Upload
ali-raza-sahni
View
3.685
Download
22
Embed Size (px)
Citation preview
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 1
The Internship Report on
MCB Bank Ltd.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 2
PREFACE
Internship is an integral part of B.Com (HONS) program. For the sake of internship the
most initial thing is to have a practical experience. This effort may get as a student to get a
practical experience if right organization is selected. During this internship, a student
comes to particle knowledge. He learns what the has so far studied. As a B.Com (HONS)
student I have also done my internship in MCB Bank Ltd. Sargodha. Here I come to know
a different and very interesting experience of learning and working with people. First of all
I will tell you about Bank then I will tell operations of different departments.
This internship report is specially meant for the students of B.Com (HONS). It is concerned
to a brief study of operation, functions, tasks and services of the MCB Bank Ltd. Banking
play very important role in the commerce and economic development of any country. Now-
a-days banks are using different modern technologies which influence the managerial
activities that are why I decided to do my internship training in the bank.
In preparation of this report I have tried my best to provide all possible information about
the operation, functions, task and the corporate information of the MCB Bank Ltd. in brief
and comprehensive way. This internship ends with some recommendations after
identification of problems that I observed during the course of my internship training.
Ali Raza Sahni
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 3
Dedication
My report is dedicated to my parents, teachers and my cute friends who are
always with me in Every Hardships of life and has waited for me to be here
at Final stage.
May! Allah Give them Long Life (AMEEN)
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 4
Acknowledgement
Most grateful to Almighty Allah who enabled me to utilized my knowledge and skills for
the preparation and completion of this internship report. I want to express my most humble
gratitude to my supervisor and all other teachers and class fellows who furnished me with
the opportunity to complete report I m also thankful to the manager Mr. Rashid Iqbal of
MCB, Girls College Road Branch, Sargodha. I am also grateful to my colleagues and
friends who provided with the moral support during the completion of this report.
Ali Raza Sahni
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 5
EXECUTIVE SUMMARY
The banking structure in Pakistan comprises of the following types, State Bank of Pakistan,
Commercial Bank of Pakistan; Exchange Banks, Saving banks, Cooperative banks,
specialized credit institutions. The state bank of Pakistan is the Central bank of the country
and was established on July 01, 1948. The network of bank branches now covers a very
large segment of national economy. The State Bank of Pakistan issues the shares of these
periodically. Bank employees and other common people can also purchase these shares
and earn profit. In 1956, MCB transferred its registered office to Karachi, where the Head
Office is presently located. In April 1991, MCB became Pakistan‟s first privatized bank.
The corporate branch at Shahrah-e-Faisal Karachi (SFK) branch is the corporate branch of
MCB in Karachi. The bank is using SWIFT for transfer of information about imports and
exports.
MCB SFK branch has Currently Following three Departments General Banking
Department, Advances Department & Foreign Exchange Department. To open an account
the customer has to meet the general banking manager with an introducer. The procedure
begins with the punching of account opening form to the customer file i.e. customer‟s
master file. Before closing any account, bank send letter to the account hold for informing
him that his account is going to be closed. There is need an approval form higher authority
to close any account. Current deposits are those which are payable to bank whenever
demanded by the customer.
Bank does not pay any profit on current deposits. The following are the financial
products/services of MCB Malay Mail Scheme, PLS Account, Saving 365 Account,
Capital growth certificate scheme, Fund Management Scheme, Khushali Bachat Account,
Term/ Fixed Deposits and others like night banking, credit cards, traveler cheques. In
remittance department like any other bank MCB also have instruments for transferring of
money, Telegraphic Transfer, Mail Transfer.
In cash department both deposits and withdrawals go side by side. This department works
under the accounts department and deals with cash deposits and payments. This department
maintains the following sheets, books, and ledger of account cash received voucher sheet.
Cash paid voucher sheet, Paying- in-slip, Cheque Book, Cash balance book. The clearing in
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 6
Karachi at MCB or other banks is being done through NIFT (National Institute of
Facilitation Technology). Bank provides this facility to the people who need advance
money to meet their requirement.
Party dealing with other banks financial condition of borrower business and as a first step
credit proposal is being made. MCB provides advances, which are of two types. Secured
Advances, Unsecured Advances. MCB usually classified advances in to following types
Agricultural Advances, Commercial Advances Industrial Advances. Commercial Advances
are of following types Demand Finance, Cash Finance, Foreign bills purchased, Finance
against imported goods, Finance against foreign bills, Export Refinance Part I (Pre
Shipment) & others. Banks Agriculture division deals with the agriculture advances. Bank
provides the Agriculture Advances in order to enhance and support the agriculture sector of
the country. Farm Credit & Non Farm Credit. In foreign exchange, MCB is dealing Foreign
Currency Accounts, Foreign Remittances, and Foreign Bills for Collection, Imports &
Exports Foreign currency accounts & the foreign currency department deals with the
following types of accounts, Dollar Khushali account, Current account, Saving bank
account, Term deposit, Prime Currency Scheme. Foreign accounts are convertible on
floating rate available to the bank. Letter Of Credit facility is being provided by MCB in
foreign exchange.
HISTORY OF THE MCB BANK LIMITED
Before separation of Indo Pak, the need for more Muslim banks was felt. And Muslims
having strong financial capacity were thinking to invest in this sector as well. This was the
idea which paved the way for setting up MCB Bank Ltd known as MCB. This was the third
Muslim bank in the subcontinent.
This bank was incorporated under companies‟ act 1913 on 9th July, 1947 (just before
partition) at Calcutta. But due to changing scenario of the region, the certificate of
incorporation was issued on 17th August, 1948 with a delay of almost 1 year; the certificate
was issued at Chittagong. The first Head office of the company was established at Dacca
and Mr. G.M. Adamjee was appointed its first chairman. It was incorporated with an
authorized capital of Rs. 15 million.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 7
After some time the registered office of the company was shifted to Karachi on August
23rd, 1956 through a special resolution, now recently the Head office of MCB has been
transferred to Islamabad in July, 1999 and now Head office is termed as Principle Office.
This institute was nationalized with other on January 1st, 1974. At that time it had 506
branches and deposits amounting to Rs. 1,640 million. Although. MCB has a reputation of
a conservative bank but nationalization also left its effects on this institute as well and by
end of year 1991 in which it was privatized the total number of branches were 1.287 and
deposits amounting to as high as Rs. 35,029 million
Privatization
When privatization policy was announced in 1990, MCB was the first to be privatized upon
recommendations of World Bank and IMF. The reason for this choice was the better
profitability condition of the organization and less risky credit portfolio which made'' it a
good choice for investors. On April 8th, 1991, the management control was handed over to
National Group (the highest bidders). Initially only 26% of shares were sold to private
sector at Rs. 56 per share.
After Privatization
Ten years after privatization, MCB is now in a consolidation stage designed to lock in the
gains made in recent years and prepare the groundwork for future growth. The bank has
restructured its asset portfolio and rationalized the cost structure in order to remain a low
cost producer.
After privatization, the growth in every department of the bank has been observed.
Following are some key developments:
Launching of different deposit schemes to increase saving level.
Increased participation on foreign trade.
Betterment of branches and staff service level.
Introduction of Rupee Traveler Cheques & Photo Credit Card for the first time in
Pakistan.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 8
MCB Bank – Today
MCB today, represents a bank that has grown with time, experience and Pakistan. A major
financial institution, in scope and size, it symbolizes a fully growing tree evergreen, strong,
and firmly rooted.
Foreign Trade
The bank conducted import business during the year amounting to RS. 54.0 billion as
compare to RS. 56.4 Billion In 2005. The export business slightly improves to RS. 36.9
Billion From RS. 35.1 Billion. In 2006. Home remittances decline to RS. 16.7 Billion From
30.7 Billion the decline in home remittances business was due to freezing of Foreign
Currency Accounts, which has affected the confidence of Pakistanis working overseas.
COMPALINCE YEAR 2006
MCB‟s strength lies in providing a technological base at the gross root level of the society
with a challenge to educate and assimilate such systems across vast cultural and economic
backgrounds. With over 768 automated branches, 263 online branches, over 151 MCB
ATMs in 27 cities nationwide and a network of over 16 banks on the MNET ATM switch,
MCB continuously innovates new products and services that harness technology for the
customer‟s benefits.
SOCIAL SECTOR
The bank activity participating in the Prime Minister self-employment Scheme. The
application received from various applicants is being processed on merit and disposed off
as quickly as possible.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 9
THE BUSINESS
MCB is in it‟s over 50 years of operation. It has a network of over 1,000 branches all over
the country with business establishments in Sri Lanka and Bahrain. The branch break-up
province wise is Punjab (57%), Sindh (21%), NWFP (19%) and Blochistan (3%)
respectively.
MCB has an edge over other local banks, as it was the first privatized bank. The State Bank
of Pakistan has restricted the number of branches that can be opened by foreign banks, an
advantage that MCB capitalizes because of its extensive branch network.
Fourteen years after privatization, MCB is now in a consolidation stage designed to lock in
the gains made in recent years and prepare the groundwork for future growth. The bank has
restructured its asset portfolio and rationalized the cost structure in order to remain a low
cost producer.
MCB now focuses on three core businesses namely Corporate, Commercial and Consumer
Banking. Corporate clientele includes public sector companies as well as large local and
multi national concerns. MCB is also catering to the growing middle class by
Providing new asset and liability products. The Bank provides 24 hour banking
convenience with the largest ATM network in Pakistan covering 27 cities with over 151
ATM locations. The Bank‟s Rupee Traveller Cheques have been market leaders for the
past six years and have recently launched their Gift Cheque Scheme.
MCB looks with confidence at year 2007 and beyond, making strides towards fulfillment
of its mission, "to become the preferred provider of quality financial services in the country
with profitability and responsibility and to be the best place to work".
A major achievement of MCB is that the state bank of Pakistan has issued a license to
MCB to start Islamic banking. Now MCB is setting up a 1 st Islamic banking branch at 1st
floor shaheen complex, Karachi. This complex starts working from September 1, 2003.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 10
Vision Statement
CHALLENGING AND CHANGING THE WAY YOU BANK
Mission Statement
To become the preferred provider of quality financial services in our country
with the profitability and responsibility and to be best place to work
Our Core Values
CUSTOMER FOCUS
We treat each of our customer equality & as the most important person while we interact
with him/her. We must ensure that we do everything to meet and exceed the customers
expectations with perfect to times, accuracy & quality services.
EMPLOYEE RESPECT & DIGNITY
We treat each of our employees with fairness, which includes giving constructive feedback
for their development. We celebrate diversity and seek suggestions from all employees for
improvement. We ensure that responsibility & fairness in all our decision-making.
TEAM BASED APPROACH
We work towards achievement of our vision & mission as a combines group. We
encourage inter & intra-departmental communications. We treat our colleagues as our
internal customers & ensure that the requirements of internal customer focus are always
met.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 11
QUEST FOR QUALITY
We ensure that each moment of our time is spent on value adding activity. We always seek
ways for exceeding expectations of customers & colleagues. We also ensure that we do
things right, first time every time.
GOOD CORPORATE CITIZENSHIP
We ensure that we contribute our due share to the Govt. we realize that we have a
responsibility to the society in which we operate & we seek ways of playing a positive role
for the betterment of the community at large.
Board of Directors
Mian Mohammad Mansha Chairman
S.M. Muneer Vice Chairman
Mohammad Aftab Manzoor President & Chief Executive
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 12
Tariq Rafi Director
Sheikh Mukhtar Ahmed Director
Mohammad Arshad Director
Shahzad Saleem Director
Mian Umer Mansha Director
Sarmad Amin Director
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 13
Audit Committee
Mian Mohammad Mansha Chairman
Shaikh Mukhtar Ahmed Member
Shahzad Saleem Member
Chief Financial Officer
Ali Amin
Company Secretary
Tameez-ul-haque
Auditor
A.F.Ferguson & co
Chartered accountants
M. Yousuf Adil Saleem & co
Chartered accountants
Legal Advisor
Chartered accountants Mandviwalla & Zafar
Advocates & legal consultants
Shariah Advisor
Dr. Muhammad Zubair Usmani
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 14
ORGANIZATIONAL HIERARCHY OF MCB
PRESIDENT
EXECUTIVE VICE
PRESIDENT
SENIOR EXECUTIVE
VICE PRESIDENT
SENIOR VICE
PRESIDENT
OFFICERS GRADE
I II III
VICE PRESIDENT
ASSISTANT VICE
PRESIDENT
CASHIER
ASSISTANTS
PEONS
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 15
MANAGEMENT LEVEL
The organization chart within a department and in different offices is as follows:
Divisional Heads ………..…………………… Head Office
Regional Head (EVP) ………..…………………… Regional Office
Zonal Head (VP) ………..…………………… Zonal Office
Branch Manager ………..…………………… Branch
(VP, AVP, GRADE 1, 2, 3)
ORGANIZATIONAL SETUP OF MCB
PUNJAB
NWFP & AZAD
KASHMIR
SINDH
BALOCHISTAN
KARACHI
LAHORE
PESHAWAR
PROVINCIAL HEAD
QUARTERS
QUETTA
HEAD QUARTER
CIRCLE OFFICES
BRANCH OFFICES
KARACHI
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 16
ORGANIZATIONAL STRUCTURE OF MCB
As MCB is a banking company listed in stock exchange therefore it follows all the
legalities which are imposed by concerned statutes Mr. Muhammad Mansha is chairman
& chief executive of the company with a team of 10 directors and 1 vice chairman to help
in the business control and strategy making for the company.
Operational Management of the bank is being handled by a team of 10 professionals. This
team is also headed by Mr. Muhammad Mansha. The different operational departments are
Consumer Banking & IT div; Financial & Inter branch div; Banking operations div; HR &
Legal div; financial control & Audit div; Credit management div; Commercial Banking
div; Corporate Banking div; Treasury management & FX Group and lastly Special Assets
Management (SAM) Group.
For effective handling of branches, it has been categorized into three segments with
different people handling each category. These categories are:
Corporate Banking
Commercial Banking
Consumer Banking
Corporate Banking
These are branches which have an exposure of over Rs. 100 million. Usually includes
multinational & public sector companies.
Commercial Banking
The branches which has a credit exposure of less than Rs. 100 million but having a credit
portfolio of more than Rs. 20 million (excluding staff loans). Usually branches in large
markets and commercial areas come under this category.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 17
Consumer Banking
These are the branches which have exposure up to Rs. 20 million and these include all the
branches which are neither corporate nor commercial branches.
Recently the organizational structure was re-designed as follows:
Province wise branches
MARKETING MIX OF MCB BANK LIMITED
Marketing is the task of creating, promoting and delivering goods and services to
consumers and businesses. Organizations identify and profile distinct group of buyers who
might prefer or require varying products and marketing mixes. The customer seeks for
value and satisfaction. The organizations can increase the value of the customer offering in
several ways e.g. raising benefits, reducing costs etc. marketing mix is a set of marketing
tools that the firm uses to pursue its marketing objectives in the target market. These
marketing tools are known as 4 p‟s of marketing.
To identify the customer needs and fulfilling hem is the basic objective of an organization.
Marketing is not just satisfying your customers, you have to delight them and this can be
done by acting upon this phrase.
“Under Promise and Over Deliver”
MCB Bank provides a winning combination of products and services to its prime
customers. It is one of the country‟s leading commercial banks, which ensures complete
security, and reliability in all- financial transactions.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 18
PRODUCT MIX & PRICES OF MCB BANK
MCB Rupee Traveler Cheque
MCB Rupee Travelers Cheques are as good as cash, infact better.
Better because with Rupee Travelers Cheques you have the power
to purchase and a feeling of security that should you lose them, you
will get a refund.
MCB Rupee Travelers Cheques are accepted at major shops, travel agents, hotels, business
establishments and MCB branches all over Pakistan. You don't have to be an MCB account
holder to buy the Rupee Traveler Cheques. Anybody can purchase them. It's a safe and
convenient way to conduct everyday business. At a time when thefts and robberies are on
the increase, you are better off carrying Travelers Cheques rather than money.
Mahnama Khushali Scheme
A 5- year fixed Deposit Scheme, targeted to persons with small savings who would desire a
regular monthly return on their investment.
Salient Features
Minimum amount of investment shall be Rs.0.010m and the maximum amount of
investment would be Rs. 1.000m.
Khushali Certificates can be purchased by individuals (singly or jointly) or by the
Proprietorship/Partnership concerns or Companies, etc. in their name
The Khushali Certificate will be of five years maturity.
The interim rate of profit offered will be minimum 1% per month. If the profit
declared by the bank is higher, additional profit will be paid.
Zakat will be deducted wherever applicable on yearly basis whether you will be
receiving your profit or encashing your certificates.6
As per Government Directions, tax on the profit / return is to be deducted by MCB
branches at the time of payment.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 19
MCB Khushali Bachat Account
Salient Features
8% rate of return per annum.
Returns calculated on daily.
Average balance and paid half yearly.
Introduced first time in Pakistan.
The facility of helping account holders pays utility bills (electricity, telephone and
gas) through their account. No queues. No delays.
Prime Currency Account Scheme
Launched to attract deposits in foreign
currencies. US Dollars, Pound Sterling,
Euro and Japanese Yen.
Salient Features
Owing foreign currency account
under the Prime Currency Scheme allows you to earn attractive rates of interest in
foreign currency.
You have a choice between opening this account in your personal name and
opening it under joint names.
Whether you are a resident or a non-resident Pakistan, MCB Prime Currency
Scheme invites all to operate a foreign currency account.
Foreign nationals and foreign companies can also open a foreign currency account
under the Prime Currency Scheme.
Your foreign currency account can be opened in four global currencies: The United
States Dollar, the Pound Sterling, the Japanese Yen and the Euro.
Travellers Cheques and Foreign Currency Notes can also be issued to holders of
persona! and Joint accounts.
Rupee Loan facility will also available against this account.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 20
You can draw any amount of foreign exchange from your foreign currency account
and transfer or remit the amount freely to any part of the world without any
restrictions.
The restrictions imposed by the State of Pakistan for the opening of foreign
currency accounts in case of passport; Work-permit and resident Visa have been
withdrawn. Your account will be restriction free.
The Prime Currency Scheme is exempt from al! forms of taxes including Income
Tax, Wealth Tax and Zakat deductions.
MCB Prime Currency Scheme is a world in itself.
Hajj Mubarak Scheme
A saving scheme, of 2/3 years duration, for the convenience of persons, with a limited
income, who desire to perform Hajj, was introduced. Under the 2 years scheme, a monthly
deposit of Rs.1800 is required, whereas under the 3 years scheme, the required monthly
deposit is only Rs.1200
Capital Growth Certificate Scheme
For long term depositors under which the amount deposited almost doubles at the end of 5
years. For the scheme, the minimum amount of deposits is Rs. 10000 while there is no
maximum limit. In case of premature encashment of the certificate, the depositor will profit
at the same rates as that of PL Saving Account.
Fund Management Scheme
This scheme is offered to corporate and customers and is aimed at providing better rate of
return up to 15% per annum. One of the objectives of the scheme is to develop secondary
market for Government Securities.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 21
Consultancy Services
In the process of privatization of public sector units, prospective buyers need professional
assistance and MCB, with its expertise, offers to them specialized service for valuation of
the market value of the industrial unit,
preparing bid documents and arranging
finance for the purchase of the unit.
Self Supporting Scheme
For the benefits of genuine worker/borrowers
who are poor and needy and for small entrepreneur the bank as evolved a self supporting
scheme: maximum amount of loan Rs.25000 and minimum Rs.5000 per individual. Loan
will be totally free of mark-up. Fax Press
This product was first of its kind introduced by using modem technology of The Fax
Machine. It facilitates speedy transfer of funds within Pakistan. The service guarantees
transfer of from one city to another, within an hour.
Night Banking Service
For the convenience of the account holder, service has, especially, been introduced at busy
commercial centers. Traders and other clients can now make deposit, with case, at such
centers up to 8.00PM.
Utility Bill Collection
With the aim of extending this service to wider range of customers, the number of MCB
branches collecting Utility Bills more than 900.
MCB Mobile Banking
At the forefront of technological excellence, MCB proudly introduces MCB MOBILE
BANKING. The convenience of accessing account balance information and mini
statements whenever want or wherever may need them, with comfort and peace of mind.
MCB Mobile Banking service is available to all MCB ATM cardholders, 24 hours - 365
days.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 22
MOBILE BANKING AT A GLANCE
MCB Mobile Banking gives easy and quick access to account(s) at a time find convenient,
including all holidays.
WITH MCB MOBILE BANKING
Check balance
View the last 4 transactions of your MCB account(s).
A FREE SERVICE
MCB Mobile Banking is a free service for MCB account holders who have an ATM card
of an SMS message if charged by the service provider.
BANKING AT FINGERTIPS
Dial in anytime to get information regarding balance and mini statements.
MCB Islamic Banking Services
Islamic banking services through exclusive units/branches offering a range of liability and
asset based Sharia compliant products like Musharika, Murabaha, Ijara and Istasana.
MCB Car Cash
Car financing and leasing at competitive rates with flexible options Car cash finances both
semi-commercial and non-commercial vehicles for personal and business use.
MCB Locker
The best protection for your valuables. Lockers of different capacities are available
nationwide.
MCB Master Card
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 23
THE FUTURE OF MONEY
Since the beginning of time, people have tried to find more convenient ways to pay, from
gold to paper money and checks. Today, money is moving away from distinct hard
currencies and towards universal payment products that transcend national borders, time
zones, and, with the Internet, even physical space.
Plastic or "virtual" money, credit, debit, and electronic cash products, inevitably will
displace cash and checks as the money of the future.
MasterCard International has expanded globally in more locations in the world than any
other card. The card was introduced by MCB Bank Limited in 1995 and now offers card
members over 15 million outlets in 232 countries.
Photo security- The first bank in Pakistan to introduce the enhanced feature of
photograph on the card limiting fraud in case of card loss.
Welcomed at over 3, 000 outlets in Pakistan.
Provides up-to 45 days Free Credit.
Joining and Annual Fees to suit you.
24 Hour Customer Services- Call 111-700-700 and you can get information from
our customer services representatives on new card application or have your queries
resolved anytime of the day.
Cash Advance Facilities
Available in Pakistan and worldwide with a network of over 1,000 branches and a team of
dedicated professionals, MCB is Pakistan‟s largest private sector commercial bank.
Our Consumer Banking provides customers with innovative saving schemes, products and
services. Our ATM network is the largest in Pakistan and our Pak Rupee Tra velers
Cheques are market leaders. We were the first to introduce the photo card with the
introduction of the MasterCard.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 24
Our Corporate Banking ensures assistance from a dedicated team of professional financial
advisors for underwriting, project finance or corporate advisory services.
When it comes to banking practices, you can depend on us. We‟ve been around for over
fifty years.
MCB Smart Card
MCB now brings you MCB SmartCard -a secure
and convenient instrument of payment with
unmatched functionalities. It provides 24-hour direct
access to your bank account
The convenience and flexibility of MCB SmartCard will help live a smarter life. It not
only helps you manage your expenses, but also avoids undue interest on your day to day
credit card transactions.
Your balance is always within your reach and you spend accordingly.
MCB is the only bank to introduce a debit card that gives the option to choose from
domestic and international card for local and global usage respectively
Remit Express
Fastest to Pakistan - Anywhere in Pakistan.
The fastest way of getting your money across to
Pakistan. Remit Express offers low cost remittance
from U.A.E. and Saudi Arabia. Your relatives,
friends or business associates receive drafts within
72 hours.MCB Remit Express has been specifically designed to meet the needs of the
expatriate Pakistani community residing in the Gulf countries.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 25
Easy Personal Loan
Helping You Do More
MCB Easy Personal Loan provides you with the financial advantage to do things you've
always wanted to but never had the sufficient funds for. Take that much-needed holiday.
Buy a car. Refurnish your house. Purchase a new TV. Finance a better education for your
children.
Salient Features
MCB will lend you any amount, from Rs 30,000 to Rs 490,000, depending upon
your net monthly income
You can choose tenure of 1 to 3 years for the repayment of the loan
Bank to Bank Balance transfer
Credit Card balance transfer
Loan Protector Shield- insurance coverage of balance loan amount in case of death
or permanent and total disability
Availability of early repayment option
Repayment Arrangements
Repayment of principal and mark-up is monthly and can repaid using either one of
the following modes:
Direct Salary Transfers
Payroll Deduction
Eligibility Criteria
Minimum net monthly income Rs 10,000
25 to 55 years of age
Pakistani national
At least 2 years of employment with current employer
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 26
Processing fee of 1% of the principal loan amount to be charged at the time of loan
disbursement.
MCB Pyara Ghar
MCB gives dream home at the lowest and best
possible mark-up rates. You can choose either one of
our two mark-up rate options- fixed or variable.
Early repayment option tailor-made to allow making partial prepayments at dates that suit.
Who Can Apply
Anyone who fulfills the following criteria is eligible to apply:
Pakistani national residing in the city and area where the product is launched.
25 years old or above when you apply and under 60 at the time of maturity of the
applied financing period.
Salaried person, self-employed professional or a businessman with a verifiable monthly
income stream.
Net take -Home income not less than Rs. 25,000 per month.
Have 5 years or more of business or professional experience.
Employed with the present employer for 2 years with a total employment history of 5
years.
Home Purchase Home Renovation Home Construction
Tenure 3 years to 15 years 2 years to 5 years 3 years to 15 years
MCB Virtual
MCB Virtual provides the continence of banking on
internet. Whether at office or home or traveling. Log on
at www.mcb.com.pk and enjoy 24 hours access of all
your accounts for the largest array of service.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 27
MCB Business Sarmaya
MCB Business Sarmaya is a running finance against your residential property. It offers
running finance up to 20 millions with low markup.
MCB Car 4 U
MCB car 4 u auto finance is a power move that gets you
not only a car of your own choice but leads you best in
life. It is affordable with competitive markup, flexible
conditioning and easy processing and above all no hidden cost.
PLACING STRATEGIES OF MCB BANK
The location of the bank plays a
vital role in making its operations
profitable. If the bank is located in
some business center then it will be
very easy for it to attract business
people as its customers. Therefore
MCB has most of its branches at
places where it can reach its targets customer easily. The branch network of MCB is given
as follows:
Punjab 632
Sindh 232
NWFP 123
Baluchistan 34
Azad Kashmir 19
Domestic 1040
Overseas 4
Total 1045
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 28
PROMOTION STRATEGIES OF MCB BANK
MCB Bank is actively participating in promotion of its products and services through
advertisement and other promotional schemes.
Initially, the bank focused on the upper class customer‟s only and offered products for a
limited class of people. But now the strategy has been changed and the bank is now
targeting the middle market also. The products offered are of diverse nature to cater the
needs of maximum number of people.
Customer Oriented Attitude
MCB Bank values its customers. Customers‟ complaints are encouraged because it gives an
opportunity to know the needs of the customer and build more confidence in them.
Most of the promotional efforts are done through
Direct marketing
Public relations
MCB bank sometimes gets suggestions and recommendations from its good customers.
Branch layout is being designed in such a way that more and more customers are attracted.
Some of the branches of MCB Bank have a very good entrance and outlook but many still
need to be improved.
My Internship experience
&
FIELDS OF ACTIVITIES
Which I observed and done
The purpose of banks is to provide some services to the general public. And for this
purpose different banks provide different services to the people in different forms. The
MCB Bank is a commercial bank, in modern time commercial banks play a very important
role and their functions are manifold. The main functions and services which MCB Bank
Limited provides to different peoples are as follows.
Open Different accounts for different people
Accepting various types of deposits
Granting loans & advances
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 29
Undertaking of agency services and also general utility functions, few of those are
as under
Collecting cheques and bill of exchange for the customers.
Transfer of money from place to place.
Acting an executor, trustee or attorney for the customers. „Providing safe custody
and facilities to keep jewellery, documents or securities.
Issuing of travelers cheques and letters of credit to give credit facilities to travel.
Accepting bills of exchange on behalf of customers.
Purchasing shares for the customers.
Undertaking foreign exchange business.
Furnishing trade information and tendering advice to customers.
For proper functioning of branches and the over all bank has been divided in different
departments. These departments handle different jobs so that division of work is there for
improvement of functions and also it is easy to control the situation. The general division in
a branch is as follows:
(i) Cash department
(ii) Deposit department
(iii)Advances & credit department
(iv) Remittance department
(v) Technology department (new addition in order to cop with the growing needs of
day to day technology requirements)
CASH DEPARTMENT
The following books are maintained in the Cash Department:
Receiving Cash Book
Paying Cash Book
Token Book
Scroll Book
Cash Balance Book
When cash is received in counter, it is entered in the Scroll Book and Receiving Cashier
Book. At the close of the day, these are balanced with each other.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 30
When the cheque or any negotiable instrument is presented at counter for payment, it is
entered in the token book and token is issued to the customer. The token clerk and the
Cashier make entries in the paying book and payment is made to payee. At the close of day,
the Token Book and Paying Cashier Book are balanced.
The consolidated figure of receipt and payment of cash is entered in the cash balance book
and drawn closing balance of cash.
Opening Balance + Receipts - Payments = Closing Balance.
This is very important department because cash is the most liquid asset and mostly frauds
are made in this department, therefore, extra care is taken in this department and nobody is
allowed to enter or leave the area freely. Mostly, cash area is grilled and its door is under
supervision of the head of that department. All the books maintained in this department are
checked by an officer.
DEPOSIT DEPARTMENT
Bank deals in money and they are merely mobilizing funds within the economy. They
borrow from one person and lend to another, the difference between the rate of borrowing
lending forms their spread or gross profit. Therefore we can rightly state that deposits are
the blood of the bank which causes the body of an institution to get to work. These deposits
are liability of the bank so from point of view of bank we can refer to them as liabilities.
The total deposits of MCB are growing since its inauguration but after privatization there is
a sharp incline in over all deposits of the bank. The increase in deposits is also a cause of
increase on total number of accounts; bank has progressed in both aspects.
TYPES OF DEPOSITS
Deposits can be segregated on two bases, one is the duration in which there funds are
expected to be with the bank and second is the cost of getting these funds. So divide
deposits in two classes according to duration of deposits i.e.
(i) Time deposits / liabilities
(ii) Demand deposits / liabilities
And on the basis of the cost to acquire these funds, a deposit can be classified as any one
of following four, High Cost Medium Cost, Low Cost No Cost.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 31
Banks has different kinds of deposit schemes in order to induce deposits. These schemes
are a mixture of the above mentioned two types of deposits with an addition of different
services & requirements such as minimum balance' requirement, mode of transaction, basis
for calculation of profit, deductions, additional benefits, eligibility for different groups.
In the similar fashion, MCB has a large variety of deposit schemes and some of them are as
follows:
CURRENT ACCOUNT
In this type of accounts the client is allowed to deposit or withdraw money as and when he
likes. He may, thus, deposits or withdraws money several times in a day if he likes. There
is also no restriction of amount to be deposited or withdrawn. However, there is
requirement of minimum balance maintenance of Rs. 1000/-. Usually this type of account
is opened by the businessmen. No profit is paid by the bank and no service charges are
deducted by the bank on current deposits account. These types of deposits are also exempt
from compulsory deduction of Zakat.
PLS ACCOUNT
This type of account is for those persons who want to make small savings'. This type of
account is opened with a minimum deposit of Rs. 1000/-. Under this scheme deposits can be
made only up to a-costing amount and withdrawals are allowed twice a week or 8 times a
month. If a big amount is required a seven days notice is required before the withdrawal.
The profit is paid on these accounts on the minimum balance during a month for the whole
of that month. Zakat & other withholding taxes are deducted as per rules of the
government.
Zakat and withholding taxes are deducted as per rules only at the time of maturity while
making payment to the customer.
Term Deposits Receipts
This is a type of term deposit in which a receipt is issued for varying tenors ranging from 1
month to 5 years or more. These are in the form of receipts and profit on these receipts is
paid biannually. These receipts are encashable after expiry of the period for which they
were issued. Different profit rates are applied to different type of TDRs.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 32
FUNCTIONS OF DEPOSIT DEPARTMENT
This was a brief review of different types of deposit schemes. The Deposit Department
handles the account opening, profit payment and accounting of all types of deposit
schemes.
Account Opening
Account opening is an agreement in which customer offers his funds and bank accepts
these funds, therefore the nature of relation between a banker and customer is of a
contractual one and all the conditions applicable to this contract act are also applicable.
Profit payment & calculation
Profit payment & calculation is done in accordance with the rules of each type of deposit
scheme-by the deposit department. The products for each deposit scheme are calculated
separately and added till the end of 6 month period. Then the sum total of these products is
multiplied with the respective profit rates which are issued by the Head Office at the end of
each half yearly closing. The profit provisions for each type of deposits are also calculated
on monthly basis by the same department in order to calculate the net profit or loss position
of the branch.
Accounting Entries
Accounting entries are also made in the respective books of account by this department.
However, in small and medium size branches, the accountant performs the book keeping
duties for all kinds of ledgers.
CLEARING DEPARTMENT
Every banker acts both as a paying as well as a collecting banker, It is however an
important function of crossed cheques. A large part of this work is carried out through the
bankers clearing house.
A clearing house is a place where representative of all banks of the city get together and
settle the receipts and payment of cheques drawn on each other. As the collecting banker
runs certain risks in receipt of their ownership the law has provided certain protections to
the banks.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 33
The Negotiable Instrument Act, 1881, lays down hat drawer or holder of a cheque or draft
may cross the instrument generally or specially. It further lies down that a crossed cheque
can only be paid to a banker, who collects it for a customer in good faith and without
negligence.
Types of Cheques
Transfer cheques: are those cheques, which are collected and paid by the same branch
of bank. Both parties have account in the same bank
Transfer delivery cheques: are those cheques, which are collected and paid by two
different branches of the same bank situated in the same city.
Clearing cheques: are those chequnes, which are drawn on the branches of some other
bank of the same city or of the same area, which is covered by a particular clearing
house.
Collection cheques: are those cheques, which are drawn on the branches of either the
same bank or of another bank, but those branches, are not in the same city or they are
not the members of clearing house.( out station cheques)
Functions of Clearing Department
To accept Transfer, Transfer delivery, clearing and collection cheques from the
customers of the branch and to arrange for their collection.
To arrange the payment of cheques drawn on the branch and given for collection to
any other branch on MCB or any other members or sub member of the local
clearing house.
To collect amount of cheques drawn on members, sub-member of local clearing
house, sent for collection by MCB Branches, not represented at the local clearing
house
Receiving and scrutinizing the cheques and other deposit instruments, and the pay-
in-slip at the counter.(verify by the way of a/c number and a/c title)
Fixing the stamps.
Scrutiny and receipt by the authorized officer.
Returning the counter file to the depositor.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 34
Certificate and confirmation by the officer in charge of the department.
Separating the cheque into transfer, transfer delivery(same bank diff branch), and
clearing cheques.
CLEARING PROCESS (FLOW CHART)
Cheque with slip taken
Cheque along with slip checked, signed &
received by officer
The same day not honored cheques are
returned to Main Branch
The day after tomorrow the banks are informed
about dishonored cheques
Provisional entries for returned cheques are
debited again in both computer & daybooks
Party is informed about returned cheques through Phone or personal contact
Cheques are mailed through TCS in case of no personal contact the same day
(If there is any availability)
Slip is asked & filled
Entries in daybooks are made
Entries checked & verified by another officer
after banking hours by officer
Cheques collected at the day end by Main
Branch’s Officials
Cheques are sent to respective banks next day
after posting in computer by Main Branch
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 35
ADVANCES DEPARTMENT
Advances are the most important source of earning for the banks. MCB is also giving full
attention towards this aspect and it is also obvious from the growing portfolio of advances
and from very low delinquency rate. The credit portfolio of this institution is in a very
much better shape than other financial institutions of Pakistan and the credit goes to the
management and the staff who are concerned about the quantity and quality as well.
Loans
Cash Credits
Overdraft
LOANS
Loans are monetary assistance by a financial institution to a business, individual etc. The
loans are granted by the bank in lump sum, so these types called fixed or demand loans.
Interest is charged on the whole amount of a fixed loan.
The borrower withdraws whole the amount of loan. This type of loan is normally granted
against security of gold documents.
In case of demand loans against gold or documents, a demand promissory note for the
amount of loan is taken from the borrower loans are granted under;
LOAN AGAINST GOLD
Under this type of loan, which is granted to the borrower the Head Cashier estimates the
value of Gold or Gold ornaments through an agent (Gold smith) and keeps a margin of 40
to 50 percent. After the opening the gold loan account a token is given to the borrower,
which is a bank receipt.
On repayment of loan, the gold or ornaments held as security for it, together with the
demand promissory note duly discharged is returned to the borrower and his receipt for the
gold ornament taken in the demand loan ledger. This receipts states that he ornaments
returned are complete and in order. Part delivery of ornaments is given against part
payment of a loan but care is taken that the ornaments still in banks possession fully covers
the balance of the loan outstanding. The interest gold loan is to be applied with quarterly.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 36
LOAN AGAINST PLEDGE OF STOCKS
In case of advancing such types of loans, the following precautions are kept in the mind:
Stock pledged must be readily saleable
Products should be readily saleable
Advance should be within the borrows means
REQUIREMENTS OF LOAN
For granting loan to any party or individual, the bank checks following particulars of the
client:
Credibility
Feasibility Report
By Credibility, bank Judges the credibility of the client by his past bank record, CBI report
etc. it is very important in making decision about giving him loan.
Feasibility report is on the running or proposed business of the client. The report enables
the bank to judge the likely return of the business.
CASH CREDIT
Such cash account is opened in the name of the customer who borrows from the bank.
Customer is granted a loan up to a certain limit, sanctioned by the head office, from which
he can draw when he requires and interest is charged on the amount actually utilized by the
customer. In order to avoid the danger of idle fund, the bank charges a certain rate of
interest, even if the customer does not withdraw any amount. The rate charged by the bank
on cash credit in 46 paisa per thousand on daily basis.
The credit is usually given against the securities of goods or merchandize as follows:
ADVANCE AGAINST PLEDGE OF STOCKS
When cash is granted against the pledge of stock or product, cash credit form is taken, from
the certain products or stock, but the actual pledge is created when the stock or finished
products are placed under the bank's lock or the document of title is duly endorsed to the
bank by the borrower.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 37
MORTGAGE OF PROPERTY
Title deeds of immovable property are accepted by the bank only as collateral security or
alternatively as unauthorized security.
REMITTANCE DEPARTMENT
Remittance department performs following functions:
Mail Transfer (MT)
Telegraphic Transfer (TT)
Demand Drafts (DD)
Pay order (PO)
MAIL TRANSFER (MT)
When a customer requests the bank to transfer his money from one branch of ba nk to
another branch of the same bank or from one city to another city to the same bank or any
other bank. Customer fills the form given by bank. If the customer has an account with that
amount as mentioned in the application form then concerned officer will undertake the
following procedure to make the mail transfer complete.
Branch Mail transfer form
Receiving Branch Register copy
Issuing branch register Copy
beneficiary advice
advice to customer
In case where the customer is not account holder of the bank then the customer will have to
deposit the amount which he wants to transfer under Mail. Then the above said procedure
will be done. Banks should be same branches can be different.
TELEGRAPHIC TRANSFER (TT)
This type of transfer is simple. After filling the application form the concerning officer
shall fill the telegraphic transfer form. Then it is sent to the required bank which on
receiving it immediately makes the payment to the customer and afterwards the voucher are
sent to that bank by ordinary mail.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 38
DEMAND DRAFT (DD)
Demand draft is just like cheques and issued when the customer wants to take cash with
him personally. The idea behind is to avoid the risk and burden of currency notes in huge
quantity. Demand draft can easily be handled whatever amount it has and the money can
easily be taken from the bank when it is presented. In fact, the bank persuades the customer
to transfer money by drafts and avoid the risk of frauds involves in MT and T.T. Draft is
only issued when the bank knows customer and bank has the confidence in him
In case of transfer of money by drafts, the customer has to fill an application form. Then
the concerned officer fills the following forms:
Customer‟s advice
Customer‟s debit form
Register copy
Cover Advice
FOREIGN DEMAND DRAFT
Foreign Demand Draft is just like demand draft. The only difference is that a bank issues
FDD to the bank of another country. It requires foreign exchange and it involves seven
forms, which are to be filled
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 39
INFORMATION ABOUT MY BRANCH
Branch Manager Rashid Iqbal
Operational Manager Qaiser Waqar
General Banking Officer Ali Shahrukh
Chief Cashier Mian Iftikhar
Cashier Malik Hassan
Billing Cashier Muhammad Ali
CSO Miss Sundas Gull
ACCOUNT OPENING DEPARTMENT
Account opening and closing is the function of accounts departments. Bank‟s customers
may be individuals (Single or Joint), firms (partnership/proprietorship), Autonomous
corporations, Limited Companies, Charitable Institutions, Associations Educational
Institutions or Local Bodies.
BASICS TO OPEN AN ACCOUNT
During the span of job in MCB, I learned and observed a lot of about the opening of an
account. Basically I think that the opening of an account is the establishment of a
contractual relationship between the banker and the customer. By opening an account at a
bank a person becomes a „customer‟ of a bank. Further I am going to express the basic
requirements and steps involved in the opening of an account.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 40
INTRODUCTION AND PRELIMINARY INVESTIGATION
Before opening an account MCB as like the other banks in Pakistan ascertain whether or
not the person who is going to open the account is a desirable customer or not. Then MCB
determine the prospective customer‟s integrity, respectability, occupation and the nature of
business by the introductory references given at the time of account opening. Negligence in
this informal preliminary investigation may result in serious consequences not only for the
banker concerned directly but also for other bankers and the general public who may be
affected indirectly.
In order to further strengthen and streamline this process, the Federal Ombudsman of
Pakistan, vide his ruling on complaint No. II/31/5186, has directed the banks to retain with
the account opening form a Photostat copy each of the National Identity Cards of the
person desiring to open an account as well as that of the introducer. As per these directions,
the concerned Branch Managers are required to obtain the original National Identity Cards
along with their Photostat copies and then return the original after attesting the authenticity
of the retained copy.
Preliminary investigation is necessary because of the following reasons:
Avoid Frauds: In this regard I learned that if a banker does not make the necessary
inquiries mentioned above he may enable dishonest persons to possess cheque books for
fraudulent purposes. If any such person happens to be an undercharged bankrupt, the
banker might be placed in an awkward position for having allowed such a person to open
and open a bank account.
Safeguard against unintended overdrafts: Sometimes due to a mistake an account may
be given an overdraft, For instance, the ledger keeper, misreading the balance of an account
honors a cheque for an amount larger than the balance. Similarly a credit entry belonging to
a customer may be made by mistake in another customer‟s account. In such situations the
excess amount withdrawn by the customer can only be realized if the customer is a
respectable person.
Inquiries about clients: Being a banker I think MCB has a business obligation to respond
to inquiries from other banks etc. about his customer‟s financial position. Though the
banker gives only a general ideal about the financial standing of his customer, it should
nevertheless have the necessary information available with him.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 41
Specimen Signature
When an account is opened with MCB customer provides to the bank a specimen of the
form of signature which would appear on all his cheques to express his authority for the
payment of cheques drawn on his banker. This specimen is taken generally on a card
specially designed for this purpose, and rule for the customers, full name, and account
number are entered on it.
If the bank has reasons to doubt the genuineness of a signature, he should either get it
confirmed for his satisfaction or return the cheque with the remark „Signature differs‟. I f
the signature of the customer is forged the banker cannot escape his liability because he has
actually acted on his customer‟s mandate.
HOW TO OPEN AN ACCOUNT (GENERAL)
Before opening an account in MCB I observed that the following points must be considered
in this regard.
Another account holder of the bank should properly introduce the new customer.
The account holder should sign the account opening form in the presence of bank
officer and the signature is duly verified.
A copy of identity Card is required by Bank.
Against submission of the Bank‟s prescribed application form, duly introduced in the
manner provided and on supplying such document, as may be required and account
may be opened. The Bank reserves to itself the right to refuse to open and account
without assigning any reason.
Each account shall be allotted a distinct number that is to be quoted in all
correspondence with the bank relation to the account.
Minimum amount for opening and continued maintenance of various types of accounts
is as follows:
Rs.
Saving 1000
Current 1000
Term Deposit 1000
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 42
The bank reserves the right to change the above mentioned minimum balance requirement
at any time without any notice.
PROCEDURE TO OPEN AN ACCOUNT
According to my practice in MCB, when a customer wants to open an account, the bank
officer gives him an application form. All information, which is necessary to be known by
the bank, are requirements of the application form. Form also requires the essential
documents to be attached by the customer.
Basically following information is required to open an account with MCB.
Title of Account
Full Name of Applicant
Occupation
Address
Telephone No.
Currency of account
Nature of Business
Introducer‟s Name, Address & Signatures
Special instruction regarding the account
Initial Amount of the Deposit
Signature of the applicant
DOCUMENTS TO BE ATTACHED
Further I learned that if you wanted to open an account with MCB then you should attach
the following documents with your application form which are different for different
categories.
SOLE PROPRIETOR’S ACCOUNT
In order to open an account with MCB Sole Proprietors have to submit their business
registration certificate number.
PRIVATE / JOINT ACCOUTS
For individual or private or joint accounts National Identity Card is required.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 43
JOINT STOCK COMPANY
Before an account of a Public Limited Company is opened MCB must ask the person
authorized to do so to submit the certified copies or the following documents
Certified true copy of the Memorandum and Articles of Associat ion of the
company.
Certified true copy of the resolution of the board of directors / managing committee
/ governing body regarding conduct of the account.
Certified list containing names and signatures of the directors / office bearers.
Certified true copy of the certificate of incorporation or registration.
Certified true copy of the certificate of commencement of business (in case of
public limited companies).
Balance Sheet
I.D. Card copy of each director
Original is also enclosed for inspection and return
List of persons authorized to operate the account.
Power of Attorney in favor of the person opening account.
PARTNERSHIP FIRM ACCOUNT
Information which is required to be submitted to MCB by a partnership firm in this case is
as follows:
Full Names
Address
Specimen of signatures of the partners
Certified true copy of partnership deed
Registration No. if the Partnership is registered
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 44
SOCIETIES / CLUBS AND ASSOCIATIONS ACCOUNT
MCB is authorized to open the accounts of the societies/clubs and associatio ns, These are
non-trading organizations, formed for the promotion of culture, science, education,
recreational activities and charitable purposes etc. some of these institution are registered
under the Societies Registration Act, 1866, and are issued a certificate of registration after
they have been found fit for registration.
ISSUANCE OF CHEQUE BOOK
When a customer opens an account with the bank, he is provided with cheque book for
withdrawals from account. However, the first cheque book is given to the customer only
when all the required documents are checked. A cheque book contains ten, twenty five,
fifty or hundred leaves. The cheque book also carries a requisition slip for the issuance of
the new cheque book. This slip is duly filled and singed by the customer. The signature of
the customer is verified by the bank and new cheque book is issued to the customer and
serial numbers of the cheque are duly entered in the book of the bank. Along with the
signature, person should also write his full name & address.
Usually only one cheque book is issued at a time, however big concerns who need a
number of cheque books at a time, may ask the bank to stock as number of cheque books in
their name and to point their name on these cheque books.
Bank debits the client‟s account for excise duty of Rs.2.50/- per cheque and keeps the
cheque book ready for the customer, as on his advice.
The officer keeps and maintains the cheque book register Cheque book inventory and
cheque books issued are recorded in this register. The account number for which the
cheque book is issued and the number of leaves are also recorded in this register when the
cheque book issued an entry is passed in the cheque book issue register.
In case of loss of cheque book or requisition slip on cheque book the customer has to fill
the Form No. 216-B to obtain a new cheque book. It is issued by operations manager.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 45
FINANCIAL
ANALYSIS "Financial statement analysis is the process of identifying of financial strengths and
weaknesses of the firm by properly establishing relationship between the items of the
balance sheet and the profit &loss account," and it is done through ratio analysis.
RATIO ANALYSIS
Ratio means “one number expressed in term of another a ratio is statistical yardstick by
mean of which relationship between two or various figures can be compared or measured.
Here we are going to explain the ratio analysis of MCB.
Financial ratios can be divided into the following six parts.
Liquidity ratios
Activity ratios
Leverage ratios
Profitability ratios
Investor ratios
Bank special ratios
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 46
A. Liquidity ratios
Current ratios
Quick ratios
Absolute Liquid ratio
B. Activity ratios
Inventory turnover ratio
Average collection period
Average payment period
Total assets turnover ratio
C. Leverage ratios
Proprietary ratio
Debt ratio
Debt to Equity ratio
Debt to Tangible net worth ratio
Debt to Funds ratio
External-Internal Equity ratio
D. Profitability ratio
Return on total assets
Return on-equity
Return on investment
Return on fixed assets
Average profit per branch
Net profit Margin
Interest income to total income
Interest expense to total expense
Return on advances
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 47
E. Investor Ratios
Earning per share
P/E ratio
Dividend per share
Dividend yield ratio
Dividend payout ratio
Break up value/Book value per share
M/B ratio
F. Bank special Ratios
Earning assets to total assets
Return on earning assets
Net margin to earning assets
Loan loss coverage ratio
Equity to total assets
Deposit time equity
Loan to deposit ratio
Because here we are discussing ratio analysis of bank, therefore we will not discuss A & B
category of ratios.
LEVERAGE/SOLVENCY ANALYSIS
Solvency analysis of a firm indicates the amount of the other people‟s money being used to
generate profit. In general, these analyses are more concerned with long term debts,
because these commit the firm to a stream of payments over the long run. Solvency
analysis includes:
Proprietary ratio
Debt ratio
Debt to Equity ratio
Debt to Tangible net worth ratio
Debt to Funds ratio
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 48
External-Internal Equity ratio
PROFITABILITY ANALYSIS
Profitability analysis of a firm indicates the overall efficiently of the management. Without
profit a company can not attract the outside capital. Profitability analysis includes:
Return on total assets
Return on-equity
Return on investment
Return on fixed assets
Average profit per branch
Net profit Margin
Interest income to total income
Interest expense to total expense
Return on advances
Common size analysis
Common size analysis is an analysis of financial statements where total assets divide all
balance sheet items and all income statement items are divided by net sales or revenues.
Common size statements can be extremely helpful to highlight changes over time in the
financial performance and financial condition of a company. However, growth or decline in
various items of balance sheet and income statement cannot be detected from the common
size percentage only changes in the data relative to a total for a particular date or period can
be determined. A statement item that has increased in rupee amount will show a decrease
percentage if the total has increased at a greater rate than the individual item or vice versa.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 49
Interpretation:
The past two years data shows an increase in all return (i.e. interest earned, interest income,
Profit after taxation) which is a positive sign. But mostly expenses (i.e. interest expensed,
Provisions, Taxation) are also increase which show negative sign of business. The Bank
should have to review its policies to decrease expenses.
FINANCIAL RATIOS 2009 2008
Profit before tax ratio (PBT/
total income) 55.91% 63.80%
Gross Spread (NIM/Int Income) 69.31% 71.13%
Income/ expense ratio Times 3.84 4.10
Return on average equity
(ROE) 27.35% 31.49%
Return on average assets
(ROA) 3.25% 3.60%
Return on Capital Employed 27.35% 31.49%
Variance compared to 2008
2009 Amount %
Mark-up / return / interest
earned Rs. M 51,616 11,572 29%
Mark-up / return / interest
expensed " 15,841 4,281 37%
Net mark-up / interest income " 35,775 7,291 26%
Provisions & write off " 7,465 3,423 85%
Non-mark-up / interest income " 5,643 (149) -3%
Non-mark-up / interest expenses " 10,797 2,433 29%
Profit before taxation " 23,155 1,287 6%
Taxation " 7,660 1,167 18%
Profit after taxation " 15,495 121 1%
EPS Rupees 22.42 0.17 1%
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 50
(ROCE)
Earnings per share (EPS before
tax) Rs. 33.50 31.64
Earnings per share (EPS after
tax) Rs. 22.42 22.25
Advances/ deposits ratio
(Gross) 73.37% 82.64%
Advances/ deposits ratio (Net) 68.89% 79.39%
Breakup value per share Rs. 88.37 75.60
Breakup value per share
(including surplus) Rs. 100.91 84.55
Earning assets to total assets
ratio 87.23% 85.70%
Earning assets to Deposits &
borrowings 107.74% 107.75%
Deposits to shareholder equity
ratio Times 6.02 6.32
Capital Adequacy Ratio 19.07% 16.28%
Interpretation:
The past two years data shows that mostly financial ratios decrease which show negative
sign of company. The Bank should have to review its policies to decrease expenses.
DIVIDEND RATIOS 2009 2008
Cash Dividend Per Share Rs. 11.00 11.50
Dividend Yield Ratio (based on
cash dividend) 5% 9.14%
Dividend Payout Ratio 53.52% 56.19%
Bonus Shares Issued 10.00% 10.00%
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 51
Interpretation:
The past two years data shows that dividend ratios decrease which show negative sign of
company. The Bank should have to review its policies to decrease expenses.
Balance Sheet
The following table shows balance sheet of MCB for years, 2005, 2006, 2007 and Half
year 2008.
Rupees in million
Assets 2,005 2,006 2,007 2008
Cash 23,665 32,465 39,684
37,855.00
Balance with Banks 1,466 6,577 3,808 1,565
Lending to institutions 9,998 21,082 1,051
5,586.00
Investment short term 24,741 41,743 66,545 32,916
Advances short term 127,921 144,593 150,980 114,000
Other Assets 5,471 11,031 17,868 19,771
Total current Assets 193,262 257,491 279,936
211,693.00
Advances long term 52,405 53,646 75,752 115,866
Investment long term 44,741 21,743 40,635 52916
Operating fix assets 8,182 9,054 14,024 16,211
Deferred tax assets 191 172 - -
Total long term assets 105,519 84,615 130,411
184,993
Total assets 298,781 342,106 410,347
396,686.00
Liabilities
Bills payable 8,536 7,089 10,479 9,506
Borrowing short term 20,377 20,000 32,200 12,436
Deposited and other accounts 200,300 200,461 220,006 160735
Other current liab ilities 8,192 11,171 11,722 13,082
Total current liabilities
237,405 238,721 274,407
195,759
Subordinate loans
1,598 1,597 479 -
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 52
-
50,000
100,000
150,000
200,000
250,000
300,000
2005 2006 2007
Assets
Cash
Balance with
Banks
Lending to
institutions
Investment
short term
Advances short
term
Other Assets
Total current
Assets
deposits fixed 29,041 57,000 72,092 140936
Borrowing long term 7,000 3,943 7,207 3,000
Deferred tax liabilit ies - - 1,180 962
Total long term liabilities 37,639 62,540 80,958
144,898
Total debt 275,044 301,261 355,365
340,657
Shared capital 4,265 5,463 6,282 6,283
Reserve fund 9,054 24,662 34,000 34,428
Un-appropriated profit
4,990
5,530
5,131
5,709
Surplus on revaluation 5,432 5,187 9,706 9,609
Share holder equity 23,741 40,842 55,119
56,029
Total Liabilities& O’E 298,785 342,103 410,484 396,686
Source: MCB, (2005-2008) Annual Report
Graph Trend of Balance Sheet Items in absolute figures
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 53
-
50,000
100,000
150,000
200,000
250,000
300,000
2005 2006 2007
Liabilities
Bills payable
Borrowing short term
Deposited and other accounts
Other current liabilities
Total current liabilities
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2005 2006 2007
Advances long
term
Investment long
term
Operating fix
assets
Deferred tax
assets
Total long term
assets
Graph Trend of Balance Sheet Items in absolute figures
Graph Trend of Balance Sheet Items in absolute figures
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 54
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2005 2006 2007
Subordinate loans
deposits f ixed
Borrowing long term
Deferred tax liabilities
Total long term liabilities
-
10,000
20,000
30,000
40,000
50,000
60,000
2005 2006 2007
Shared capital
Reserve fund
Un-appropriated prof it
Surplus on revaluation
Share holder equity
Graph 4.4 Trend of Balance Sheet Items in absolute figures
Graph 4.5 Trend of Balance Sheet Items in absolute figures
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 55
The deposits are showing up ward trend that is mainly because the current deposits have
increased. Fixed deposits are the main source of the fund, which the bank can safely
advance. The fall in fixed deposit and constant falling of interest rate will directly affect the
advances capacity of bank. So bank margin on advances is shrinking. That‟s why bank
reserve shift from advances to investment. Share holder equity shows increase
tremendously in year 2003. Long term assets shows slightly increase, the main reason for
which is the increasing in long term investment.
INCOME STATEMENT PERFORMANCE
In the coming text income statement of MCB has analyzed by help of trend analysis.
Income Statement of MCB
For the period ended 2005-2008
2,005 2,006 2,007 2,008
Mark up revenue 17,756 25,778 31,787 8,188
Markup expenses 2,781 4,526 7,865 1,992
Gross profi t margin 14,975 21,252 23,922 6,196
Provision for invest (99) 121 105 0
Bad debt provision 1,242 1,014 2,960 615
Bad debt actual 2 47 - 0
Total bad debt 1,145 1,182 3,065 615
Net markup income 13,830 20,070 20,857 5,581
Non mark up income
Fees& commission 2,449 2,311 2,635 753
Dividend income 480 812 632 92
Exchange income 532 692 693 147
gain on sales of securities 866 606 1,501 611
unrealized gain 2 - (13) 15
Other income 1,425 571 563 292
Total non markup 5,754 4,992 6,011 1,910
Total income 19,584 25,062 26,868 7,491
Non mark up expenses
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 56
(5,000)
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Mar
k up
reve
nue
Mar
kup
expe
nses
Gro
ss p
rofit m
argin
Pro
vision
for i
nves
t
Bad
deb
t pro
vision
Bad
deb
t actua
l
2,005
2,006
2,007
Administrative Exp . 6,460 6,483 5,022 1696
Other provisions (73) 11 (4) 0
Other charges 179 66 541 76
Total non- markup Exp. 6,566 6,560 5,559 1,772
Profit before tax 13,018 18,502 21,309 5,719
Taxation 4,096 6,358 6,042 1740
Profit after taxation 8,922 12,144 15,267 3,979
Source: MCB, (2005-2008) Annual Report
Graph No. 4.6 Trend of Income Statement items in absolute figures.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 57
(500)
-
500
1,000
1,500
2,000
2,500
3,000
Fees&
com
mis
sio
n
Exchange
incom
e
unre
alis
ed
gain
2,005
2,006
2,007
(1,000)
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2,005 2,006 2,007
Administrative
Exp.
Other provisions
Other charges
Graph No. 4.7 Trend of Income Statement items in absolute figures.
Graph No. 4.8 Trend of Income Statement items in absolute figures.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 58
The income statement table and trend analysis shows that MCB has been able to control its
interest/ mark up expenses because the NI trend line is steeper than revenue trend line. Due
to decrease in markup expenses total revenue has shown an upward trend of continuous
increasing.
Net profit shows a continuous growth trend but the gross profit is higher than the net profit
margin in year 2002. The reason of this is increase in non mark up expenses and a taxation
percentage shows a constant increased.
Table – 4.3 Common Sizes Balance Sheet
Rs. In Millions Common Size %
Assets
2005
2006
2007
2005
2006
2007
Cash
23,665
32,465
39,684 7.92 9.49 9.67
Balance with
Banks
1,466
6,577
3,808
0.49 1.92 0.93
Lending to
institutions
9,998
21,082
1,051
3.35 6.16 0.26
Investment short
term
24,741
41,743
66,545
8.28 12.20 16.22
Advances short
term
127,921
144,593
150,980
42.81 42.27 36.79
Other Assets
5,471
11,031
17,868 1.83 3.22 4.35
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 59
Total current
Assets
193,262
257,491
279,936
64.68 75.27 68.22
Advances long
term
52,405
53,646
75,752
17.54 15.68 18.46
Investment long
term
44,741
21,743
40,635
14.97 6.36 9.90
Operating fix
assets
8,182
9,054
14,024
2.74 2.65 3.42
Deferred tax
assets
191
172
- 0.06 0.05 0.00
Total long term
assets
105,519
84,615
130,411 35.32 24.73 31.78
Total assets
298,781
342,106
410,347 100.00 100.00 100.00
Liabilities
Bills payable
8,536
7,089
10,479 2.86 2.07 2.55
Borrowing short
term
20,377
20,000
32,200
6.82 5.85 7.84
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 60
Deposited and
other accounts
200,300
200,461
220,006
67.04 58.60 53.60
Other current
liab ilit ies
8,192
11,171
11,722
2.74 3.27 2.86
Total current
liabilities
237,405
238,721
274,407
79.46 69.78 66.85
Subordinate loans
1,598
1,597
479
0.53 0.47 0.12
deposits fixed
29,041
57,000
72,092 9.72 16.66 17.56
Borrowing long
term
7,000
3,943
7,207
2.34 1.15 1.76
Deferred tax
liab ilit ies
-
-
1,180
#VALUE! #VALUE! 0.29
Total long term
liabilities
37,639
62,540
80,958
12.60 18.28 19.72
Total debt
275,044
301,261
355,365 92.05 88.06 86.57
Shared capital
4,265
5,463
6,282 1.43 1.60 1.53
Reserve fund
9,054
24,662
34,000 3.03 7.21 8.28
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 61
Un-appropriated
profit
4,990
5,530
5,131
1.67 1.62 1.25
Surplus on
revaluation
5,432
5,187
9,706 1.82 1.52 2.36
Share holder
equity
23,741
40,842
55,119
7.95 11.94 13.43
Total
Liabilities& O’E
298,785
342,103
410,484
100.00 100.00 100.00
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 62
Rs. In Million Indexed in %
2005 2006 2007 2005 2006 2007
Mark up revenue 17,756 25,778 31,787 100 100 100
Markup expenses 2,781 4,526 7,865 15.66 17.56 24.74
Gross profi t margin 14,975 21,252 23,922 84.34 82.44 75.26
Provision for invest -99 121 105 -0.56 0.47 0.33
Bad debt provision 1,242 1,014 2,960 6.99 3.93 9.31
Bad debt actual 2 47
- 0.01 0.18 0.00
Total bad debt 1,145 1,182 3,065 6.45 4.59 9.64
Net markup income 13,830 20,070 20,857 77.89 77.86 65.61
Non mark up income
Fees& commission 2,449 2,311 2,635 13.79 8.97 8.29
Dividend income 480 812 632 2.70 3.15 1.99
Exchange income 532 692 693 3.00 2.68 2.18
gain on sales of securities 866 606 1,501 4.88 2.35 4.72
unrealized gain 2
- -13 0.01 0.00 -0.04
Other income 1,425 571 563 8.03 2.22 1.77
Total non markup 5,754 4,992 6,011 32.41 19.37 18.91
Total income 19,584 25,062 26,868 110.30 97.22 84.53
Non mark up expenses
Administrative Exp . 6,460 6,483 5,022 36.38 25.15 15.80
Other provisions -73 11 -4 -0.41 0.04 -0.01
Other charges 179 66 541 1.01 0.26 1.70
Total non- markup Exp. 6,566 6,560 5,559 36.98 25.45 17.49
Profit before tax 13,018 18,502 21,309 73.32 71.77 67.04
Taxation 4,096 6,358 6,042 23.07 24.66 19.01
Profit after taxation 8,922 12,144 15,267 50.25 47.11 48.03
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 63
RATIO ANALYSIS
A ratio is a quantitative relation between two magnitudes of the same kind. In ratio
analysis, the financial ratios of the firm are compared to that of its competitors. This
comparison allows the firm to detect major operating differences, which if corrected, will
increase its efficiency. Another very popular method of ratio analysis is to compare the
firm‟s financial ratios to industry average or similar form in industry or to our own past
performance.
Before discussion financial ratios, three cautions are in order:
(i) A single ratio does not generally provide sufficient information to judge the overall
performance of the firm. Only when a group of ratios is used, a reasonable judgment
concerning the firm‟s overall financial state can be made.
(ii) An analyst, when comparing financial statement, should ensure that predetermined uniform
standards are used for this purpose.
(iii)It must be ensured that the data used in calculating financial ratios have been developed in
the same manner and are sound and reliable.
There is no doubt that financial ratios are a useful guide for managerial decision-making
but these are not exact and definite. Ratios only suggest the questions that need to be
answered and provide no answers.
Let us now calculate some of the key financial ratios of MCB for the years 2005-2007 and
try to answer the questions that these ratios suggest.
These ratios are calculated from the “Balance Sheet” and “Profit and Loss Account” of
Muslim Commercial Bank.
Financial Ratios of MCB
Years 2005 2006 2007
Current Ratio 1.10 1.14 1.13
Assets turn over 0.09 0.065 0.038
Debt to total assets 0.97 0.95 0.96
Coverage ratio 1.28 1.51 2.23
Gross profit marg in 55.70% 60.51% 71.72%
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 64
Net profit marg in 6.51% 11.30% 21.51%
Return on investment 0.59% 0.74% 0.82%
Return on equity 16.09% 14.86% 20.07%
Debt to equity 26.16 19.10 23.51
Receivables turn over 5.79 5.91 5.60
Receivables turnover in days 62 days 61 days 64 days
Advances to deposits 49.55% 43.20% 45.96%
Investment to deposits 35.87% 49.05% 60.65%
Cash ratio 14.71% 10.09% 11.66%
Interest earned to advances 22.24% 19.49% 10.67%
Interest expense to Deposit 4.88% 3.32% 1.39%
Current Assets
Current Liabilities
Its shows the firm‟s ability to covers it current liabilities with it current assets.
Ratio for 2005 = 193,262 / 237,404 = 1.106
Ratio for 2006 = 257,491 / 238,721 = 1.137
Ratio for 2007 = 279,936/ 274,407 = 1.131
Current Ratios For 2005, 2006, 2007
CURRENT RATIO
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 65
2005
2006
2007
1.1
1.1
4
1.1
3
2003 2004 2005 2006 2007 2008 2009
1
2
3
Years Current Ratio
INTERPRETATION
Current Ratio of MCB has slightly decreased in 2007 as compared to 2006. Falling current
ratio of MCB shows the aggressive approach of MCB towards working capital
management. This surely improves profitability as the percentage of current assets.
However, this may increase the risk of short-term insolvency due to the inability of meeting
with small amount of current assets the short obligations as they come due.
Mark Up Revenue
Total Assets
It tells the relative efficiency with which a firm utilizes its total assets to generate sales.
Ratio for 2005= 17,756/ 298,781 = 0.091
Ratio for 2006 = 25,778 / 342,106 = 0.065
Ratio for 2007= 31,7897/ 410,347 = 0.038
Assets turn over ratio for, 2005, 2006, 2007
ASSETS TURNOVER RATIO
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 66
2005
2006
2007
0.0
9
0.0
65
0.0
38
2003.5 2004 2004.5 2005 2005.5 2006 2006.5 2007 2007.5
1
2
3
Years Assets turn over
INTERPRETATION
This shows revenue generated per rupee investment in total assets. This ratio is decreased
in 2007, because the total assets increased in 2007. Bank has relatively low ATR, because
they are selective in advancing loan.
Earning Before Income Tax
Interest Expense
This ratio shows that number of time a company can cover or meet its financial charges or
obligation.
Ratio for 2005 = 19,584 / 6,566 = 1.28
Ratio for 2006 = 25,062/ 6,560 = 1.51
Ratio for 2007 = 26,868/ 5,559 = 2.23
Coverage Ratios for 2005, 2006, 2007
INTEREST COVERAGE RATIO
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 67
2005
2006
2007
1.2
8
1.5
1
2.2
3
2002 2003 2004 2005 2006 2007 2008 2009 2010
1
2
3
Years Coverage ratio
INTERPRETATION
The interest coverage ratio of MCB has shown an improvement over the period of three
years. In the year 2007, the ratio is 2.23. Which shows that the income in 2007 covers 2.23
times the interest expense constitute the main expense of the business, it is why the interest
expense is so higher and the ratio is so lower.
Total Debt
Total Equity
The Ratio shows extend to which the firm is financed by debt.
Ratio for 2005 = 275,044 / 23741 = 26.16
Ratio for 2006 = 301,261 / 40,842 = 19.09
Ratio for 2007 = 355,365 / 55,119 = 23.51
DEBT TO EQUITY RATIO
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 68
Debt to Equity Ratio for 2005, 2006, 2007
2005
2006
2007
26.1
6
19.1
23.5
11990 2000 2010 2020 2030 2040
1
2
3
Years Debt to equity
INTERPRETATION
MCB„s upward trend of Debt to Equity ration shows that the bank is not relying in debt
financing. The ratio of 2007 as compared to 2006 has increased.
Total Debt
Total Assets
It shows the percentage of firm assets that are supported by debt financing.
Ratio for 2005 = 275,044 / 298,781 = 0.963
Ratio for 2006= 301,261/ 342,106 = 0.950
Ratio for 2007 = 355,365/ 401,347 = 0.959
DEBT TO TOTAL ASSET
RATIO
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 69
Debt to total Asset Ratio
2005
2006
2007
0.9
7
0.9
5
0.9
6
2003 2004 2005 2006 2007 2008 2009
1
2
3
Years Debt to total assets
INTERPRETATION
Debt to assets ratio is slightly increased in the year 2007 as compared to 2006 because of
the growing debt.
Gross Profit x 100
Net Revenue
This ratio tells that the profit of the firm relatively to sales, after we deduct the cost of
producing the goods.
Ratio for 2005 = 14,975/ 17,756X 100 = 55.70%
Ratio for 2006 = 21,252/ 25,778 X 100= 60.51%
Ratio for 2007 = 23,922/ 31,787 X 100 = 71.72%
GROSS PROFIT MARGIN RATIO
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 70
Gross Margin Ratio for 2005, 2006, 2007
2005
2006
2007
55.7
0%
60.5
1%
71.7
2%
2003 2004 2005 2006 2007 2008
1
2
3
Years Gross profit margin
INTERPRETATION
MCB gross profit margin per rupee has shown a rising trend over a year. This shows that
the efficiency of the bank in controlling cost of sale and better stately of pricing product.
Net Profit after Taxes X 100
Net Revenue
It is measure of the firm profitability of sale after taking account of all expense a nd income
taxes.
Ratio for 2005 = 8,922/ 17,756 X 100 = 6.51%
Ratio for 2006 = 12,144/ 25,778 X100 =11.30%
Ratio for 2007 = 15,267/ 31,787 X 100 = 21.51%
NET PROFIT MARGIN RATIO
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 71
Net Profit Margin For 2005, 2006, 2007
2005
2006
2007
6.5
1%
11.3
0%
21.5
1%
2003.5 2004 2004.5 2005 2005.5 2006 2006.5 2007 2007.5
1
2
3
Years Net profit margin
INTERPRETATION
Net profit margin of MCB has improved, during the current year tremendously. This signal
towards higher efficiency and lower administrative cost of the bank.
Net Profit after Taxes X 100
Total Assets
This ratio measures the profitability per rupee of investment in assets.
Ratio for 2005 = 8,922 / 298,781 X 100= .59%
Ratio for 2006 = 12,144/ 342,106 X 100 = .74%
Ratio for 2007 = 15,267/ 410,347 X 100 = .82%
Return on Investment Ratio for 2005, 2006, 2007
RETURN ON INVESTMENT RATIO
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 72
2005
2006
2007
0.5
9%
0.7
4%
0.8
2%
2003.5 2004 2004.5 2005 2005.5 2006 2006.5 2007 2007.5
1
2
3
Years Return on investment
INTERPRETATION
MCB‟s ROI has shown improvement over the previous years. This is due to the increase in
net profit margin of MCB.
Net Profit X 100
Total Equity
This ratio shows that residual profit as a proportion of the bank value of common
shareholder equity.
Ratio for 2005 = 8,922 / 23,741 X 100= 16.09%
Ratio for 2006 = 12,144/ 40,842 X 100 = 14.86 %
Ratio for 2007 = 15,267/ 55,119 X 100 = 20.07%
Return on Equity for 2005, 2006, 2007
RETURN ON EQUITY RATIO
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 73
2005
2006
2007
16.0
9%
14.8
6%
20.0
7%
2003.5 2004 2004.5 2005 2005.5 2006 2006.5 2007 2007.5
1
2
3
Years Return on equity
INTERPRETATION
The ROE of MCB has shown a mix trend. In the 2006 it decreased as compare to year 2005
but it increase in year 2007. The increase in ROE is due to improvement in Net Profit
Margin.
Total Advance X 100
Total Deposit
This ratio shows the company advances employed per unit of deposit.
Ratio for 2005= 180,323/ 229,342 X 100= 49.55%
Ratio for 2006 = 198,239/ 257,462 X 100 = 43.20%
Ratio for 2007 = 218,961/ 292,098 X 100 = 45.96%
Advance to Deposit Ratio for 2005, 2006, 2007
ADVANCE TO DEPOSIT RATIO
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 74
INTERPRETATION
This ratio of MCB over the resent 3 years has shown a mix trend, but deposit has
increasing tremendously. This shown a concentration on investment as the rate of interest
declining on lending.
Total Investment X 100
Total Deposit
This ratio shows the bank investment employed per unit of deposits.
Ratio for 2005= 69,482/ 229,342 X 100 = 35.87%
Ratio for 2006= 63,486/ 257,462 X 100 = 49.05%
Ratio for 2007= 113,087/ 292,098 X 100 = 60.65%
Investment To Deposit Ratio For 2005, 2006, 2007
INVESTMENT TO DEPOSIT RATIO
2005
2006
2007
49.5
5%
43.2
0%
45.9
6%
2003.5 2004 2004.5 2005 2005.5 2006 2006.5 2007 2007.5 2008
1
2
3
Years Advances to deposits
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 75
2005
2006
2007
14.7
1%
10.0
9%
11.6
6%
2003.5 2004 2004.5 2005 2005.5 2006 2006.5 2007 2007.5
1
2
3
Years Cash ratio
INTERPRETATION
The year data showed that MCB has toward higher risk and consequently higher yield
investment, rather than under less risky loaning activities.
Cash & Cash Equivalents X 100
Current Liabilities
It is the ratio of cash and cash equivalents to current liabilities. It shows that how much
cash available to cover the current liabilities.
Ratio for 2005 = 23,665/ 237,405 X 100 = 14.71%
Ratio for 2006 = 32,466 / 238,721 X 100= 10.19%
Ratio for 2007 = 39,684/ 274,407 X 100 = 11.66%
Cash Ratio for 2005, 2006, 2007
CASH RATIO
2005
2006
2007
35.8
7%
49.0
5%
60.6
5%
2003 2004 2005 2006 2007 2008
1
2
3
Years Investment to deposits
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 76
INTERPRETATION
Cash ratio increased during the financial period of 2005-2007 but it indicates decrease in
2005. Because bank slope down the lending process and make payment for current and
fixed liabilities.
CONCLUSION
After doing the common size, growth and ratio analysis of MCB, bank limited, we
conclude that the financial health of MCB is continually improving. The effective control
of cost of funds and operating and administrative expenses has resulted in continuously
growing trend in profit margin. Both the slightly increasing in Total Assets turnover trend
and highly growing profit margin trend has resulted in continuously improving ROA. The
broadening of equity base and high retention ratio has resulted in growing trend in owner
equity. The bank average collection period has dropped which shows the efficiency of the
bank.
Present Status:
During the first half of 2010, MCB has shown an after tax profit of Rs 7.94 billion, an
increase of 2.4% over the same period last year. As a result, EPS has also increased by
2.4%, from Rs 10.2 per share to Rs 10.45 per share. EBIT increased by almost 5% as
compared to the same period last year, the improvement being attributed to an increase in
the interest margin from 30.69% to 32.96%.. Markup increased marginally over the past six
months, as compared to the first half of 2009, while markup expense increased
significantly, resulting in a decline in the net markup income. However, due to lower
provisions, a rise of 10% was seen in the net markup after provisioning. Non-markup
income increased by 8.5%, mainly due to a sharp rise in fee, commission, and brokerage
income. Non-markup expenses saw a rise of 22% over the same period last year, as a result
of which the increases in income could not be completely translated into earnings.
During the first six months of 2010, Deposits rose to Rs 419 billion, from Rs 367 billion in
December 2009, a rise of 14%. Within Deposits, Fixed Deposits saw a growth of almost
21%, followed by Current accounts and Savings Deposits growing by 15% and 10%
respectively. Borrowings declined from Rs 44.6 billion in December 2009, to only Rs 13.3
billion by June 2010. The increase in Deposits was thus offset by the decrease in
Borrowings, resulting in only a small change in liabilities. On the Assets side, lending to
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 77
financial institutions increased from Rs 3 billion in December 2009 to Rs 16.5
billion by the end of the first half of 2010. Cash and balances with treasury banks rose by
14.7% while balances with other banks declined sharply. NPLs saw an increase of 15.7%
as compared to the same period last year, rising to Rs 24.13 billion. This rise was much
larger than the increase in NPLs of UBL, which was only 6.7%. However, MCB has a
lower ratio of NPLs to Advances than its competitor, a sign of better asset quality. Due to
increased caution in lending, Advances of MCB saw a negative growth over the past six
months. The Advance to Deposit ratio also declined as a result, dropping to 63% from 74%
at the end of last year, which is lower than the industry average. MCB has announced an
interim dividend of Rs 3.00 per share, and increase from the Rs 2.50 per share announced
the previous year.
Banking sector overview:-
The banking system, as a whole, remains healthy despite the economy going
through a period of economic difficulty. The banking sector absorbed the build-up of non-
performing loans in the system while maintaining profitability and robust balance sheets.
Much of the credit for this must go to the SBP for the policies it has pursued over the last
decade to ensure that banks are adequately capitalized and adhere to prudent risk
management
INVESTMENTS
The investments, especially the Government papers, which declined in both absolute rupee
terms as well as a proportion of total assets during the first FY08, registered a slight
increase during the last quarter. Actually, the heightened credit risk on account of
deterioration in macroeconomic fundamentals and already constrained liquidity profile
induced the banks to risk-free MTB
The banking system is marked with a high concentration as a fewer number of banks hold a
major share of the system's total assets and deposits. This concentration has been following
an overall declining trend as the medium sized banks gradually gained market share.
However, due to unusual liquidity stress that affected mainly the small AND medium sized
banks the market share of 5 large banks increased.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 78
DEPOSITS
The deposits in the industry are generally showing an upward trend, though the growth is
slow. The industry has been witnessing a gradual shift in deposits from savings to term
deposits for quite some time. This trend emerged largely in response to SBP's policy
incentives to encourage the mobilization of longer terms deposit so as to reduce the
maturity mismatches. Consequently, fixed deposits gained a significant share of savings
deposits since 2004. Other factors like general rise in interest rates and innovative deposits
scheme have also augmented depositors preference for the term deposits.
ADVANCES
the worsening business and economic environment somewhat increased the credit risk,
which compelled the banks to adopt cautious lending strategy, particularly in consumer
sector where the advances have been decreasing since the start of CY08. Some new loans
have been issued of which a significant portion of these were disbursed to public sector
enterprise thus the Advances show decling trend.
NPLs This rise in NPLs observed across all the banking groups except specialized banks,
where NPLs have actually decreased. NPLs have been on the rise mainly due to poor
economic performance of the economy and the FSV benefit, thus resulting in worsening
the Asset quality ratio. Interestingly, in the wake of economic slowdown, banks seem to
facilitate the businesses through rescheduling/ restructuring of loans; the Textile sector
being the major beneficiary. Latest banking industry numbers show an effort to keep
balance sheets clear of NPLs by recognizing and providing for NPLs on criteria that are
more stringent. This approach might look costly in the meantime but in the long run it'll
definitely benefit banks by providing a cushion to withstand
During the last fifteen years, the Bank has concentrated on growth through improving
service quality, investment in technology and people, utilizing its extensive branch
network, developing a large and stable deposit base and managing its non-performing loans
via improved risk management processes.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 79
In 2005, the management of the bank abbreviated its name from Muslim Commercial Bank
Limited to MCB Bank Limited to explore international markets; they were facing
resistance due to the word Muslim specially from Western Countries to avail license. In
2008 the head office of MCB was shifted from Karachi to Lahore in a newly constructed
building, namely MCB House located at Sharea Ghous-ul-Azam, commonly known as Jail
Road.
The MCB Tower in Karachi serves as the MCB's headquarters, and is also the ta llest
building in Pakistan. MCB, advised by Merrill Lynch, became the fourth Pakistani
company (the other three being Hubco, PTCL and Chakwal Cement - they all have been
delisted) to list on the London Stock Exchange when it raised US$150 million global
depositary receipts.
In May 2008 Malaysian bank, Maybank and MCB signed an agreement, whereby Maybank
will acquire up to 20% of the ordinary shares in MCB from Nishat Group. The acquisition
is in- line with Maybank‟s strategy, as Malaysia‟s financial services leader in the region, to
build its presence in key growth markets across the region. It also paves the way for MCB,
one of Pakistan‟s premier financial services groups, to engage Maybank as its exclusive
foreign commercial bank strategic partner.
Maybank initially acquired from Nishat Group 94,241,527 ordinary shares in MCB,
representing a 15% stake in the Bank, for a cash price of PKR470 per share. The total
consideration paid was approximately US$686 million. The purchase price represented a
11.4% premium to MCB‟s closing share price of PKR 422 on May 2, 2008, and a premium
of 12.9% to the average closing share price for MCB over the 30 trading days immediately
preceding the date of this announcement.
Based on MCB‟s December 31, 2007 audited book value, the purchase price represents an
implied price to book value multiple of 5.13x, a price to 2007 earnings multiple of 18.0x
and a price to 2008 earnings multiple of 15.2x. In July 2008 Maybank exercised its right to
increase its stake to 20%.
The stake in MCB allows Maybank the right to appoint two Directors to represent its
interest on the Board of MCB. One of these Directors was to be appointed immediately and
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 80
the second Director will be appointed upon completion of the term of the existing
Board, scheduled to be on March 27, 2009.
As part of the transaction, Maybank and MCB are also expected to enter into a business
cooperation arrangement which will include, among others, Islamic banking, retail
banking, credit cards, asset management and SME banking. Leveraging Maybank‟s
leadership and experience in these segments coupled with MCB‟s brand and broad
distribution network, Maybank and MCB believe that significant revenue synergies can be
attained. Both Maybank and MCB are also expected to benefit from increased business ties
and trade flows between Pakistan and Malaysia.
RECOMMENDATIONS
From the Quantum of the profit and its financial data it can be easily judged that a fter
privatization, MCB is performing well. Its deposits are growing day by day and so its
profitability. The controlling body is responsible for the productive performance of the
Bank.
Following are my observation and suggestion to improve the efficiency for the
development of the bank.
There is a criticism on the banking management that the salaries of the employees
are decreasing in every succeeding year. And I think this will shake the confidence
and working habit of the employees.
There is another recommendation about the bank that there is no proper timing of
the bank and there is made an unnecessary delay in the banking transactions, which
might not be a good sign for the bank from future prosperity point of view.
Staff turnover particularly of trained staff result in financial and other losses. The
amount spent by the bank on employment, induction and training of outgoing
officers constitutes to beat till another officer should ready prove this work. The
exodus of bank officer in the past has worsened the situation.
Most of the bank employees, are sticking to one seat only with the result that they
become master of one particular job and loose their grip on other banking operation.
In my opinion all the employees should have regular job experience all out- look
towards banking. The promotion policy should be adjusted.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 81
Refresher Courses for the staff are most important in any international organization.
Alt the employees should have these courses according to their requirement.
Foreign experts can also be called for this purpose.
Every year some of the employees should be sent for training to other countries and
employees from other branches should be brought here. Some more reading
material should be provided. The purpose should be to
Educate the employees with the advance studies in their field. The employee should
be provided the opportunities to attend and participate in seminars and lectures on
banking.
Bank should give some more incentive to its employees in order to remove the
conflict between lower and higher officers and should try to improve the working
condition of the bank.
As such system should be designed that every employee who has some problems
with his officers can communicate it to the higher management and some steps must
be taken to improve that.
Recruitments should be strictly on merit basis and induction should be after proper
and extensive training.
Old and lazy staff should be replaced by young, qualified and energetic staff.
Foreign branches should be opened in order to capture the international market and
to earn international repute for the bank.
Working environment, equipment, furniture and staff dressing should be according
to the modern banking style.
Proper attention should be paid to upgrade customer services.
Bank should adopt the global organizational banking structure to meet the
international standards of banking sector.
INTERNSHIP REPORT ON MCB BANK LTD.
University of Sargodha Department of Commerce P a g e | 82
Reference
Siddiqui Kamran (2004) An internship Report on MCB satellite . Institute of
Business and Management Science.
David, R.F, (1998). 7th Edition, Strategic Management; concepts & Cases New
Jersey; Prentice-Hall Ine.
Emery. D.R, J.D Finnerty and J.D. Stowe, (1998) Principles of Financial
Management. New Jersey; Prentice Hall.
Griffin R.W (1997) Management Essentials; Concepts and Application, Chicago
Science Research Associates, Inc.
Howard, MA (1979), Management Essentials, Concepts and Application Chicago;
Science Research Associates, Inc.
Kenney, R. D and S.Y. Me Mullen (1978). 6th Edition, Financial Statemetns; Form,
Analysis, and interpretation. London; Irwin-Dorsey International.
Meenai. S.A. Money and Banking in Pakistan, Karachi The allies Book
Corporation.
Nasir. M.S Money Banking & Finance, Kitab Markaz; Faisalabad.