INTERNSHIP REPORT ON MCB BANK LIMITED

PREPARED BY FAIZA IQBAL BBA (HONS) MORNING

DEPARTMENT OF MANAGEMENT SCIENCES

Internship Report

2011

Practice makes a man perfect. Theoretical knowledge is not enough on its own. It is useful when implemented. That’s why it is necessary for completion of BBA program to do practical work. Internship program is also held in every management institution to support the same purpose. Banking plays very important role in the development of commerce and economic fields of a country. As banks are using different modern and up to date technologies in order to perform well and influence different managerial activities, it is a better option for business students to get internship experience in banks. I did five weeks internship in MCB BANK Model Town Branch, Bahawalpur. During this time I visited different departments and was thoroughly briefed about the procedures and working by friendly senior staff of there. In preparation of this Report I have tried my best to provide all possible information about the operations, functions and tasks of MCB in brief and comprehensive form. It also includes a brief view of what I did during internship. Internship report ends with some recommendations and concluding remarks after identification of problems that I observed during internship. Although I have put all my efforts but surely there are chances for mistakes, suggestions are welcomed.

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Internship Report

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I offer my foremost and humblest thanks to ALMIGHTY ALLAH, The most Beneficent, the Most Considerate and the entire source of all knowledge and wisdom. I thank ALMIGHTY ALLAH, who gave me the aptitude to prepare this Internship report efficiently and successfully. With prayers of my parents and support of my teachers it became possible for me to formulate this report; I pay high regards to them. The account of acknowledgement will be incomplete if I do not express my appreciation to the staff of MCB Model Town branch Bahawalpur, as they guided me and assisted me to perform different productive activities during the entire period I am also thankful to my friends and other family members who were always there to encourage and help me design this report to its present form.

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Internship Report

2011

I dedicate my entire efforts to my DEAR PARENTS who pray for me every single minute and guide me at every step of life whenever I feel difficulty. I dedicate this report to my dear sister AYESHA IQBAL who always supports me and prove to be helpful for me in any kind of circumstances. I dedicate this report to RESPECTED STAFF of MCB Model Town Branch, Bahawalpur as well, as everyone guided me and helped me whenever I needed during whole internship and made me learn many new things.

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Internship Report

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EXECUTIVE SUMMARY ............................................................................................................................. 9 1. 2. INTRODUCTION OF BANKS ............................................................................................................ 10 BRIEF HISTORY OF BANKING IN PAKISTAN .............................................................................. 12 2.1 Nationalization of Banks ..................................................................................................................... 12 3. INTRODUCTION OF MCB BANK LIMITED ....................................................................................... 15 4. VISION, MISSION AND VALUES OF MCB BANK............................................................................. 17 4.1 Vision .................................................................................................................................................. 17 4.2 Mission ................................................................................................................................................ 17 4.3 Values .................................................................................................................................................. 17 5. OBJECTIVES ........................................................................................................................................... 18 6. BUSINESS STRATEGY OF MCB .......................................................................................................... 19 7. ORGANIZATIONAL STRUCTURE ...................................................................................................... 20 7.1 Branch Organizational Structure ......................................................................................................... 21 8. CORPORATE PROFILE .......................................................................................................................... 22 9. PRODUCTS AND SERVICES ................................................................................................................. 26 9.1 Current Account .................................................................................................................................. 26 9.2 Savings Account .................................................................................................................................. 26 9.3 Term Deposit ....................................................................................................................................... 26 9.4 MCB Online Banking .......................................................................................................................... 27 9.5 MCB MNET ........................................................................................................................................ 27 9.6 MCB Cash Management ..................................................................................................................... 27 9.7 MCB Channel Financing ..................................................................................................................... 27 9.8 MCB Local Rupee Drawing Arrangement .......................................................................................... 27 9.9 MCB Home Remittance ...................................................................................................................... 27

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9.10 MCB Corporate Financing ................................................................................................................ 28 9.11 MCB Project & Structured Finance................................................................................................... 28 9.12 MCB Syndicated Loans and Debt Capital Markets ........................................................................... 28 9.13 MCB Quasi Equity/Hybrid Instruments ............................................................................................ 28 9.14 MCB Equity Capital Raising ............................................................................................................. 28 9.15 MCB Advisory Services .................................................................................................................... 28 9.16 MCB Islamic Banking ....................................................................................................................... 28 9.17 MCB Agri Products ........................................................................................................................... 29 9.18 MCB Privilege ................................................................................................................................... 29 9.19 MCB Salary Club .............................................................................................................................. 29 9.20 MCB Investment Services ................................................................................................................. 29 9.21 MCB Visa Credit Card ...................................................................................................................... 29 9.22 MCB Car4U....................................................................................................................................... 30 9.23 MCB Instant Finance......................................................................................................................... 30 9.24 MCB Smart Card ............................................................................................................................... 30 9.25 MCB Rupee Travelers Cheque .......................................................................................................... 30 9.26 MCB ATMs ....................................................................................................................................... 30 9.27 MCB Mobile ATM ............................................................................................................................ 30 9.28 MCB Lockers .................................................................................................................................... 31 9 29 MCB SMS Banking........................................................................................................................... 31 9.30 MCB Full-Day Banking .................................................................................................................... 31 9.31 MCB Bancassurance ......................................................................................................................... 31 9.32 MCB Call Centre ............................................................................................................................... 31 9.33 MCB Mobile...................................................................................................................................... 31 9.34 MCB Virtual Banking ....................................................................................................................... 32 10. WORKING OF VARIOUS DIVISIONS AND DEPARTMENTS ........................................................ 32

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10.1 Customer Services Department ......................................................................................................... 32 10.2 Clearing ............................................................................................................................................. 33 10.2.1 Outward clearing ........................................................................................................................ 33 10.2.2 In ward Clearing ......................................................................................................................... 33 10.2.3 Same day clearing....................................................................................................................... 34 10.2.4 Normal clearing .......................................................................................................................... 34 10.2.5 Intercity clearing ......................................................................................................................... 34 10.2.6 NIFT- National Institutional Facilitation Technologies ............................................................. 34 10.3 Remittances ....................................................................................................................................... 35 10.3.1 Demand Draft ............................................................................................................................. 36 10.3.2 Payment Order ............................................................................................................................ 37 10.3.3 Telegraphic Transfer................................................................................................................... 38 10.3.4 Rupee Traveler‟s Cheques .......................................................................................................... 38 10.4 Forex Department .............................................................................................................................. 39 10.4.1 FTT ............................................................................................................................................. 40 10.4.2 Swift operations .......................................................................................................................... 40 10.4.3 Export finances ........................................................................................................................... 40 10.4.4 Export refinance ......................................................................................................................... 41 10.4.5 Letter of credit ............................................................................................................................ 42 11. SWOT ANALYSIS ................................................................................................................................. 44 11.1 Strengths ............................................................................................................................................ 44 11.2 Weaknesses........................................................................................................................................ 45 11.3 Opportunities ..................................................................................................................................... 46 11.4 Threats ............................................................................................................................................... 47 12. FINANCIAL ANALYSIS ....................................................................................................................... 48 12.1 CURRENT RATIO ....................................................................................................................... 49

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12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9

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QUICK RATIO ............................................................................................................................. 50 NET WORKING CAPITAL (Rs. In 000s) ................................................................................... 51 DEBT RATIO ............................................................................................................................... 52 TIMES INTEREST EARNED RATIO ......................................................................................... 53 EARNINGS PER SHARE (Rs.).................................................................................................... 54 RETURN ON AVERAGE ASSETS (ROA) ................................................................................. 55 RETURN ON AVERAGE EQUITY (ROE) ................................................................................. 56 MARKET CAPITALIZATION (In Rs. Million) .......................................................................... 57

12.10 DIVIDEND YIELD RATIO (based on cash dividend) ................................................................ 58 12.11 DIVIDEND PAYOUT RATIO..................................................................................................... 59 12.12 EARNING ASSET TO TOTAL ASSET RATIO (Rs. In Million) .............................................. 60 12.13 12.14 12.15 12.16 12.17 12.18 RETURN ON EARNING ASSETS ............................................................................................. 61 INTEREST MARGIN TO AVERAGE EARNING ASSETS ..................................................... 62 AVERAGE EQUITY TO TOTAL ASSETS ............................................................................... 63 DEPOSITS TIMES CAPITAL.................................................................................................... 64 LOANS TO DEPOSITS RATIO ................................................................................................ 65 GROSS ADVANCES TO DEPOSITS RATIO .......................................................................... 66

13. SUGGESTIONS AND RECOMMENDATIONS ................................................................................... 67 14. CONCLUSION ....................................................................................................................................... 69 15. REFERENCES ........................................................................................................................................ 80

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Internship Report EXECUTIVE SUMMARY

2011

MCB Bank Limited (Formerly Muslim Commercial Bank Limited) has a solid foundation of over 50 years in Pakistan, with a network of over 1100 branches, over 500 MCB ATMs nationwide and a network of banks on the MNET ATM Switch. MCB's operations continued to be streamlined with focus on rationalization of expenses, re alignment of back-end processing to increase productivity, enhancement of customer service standards, process efficiency and controls. The Bank has taken the lead in introducing the innovative concept of centralizing Trade Services in the country by providing centralized foreign trade services to branches with a view to improve efficiency, expertise and reduce delivery cost. During my internship in MCB I mainly worked in Remittances and Customer Service Office department, I also took information about Forex department by spending a week there and I successfully completed all the task/duties that were assigned to me. During the course of internship I learned about different functions performed by Remittances, Foreign Exchange and Customer Service Office department and by the bank as a whole. I also learnt bank‟s correspondence with their customers and within branches. I learnt about documentation requirements and record keeping for different activities and processes, especially the documentation required for different kinds of remittance i.e., pay order and demand draft. This report includes the introduction of Banking, Banking in Pakistan, the brief history of MCB Bank Limited, mission and vision of MCB Bank, its products, awards, corporate profile, organizational structure, working of various divisions and departments including the tasks performed by the intern, SWOT and financial analysis and finally ends with recommendations and conclusion.

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Internship Report 1. INTRODUCTION OF BANKS

2011

History of bank is as old as human society. Forever since man came to realize the importance of money as medium of exchange, the necessity of a controlling or regulating agency or institution was naturally felt. The work „BANK‟ is derived from the word „BANCUS‟ or „BANQUE‟ which means a bench. Other authorities hold the opinion the word „BANK‟ is derived from the German word „BACK‟ which means “joint stock fund”. Later on, when the Germans occupied major part of Italy, the word “BACK” was Italianized into „BANK‟. Modern banking system was introduced into the Muslim countries at a time when they were politically and economically at low ebb, in the late 19th century. The main banks in the home countries of the imperial powers established local branches in the capitals of the subject countries and they catered mainly to the import export requirements of the foreign businesses. The banks were generally confined to the capital cities and the local population remained largely untouched by the banking system. The local trading community avoided the “foreign” banks both for patriotic as well as religious reasons. However, as time went on it became difficult to engage in trade and other activities without making use of commercial banks. Even then many confined their involvement to transaction activities such as current accounts and money transfers. Borrowing from the banks and depositing their savings with the bank were strictly avoided in order to keep away from dealing in interest which is prohibited by religion. However with the passage of time and other socio-economic forces demanding more involvement in national economic and financial activities, avoiding the interaction with the banks became impossible. Local banks were established on the same lines as the interest- based foreign banks for want of another system and they began to expand within the country bringing the banking system to more local people. As countries became independent the need to engage in banking activities became unavoidable and urgent. Governments, businesses and individuals began to transact business with the banks, with or without liking it. This state of affairs drew the attention and concern of Muslim intellectuals. The story of interest-free or Islamic banking begins here. In the following paragraphs we will trace this story to date and examine how far and how successfully their concerns have been addressed.

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Internship Report
What is bank?

2011

There are many definitions of the word "bank". Even the standard encyclopedia and law books find it difficult to state exactly what a bank is. There have been many attempts by different writers to explain the exact definition of the term “bank”. Here some of the definitions are quoted as follows. According to Negotiable Instruments Act (1881): “Bank is an institution transecting the business of accepting, for the purpose of lending or investment, of deposits of money from the public repayable on demand or otherwise and withdraw able by cheques, draft order or otherwise and includes any post office saving bank” According to Banking Companies Ordinance 1962: “Banking means the accepting for the purpose of lending or investing of deposits of money from the public repayable in demand or otherwise and withdraw able by cheques, draft, order or otherwise”. According to Kent: “An organization whose principle operations are concerned with the accumulation of the temporarily idle money of the general public for the purpose of advancing to others for expenditures.” According to Dr. Harts: “A banker is one who in the ordinary course of his business, receives money which he repays by honoring cheques of persons from whom or on whose account he received it.” So the comprehensive definition of bank is: “A bank is a financial institution, which deals with money and credit. It accepts deposits from individuals, firm and companies at a lower rate of interest and gives at a higher rate of interest those who need them. The difference between the terms at which it borrows and those at which it lends from the source is its profit. A bank, thus, is a profit earning institution.”

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Internship Report 2. BRIEF HISTORY OF BANKING IN PAKISTAN

2011

Pakistan came into being on 14th August, 1947; sufficient banking services were available in the areas forming Pakistan. Out of the total branches of the nearly 3,500 in the undivided India, as many as about 1,500 branches were existing in these areas. It was agreed between the two countries that reserve bank of India shall continue to function in the Pakistan territory until 30th September 1948 and that Indian notes would continue to be legal tender at Pakistan until 30th September 1948. Unfortunately, relationship between the two countries became most strained i m m e d i a t e l y a f t e r i n d e p e n d e n c e ; b a n k i n g w a s m o s t l y i n t h e h a n d s o f H i n d u s w h o i m m e d i a t e l y s t a r t e d transferring their offices and assets into India. As a result most of the banks in Pakistan were closed down and even those which were open were not doing any effective business. The number of banking office in Pakistan came down to about 200 on 30th June 1948. Branches of some European banks were also functioning in a limited manner, financing in export of crops, and their number was limited to about 20. It was only the Habib bank, which transferred its office from Bombay to Karachi. Australasia bank was another bank, which was in existence in the Pakistan territory at the time of independence. Despite of best efforts on the part of government of Pakistan, no heady way could be made on this behalf and reserve bank of India was in no mood to help the new country. Imperial bank of India, agent of the Reserve bank of India also started closing down its branches in Pakistan. Reserve bank also refused to advance money to Pakistan to make essential payments such as salaries etc.; also Pakistan‟s share of Rs.75 billion in cash balance was withheld by bank, causing hardships to the newly born state. In view of these hopeless state affairs it was agreed between the two countries that Reserve bank would serve as monetary authority in Pakistan only up to 30th June 1948.

2.1 Nationalization of Banks
The government nationalized all Pakistani banks on January 1, 1974. The principle of nationalization of banks was to stream line the operations of commercial banks in such a way that it may be conductive to the development activities in process in the country. Since the commercial banks were owned and controlled by big business groups of the country it was feared that these banks would not maintain uniformity in their operations and would be instrumental to inflationary pressure. However, the considerations behind nationalization are:

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Internship Report

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1. To form uniformity in the policy of the commercial banks so they may serve the best national interest. 2 . To make the operation of commercial banks highly sensitive and responsive to the policy of the government relation to financial matters. 3. To make the credit policy of the commercial banks more purpose full and effective especially in the development of economic sectors of the country. It acts as an agent of the State Bank of Pakistan 4. To make the best use of the funds available at the disposal of these banks for the economic development of the country. 5. To eliminate unhealthy and uneconomic competition among commercial banks. 6. To develop strong money market in the country so that the value of currency may be maintained at stable level both in national facilities to exporter and agriculturists which have not been satisfactory in the past years.

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Internship Report 3. INTRODUCTION OF MCB BANK LIMITED

2011

MCB bank limited with more than 60 years of experience as one of the leading banks in Pakistan, was incorporated on July 9 in 1947. The bank has journeyed remarkable tenure of more than half a century of competitively edged and well positioned heights of success by deploying quality banking, heads on technological developments, professionally leading management and prudent and ethical work methodologies. MCB was nationalized along with other private banks in 1974 as part of Government of Pakistan's economic reform movement and was later privatized to Nishat Group lead consortium in 1991. Since privatization, MCB's growth has been phenomenal. Today, MCB in one of the largest foreign banks in Sri Lanka, the first bank in Pakistan to launch Global Depository Receipts (GDR) in 2006, has strategic foreign partnership with Maybank of Malaysia which holds 20% shares in MCB through its wholly owned subsidiary Mayban International Trust (Labuan) Berhad since 2008, has international indirect regional presence in Dubai (UAE), Bahrain, Azerbaijan, Hong Kong and Sri Lanka and serving through a domestic network of over 1,130 branches and 600 ATMs across Pakistan with a customer base of 4.5 million (apprx.) MCB is reputed as one of the most sound financial institution and as one of the leading banks in Pakistan with a deposit base of PKR. 462 bln (apprx.) and total assets of PKR 605 bln (apprx.). The bank is versed as one of the oldest and most responsible banks in Pakistan and has played pivotal role in representing the country on global platforms while being one of the few institutions that are recognized and traded in the international market. The bank has also been acknowledged though prestigious recognition and awards by Euromoney, MMT, Asia Money, SAFA (SAARC), The Asset and The Asian Banker.

Awards
2010 The Asian Banker: Strongest Bank in Pakistan 2010 The Asian Banker: Leadership Achievement Award 2010 MMT: Best Bank Led MMT Service 2010 ICAP / ICMAP: BCR Award 2009-Banking Sector

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2010 SAFA: Certificate of Merit Award 2009 Asiamoney: Best Domestic Bank in Pakistan 2009 The Asset: Best Domestic Bank in Pakistan 2008 Euromoney: Best Bank in Asia 2008 Euromoney: Best Bank in Pakistan 2008 Asiamoney: Best Domestic Bank in Pakistan 2006 Asiamoney: Best Domestic Bank in Pakistan 2006 Euromoney: Best Bank in Pakistan 2005 Asiamoney: Best Domestic Bank in Pakistan 2005 Euromoney: Best Bank in Pakistan 2004 Euromoney: Best Bank in Pakistan 2004 Asiamoney: Best Domestic Bank in Pakistan 2003 Euromoney: Best Bank in Pakistan 2001 Euromoney: Best Bank in Pakistan 2000 Euromoney: Best Bank in Pakistan

2011

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Internship Report 4. VISION, MISSION AND VALUES OF MCB BANK
4.1 Vision

2011

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

4.2 Mission
“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”

4.3 Values
“The standards and principles which determine our behavior and how we interact with our customers and each other”  Integrity

We are the trustees of public funds and serve our community with integrity. We believe in being the best at always doing the right thing. We deliver on our responsibilities and commitments to our customers as well as our colleagues.  Innovation

We encourage and reward people who challenge the status quo and think beyond the boundaries of the conventional. Our teams work together for the smooth and efficient implementation of ideas and initiatives.  Excellence

We take personal responsibility for our role as leaders in pursuit of excellence. We are a performance driven, result oriented organization where merit is the only criterion for reward.  Customer Centricity

Our customers are at the heart of everything we do. We thrive on the challenge of understanding their needs and aspirations, both realized and unrealized. We make every effort to exceed customer expectations through superior services and solutions.  Respect We respect our customers‟ values, beliefs, culture and history. We value the equality of gender and diversity of experience and education that our employees bring with them. We create an environment where each individual is enabled to succeed.

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Internship Report 5. OBJECTIVES

2011

• Delivering remarkable returns to stakeholders, sustainable performance, exceeding market and shareholder expectations. • Providing value added services through operational expansion, geography and upgraded systems. • Building a corporate culture of equality, trust and team spirit as we remain dedicated to be a socially responsible organization.

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6. BUSINESS STRATEGY OF MCB
The business strategy of MCB is to provide financial solutions to major segments of its customer base, namely retail and corporate. Separate business groups have been set up to ensure a more focused approach in satisfying the diversified customer segments. The Bank has also established an Islamic Banking unit to offer Shariah compliant products and services, with dedicated Islamic banking branches in six cities. The plan for future is to further realize the capacity of Islamic Financial Systems and to bring Shariah compliant network parallel to current retail network of traditional banking. Wholesale Banking Group caters to the top tier local and multinational companies. As a result of organizational restructuring, including reinvigorating Investment Banking and beefing up relationship teams, the Group is in line with the industry‟s best practices. MCB has closed some large deals and is currently working on a number of large transactions including advisory business. It is a strong competitor in cash management and structured financing activities. Retail Banking Group focuses on trading and middle market segment primarily for building risk assets and trade related business. MCB caters to their needs of financing foreign and local trade, funds transfer and other seasonal requirements. The Bank has renovated a large number of branches and staff has been trained for meeting the requirements of SMEs and other retail customers. A separate SME Financing Division has been set up to provide customized financing solutions to this very important segment of the economy. The Group also focuses on the development of innovative consumer asset products for satisfying the personal needs of the customers. MCB has a significant share of consumer financing business with its House and Car Financing schemes. The recently launched running financing facility against the mortgage of property is also expected to go a long way in increasing the quality consumer credit portfolio of the bank. With the experience gained in the past few years, the Bank is fast progressing towards becoming the leading bank in consumer business.

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Internship Report 7. ORGANIZATIONAL STRUCTURE

2011

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Internship Report 7.1 Branch Organizational Structure

2011

Given is the organizational structure of MCB MODEL TOWN Branch, BAHAWALPUR.

Branch Manager

Operations Manager

Trade Manager

Credit Manager

Customer Service Officer

General Banking Officer

Cashier Credit Incharge

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Internship Report 8. CORPORATE PROFILE
Board of Directors Mian Mohammad Mansha Chairman Mr. S. M. Muneer Mr. Tariq Rafi Mr. Shahzad Saleem Mr. Sarmad Amin Dr. Muhammad Yaqub Dato' Mohammed Hussein Mian Raza Mansha Mr. Aftab Ahmad Khan Mian Umer Mansha Dato' Seri Ismail Shahudin Mr. Manzar Mushtaq Mr. M.U.A. Usmani Vice Chairman Director Director Director Director Director Director Director Director Director Director President / CEO

2011

Management Committee Mr. Ali Munir Mr. Agha Saeed Khan Mr. Azfar Alam Nomani Mr. Imran Maqbool Mr. Kamran Zaffar Muggo

Strategic Planning and Investment Operations Compliance Commercial Branch Banking Group Audit & Risk Assessment Review

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Mr. Laqa Sarwar Mr. Muhtashim Ashai Mr. Muhammad Nauman Chughtai Mr. Salman Zafar Siddiqi Mr. Ahmed Kareem Mr. Mohammad Ramzan Mr. Ali Kazmi Special Assets Management Wholesale & Investment Banking Credit Risk Review Chief Financial Officer Human Resources Treasury Head Consumer Banking

2011

Audit Committee Mr. Tariq Rafi Dr. Muhammad Yaqub Dato' Mohammed Hussein Mr. Aftab Ahmad Khan Dato' Seri Ismail Shahudin

Chairman Member Member Member Member

Human Resources Committee Mian Mohammad Mansha Chairman Dr. Muhammad Yaqub Mian Raza Mansha Mr. Shahzad Saleemn President / CEO Member Member Member Member

Risk Management & Portfolio Review Committee Mian Umer Mansha Chairman

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Internship Report
Mr. Sarmad Amin Mr. Manzar Mushtaq President / CEO Member Member Member

2011

Committee on Physical Planning, IT System & Contingency Arrangements Mr. Sarmad Amin Chairman Mr. S. M. Muneer Mr. Tariq Rafi Mian Umar Mansha President / CEO Member Member Member Member

Business Strategy & Development Committee Mian Mohammad Mansha Chairman Mr. S. M. Muneer Mr. Shahzad Saleem Dr. Muhammad Yaqub Dato' Mohammad Hussein Mian Raza Mansha Mian Umer Mansha Dato‟ Seri Ismail Shahudin President / CEO Member Member Member Member Member Member Member Member

SBP Report Compliance Monitoring Committee Mr. S.M. Muneer Chairman Mr. Shahzad Saleem Member

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Mr. Sarmad Amin Dr. Muhammad Yaqub President / CEO Member Member Member

2011

IT Committee Mian Raza Mansha Mr. Tariq Rafi Mr. Aftab Ahmad Khan President / CEO

Chairman Member Member Member

Write Off & Waiver Committee Mian Muhammad Mansha Chairman Mr. Tariq Rafi Mr. Aftab Ahmad Khan Chief Financial Officer Mr.Salman Zafar Siddiqi Member Member

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9. PRODUCTS AND SERVICES
In order to achieve long-term goals of expansion and penetration in the market MCB bank introduced various new products for its customers, which cater to the needs of various segments of the society. In order to do so, a constant process of market research, evaluation and development of New products was started which resulted in introduction of various new products which were earlier not introduced by any other Bank in the country. Introduction of these products was indeed a major source of penetration for the bank and turned out to be a differential factor as compared to other banks.

9.1 Current Account
MCB Bank offers a variety of current accounts to cater to the everyday transactional needs of various customers. These accounts ensure ease and freedom to bank from any of the 1100+ branches across the country. The different accounts include: the Basic Banking Account that has no minimum balance; Business Account offering free online transactions, Demand Drafts, Pay Orders and lots more to meet the day to day business requirements; Current Life Account which offers the security of life insurance free of cost; and for all others, the conventional Current Account.

9.2 Savings Account
MCB Bank offers a wide array of savings products that suit short term growth & transactional needs. Our savings accounts offer attractive profit rates as well as flexibility to transact. Savings Xtra is targeted for customers having Rs. 5 million + deposit, 365 Gold offers profit rate on daily balance while PLS savings has a lower minimum balance requirement. In addition, two unique products: Smart Savings and Savings Maximizer are special saving accounts run solely via debit cards and other remote banking channels, offering a very competitive rate to both high and low end savers.

9.3 Term Deposit
MCB Term Deposit offer attractive short to mid-term investment options with flexibility, convenience and security. With various tenor options available, customers can choose one that suit their needs. This is combined with different profit payout options and the added facility of being able to avail credit facility against their deposits.

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9.4 MCB Online Banking

2011

MCB has a fast growing network of 1100+ online branches in the country providing customers real-time online transaction facilities.

9.5 MCB MNET
MNET is an electronic inter-bank connectivity platform for online transactions on ATM and other remote banking channels. It offers other value added services that include a portfolio of e-banking and payment system products as well as management and day-to-day operations of the same. Members include 10 local and foreign financial institutions enjoying ATM sharing and value added services.

9.6 MCB Cash Management
Cash Management provides a wide range of value added services to large corporations through its vast network of online branches. Our structured and customized products enable our customers to realize their sales proceeds swiftly from all over the country, supported by real-time MIS. Cash Management also provides payment solutions through MCB network and through third parties and customized solutions for dividend payouts.

9.7 MCB Channel Financing
MCB Channel Financing provides working capital facilities to dealers and vendors of selected companies under a structured product program. This product enables our customer's dealers to leverage themselves and increase their business capacity with their respective business partners.

9.8 MCB Local Rupee Drawing Arrangement
Transaction Banking Department at MCB, provides Local Rupee Drawing Arrangement, a product for small banks and financial institutions to use our vast branch network platform to make payments in areas where their own branch network does not exist, thus extending their reach nationwide.

9.9 MCB Home Remittance
MCB Home Remittance provides a seamless inflow of foreign remittances credited in the beneficiary's account within minutes. Cash payments can also be made at our designated branches on behalf of XpressMoney, Samba (SpeedCashNow), MoneyGram and Maybank Money Express Malaysia, along with cash payments from other correspondents from all over the world under the brand name of MCB Fast & Easy.

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9.10 MCB Corporate Financing

2011

MCB Corporate Financing provides access to diversified financing options, including working capital loans, term loans, trade finance services and investment banking.

9.11 MCB Project & Structured Finance
MCB Project & Structured Finance involves financing complex projects, usually in an SPV structure, where the loan is tightly structured around the cash flows, risks are allocated amongst various stakeholders, and there is limited or no recourse to the sponsors.

9.12 MCB Syndicated Loans and Debt Capital Markets
MCB Syndicated Loans and Debt Capital Markets involve arrangement, underwriting and placement services for significant financing requirements by large corporate and institutional clients to other financial institutions or through the debt capital markets.

9.13 MCB Quasi Equity/Hybrid Instruments
MCB Quasi Equity/Hybrid Instruments structure and place a category of debt that has some characteristics of equity such as being unsecured, subordinated or with a potential equity upside.

9.14 MCB Equity Capital Raising
MCB Equity Capital Raising relates to raising capital for our clients by offering common or preferred equity to public or private investors, through initial public offers, offers for sale, rights issues and private equity placements.

9.15 MCB Advisory Services
Financial and Capital Raising Advisory provides our clients with financial advisory services, commercial structuring support and access to capital resources to help companies successfully finance their business/project.

9.16 MCB Islamic Banking
With the help of Shariah specialists, lawyers and professional commercial bankers, MCB Islamic Banking provides Riba Free and Shariah Compliant products and services both on the liability and asset side of the statement of financial position to various customers of all demographic segments with its presence in a growing number of cities. MCB's Islamic Banking products are available to cater the need of Working Capital, Capital Expenditures, International/Local trade and consumer's requirements.

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9.17 MCB Agri Products

2011

MCB is committed to the farming community to support their national objectives of selfsufficiency & food security to the people of Pakistan. Dedicated and specialized staff, supervised by the Agri Credit Division, is posted in lending branches to cater for strong business relationships & facilitation. The bank's extensive branch network in all the provinces and diversified product range extends our reach of agri credit facilities to farmers engaged in any type of activity, encompassing both crop & non crop sectors. We overwhelmingly cherish and stay committed to support the farmers in view of unparallel significance of agri sector in our national life aligned with economic priorities of the country and role of our bank as a responsible corporate citizen.

9.18 MCB Privilege
A first from a local bank, MCB Privilege through its dedicated, world class Privilege Centers offers a higher level of personalized services, more rewarding in-branch experiences and a wide array of deposit and investment products that are tailored to meet the financial expectations of our affluent clientele. As members of MCB Privilege, customers experience unparalleled advantages that put them ahead of others. MCB's dedicated Privilege Centers await to welcome you in Karachi, Lahore, Islamabad and Multan, with plans to expand to more locations.

9.19 MCB Salary Club
A payroll solution designed to make life easy; it simplifies all the monthly payroll related banking needs of employers and opens the door to a world of special offers for employees. Salary Club provides the convenience of having an extensive range of financial services available to employees at their place of work.

9.20 MCB Investment Services
Make the most of your wealth with investment opportunities that match your unique financial aspirations. MCB Investment Services offer distribution of mutual funds managed by the leading fund managers of Pakistan. We can suggest the products most suited for your needs, or work with you to create a personalized solution completely focused on your expectations of the capital markets.

9.21 MCB Visa Credit Card
MCB offers a complete suite of Classic, Gold and Platinum Visa Credit Cards

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focusing on providing, superior services, travel privileges & shopping pleasure. It also offers comprehensive insurance & installment plans, reward points and SMS alerts that give a different feel to the world of credit cards. These unique features include i-revolve, which makes variable mark-up rate available to customers allowing them to repay at affordable rates.

9.22 MCB Car4U
MCB Car4U not only gets you a car of your own choice but is also affordable with competitive mark-up, flexible conditions, easy processing and above all, no hidden costs.

9.23 MCB Instant Finance
With MCB Instant Finance, you can get a loan instantly at any MCB branch against liquid collateral at competitive pricing.

9.24 MCB Smart Card
MCB Smart Card opens the opportunity to have access to your funds via multiple banking channels. It enables you to withdraw cash from ATMs across Pakistan and around the world, transfer funds, pay utility and mobile bills and register for mobile and virtual banking services.

9.25 MCB Rupee Travelers Cheque
MCB Rupee Travelers Cheque is the best and safest alternate way of carrying cash. It can be used by travelers, businessmen or by the general public in meeting their day to day cash requirements while they travel. It is a safe and secure way to make payments because it gives the purchaser security that even if the cheque is lost it can be refunded. Unlike other modes of fund/remittance transfer which can only be drawn at a particular branch and can be encashed only at that branch, MCB Rupee Travelers Cheque can be encashed at any of our branches across the nation.

9.26 MCB ATMs
MCB has one of the nation's largest ATM networks with 500 ATMs covering 110 cities across the country and still growing. MCB ATMs give you a 24hours convenience of cash withdrawal, mini-statement, utility bill payments, mobile top-ups, funds transfer services and much more.

9.27 MCB Mobile ATM
Through our MCB Mobile ATM we allow for convenient world class banking services. Our

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innovative MCB Mobile ATM van ensures that we offer our services wherever you are, be it concerts, fairs or any other occasion/special event.

9.28 MCB Lockers
MCB Lockers are the best protection for your valuables. Lockers of different capacities are available nationwide.

9 29 MCB SMS Banking
With MCB SMS Banking, you can bank on your fingertips. Once you're registered onto the service you can SMS anytime to get account information.

9.30 MCB Full-Day Banking
Enjoy the convenience of extended banking hours from 9am to 5pm, including Saturdays at MCB Full-Day Banking branches across the country.

9.31 MCB Bancassurance
Combining the best of banking and insurance solutions, MCB Bancassurance has created a onestop shop for all your financial and insurance needs. Whether you want to save for your child's education or marriage, for the security of dignity after retirement or gaining maximum return on savings, MCB Bancassurance has a plan for you. You can also buy instant insurance coverage through your mobile without any medical assessment.

9.32 MCB Call Centre
The simplest way to bank is with the new enhanced 24/7 MCB Call Centre, which blends innovation and convenience to provide banking services that go beyond expectations. MCB Call Centre enables you to manage your VISA Credit & ATM/Debit Cards, confirm account balances & view last 5 transactions, pay utility/mobile phone & MCB Visa Credit Card bills, top- up your mobile, transfer money within MCB network accounts and register complaints. Most importantly it provides you with our very own banking consultant to discuss your financial needs and requirements. Simply call at 111-000-622 and we'll do the rest.

9.33 MCB Mobile
MCB Mobile is a quick easy and secure way to recharge mobile phones, transfer money, pay bills and do much more. Visit the nearest MCB ATM or call 111-000-622 to register and logon to www.mcbmobile.com using your mobile phone to start transacting.

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9.34 MCB Virtual Banking

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MCB Virtual Banking Service is a convenient way to access your account(s) 24/7. It is secure, free of cost and lets you do your banking whenever and wherever. This service allows you to transfer funds, pay utility/mobile bills, set up standing order instruction, download account statement and much more.

10. WORKING OF VARIOUS DIVISIONS AND DEPARTMENTS
This section is based on the details of the various departments at the concerned branch. In MCB Model Town branch, following departments are found working. 1. Customer Services 2. Clearing 3. Remittance 4. Forex 5. Advances 6. Assurance Brief discretion of departments is given under where I have performed.

10.1 Customer Services Department
I spent almost a week at customer services desk. All the necessary activities to better serve the customers are performed here. At this desk, I learnt to first of all behave well with the customers as these are the biggest asset of organization in this world of neck to neck competition. Different functions that are performed at CS desk include filling the deposits slips for customers, filling the vouchers for remittance purpose i.e. DD, PO, online money transfer etc. Moreover the account opening form is also filled at this desk by the customers, checque requisition slip for acquiring cheque books, ATM application form, reactivation of dormant account form are also filled at this desk. Few activities including Account opening, account closing, and reactivation of dormant accounts are performed in collaboration with operations department at MCB Model Town branch, because these include the use of computer network by Operations Manager. General help and

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guidance is provided to customers relating their problems. Any sort of information regarding any issue or product is provided at this desk. I learnt all these things in very friendly and stress free environment. It was a good experience spending time at this desk. I observed that the behavior of customer service officers is very good and appreciable with customers that is a source of satisfaction for customers and is helpful in increasing goodwill of bank and generating a positive word of mouth.

10.2 Clearing
“Fund transfer between two banks and branches via checques is called clearing”. There are mainly two types of clearing:   Outward clearing Inward clearing

10.2.1 Outward clearing
“Outward clearing is to send the cheques to other banks”. When the account holder of our bank receives payment from any other party in the form of cheque, and that cheque is not of our bank or branch, and our account holder deposits it in his MCB account then that cheque has to pass from the process of outward clearing. All the cheques deposited in one day of other banks are then sent through the NIFT to the SBP which sends them to the head offices of their respective banks which through NIFT sends the instruments to the respective branches from which they were issued either if they are passed or held to be bounce. This process of outward clearing is exactly opposite to the process of inward clearing.

10.2.2 In ward Clearing
In the morning time banker receives the inward clearing from the NIFT employee and counts the instruments which are received and match it with the summary which is also attached with these instruments. Then banker posts these instruments, either by himself or hand over those to computer operator. After posting all these instruments, they are manually entered in the clearing sheet in its Debit side. There are other three types of clearing:

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1. Same day clearing 2. Normal clearing 3. Intercity clearing

2011

10.2.3 Same day clearing
In same day clearing cheque is sent in the morning and payment is received in evening. Same day clearing involve two conditions:   Cheque will be of Rs. 500000 or above (although it is not strictly followed). Bank should be the member of the same day.

10.2.4 Normal clearing
In normal clearing cheque is sent in present day and payment is received next day. No condition is imposed in normal clearing.

10.2.5 Intercity clearing
There is the new concept of clearing which is named as intercity clearing. Clearing between two cities is called intercity clearing. In intercity clearing cheque is cleared in two or three days. State Bank of Pakistan has revised his policies and introduced this concept, in which cheques are cleared that are of banks or branches located in other cities. To understand the process of clearing we first need to understand and comprehend the workings and the purpose of the state bank‟s institution called NIFT.

10.2.6 NIFT- National Institutional Facilitation Technologies
In the process of clearing NIFT plays a very important role. NIFT (National Institutional Facilitation Technologies) has a very vital role as it is the “middle man” in the process of clearing. This institution performs the duties of receiving all the clearing cheques from all the branches of all the banks and taking them to the State Bank. At the SBP, first the NIFT forms a list of all the cheques from all the banks and then forwards it to the SBP representative. That person categorizes all these cheques according to their respective banks and branches and forms another list of his own. Then these sorted cheques are again given to the NIFT agent and he then takes them to the head offices of their respective banks and from there they are distributed to the respective

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branches also through NIFT. This way NIFT delivers back all the cheques to their parent branch from which they have been issued. FLOW CHART OF WORKING OF NIFT

Memo on Returned Cheques Also prepare the Memo on (S.F 16) in which the details of objections are given that for purpose we return this instrument, and charge RS 200/- per instrument for cheque presented for outward clearing and Rs. 300/- per instrument for cheque presented for inward clearing. Calculate the Difference Vouchers of Clearing Difference voucher means the difference between the Out ward Clearing and In Ward Clearing.  if liabilities are outstanding on MCB side then made Credit voucher  If liabilities are outstanding are on their side then made Debit Voucher

10.3 Remittances
This section covers the services and products that Bank offers to its customers for Funds Transfer. Currently Bank is offering following Products & Services for Fund Transfer: (Locally & Internationally).

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     Payment Order Demand Draft (Local & Foreign Currency) Telegraphic Transfer (Local & Foreign Currency) Rupee Traveler‟s Cheques Mail Transfer (Local Currency)

2011

10.3.1 Demand Draft
Features:   Demand Draft is a written order. Drawn by one branch of a Bank upon another branch of the same Bank, or upon other pay a certain sum of money to or to the order of a specified person. It is issued a bank and payable by another branch of the same bank or another bank      Demand Draft is a negotiable instrument. Demand Draft is neither issued payable to bearer nor drawn on branches situated within the same city. Legal provisions as to crossing, endorsement, collection and payment in due course are similar to those as for cheques and other negotiable instruments. It is to be ensured that the purchaser of Demand Draft is able to at least sign his name. Thumb impression is not to be accepted on Funds Transfer Application except in cases where purchaser is maintaining an account with the issuing branch. A person unable to sign and not having an account may be advised to apply for the DD through a literate person to sign on his behalf. Bank to

by one branch of

Parties involved in the Demand Draft
1. Purchaser: Is the person, firm, company or local authority. 2. Issuing or Drawing Branch: The Branch which issues a Draft on another Branch. 3. Drawee Branch: Is the Branch on which a draft is drawn. 4. Payee / Beneficiary

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Process is represented with the help of figure given below:

2011

Remitter

Draft

Beneficiary

Fund received

Draft

Issuing Branch

Drawee Branch

10.3.2 Payment Order
Payment Order is used for making payments within a city. Literal definition of Payment Order is as follows: “A Pay Order is a written authorization for payment, made in a cheque form issued and payable by the bank, to the person named and addressed therein on his giving a proper discharge thereon”. Features:  It is issued by and drawn upon and payable by the same branch of the bank.  It is neither transferable nor negotiable and as such it is payable to the payee named therein.

Parties involved in the Pay Order
Purchaser: Purchaser is a person, firm, company, Government/Semi Government Organization or local authority. Issuing/Paying Branch: This issues/pays on presentation of the instrument.

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Payee: Payee is the person named on a bill to whom, or to whose order, payment is to be made. Where a bill is not payable to bearer, the payee must be named or otherwise indicated therein with reasonable certainly.

10.3.3 Telegraphic Transfer
Transfer of funds from one branch to another branch of the same bank or upon other Bank under special arrangements for the payments to the Beneficiary through Telephone, Fax is called Telegraphic Transfer (TT). Features:     TT is not negotiable The funds remitted by TT are not payable to bearer/ order but only to the payee. TT of funds to a branch situated within the same city should not be affected. Remittance can be made for credit of the account of the Payee /Beneficiary if account is maintained. With the Drawee branch or may be paid in cash, subject to proper identification or may be collected by the payee through his baker according to instructions. Such instructions for payment are called “Advise and Pay”.

Parties of TT Remittance:
i) ii) iii) iv) Applicant: one who wants of remit funds from one branch to another branch of other city. Remitting or Drawing Branch: which remits the fund on another branch. Drawee Branch: on which a TT is issued Beneficiary / Payee: the person named in the TT to whom the fund is payable.

10.3.4 Rupee Traveler’s Cheques
MCB Bank has been at the forefront of providing its customers with new and innovative products and financial instruments that are safe, secure and profitable.

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MCB Rupee Traveler's Cheques were first introduced in 1993 as safe cash for traveling and travel related purposes. The product has been extremely popular and is preferred over cash by customers while travelling and in all walks of life. Features:         Easily available: Buy them from any of the designated branches in Pakistan. As good as cash: MCB RTCs are safe to carry and can be used without any inconvenience especially by Travellers. More than 900 MCB Authorized branches are selling and purchasing Cheques all over Pakistan. Easily encashed: At any designated MCB branch. Easily refunded: in case of loss or theft, you can get the full amount back. Customer Service Facility: (021) 111-000-123. Validity: 10 years from the date of purchase. Denominations: Available in denominations of Rs 1000, Rs 5000, Rs 10,000.

10.4 Forex Department
Forex department at MCB deals in the followings:   LCs (Letter of Credit) FTT o Inward FTT o Outward FTT   Swift Operations Export finances o IBP (Inland Bill Purchase) o FBP (Foreign Bill Purchase) o FAFB (Finance Against Foreign Bill)

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 Export Refinance

2011

10.4.1 FTT
FTT stands for Foreign Telegraphic Transfer. All dealings are done in foreign currency. There are two types of FTT i.e. outward FTT and inward FTT. In outward FTT, accountholder sends out the money from Pakistan. In inward FTT, accountholder sends money from abroad to Pakistan. For FTT, request is sent to COD (centralized Operations Division) which allows the further processing. Moreover FTT returns are reported to State Bank of Pakistan on monthly basis.

10.4.2 Swift operations
An international swift code is owned by each bank. All types of interaction are done between banks using those swift codes.

10.4.3 Export finances
a) IBP: Inland Bill Purchase In Inland Bill Purchase, sale contract is executed by between two parties within the country. Local currency is used for payment. Process is represented by the following figure:

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b) FBP: Foreign Bill Purchase In Foreign Bill Purchase, sale contract is executed by between two parties not within the same country. Foreign currency is used for payment. Moreover FBP contains letter of credit (LC). Discounting rate is offered to the customers. c) FAFB: Finance Against Foreign Bill There is simple sale contract and not LC in FAFB. Bank is not responsible for any action of both parties. Parties with their own mutual understanding execute the sale contract. Bank is only used as a mode of payment. Note: In the concerned branch only IBP is in practice because the area of Bahawalpur is not of industrial nature.

10.4.4 Export refinance
To facilitate and compensate exporters, finance is offered to them. There are two parts in export refinance, part I and part II.

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PART I:

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In part I, simple sale contract is executed between two parties before shipment. Contract documents are shown by the exporter to his bank in order to be facilitated with the finance. After taking money from the bank, the exporter prepares the shipment order received from the importer. Sale contract sometimes may not execute in the first part. PART II: Part II is further divided into two parts i.e. a) Pre shipment b) post shipment

10.4.5 Letter of credit

Buyer or Importer

Seller or Exporter

His Bank

His Bank

Importer‟s bank will issue the letter of credit to the exporter‟s bank, providing assurance about the payment of shipment so that the exporter will deliver the shipment to the importer. After shipment is sent, exporter will hand over all the related documents to his bank. The bank will send those documents to the importer‟s bank after receiving payment made by bank. The importer‟s bank will

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inform importer that shipment is reached, pay the money, get documents from us, go and receive your shipment.

10.4.5.1 Parties to letter of credit
In documentary credit operations, the maximum numbers of parties involved are as under. i) The Applicant (Opener of L/C): Applicant means the party on whose request the credit is issued ii) Issuing Bank (Opening Bank): Issuing bank means the bank that issues a credit at the request of an applicant or on its own behalf. iii) Advising Bank: Advising bank means the bank that advises the credit at the request of the issuing bank iv) Beneficiary (Seller or Exporter): Beneficiary means the party in whose favour a credit is issued (Article-2 of UCP-600). v) Confirming Bank: Confirming bank means the bank that adds its confirmation to a credit upon the issuing bank‟s authorization or request. vi) Negotiating Bank: Negotiation means the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) and/or documents under the complying presentation, by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank. The bank that makes negotiation is called Negotiating Bank. vii) Reimbursing Bank: Reimbursing Bank is the Bank, which on behalf of the opening Bank honours the reimbursement claim lodged by the negotiating Bank.

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11. SWOT ANALYSIS

11.1 Strengths
 It is mainly operated by Mansha's group, a very renowned industrial group in Pakistan. MCB is working in Pakistan from very past as it has over 60 years of excellence and success. MCB Bank comes under the category of one of the largest domestic commercial banks. It has a good brand image in an Islamic country because of word "Muslim" in the name.  Overall performance of bank is increasing day by day. MCB is largest private bank in Pakistan with around 1130 branches, which cover almost every area of Pakistan. All the branches are online.  At present it has near about 600 ATM branches in Pakistan representing the largest ATM network in the country. IT infrastructure and network of online branches is very efficient. The launch of MCB switch allows other banks to utilize MCB's ATM network. MCB is also

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offering GPRS enabled banking. By introducing mobile banking, internet banking etc. it is meeting global and latest technological changes.  It is a customer bank of more than 4.5 million customers. Strong customer relationship is another strengthening factor for the bank. Wide variety of services is offered by the bank to its customers. Customer default rate is lower as compared to other banks. Moreover MCB has captured majority of potential customers in Pakistan. It has above 10,000 employees. The bank has efficient and experienced management involved in decision making and bringing significant changes. MCB bank has strong culture and has professional and committed employees. Huge sums of money are invested on Human Resource development and training.  MCB is Market oriented bank. To attract greater market, bank‟s major focus is on developing new and innovative products. Another major strength of MCB is that it has very stable deposit base. The bank is enjoying strong competitive advantage over other banks in Pakistan and strong competitive profitability in the industry as well.  MCB has the accounts of big organizations like OGDCL, PTCL, EFU, PTC etc.

11.2 Weaknesses
 Although Employees are professional and committed, they are not much satisfied with their job. This dissatisfaction is mainly caused by ill treatment and improper reward system. Promotions are not offered frequently. Employee turnover rate is high because there lacks loyalty among employees. To give everyone equal protocol is lacking among employees.  Although staff is proficient but unwilling to serve better during audit due to extreme pressure put by the auditors. As most of the employees are young they have more tendencies to switch the organization in order to seek better opportunities, to prohibit this thing high motivation is required which is not dominant in MCB i.e. there is low motivation level.  Customers face problem of NADRA verification while opening their accounts because its process is time consuming and inefficient.

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Customers having account with small amounts are not given same services like dealing to others who have high accounts of high amounts so we can sau there is partiality in customer dealing.

Lack of decentralization. Banks is planning to restructure its departments and is going to be centralized very soon. Decision making process is very slow.

 

Partiality and favoritism is seen in recruitment. Though ATM network is the largest in Pakistan, still some potential areas don‟t have the ATM.

 

MCB RTC is useable only in Pakistan. Less efficiency of SYMBOL System due to dis connectivity.

11.3 Opportunities
 As MCB is currently increasing its operations in global environment, there are chances for its full globalization.  Because of rapid growth of technology at international level, there are better opportunities for bank to move towards improved technology usage, this can help MCB serve its customers better, anytime and anywhere.  Increase in Islamic banking operations can attract a good customer range for MCB which will enhance the market share of the bank.  Offering customized and innovative products e.g. car financing, home financing has helped bank secure a good range of loyal customer, being source of positive word of mouth.  There are more opportunities to open branches in rural areas so as to increase its branch network and operations.  Frequent training sessions, free and fair promotions, better reward system can make employees more committed to their work and dedicated to MCB.  Providing Agri finance facility to farmers has opened new doors of success and a new way to build remarkable customer relationship for MCB.

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 

2011

Announcing new loan schemes on regular basis can better meet customer requirements. Continuous growth in leasing sector in Pakistan from past few years provides an opportunity for MCB to grow in this area.

11.4 Threats
 Global economic crisis has affected all the economies and financial sectors a lot, MCB is not out of its range. People are losing their trust in banks.  In Pakistan, political system is highly unstable being a threat for MCB. Instability of Govt. and govt. policies is another point to worry about by MCB.  War against terror in Pakistan and neighboring countries is the greatest threat of this time to the whole economy and banking sector of Pakistan.   Continuously rising competition in banking sector is one of the major threats for MCB. Establishment of many foreign banks in Pakistan is very threatening for all local banks including MCB. The market share is mainly influenced by this phenomenon.  Market saturation, poor law and order situation, mergers and acquisitions in banking sectors, involvement of foreign banks in foreign trade prove to be major threats for MCB.  Other private, commercial banks with sound profitability i.e. HBL, NBP are also a risk for MCB.

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Financial analysis (also referred to as financial statement analysis or accounting analysis) refers to an assessment of the viability, stability and profitability of a business.

Following are the ratios calculated (in order to do financial analysis) which represent the financial position of the organization.

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12.1 CURRENT RATIO = Current assets ÷ Current Liabilities YEAR VALUE 2010 0.92:1 2009 0.90:1 2008 0.88:1 2007 0.86:1 2006

2011

0.88:1

INTERPRETATION Current ratio measures the firm‟s ability to meet its short-term obligations. This ratio for MCB Bank is not good and indicates an alarming situation although there is overall increase in this ratio from year 2006 to 2010 because the current portion of assets is representing more increase than current portion of liabilities but its assets are still not sufficient enough to pay its liabilities.

Current Ratio
0.93 0.92 0.91 0.9 0.89 0.88 0.87 0.86 0.85 0.84 0.83 2010 2009 2008 2007 2006 Current Ratio

Graphical Representation of Current Ratio

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12.2

QUICK RATIO = {Current Ratio – (Inventories + Prepaid Expenses)} ÷ Current Liabilities

YEAR VALUE

2010 0.92:1

2009 0.89:1

2008 0.87:1

2007 0.86:1

2006 0.87:1

INTERPRETATION Quick ratio is the measure of liquidity of firm. Higher this ratio means more is the firm liquid. The ratio should be greater than 1. This ratio for MCB Bank is not good indicating that the bank‟s liquidity is very less. Although an increasing trend is seen but the liquidity state of bank is at dangerous level because cash and other liquid assets are making lesser portion of total assets. (greater portion of total assets is seen in advances and investments.)

Quick Ratio
0.93 0.92 0.91 0.9 0.89 0.88 0.87 0.86 0.85 0.84 0.83 2010 2009 2008 2007 2006 Quick Ratio

Graphical Representation of Quick Ratio

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12.3 NET WORKING CAPITAL (Rs. In 000s)
= Current assets - Current Liabilities

YEAR VALUE

2010 (35103457)

2009 (41020413)

2008 (42552543)

2007 (45205588)

2006 (33389843)

INTERPRETATION Networking capital also measures the solvency of the firm. In case of MCB Bank, negative values of Networking Capital for 5 years are seen which show that bank is not performing well and current assets are not able to pay current liabilities.

Net Working Capital
0 -5000000 -10000000 -15000000 -20000000 -25000000 -30000000 -35000000 -40000000 -45000000 -50000000 Net Working Capital

2010

2009

2008

2007

2006

Graphical Representation of Net Working Capital

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12.4 DEBT RATIO
= Total Liabilities ÷ Total Assets

2011

YEAR VALUE

2010 85.6%

2009 85.8%

2008 86.4%

2007 86.0%

2006 87.7%

INTERPRETATION Debt ratio measures the proportion of its debt which finances assets of the firm. The higher value of this ratio means that firm is using greater amount of people‟s money to generate profit. Increase in this value represents the higher risks for the firm. In case of MCB Bank there is an overall decreasing trend although the value is still very high indicating that more than half of its assets are financed by its debts.

Debt Ratio
88.00% 87.50% 87.00% 86.50% 86.00% 85.50% 85.00% 84.50% 2010 2009 2008 2007 2006 Debt Ratio

Graphical representation of Debt Ratio

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12.5 TIMES INTEREST EARNED RATIO = EBIT ÷ Interest Expense

2011

YEAR VALUE

2010 2.47 times

2009 2.47 times

2008 2.88 times

2007 3.86 times

2006 5.19 times

INTERPRETATION This ratio measures the firm‟s ability to make interest payment. Increase in this ratio shows a good situation of the firm. In case of MCB Bank, its value is 2.47 times in 2010 and 2009, whereas it is 2.88 times in 2008, 3.86 times in 2007 and 5.19 times in 2006, indicating that there is decrease in this ratio which shows that bank is not having enough capacity to make interest payments.

Times Interest Earned Ratio
6 5 4 3 2 1 0 2010 2009 2008 2007 2006

Times Interest Earned Ratio

Graphical Representation of Times Interest Earned Ratio

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12.6 EARNINGS PER SHARE (Rs.) = earnings available for common shareholders ÷ no. of common shares outstanding YEAR VALUE 2010 22.20 2009 22.66 2008 24.38 2007 26.16 2006 22.95

INTERPRETATION EPS is the amount of Money earned during specific time, on each outstanding common share. There should be an increase in EPS with time. This ratio for MCB Bank is showing a positive trend as there is an overall increase in it in year 2010 i.e. Rs. 22.20 however it is lowered down in 2008 i.e. Rs. 24.38 and Rs. 22.66 in 2009 as compared to 2007 where it is 26.16 rupees.

EPS (Rs.)
27 26 25 24 23 22 21 20 2010 2009 2008 2007 2006 EPS (Rs.)

Graphical Representation of EPS

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12.7 RETURN ON AVERAGE ASSETS (ROA) = earnings available for common shareholders ÷ average total assets

2011

YEAR VALUE

2010 3.12 %

2009 3.27%

2008 3.57%

2007 4.35%

2006 3.90%

INTERPRETATION ROA also called ROI is the measure of generated profits from available assets. This ratio should also show an increase however in case of MCB Bank there is an overall decrease from 2006 to 2010 except year 2007 where it is increased. This also indicates an alarming situation for MCB Bank.

ROA
5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2010 2009 2008 2007 2006 ROA

Graphical Representation of ROA

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12.8RETURN ON AVERAGE EQUITY (ROE)

2011

= earnings available for common shareholders ÷ average common stock equity YEAR VALUE 2010 25.11% 2009 26.72% 2008 30.21% 2007 39.27% 2006 45.55%

INTERPRETATION ROE is the measure of the return earned on the common stock holders‟ investment in the firm. Increase in ROE shows the strength of the firm. ROE for MCB is showing a continuous decrease from 45.55% in year 2006 to 25.11% in year 2010 indicating an unhealthy situation for the bank.

ROE
50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2010 2009 2008 2007 2006 ROE

Graphical Representation of ROE

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12.9 MARKET CAPITALIZATION (In Rs. Million) =market price × no. of common shares outstanding YEAR VALUE 2010 173,740 2009 151,822 2008 79,044 2007 251,279

2011

2006 134,451

INTERPRETATION Market capitalization measures the size of a firm calculated by multiplying no. of common shares outstanding with the market value per share. This ratio for MCB Bank is showing a varying trend for past five years. It is decreased in year 2008 then a gradual increase is seen in year 2009 and 2010 which represents the good market share position for company.

Market Capitalization (Rs. In Million)
300,000 250,000 200,000 150,000 100,000 50,000 0 2010 2009 2008 2007 2006 Market Capitalization (Rs. In Million)

Graphical Representation of Market Capitalization

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12.10 DIVIDEND YIELD RATIO (based on cash dividend) = Dividend per share ÷ market price per share YEAR VALUE 2010 5.03% 2009 5.01% 2008 9.14% 2007 3.13%

2011

2006 2.95%

INTERPRETATION This ratio measures the relationship between dividend per share and market price per share. This ratio is calculated for common stock holders. The ratio should be low for capital gain focused investors while high for profit oriented investors. Relating to MCB Bank, this ratio is showing a varying trend. For given time period, ratio is again increased for 2010. However ratio is greater in year 2008.

Dividend Yield Ratio
10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2010 2009 2008 2007 2006 Dividend Yield Ratio

Graphical Representation of Dividend Yield Ratio

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12.11 DIVIDEND PAYOUT RATIO = Dividend per share ÷ EPS YEAR VALUE 2010 51.8% 2009 48.5% 2008 47.16% 2007 47.7%

2011

2006 31.5%

INTERPRETATION This ratio calculates the relationship between dividend per share and EPS. This ratio should show an increase. For MCB Bank the ratio is showing a continuous increase from year 2006 to 2010 except year 2008 where it is decreased then again showing an increasing trend in next years indicating a good position of Bank.

Dividend Payout Ratio
60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2010 2009 2008 2007 2006

Dividend Payout Ratio

Graphical Representation of Dividend Payout Ratio

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12.12 EARNING ASSET TO TOTAL ASSET RATIO (Rs. In Million) = earning assets ÷ total assets

2011

YEAR VALUE

2010 87.15%

2009 87.23%

2008 85.70%

2007 83.60%

2006 85.54%

INTERPRETATION This ratio shows how well bank‟s management puts bank‟s assets to work. Increase in this ratio represents the strength and good performance of banks. Although the ratio is increased after 2007 for MCB Bank, but in year 2010 it is reduced to a little fraction from 87.23% in 2009 to 87.15% in 2010. It shows that assets are not performing well, volume of advances is decreased because of poor economic conditions.

Earning Asset to Total Asset
88.00% 87.00% 86.00% 85.00% 84.00% 83.00% 82.00% 81.00% 2010 2009 2008 2007 2006 Earning Asset to Total Asset

Graphical Representation of Earning Asset to Total Asset Ratio

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12.13 RETURN ON EARNING ASSETS
= Net Income ÷ Average Earning Assets YEAR VALUE 2010 3.59% 2009 3.75% 2008 4.25% 2007 4.80%

2011

2006 4.38%

INTERPRETATION This ratio measures the profitability of bank. For MCB Bank this ratio is showing an overall decreasing trend from year 2006 to 2010 except year 2007 where it is bit increased. This overall trend is indicating an alarming situation for the bank.

Return on Earning Assets
6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2010 2009 2008 2007 2006

Return on Earning Assets

Graphical Representation of Return on Earning Assets

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12.14 INTEREST MARGIN TO AVERAGE EARNING ASSETS = Interest Margin ÷ Average Earning Assets 2010 7.84% 2009 8.68% 2008 7.86% 2007 7.52%

2011

YEAR VALUE

2006 7.68%

INTERPRETATION This is a key ratio that measures the bank‟s profitability. In case of MCB Bank, it is clear that MCB profitability is showing a varying trend. Value is greater in year 2009 and has fallen again in year 2010, representing the dangerous situation.

Interest Margin to Average Earning Assets
8.80% 8.60% 8.40% 8.20% 8.00% 7.80% 7.60% 7.40% 7.20% 7.00% 6.80% 2010 2009 2008 2007 2006 Interest Margin to Average Earning Asests

Graphical Representation of Interest Margin to Average Earning Assets

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12.15 AVERAGE EQUITY TO TOTAL ASSETS = Average Equity ÷ Average total assets YEAR VALUE 2010 12.41% 2009 12.25% 2008 11.82% 2007 11.07%

2011

2006 8.56%

INTERPRETATION This ratio measures the extent of equity ownership in the bank and minimizes the risk of using debt and leverage. For MCB Bank, an increasing trend is represented, indicating an excellent performance of the bank. Magnitude of risk is decreased that oftenly comes up because of using debt.

Average Equity to Total Assets Ratio
14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2010 2009 2008 2007 2006 Average Equity to Total Asset Ratio

Graphical Representation of Average Equity to Total Assets Ratio

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12.16 DEPOSITS TIMES CAPITAL = Average Deposits † Average Stockholders‟ equity YEAR VALUE 2010 5.94 times 2009 5.95 times 2008 6.13 times 2007 6.16 times

2011

2006 8.8 times

INTERPRETATION This ratio is concerned with both depositors and stockholders. More capital implies a greater margin of safety, while a larger deposit base gives a prospect of higher return to shareholders, since more money is available for investment purpose. For MCB Bank, there is a decreasing trend in this ratio indicating that the deposits are lesser in coming years and there are now less investment opportunities in MCB, less protection to stockholders is seen. Lesser deposits base provides lesser investment return opportunities for the bank.

Deposit Times Capital
10 9 8 7 6 5 4 3 2 1 0 2010 2009 2008 2007 2006 Deposit times Ratio (Times)

Graphical Representation of Deposit times Ratio

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12.17 LOANS TO DEPOSITS RATIO = Average Total Loans ÷ Average Deposits YEAR VALUE 2010 63.55% 2009 73.85% 2008 77.31% 2007 75.91%

2011

2006 77.76%

INTERPRETATION Loans to deposit ratio is the measure of position of bank with regard to risk taking ability. An increase in this ratio indicates the increased level of risk with regard to debt and decreased liquidity. Talking about MCB Bank, there is a slight decrease in this ratio. Higher values in past year depict that bank is not enough liquid to cover any unforeseen fund requirements. A gradual decrease in this ratio is showing that bank is now generating liquidity.

Loans to Deposit Ratio
90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2010 2009 2008 2007 2006 Loan to Deposit Ratio

Graphical Representation of Loan to Deposits Ratio

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12.18 GROSS ADVANCES TO DEPOSITS RATIO
=Gross Loans ÷ Average Deposits YEAR VALUE 2010 63.55% 2009 73.37% 2008 82.64% 2007 78.65%

2011

2006 80.34%

INTERPRETATION Gross Advances represents the total amount of loans given by the Bank including nonperforming loans as well. Gross Advances to Deposits Ratio represents how much amount Bank can lend by the amount it holds in deposits. Banks are required to maintain certain level to fulfill contingent fund requirement by the depositors. Increase in this ratio represents that bank has lent more money neglecting the amount it has to keep with it to fulfill fund requirements. In case of MCB Bank, this ratio is representing a decreasing trend which shows that it is having certain deposit reserves so that to fulfill fund requirements.

Gross Advances to Deposits Ratio
90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2010 2009 2008 2007 2006 Gross Advances to Deposits Ratio

Graphical Representation of Gross Advances to Deposits Ratio

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Internship Report 13. SUGGESTIONS AND RECOMMENDATIONS

2011

After spending time at MCB MODEL TOWN Branch Bahawalpur, keenly observing the functioning and management, I am able to find out some flaws in the working and management of branch and want to make following recommendations regarding those issues and about what I want to suggest after having SWOT and Financial analysis done about MCB Bank Limited. About the branch I would like to first of all suggest that staff at MCB Model town branch is crucially needed to be increased in number. According to my observation, there is less number of employees working in the branch and the work load of each worker is high. This thing builds up mental pressure and is a source of stress for employees. Another thing recommended that there should be efficiency of the whole computer system, most of the times it gets failed which is a soure of trouble for customers and very embarrassing for employees when they say, “come late, or visit another as system is not working properly.” Moreover there is only one tea boy in the branch. Everyone keeps on calling the same single person all the time which creates a mess in a cool and smooth working environment and it gets noisy and irritating. I have also observed that customers have to wait for longer time because connection of computer system with that of NADRA is also very poor. Most of the times, it does not work. There should be efficiency and accuracy in it in order to better work and serve. Most frequently and in greater no. the customers from rural areas visit the branch, they need more and proper attention and guidance which is impossible to be paid by the CSOs because of heavy work load. There should be proper division and management of tasks among employees. Efficiency and working of ATM machine is also not so good. It needs to be more efficient than it is now. Many customers complain about working of ATM machine at MCB Model Town Branch Bahawalpur.

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Now there are some recommendations regarding MCB BANK LIMITED as a whole.

2011

MCB in this age of hyper competition needs to launch new, innovative, flexible, unique and reasonable products for its customers because products mainly offered are same as that of other banks. At MCB Bank, there is crucial need of print and electronic media to promote itself. There is no advertisement of any of its product via any source these days. In this era of competition, you all the time need to make your customers remember you and media is the best source for it. Frequent training sessions and timely promotions can better retain and motivate employees as employees also need better response from their organization. Recommended two are the best ways to provide feedback and take care of employees by the organization. Rewards system should fulfill the requirements of the employees. Creativity and innovation should be really valued. The suggestions for change from employees should be truly and timely valued and be asked for frequently in order to scratch and make use of employees‟ talent and abilities. To motivate them and other employees, their ideas should be appreciated, told to others, and their practical application should be made possible as soon as it can be. More branches in rural areas should be opened and for ease and convenience of the customers of those areas, who travel a lot to visit the branch in urban area in order to enjoy the services. There should be timely job rotation of employees i.e. not so earlier and not so late, so that they know about the working of all departments and are able to work at any desk in any contingent situation i.e. if employee has left working in the bank or has taken long leave.

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Internship Report 14. CONCLUSION

2011

MCB Bank Limited (Formerly Muslim Commercial Bank) incorporated on July 9, 1947 by the Adamjee Group was established to deliver banking facilities to the business community and genral public of the South Asia. The bank was nationalized in 1974 during the government of Zulfikar Ali Bhutto. This was the first bank to be privatized in 1991 and now it is mainly owned by Nishat group. The president of the bank is M.U.A Usmani. Mian Mohammad Mansha is the Chairman of the Nishat group and also of MCB. This man has played vital role in its success. In order to recognize and value Mr. Mansha‟s contribution, the Government of Pakistan has conferred him with "Sitara-e-Imtiaz", which is one of the most prestigious civil awards of the country. Looking back at last fifteen years‟ performance of the bank, it is evaluated that bank has paid keen attention in many areas in order to boost up performance. Improvements in many departments is brought by concentrating on service quality, investment in technology and people, using its extensive branch network, developing large and stable deposit base. MCB has over 1,150 branches which includes local branches, and business establishments in SriLanka and Bahrain and newly established Rep. Office in Dubai, UAE. The Bank has also formed a private company in partnership with Standard Chartered Bank in Hong Kong, to handle trade transactions of selected countries in the Asia-Pacific region. After its privatization, MCB has successfully turned its operations to better perform in competitive environment and is continuously setting and achieving high performance standards with kind support of customers and efficient leadership. To further strengthen its financial services base, MCB has also incorporated an Asset Management Company in the year 2005 known as MCB Asset Management Company. MCB has also incorporated a leasing company in Azerbaijan in 2009. Fully Owned Subsidiaries of MCB are: • Muslim Commercial Financial Services (Private) Limited • MNET Services (Private) Limited • MCB Trade Services Limited • MCB Asset Management Company Limited • MCB leasing (Closed Joint Stock Company) The Bank has

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achieved this success, especially in the last few years, through consolidating corporate banking operations, strengthening retail banking, launching diversified and innovative products, giving more focus to consumer financing and investing in IT. The success story and acknowledgements do not end at home only. MCB Bank Limited received Euromoney Award for Excellence seven times in the last eight years, which include “Best Bank in Asia” in 2008; four times “The Best Bank in Pakistan” award and one time “The Best Domestic Bank” award besides being declared the “The Best Domestic Bank in Pakistan” by Asia Money for the last two years. MCB Bank also received the “The Strongest Bank 2010” award by The Asian Banker for being Pakistan‟s best-performing financial institution in 2010. President and CEO MCB Bank, Atif Bajwa, has been awarded “The Qatar Financial Centre Asian Banker Leadership Achievement Award 2010”. MCB Bank is truly acting as per its vision and mission statement and achieving all the standards determined, having long and loyal customer relationship and has won the confidence of shareholders for itself. I observed that to provide customers with what they need, MCB has launched many new, innovative and flexible products for its customers of any class. These innovative products proved to be a major cause of high market penetration of the bank and there is seen a remarkable increase in no. of customers which ranges from more than 4 million. MCB has a wide range of products for its customers including Savings Account, Current Account, Term Deposit, MCB Online Banking, MCB MNET, MCB Cash Management, MCB Channel Financing, MCB Local Rupee Drawing Arrangement, MCB Home Remittance, MCB Corporate Financing, MCB Project & Structured Finance, MCB Syndicated Loans and Debt Capital Markets, MCB Quasi Equity/Hybrid

Instruments, MCB Equity Capital Raising, MCB Advisory Services, MCB Islamic Banking, MCB Agri Products, MCB Privilege, MCB Salary Club, MCB Investment Services, MCB Visa Credit Card, MCB Car4U, MCB Instant Finance, MCB Smart Card, MCB Rupee Travelers Cheque, MCB ATMs, MCB Mobile ATM, MCB Lockers, MCB SMS Banking, MCB Full-Day Banking, MCB Bancassurance, MCB Call Centre, MCB Mobile, MCB Virtual Banking.

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The launch of Islamic Banking services has increased the goodwill of bank to a further greater level. This action has clearly shown that customers are the main focus of the bank and they will be served ever with regards and their preferences. ATM network of MCB is the largest one in Pakistan with 500 ATMs in near about 110 cities. For me, it was a great and learning experience to work at MCB BANK LIMITED, Model Town Branch Bahawalpur. I was able to learn many new things about banks, banking sector, banking system etc. with the help of proper guidance and kind cooperation of the staff at the branch. The staff at MCB Model Town branch is very kind, generous, cooperative and well mannered. They all helped me a lot learn many new and different things about banks and banking procedures. I at vey start of my internship, learned how to deal and cooperate with customers in any circumstances, facing varied moods of customers. I am now very much confident that I can deal with any kind of people. I actually learned the meaning of the statement that “Customer is always right” and learned to be very patient all the time with customers as they are biggest and most valuable assets of any organization. Although ups and down happens in case of jobs as well, all the staff members were still very much cooperative with each other. In this age of extreme professional jealousy, I learned, by observing the behavior of whole staff of the branch, how to ignore the ill words of others, be patient and cope up with stressed situations. The manager‟s control over the all branch activities was very tight and appreciable. I understood how to obey your bosses and listen to them silently even when they scold. Because all what they do or say is for betterment and good reputation of the organization. This thing in turn satisfies you. In MCB Model Town Branch, following departments are working:     Operations Customer Services Clearing Remittance

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       Forex Advances Assurance

2011

During my internship at MCB Model Town Branch, I have rotated in the following departments: Customer services Remittance Forex Clearing

The functions performed by Customer services departments include filling the deposits slips for customers, filling the vouchers for remittance purpose i.e. DD, PO, online money transfer etc. Moreover the account opening form is also filled at this desk by the customers, checque requisition slip for acquiring cheque books, ATM application form, reactivation of dormant account form are also filled at this desk. Few activities including Account opening, account closing, and reactivation of dormant accounts are performed in collaboration with operations department at MCB Model Town branch, because these include the use of computer network by Operations Manager. General help and guidance is provided to customers relating their problems. Any sort of information regarding any issue or product is provided at this desk. I learnt all these things in very friendly and stress free environment. It was a good experience spending time at this desk. I observed that the behavior of customer service officers is very good and appreciable with customers that is a source of satisfaction for customers and is helpful in increasing goodwill of bank. In the Remittance department, the services and products that Bank offers to its customers for Funds Transfer are dealt. Currently Bank is offering following Products & Services for Fund Transfer: (Locally & Internationally).     Payment Order Demand Draft (Local & Foreign Currency) Telegraphic Transfer (Local & Foreign Currency) Mail Transfer (Local Currency)

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Forex department at MCB deals in the followings:

2011

LCs (Letter of Credit), FTT (Foreign Telegraphic Transfer) including both inward and outward FTT. Swift Operations, Export finances including IBP (Inland Bill Purchase), FBP (Foreign Bill Purchase) and FAFB (Finance Against Foreign Bill). And Export Refinance. One thing which I would like to mention here is that in the concerned branch only IBP is in practice because the area of Bahawalpur is not an industrial area. In the clearing department, fund transfer via cheques is mainly dealt, bank exchanges cheques and other negotiable instruments drawn on each other within specified area and securing the payments for their clients through the clearinghouse. The Cheques and other negotiable instruments are sent to the Clearing Department / Collection Cell located at the Main Branch by the coordination of NIFT. When I did SWOT analysis of MCB Bank, I came to know about many strengthening points of MCB Bank. One of the main strengths of MCB is that the president of the bank is Mian Muhammad Mansa, richest person in Pakistan, a very competent and person in the field of business. Other factors that add strength to bank are its strong deposits base, largest branch network continuously increasing customer‟s range and the largest ATM network in the country. As per the statement “Nothing is perfect in this world”, I also found some weaknesses in its operations and workings. I have observed few wrong practices from disciplinary standpoint. Moreover there are lesser no of staff members as compared to task requirements. Work load of individuals is much more than it should be. Inefficient computer systems which fail down again and again become a cause of disturbance for customers. I also observed that NADRA verification process is also very slow and takes a lot of time. It needs immediate improvements. Moreover I found that employee training and development program are not very efficient, during the course of my internship no training program was held for the branch and was done a long time ago, as told to me when I asked. Promotions are also offered after a long tenure. Both these things add to the demotivation of the employees and a way to switch their job which is not a healthy sign.

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I noticed that MCB is having many great opportunities as per the environmental conditions. If MCB avails those opportunities, it would be even more successful. Moving towards globalization is now becoming a trend. MCB should also go for it in order to enjoy the benefits of global market. MCB should also fully utilize all the modern technologies to bring efficiency and effectiveness in its working processes. There are also many challenges which, according to my observation, MCB has to face and there are many threats for it in the external environment. The rising market share of other competent banks like HBL, National Bank, Standard Chartered etc. is also a threat for MCB Bank. Global economic crisis and opening of many foreign banks in Pakistan also depicts a dangerous situation to be faced by MCB Bank. I have also observed that political, economic instability and the war against terror has affected much the banking sector in Pakistan and MCB Bank has no exceptions. During the course of my internship, I found that there are certain areas where improvements and modifications are needed in order to perform better and give best results. Some things are listed below: 1. Training can be provided with job rotations so each of the employees is capable of doing others work in case of emergency, this will ensure no delays are met. 2. Workers need more computer training. 3. MCB need to invest more in technology and bring all banking procedures up-to-date. 4. They should implement advance technology and make it one window shopping or one window service where each teller is capable of handling every transaction for example payments, deposits, transfers, bill payments, foreign exchange, ATM card issue and opening of new account. This will make MCB more proficient in customer service. 5. ATM network needs to be updated more to handle transfers, deposits, bill payments and print statements. This will free up a lot staff time. Another critical issue which I have observed is that to make internship program more productive the period of internship should be divided into the number of departments of the MCB. The internee should be given timetable mentioning the number of days he has to work at different places in the bank. On the 1st 2 days in each department internee should be given a lecture by the

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officer of the department concerned about working of the department.

2011

Moreover I have observed that in the name of lunch break a lot of productive time is wasted by the staff in unproductive relaxations, breaks are extended voluntarily and fruitless discussion are made. Rather this time should be productively used because this time, the rush of customers is much less and they can perform the work better without interruption. This tendency of being late must be eliminated which reflect adversely on the image of the institution. Some workers have to work hard and have to work in late hours without any extra reward as there is no proper task allocation. So I evaluated that certain steps should be taken to allocate the work properly or to make employees work with more courage. It is human nature one goes behind reward and incentives and tries to avoid punishment. Likewise in commercial institution including banks, this system must be introduced with full force means that active, smart, educated, skilled, self-spoken and well versed staff personnel, should be rewarded and appreciated, while on the other hand lazy, lethargic, rough dealers and ill-mannered must be warned and punished. And recruitment and selection should be done on the bases of merit and statement “honesty is the best policy” and not due to some personal liking, disliking, and prejudice. It is therefore suggested that certain schemes and checks may be introduced in banks to increase efficiency through reward and punishment system. When I conducted financial analysis of the bank by calculating different liquidity ratios, long term solvency ratios, profitability ratios and some special banking ratios, following results are found. When I calculated Current ratio I concluded that this ratio for MCB Bank is not good and shows a disturbing situation although there is an overall increase in this ratio from year 2006 to 2010 because the current portion of assets is representing more increase than current portion of liabilities but its assets are still not sufficient enough to pay its liabilities. Quick ratio which also measures the liquidity of firm is also not good in case of MCB Bank indicating that the bank‟s liquidity is very less. Although an increasing trend is seen but the liquidity state of bank is at dangerous level. This ratio should be higher than 1, representing a good liquidity position of any organization.

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Networking capital also measures the solvency of the firm. In case of MCB Bank, negative values of Networking Capital for 5 years are seen which show that bank is not performing well and current assets are not able to pay current liabilities. I concluded that the cash and other liquid reserves of MCB are not in adequate amount and do not fulfill the liquid requirements of the bank. Debt ratio as it measures the proportion of debt which finances assets of the organization, in case of MCB Bank I came to know that it is showing a decreasing trend although the value is still very high i.e. 85.6% in year 2010 show that most of banks assets are financed by the debts taken from the customers. Times Interest Earned ratio measures the firm‟s ability to make interest payment. Increase in this ratio shows a good situation of the firm. In case of MCB Bank, there is decrease in this ratio which shows that bank is not having enough capacity to make interest payments. EPS is the amount of Money earned during specific time, on each outstanding common share. There should be an increase in EPS with time. When I measured this ratio, I found that for MCB Bank it is showing a positive trend as there is an overall increase in it in year 2010 however it is lowered down in 2008 and 2009 as compared to 2007. ROA also called ROI is the measure of generated profits from available assets. This ratio should also show an increase however in case of MCB Bank there is an overall decrease from 2006 to 2010 except year 2007 where it is increased. This ratio indicates an alarming situation for MCB Bank. ROE is the measure of the return earned on the common stock holders‟ investment in the firm. Increase in ROE shows the strength of the firm. After calculating I found that ROE for MCB is showing a continuous decrease from year 2006 to 2010 indicating an unhealthy situation for the bank. Market capitalization measures the size of a firm. This ratio for MCB Bank is showing a varying trend for past five years. It is decreased in year 2008 then a gradual increase is seen in year 2009 and 2010 which represents the good market share position for company. Dividend yield ratio measures the relationship between dividend per share and market price per share and is calculated for common stock holders. The ratio should be low for capital gain focused

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investors while high for profit oriented investors. Relating to MCB Bank, this ratio is showing a varying trend. For given time period, ratio is again increased for 2010. However ratio is greater in year 2008. Dividend payout ratio calculates the relationship between dividend per share and EPS. This ratio should show an increase. For MCB Bank the ratio is showing a continuous increase from year 2006 to 2010 except year 2008 where it is decreased then again showing an increasing trend in coming years indicating a good position of Bank Earning assets to total assets ratio shows how well bank‟s management puts bank‟s assets to work. Increase in this ratio represents the strength and good performance of banks. After calculating I conclude that although the ratio is increased after 2007 for MCB Bank, but in year 2010 it is reduced to a little fraction from 87.23% in 2009 to 87.15% in 2010 representing that assets are not performing well. Return on earning assets ratio also measures the profitability of bank. For MCB Bank this ratio is showing an overall decreasing trend from year 2006 to 2010 except year 2007 where it is bit increased. This overall trend is indicating an alarming situation for the bank. Interest Margin to average earning assets is a key ratio that measures the bank‟s profitability. In case of MCB Bank, it is clear that MCB profitability is showing a varying trend. Value is greater in year 2009 and has fallen again in year 2010, representing the unsafe situation. Average Equity to total assets ratio measures the extent of equity ownership in the bank and minimizes the risk of using debt and leverage. For MCB Bank, an increasing trend is represented, indicating an excellent performance of the bank. Magnitude of risk is decreased that mainly comes up because of using debt. Deposits times capital ratio is concerned with both depositors and stockholders. More capital implies a greater margin of safety, while a larger deposit base gives a prospect of higher return to shareholders, since more money is available for investment purpose. For MCB Bank, there is a decreasing trend in this ratio indicating that the deposits are lesser in coming years and there are now less investment opportunities in MCB, less protection to stockholders is seen. Lesser deposits base provides lesser investment return opportunities for the bank.

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Loans to deposit ratio is the measure of position of bank with regard to risk taking ability. An increase in this ratio indicates the increased level of risk with regard to debt and decreased liquidity. Results for MCB Bank represent that there is a slight decrease in this ratio. Higher values in past year i.e. 77.76% in year 2006 depict that bank is not enough liquid to cover any unforeseen fund requirements. A gradual decrease in this ratio is showing that bank is now generating liquidity. Its value is 63.55% in year 2010. Gross Advances represents the total amount of loans given by the Bank including non-performing loans as well. Gross Advances to Deposits Ratio represents how much amount Bank can lend by the amount it holds in deposits. Banks are required to maintain certain level of deposits to fulfill contingent fund requirement by the depositors. Increase in this ratio represents that bank has lent more money neglecting the amount it has to keep with it to fulfill fund requirements. In case of MCB Bank, this ratio is representing a decreasing trend which shows that it is having certain deposit reserves to fulfill fund requirements. Its value is 63.55% in year 2010 whereas in year 2006 its value was 80.34%. As an ending note of conclusion I would like to say it is evident that MCB Bank Limited is building progress by leaps and bounds and making its way right to the hearts of people by offering what they actually need, at the very right time. The profits of MCB are rising each year and I expect that this trend will continue in the future and MCB will be more successful. I conclude that MCB has a prosperous present and more successful future is lying ahead for it. It assures the safest pattern of investment and returns for shareholders and is acting exactly as to the part its mission statement that “our shareholders can invest with confidence in us”. Moreover if MCB acts upon the suggested things on a serious note it would be even more towards the road of success, development and prosperity. Moving ahead, bank will be able to compete with competitors, survive in industry in much better ways and will be able to get globalized. I also concluded that MCB has created a challenging environment that encourages creativity and commitment. It is focusing on attracting, developing and retaining the best talent in the marketplace. Its dynamic culture offers diverse growth opportunities across Pakistan. MCB fosters a work environment where employees can realize their potential. MCB with its professional management is in the process of turning around the bank. Its products and services

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such as debit card, credit card, online banking and phone banking has resulted a strong potential for turn around and value creation. I would to like to my end conclusion with a very strong point that understanding and the effective management of the human resources is the most difficult challenge faced not only by the bank but by all the organizations. Even though the people have been sacrificed in the new organizational developments, it is becoming clear that the true lasting competitive advantage comes through human resources and how they are managed. MCB seems not to as much focusing on this highly critical issue as it should be as the job satisfaction level of the employees working at MCB is not so high, although it is improved but still it needs to be higher. Moreover their workload should also be decreased to make tem more productive in true means.

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15. REFERENCES
www.mcb.com.pk http://en.wikipedia.org/wiki/MCB_Bank_Limited MCB Annual Reports: Year 2010, 2009, 2008, 2007

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