,631,874 167,134,465 28% 22% 33%
Advances 218,960,598 262,135,470 253,249,407 53% 59% 50%
Operating fixed assets 16,024,123 17,263,733 18,014,896 4% 4% 4%
Deferred tax assets – – – – – –
Other assets 17,868,761 19,810,476 23,040,095 4% 4% 5%
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University of Sargodha
Analysis
2007 2008 2009 2007 2008 2009
COMMENTS
Cash is constantly decreasing from year 2007 to 2009; it shows that the liquidity position of the
bank is going to be weak, so it is alarming sign for the bank. Therefore bank should take
necessary steps according to the position.
The with the other is constant form 2007 to 2009.
Increase in money at call and short notice, it means that customers of bank are very punctual in
making payments. Therefore it is good sign for the bank.
In the field of investment there is increasing trend with the passage of time. It is common term
of finance” more investment more return.
As we know that main source of profit of a bank is the difference between the percentages of
interest, Banks pay less rate of interest than receiving the interest from the customers. In this
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case advance to customers are high in 2007 & 2008 but it decrease in 2002. It means that MCB
is not running very well.
LIABILITIES
There is increasing trend in deposits and other accounts which shows the credibility of the
bank.
Borrowing is decreasing in 2008 but there is increasing trend in the year 2009. Although it is
seeing that bank’s borrowing is increasing with the passage of time which is not a good sign but
there is a positive thing in this behalf, usually banks borrow money at that time when they
would have to give it for earning more profit, I think the MCB BANK LTD. doing the same thing
for increasing its profits.
Bills payable increase in 2008 & 2009 it is negative sign.
INCOME
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University of Sargodha
Analysis
2007 2008 2009 2007 2008 2009
Assets
Cash and balances 39,683,883 39,631,172 38,774,871 100% 99.9% 98%
with treasury banks
Balances with other 3,807,519 4,043,100 6,009,993 100% 106% 158%
banks
Lending to financial 1,051,372 4,100,079 3,000,000 100% 390% 285%
intuitions
Investments 113,089,261 96,631,874 167,134,465 100% 85% 148%
Advances 218,960,598 262,135,470 253,249,407 100% 120% 116%
Operating fixed assets 16,024,123 17,263,733 18,014,896 100% 108% 112%
Deferred tax assets – – – – – –
Other assets 17,868,761 19,810,476 23,040,095 100% 111% 129%
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University of Sargodha
Analysis
2007 2008 2009 2007 2008 2009
INCOME
Interest income increase with great proportion with is favorable. It means that interest
received by the bank is increasing with the passage of time. It is not good for a banking
company.
As we all know that banks provide many services for their customers and also act as a
agent of the customer. The banks receive fee and commission after their services; it is a
main source of bank to receive fee and commission from their customers. In case bank is
taking more fees as compared to previous years. This is good for the bank.
EXPENSE
Return on deposit decreases which shows good sign and it is due to decrease in return
rate. Admin and diminution and provision against non performing loan increasing turned
that is favorable.
Bad debts increased with huge amount not positive sign.
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Profit before taxation has increased but not with greater proportion. Tax increases which
are not bad because it is interrelated with profit, if profit increased, tax also increase
RATIOS 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 decision in case of investor and lending decision in case of Bankers
etc.
However, the ratios are only indicators, they cannot be taken as final regarding good or bad
financial position of the business other things have also to be seen.
Ratio Analysis:
Current Ratio:
The current ratio measures the number of items of the firm s current assets cover its current
liabilities. The current ratio should be part of your business' basic financial planning, meaning it
should be tracked monthly or quarterly. By keeping a close eye on this figure, you will recognize if
it begins to get out of line. This will allow you to take early action to prevent your business from
ending up in a difficult position.
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University of Sargodha
2008
Current Ratio
Year 2007 2008 2009
Percentage 1.10 1.12 1.11
Current Ratio
112%
112%
111%
111%
110%
110%
109%
2007 2008 2009 Current Ratio
Quick ratios:
Quick ratio shows a firm’s ability to meets it current liabilities with its current assets excluding
inventories and prepaid expenses, which are least liquid portion of the current assets. Since
banks don’t have any sorts of inventories, therefore only prepaid expenses are subtracted
from the current assets of the bank.
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University of Sargodha
2007
Cash + Account Receivable 263,503,372
+Marketable Securities
Current Liabilities 342,463,187
Quick Ratio .77:1
2008
Quick Ratio
Quick Ratio
0.85
0.9
0.85 0.77
0.8
0.72 Quick Ratio
0.75
0.7
0.65
2007 2008 2009
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University of Sargodha
Working Capital:
Working capital is the difference between current assets and current liabilities. Working capital
is often considered a measure of liquidity by it self. This ratio shows the amount of liquidity.
Working capital is used to check liquidity of the organization.
Working Capital= Current Assets – Current Liabilities
2007
Current Assets 376,592,633
Current Liabilities 342,463,187
Working Capital 34,129,446
2008
Working Capital:
Working Capital
47,700,847
50,000,000 43,144,763
40,000,000 34,129,446
30,000,000
Working Capital
20,000,000
10,000,000
0
2007 2008 2009
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Cash Ratio:
Cash and equivalent are the most liquid assets. The cash ratio shows the proportion of the assets
held in the most liquid possible form. It is used to check the liquidity of the organization
2007
Cash Equivalent + 43,491,402
Marketable Securities
Current Liabilities 342,463,187
Cash Ratio 0.13
2008
2009
Cash Ratio
Year 2007 2008 2009
Ratio 0.13 0.12 0.11
Cash Ratio
0.13
0.13
0.12
0.12 0.11
Cash Ratio
0.11
0.1
2007 2008 2009
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University of Sargodha
2007
Total Liabilities 355,365,842
Shareholder Equity 6,282,768
Debt to Equity Ratio 56.56%
2008
2009
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University of Sargodha
Debt Ratio:
It shows that how much assets have been financed by liabilities and it also shows the margin of
protection available for the creditors.
2007
Total Liabilities 355,365,842
Total Assets 410,485,517
Debt Ratio 87%
2008
2009
Debt ratio
Debt Ratio
88%
87% 87%
87%
86%
2007 2008 2009
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University of Sargodha
Return on Investment:
Return on investment measure the ratio of profit generated in relation to the total assets
employed. Net profit after tax divided by total assets gives the return on investment.
2009
ROI
ROI
29%
30% 23.23%
25% 20%
20%
15% ROI
10%
5%
0%
2007 2008 2009
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University of Sargodha
2007
EBIT 21,308,035
Interest Expense 7,865,533
Interest coverage ratio 270%
2008
EBIT 21,867,566
Interest Expense 11,560,740
Interest coverage ratio 189%
2009
EBIT 23,154,945
Interest Expense 15,841,463
Interest coverage ratio 146%
300% 270%
250%
189%
200% 146%
150% Interest Coverage Ratio
100%
50%
0%
2007 2008 2009
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University of Sargodha
Return on assets:
2007
Net Profit After Tax 15,265,562
Average Total Assets 376,296,880
Return On Assets 4.1%
2008
2009
Net Profit After Tax 15,495,297
Average Total Assets 476,419,815
Return On Assets 3.3%
ROA
ROA
4.10%
4.50%
3.60%
4.00% 3.30%
3.50%
3.00%
2.50%
ROA
2.00%
1.50%
1.00%
0.50%
0.00%
2007 2008 2009
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University of Sargodha
Income/Expense Ratio
2007
Total Income 29,932,353
Operating Expense 5,563,010
Income/Expense Ratio 5.3 times
2008
2009
Income/Expense Ratio
Income/Expense Ratio
6 5.3
5 4.1
3.83
4
3
Income/Expense Ratio
2
0
2007 2008 2009
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University of Sargodha
2007
Total Income After Tax 15,265,562,000
Weighted Average Number of Common 628,276,843
Share Outstanding
Earning Per Share Rs. 24.30
2008
2009
Total Income After Tax 15,495,297,000
Weighted Average Number of Common 691,104,527
Share Outstanding
Earning Per Share Rs. 22.42
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University of Sargodha
Price/Earning Ratio:
Price/Earning Ratio=Market Price per Share/Diluted Earning Per share
2007
Market Price per Share 399.95
Diluted Earning Per share 24.30
Price/Earning Ratio 16.5 Times
2008
2009
Market Price per Share 219.68
Diluted Earning Per share 22.42
Price/Earning Ratio 9.8 Times
Price/Earning Ratio
Price/Earning Ratio
20 16.5
15
9.8
10 5.65
Price/Earning Ratio
5
0
2007 2008 2009
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University of Sargodha
2009
Dividend per Common Share 11.00
Diluted Earning Per share 22.42
Dividend Payout Ratio 49.06%
Dividend Payout
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University of Sargodha
Dividend Yield
Dividend Yield= Dividend per Common Share / Market Price per Common Share
2007
Dividend per Common Share 12.50
Market Price per Share 399.95
Dividend Yield 3.13%
2008
2009
Dividend per Common Share 11.00
Market Price per Share 219.68
Dividend Yield 5%
Dividend Yield
Dividend Yield
9.14%
10.00%
8.00%
5.00%
6.00%
3.13% Dividend Yield
4.00%
2.00%
0.00%
2007 2008 2009
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7. Return on Investment:
This ratio is more meaningful for share holders who are interested to know the profit
earned by the company because the dividend paid from available profit higher ratio
means factor of production fully utilized and good position. Here return on Investment is
higher in 2007 as compare to year 2008 & 2009.
8. Interest Coverage Ratio:
Coverage ratio shows the number of the times a firm can recover or meet particular
financial obligations. The interest coverage ratio, which is also called the time
interest earned ratio, measure the coverage of the firm s interest expense. Year 2007 is
better in interest coverage ratio as compare to the other years.
9. Return on Assets:
This ratio has a decreasing trend. It means the assets of the business are not fully utilized
in more and efficient way and also shows an unfavorable trend of the business. This ratio
of the bank was too low in the year 2009, as compare to other two years.
10. Interest to Expense Ratio:
The interest to expense ratio is the profitability ratio. The more the good ratio means that
the business is running well. The Interest to expense ratio of the MCB is not good as
compare the year 2007, 2008.
11. Earning per Share:
This ratio got really improved 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
decreasing EPS, which will surely decrease share price. This ratio has the same trend as
the return on the assets.
12. Price earning Ratio:
Price earning ratio of MCB bank is high in 2007 as compared to the other years. Because
the market price per share is high in 2007. Because in this year MCB generate an
excellent profit. 2009 is also good but 2008 is worst all of them.
13. Dividend Payout Ratio:
The dividend payout ratio of the MCB is almost constant for the years 2007, 2008, 2009.
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CONCLUSION
With Cooperation of all branch members, I have been able to learn and experience many new
things related to the banking sector and the banks workings. I am able to handle the public with
respect to many different workings on many different instances and also in account opening for
customers and can handle many other tasks as well.
Finally I concluded that MCB is a good organization for a person for his long term career
workings. Overall working and environment of the bank is very comfortable and the staff is very
helpful and respectful of each other and it still maintains a professional environment.
Management of the bank is very strong.
Employees of MCB Fatimah Jinnah Road branch, Sargodha work more than their working hours
and all the workings take place in a very friendly atmosphere that does not induce pressure on
the person working there. It also shows their loyalty and commitment to the organization. This
branch of MCB relatively small and has climbed its way up very quickly and all that only
because of the employee’s efforts and consideration for each other
Understanding and the effective management of the human resources is the most difficult
challenge faced not only by the bank but by all the organizations. Even though the people have
been sacrificed in the new organizational developments, it is becoming clear that the true lasting
competitive advantage comes through human resources and how they are managed. MCB seems
to not focusing on this highly critical issue as the job satisfaction level of the employees working
at MCB, was quite low.
The attitude of the bankers with all of their customers is not the same, they pay more attention
and good service to some of the customers and neglect a major portion of them. Some of the
customers approach to the bank officials and get their work done before others; it is not a good
practice
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There are so many customers who don’t know how to fill cheques, pay-in-slip, application form,
etc. They waste a lot of time of the bank stall.
RECOMMENDATIONS
After doing a deep study and witnessing everything that goes on in a branch, I would then like to
make the recommendations that;
First of all, the management needs to overlook the major problems that the organization is
currently facing and then develop strategies to eradicate them. Some of the suggestions that I
would like to give at the end are:
Promotion and Mass Media Publicity
MCB Bank can improve its Marketing strategies to acquire more promotion and mass media
publicity by the use of effective channels of promotions like TV, Newspaper Advertisements. It
can also improve its magazine publication that it releases each month.
Better Reward System
Better reward system is one of the most important requirements in order to reduce the problem of
Employee retention and improve Employee motivation.
Continuous Training Of Employees
There is lack of proper and continuous training of employees that needs to be solved.
Salary Packages
Improvement should be made in the salary package of the employees as it is comparatively less
when compared to the other operating banks in Pakistan
Staff Member
In branch only two employees in cash counter and it must be increased to four person for proper
handling of cash because there is heavy load work.
SYMBOL SYSTEM
To make the SYMBOL system more efficient and make sure its connectivity all the time in order
to provides more convenience to customers.
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References:
Mr. Farooq Ali Khan (Manager Fatimah Jinnah Road Branch)
www.mcb.com.pk
www.wikipedia.org
www.scribd.com
www.google.com
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