INTERNSHIP REPORT ON

MCB JHANGI BRANCH

ABBOTTABAD

SUBMITTED BY: ABDUL JABBAR KHAN

Roll # 6121 BBA (Finance)

Department of Management Sciences

Abbottabad University of Science and Technology

2018 – 2022

viii
 INTERNSHIP REPORT ON
MCB JHANGI BRANCH
ABBOTTABAD

This Internship report is submitted to the Department of Management Sciences in partial

Fulfillment of the requirements for the degree of Bachelor of Business Administration (BBA)
awarded by Abbottabad University of Science and Technology (AUST)

Department Of Management Sciences

Abbottabad University Information Technology

2018 – 2022

ix
 Approval Sheet

Supervisor
Signature ____________________________________
Name Madam Muzna Sabra
Organization Abbottabad University of Science And Technology

External Examiner
Signature _________________________________________
Name _________________________________________
Designation _________________________________________

Coordinator Research and Development Division

Name

Signature

x
xi
 DEDICATION
I dedicate this to my beloved parents for all their love and attention which has made it
possible for me to make it up to this point and my respected teachers Specially Maam
Muzna Sabra my supervisor, who bestowed me with the courage, the commitment and the
awareness to follow the best possible route.
ABDUL JABBAR KHAN

xii
 PREFACE
This Report is specially meant for the student of BBA Hons. It is concerned to a brief study
of the operation, Function, tasks and services of MCB.

Banking play very important role in the commerce and economic development of a country.
Now-a-days banks are using different modern technologies, which influence the managerial
activities, that’s why I decided to do my internship training in the bank.

In preparation of this report I have tried my best to provide all possible information about the
operation, function and tasks of MCB in brief and comprehensive form. It also includes a
brief department worked during internship. I have also tried my best to use simple and easy
words and language.

Then internship report ends with some recommendation after identification of some problems
observed during the course of internship.

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 ACKNOWLEDGEMENT
In happy moments, praise Allah. In difficult moments, seek Allah. In every moment, thank
Allah

Allah Almighty is worthy of all acknowledgement he shows his special blessing on us

throughout our life. I surrender my compliance, capitulation, submission and docility to Allah
for his entire blessings to accomplish this report.
I offer my humble heartfelt gratitude and deepest affections to my lovely parents who pray
for my success and bright future, for being inspired for higher ideals of life and supported
morally and financially throughout my studies.
I have no words to express my heartiest of gratitude and devotion to my worthy supervisor
Maam Muzna Sabra for her supervision, contribution, intellectual guidance, constructive
suggestions, valued time, unfailing patience, inspiring attitude and wise comments that make
this effort successful.
ABDUL JABBAR KHAN

Table of Content

xiv
 s
CHAPTER NO 1 INTRODUCTION TO REPORT.........................................................................1
1.1 Introduction.................................................................................................................................1
1.2 Background:................................................................................................................................1
1.3 Objectives of the Report:.............................................................................................................1
1.4 Purpose of Report:.......................................................................................................................2
1.5 Merits of the Report:....................................................................................................................2
1.6 Scope of Report:..........................................................................................................................2
1.7 Research Methodology of Report:...............................................................................................2
1.9 Scheme of Report........................................................................................................................3
CHAPTER NO 2 ORGANIZATIONAL OVERVIEW....................................................................4
2.1 Introduction:................................................................................................................................4
2.2 Values:.........................................................................................................................................5
2.3 Information about Branch:...........................................................................................................9
2.4 Nature of Accounts:...................................................................................................................10
2.5 Account Opening Procedure:.....................................................................................................10
2.6 Clearing Department:.................................................................................................................12
2.7 Remittance Department:............................................................................................................15
2.8 Cash Departments:.....................................................................................................................17
2.9 Technology Department:...........................................................................................................18
2.10 MCB Image:............................................................................................................................19
2.11 Conclusion:..............................................................................................................................21
CHAPTER NO 3 FINANCIAL ANALYSIS...................................................................................22
3.1 Introduction:..............................................................................................................................22
3.2 Vertical analysis:.......................................................................................................................22
3.3 Horizontal Analysis:..................................................................................................................30
3.4 Ratio Analysis:..........................................................................................................................34
3.5 SWOT Analyses........................................................................................................................42
CHAPTER NO 4 FINDINGS...........................................................................................................46
4.1 Findings:....................................................................................................................................46
CHAPTER 5 RECOMMENDATION AND SUGGESTION.........................................................48
5.1 Recommendation and Suggestion:.............................................................................................48
References & Resources....................................................................................................................51

xv
 LIST OF TABELS

Serial No Title Page No

3.1 Balance sheet of MCB 25

3.2 Vertical analysis of Balance sheet of MCB 27

3.3 Income statement of MCB 31

3.4 Vertical analysis of Income statements of MCB 32

3.5 Horizontal Analysis of Balance sheet of MCB 34

3.6 Horizontal Analysis of Income Statements of MCB 37

3.7 Net Profit Margin ratio 39

3.8 Gross Profit Margin ration 40

3.9 Return on Investment ratio 40

3.10 Return on Average Equity ratio 41

3.11 Current Ratio 42

3.12 Debt to Equity Ratio 43

3.13 Capital Deposit Ratio 44

3.14 Advances to Deposits Ratio 45

3.15 Profits per Employees Ratio 45

xvi
 LIST OF ACRONYMS

BBA Basic Banking Account

PLS Profit Loss Sharing

KYC Knowing Your Customers

SBP State Bank of Pakistan

NIFT National Institutional Facilitation Technology

CC Cheque Collection

IBFT Inter Bank Fund Transfer

RTGSS Real Time Gross Settle System

xvii
 EXECUTIVE SUMMARY

The aim of this project was to prepare a stock valuation report for a company and to analyze
whether it would be favorable for investors to buy its shares considering the current economic
situation in the world in general and in Pakistan in particular.

The following research has been done on Muslim Commercial Bank Ltd. This report includes
a thorough analysis of the banking industry which is currently characterized as being one of
the highest growing and best performing sector of Pakistan.

Now days no one can neglect the importance of banks and they are playing important role in
economy of country. One of the components of these financial institution is Muslim
Commercial Bank (MCB) who play a very important financial handling of the country.
revenue in 2016 is $400

Because of the reason mentioned above the financial side of banking system has always been
the main field of interest for me. As the student of business I have done my internship in
MCB Jhangi Branch for the short span of six weeks. To get all the information about the
organization it is not possible but based on some observation, there are some short comings in
the organization, which were experienced and also narrated by personal of the MCB.

Findings:

 In MCB subscribers dealing is well ,but during the rush hour subscribers has to wait
for a long time for their tum, thus its quite hard for new subscribers or potential
subscribers to get the required information
 Lack of space for visitor and also for customers. In rush hours there is no proper place
for customers where they wait for their turn.
 There are no new and attractive schemes for customers which attract the customer.
 Lack of team work. Because there is no enough team meetings.
 At MCB Jhangi branch there is mismanagement of internees. At a time there are 7
internees. Most of them were selected on nepotism basis.

Recommendation:

 There should be an information desk to provide the information and to receive the
complaints of the subscriber in the bank.

xviii
 As there is lack of reward and other financial schemes for employees working in
finance department which is effecting employees performance so there should be
planned program for loaning policies of employees.
 They must have proper seating arrangements for people ,so they do not faceany
hurdles in bank.
 They must have to hire qualified staff in order to improve the functions of branch. As
there is sufficient supply of commerce and business graduates, they should be hire on
merits.
 During my internship I observed that there was no proper distribution of work in the
MCB bank. Proper distribution of work prevents the employees. from over and under
work situation. So for a smooth running of the bank. proper distribution of work 15
important to be followed.

xix
 CHAPTER NO 1

INTRODUCTION TO REPORT

1.1 Introduction

This report is prepared as to fulfill the preliminary requirement of degree of BBA offered
from Abbottabad University of Science and Technology. This report describes the lesson
learned and skilled achieved by me during my six week internship with the MCB bank of
Jhangi Branch.

The report will explore the different organs of the MCB bank Jhangi branch in detail.
Different process and functions which are carried out in the branch will be explored in detail.
Moreover the report will cover the functions performed by different employee at bank.

1.2 Background:

Being a mandatory degree requirement, all the BBA students are required to undertake an
internship program of six weeks duration in a national or international organization.

This report is prepared for the fulfillment of the BBA course, according to the requirements
of HEC.

1.3 Objectives of the Report:

The main objective of this report is to provide the students, an opportunity to equip
themselves with useful knowledge or information of that specific organization of their
internship and provide them best environment that they can easily adjust themselves
according to the environment of the organization.

To understand various operations and to equip with practical knowledge of banking. Basic
objective was to create a link between practical and theoretical knowledge. Besides, the
reports also aim to inculcate the students the method of collecting appropriate material and
shaping it in the form of formal report writing.

1
1.4 Purpose of Report:

The main purpose of this report is that, as it is the requirement of course and fulfillment of
degree of BBA. Internship is basically opportunity created for students to work for specific
period of time in an organization. The purpose is to utilize the knowledge and improve your
skills in internship, applying management knowledge in practice, improved human skills.
That you can write any performed analysis on report. Beside this, some other purposes are
associated, which includes;

 To give a comprehensive review of MCB.

 To study operations of the bank, and to analyze the strength and weaknesses of the
organization.
 To analyze its financial performance.
 To recommend the measures to improve overall performance.

1.5 Merits of the Report:

The report define the working of MCB, that how different functions are performed in bank.

And what process is used to solve different problems of bank

1.6 Scope of Report:

Banking has extremely wide scope and six weeks are not enough to understand all the work
and process of bank. Due to barriers of limited time and space, the scope of work is limited.
However it included the best of my understanding. The report covers overall operations of
MCB. The focus is on financial aspects of the bank.

1.7 Research Methodology of Report:

While preparing the report following data collection techniques have been used.

There are two types of data used for report writing.

1.7.1 Primary Data

The main sources of primary data of MCB includes

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  Personal observation during internship.
 Discussion with staff.
 Informal interviews with branch manager,

1.7.2 Secondary Data

The main sources of secondary data of MCB includes,

 Annual report of the MCB

 Website of MCB.
 Journals
 Circulars
 Relevant books
 Newspapers.

1.9 Scheme of Report

The internship report is categorized into five chapters, the detail of which is as follows:
Chapter 1: This chapter is an introductory chapter which describes the introduction of report,
scheme of study, scope of study, methodology of report and limitations of report.
Chapter 2: This chapter is the review of bank that includes the functions of bank, its roles,
history value, mission and departmentalization of bank.
Chapter 3: This chapter contains the different types of financial analysis of MCB. It includes
SWOT analysis, vertical and horizontal analysis and ratio analysis.
Chapter 4: This chapter is about the findings that I observed during my internship.
Chapter 5: It includes recommendations and suggestion that give detail of structural changes
organization is required to make by delegating authority, job rotation and develop their
infrastructure.

CHAPTER NO 2

3
 ORGANIZATIONAL OVERVIEW

2.1 Introduction:

MCB was founded by ISFHANI and ADAMJEE families in Calcutta on July 9, 1947. MCB
is not an overnight success story rather good track of services are responsible for the leaps
and bounds progress. After the partition of the Indo-Pak Subcontinent, the bank moved to
Dhaka from where it commenced business in August 1948. In 1956, the Bank transferred its
registered office to Karachi, where the Head Office is presently located. Thus, the bank
inherits a 52-year legacy of trust in its customers and the citizens of Pakistan.

Muslim Commercial Bank (MCB) unfolds 52 years of growth. MCB is not an overnight
success story. The bank started corporate life in Calcutta on July 9, 1947. After the partition
of the Indo Pak Subcontinent, the bank moved to Dhaka from where commenced business in
August 1948.

In 1956, the Bank transferred its registered office to Karachi, where the Head Office is
presently located. Thus, the bank inherits a 52-year legacy of trust in its customers and the
citizens of Pakistan.

2.1.1 Nationalization

In January 1974, the Government of Pakistan nationalized MCB following the banks
(Nationalization) Act 1947, Premier Bank Limited merged with MCB.

2.1.2 Change of ownership

The performance of MCB was badly affected by bureaucrat government. In January 1974,
MCB was nationalized by Bhutto Government following the bank act 1974 subsequently in
June 1974 Premier Bank Limited merged with MCB.

2.1.3 Privatization

When privatization policy was announced in 1990, MCB. MCB was the first to be privatized
upon recommendations of World Bank and IMP. The reason for this choice was the better
profitability condition of the organization and less risky credit portfolio which made" it a
good choice for investors. On April 8th, 1991, the management control was handed over to
"National Group" (the highest bidders). Initially only 26% of shares were sold to private
sector at Rs. 56 per share MCB besides being money financial organization have rendered

4
invaluable services in the economics and social developments of our country. MCB today,
represents a bank that has grown with time, experience and Pakistan. A major financial
institution, in scope and size, it symbolizes a fully-grown tree. Evergreen, Strong, and firmly
rooted

2.1.4 Vision Statement:

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

2.1.5 Mission Statement:

We are a team of committed professionals, providing innovative and efficient financial

solutions to create and nurture long-term relationships with our customers. In doing so, we
ensure that our shareholders can invest with confidence in us.

2.2 Values:

2.2.1 Trust:

We are the trustees of public finds, and serve with integrity & commitment. Ethical behavior
is of critical importance to us. We adopt full compliance with internal and external policies
and procedures, operating within the legal framework.

2.2.2 Customer Focus:

We continuously seek to exceed our customer's expectations, forging and maintaining long
term relationships.

2.2.3 Innovation:

We strive to be the market leaders in innovative products and services offering customized
financial solutions with flawless execution.

2.2.4 Teamwork:

The diversity of our people is our strength. We inspire and challenge each other working
together to achieve synergy.

2.2.5 Achievement:

5
Our people are our most valuable asset. We are committed to a result oriented culture. Our
goals are clear and merit is the only criterion for reward.

6
2.2.6 Organizational Hierarchy Chart:

General Manager

Regional Manager

Branch Manager

Branch Credit Committee Internal Auditor

Credit Department Customer Service Department General Banking

Account Opening
Department

Cash Deposit
Department

Foreign Exchange
Department

Bills Remittances
Department

Clearing
Department

7
2.2.7 Developments:

After privatization, the growth in every department of the bank has been observed. Following
are some key developments:

Launching of different deposit schemes to increase saving level. Increased participation on

foreign trade. Betterment of branches and staff service level. Introduction of Rupee Traveler
Cheques & Photo Credit Card for the first time in Pakistan.

2.2.8 Head Office:

Chudrig or Road of Karachi has same importance in Pakistan's economy as of the Wall Street
in world economy. The division working under MCB Head office is as follows:

 Administration
 Credit Management
 Investment Banking
 Human Resource
 Information Technology Corporate Planning & Budgeting
 Finance & Treasury
 International Division
 Inspection & Audit
 Law Division
 Marketing & Development
 Trustee Division

Under the President an Executive Committee and a Credit Committee works. All the matter
of the bank join to the board of director are presented to the executive committee which is
responsible for daily operation of the bank The request for credit exceeding the General
Manager power is approved by the Credit Committee. Under the area Executive is the
General Manager who is the in charge of the Circle Office. Under the General Manager are
the Zonal Manager and then the Branch Manager. At present, there are 9 circles, 47 regions
and 1400+ branches. Before privatization there were provincial chiefs for all the four
provinces. But this management now has abolished the provincial officers and improved the
efficiency of the bank.

8
2.3 Information about Branch:

I did my internship in MCB Bank Limited Jhangi Branch. Branch code is 1370. And some
important information about my branch which observed is as follows:

2.3.1 Management of the branch

Branch Manager
(Mr. Waqr Ahmed)

Operation Manager Finance Manager

(Mr.Adnan Riaz) (Mr .Nadeem)

Cusromer Service Manager Remittance Manager

Account Opening Manager
(Mr. Faris Ali) (Mr. Zahid Mehmood
(Mr. Shaban Khan )
Fasial Mehmood )

2.3.2 General Banking

It is backbone of banking. It is one of the major departments of MCB. It further consists of

following departments:

 Operations Department.
 Customer services Department.
 Remittance Department.
 Clearing Department.
 Cash Department.
 Accounts Opening Department.

2.3.3 Departments where internship was carried out

 Accounts Opening Department.

 Clearing Department.
 Remittance Department.

9
  Customer Services Department

2.4 Nature of Accounts:

 Current Account
 PLS Saving bank A/C
 Basic banking A/C (BBA)
 Current accounts:

In this type of accounts the client is allowed to deposit or withdraw money as and when he
likes. He may, thus, deposits or withdraws money several times in a day if he likes. There is
also no restriction of amount to be deposited or withdrawn. However, there is requirement of
minimum balance maintenance of Rs. 1000/-. Usually this type of account is opened by the
business men. No profit is paid by the bank and no service charges are deducted by the bank
on current deposits account. These types of deposits are also exempt from compulsory
deduction of Zakat

 PLS (Profit Loss Sharing) Saving Bank a/e:

This account was started in 1980s after the issuing of banking ordinance in 1980 by Zia
Government to develop Islamic banking in Pakistan. In this case customer would be
responsible for bearing profit as well as loss. The bank would be within its rights to make
investment of credit balances in the PLS saving accounts in any manner at its sole discretion
and to make use of the fund to the best of its judgment in the banking business under the PLS
system. Profit paid on semiannually basis.

Basic Banking a/c (BBA):

Introduced specially for salaried persons Minimum balance is Rs.1000/- No service charges.
Only two transactions allowed, in one month. For more than two transactions Rs.35/- per
transaction. Single natured A/C.

2.5 Account Opening Procedure:

Following steps are involved in A/C opening.

10
  Account opening form:

Firstly the customer fills the account opening form and provides all the information as
provided above. I experienced to fill this form. An account is needed to be introduced. The
introduction of a current account holder is accepted for the opening of an account.

The introducer should be a branch customer or may be account holder of any branch of MCB;
however signatures should be verified by the banker. In certain cases, introduction from bank
other than bank MCB may be allowed. Personally known accounts may be introduced by the
bank staff. Introduction from an account holder not personally coming to the bank should be
verified by the bank.

 Stamping:

Then it is stamped. Stamps like. MCB sign verified, Sign Admitted Stamp, Sign Verified
stamps are affixed.

 Account number

When all the procedures are completed than the final approval is taken from the branch
manager. After obtaining approval, an account number is allotted to the customer and all the
information is entered in to the computer and KYC is filled up. Then that account number is
writing on the Cheque Book, Specimen Signature cards and account opening form.

 Knowing your customers

After entering information KYC is filled up. It should be ensured that at the time of filling
information in KYC, a customer should be physically present. After this all information is
saved in system. I filled KYC form also.

 Approval:

This account is further approved by Manager Operations.

 Send form to head office:

After fulfilling all the requirements and verifying the forms from operation manager the
account opening form is sent to Head Office Karachi and make request to issue the printed
cheque book.

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  Letter of thanks:

Subsequent to the opening of an account, letter of thanks should be sent under registered post
or courier service to the customer and the introducer.

 Issuance of a Cheques Book:

After opening an a/c with the bank, the a/c holder cannot immediately start operating his/her
account. The Cheque book is issued, when a customer will submit a copy of letter of
acknowledgement duly signed by him, in case of new account. And for subsequent issuance
of Cheque book He/she has to make a request once again in the name of bank for the issuance
of Cheque book and he should mention title of A/C, A/C number, sign it properly and
mention the number of leaves requires. Normally a Cheque book having at least 25 leaves is
issued but it can also be of 50 leaves.

 Closing of an account:

There is no of reasons of closing an account. Some are listed below:

 If customer desires to close his account

 In case of death of one account holder.
 Bankruptcy of the account holder.

If an account contain nil balance or not up to the requirement of rules.

Before closing any account, bank send letter or call back to the account hold for informing
him that his account is going to be closed. There is need an approval from higher authority to
close any account.

2.6 Clearing Department:

In clearing department I worked under supervision of Mr. Zahid Mehmood. In clearing

department and learned about inward and outward clearing and I also learnt about.

Meaning of clearing

The word clearing has been derived from the word "clear" and is defined as, A system by
which banks exchange cheques and other negotiable instruments drawn on each other within

12
a specific area and there by secure payment for their clients through the Clearing House at
specified time in an efficient way.

 Clearing House

It is a place where cheques are presented, collected from bank branch. It is one of the services
provided by NIFT to other commercial banks. NIFT acts as a clearing house.

NIFT:

NIFT stands for National Institutional Facilitation Technology

Clearing House of SBP has shifted a tire some part of its work to a private institution named
NIFT. NIFT collects cheques, demand drafts, Pay orders Travelers Choques, etc. from all the
branches of different banks within city through its carriers and send them to the branches on
which these are drawn for clearing. After the branches approve the instruments drawn on
them, NIFT prepares a sheet for each branch showing the number for instruments and amount
in its favor and drawn on it and sends it to each branch. A similar sheet for each bank is also
sent to clearing house of SBP where accounts of banks are settled in the same manner

 Learning in clearing department:

My learning in clearing department was of following things

 Procedure of clearing cheques.

 Checking of cheques.
 Inward and outward clearing.
 Different reasons of returning a Cheque.
 Types of clearing stamps.
 Clearing procedure:

Instruments collected are treated as Transfer, Transfer Delivery, Claring and Cherpe
collection.

 Checking of cheques:

When the instruments are collected from the client. Following things are checked

 Cheque date, instrument should be neither stale/ nor post-dated.

13
  Title Of Accout
 Amount in figures and words should be the same
 There should be no cutting and overwriting on the Cheque.
 Instrument should not bear any unauthorized alternation.

 Transfer:

When the instruments are collected and paid by the same branch, it is called transfer.

 Transfer Delivery:

When instruments are collected and paid by two different branches of the same bank situated
in the same city, it is called transfer delivery. A Cheque is processed under transfer delivery
when it has crossing stamp and is from local branch of MCB,

 Clearing:

Instruments which are drawn on the branches of some other bank of the same city or of the
same area, which is covered by a particular clearing house, are processed f clearing. In
ourward clearing when Cheque is received two copies of voucher SF-37 are prepared, one
copy and instruments along with clearing stamp, Endorsement stamp, add list and two
vouchers of clearing summary are sent to NIFT in a sealed bag. And clearing records are
recorded in clearing register. In kwad caring Instruments received from NIFT are posted in
Computers after checking.

 Cheque collection (C.C):

When Cheque is from another city then it is grouped as C.C.Such instruments are processed
as Choque for collection. In this procedure SF-37 form is used in Cheque collection. Original
voucher with Cheque, stamped as C.C along with C.C number is sent to main branch of the
responding city which is further sent to NIFT. Whereas Carbon copy with Pay-In-Slip is
taken by bank for record purposes.

 Pay-In-Slip (Deposit slip)

It is used for two purposes

14
Whenever we want to deposit cash in our account then pay-in-slip is used by writing amount
on it and depositing it to cashier along with money. Whenever we have Cheque from any
party to be collected in our account we fill pay-in-slip (Deposit slip). One part is attached
with Cheque and another is given to Cheque holder as a receipt.

NOTE

In inward clearing sometimes cheques are not passed due to some reasons then cheques sent
back to NIFT along with Cheque return memo. Some of these reasons are,

 Cheque incomplete
 Clearing stamp required.
 Drawer's sign incomplete
 Drawer's sign different from specimen
 Post Dated
 Payment stopped by drawer
 Amount in words and figures differ.
 Insufficient funds etc.

2.7 Remittance Department:

In Remittance department I worked under supervision of Mr. FasialMehmood. In Remittance

department and learned about RTGSS (Real-time Gross Settlement System) and IBFT (Inter
Bank Fund Transfer) I also learnt about.

2.7.1 Remittance:

Remittance is transfer of funds from one place to another or from one person to another. Itis
an important service provided by banks to customers as well as non-customers. Since it is not
a free service it is a source of income for the bank.

Four parties involved in remittance: -

Remins

Ramine

Issuing Bank

15
Paving Bank

 Remitter:

One who initiates, or requests for a remittance. The bank charges him a commission for this
service. He may or may not be the branch's customer.

 Remittee

A Remittee is also called the beneficiary, or the payee. The person in whose name the
remittance is made. A Remittee is also the one who receive the payment.

 Issuing Bank

The bank that sends or affects the remittance, through demand drafts, telegraphic transfers,
or Mail Transfers.

 Paying Bank:

Paying Bank also knows as the drawee branch. The branch from where the instrument is
drawn.

2.7.2 Types of Remittance:

 Remittance is classified into following four types

 Inward remittance, instruments received for payment
 Outward remittance, issuing instrument to the responding branch.
 Inland remittance, within same country.
 Foreign remittance, from one country to another country

2.7.3 Instruments used In Remittance:

 Demand Draft (DD)

 Telegraphic Transfer (TT)
 Pay Order (PO)
 Call Deposit Receipt (CDR)
 Rupees Traveler Cheque (RTC)

16
  Demand Draft:

DD is a written order given by the branch of the bank on behalf of the customer to other
branch of the same bank to pay the certain amount to the customer DD are issued for the
particular place other than place of issuance. DD applicant or recipient, who might not be an
A/C holder present it to another bank at a different place requesting it to pay on demand a
specified amount of money which is already received to the person named on it.

 Pay Order:

For this kind of remittance the payer must have the account in the issuing bank. Pay order are
more liquid as compared to cheques because cheques may be dishonored while PO can't be. It
is written order issued by the bank drawn and pay MCB on itself. It is used for local transfer
of money from one person to another person.

2.8 Cash Departments:

The cash department the most important department of the bank.

In cash department both deposits and withdrawals go side by side. This department deals with
cash deposits and payments. The following books are maintained in the Cash Department:

 Cash Receipt Book

 Cash Payment Book
 Cash balance Book
 Cash Deposits
 Cash Payments

 Cash Receipt Book:

The cashier is responsible to receive both the paying-in-slip and cash from the depositor. For
depositing the cash into customer's accounts, there is need to fill in the paying-in slip giving
the related details of the transaction. The cashier check the necessary details provided in the
paying-in-slip(Deposit slip) and accounts the cash and tallies with the amount declared in the
slip then cashier fills in the 'Cash voucher received Record Sheer and assigns a voucher no. to
both the transaction being made in the sheet and the slip. The 2nd cashier posts the
transaction entries in computer ledger. After posting these entries, computer display before

17
posting balance and after posting Cashier assigns the stamp POSTED on the voucher to show
voucher transaction entries are posted.

 Cash Payment Book:

The only instrument that can be used to withdraw an amount from an account is the Cheque
book. No payments are made by another instrument. When cheque is valid in all respects, the
cashier enters the necessary inputs in the computer and posts the entry so that account
balance is updated. When cashier posts these entries, computer automatically display the
balance before posting the transaction amount, balance after posting. The cashier at the same
time maintains the *Cash Voucher Received Record Sheet'. Then inspects the signature of the
customer.cancellation mark of checking officer and stamp of POSTED is placed on cheque
before he hands over the cash to customer.

 Cash Balance Book:

At the end of the working day cashier is responsible to maintain the cash balance book. The
cash book contains the date, opening balance, detail of cash payment and received in figures,
the consolidated figure of receipt and payment of cash is entered in the cash book and the
closing balance of cash is drawn from that i.e.

Opening balance of Cash + Receipts-Payments Closing Balance

2.9 Technology Department:

It includes,

 Mobile Banking
 Phone Banking
 Online Banking
 ATM

 Mobile Banking:

It has been launched recently during my internship. It helps in getting accounts details and
making transactions using mobiles.

18
  Phone Banking:

"MCB Phone Banking is available to all customers on a countrywide basis. Customers can
dial(111 000-622)

 Online Banking:

MCB now offers the facility of on-line banking to its customers through its country wide
network of branches. Customers can use the ATMs or the banking counters of any branch for
day-to-day banking needs, irrespective of branch where they maintain their accounts.

 ATM (Automatic Teller Machine):

ATM stands for Automatic Teller Machine. These machines used to transact in one's account
without intervention of humans. These machines are basically used for taking cash,
confirming balances and requesting statements / chequebooks.MCB has the largest ATM
network in the country at the moment with almost one ATM at each online branch and also
ATM terminals at International Airports covering 27 cities of Pakistan.

 Silver Cards

Are ordinary cards with a maximum withdrawal facility of Rs. 10,000/- in a day? The annual
fee for this card is Rs. 300/- only.

 Gold Cards

Are special cards with maximum withdrawal limit of Rs. 25000/- in a day ?

 Platinum Cards

Are special cards with maximum withdrawal limit of Rs.50000/-in a day.

2.10 MCB Image:

MCB is a reputable financial organization and is well known all over the Pakistan. Perception
is of producing a high quality services.

 Customer care:

The Bank not only provides high quality services but it also look for the comfort and
convenience of the clients, MCB always preferred their customers.

19
  Market share:

MCB has covered much of the potential market and the net profit is increasing years after
years. Deposits and advances have sufficiently increased.

Large number of diversify products:

This is also its main strength as it has diversified in many products such as

 Debit Card
 Visa Card
 Car Financing
 Agriculture Financing

 Branch Network

It is the greatest strength of the Bank.

 Sound Marketing:

Skillful marketing of the products is being achieving countrywide goals of MCB

 Phone Banking:

Every account holder can conform its balance on Phone and may ask for any query. There are
also 24 hours help lines for customers

 Mobile Banking:

It has been launched recently. It helps in getting accounts details and making transactions
using mobiles.

 Highly Automated Bank:

MCB in Pakistan is the also in the list of highly automated banks, about 750, like Emirates
because of its modern style of banking through fully computerized control and twenty four
hour banking.

20
2.11 Conclusion:

What I have learnt in MCB?

In MCB Bank Ltd. I really enjoyed working with the staff of Jhangi Branch, having a wish to
be employee of MCB. It was almost impossible to work in all the departments within that
limited time. But the staff of the branch provided me the opportunity to work in the different
departments for the sake of practical knowledge. I feel highly indebted to work in the Main
Branch, Jhangi with the manager of that branch Mr. Waqar Ahmed, because I learnt a lot in
that branch. During my internship training in the MCB branch Jhangi as I early mentioned
that I have worked indifferent departments & seats and learnt the following things:

 Account opening.
 Cheque book issuance.
 Outward clearing.

21
 CHAPTER NO 3

FINANCIAL ANALYSIS

3.1 Introduction:

Financial statements analysis is the tool because of which we can measure the financial
position of the company. It also helps us for judging final position and outcome from the
activity of that company. This also helps us in conclusive the strengths and weakness of the
firm. In other word we can say financial analysis is done for the reason of identifying the
financial strength and weakness of an organization.

This financial analysis provides information to different departments, marking the decision of
an organization. This also helps an organization for achieving goals and objectives and helps
in making strategy for the future. The investors, creditors and other providers also take
benefit and information from the financial statement analysis.

There are three broad categories of the statement analysis:

 Vertical analysis.
 Horizontal analysis.
 Ratio analysis.

3.2 Vertical analysis:

Vertical analysis is a technique for identifying relationship between items in the same
financial statement by expressing all amounts as the percentage of the total amount taken as
100. In a balance sheet, for example, cash and other assets are shown as a percentage of the
total assets and, in an income statement, each expense is shown as a percentage of the sales
revenue.

In Vertical analysis, various components of the financial statements are standardized by

expressing them as a percentage of some bases.

Examples of common-sized statements include:

 Components of the balance sheet expressed as a percentage of total assets

22
  Components of the income statement expressed as a percentage of sales or revenue.

3.2.1 Vertical Analysis of Balance Sheet:

A method of financial statement analysis in which each entry for each of the major categories
of accounts (Total assets and Total liabilities and equities) in a balance sheet is represented as
a proportion of the total account. The main advantage of vertical analysis is that the balance
sheets of businesses of all sizes can easily be compared. It also makes it easy to see relative
annual changes within one business.

Table 3.1 Balance sheet of MCB

ASSETS 2017 2018 2019 2020 2021

Cash and Balance
46754 60568 74222 1060072 103175
with treasury bank
Balance with other
3016 3611 4344 4579 11879
banks
Leading to financial
1418 3080 2810 4396 35106
Inst
Investments 511137 565696 555929 656964 749369
Advances 303559 304122 348117 469356 503581
Operating fix assets 30498 29227 32409 39170 41072
Intangible assets 694 723 343 404 372
Other assets 37555 37384 54191 62295 53578
Total Assets 934,631 1004411 1072365 1343236 1498132

LIABILITIES
Bills payment 16628 11889 12844 22681 15699
Borrowings 59543 118040 74515 133070 216019
Deposits and 688330 696805 781430 968483 1049038
other account
Subordinated - - - - -

23
loan
Deferred tax 10397 11377 11260 4625 1532
liabilities
Other liabilities 26630 28498 50690 56921 62673
Total liabilities 804527 866609 930739 1189672 1348852
Shareholder
equality
Share capital 11130 11130 11130 11851 11851
Reserves 48830 51309 53347 70865 74148
Revolution 23196 24616 23680 17073 9749
Inappropriate 46948 50747 53469 53775 53532
profit
Total equality 130104 137802 141626 153564 149278
Total liabilities 934,631 1,004,411 1,072,365 1,343,236 1,498,132
and T. equity

Table 3.2 Vertical analysis of Balance sheet of MCB

ASSETS 2017 2018 2019 2020 2021

Cash and balance with 5.002 6.00 6.921 7.896 6.886
treasury bank
Balance with other 0.322 0.359 0.405 0.340 0.792
banks
Lending to Financial 0.151 0.306 0.262 0.327 2.343
Inst
Investments 54.688 56.32 51.841 48.909 50.020
Advances 32.479 30.27 32.462 34.942 33.613
Operating fixed assets 3.263 2.909 3.022 2.916 2.741

Deferred tax assets 0.074 0.075 0.031 0.030 0.024

Other assets 4.018 3.721 5.053 4.637 3.576

Total Assets 100% 100% 100% 100% 100%

LIABILITIES
Bills payments 1.77 1.183 1.197 1.688 1.047

Borrowings 6.370 11.75 6.948 9.906 14.419

24
Deposits and other 73.647 69.37 72.86 72.100 70.023
accounts

25
Deferred tax 1.112 1.132 1.050 0.344 0.102
liabilities

Other liabilities 3.170 2.837 4.726 4.237 4.183

Total liabilities 86.06 86.272 86.781 88.564 90.033

9

Shareholder Equity

Share capital 1.19 1.108 1.037 0.882 0.791

Reserves 5.22 5.108 4.974 5.275 4.949

Revaluation 2.481 2.450 2.208 1.271 0.650

Inappropriate profit 5.023 5.052 4.986 4.003 3.573

Total equity 13.914 13.718 13.215 11.43 9.963

1
Total liabilities and T. 100% 100% 100% 100 100%
%
equity

26
Interpretation:

 The investment in total assets has increased in 2018 i-e 56.32% as compare to 2017
54.688% which means increase in liability. But the investment in the total assets has
decreased from 56.32% to 50.020 % from 2018 to 2021 which means that they are
reducing their liability.
 The advances has decreased from 32.47% to 30.27% from 2017 to 2018 which means
their revenue from interest will decreased. But advances has increased in 2020 i-
34.942% and in 2019 - 33.613 % as compare to 2020 which means their revenue from
interest will increased and bank is contributing more in assets.
 The bill payments of MCB has decreased in 2019 and in 2020 - 1.18% and 1.197%as
compare to 2018 i-e 1.77% which means they from efficient utilization of assets and
the bills are being paid off.

3.2.2 Vertical analysis of Income statement:

Vertical analysis puts the income statement into percentage terms as Markup earned
decreased I and compares other items with respect to it. This allows you to compare, for
example, what percent of markup revenue is profit after tax. If look at below given vertical
analysis the percentage of profit after tax is 20% in 2021 in comparison with 100% of markup
revenue. As it was 27% in 2017, 26% in 2018, 26% in 2019 and 24% in 2020 respectively.

27
Table 3.3 Income statements of MCB

2017 2018 2019 2020 2021

Markup Earned 77269 80390 67400 74091 83319

Markup Expense (33757) (31077) (23586) (31429) (37306)

Net Markup Income 43512 49313 43814 42662 46013

Non markup Income 12944 16566 16175 18118 17198

Total Income 56456 65879 59989 60780 63211

Non expenses (21591) (22896) (22969) (28721) (32902)

Profit Before Provisions 34865 42983 37020 32059 30309

Provision And Write off 1864 (669) (925) (1045) 1753

Profit Before Taxation 36729 42314 36095 31014 32062

Taxation (12405) (16782) (14184) (8555) (10704)

Profit After 24324 25532 21911 22,459 21,358

Taxation

28
Table 3.4 Vertical analysis of Income statement of MCB

2017 2018 2019 2020 2021

Markup Earned 100% 100% 100% 100% 100%

Markup Expense -43 -38 -34.9 -42 -44

Net Markup Income 56. 61. 65. 57. 55.

Non Markup Income 16. 20. 23. 24. 20.

Total Income 73. 81. 89. 82. 75.

Non Markup Expenses -27. -28. -34. -38. -39.

Profit Before Provision 45. 53. 54. 43. 36.

Provision And write 2.4 -0.83. -1.37. -1. 2.

off

Profit Before Taxation 47. 52. 53. 41. 38.

Taxation -16. -20.8 -21. -11. -12.8

Profit After taxation 31. 31. 32.5` 30. 25.

7

29
Interpretation:

 As we know that banks provide many facilities other than money lending and
borrowing. Banks receive fee, commission etc. for these services. Therefore fee and
commission income are increasing which is good and favorable signs.
 Net markup income is 48% in 2017 and is increased in 2018 i-e 51% and 52% in
2019. But decreased in 2020 and 2021 i-e 46% as compare to 2017 which also effect
the financial position.
 The total income increased in 2017 i-e 68%, in 2018 is 72% and in 2020 it is 66%
which is good for bank. But total income decreases from 66% to63% in 2020 to 2021
with great proportion which is not good sign.
 There is decreased in taxation, it is-9% in 2020 and in 2021 it is -11 which is good for
investment.

 Provision and write off is increasing i-e 2% in 2020 and in previous years it is -1%.
which shows the good credit policy.

3.3 Horizontal Analysis:

This technique is also known as comparative analysis. Horizontal analysis compares cash
amount for a selected base year or we take each item of base year as 100% and compare with
other items. Thereafter, the amounts of similar items or groups of items in prior or subsequent
financial statements are expressed as a percentage of the base year amount. The resulting
figures are called index numbers or trend ratios.

The resulting figures are called index numbers or trend ratios.

Formula = Current Year amount - Base Year amount / Base Year amount 100

30
Table 3.5 Horizontal Analysis of MCB' Balance Sheet:

Assets 2017 2018 2019 2020 2021

Cash and Balances with 100% 129.54 158.75 226.87 220.67
treasury banks

Balances with other banks 100% 119.72 144.03 151.82 393.86

Lending to financial 100% 217.20 198.76 310 3375

institutions
Investments 100% 110.67 108.76 128.52 146.60
Advances 100% 100.185 114.67 154.6 165.89
Operating fixed assets 100% -95.84 106.26 128.4 134.67

Intangible assets 100% 104.17 -49.43 -58.3 -53.61

Other assets 100% -99.95 144.29 165.8 144.66
Total Assets 100% 107.46 114.73 143.71 160.29
Liabilities
Bills payable 100% -71.5 -77.25 136.40 -94.5
Borrowings from 100% 198.2 125.14 223.4 367.2
financial institutions
Deposits and other 100% 101.23 113.52 140.70 152.40
accounts
Deferred tax liabilities 100% 109.42 108.30 -44.5 -14.74

Other liabilities 100% -61.8 171.07 192.10 211.5

Total liabilities 100% 107.71 115.68 147.8 167.6
Share capital 100% 0 0 106.47 106.47
Reserves 100% 105.07 109.25 145.12 151.84
Inappropriate profit 100% 106.12 102.08 -73.7 -42.1

Surplus assets 100% 108.09 113.88 114.54 114.02

Share Holders Equity 100 % 105.91 108.85 118.03 114.73

Interpretation:
31
 Cash increased in 2021 as compared to previous three years which shows the liquidity
position of bank is good but cash decreased in 2021 as compared to 2020; it shows
that the liquidity position of the bank is not good. Therefore bank should take
necessary steps according to the position. It shows that bank needs improvements in
the current assets in 2021 as compared to 2020. The main reason for this change is
decrease in short term investment showing a constant decrease as a percentage total
assets.
 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 case advance to the customer is very low in 2020 but increase in
2021. It means that MCB is not running well.
 Assets of the banks are increasing as compare to 2020 and 2021 by purchasing the
assets. More assets mean that bank has more capacity to pay off its liabilities. There is
increasing trends in field of fixed assets. It is due to purchase of new assets.
 There is decreased in other assets in 2018 i-e -0.45 % as compare to 2017 i-e 39%.
The comparison of other assets in 2019, 2020, 2021 with 2017 has an increasing
trend, which is a positive sign. Decrease in assets decrease the worth of organization
 There is decreasing trend in deposits and other accounts in 2018 i-e 1% and in 2021 i-
e 8% as compared to 2017, which shows very less credibility of the bank.
 Bills pay MCB decrease in 2019-18, which is positive sign, it shows they are paying
off their liabilities and earning more revenue.
 Other liability has decreasing trend which is good because decrease in liability
increases the liquidity position of the bank.
 The MCB is increasing its reserves and Un-appropriated profit in order to increase its
lending power, which is good sign, because according to the prudential regulations of
State Bank of Pakistan, a bank can lend money (per party exposure) equal to the 30%
of its assigned capital plus reserves.

32
3.3.1 Horizontal Analysis of Income Statements of MCB:

Table 3.6 Horizontal Analysis of Income Statements of MCB:

Assets 2017 2018 2019 2020 2021

Markup Earned 100% 104.03 -87.23 -95.89 107.82

Markup Expense 100% -92.1 -69.87 -93.11 110.51

Net Markup Income 100% 113.33 100.69 -98.05 105.74

Non Markup Income 100% 127.98 124.96 139.97 132.86

Total Income 100% 116.69 106.25 107.65 111.96

Non Markup 100% 106.04 106.38 133.02 1052.3

Expenses

Profit Before 100% 123.28 106.18 -91.96 -86.94

Provisions

Provisions And Write 100% -35.8 -49.6 - -94.05

256.06
Of

Profit Before Taxation 100% 115.20 -98.28 -84.45 -87.3

Taxation 100% 135.28 114.34 -68.97 -86.29

Profit After Taxation 100% 104.96 -90.081 -92.34 -87.81

33
Interpretation:

 Total income increases in 2018 i-e 16.69% while in 2017 it is 15% which is good for
bank but there is decreased in 2019, 2020, 2021 which is not good for bank.
 As we all know that banks provide many services for their customers and also act as
an agent 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. .
 In foreign currency dealing and dividend there is huge increasing trend, which shows
the investment of bank in healthy organization.
 Profit before taxation has increased 2017 to 2018 i-e 14% to 15.20% which means
firm is generating more revenue and is going in profit. While the comparison of 2017
with 2019, 2020, 2021 there is decreased in profit before taxation which is not good
for bank.

3.4 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 help in planning and forecasting these can assist management in its basic functions of
forecasting, planning. Coordination and control.

 Profitability Ratios.
 Liquidity Ratios.
 Financial Leverage Ratios.
 Coverage Ratios,

3.4.1 Profitability Ratios:

These relate profits to sales and investment. These are a good indicator of a firm's overall
effectiveness of operation. These include:

a. Net Profit Margin:

It is a measure of the firm's profitability of sales after taking account of all expenses and
income taxes. It shows the net income per Rupee of sales.

34
Formula: Net Income / Interest Earned.

Table 3.7 Net Profit Margin ratio:

Years 2017 2018 2019 2020 2021

Net Profit Margin 8.50 28.59 20.1 37.1 39.1

Interpretation

The Net Profit Margin of MCB has decreased considerably, it was 37.64% in the Financial
Year 2017 but has shot up to 25.37% in the Financial Year 2018. This is because of the fall in
the profit rates offered to the depositors due to decreased of liquidity in the market. The net
profit margin measures the profit that is available from each rupee of sales after all expenses
have been pad, including cost of sales, selling, general, and administrative expenses;
depreciation, interest: and taxes.

For the Year 2019 23.36%

For the Year 2020: 19.85%

For the Year 2021 18.47%

This shows the decreased in the net profit over time, but the change in gross profit is less than
the change in the net profit margin. This results into the conclusion that either the selling
price has increased or the cost of sales has decreased. There is also another factor of the tax
rate, which also affects the income.

b. Gross Profit Margin:

It shows the Gross profit Margin in the total revenue of the Company. Gross profit includes
the Revenue minus the expenses.

Formula: Interest Income / Interest Earned

Table 3.8 Gross Profit Margin ratio:

35
 Years 2017 2018 2019 2020 2021

Gross Profit Margin 27.43 26.98 56.68 41.17 28.12

Interpretation:

In the 2019 the gross profit Margin of was 0.66% in the Total Incomie of the Bank In 2021
this margin goes down to 0.42%, as compare to 2020 Gross profit is critical because it
represent the amount of money remaining to pay operating expenses, financing costs, and
takes and to pay for profit. Gross profit margin is the amount of each sale rupee left over after
paying cost of goods tr services sold.

The profitability of the bank has decreased as the gross profit has decreased from 2020-2021)
The decreasing trend shows that there has been a remarkable increase in the markup expense
this markup expense increase is due to the management's inefficiency

c. Return on Investment or return on total assets:

It is also called the earning measures the overall effectiveness in generating profit with
available assets, invested capital etc.

Formals: Net Income / Average Total Assets 100

Table 3.9 Return on Investment ratio:

Years 2017 2018 2019 2020 2021

Return on Investment 0.68 2.14 0.70 0.68 0.63

Interpretation:

36
Return on assets in 2021 decreases as compare to previous year. As the bank has lost the
credibility in stock market, the share of bank is fall down. A high percentage rate wills guide
the hank whether it is well runing and has a healthy return on assets. Return on assets is
decrease due to increase in earnings before tax because effectively a business is utilizing its
assets to generates profits by comparing its earnings before interest and taxes to its total net
assets.

d. Return on Average Equity:

This ratio measures the carting power on shareholders' book value investment and is
frequently used in comparing two organizations in the industry

Formula: Net Income / Average Total Equity 100

Table 3.10 Return on Average Equity ratio:

Years 2017 2018 2019 2020 2021

Return on Average Equity 29.95 79.08 26.89 30.65 20.37

Interpretation:

Return on average equity ratio has decreased in 2019 as compared to previous year. In 2018 it
shows highest ratio. The return on equity of MCB is good which is favorable for bank. MCB
of Pakistan management realizes an adequate return on the capital invested by the stock
holders of the company.

3.4.2 Liquidity Ratios

These are used to measure a firm's ability to meet short-term obligations as they become due.
From these, an insight into the cash solvency of the firm and its ability to remain solvent in
the event of adversity can be judged. They are:

a. Current Ratio:

This shows a bank's ability to cover its current liabilities with its current assets. It can be
calculated by dividing the total current assets with the current liabilities for a particular
period.

37
Formula: Current Assets /Current Liabilities

Table 3.11 Current Ratio:

Years 2017 2018 2019 2020 2021

Current Ratio 1.15 1.01 0.17 1.03 1.05

Interpretation

MCB's Current Ratio is declining with time. It was 1.15 in 2019 and it is 1.01, which explains
an increase in the risk of short-term insolvency. This change is due to the fact that the bank
has decreased its short-term investments more than proportionately as compared to its short-
term liabilities. Current Ratio measures the number of times a company's current assets cover
its current liabilities. The company will be able to meet its short-term obligations if this ratio
is high.

For 2019: 0.17 times

For 2020: 1.03 times

For 2021; 1.05 times

The ratio has increased that shows the company is able to pay its liabilities by effectively
using the assets.

3.4.3 Financial Leverage Ratios

These ratios show the extent a firm uses debt financing as compared to equity. Two major
debt ratios are as follow:

a. Debt to Equity Ratio:

This shows the extent to which the firm is financed by borrowings and by the shareholder's
equity.

Formula: Average Total Debt/ Average Total Equity 100

Table 3.12 Debt to Equity Ratio:

38
 Years 2017 2018 2019 2020 2021

Debt to Equity Ratio 16.83 22.23 28.42 32.26 21.51

Interpretation:

Debt to equity ratio is the key financial ratio and is used as a standard for judging a
company's financial standing this ratio is high in year 2021 as compare to 2017 it means
majority of assets are contradictory A high debt to equity ratio of MCB of Pakistan indicates
that bank is going aggressive by financing with debt.

b. Capital Deposit Ratio:

This ratio highlights the relative importance of deposits and also highlights the need for more
capital for the firm

Formula: Average Deposits/Average Equity 100

39
Table 3.13 Capital Deposit Ratio:

Year Average Deposits /Average Equity Capital Deposit Ratio

2021 879786663 / 130573638 6.74%
2020 779308356 / 124026103 6.28%
2019 675701920 / 111007798 6.09%
2018 608423225 / 109398436 5.56%
2017 546889839 / 99145886 5.52%

Interpretation

Capital deposit ratio is 6.28% in 2020 and is 6.74% in 2021. It shows the negative sign due to
capital adequacy issues, it indicates a pressure on resources.

3.4.4 Other Ratios

Apart from the above there are certain other ratios that can help better analyze the
performance of a bank They are as

a. Advances to Deposits Ratio:

This ratio shows the advances made per unit of deposits ie. what amount of advances are
made per PKR. 1.00 Of the customers' deposits

40
Table 3.14 Advances to Deposits Ratio:

Year Average Advance /Average Advance in Deposite

Deposite
2021 501276164 / 879786663 0.57%
2020 476374997 / 779308356 0.64%
2019 444115148 / 675701920 0.66%
2018 376831982 / 608423225 0.62%
2017 328393753 / 546889739 0.60%
Interpretation:

The ratio has come down from 0.54 in 2019 to 53 in 2020. In 2021 it increased to 0.64. This
is because the advances extended match the increase in the deposits of the bank. The ratio has
increased 0.62 in 2021 its all due to increase in advances the ratio of advances increase in
current year due to rate offered by bank.

B. Profit Per Employee:

This ratio tells about the average profit generated per person employed,

Table 3.15 Profit Per Employee:

Year Profit after tax /Total No. of Employees Profit per

employee
2021 21360 / 16924 1.26%
2020 22459 / 16457 1.36%
2019 21891 / 16248 1.34%
2018 25546 / 15441 1.65%
2017 24325 / 14079 1.7%

Interpretation:

Interest income per employee is 1.7 in 2017 while in 2021 it is 1.26.The ratio shows the more
efficient the MCB limited uses its employees. Employees are showing great sense of
commitment and responsibilities as management of MCB practicing good policies.

41
Conclusion:

Write all major findings based on your ratio analysis and learning experience. But as a
financial analyst, put more focus on your ratio analysis. What is liquidity of the firm, how
much profitable the firm is, is the firm used debt or not, what is the current ratio of the firm,
so ratio analysis give a clear over view of organization each and every financial component
of the firm, after performing the analysis of MCB limited, I observed that the management
used optimal resources to run organization successfully.

3.5 SWOT Analyses

3.5.1 Introductions:

A SWOT analysis of the MCB Bank Lad further strengthens the competitive position and
helps to form growth-oriented strategy from an investment point of view.

3.5.2 Strengths:

MCB is the first Pakistani privatized bank and because of its quality management, marketing,
innovation in products and services. Owing to all such factors they have established a good
reputation in the banking market. The name of MCB makes you recall the highly cooperative
and professional individuals ready to serve you with maximum zeal and zest. The joining of
experienced people, advanced management, advance setup and facilities gave MCB an edge
over its competitors.

MCB is a reputable financial organization and is well known all over the Pakistan. Perception
is of producing a high quality services.

 Customer Care

The Bank not only provides high quality services but it also look for the comfort and
convenience of the clients, MCB always preferred their customers.

 Large Number of diversify products

The also main strong as it has divenified in many products such as

 Debit Card
 Visa Card
 Car Financing

42
  Agriculture Financing

 Sound Marketing

Skillful marketing of the products is being achieving countrywide goals of MCB Limited.

 Phone Banking

Every account holder can confirm its balance on Phone and may ask for any query. There
also 24 hours helps lines for customers.

 Mobile Banking

It has been launched recently It helps in getting accounts details and making transactions
using mobile.

 Highly Automated Bank

MCB in Pakistan is the also in the list of highly automated banks, about 750, like Emirates
because of its modem style of banking through fully computerized control and twenty four
hour banking.

 Faster Banking Service

MCB have faster banking services that are making it more prominent in the banking industry
especially in operations and Foreign exchange. The customer prefers this bank not only
because of its faster speedy service rather due to reasonable service charges

 Internationally Design Products

MCB's products are internationally designed products. These are valuable and operational in
all over the world

3.5.3 Weaknesses:

Advertisement

The majority of people are not well aware about the products of MCB. Therefore it should
advertise extensively especially RTC and Master Cards.

Accommodate Behaviorally

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A behavior has been noted that bank tries to feel at ease with good looking, rich and educated
people and the poor looking customers feel some bit strange in the environment of the bank.
The hank employees should try to accommodate behaviorally all type of customers.

 Mismanagement of Time

Mismanagement of time is another big mistake in this bank, the bank official time of closing
is 5-30pm but due mismanagement of time allocation and work the staff is normally on their
seats till 7:00 or 8,00 clock.

And Also

 Costly documents are required for loan sanctioning

 Sometimes bank also never meets stated rate of profit.

3.5.4 OPPORTUNITIES:

 Privatization:

As on December 31, 1998, sixty-eight scheduled banks with 9,106 branches are operating in
Pakistan. As on this date, total population of Pakistan is 140.05 million. Total number of
personal accounts with all scheduled banks as on December 31, 1997, is 28.98 million. If we
consider the population statistics of working age group as on December 31, 1997, it stands to
the figure of 96.64 million. Thus we can say those 28% of working age people of Pakistan are
having accounts with banks while 72% are unbanked. The need of privatization has made
people to switch to banks to satisfy their needs of lending and borrowing. This not only
increases the deposits but also the credit business,

 Diversification

They may enter in new business or any other consumer-durable product in order to promote
their name, by introducing Loan for the students, small businesses, and handicraft industry.

 Some more Opportunities

 Information Technology.
 Credit cards can give more earning.
 Awards for employees performance
 They should introduce Student Finance Facility

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  They should also introduce mobile ATM

3.5.5 THREATS:

 Change in government policies

Change in government policies has affected the banking business. Still banks have to wait to
get Permission of state bank. The freezing of foreign currency accounts is a vital example of
letting people not to trust on banks.

 Competition

The Competition has become severe by the entrants of so many others banks ,So to exist one
will have to prove himself in its services through excellent management and will have to
satisfy its shareholders. Otherwise he will be out the market.

 Low Investment

The decrease purchasing power of consumer in the current economic situation of the country
affecting the business activity speed too much and the result is the low investment from the
investors in new projects can create problem for the bank because it is working a lot in trade.

 State Bank Regulation

As the Bank introduces unique products so they face problem if State Bank of Pakistan
employ taxes on them which force them to increase the rate of Interest.

 Expectation of the people

Due to huge competition among those banks and MCB people are the basic beneficiaries
from it and thus their expectations tend to increase about the products and the relative rate of
interest thus creating a threat for MCB.

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 CHAPTER NO 4

FINDINGS

4.1 Findings:

The findings are the facts that I have discovered from the analysis of MCB Limited Jhangi
and in the light of those findings I have given the suggestions, which are realistic and
adoptable for the organization. After critically analyzing both the operations and financial
data of MCB I have summarized the findings of report. These analysis are mainly based on
my practical working and experience at MCB Jhangi during my internship.

4.1.1 Customers Dissatisfaction:

In MCB Jhangi branch customer dealing was not satisfactory, during busy hours the
customers have to wait for a long time for their turn. Also it was quite hard for a new
customer or potential customer to get the required information.

4.1.2 Unequal Distribution of Work:

Work is not equally distributed On one hand some employees have to work all day without
relaxing while some others have very little to do. This not only creates confusion among
employees but also hurting and disturbing the overall setup of the bank. And above all it
results in dissatisfaction among customers as well.

4.1.3 Lack of Staff:

Staff of branch is less and workload is too much on the existing staff. Due to which they are
unable to give proper time to their customers. Sometimes due to this shortage of time they
lose their good customers and are unable to give proper time to recording and other functions
of the bank.

4.1.4 Mismanagement of Internees:

At MCB Limited Jhangi branch there is mismanagement of internees. At a time there are 5
internees at Jhangi branch. Most of them were selected on nepotism basis. Some internees
even did not hold a commerce or business qualification, but they were working due to some

46
relationship with manager or some other employee of branch. Moreover there was no proper
plan to train the internees

4.1.5 No Marketing Efforts:

No marketing efforts made to promote the bank as well as improve the competitive position.
A useful mode of contact in banking now a day is through personal marketing visits or
efforts. Such visits are important in informing and perusing the existing and potential
customers about the products and creating a sense of belongingness with them. By this way a
branch manager increasing deposits and creates more advances.

4.1.6 Lack of Specialized Training:

MCB does not provide adequate facility of specialized training to their staff. Training is
generalized rather than specialized. As the worker finishes his training, he is inducted into a
specific field without having great deal of knowledge about the field.

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 CHAPTER 5

RECOMMENDATION AND SUGGESTION

5.1 Recommendation and Suggestion:

After reviewing all the system, procedures and functions of MCB Jhangi branch, I am giving
some suggestions, which in my view can add some input for efficiency and better
performance of MCB as an organization in general and for the branch in particular.

4.2.1 Professional Training:

The staff of MCB Jhangi branch is not much professional. They lack the necessary training
to do the job efficiently and properly. Although staff colleges are in all major cities but they
are not performing well. For this purpose these staff colleges should be reorganized and their
syllabus should be made in such a way as to help the employees understand the ever-
changing global and local banking and economic scenario.

4.2.2 Hiring Qualified Staff:

Required qualified staff should be provided to branch in order to improve the functions of the
branch. As there is a sufficient supply of commerce and business graduates, they should be
hired on merits.

4.2.3 Proper Distribution of Work:

During my internship I observed that there was no proper distribution of work in the bank
Proper distribution of work leads to success in every organization. Proper distribution of
work prevents the employees from over and under work situation. So for the smooth running
of bank, proper distribution of work is important to be followed.

4.2.4 Management of Time:

There should be a good management of time for the sake of employees i.e. offering them free
break hours instead of making them work in this time as well.

4.2.5 Marketing Policies:

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MCB should adopt marketing strategy and promotion strategy to promote the bank and its
products. The most important in my opinion is personal marketing. It is the most effective of
all when you think in term of branch level. But on the whole organizational level, it should
arrange the seminars within the bank and outside the bank.

4.2.6 Attract Customers:

The banking company should offer such policies which would attract customers which are
denied by other banking in the market.

4.2.7 Job Rotation and Promotion

Most of the bank employees, are sticking to one seat only with the result that they become
master of one particular job and lose their grip on other banking operation. In my opinion all
the employees should have regular job experience all out-look towards banking. The
promotion policy should be adjusted.

4.2.8 Communication System for Employees

As such system should be designed that every employee who has some problems with his
officers can communicate it to the higher management and some steps must be taken to
improve that.

4.2.9 Delegation of Authority:

Employees of the bank should be given a task and authority and they should be asked for
their responsibilities.

4.2.10 Performance Appraisal:

The manager should strictly monitor the performance of every staff member. All of them
should be awarded according to their performance and result in the shape of bonuses to
motivated and incite them to work more efficiently.

4.2.11 Staff Relationship:

Good relationship among staff member leads to the peak performances in any organization. I
observed that the staff relationship was normal, but some time it is noticed that there existed
little consistency among the staff members.

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4.2.12 Improper Distribution of Work:

Proper work distribution leads to success in every organization. Proper distribution of work
prevents the employee from over and under work situation. So for a smooth running of an
organization, proper distribution of the work is hint to be followed. During my internship it
was observed that there was no proper distribution of work in MCB Jhangi branch. It was
seen that some of employee worked like ants while other sat idle starting here and there. So
this creates a lot of over work situation for while relaxation for other.

4.2.13 Favoritism and Nepotism:

It is suggested that in the organization there should be no favoritism, nepotism and politics
and their transfer and promotion should be made on merits and according to the rules and
regulations of the bank and provided favorable environment to the employees to show their
performances.

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 References & Resources
To make this internship report data is taken from the following resources:

Online Resources:

MCBBank, Ltd http://www.Mcb.comMCBBankPakistan http://www.Mcb.com/pakistan/State

Bank of Pakistan http://www.sbp.org.pk Statistical Bureau of Pakistan http://www.fbs.gov.pk

Book References

Van Home, J.C, & J. M. Wachowiez(1998),"Fundamentals of Financial International,

Management" (10th Edition) New York: Prentice Hall International, Charles H.
Gibson (2000), Financial Statement Analysis. Fourth Edition, USA, McGraw Hill,
p.65

Charles H. Gibson (2008): "Financial Reporting & Analysis", (9th Ed)

Gerald I. White, Aswinpaul C. Sondhi&Dov Fried, (2000),

"The Analysis and Useof Financial statement", (3rd Edition) published by Me

Graw Hill New York.

Werther Jr. William B and Davis, Keith, (1996)."Human Resources and

Personnel Management.Fifth Edition. USA: McGraw-Hill, Inc.

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