Pre and Post Acquisition Analysis of NIB and

MCB Bank
Prepared By:
Walid Rehan

A Thesis
Submitted In Partial Fulfilments of the Requirements for the Degree of Master of
Business Administration to Research Facilitation Unit– RFU
(Department of Business Administration)
At the Iqra University, Main campus, Karachi, Pakistan

Submission
Spring, April 2020
 Acknowledgement

I start with the name of Almighty Allah for giving me strength, potential and strong
points to complete this entire significant research in a relevant manner. On the other
hand, my prime appreciation goes to my supervisor Dr. SaminaRiaz and Sir Dr Agha
Nabi, the encouragement and support they provides me with their knowledge on the
subject; which is unique. Both of them exercised their level of persistence and
understanding which enormously helped me in gaining the mandatory confidence to
accomplish the assignment. I always found them willing to render best of their
assistance with kind attitude, their professional advice had complete mastery on the
subject. Their positive attitude kept me alert all the time and gave me unprompted
ideas to fulfill the requirements. I would also like to pull out my facilitations to my
supervisors for their cooperation and assistance in identifying the research data
needed for this specific project. Their support and sharing of acquaintance by
different intellectuals made my task easier than what I was expecting.

In the last part, I would like to talk about special gratefulness to my parents for giving
me brainwave to work with passion and enthusiasm. Not only them but also; all my
family members support makes me complete this vital and lengthened assignment.

ii
 Abstract

This present study addresses the Acquisition and provides insight to the impacts of
Acquisition. It explores the effects of Acquisition on financial performance of the
bank by using different financial ratios. We have selected MCB and NIB banks that
faced Acquisition in 2017. These banks are selected from the Karachi Stock Exchange
(KSE). Quantitative data analysis techniques are used for inference. Data were
collected from the quarterly reports of the sample banks for the period of five years
from 2015-2020 (two years before the combination and two after) with having 10
observations each. Analysis was done by using Descriptive Statistics, Correlation and
Paired Sample t-Test. The results from this study recommend that performance of
MCB has shown boost after acquiring NIB. The results show that there is significant
difference in most of the Profitability, Liquidity and Leverage ratios. We can argue
that increased performance after Acquiring can be attained depending on the portfolio
of the company.

Keywords: Mergers, Acquisitions, Financial Performance, Ratio analysis, Paired

Sample T-Test, Correlation, Banking, Pakistan.

iii
Table of Contents
Acknowledgement
Abstract
Table of Content
List of Tables
List of Abbreviations
CHAPTER 1: INTRODUCTION01
1.1 Backfround
1.2 Research Problem
1.3 Purpose of Research
1.4 Research Question
1.5 Significance of Project
1.6 Outline of the Study
CHAPTER 2: LITERATURE SUMMARY 05
2.1 Introduction
2.2 Financial Ratios
2.3 Research Framework
2.4 Hypothesis
CHAPTER 3: RESEARCH METHODOLOGY 10
3.1 Introduction
3.2 Research Method
3.3 Approach
3.4 Sample of Study
3.5 Data Collection
3.6 Sample of Study
3.7 Ethical Consideration
CHAPTER 4: DATA ANALYSIS 14
4.1 Introduction
4.2 Results
CHAPTER 5: CONCLUSION AND RECOMMENDATION 20
5.1 Introduction
5.2 Results and Discussion
5.3 Limitation
5.4 Future Research
REFERENCES22
APPENDIX24

iv
 List of Tables

S.NO. TABLE(S) PAGE

NUMBER
S
01 List of Merger and Acquired Banks 02
02 Indicators to Measure Financial Performance 11
03 Table of Descriptive 14
04 Kurtosis and Skewness 15
05 Table of Correlation 17
06 Table of Paired Sample T-Test 18

List of Abbreviations

v
S.NO Variables Abbreviation
s
01 Return on Assets ROA
02 Return on Equity DPR
03 Debt to equity ratio D/ER
04 Total Liabilities to total assets TL/TA
05 Total Deposit to total Equity TD/TE
06 Interest Expense to Interest Income IE/II
07 Earnings per share EPS
08 Investment To Total Assets I/TA

vi
 Pre and Post Acquisition Analysis of MCB & NIB1

Chapter 1: Introduction
1.1 Background:

This day’s industry of banking is going through a large number of changes

concerning policies and effects of globalization. The impact of these changes occurred
both strategically and structurally. To become a leading organization is the motive of
every organization having a mission to have increased market appearance and future
forecasting growth. To meet this motive company, have to be powerful to have a
maximum appearance in the market. For this purpose, they have gone through a
different type of strategy to be compatible in such active surroundings. Thus, they use
the tool of mergers & acquisitions, which plays an effectual perspective to be
compatible in such an active banking world. The merger is a useful process that can
be defined as when two separate entities, an acquiring company, and an acquired
company merge and the merger retains in the name of Acquired Company. Whereas
Acquisition is when a firm purchases all the shares of other firms to gain control over
it.
During the previous few decades, M&A has become a magnificent activity. To
keep business in running condition M&A gives a margin to the organization. Business
entities are now getting aware of the fact that it is favorable for their objectives to get
into activities (Zahid& Shah, 2011). A lot of activities for business combinations are
happening nowadays in this compatible corporate domain. With a sample of (FDI),
Global Mergers and Acquisitions have now come up with the most suitable methods
concerning the researches we have in the last few years. The bank's enlargement is
broadly occurring in the reference of merging in the United States and Western Side
(Majidi, 2007).
This strategy has not fully used in Pakistan as it has been observed worldwide.
The most observed logic behind this is the nationalization by the establishment of our
country in the starting years of the 1970s. This association of government authorities
was raised which influenced the private and corporate sectors. Numerous Mergers
activities have been witnessed in this Pakistani Banking section. Moreover, several
researchers have clarified the scenarios of business combinations in Pakistan
buthaving these studies with certain limitations established to need a current study to
 Pre and Post Acquisition Analysis of MCB & NIB2

access the effect of business combinations for the financial performance on banks in
Pakistan.
The list of some of the Mergers and Acquisitions of Pakistani Banking Sector:
Table-1: List of the Merged and Acquired Banks:
S# Types Date Acquirer Acquired
1. Acquire 15-Sep-2008 HBL Saif Power Ltd
2. Acquire 28-Oct-2008 Dubai Banking Group Bank Islami
3. Merge 07-Nov-2008 Atlas Bank Ltd KASB
4. Acquire 27-Mar-2009 Bank al Habib Ltd Habib Sugar Mills Ltd
5. Merge 31-Aug-2009 MCB RBS
6. Merge 22-Dec-2009 Askari Bank Ltd Askari Leasing Ltd

Hunjra&Qamar, (2014). Intending to expand market share the Acquisition of

NIB Bank with and into MCB Bank took place on July 07, 2017 which made NIB
Bank to cease its existence as an independent entity and stands acquired by MCB. The
Central Bank of Pakistan accepts this closure of business for the Acquisition. With the
acquisition of operations by MCB Bank, the investors and patrons of the bank will
increase great margins going forward.
1.2 Project Research Problem:

With a desire of improving performance, Stockholders and Management use

mergers and acquisitions but the results produced in these studies are of mixed nature.
It is recommended that sometimes combined bank works a way better than
independent bank, whereas other research hasn’t come up with any expressive
improvement in financial performance as having with the merger. It is observed in a
study that merging did not take to a boost in performance as studied by gain adjusted
for the industry mean. (Saple, 2000).
IrfanShakoor, (2014). It has been observed, previous studies have focused on whole
industry analysis which is not enough to get to the point that whether the merger of
banks is worthwhile or not. 
Similar results have been observed in some other researches as well.
(Devarajappa’s, 2012), (Zahid& Shah, 2011) & (Kemal, 2011).
Previous studies with certain limitations have established a need of current
study to access the effect of business combinations to the financial performance on
banks in Pakistan. Previous studies have focused on whole industry analysis regarding
above statements it has been observed that none of the studies has analyzed the
 Pre and Post Acquisition Analysis of MCB & NIB3

comparative performance analysis of Acquisition of NIB by MCB. Moreover, the

analysis of this combination will be very helpful to get the actual picture of the pros
and cons of the Acquisition. The out-turn of this analysis will provide management
and stockholders of related banks with statistics at which they might can have their
future decision making for business combination which is the ultimate objective
behind this research.
1.3 Purpose of Research:

The research work motive is to look into the prior and subsequent financial
performance of MCB after acquiring NIB in 2017. Moreover, to analyze efficiency
refinement due to which banks mergers take place. An effort has been made to
forecast the future of merger and acquisitions for performance using ratios. This
analysis will thoroughly focus on exploring the in-depth facts and figures about the
research context. The theory of acquisition will be explored thoroughly to enable the
readers and upcoming investigators to have a better understanding about the research
matter.
1.4 Research Question:

The analysis of our research will be based on the question which is framed as, 
What is Pre and Post Merger comparative analysis of Financial Performance of MCB?
1.5 Significance of the Project:

To provide in-depth facts and figures about the major acquisition influence on
MCB performance is the main motive on the back of this research. This analysis will
be helpful in the context that it will update the available literature on the consequence
of business combination to look over bank performance financially through investors
of the day, commercial activity of bank. Moreover, this analysis will also help us to
develop a strong and suitable abstract and conceptual base by exploring variety of
concepts and theories and obtain reliable statistics for this research. Those banks
which have an intention to be merger soon, this research will also come to know the
effectiveness of their decisions.
1.6 Outline of the Study

This paper is segmented into separate sections to maintain the flow of

information and to explore the dimensions of research subject. Chapter 01 of this
 Pre and Post Acquisition Analysis of MCB & NIB4

research gives a brief overview on the subject of Merger & Acquisition in general and
in Pakistan. Chapter 02 provides an extensive literature on private banking sectors,
discussion on the fact that whether these combinations are worthwhile, performance
on banks after mergers and acquisitions. Chapter 03 gives an overview of the methods
used to obtain data, tools and techniques applied and the variables using necessary
data. 
 Pre and Post Acquisition Analysis of MCB & NIB5

Chapter 2: Literature Review

2.1Introduction:

Literature review forms notable importance in managing the research work as

it appears with the required conceptual base to enhance the researcher's
comprehension of the research topic to meet the purpose of research effectively.Machi
and McEvoy (2016) in a similar context inquired that literature review assists in
synthesizing the key proposal, thoughts, same or different perceptions and discussions
of the researchers and scholars. This review supports us in assessing the available
literature in the selected research topic that, in return, helps the researcher to make a
comprehensive understanding and comprehension related to the search topic.The
corporate competition in increasing globally nowadays to the changing business
dynamics worldwide. These competitions have encouraged business entities to come
up with different policies and strategies and these policies and strategies were adopted
widely by the organizations along and across borders. Among those policies and
strategies, M&A is the strategy being used by the most of the business entities to be
compatible in this corporate world. Number of research studies during the last two
decades has observed successful execution of M&A in this business world. To have
the successful M&A, different techniques were used and these techniques are
encouraged widely on short,additionally, long basis (Kouser& Saba, 2011).
In views of Gaughan, the theory of business combinationis mostly considered
as an important area accountable for the business finances which deal with the
purchasing and venturing of the company’s existing with that of the other companies
to enhance the performance of the existing business. These activities strategically and
conceptually have become an important part having the change observed for
integration and cultural along the corporate entities. (Gaughan, 2010).The most
essential objective behind these mergers activities are to generate higher financial
performances with having higher net profit after being into these mergers to justify
the decision of combination. For this improved performance has been observed by
Devarajappa’s in his study which is influenced by merger of banks. He used a
comparison technique to examine performance using financial ratios including, Gross
Profit margin, Net Profit margin, Operating Profit margin, return on Capital
employed, Return on Equity and Debt equity ratio. The objective of his research,
enquirer applied t-test for the analysis of pre and post-merger performance of the
 Pre and Post Acquisition Analysis of MCB & NIB6

sample of bank he used in his study. Additionally, results of his study have suggested
that after the occurrence of these combinations, the graph of financial performance of
these banks have observed going upward direction which resulted in boost in the
performance of these banks. (Devarajappas., 2012).
Another study has been conducted to study the pre and post-merger
comparison of banks in Pakistan with three different type of ratios Profitability,
Liquidity and Capital adequacy ratios where Most of the ratios studied do not show
any significant change in the post-merger period, while some of the ratios are shown
to have declined in the post-merger period. Additionally, the performances of the
acquirer banks were observed to have deteriorated in the post-merger period. The
author suggested it could be better for banks to invest their resources in expanding
their networking instead of participating in the ineffective mergers deals. (Burhan. A
&Niaz. K, 2017)
Sinha and Gupta (2011) having data between the period of 1993 – 2010 to
measure the merger impacts of performance financially on banks in India. Hence
except liquidity, which reduced all the other variables used in their study, were
observed positive. The performance of the firms is not influenced by the mergers and
acquisition deals. As far as his study with the help of ratio analysis is concerned, four
ratios have been used and out of those only one ratio has observed positive which
Liquidity Ratio is. Moreover, the remaining three ratios namely Profitability Ratio,
Solvency Ratio and Investment were observed negative after having merger activity.
Irfan is his study analyzed two years’ pre and post-merger data, which resulted in,
overall negative impact. However, it has to be put into notice that these results have
come with having a data of only four years and this period is considered as short term
period while these business combination activities took place to get the benefits in the
longer run and Sometimes organizations get into these activities to get competitive
edge which resulted positive for the organizations. (IrfanShakoor, 2014).
M&A enhances the efficiency and effectiveness, provides the value, and
resulted in increase of market share by enhancing assets allocation of the merging
firms (Altunbas and Marques, 2008).
One of the researcher observed improved performance after merger. The
positive impact was analyzed by using the ratios analysis and they used the annual
reports to extract the financial performance data which in return helped to calculate
 Pre and Post Acquisition Analysis of MCB & NIB7

the ratios to analyze the impact of merger on the banks performance which he
concluded as positive result. (Muhammad. H & Muhammad. M, 2018)
Many developed states including some western countries, China, America,
United Kingdom have performed more business combination deals as compared to the
developing countries has proved the fact that business combination magnified the
performance of business entities (Zahid& Shah, 2011).When Kemal conducted the
study based on ratio analysis, he used ratios with four years accounting data to
compute analysis. He gathered the sample of 20 accounting ratios. In his study he
found that those all 20 ratios calculated using the financial data, the scores for the
positive results after merger were only 6 (which is just 30% of all the ratios). He
concluded that the merger of his sample bank was unable pull up its performance
concerning profitability, thus he finished up having one of the failed mergers
observed in the banking industry as per applying ratio analysis technique (Kemal,
2011).
Kouser and Saba (2011) Another study using their analysis in their research
related to Pakistan banking industry using 10 examples of merger and measured with
the help of six mainly used ratios. They result concluded, all these ratios have shown
negative impact after the merger and acquisition activity. Qamar Abbas in 2014 used
ratio techniques with mergers to study banks performance financially. The findings of
his research shown, no such enhance observed in bank performance after they come
up with a business combination. The decline in many ratios has been noticed in many
banks. However, opposite figures have been observed when these applied to HSBC
and Dubai Banking Group, but still he concluded with negative relation of mergers on
banks performance. (Qamar Abbas, 2014).
These above literature indicates that M&A haven't observed to be performing
well in Pakistan but in some cases, we have seen some extraordinary growth.
However, to get the exact point of whether M&A is useful to implement in
organizations or not we have studied the Acquisition of NIB by MCB.
2.2 Financial Ratios:

Financial ratios are the most helpful indicator to measure the firm’s
performance. These ratios can be used by having financial statements of the
subsequent firms. These financial statements are (Balance Sheet, P/L A/C and Cash
Flow Statement). Ratios transform these statements in such comprehensible way that
 Pre and Post Acquisition Analysis of MCB & NIB8

a normal person can easily interpret the financial position of those subsequent firms.
The main purpose of the ratios is the observe the trend with in the similar industry, on
the other hand the results of these ratios help entities to compare their performance to
other entities to achieve industry bench mark. This analytical tool with having high
importance help the financial analysts to take decisions to improve the liquidity,
profitability, financial structure, leverage and interest coverage etc (Kemal, 2011).
2.3Research Framework:

To explain the Pre and Post Acquisition comparative analysis of Financial

Performance of NIB & MCB, this model is developed, in which the impact
ofAcquisition on three different types of ratios are mentioned to analyze the bank
Financial Performance after acquisition.
 Profitability Ratios
 Liquidity Ratios
 Leverage Ratios
2.4Hypotheses:

The Hypothesis extracted from the above literature are mentioned below:
H1: Acquisition has a significant impact of performance with reference to return on
equity.
H2: Acquisition has a significant impact of performance with reference to return on
assets.
H3: Acquisition has a significant impact of performance with reference to net interest
margin.
H4: Acquisition has a significant impact of performance with reference to earning per
share.
H5: Acquisition has a significant impact of performance with reference to spread ratio
H6: Acquisition has a significant impact of performance with reference to interest
expense to interest income
H7: Acquisition has a significant impact of performance with reference to non-interest
income to total assets
H8: Acquisition has a significant impact of performance with reference to non-interest
expense to total income
 Pre and Post Acquisition Analysis of MCB & NIB9

H9: Acquisition has a significant impact of performance with reference to cash and
cash equivalent to total assets
H10: Acquisition has a significant impact of performance with reference to advance
net of provision to total assets
H11: Acquisition has a significant impact of performance with reference to total
liabilities to total assets
H12: Acquisition has a significant impact of performance with reference to return on
equity
H13: Acquisition has a significant impact of performance with reference to return on
equity
H14: Acquisition has a significant impact of performance with reference to return on
equity.
H15: Acquisition has a significant impact of performance with reference to return on
equity
H16: Acquisition has a significant impact of performance with reference to return on
equity
H17: Acquisition has a significant impact of performance with reference to return on
equity

Chapter 3: Research Methods

3.1 Introduction:
 Pre and Post Acquisition Analysis of MCB & NIB10

The research design used in this research is quantitative. The impact of

business combination is analyzed in in-depth manner. This part of report contains the
details regarding variables used in the study, Study sample, methods of research and
tools used for analysis.
3.2 Method:

The objective of this investigation is to explore the answer “Does combination

take the influence Financial Performance of MCB?” Different financial ratios are
being used to explore this objective. Sample of MCB acquiring NIB has been selected
to analyze the effect. These banks have selected on the base of availability of required
data for reasonable analysis and decision making. Different financial ratios include
Profitability, Efficiency, Liquidity and Leverage have been selected to analyze these
banks performance. These ratios play major role in any business performance by
computing their improvement in the direction of their goals (Irfan and Shakoor,
2014).
3.3Approach:

There are two broad classifications of the research approach, one is the
inductive and the other is deductive approach. Moreover, the point making difference
between these two is based on the purpose of theory testing, drawing new data, and
exploring the concept of novel. An explorer or inquirer is required in the deductive
approach to begin the research with an open mind and with gradual progression
narrows down the research range to obtain certain outcome. On the other hand,
Inductive approach embraces a bottom-up approach and makes a common conclusion
regarding the research aim and objectives. To analyze the Acquisition implicated
strategy with specific consideration to the combination of MCB and NIB banks in
Pakistan, it is necessary to structure the method of research following deductive
reasoning, so the approach used in this research is deductive. Moreover, this does not
bound a researcher to make changes to the direction of study, which is, add further
logic for its incorporation in this specific research as this flexibility can help to pursue
thorough inquiring as per the changing needs and proportion of the research (Bryman
and Bell, 2015).
3.4Sample of Study:
 Pre and Post Acquisition Analysis of MCB & NIB11

Research questions based on purposive sampling. Moreover, the acquisition is

selected from the financial sector. Additionally, the acquisition took place on KSE
particularly to the banking section. The study sample of this includes financial reports
of Muslim Commercial Bank (MCB) as its acquisition with NIB Bank occurred in the
year of 2017.
3.5Data Collection:

The research analysis is on secondary based data. A total of 5yearsquarterly

data is taken from period (2015-20) with 2.5 years pre and 2.5 years post data, which
makes 10 observations each. Moreover, secondary sources are used mainly to collect
data, annual reports of the subsequent firm, SBP official website, and “Financial
Statements Analysis of Financial Sector” circulated by the Central Bank of Pakistan. 
3.6 Statistical Methods:

To analyze financial performance, indicators used in this statistics are

Profitability, Liquidity and leverage ratio(s). Additionally, indicators are measured
with below financial ratios:

Table 2: Indicators to measure Financial Performance:

Variables Indicators Proxy

Profitability Return on Equity Net profit after tax / Total equity
Return on Assets Net profit after tax / Total Assets
Net Interest Margin Interest earned- interest expense /
Total Assets
Earnings Per Share Net profit after tax / No. of ordinary
shares
Spread Ratio Net interest income /Total interest
earned
Interest expense to Interest Interest expense / Interest Income
Income
Non-Interest Income to Total Non-Interest Income / Total Assets
Assets
Non-Interest Expense to total Non-Interest Expense / Total Income
Income
Liquidity Cash & Cash Equivalent to Cash & Cash equivalent /
Total Assets Total assets
Investment to total assets Investment / Total assets
Advance net of provision to Advance net of provision /
 Pre and Post Acquisition Analysis of MCB & NIB12

total assets Total assets

Total Liabilities to total assets Total Liabilities / Total assets
Leverage Debt to Equity Ratio Total Debt / Total Equity
Total Deposit to total Equity Total Deposit / Total Equity
Capital Ratio Total Equity / Total Assets

The analysis is done on all selected ratios using pre and post-acquisition data.
Mentioned ratios are examined having 2.5 years pre along with 2.5years’ post-merger
data of MCB with having 10 quarterly observations each. Accounting data between
the years 2015-2020 are selected to measure their performance. For this purpose,
MCB is chosen as a Sample Company for this study. The ratio Analysis method is
used for the comparative analysis of both these banks. Profitability ratios, liquidity
ratios, leverage ratios have been considered as the most reliable and efficient ratios to
check the profitability performance of the companies. Three techniques are applied in
this study to analyze the pre and post-Acquisition financial ratios. First is Descriptive
Statistics, which helps to summarize the data. Secondly, the Correlation technique is
employed to get the relation between the variables used in the study. And in the last
Paired Sampled-Test is employed to check the significant difference between pre and
post-Acquisition financial ratios. All these tests are employed using Statistical
Package for the Social Sciences (SPSS).

3.7Ethical consideration:

Research ethics is the central reflection in the process of conducting a study

without proper following to ethical norms and criteria during the investigation of
theresearch happening, quality aspects, considerable facts and reliability of the
research work are influenced in an inauspicious manner (Crowther and Lancaster,
2012). The data is relied on a secondary source. The matter of ethical consideration
arises if there is no risk of data manipulation in the original data files without any
approval of ethics for ethical support required. However, the current research project
is based on the financial data of MCB Bank which is easily available in Annual
Reports and State Bank website, which can easily be conclude that there is no such
chances of conflict of interest and data manipulation.
 Pre and Post Acquisition Analysis of MCB & NIB13

Chapter 4: Results and Analysis

4.1Introduction:

This chapter is a central part of the project as it summarizes the collected data
(AkshayManoj Kumar, 2019).All the results and analysis of the study are discussed
here. Paired sample T-test is employed to get paired results of pre and post
observations. Different test has applied. Paired Sample T.Test, other tools like
Correlation is also used to check whether how strong or weak the relation exist
 Pre and Post Acquisition Analysis of MCB & NIB14

between the variables and to check whether multicolenierity exists within the variable
or not. Further Descriptive Statistics is also used which is broken into measures of
central tendency and measures of variability.
4.2Results:

4.2.1 Descriptive Statistics:

Table-3: Descriptive Statistics:

Minimu Maximu Varianc
N Range Mean Std. Deviation
m m e
Variables Std.
Statisti Statisti Statisti Statisti
Statistic Statistic Erro Statistic
c c c c
r
Return on Equity 20.00 0.04 0.02 0.06 0.04 0.00 0.01 0.00
Return on Assets 20.00 0.01 0.00 0.01 0.00 0.00 0.00 0.00
NetInterest Margin 20.00 0.00 0.01 0.01 0.01 0.00 0.00 0.00
Earnings Per Share 20.00 4.47 2.64 7.11 4.98 0.25 1.11 1.22
Spread Ratio 20.00 0.27 0.39 0.66 0.57 0.02 0.08 0.01
Interest expense to
20.00 1.07 0.51 1.59 0.81 0.07 0.30 0.09
Interest Income
Non-Interest Income
20.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00
to Total Assets
Non-Interest
Expense to total 20.00 0.67 0.22 0.89 0.49 0.04 0.20 0.04

Income
Cash & Cash
equivalent to total 20.00 0.05 0.05 0.11 0.08 0.00 0.01 0.00

assets
Investment to total
20.00 0.27 0.33 0.60 0.52 0.02 0.07 0.01
assets
Advance net of
provision to total 20.00 0.09 0.28 0.38 0.33 0.01 0.03 0.00

assets
Total Liabilities to
20.00 0.05 0.86 0.90 0.88 0.00 0.01 0.00
total assets
Debt to Equity Ratio 20.00 1.40 0.31 1.71 0.99 0.09 0.41 0.17
Total Deposit to total
20.00 2.50 5.13 7.64 6.17 0.18 0.82 0.67
Equity
Capital Ratio 20.00 0.05 0.10 0.14 0.12 0.00 0.01 0.00
 Pre and Post Acquisition Analysis of MCB & NIB15

The main aim of descriptive table is to present a concisere view of

particular research. The table 4.1 shows the descriptive values presentation mean
median probability and different values. For variables, the mean variables are; ROE
(0.04), ROA (0.00), Net interest margin (0.01), EPS (4.98), Spread ratio (0.57), IE/II
(0.81), , Noninterest expense to total income (0.49), Cash & cash equivalent to total
assets (0.08), Non II/TA (0.00)Investment to total assets (0.52), Adv net of provision
to TA (0.33), TL/TA (0.88), Debt to Equity Ratio (0.99), TD/TE (6.17) and
Capital ratio (0.12).While variances of ROE, ROA, Net interest margin, EPS,
Spread ratio, IE/II, Non II/TA, NIE/TI, Cash and cash equivalent to total assets,
I/TA, Advance net of provision over total assets, TL over TA , D/E, TD/TE and
Capital ratio are 0.00, 0.00, 0.00, 1.22, 0.01,0.09, 0.00, 0.04, 0.00, 0.01, 0.00,
0.00,0.17, 0.67 and 0.00 respectively.

Table-4: Kurtosis and Skewness

Skewness Skewne Kurtosis

Kurtosi
Variables Statisti Std. ss Statisti Std.
s Value
c Error Value c Error
ROE 0.21 0.51 0.41 -0.08 0.99 -0.08
ROA 0.68 0.51 1.33 0.23 0.99 0.23
Net Interest Margin 0.25 0.51 0.49 -1.44 0.99 -1.45
EPS 0.17 0.51 0.34 -0.02 0.99 -0.02
Spread Ratio -0.89 0.51 -1.73 -0.01 0.99 -0.01
IE/II 1.25 0.65 1.92 1.38 0.99 1.39
NII/TA 1.31 0.51 2.55 2.07 0.99 2.09
Non.Interest Expense
1.01 0.52 1.94 -0.06 0.99 -0.06
over total Income
Cash & Cash
equivalent to total 0.08 0.51 0.16 -0.68 0.99 -0.68

assets
Investment to total
-1.42 0.51 -2.77 2.08 0.99 2.09
assets
Adv net of provision
0.22 0.51 0.44 -1.15 0.99 -1.16
to TA
TL/TA 0.04 0.51 0.08 -1.05 0.99 -1.06
Debt to Equity Ratio 0.17 0.51 0.33 -0.84 0.99 -0.84
Total Deposit to total 0.27 0.51 0.53 -1.32 0.99 -1.33
 Pre and Post Acquisition Analysis of MCB & NIB16

Equity
Capital Ratio -0.04 0.51 -0.08 -1.05 0.99 -1.06

Whereas skewness of ROE, ROA, Net interest margin, EPS, Spread ratio,
IE/II, , NIE/TI, IT/TA, Cash & Cash equivalent to total assets, Adv Net of Provision
to total assets, TL/TA , Debt to Equity Ratio, TD/TE and Capital ratio are 0.41,
1.33,0.49, 0.34, -1.73, 1.92, 2.55, 1.94, 0.16, -2.77, 0.44, 0.08, 0.33, 0.53
and-0.08 respectively.In table 5, the Skewness and Kurtosis value of all the
variables is lying between -1.96 to +1.96 except for Non-Interest Income to
Total Assets and Investment to total assets which means that there is no such
normality exists within the variables.
4.2.2 Correlation:

Table-5: Correlation:
Pearson Correlation 1
Return on Equity Sig. (2-tailed)  
Pearson Correlation .896**
Return on Assets Sig. (2-tailed) 0
Pearson Correlation 0.341
Net Interest Margin Sig. (2-tailed) 0.141
Pearson Correlation .968**
Earnings Per Share Sig. (2-tailed) 0
Pearson Correlation -0.059
Spread Ratio Sig. (2-tailed) 0.806
Interest expense to Interest Pearson Correlation 0.048

Income Sig. (2-tailed) 0.841

Non-Interest Income to Pearson Correlation .579**

Total Assets Sig. (2-tailed) 0.007

Non-Interest Expense to Pearson Correlation -0.124

total Income Sig. (2-tailed) 0.601

Cash & Cash equivalent to Pearson Correlation -0.4

total assets Sig. (2-tailed) 0.081

Pearson Correlation .492*
Investment to total assets Sig. (2-tailed) 0.028
Advance net of provision Pearson Correlation -.611**

to total assets Sig. (2-tailed) 0.004

Total Liabilities to total Pearson Correlation -0.21

assets Sig. (2-tailed) 0.375

Pearson Correlation 0.188
Debt to Equity Ratio Sig. (2-tailed) 0.428
Pearson Correlation -0.313
 Pre and Post Acquisition Analysis of MCB & NIB17

Total Deposit to total

Sig. (2-tailed) 0.18
Equity
Pearson Correlation 0.21
Capital Ratio Sig. (2-tailed) 0.375

To find the Correlation between the Variables the no. of observations chosen
are 20 with having 15 different types of ratios.The result reveals that Interest
expenseto Interest Income and Debt to Equity Ratio are the variables that have shown
very weak correlation. However, Capital Ratio and Net Interest Margin have also
come up with a weak correlation but better than the previous ones. It has been found
that there is moderately strong correlation seen in Non-Interest Income to Total Assets
and Investment to total assets. While Return on Assets and Earning per Share come
up with very strong correlation as seen in Table 5. Moreover, a large number of
variables have been observed as negative relations, which are Spread Ratio, Non-
Interest Expense to total Income, Cash & Cash equivalent to total assets, Total
Liabilities to total assets and Total Deposit to total Equity. However, Advance net of
provision to total assets has been observed negatively strong relation.
Secondly the Sig value (2 Tailed) showing that most of the variables have
insignificant relation with each other which are Net Interest Margin, Spread Ratio,
Interest Expense to Interest Income, Non-Interest Expense to Total Income, Cash to
Cash Equivalent, TL/TA, DE, Total Deposits to Total Equity and Capital ratio and
shows that the correlation of these variables is not statistically significant. While the
variables showing significant relation with having probability less than 0.05 are
Return on Equity and assets, Earning per share, Non-Interest Income to Total Assets,
Investment and Advances to Total Assets.
Therefore, we can conclude from the above table that in most of the variables
there is enough evidence as far as sig value is concerned that the correlation we
suggestdoes not exist between the variables.
4.2.3 Paired Sample T-Test

Table-6: Paired Sample T-Test

Std. Sig. (2-
Particular Duration Mean T
Deviation tailed)
Return on Equity 0.0436 2.302 0.047
0.0353 0.007288
 Pre and Post Acquisition Analysis of MCB & NIB18

0.0056 0.001265
ROA 3.308 0.009
0.0041 0.000568
0.0106 0.001647
Net Interest Margin 1.928 0.086
0.0091 0.000994
5.493 1.017929 2.684 0.025
Earnings Per Share
4.466 0.978754
0.6164 0.041143
Spread Ratio 4.16 0.002
0.5151 0.079219
Interest expense to 0.6291 0.112348 -
0.004
Interest Income 0.986 0.327127 3.795
Non-Interest Income to 0.004 0.000943
2.739 0.023
Total Assets 0.003 0.000471
Non-Interest Expense to 0.4372 0.165049 -
0.335
total Income 0.5513 0.22188 1.018
Cash & Cash equivalent to Pre Merger 0.0689 0.01117 -
0.003
total assets 0.0878 0.009739 4.104
0.5661 0.02932
Investment to total assets 4.549 0.001
0.4691 0.071514
Adv net of provision to 0.3059 0.018782 -
0.001
total assets 0.3455 0.020946 4.909
0.8704 0.010448 -
TL/TA 0.001
0.8911 0.008787 5.267
1.0188 0.432573
D/TE 0.27 0.793
0.9706 0.409096
Total Deposit to total 5.4662 0.321064 -
0
Equity 6.8714 0.465389 8.443
0.1296 0.010448
Capital Ratio 5.267 0.001
0.1089 0.008787

The above Table 7 represents that ROE, ROA, Interest expense to interest
income, EPS, NII/TA, Cash & Cash equivalent to total assets,I/TA, Spread ratio Adv
net of provision to TA, TL/TA, TD/TE and Capital Ratio have significant positive
impact with the probability values ( 0.047, 0.009 , 0.025 , 0.002 , 0.004 , 0.023 ,
0.003 , 0.001 , 0.001, 0.001 , 0, 0.001) respectively. While Net Interest Margin, Non-
Interest Expense to total Income and Debt to Equity Ratio have insignificant positive
impact 0.086, 0.335 and 0.793.
 Pre and Post Acquisition Analysis of MCB & NIB19

Chapter 5: Conclusion

Banking sector is one of the

fastest growing areas in the
developing economies like India.
M&A is discussed as one of the
most useful tool for growth,
which has evoked the interest
of researchers and scholars.
Indian economy has witnessed
fast pace of growth post
liberalization era and banking is
one of them. M&A in banking
sector has provided
evidences that it is the useful tool
for survival of weak banks by
merging into larger bank.
5.1Introduction:

This is the last part of study, which contain the summing up of all the work of
thesis. As the sample of the research is taken from the banking sector and it is one of
the best rising field in the economy development of Pakistan. M & A is most essential
tools to grow. Economy of Pak has witness rapid speed of enlargement position
liberalization period and banks sector is one of them. Innumerable studies have been
completed to conclude the result of this policy on commercial sector.
 Pre and Post Acquisition Analysis of MCB & NIB20

5.2Discussion:

According to the thesis question (1.4), what is Pre and Post Merger comparative
analysis of Financial Performance of MCB? The output indicates that all profitability
variables having significant positive impact except Net interest margin and Non-
interest expense to total assets while according to [ CITATION Hus18 \l 1033 ] all
profitability variables have insignificant positive impact except EPS, IE/II, Spread
ratio. Leverage ratio have significant positive impact except Debt to equity ratio,
whereas Leverage ratio have insignificant impact [ CITATION Kou11 \l 1033 ]
Meanwhile all liquidity ratios have positive result while as per [ CITATION Sha17 \l
1033 ]liquidity ratios have significant positive output except cash and cash equivalent
to total assets.
5.3Limitation:

This strategy has focused on MCB Bank only and we can witness that MCB
has some excellent reputation in the market and the statics of this bank are highly
considered in the banking sector. However, the aim was to use annual data on yearly
basis but because this acquisition occurred in 2017 which results in limiting the
research to rely on quarterly based data to increase the number of observations.
5.4Future Research

In this study only, 15 ratios have been selected for getting complete statistics
related to MCB presentation. In this particular research project, only the MCB Bank is
focused which give limited consequences thus restrictive the possibility of the
research. In future, more banks and data should be used to get consequences.
 Pre and Post Acquisition Analysis of MCB & NIB21

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