Intern ship report report final

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INTERNSHIP REPORT

ON

Program: M.Com (Accounts)

Session : 2012-2014

Submitted To:

Chairman

Department of Commerce

Submitted By:

Name: Ruquia Batool

Roll #:02

Email Address:[email protected]

Mailing Address:House 28 Arif Colony BWP

Date of Submission:Sep 1,2014

DEPARTMENT OF COMMERCE

Internship Report on MCB Bank

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ACKNOWLEDGEMENT

Person is not a perfect in all the contexts of his life, He has a limited mind and mind thinking

approaches. It is the guidance from Almighty Allah that shows the man light in the darkness

and the person find his way in the light. Without this helping light, person is nothing but a

helpless creation.

The teaching of the Holy Prophet Muhammad (PBUH) were also the continuous source of

guidance for me especially his order of getting knowledge and fulfilling once duty honestly

was key motivation force for me.

With prayers of my parents and support of my teachers it became possible to formulate this

report. I pay high regards to them.

I like to thank Mr. Fawad and Miss Shakila as they helped me remarkably for this project.


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Contents

ACKNOWLEDGEMENT ....................................................................................................................... II

CONTENTS ....................................................................................................................................... III

CHAPTER # 1 ..................................................................................................................................... 1

REVIEW ............................................................................................................................................. 1

1 OBJECTIVES ............................................................................................................................ 2

2 OVERVIEW OF THE ORGANIZATION ............................................................................... 3

BRIEF HISTORY OF THE ORGANIZATION ......................................................................................... 3

AWARDS & ACHIEVEMENTS .................................................................................................... 8

VISION & MISSION .................................................................................................................... 10

VALUES OF MCB ........................................................................................................................ 10

3 NATURE OF THE ORGANIZATION ................................................................................... 12

BUSINESS ACTIVITIES .............................................................................................................. 12

BUSINESS VOLUME ................................................................................................................... 14

YEARS TREND (2003 - 2013) ...................................................................................................... 14

ORGANIZATIONAL STRUCTURE ........................................................................................... 19

CORPORATE INFORMATION .................................................................................................. 20

BRANCH NETWORK .................................................................................................................. 22

PRODUCT & SERVICES ............................................................................................................ 23

4 OVERVIEW OF DEPARTMENT .......................................................................................... 38

ORGANIZATIONAL STRUCTURE OF THE BRANCH .......................................................................... 38

EMPLOYEES DETAIL ................................................................................................................ 39


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DEPARTMENTS OF MCB DUBAI CHOWK BRANCH (1164) ................................................ 40

5 DORMANT ACCOUNT ACTIVATION PROJECT:............................................................ 44

CHAPTER NO-2 ................................................................................................................................ 49

ANALYSIS ........................................................................................................................................ 49

6 MACRO ANALYSIS OF COMMERCIAL BANKS INDUSTRY ......................................... 50

PEST ANALYSIS ........................................................................................................................... 50

POLITICAL...................................................................................................................................... 50 ECONOMIC ..................................................................................................................................... 50 SOCIAL AND CULTURAL ................................................................................................................. 50 TECHNICAL .................................................................................................................................... 51

7 MICRO ENVIRONMENT ANALYSIS.................................................................................. 52

SWOT ANALYSIS ........................................................................................................................... 52 PORTER FIVE FORCES MODEL ....................................................................................................... 56

8 SHARE PRICE SENSITIVITY ANALYSIS .......................................................................... 58

9 ORGANIZATIONAL ANALYSIS ......................................................................................... 59

(COMPARISON WITH OTHER BANKS) .................................................................................. 59

10 MARKET SUMMARY AT 22-8-2014 OF ALL COMMERCIAL BANKS COMPETING

MCB ............................................................................................................................................... 62

11 FUTURE PROSPECTS OF MCB ......................................................................................... 74

12 FINANCIAL ANALYSIS ...................................................................................................... 75

STATEMENT OF FINANCIAL POSITION ............................................................................... 75

PROFIT AND LOSS ACCOUNT ......................................................................................................... 77

13 RATIO ANALYSIS ............................................................................................................... 80

14 FIVE YEARS’ VERTICAL ANALYSIS .............................................................................. 93

BALANCE SHEET ....................................................................................................................... 93


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PROFIT AND LOSS ACCOUNT ................................................................................................. 95

15 FIVE YEARS’ HORIZONTAL ANALYSIS ........................................................................ 96

STATEMENT OF FINANCIAL POSITION ............................................................................... 96

PROFIT & LOSS ACCOUNT ...................................................................................................... 98

COMMENTARY ON HORIZONTAL AND VERTICAL ANALYSIS......................................................... 99

CHAPTER NO-3 .............................................................................................................................. 101

FINDINGS, ..................................................................................................................................... 101

CONCLUSIONS AND RECOMMENDATIONS .................................................................................... 101

16 WEAKNESSES OF THE ORGANIZATION..................................................................... 102

17 SUMMARY.......................................................................................................................... 104

18 CONCLUSIONS .................................................................................................................. 105

19 RECOMMENDATIONS ..................................................................................................... 106

20 GLOSSARY ......................................................................................................................... 108

21 ANNEXURE ............................................................................................................................ 110


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Supervisor Detail:

Name: Mr Shoaib

Desigination: Branch Manager

Qualification: MA

Office Email address: [email protected]

Name: Fawad ul hasnain

Desigination: NPL Officer

Qualification: M.Com

Office Email address: [email protected]

Contact No: 03336361514


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MCB Dubai Chowk Branch (Regional

Branch) Branch Code-1164


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1

Chapter # 1

Review


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1 Objectives

This internship offers me an incredible opportunity to gain real-world experience in the high-

stakes finance industry. The primary objective of the project is to forecast or determine the

actual financial status and performance of an organization.

Following are other objectives of studying the organization:

To learn about Capital Adequacy, Asset and Liability Management, Interest Rate

Risk, Liquidity, Asset Quality & Profitability of bank.

To monitor the adequacy and effectiveness of the internal control system and

Financial Reporting Framework.

Assessment of the company’s financial condition through the financial statements.

Analyzing savings and investment trends in banking sector.

To describe the impact of financial decisions on the health and functioning of the

overall organization.

To examine the Innovations in customer service in banking.

Internship is the capstone experience that provides me with hands-on, real-world

experience in a work setting. Ideally, internship will enable internees to:

Use my knowledge and skills get from the classroom,

Discover where further competence is needed,

Convert the bookish knowledge into practical life, and

become better acquainted with the types of work settings in which such

Competence can be applied.

Limitation of the Study:

The study is done with the sole purpose of doing the best work but there were

certain limitation faced during the internship period. The most important limitation

from which the study suffers is the non-availability of information in a manner

required for analysis and the secrecy of the bank. Another important limitation of the

study is time and space constraint. Main limitation which I faced is that I only worked on

project for which I have selected by HRMG of MCB Bank Dormant Account Activation


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Project and on general banking and I have no experience about other department like, credit,

remittance, advances, receipts, payments and forex.

2 Overview of the Organization

Brief History of the Organization

The history of MCB can be divided into four main Phases:

• Development Phase

• Nationalization Phase

• Privatization Phase

• Present Position of MCB

Development Phase

MCB Bank Limited was incorporated by the Adam jee Group on July 9, 1947, under the

Indian Companies Act, VII of 1913 as a limited company. The bank was established with a

view to provide banking facilities to the business community of the South Asia. After the

partition of the Indo-Pak subcontinent, the bank moved to Dhaka (then the capital of former

East Pakistan) from where it commenced business in August 1948. In 1956, the bank

transferred its registered office to Karachi, Where the head office is presently located. Thus,

the bank inherits a 64 years legacy of trust of its customers and the citizens of Pakistan. MCB

Bank is not an overnight success story. It started with a share capital of Rs. 30 million which

is divided into 3 million ordinary shares of Rs 10 each.

Nationalization Phase

The 1960s decade is stated as the golden era in Pakistan’s economic and financial

development. The banking sector also registered noticeable growth during that period and

lent a strong helping hand to the government to achieve rapid economic growth of the

country. But in early 1970s this scenario changed altogether. The separation of East Pakistan

(now Bangladesh) and induction of the government led by Zulfiqar Ali Bhutto were the most

significant events of early 70s having far reaching effects on the banking system.

In the wake of rapidly changing conditions of the country, the government decided to

nationalize all the commercial banks so that the nation as a whole can benefit from a better


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use of resources. Consequently, the Muslim Commercial Bank was nationalized under the

Banks (Nationalization) Act, 1974 promulgated on January 1, 1974.

In the banking sector, the then government decided to retain only five major banks by

merging all the smaller banks with the large ones. As a result of this policy, the Premier Bank

was merged into Muslim Commercial Bank in 1974.

Privatization Phase

This was the first bank to be privatized in 1991 and the bank was purchased by a consortium

of Pakistani corporate groups led by Nishat Group. The banks after nationalization came

under political and bureaucratic control and deviated from normal banking practices. Some of

their senior executives were tempted to nurture a culture of obliging big businessmen, feudal

and political influential. They sacrificed their personal integrity and interest of banking sector

for gaining promotion and accumulating personal wealth. That is how banking sector started

losing its upright and professional institutional image from mid-80s and its downward slide

started which touched new low during 1990s.

The then PML government also became conscious of the falling standard of the banking

sector and decided to privatize all the commercial banks. Banks (Nationalization) (Second

Amendment) Ordinance 1991 was also promulgated to pave the way for privatization of

banks in Pakistan.

In the wake of above amendments, 26% shares valuing Rs. 149.8 millions of the Muslim

Commercial Bank, held by the State Bank of Pakistan were sold and the Bank’s management

was transferred to the purchasers of these 26% shares.

Mian Mohammad Mansha is the Chairman of the MCB and has played instrumental role in

its success.

Present position of MCB

MCB has significant contributions in building & strengthening both corporate and retail

banking sector in Pakistan. MCB Bank Ltd in 2009 delivered a profit before tax of Rs. 23.2

Billion registering a growth of 6% over last year. This growth is directly attributable to an

increase of 14% in CASA deposits, 21% in revenues and a tight control on expense base

enabling to retain position as one of the most profitable banks in the country.

In 2009, MCB delivered a superior return on equity of 27.4% and assets crossed the Rs. 500

Billion mark. This performance is all the more remarkable keeping in view the economic &


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political challenges faced by the country during this past year and miscreant created issues

that MCB specifically grappled with for a large part of the year. MCB fundamental belief is

that a financial services company can only succeed if it meets its customers’ needs. If they

can understand customer’s financial objectives and offer them the right products and services

so that they can be financially successful, then MCB Bank will continue to build on its

leadership position and provide requisite returns to its shareholders. During 2009, MCB took

several initiatives that brought even closer to their customers. With the launch of MCB

Privilege, MCB became the first local bank to offer a dedicated proposition for the affluent

segment; to meet the growth and protection needs of customers, Bank introduced

Bancassurance and Investment Products in many branches; to enhance transactional

convenience for customers, MCB became the first Pakistani bank to launch mobile banking.

These coupled with several other initiatives enabled MCB to continue on the path of growing

customer base and profitability. Last year, to expand and reach customer proposition, MCB

also reached an agreement with RBS Pakistan to acquire their business. Unfortunately, the

deal did not go through but bank continue to invest organically to further strengthen

businesses.

The Board of Directors of MCB Bank Limited met under the Chairmanship of Mian

Mohammad Mansha, on April 22, 2014 to review performance of the Bank and approve

financial statements for the quarter ended March 31, 2014.From financial performance

perspective, the operational profitability of the Bank depicted an improvement as net interest

margin increased by 3% over March 2013. This was achieved despite the fact that the Bank

offered higher rates on its savings and term deposits, based on regulatory revisions on

minimum deposit rate. MCB Bank focused on improving its non-markup income proportion

and registered a growth of 17% over corresponding period of last year. The administrative

expense base (excluding pension fund reversal) recorded an increase of approximately 12%.

A substantial reversal of Rs. 583 million in the provision charge is reflective of the prudent

and aggressive provision strategy adopted by the Bank and rigorous efforts put in by the

recovery units. All this translated into profit before tax at Rs. 8.35 billion and profit after tax

at Rs. 5.51 billion. MCB Bank’s total asset base was reported at an all-time high of Rs.

827.25 billion which increased by 1% over December 31, 2013. Net investments increased

by Rs. 13.14 billion to Rs. 462.15 billion, whereas gross advances were reported at Rs.

272.46 billion. Following the trajectory set in 2012 and 2013, the non-performing loan base

of the Bank reported a significant contraction of Rs. 753 million in the quarter ended March

31, 2014 with major recoveries in loss categorized loans. On the liabilities side, the Bank


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continued with its strategy of shifting its base to low cost current and savings accounts, taking

the CASA base to an all-time high of 91% approximately. Earnings per share (EPS) for the

period came to Rs. 4.95, whereas return on assets was reported at 2.68%. Return on equity

came to 22.44% with book value per share improving to Rs. 89.15 as compared to 87.39 for

December 31, 2013.The Board of Directors of MCB Bank declared a cash dividend of Rs.

3.00 per share for the period ended March 31, 2014.

Corporate Profile of the Bank

MCB is one of the oldest banks of Pakistan, incorporated in 1947. It was privatized in 1991.

To accede to international capital markets, the Bank launched Global Depositary Receipts

(GDRs) in 2006. It was the first Pakistani Bank that got its GDRs listed on the London Stock

Exchange. In 2008, the Bank entered into a strategic partnership with Maybank, Malaysia,

which owns 20% stake in it through Mayban International Trust (Labuan) Berhad.

Subsidiaries

MCB Financial Services Limited

Holding: 99.999%

Profile: Float, administer and manage modaraba funds, modarabas and also acts as trustees of

various mutual funds.

MNET Services (Private) Limited

Holding: 99.95%

Profile: One of the largest service providers for Electronic Transactions to various financial

institutions/banks including related services in Information Technology, software and data

processing.

MCB Trade Services Limited

Holding: 100%

Profile: Provides agency services.

Arif Habib Investments Limited

Holding: 51.33%

Profile: Asset management, investment advisory, portfolio management, equity research and

underwriting.

“MCB Leasing” Closed Joint Stock Company, Azerbaijan


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Holding: 95.00%

Profile: It leases various types of industrial equipment, public transports, real estate and retail

auto leases.

With reference to significant holding, the following entities are associates of the Bank

Adamjee Insurance Company Limited

Holding: 29.13%

Euronet Pakistan (Private) Limited

Holding: 30%

First Women Bank Limited

Holding: 15.46%


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Awards & Achievements

2013 The Asset Triple A: Best Domestic Bank - Pakistan

2013 The Asset Triple A: Best Islamic Deal

2013 ICAP and ICMAP: 1st - BCR Award 2012 - Banking Sector

2013 LK Domain Registry Sri Lanka: Best Website Award

2013 Lanka Clear Pvt. Limited: T+1 Cheque Clearing Award

2012 The Asset Triple A: Best Domestic Bank - Pakistan

2012 Euromoney: Best Bank in Pakistan

2012 NFEH: CSR Business Excellence Award “Best Media Coverage”

2012 ICAP and ICMAP: 2nd Best Corporate Report Award

2011 - Banking Sector 2012 World Finance: Best Commercial Bank - Pakistan

2012 Pakistan Centre for Philanthropy: PCP Corporate Philanthropy Award

2011 CFA Association Pakistan: Most Stable Bank of the Year

2011 CFA Association Pakistan: Best Bank of the Year


2011 ICAP / ICMAP: 1st - BCR Award 2010 - Banking Sector

2011 SAFA: Joint 2nd Runner-up for BCR 2010

2010 The Asian Banker: Strongest Bank in Pakistan

2010 The Asian Banker: Leadership Achievement Award

2010 MMT: Best Bank Led MMT Service

2010 ICAP / ICMAP: 1st - BCR Award 2009 - Banking Sector

2010 SAFA: Certificate of Merit Award for BCR 2009

2009 Asiamoney: Best Domestic Bank in Pakistan

2009 The Asset: Best Domestic Bank in Pakistan

2008 Euromoney: Best Bank in Asia








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Vision & Mission

Vision

To be the leading financial services provider, partnering with our customers for a more

prosperous and secure future.

Mission

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

solutions to create and nurture long-term relationships with our customers. In doing so, we

ensure that our shareholders can invest with confidence in us.

Values of MCB

Integrity

We are the trustees of public funds and serve our community with integrity. We believe in

being the best at always doing the right thing. We deliver on our responsibilities and

commitments to our customers as well as our colleagues.

Respect

We respect our customer’s values, beliefs, culture and history. We value the equality of

gender and diversity of experience and education that our employees bring with them. We

create an environment where each individual is enabled to succeed.

Excellence

We take personal responsibility for our role as leaders in the pursuit of excellence. We are a

performance driven, result oriented organization where merit is the only criterion for reward.

Customer Centricity

Our customers are at the heart of everything we do. We thrive on the challenge of

understanding their needs and aspirations, both realized and unrealized. We make every effort

to exceed customer expectations through superior services and solutions.

Innovation


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We encourage and reward people who challenge the status quo and think beyond the

boundaries of the conventional. Our teams work together for the smooth and efficient

implementation of ideas and initiatives.


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3 Nature of the organization

MCB Bank Limited is a banking company incorporated in Pakistan and is engaged in

commercial banking and related services. The Bank’s ordinary shares are listed on all the

stock exchanges in Pakistan whereas it’s Global Depository Receipts (GDRs) representing

two ordinary shares are traded on the International Order Book (IOB) system of the London

Stock Exchange.

Business Activities

MCB Bank Limited is a Pakistan-based company. The Bank operates in four business

segments:

Corporate finance

Trading and sales

Retail and consumer banking

Commercial banking

Corporate Finance

Corporate finance includes underwriting, securitization, investment banking, syndications;

initial public offerings (IPO) related activities (excluding investments) and secondary private

placements.

Trading & Sales

Trading & sales segment includes fixed income, equity, foreign exchange commodities,

lending’s to financial institutions and brokerage debt.

Retail & Consumer Banking

Retail & consumer banking includes retail lending and deposits, banking services, private

lending and deposits, banking services and retail offered to its retail customers and small and

medium enterprises.

Commercial Banking

Commercial banking segment includes project finance, export finance, trade finance,

leasing, lending, guarantees and bills of exchange relating to its corporate customers.

Islamic Banking


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MCB-Islamic Banking Group (IBG) provides Shariah-compliant solutions to its valued

customers to fulfill their deposits as well as financing needs. Customers’ needs on deposit

side are being satisfied keeping in view of their business, short term and long term investment

requirements; whereas on financing side, the Working Capital, Capital Expenditures, Trade

Business and Consumer requirements are being satisfied through available sharia compliant

financing products. In addition to existing IB products, IBG believe in facilitating it’s

customer by offering new products both on assets and liability side. This year, IBG has

introduced a new asset based product for satisfying exporter’s pre-shipment financing needs

by offering “Istisna Pre-shipment Export Finance”. And for its valued depositors, a special

term deposit scheme with attractive profit rates for senior citizens and widows under the

name of “Aasoodgi” was also introduced. MCB-Islamic Banking is offering its product

through its 27 dedicated Islamic Banking branches in 14 cities across the country. In order to

facilitate its customer and to increase outreach of Islamic banking deposit products, an

initiative was taken by introducing Islamic which is expected to further enhance in future.

.


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Business Volume

Years Trend (2003 - 2013)

Total Assets

The asset base of the Bank has almost doubled over the last 6 years growing from Rs. 443

billion as at December 31, 2008 to Rs. 815 billion at the end of financial year 2013,

translating into an annual growth of 12% for the last six years; Prime contributors to the said

increase have been advances and investments over years, which increased contributions from

investments in the recent years. MCB Bank has been prudently able to manage the risks and

returns of its earning asset base to deliver maximum return to its stakeholders.


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Investments

The lacks of credit opportunities have paved way for build-up in investment base over the

years. The investment base of the Bank has increased extravagantly from Rs. 96 billion in

2008 to Rs. 449 billion in 2013 with major concentration levels in risk free Market Treasury

bills and Pakistan Investment Bonds.


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Deposits

The deposit base of the Bank has steadily grown over the last six years, with absolute

numbers increasing from Rs. 330B in 2008 to Rs. 632B in 2013. MCB Bank’s competitive

edge has been the highest CASA base, supporting its lower cost of deposits. The Bank has

been constantly shifting its high cost deposit to low cost deposits, as CASA base has more

than doubled in last 6 years, increasing from Rs. 268 billion in 2008 to Rs. 568 billion in

2013; MCB Bank has been able to maintain its share in the domestic industry deposit pie with

an average share of approximately 8%. As depicted by the deposit categorization, the quality

of service and returns provided by the Bank has enabled to keep the CASA base above 80%

for the last six years.


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Advances

The macro-economic instability coupled with energy crisis has adversely affected the private

sector credit demand of the local banking industry and a similar pattern can be observed for

MCB Bank Limited. Being mainstream business line of the Bank, credit growth remained

prime focus of the Bank but the lack of credit opportunities and intense competition resulted

in a moderate growth in gross advances base. However, based on significant additions

recorded in investment base, the ADR had been decreased as a result of shift in asset mix

from 83% reported in 2008 to 42% reported for 2013.


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Non-Markup Income

• To coupe up with the interest rate volatility, the bank has strategically focused on the

increased contribution from non-markup based income. The product development teams of

the Bank have been tapping the unbanked segment of the population and offering them

tailored products to meet their specific financial requirements. Numbers of products have

been launched in past 6 years in order to increase non-markup income like credit card, mobile

banking, visa debit card, MCB Lite, prepaid cards etc.

• The fee, commission and brokerage block of the Bank has been constantly increasing over

years with major contributions coming from commission earned on bancassurance business,

remittances and intercity / intra-city cash transfers.

• The equity investment base of the Bank has been providing outstanding dividend yields

with dividend income registering the second highest contribution to non-markup income.

During the year 2013, substantial capital gains were earned, benefitting from the record levels

posted by the equity markets.


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Organizational Structure


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Corporate Information

Board of Directors

Mian Mohammad Mansha (Non-Executive

Director)

(Chairman)

S. M. Muneer (Non-Executive Director)

(Vice Chairman)

Tariq Rafi (Non-Executive

Director)

Shahzad Saleem (Non-Executive

Director)

Sarmad Amin (Non-Executive

Director)

Mian Raza Mansha (Non-Executive Director)

Aftab Ahmad Khan (Non-Executive

Director)

Mian Umer Mansha (Non-Executive Director)

Ahmad Alman Aslam (Non-Executive Director)

Dato’ Seri Ismail (Non-Executive

Director)

Shahudin

Muhammad Ali Zeb (Non-Executive

Director)

Imran Maqbool (Executive Director)

(President and CEO)

Audit Committee

Tariq Rafi (Non-Executive

Director)

Chairman

Aftab Ahmad Khan (Non-Executive

Director)

Chief Financial Officer Salman Zafar Siddiqi

Company Secretary

Syed Mudassar Hussain Naqvi

Auditors

M/s. A. F. Ferguson & Co.

Chartered Accountants

Legal Advisors

M/s. Khalid Anwer & Co.

Advocates & Legal Consultants

Registrar’s and Share Registration

Office

Head Office

M/s. THK Associates (Pvt.) Ltd.

State Life Building No.3

Dr. Ziauddin Ahmed Road Karachi,

Pakistan.

Branch Office

M/s. THK Associates (Pvt.) Ltd.

2nd Floor, DYL Motorcycles Ltd.

Office Building

Plot No. 346, Block No. G-III,

Khokhar Chowk

Main Boulevard, Johar Town,

Lahore, Pakistan.


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Dato’ Seri Ismail Shahudin (Non-Executive

Director)

Ahmad Alman Aslam (Non-Executive

Director)

Principal/Registered Office

MCB Building, 15-Main Gulberg

Jail Road, Lahore, Pakistan.

Contact us:

UAN: +92 42 111 000 622

Email: [email protected]

Visit us: www.MCB.com.pk

http://www.mcb.com.pk/


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Branch Network

Branch Network

Domestic Operation-

1194

Overseas Operations-

08

Sri Lanka-06 EPZ-01

Bahrain-01 UAE-01

(Rep. Office)

Branches-1180 Retail-1133

Privilege-10

WBG-10

Islamic-27

Retail Sub Branches-

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Product & Services

1.5

PRODUCT & SERVICES

MCB CORPORATE FINANCING

VIRTUAL BANKING

ISLAMIC BANKING

AGRI PRODUCTS

MCB INVESTMENT BANKING

MCB RETAIL BANKING

OTHER SERVICES

PRIVILAGED BANKING


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Product & Services

MCB Corporate Financing

MCB Corporate Financing provides access to diversified financing options, including

working capital loans, term loans, trade finance services and investment banking.

Working Capital Loans

Based on the customer’s specific needs, the Corporate Bank offers a number of different

working capital financing facilities including Running Finance, Cash Finance, Export

Refinance, Pre shipment and Post- shipment etc. Tailor- made solutions are developed

keeping in view the unique requirements of your business.

Term Loans

MCB offers Short to Medium Term Finance to meet capital expenditure and short term

working capital requirements of our customers. The loans are structured on the basis of

underlying project characteristics and cash flows of the business.

Trade Finance Services

Under Corporate Banking MCB offers trade finance services that include an entire range of

import and export activities including issuing Letters of Credit (L/Cs), purchasing export

documents, providing guarantees and other support services.

Cash Management

Cash Management provides a wide range of value added services to large corporations

through its vast network of online branches. Our structured and customized products enable

our customers to realize their sales proceeds swiftly from all over the country, supported by

real-time MIS.

Transaction Banking Division

Transaction Banking provides wide range of value added services to large corporations

through its vast network of real-time online branches network. Our structured and customized

products enable our customers to realize their sales proceeds swiftly from all over the

country, supported by real-time MIS.

The basic products offered by Transaction Banking Division are as under:

a. Collections

b. Payments

c. Channel Financing

d. Local Rupee Drawing Arrangement


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e. Home Remittances

MCB Retail Banking

1. Deposit Accounts

2. MCB Bancassurance

3. MCB’s Remittance

4. MCB Loan Products

5. MCB Rupee Travelers Cheque

6. MCB Online Services

7. MCB Cards

1. Deposit Accounts

Current Account

MCB Bank offers a variety of current accounts to cater to the everyday transactional needs of

various customers. These accounts ensure ease and freedom to bank from any of the 1,100

branches across the country. The different accounts include: the basic account that has no

minimum balance; Business Account offering free online transactions, Demand Drafts, Pay

Orders and lots more to meet the day to day business requirements; Current Life Account

which offers the security of life insurance free of cost; and for all the others the conventional

Current Account.

Savings Account

It offers a wide array of savings products that suit short term growth & transactional needs.

Our savings accounts offer attractive profit rates as well as flexibility to transact. Savings

Xtra is targeted for customers having Rs. 5 million deposit, 365 Gold offers profit rate on

daily balance while PLS savings has a lower minimum balance requirement. In addition, a

unique product: Smart Savings is an account run solely via a debit cart, offering a very

competitive rate to small savers.

Foreign Currency Account

Enjoy the confidence of operating an international account, locally. MCB Foreign Currency

Account offers the option of earning attractive returns on your Foreign Currency Investment.

Saving 365 Gold

MCB Savings 365 Gold Account offers you a wide range of attractive profit rates. The MCB


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Saving 365 calculates profits on a daily product basis and gives you the facility of unlimited

withdrawals.

Smart Dollar Account

MCB Smart Dollar Account is a sensible way to maintain or grow your US Dollar deposit

across USD Current, Savings or Term Deposits.

Special Term Deposits

With a wide range of choices and tenors, you can open one or more term deposit accounts

that best suit your current or long term needs MCB Term Deposits offer attractive short to

mid-term investment options with flexibility, convenience and security. With various tenor

options available customers can choose one that suits their needs. This is combined with

different profit payout options and the added facility of being able to avail credit facility

against their deposits.

Business Accounts

MCB Business Account lets you build your business through the accrued savings from

discounted transaction fees, and more.

Saving Xtra Account

MCB Savings Xtra Account offers you a wide range of attractive profit rates. Grow with

MCB Xtra by saving more and earning greater profit.

Current Life Account

The coverage you need for the life you lead. MCB Current Life gives you the peace of mind

of comprehensive life insurance in a current account and fits right into your lifestyle

Mahana Khushali Bachat

MCB Monthly Khushali Scheme provides you with a steady income every month. Just

purchase a Monthly Khushali Certificate and you will enjoy a steady income of your total

deposit every month. Terms deposit.

2. MCB Bancassurance

Combining the best of banking and insurance solutions, MCB Bancassurance has created a

one-stop shop for all your financial and insurance needs. Whether you want to save for your

child’s education or marriage, for the security of dignity after retirement or gaining maximum

return on savings, MCB Bancassurance has a plan just for you.

Flexi Life

Life Partner


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Edu Care

Dream Wedding

Capital Sure

Retire Easy

Income Max

Future Assure

Protection Plan

3. MCB’s Remittance

Fast, secure and easy-to-use, MCB's Remittance Services is an efficient way to transfer

money overseas. You can remit funds from any country to Pakistan through Swift System.

MCB Home Remittance provides a seamless inflow of foreign remittances credited in the

beneficiary’s account within minutes. Cash payments can also be made at our designated

branches on behalf of Xpress money, Samba (Speed cash now) and MoneyGram, along with

cash payments from other correspondents all over the world.

4. MCB Loan Products

Car4U

MCB Car4U not only gets a car of your own choice but is also affordable with competitive

mark-up, flexible conditions, easy processing and above all, no hidden costs.

Business Sarmaya

Good cash flow is the key to any successful business. MCB Business Sarmaya offers running

finance facility against your house/ flat, insuring a steady cash flow for your business.

Pyara Ghar

MCB Pyara Ghar is an ideal Home Finance from your own bank that lets you Purchase,

Renovate or Construct your home the way you have always wanted. Having your own home

was never so easy

Easy Personal Loan

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.

Instant Finance


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With MCB instant Finance get a loan instantly at any MCB branch against liquid collateral at

competitive pricing.


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5. MCB Rupee Travelers Cheque

It is a safe and secure way to make payments nationwide. MCB Rupee Travelers Cheque,

being the market leader, is the most widely accepted way to pay cash for travel-related

purposes MCB Rupee Traveler's Cheques were first introduced in 1993 as safe cash for

traveling and travel related purposes.

6. MCB Online Services

ATMs

MCB has one of the nation's largest ATM networks with over 450 ATMs and still growing.

MCB ATMs give you 24-hours convenience of cash withdrawal, mini-statement, utility bill

payment, funds transfer services and much more. With MCB Mobile ATM not only do we

provide you with world class banking service but we also provide convenience. Our

innovative mobile ATMs ensure that you are given service close to you.

Call Center

The state of the art MCB call center is the right choice to keep you in step with your ever

hectic schedule by providing you services relating to your account and Smart card at any

point in time.

There’s no easier way to bank than the new enhanced 24/7 MCB Call Center, which blends

innovation and convenience to provide Banking Services that go beyond expectations. With

MCB Call Centre you can maintain your VISA credit & ATM/Debit cards, check your

account balances, confirm last 5 transactions, pay utility & mobile phone bills, top-up your

mobile, pay MCB Visa Credit Card bill from your MCB account, transfer money within your

own accounts in MCB and register complaint.

Mobile Banking

At the forefront of technological excellence, MCB proudly introduces MCB MOBILE

BANKING. MCB Mobile is a quick easy and secure way to recharge mobile phones, transfer

money, pay bills and do much more. No need to visit a branch or an ATM anymore, login to

www.MCBmobile.com using your mobile phone and start transacting.

Bill Payments

MCB easy bill pay offers unmatched convenience to pay your utility and mobile phone bills

or re-charge your prepaid mobile phone accounts anywhere, anytime with security and peace

of mind. MCB is the only bank that offers you 3 convenient options of making bill payments


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to PTCL, SSGC, SNGPL, KESC, Mobilink, Supernet, IESCO, HESCO, and Ufone. So, save

your precious time by avoiding long queues and pay your bills through MCB Easy Bill Pay.

Online Banking

MCB has a fast growing network of over 1,100 online branches in the country providing

customers real time online transaction facilities.

7. MCB Cards

Smart Card

MCB Smart Card is the key that enables access to convenient banking services. Smart Card

allows you to manage your account, withdraw cash, transfer funds, pay utility and mobile

bills, recharge prepaid connections, and register for mobile and internet banking services and

much more. The convenience and flexibility of MCB Smartcard will help you live a smarter

life. It not only helps you manage your expenses, but also eliminates undue interest on your

day to day credit card transactions. Your balance is always within your reach and you spend

accordingly.

MCB now brings MCB SmartCard a secure and convenient instrument of payment with

unmatched functionalities. It provides 24-hour direct access to your bank account.

Debit Card

Now MCB brings a secure, convenient and quick payment facility that enables you to do

purchasing by using your existing MCB ATM / MCB Smart Card as a DEBIT CARD.

Visa Credit Card

MCB offers a complete suite of Classic, Gold and Platinum Visa Credit Cards focusing on

providing, superior service, travel privileges & shopping pleasure. It also offers

comprehensive insurance & installment plans, reward points and SMS alerts that give a

different feel to the world of Credit Cards. These unique features include i-revolve, which

makes variable mark-up rate available to customers allowing them to repay at affordable

rates.


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MCB Investment Banking

Make the most of customer’s wealth with investment opportunities that match their unique

financial aspirations. MCB Investment Services offer distribution of mutual funds managed

by the leading fund managers of Pakistan. We can suggest the products most suited for their

needs, or work with them to create a personalized solution completely focused on their

expectations of the capital markets.

MCB goal is to provide best financial solutions to client helping them achieving their

objectives and support economic growth of the Country. The basic services offered by

investment banking are as under:

Project & Structured Finance

Involves financing complex projects, usually in an SPV structure, where the loan is tightly

structured around the cash flows, risks are allocated amongst various stakeholders, and there

is limited or no recourse to the sponsors.

Syndicated Loans and Debt Capital Markets

It involves structuring/advisory arrangement, underwriting and placement services for

significant financing requirements by large corporate and institutional clients to other

financial institutions or through the debt capital markets.

Quasi Equity/Hybrid Instruments

It structures and places a category of debt that has some characteristics of equity such as

being unsecured, subordinated or with a potential equity upside.

Equity Capital Raising

Equity Services relate to raising capital for clients by offering common or preferred equity to

public or private investors, through initial public offers, offers for sale, rights issues and

private equity placements.

Advisory Services

Financial and Capital Raising Advisory provides clients with financial advisory services,

commercial structuring support and access to capital resources to help companies

successfully finance their business/project.


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Facility Administration

Management of creditor interests in syndicated transactions in capacities such as facility

agent, security trustee, project monitoring bank, book-runner etc.

Commercial Banking

Complementary products and services such as revolving lines of credit, trade services and

cash management that may be bundled with our Investment Banking Products.

MCB Agriculture Products

MCB has been providing finance to the agriculture sector since 1973. With the help of our

vast branch network, specialized staff posted in the branches, multiple and diversified product

range, we cater to the financing requirements of the farming community spread throughout

the country and facilitate in achieving increased productivity.

Shadabi Plan

Shadabi Plan caters the financing needs for production activities on the farm which mainly

include seed, pesticides and fertilizers along with provisions for miscellaneous expenses like

payment of electricity & diesel bills of tube wells, maintenance expenses for tractors and the

like items as per list of Eligible items.

Khushali Scheme

Under Khushali Scheme loans/finances are allowed for farm/ non-farm credits which include

fixed investments/working capital requirements. Amount of finances sanctioned depend upon

the credit requirement and collateral.

Financing for land leveling/development, heavy equipment’s, agriculture machinery,

vehicles/transport for agri purpose are covered under this scheme. There may be other

development projects proposed by the farmers falling with in the ambit of agri financing,

which can be considered under this scheme.

Tractor Finance Scheme

To boost up the mechanized farming in the country, Tractor Finance Scheme is introduced to

offer specialized services to farmers. Under this scheme, there is no requirement of minimum

land holding because of multipurpose use of tractor for agriculture cum commercial.

However, the repayment capacity and potential use of tractor will be evaluated at the time of

loan processing.


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Aabiari Scheme

Under the Aabiari scheme, financing facilities for tube well, other wells, irrigation systems of

all types including sprinklers are covered. The purpose is to facilitate the farmers in

overcoming the shortage of water for cultivation/plantation since water is essential

requirement for crops.

Grower Finance

Grower Finance is a unique way of financing registered/ (bonafide) growers/farmers of

sugarcane, cotton and rice (mills). The special characteristic is that the financing facilities are

extended to farmers against the Mill/Factory guarantee. Fixed/floating charge may be created

on the Mill's assets and the loan is disbursed directly to the growers. This finance is short

term in nature but the tenure may extend to eighteen months in case of growers of sugarcane.

Dairy & Meat Plan

The plan is aimed at promoting the Dairy sector & meat production in the country. The

farmers are extended financing facilities to purchase dairy animals for milk and for the

establishment of animal fattening stations to increase meat production on commercial line,

thus enabling the farmer to create more income.

Murghbani Scheme

Murghbani Scheme covers extensively all requirements of the poultry industry with focus on

facilitating the farmers. We offer financing facilities of all types of activities in the value

chain starting from establishment of poultry farms infrastructure to all requirements in the

process till the final out put including marketing of the same by the farmers. Value addition

process by the farmers for poultry processing is also covered under the scheme.

Baghbani

The scheme aims at facilitating the farmers engaged in horticulture by extending credit

facilities covering the entire range of related activities. The proposals are assessed keeping in

view the market potential and repayment capacity based on the cash flows of the activity.

The farmers are extended all type of credit facilities required to produce fruits & vegetables

of better quality. The repayment of the loan is as per farmer convenience or linked to crop

cycle and timings of cash flows. Facilities like running finance, working capital requirements,

infrastructure development, machinery & equipment, irrigation etc. are all covered under this

scheme. Progressive farmers are especially encouraged.


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Mahigeri Scheme

Mahigeri Scheme caters to the credit needs of fish farmers covering entire range of activities

including marketing of their produce. The loans are of short, medium and long term

depending upon the purpose. Financing for value addition process by the fish farmers is also

covered under the scheme.

Virtual Banking

MCB provides the convenience of banking via internet, whether at home, office or on travel,

log on to www.MCB.com.pk and enjoy 24 hour access to all your accounts at MCB for great

number of services such as Funds Transfer, Utility Bill Payments, Mobile Top-ups and much

more.

Detailed Account Summary of all listed accounts.

Mini-statements of each of the listed accounts showing recent transaction history for

that account(s).

Statement-by-Period of each of the listed accounts, based on the period specified.

Immediate or Scheduled Transfer of Funds between your own accounts, as well as to

third-party accounts setup as beneficiaries, maintaining accounts with MCB.

Scheduling of ‘One-Time’ as well as ‘Recurring’ Funds Transfers.

Payment of utility bills for registered Utility Companies.

Immediate or Scheduled Bills Payment. Scheduling of ‘One-Time’ as well as

‘Recurring’ bill payments. Option for ‘Full’ or ‘Partial’ payment based on the

payment conditions specified by a particular Utility Company.

Bulk Salary Transfer for Corporate Customers, to facilitate them in paying salary to

the corporate employees, who maintain accounts with MCB.

Bulk Funds Transfer for Corporate Customers.

Cheque Book Request for any of your listed accounts.

Payment/Transfer Alerts for reminding, in advance, prior to the processing of

specified payments and transfers.

Personal Alerts for reminding of pre-specified events and occasions.


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Islamic Banking

With the help of Shariah specialists, lawyers and professional commercial bankers, MCB

Islamic Banking provides Riba Free and Shariah Compliant solutions to various customer

segments in a growing number of cities.

1. Deposit Schemes

For customers who are looking for a deposit opportunity where they can purse their funds and

reap halal returns on it, MCB offer the following products:

I. Al-Makhraj Saving Account

II. Al-Makhraj Ianat Account

III. Al-Makhraj Term Deposit

2. Fund Based Facilities

MCB offers 3 broad Islamic fund based facilities:

Ijarah

Murabahah

Diminishing Musharika Equipment

Ijarah Products

MCB’s Islamic Ijarah, analogous to the English term 'leasing’, is based on the ‘Ijarah wa

Iqtina’ concept which means the sale of the asset to the lessee after the Ijarah has matured.

Under this scheme, MCB will be the owner of the asset, and the customer (lessee) will be

given the asset to use for a certain period of time in return for monthly rental payments.

MCB will give a separate unilateral undertaking that it will offer to sell the asset to the

customer (lessee) at the maturity of the Ijarah agreement at a price that may be equal to the

security deposit amount, hence the term ‘Wa Iqtina’

Types of Ijarah

I. Car Ijarah

II. Equipment Ijarah

Murabahah

It is a contract between a buyer and a seller under which the later first purchases the goods at

the request of the former i.e., customer and then sells it to same customer after adding profit.

Murabah Sale Price = Cost + Expenses incurred + Agreed Profit


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Musharika Equipment

It is a contract through which the bank and its client participate in the joint ownership of a

property. The share of the Bank is further divided into a number of units and it is agreed that

the client will purchase the bank’s share periodically, thus increasing his own share until all

the units of the bank are purchased by him so as to make the client the sole owner of the

property.

Privilege Banking

A first from a local bank, MCB Privilege through its dedicated, world class Privilege Centers

offers a higher level of personalized services, more rewarding in-branch experiences and a

wide array of deposit and investment products that are tailored to meet the financial

expectations for affluent clientele. As members of MCB Privilege, customers experience

unparalleled advantages that put them ahead of others. MCB’s dedicated Privilege Centers a

wait to welcome you in Karachi, Lahore, Islamabad and Multan, with plans to expand to

more locations.

Other Services

MCB MNET

MNET is an electronic inter-bank connectivity platform for online transactions on ATM and

other remote banking channels. It offers other Value Added Services that include a portfolio

of e-banking and payment system products as well as management and day-to-day operations

of the same. Members include 10 local and foreign financial institutions enjoying ATM

sharing and Value Added Services.

MCB Salary Club

A payroll solution designed to make life easy; it simplifies all the monthly payroll related

banking needs of employers and opens the door to a world of special offers for employees.

Salary Club provides the convenience of having an extensive range of financial services

available to employees at their place of work.


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MCB Lockers

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

available nationwide.

MCB SMS Banking

Banking at your fingertips SMS anytime to get information regarding balance, mini

statements and credit card related information once your card is linked.

MCB Full Day Banking

Enjoy the convenience of extended banking hours from 9am to 5pm, including Saturdays at

MCB branches across the country.


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4 Overview of Department

Organizational Structure of the Branch

A well-developed and properly coordinate structure is an important requirement for the

success of any organization. It provides the basic framework within which functions and

procedures are performed. Any organization needs a structure, which provides a framework

for successful operations. The operation of an organization involves a number of activities,

which are related to decision making, and communication of these decisions. These activities

must be well coordinated so that the goals of the organization are achieved successfully

Regional Head

Commercial

Branch Manager

Branch Operation

Manager

Senior Personal Banking

Advisor Forex Manager Customer Service Officer Credit Manager/

Relationship Manager

Teller Service Supervisor General Service Officer General Banking Officer-

-Remittance

-Clearing

-GL Accounts

-Shares

-Atm

Forex Officer

Teller Service Officer


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Employees Detail

Serial No. Employee Name Department

1 Shoaib Khan BM

2 Shabir Hussain Bajwa BOM

3 M Ijaz Balouch TSO

4 Syed Shahid GBO

5 M. Asif Iftikhar Credit Manager

6 Syed Ali Mohtisham Naqvi Credit Officer

7 Ali Raza Credit Officer

8 Shahzad Ali Khan Trade Officer

9 Ghulam Ghous TSO

10 Uzair Masood TSO


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Departments of MCB Dubai Chowk Branch (1164)

The departments are as under

General Banking Department

I. Clearing Department

II. Remittance Department

Accounts Department

Credit Department

Foreign Trade

Internal Control Department

Clearing Department

Clearing means collection of cheques receive from our customers but drawn on other banks.

Receiving the instruments deposited by customers posting the amount of instruments in credit

of customer’s account If cheque returns from the concerned bank, the customer account is

debited. Crossing stamp is put on the instrument and slip given to customer on receipt of the

instrument. Clearing stamp and “payee account credited” are put on the instrument and the

voucher. Clearing House has provided this facility. Clearing house facilitates different banks,

in one city, to get their cheques drawn upon other banks to be cleared.

Cheques lodged in clearing constitute in clearing constitute two types of clearing:

Outward Clearing

Inward Clearing

Outward Clearing

When cheques, TC’s and other negotiable instruments drawn upon other banks like NBP,

ABN AMRO of the same city (as Bahawalpur) are presented in Muslim Commercial bank to

deposit them in the respective payee’s accounts, these instruments are lodged in outward

clearing (o/w clg) of MCB bank.

Procedure of Outward Clearing

The name of the branch appears on its face where it is drawn.

It should not stale or post - dated or without date.

Amount in words and figures does not differ.

Signature of the drawer appears on the face of the instrument.


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Instrument is not mutilated.

There should be no material alteration, if so, it should be properly authenticated.

If order instrument suitably indorsed and the last endorsee’s account being credited.

Endorsement is in accordance with the crossing if any.

The amount of the instrument is same as mentioned on the paying-in-slip and

counterfoil.

The title of the account on the paying-in-slip is that of payee or endorsee (with the

exception of bearer cheque).

If an instrument received other than MCB of Pakistan then special crossing stamp is

affixed across the face of the instrument. Clearing stamp is affixed on the face of the

instruments, paying-in-slip and counterfoil (The stamp is affixed in such a manner

that half appears on counterfoil and paying-in-slip). The instrument is suitably

discharged, where a bearer cheque does not require any discharge and also an

instrument in favor a bank not need be discharged.

Over writing.

No stamp of clearing or if it is not clear.

No stamp of crossing or if it is not clear.

Inward Clearing

Inward clearing means cheques drawn on Bank and presented by other banks. In inward

clearing Branch acts as paying banker. After realization of inward clearing, banks deposits

are decreased as bank makes payment to other banks from the balances held by the branch.

This realization of inward clearing is also referred to as responding to the clearing. Cheques

and other negotiable instruments (PO, DD, PS, CDR etc.) drawn on Muslim bank, sent by

other banks, constitute the inward clearing of MCB.

Procedure of Inward Clearing

Instruments with schedules are received from NIFT.

Amount of each instrument entered is in inward clearing register.

Instruments are detached and handed over to the deposits and other respective

department for checking and payment.

In case of any instrument is returned, return memo is prepared stating the reason of

the return.

Entry is made in cheques Return register.

Cheques return charges are recovered from the party as per charges schedule.

Checking / Return of Instruments


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Over writing

No stamp of clearing or if it is not clear

No stamp of crossing or if it is not clear

Remittance Department

The Remittance department deals with the transfer of money from one place to another.

Funds transfer facility or remittance of funds is one of the key functions of the banks all over

the world. Remittances through banking channels save time, costs less and eliminate the risks

involved in physical transportation of money from one place to another. Muslim Commercial

Bank of Pakistan transfers money in the following ways.

Pay Order

Demand Draft

Mail Transfer

Telegraphic Transfer

Pay Slip

Call Deposit Receipt

Letter of Credit

Travelers Cheque

Accounts Department

Opening of account is the most important department of the Branch as this is a contract

between the customer and bank. All future transaction/operation are carried out as per this

contract and any deviation may jeopardize the bank’s interest. The opening of a new account

is the establishment of customer banker relationship. By opening an account at a bank, a

person becomes a customer of the bank. The customers can open following accounts:

Current Account (CD A/C)

Profit and loss sharing Account (PLS A/C)

Basic Bank Account (BBA A/C)

Fixed Deposit (FDR/TDR)

Account Opening


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When a client comes to the bank, and makes a request for opening of an A/C. The officer

says that first fill up a prescribed application form. If he/she wants to open a PLS A/C, then

he/she has to fill a form according to the account.

Requirements

ID Card of applicant

ID Card of father, mother, brother, sister, husband or wife

Student card (if applicant is student)

Two photos for illiterate person or those who use Urdu signatures

Documents Attach with A/C Opening Form

A/c opening form

Specimen signature card

Zakat form (for non-muslims)

Deposit slip

Requisition form

Issuance of Cheque Book

After opening an A/C with the bank, the A/C holder once again makes a request in the name

of bank for the issuance of a cheque book. The A/C holder mentions title of A/C, A/C

number, sign it properly and mentions the no of leaves he requires

Credit Department

The bank is profit seeking institution. It attracts surplus balance from the customer at low rate

of interest and makes advances at a higher rate of interest to the individuals and business

firms. Credit extensions are the most important activity of all the financial institutions,

because it is the main source of earnings. Advances department is one of the most sensitive

and important department of the bank. The major portion of the profit is usually earned

through this department. The job of this department is to make proposals about the loans; the

credit management division of head office directly controls all the advances. The advances

Department receive application from intending borrowers. After receiving application the

advance department processes it further. After analyzing and detailed investigation, they

decide whether to approve the loan or not. Some loan approvals are made by the Manager of

the branch within his powers as prescribed by the bank’s higher authorities, while some loan

applications are submit to higher authorities for their approval.


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Some advances are of the following nature

Loan against Gold

Agriculture advance to farmers

Medium term advance for working capital

Long term advance for setting industry

Short term advance to businessman

Foreign Exchange Department

This department mainly deals with the foreign business. The main functions of this

departments are:

L/C dealing.

Foreign currency accounts dealing.

Foreign Remittance dealing.

Internal Control Department

Role of branch compliance department is to reconcile the prescribed frequencies, investigate

long pending reconciliation item, and ensure correct treatment every half-year and clearing

system service branch-in major cities. Internal control is the integration of the activities,

plans, attitudes, policies and efforts of the people of the bank working together to provide

reasonable assurance that the organization will achieve its objectives and mission.

5 Dormant account Activation project:

Dormant / Inoperative Accounts & Financial Instruments


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Checking accounts are classified accounts due to the conditions mentions mentioned in the

table below. The account become dormant if there is no activity in the account (excluding

system generated activity e. g. profit disbursement) shall be classified and flagged by the

system as “dormant account”. (No financial entry is passed). However half yearly profit shall

continue to be applied as usual on Savings account only.

Type of Account Dormancy Inoperative Unclaimed

Current Account 6 Months 2 Years 10 Years

Saving Account 1 Year 3 Years 10Years

Financial

Instruments -

3 Year from Date of

Issuance

Unclaimed Deposits- Saving & Current Account

Current & Savings Account not operated four tan years from the date of last activity in the

account (excluding system generated activity e. g. profit disbursement) will be classified and

flagged by the system as un-claimed and on financial entry is passed).

Note: As per SBP BPRD circular 02 of jan 05, 2010 banks are NOT allowed to deduct

‘Service Charges’ on customer accounts which are classified as Dormant, In-operative & un-

claimed. And it is further notified that bank statement for such accounts will also not be

dispatched after the change of status from active to dormant

Activation & Operation in Dormant, Inoperative & Unclaimed Deposit

Accounts

Prime responsibility to approve operation and activation of a Dormant, inoperative and

Unclaimed (not yet surrendered to SBP) Accounts as well as payment of a claim lies with

PARENT BRANCH ONLY.

1. Any request for operation in above accounts should be initiated in-person by the

account holder in writing and must be supported by attested copy of valid CNIC (If

customer CNIC do not exist in the system, that it is required to verify it’s genuineness

through NDRA’s online VeriSys and retain the same as the record and update

customer’s record with CNIC number on the system. Request received from person

other that the account holder himself should not be entertained.


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2. Request received by the parent branch for execution of any customer initiated

transaction (financial or non-financial) will invariably be referred to the branch

manager who will scrutinize the request personally and satisfy himself beyond doubts

as to the genuineness thereof.

3. After being the satisfied, the branch manager operations manager will jointly approve

the operation in dormant, inoperative and unclaimed accounts OR will pay to a

rightful claimant means of payment order only as the case maybe.

4. In case of any particular does not match with NADRA records with the CNIC

provided by the customer, account should not be activated till completion information

is not updated on NADRA VeriSys.

5. In case where customer is reported as having dual CNIC’s as per NADRA VeriSys,

only valid CNIC should be obtained at the time of activation of Dormant Account and

this account should be marked as High Risk and should be monitored at regular

intervals. Further branches must ensure that he duplicate CNIC has been surrendered.

6. Where customer is holding dual CNIC as per NADRA VeriSys, and the account was

opened against surrendered CNIC, branch should immediately close the account after

completing all the formalities / requirements in light of instructions provided in CDD

/AML handbook.

In Case of Cross Branch Transaction

If customer approaches a Branch other than the ‘parent’ branch for operation in dorment,

inoperative and Unclaimed accounts the concerned branchbefore execution of customer

initiated transaction (financial or non-financial), is required to obtain written approval

from the parent branch, for this purpose:

1. Concerned branch will forward customer’s written request to the Branch Manager of

parent branch via fax or e-mail with scanned copy of customer request.

2. Branch Manager of parent branch will verify customer signature on customer’s

request, affix signature verification stamp and scrutinize the request personally and

satisfy himself beyond doubts as to the genuineness thereof. Also check the account

for complete documentation and KYC / AML requirements.


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3. After being so satisfied, request will be jointly approved by the Branch manager and

Branch Operation Manager of the parent branch mentioning their IBS number and

will forward the customer request back to the concerned branch through fax or e-mail.

4. This will be done only where the customer visits the paying branch in person.

5. Parent branch should retain a copy of the duly approved customer request as an

evidence and record in its dormant account activation file.

6. To ensure better customer service staff as both the branches should ensure that

process is completed in shortest possible time.

7. Account status will not be changed to ‘normal’ until customer personally performs a

financial transaction (deposit or withdrawal) in his account on the counter.

8. Branches will print the “Change in Account Status Report- KM0099” on daily basis

and file it chronologically as a branch record and for onward review by ROM.

In case of Inward Remittance in Dormant Account

When the Remitter and beneficiary is the same person

If remittance is received in an account which is dormant, but the remittance has been sent

by the beneficiary himself, the bank will make the account operative and accept the

remittance provided the account is normal otherwise i.e., the account was opened without

any discrepancies and a valid CNIC is available for the account. In case the account has

discrepancies, BM/BOM will ensure to complete all formalities to regularize the account.

When the Remitter and Beneficiary are different persons

If remittance is received in an account which is dormant and the remittance receives has

not been sent by the beneficiary himself, the Branch Manager/ Branch Operations

Manager should make full efforts to contact the customer and complete all formalities to

regularize the account. After being satisfied with the purpose of the remittance and

obtaining all relevant information/ documents to regularize the account, Account will be

activated and the remittance will be accepted.

Preservation of Documents

Branches are required to preserve all signature cards and document indicating the

“Signing Authorities” given to them and other documents relating to the debt or


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instrument in the dual custody of Operations Manager and Designated Authorized Officer

until informed by SBP in writing that they need not be preserved the same any longer.


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Chapter No-2

Analysis


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6 Macro Analysis of Commercial Banks Industry

Pest Analysis

Political

Employment practices are expected to change.

Unions, Associations are being allowed to work effectively which can affect the

performance of the company both positively or negatively.

Political interference regarding policies is expected to increase as current government is

in race of power gain.

Due to lack of confidence on government, investor is reluctant so mobilization of funds is

going to decrease.

Economic

Inflation is very high which will decrease the demand as purchasing power is decreasing.

Staff cost is increasing as basic wage rate has increased and inflation has compelled to

will compel to increase salaries.

Operating costs are increasing due to inflation.

Interest rate is increasing so loan taking has decreased.

Value of rupee is decreasing which is pressurizing the economy.

Social and Cultural

Lack of experts is in our country regarding management hence innovative activities are

slow and conventional methods are adopted.

Cultural strain to savings is the reason due to which investment remains low.

Declining work ethics is also our problem which is mainly due to poverty, lack of

training.

Inadequate Accountability, lack of good governance and lack of good infrastructure helps

creditor to cheat and heavy bad debts occur. Same situation is hoped to prevail.

Inadequate Empowerment is also a usual problem in our organization as every person

want to get more power hence there is less delegation of authority and decision making.

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Due to the fast paced life style of modern day individual, modern facilities has been

provided by banks to customer.

MCB commercial banking is also effected by religion because many people considered

banking HARAM due to interest.

Technical

MCB has computerized its most of the branches but still some are manual there is need to

computerized otherwise customers will get bad image.

Now a day computerized system is used by banks which is very effective. But MCB will

have to improve its computerized technology as some fake transactions occur by ATM.

Employees of each organization need IT training and organization has this trend. MCB

will have to follow it.

Commercial bank industry is using new technology of communication like banners and

customer relationship management (CRM). MCB has to improve its way of

communication.



52

7 Micro Environment Analysis

SWOT Analysis

Strengths

Strong capital base & Highest Capital

Adequacy Ratio in peer Banks.

Highest CASA ratio / low cost deposits

(90%) in the industry.

Ability to introduce new products to

improve margin and volumes.

Diversified Portfolio of loans and

advances and diversified income streams.

2nd lowest infection ratio in peer banks

Conservative and sustainable business

policy.

MCB is Successive and Market oriented.

MCB investing huge sums on HR

development and training.

Customer default rate is lower as

compared to other banks.

MCB has the largest ATM network in the

country.


53

Limited credit opportunities having low

risk profiles.

Concentration in Govt securities &

Lending to Public/ Govt owned entities.

Lesser international / Global presence as

compare to peer banks.

Dependence on the money and capital

markets.

Linkage of minimum deposits rate with

discount rate by regulator squeezing

banks margin.

Exposure to the Euro/US dollar exchange

rate, with an impact on growth and

results.

Low motivational level.

Employees, dissatisfaction due to ill

treatment and improper reward system.

Favoritism and Nepotism in recruitment.

High Employees Turnover.

Decision making process is very slow.

It is not having greater no. of branches

abroad.

Weaknesses

Opportunities

Potential for capitalization on the

anticipated growth in Islamic industry.

Strong capital base enable the Bank to

explore international markets.

GSP plus status helping to raise the credit


54

demand and recovery of classified

portfolio in textile sector.

Positive and macroeconomic stability will

increase demand.

Significant increase in the customer base,

further extension of the range of the

products.

Expansion in Africa, Europe and Middle

East- Growth and expansion

opportunities in emerging economies.

Expanding the advisory and other

services offered to clients and investors.

Potential relationship with non-resident

Pakistanis to attract FDI and home

remittance.

Population demographics show an

increase in working age population and

hence increase in banking needs.

Leasing sector is growing in Pakistan for

the last two to three years which provides

opportunity to MCB to go ahead in this

area as well.

MCB is providing Consumer Finances at

comparatively lower rates which paves a

way to grab more customers.

Islamic Trading Based Banking can

enhance the business of the bank.

Overseas Operations.

Competition from peer banks.

Competition from growing branchless

banking.

Threats


55

Delinquencies of credit portfolio due to

ailing economic conditions.

Squeezing margin of Banking industry

due to minimum threshold for deposits

rates and reducing discount rate.

For the last of many years, Pakistan is

facing economic and political instability

which is a big threat.

Slowdown in the world economy

Prevalent energy crises adversely

affecting projects viabilities and demand

for credits.


56

Porter Five forces Model

Potential Entrants

The banking sector of any country has always potential of growth and competition. Mostly

foreign banks step in the developing countries for expanding their branches, not only this

mergers between foreign and local banks take place at large scale but Pakistan's present

economic condition and government instability has arose the feelings of awe and terror

among most of the foreign banks to enter in the market. In future due to uncertainty and

security problems in Pakistan investors will not be willing to invest here. Due to overall

financial problems in the whole world new banks will not be entering in to the banking

industry

Bargaining Power of Customers

Bargaining power of buyer is low where the products substitutes are not available and

customers are large in number. In case of banks there are lots of other banks and banking

intermediaries, having wide range of products, so power of buyer in banking sector is high.

The bank cannot force any customer to buy the desired product because this directly affects

its reputation. However, the bank can convince its customers by giving them special discount

or rewards. If we look at MCB we will find that the competitors are also offering products

due to which customer feel in power by saying that they can go to some other bank in case of

dissatisfaction.

Threat of Substitutes:

Substitution of one product with another one increases the competition within an industry.

However, the perfect substitutes of banks are not available in the market at present, but

people still have choices of saving or investing their money. The people can save their money

in their own houses or they can deposit their money in the National Saving Centers (Banking

Intermediaries) which give protection to their assets. Aside from saving one can invest money

in stock market in form of shares / bonds or in real estate. These kinds of substitutes increase

the competition in the banking sector.


57

Bargaining Power of Suppliers

The lending power of bank is enhanced by its depositors as they are suppliers of the bank. It

allows bank to involve in other business activities to invest such as personal and business

loans. The suppliers then get interest on their amount as profit earned by the bank. Banks

need to concentrate on their policies as bargaining power of suppliers is very high and they

move towards highest interest rates

Rivalry among Current Competitors

There is tough competition between different banks. There is a huge variety of public and

private banks already exist in the market, offering products on competitive prices. If we look

at banking products (loans, savings and current accounts) then Alfalah Bank, Meezan Bank,

Habib Bank and many others are offering wide range of products in this sector. The tough

competition between these banks increases the challenge which the MCB have to face. The

competition among various banks increases the switching of the customers form one bank's

product to the other bank.

According to Porters Five Forces analysis we can say that MCB has no fear of new entrants

due to the poor economic position of Pakistan. However, it should keep its eyes open

regarding mergers of various banks. There are two big threats; firstly from the buyers who

can go to the other banks and secondly form the substitutes like investment in stock market,

so MCB should carefully examine its task environment.


58

8 Share Price Sensitivity Analysis

Factors that can influence the share price of MCB Bank Limited are given below:

Discount rate / Monetary Policy:

Based on different assessment parameters, the State Bank of Pakistan can change the

monetary policy rate. Any decrease in discount rate will result in lower net interest income

and reduce profitability of the Bank. As a result, its share price may drop.

Minimum Rate of Return on Deposits

Any upward revision in the minimum deposit rate will result in compression in net interest

margins earned due to increased cost of deposits. Such revision can negatively impact the

earning and correspondingly the share price of the scrip.

Inflation

Inflation is considered as a key determinant for policy rate change. Any uptick in the inflation

statistics will have a corresponding impact on the monetary policy rate. With higher discount

rates, the Banks will be able to invest in high yielding investments, thus resulting in increased

profitability. This, in turn will have a positive impact on the share price.

Political Stability & Law and order situation

Political stability and controlled law & order situation is a pre-requisite for any economic

development. This in turn reposes investor confidence in the soils of Pakistan, making our

corporates a potential investment opportunity. However, any act of terrorism or political

instability can negatively impact the equity market and share prices of traded stocks.


59

9 ORGANIZATIONAL ANALYSIS

(COMPARISON WITH OTHER BANKS)

MCB Comparison with United Bank Limited & National Bank of Pakistan and Habib Bank

Limited

(Thousand Rupees)

Particulars HBL UBL MCB NBP

Deposits and other accounts 1,401,229,814 889,525,603 632,309,094 1,101,845,283

Investments 826,062,308 458,846,198 453,808,345 396,411,825

Profit after taxation 23,027,095 19,730,771 21,950,141 5,306,783

Total liabilities 1,572,837,124 972,359,569 705,815,509 1,211,054,416

MCB has less deposits then all oter banks.


60

MCB Bank has less investment then HBL and UBL but more than NBP.

Profit after taxation has less than HBL but more than others.


61

Total liabilities are less as compared to all other Banks. This shows good trend.


62

10 Market Summary at 22-8-2014 of All Commercial Banks

Competing MCB

Commercial Banks

SYMBOL LDCP OPEN HIGH LOW CURRENT CHANGE VOLUME

Allied Bank 112.75 112 113 111.7 112.13 -0.62 700

Askari Bank 19.84 20 20.2 19.85 19.92 0.08 434,500

B.O.Punjab 8.04 8.06 8.14 7.95 8.04 0 5,307,500

Bank Al-Falah 27.48 27.5 27.99 27.5 27.81 0.33 216,500

Bank AL-

Habib

46.28 46.5 46.9 46.25 46.25 -0.03 2,500

Bank Of

Khyber

8.45 8.01 8.01 8.01 8.01 -0.44 4,000

Bank islami

Pakistan

9.5 9.5 9.5 9.5 9.5 0 7,500

Faysal Bank 16 16.02 16.02 15.7 15.79 -0.21 1,080,500

Habib Bank

Ltd

186.87 186.75 187.17 186 186.02 -0.85 871,400

Habib

Metropol

30.3 30 30.75 29.75 30.24 -0.06 53,500

JS Bank Ltd 4.89 4.8 4.9 4.8 4.89 0 344,500

KASB Bank

Ltd.

1.48 1.43 1.5 1.43 1.47 -0.01 113,500

MCB Bank

Ltd

290.1 289.95 292.99 289 289.67 -0.43 47,000

Meezan Bank 40.26 40.3 40.5 40.3 40.5 0.24 5,500


63

National

Bank.

58.31 58.5 58.8 57.75 57.99 -0.32 1,117,500

NIB Bank

Limited

2.01 1.98 2.03 1.9 2 -0.01 293,500

Samba Bank 6.2 6 6.3 6 6.25 0.05 241,000

SilkBank

Limited

1.96 2 2.04 1.88 1.95 -0.01 569,500

Soneri Bank

Ltd

12.8 12.71 12.71 12.5 12.52 -0.28 22,500

St.Chart.Bank 23.9 23.3 25 23.26 24.74 0.84 30,000

Summit Bank 2.9 2.91 3 2.9 2.99 0.09 194,000

United Bank 179.92 180.2 181.99 178.11 179.13 -0.79 387,400

Graphical Representation

As compared to MCB bank Allied Bank has less closing price and less number of share and

both bank has negative change -0.62 and -0.43 respectively.


64

As compared to MCB bank Askari Bank has less closing price but more number of share of

Askari Bank are traded in market .MCB bank has negative change -0.43 and Askari Bank

has 0.08 positive change in LDCP and Current price. .

As compared to MCB bank B.O. Bank has less closing price but more number of share of

Askari Bank are traded in market .MCB bank has negative change -0.43 and Askari Bank

has no change in LDCP and Current price..


65

As compared to MCB bank Bank Al-Falah has less closing price but more number of share of

Bank Al-Falah are traded in market .MCB bank has negative change -0.43 and Bank Al-Falah

has no change in LDCP and Current price.

As compared to MCB bank Bank Al-Habib has less closing price but more number of share

of Bank Al-Habib are traded in market .MCB bank has negative change -0.43 and Bank Al-

Falah has also negative change of -0.03 in LDCP and Current price.


66

As compared to MCB bank Bank of Khyber has less closing price and less number of share

of Bank Al-Habib are traded in market .MCB bank has negative change -0.43 and Bank Al-

Falah has also negative change of -0.44 in LDCP and Current price.

As compared to MCB bank Bank Islami Pakistan has less closing price and less number of

share of Bank Islami Pakistan are traded in market .MCB bank has negative change -0.43 and

Bank Islami Pakistan has has no change in LDCP and Current price..


67

As compared to MCB bank Faysal Bank has less closing price and less number of share of

Faysal Bank are traded in market .MCB bank has negative change -0.43 and Faysal Bank has

also negative change of -0.21 in LDCP and Current price.

As compared to MCB bank United Bank has less closing price but more number of share of

Faysal Bank are traded in market .MCB bank has negative change -0.43 and Faysal Bank has



68

As compared to MCB bank Summit Bank has less closing price but more number of share of

Summit Bank are traded in market .MCB bank has negative change -0.43 and Summit Bank

has also positive change of 0.09 in LDCP and Current price.

As compared to MCB bank St.Chart Bank has less closing price and less number of share of

St.Chart Bank are traded in market .MCB bank has negative change -0.43 and St.Chart Bank

has also positive change of 0.84 in LDCP and Current price.


69

As compared to MCB bank Soneri Bank has less closing price and less number of share of

Soneri Bank are traded in market .MCB bank has negative change -0.43 and Soneri Bank has


As compared to MCB bank Meezan Bank has less closing price and less number of share of

Meezan Bank are traded in market .MCB bank has negative change -0.43 and Meezan Bank

has positive change of 0.24 in LDCP and Current price.


70

As compared to MCB bank KASB Bank has less closing price and more number of share of

KASB Bank are traded in market .MCB bank has negative change -0.43 and KASB Bank has


As compared to MCB bank JS Bank has less closing price and more number of share of JS

Bank are traded in market .MCB bank has negative change -0.43 and JS Bank has no change

of in LDCP and Current price


71

As compared to MCB bank Habib Metropol Bank has less closing price and more number of

share of Habib Metropol Bank are traded in market .MCB bank has negative change -0.43

and Habib Metropol Bank has also negative change of -0.06 in LDCP and Current price.

As compared to MCB bank Habib Bank has less closing price and more number of share of

Habib Bank are traded in market .MCB bank has negative change -0.43 and Habib Bank has



72

As compared to MCB bank Silk Bank has less closing price and more number of share of

Silk Bank are traded in market .MCB bank has negative change -0.43 and Silk Bank has also

negative change of -0.01 in LDCP and Current price.

As compared to MCB bank Samba Bank has less closing price and more number of share of

Samba Bank are traded in market .MCB bank has negative change -0.43 and Samba Bank has

positive change of 0.05 in LDCP and Current price.


73

As compared to MCB bank NIB Bank has less closing price and more number of share of

NIB Bank are traded in market .MCB bank has negative change -0.43 and NIB Bank also has

negative change of -0.01 in LDCP and Current price.

As compared to MCB bank National Bank has less closing price and more number of share of

National Bank are traded in market .MCB bank has negative change -0.43 and National Bank

also has negative change of -0.32 in LDCP and Current price.


74

11 Future Prospects of MCB

MCB team committed to taking the Bank to the next levels of success. Key features of

multipronged plan are as follows:

1. MCB wants to be viewed as the leader in transactional convenience. To get top market

share, they will continue to invest in alternate channel payment capabilities and services

as well as getting a larger share of transaction driven businesses like remittances, cash

management, payroll and trade.

2. Managements want to continue to invest in branches to make them more sales and service

oriented. Through introduction of new sales and service model, strengthened transaction

processing and leading financial products menu, aspire to achieve this ambition.

3. Management core focus on mass, mid-market and corporate segments, continue down the

path of further segmenting customer needs and developing focused customer

propositions, particularly in Privilege, Islamic & SME.

4. Not any organization can deliver without investing in its employees. In order to achieve

growth targets, management have to further strengthen reserve of talent and leadership

powered by a strong performance culture and training.

5. Finally, for an organization, controls and efficiency is central to existence. Management’s

strategy to build stronger controls, develop a unit cost culture.

MCB’s strengths in terms of its franchise, balance sheet and reputation are unparalleled.

Entire team task is to ensure that continue to go from strength to strength. Bank’s

performance in 2013 is an attestation of the commitment & passion that the team brings to

MCB and the strong support of the shareholders.


75

12 Financial Analysis

Statement of Financial Position


As at December 31, 2013(2009-2013)

(In millions)

2013 2012 2011 2010 2009

Assets

Cash and

balances with

treasury banks

59,946,150 57,420,211 53,122,620 45,407,264 38,774,871

Balances with

other banks 1,536,946 1,236,736 2,357,418 1,551,518 6,009,993

Lending to

financial

Institutions

1,224,638 1,551,472 955,087 4,401,781 3,000,000

Investments-

net 449,006,019 405,601,313 319,005,983 215,747,844 167,134,465

Advances-net 248,242,965 239,788,511 227,573,618 254,565,471 253,249,407

Operating

Fixed assets 28,595,338 24,144,242 22,418,450 21,061,787 18,014,896

Deferred tax

asset - - - - -

Other assets 26,956,315 41,715,761 31,440,700 27,746,198 23,040,095

Total current

assets 815,508,371 771,458,246 656,873,876 570,481,863 509,223,727

Liabilities and


76

stockholders'

equity

Bills payable 10,138,726 9,896,284 9,466,818 10,265,537 8,201,090

Borrowings 38,542,660 79,064,351 39,100,627 25,684,593 44,662,088

Deposits and

other accounts 632,330,286 544,988,091 491,146,798 431,295,499 367,604,711

Sub-ordinated

loans - - _ - -

Liabilities

against assets

subject to

finance lease

- - - - -

Deferred tax

liabilities 4,201,373 9,768,871 6,689,736 5,146,733 3,196,743

Other liabilities 20,064,345 21,265,639 18,457,835 16,090,374 15,819,082

Total

Liabilities 705277390 664983236 564861814 488482736 439483714

NET ASSETS 110,230,981 102,470,689 88,802,482 79,204,209 69,740,013

Represented

By:

Share capital 10,118,461 9,198,601 8,362,365 7,602,150 6,911,045

Reserves 46,601,214 44,620,928 42,412,588 40,164,526 38,385,760

Unappropriated

profit 40,552,043 37,530,955 88,802,482 23,458,429 15,779,127

97,271,718 88,876,792 78,915,003 69,180,011 61,075,932

Surplus on

revaluation of

assets net of

tax

12,959,263 13,593,897 9,887,479 10,771,324 8,664,081

110,230,981 102,470,689 88,802,482 79,204,209 69,740,013


77

Profit and Loss Account


For the year ended December 31, 2013 (2009-2013)

(In millions)

Year Ended June 30, 2013 2012 2011 2010 2009

Mark-up / return /

interest earned 65,064,123 68,356,191 68,215,902 54,829,365 51,616,007

Mark-up / return /

interest expensed 27,195,894 27,500,019 23,632,615 18,027,372 15,841,463

37,868,229 40,856,172 44,583,287 36,801,993 35,774,544

Provision for diminution

in value of investments -

net -6,834 -3,044 778,526 444,476 1,484,218

Provisions against loans

& Advances -net -2,828,783 480,903 2,846,523 3,100,594 5,796,527

Bad debts written off

directly - 206 28,565 52,047 41,576

Provisions against loans

& advances -net -2,835,617 478,065 3,653,614 3,597,117 7,322,321

Net mark-up / interest

income after

provisions 40,703,846 40,378,107 40,929,673 33,204,876 28,452,223

Non Mark – up / Interest

income

Fee, Commission and

Brokerage Income 6,741,404 5,934,472 4,921,269 33,204,876 3,331,856

Income earned as trustee

to various funds - - 17,257 22,714


78

Dividend Income 932,717 1,197,615 785,549 450,492 459,741

Income from dealing in

foreign Currencies 916,572 822,856 924,236 632,819 341,402

Gain on sale of

securities - net 2,130,341 824,539 761,890 410,618 773,768

Unrealized gain on

revaluation of

investments

classified as held for

trading - - 16,616 40,832 -

Other income 449,604 373,849 814,443 751,058 736,118

Total non- mark-up /

return / interest

income 11,170,638 9,153,331 8,241,260 6,441,642 5,642,885

51,874,484 49,531,438 49,170,933 39,646,518 34,095,108

Non Mark-up /

Interest

Administrative expenses 18,709,969 17,476,862 15,860,242 12,327,496 10,107,189

other provision –net -52,285 -187,305 514,646 88,261 -72,740

Other charges 928,595 817,824 1,402,756 990,638 690,150

Total non -mark-up

/interest Expenses 19,586,279 17,889,531 17,777,644 13,406,395 10,940,163

Extraordinary/ unusual

item _ _ _ _ -

Profit Before Taxation 32,288,205 31,641,907 31,321,782 26,509,636 23,154,945


79

Taxation 7,659,648 6,492,966

6,358,272 4,096,072

Current year 15,170,974 9,600,760 9,739,369 8,053,368 7,703,305

Prior Year - 116,725 1,038,662

-2,232,226

Defered -4,378,107 1,251,420 1,312,316 1,554,809 2,188,569

10,792,867 10,968,905 12,058,273 9,637,510 7,659,648

Profit After Taxation 21,495,338 20,673,002 19,424,906 16,872,126 8,922,415

Unappropriated profit

brought Forward 35,424,921 28,723,928 23,458,429 17,821,670 9,193,332

Transfer from surplus

on revaluation of fixed

assets – net of tax 35,788 35,789 36,182 21,879 22,324

35,460,709 28,759,717 23,494,611 17,843,549 9,215,656

Profit Available For

Appropriation 56,956,047 49,432,719 42,768,927 34,717,568 24,710,953


80

13 Ratio Analysis

Trend/Ratio Analysis

Five Years Financial Summary 2009 - 2013

Ratios 2013 2012 2011 2010 2009

Debt Ratio 1.156 1.160 1.163 1.168 1.159

Time interset earned

ratio 2.992 2.885 2.598 2.751 3.023

Profitability ratios

Net markup/interest

margin 4.99% 5.23% 6.23% 5.82% 5.59%

Non-interest income to

Total Assets Ratio 1.37% 1.19% 1.25% 1.13% 1.11%

Gross spread 63 59 60 61 55

Admin. expense to non-

markup/ 1.675 1.909 1.924 1.914 1.791

Admin. expense to profit

before tax. 0.58 0.55 0.51 0.47 0.44

Return on assets % 2.72% 2.91% 3.18% 3.13% 3.25%

Modified dupond

formula

Leverage 80.596 83.867 78.551 75.042 73.683

Return on equity 2.124 2.247 2.320 2.219 1.291

Market ratios

Total Equity to Total

Asset 0.012 0.012 0.013 0.013 0.014

Book Value per 96.13 96.62 94.37 91.00 88.37


81

Earnings per share

(before tax) 31.91 34.40 37.46 34.87 33.50

Earnings per share (after

tax) 21.24 22.47 23.23 22.19 12.91

Capital ratio 12% 12% 12% 12% 12%

Liquidity ratios

Gross advances to

deposits ratio 0.424 0.481 0.5088 0.636 0.734

Total liabilities to total

assets 86.48% 86.20% 85.99% 85.63% 86.30%

Investments to deposits

ratio 71.01% 74.42% 64.95% 50.02% 45.47%

Deposits to shareholder

equity 62.49 59.25 58.73 56.73 53.19

Assets to equity 80.60 83.87 78.55 75.04 73.68

Share Information

Market value per share-

Dec 31 281.17 209.76 134.6 228.54 219.68

High - during the year 323 216.75 250.48 233.8 244

Low - during the year 182.2 133 134 173.04 75


82

Graphical Representation:

There is fluctuation in the debt ratio of MCB bank.

Time interest earned ratio increased after 2011.


83

Net mark up to interest margin ratio shows decreasing trend after 2011.

Non interest income to total asset ratio shows fluctuation in five year.


84

Gross spread ratio looks at the spread of interest between borrowing and lending. Higher

Gross spread ratio of MCB Bank indicates a higher profit margin for the bank.

Admin exp / non markup Income ratio measures the proportion of bank's admin expense in

relation with non-markup/interest earned. After 2011 ratio shows decreasing trend.


85

Admin exp / PBT measures the proportion of bank's admin expense in relation with Profit

before tax. Ratio has fluctuation in five years.

ROA ratio measures the overall effectiveness of management in generating profit with its

available asset.ROA ratio is fluctuating but less than 4%. It shows the ineffectiveness of

management I generating profit.


86

Leverage measure current asset which are purchased by equity . Ratios shows that bank has

more part of equity in current asset.

Return on common equity measures the return on the common stockholder’s investment.

Ratio is fluctuating year to year. Ratio is highest in 2011 but after that ratio fluctuating.


87

This ratio shows part of equity used in purchasing asset. This ratio shows that solvency

position of bank is not good.

Book value per share is increasing year by year.


88

The earnings per share ratio (EPS ratio) measures the amount of a company's net income that

is theoretically available for payment to the holders of its common stock. MCB Bank with a

high earnings per share ratio is capable of generating a significant dividend for investors, or it

may plow the funds back into its business for more growth

.

Earning per share after tax is highest in 2011 but onward it is decresing.


89

Capital ratio is samr in 5 year.

Gross advances to deposit ratio show fluctuations from 2009 to 2013.


90

The ratio shows the proportion of banks assets, which are financed through debt. This

shows that more assets are financed through debts.

Investment to deposit ratio shows fluctuations from 2009 to 2013.


91

Deposit to shareholder equity ratio shows fluctuations from 2009 to 2013.

Asset to shareholder equity ratio show fluctuations from 2009 to 2013.


92

Market Value per share increased from 2009 to 2010, in 2011 Value is lowest but after that it

shows increasing trend up to 2013.

This graph shows that there is fluctuation in High and low price of market value per share

during the year.


93

14 Five Years’ Vertical Analysis

Balance Sheet

Assets 2013

2012

2011

2010

2009

Cash and balances

with treasury banks 7% 8% 8% 8% 8%

Balances with other

banks 0.20% 0.20% 0.40% 0.30% 1.00%

Lending to financial

Institutions 0.20% 0.20% 0.20% 1.00% 1.00%

Investments-net 55.00% 52.00% 48.00% 38.00% 33.00%

Advances-net 30.00% 31.00% 35.00% 45.00% 50.00%

Operating Fixed

assets 4.00% 3.00% 3.00% 4.00% 4.00%

Deferred tax asset

Other assets 3.00% 5.00% 5.00% 5.00% 5.00%

Total current assets 100.00% 100% 100% 100% 100.00%

Liabilities and

stockholders'

equity

Bills payable 1.00% 1.00% 1.00% 2.00% 2.00%

Borrowings 5.00% 10.00% 6.00% 5.00% 9.00%

Deposits and other

accounts 78.00% 71.00% 75.00% 76.00% 72.00%

Deferred tax

liabilities 1.00% 1.00% 1.00% 1.00% 1.00%

Other liabilities 2.00% 3.00% 3.00% 3.00% 3.00%


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Total Liabilities 87% 86% 86% 86% 86%

Net Assets 14% 13% 14% 14% 14%

Represented By:

Share capital 1% 1% 1% 1% 1%

Reserves 6% 6% 6% 7% 8%

Unappropriated

profit 5% 4% 5% 4% 3%

Surplus on

revaluation of assets

net of tax

2% 2% 2% 2% 2%

14% 13% 14% 14% 14%


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Five Years’ Vertical Analysis


Particular 2013

2012

2011

2010

2009

Mark-up / return /

interest earned 85% 88% 89% 90% 90%

Mark-up / return /

interest expensed -36% -35% -31% -29% -28%

Net mark-up income 50% 53% 58% 60% 62%

Provisions & write

off 4% 0% -5% -6% -13%

Net mark-up income

after provisions 53% 52% 53% 54% 49%


return / interest

income

15% 12% 11% 10% 10%

Total non -mark-up

/interest Expenses -26% -23% -22% -22% -19%

Profit Before

Taxation 42% 41% 41% 43% 40%

Taxation -14% -14% -16% -15% -13%

Profit After

Taxation 29% 27% 25% 28% 27%


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15 Five Years’ Horizontal Analysis


Assets 2013

2012

2011

2010

2009

Cash and balances

with treasury banks 4% 8% 17% 17% -2%

Balances with other

banks 29.00% -48.00% 54.00% -75.00% 49.00%

Lending to financial

Institutions -21.00% 62.00% -78.00% 47.00% -27.00%

Investments-net 12.00% 27.00% 49.00% 27.00% 73.00%

Advances-net 4.00% 5.00% -11.00% 1.00% -3.00%

Operating Fixed

assets 20.00% 8.00% 5.00% 16.00% 4.00%

Deferred tax asset

Other assets -35.00% 33.00% 13.00% 20.00% 16.00%

Total current assets 6.00% 17.00% 15.00% 11.00% 15.00%

Liabilities and

stockholders'

equity

Bills payable 2.00% 5.00% -8.00% 25.00% 2.00%

Borrowings -51.00% 102.00% 52.00% -42.00% 9.00%

Deposits and other

accounts 16.00% 11.00% 14.00% 17.00% 72.00%

Deferred tax

liabilities -56.00% 47.00% 31.00% 54.00% 1.00%

Other liabilities -5.00% 15.00% 14.00% 2.00% 3.00%

Total Liabilities 6% 6% 16% 11% 86%

NET ASSETS 8% 15% 13% 14% 19%

Represented By:


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Share capital 10% 10% 10% 10% 10%

Reserves 5% 5% 5% 5% 5%

Unappropriated

profit 14% 23% 34% 36% 72%

Surplus on

revaluation of

assets net of tax

-5% 37% -1% 16% 40%

8% 15% 13% 14% 19%


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Profit & Loss Account

Assets 2013

2012

2011

2010

2009

Mark-up / return /

interest earned

-5% 0% 24% 6% 29%

Mark-up / return /

interest expensed

-1% 16% 31% 14% 37%

Net mark-up income -7% -8% 21% 3% 26%

Provisions & write

off

-1093% -93% 13% -51% 85%

Net mark-up income

after provisions

0% 1% 22% 17% 16%


return / interest

income

22% 13% 29% 11% -3%

Total non -mark-up

/interest Expenses

9% 6% 29% 22% 29%

Profit Before

Taxation

2% 1% 20% 13% 6%

Taxation -2% -9% 29% 22% 18%

Profit After Taxation 4% 6% 15% 9% 1%


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Commentary on Horizontal and Vertical Analysis

Vertical Analysis

Vertical analysis highlight over the last six years signifies higher concentration levels of

investments and advances in the asset base of the Bank. The advances base of the Bank has

posted moderate growth over the last few years due to the lack of credit opportunities and

intense competition impacting earning potential. Resultantly, the significant increase in

deposit base has been invested in T-Bills and PIBs over years with a substantial increase in

the concentration levels from 22% in 2008 to 55% in 2013.

Corresponding to the infrastructural and operational growth registered by the Bank, the

deposit base has increased considerably over the period of six years. Improved quality service

levels and tailored products has earned the loyalty of our customers. The fact can be

substantiated with the fact that the CASA base of the bank has been above 80% over the last

many years.

Markup income growth has been steady over the last 6 years. On an average, the contribution

from markup income approximates 88% of the total revenue. Markup expense has increased

over the last 6 years, based on regulatory revisions enacted over the period and growth

registered in the deposit base. Non markup income has a steady concentration of almost 12%

of gross revenue.

Horizontal Analysis

Asset base of the bank has increased considerably over the past 6 years; highest increase was

observed in 2012 where assets have increased by 17%, mainly contributed by investments in

terms of volume. On an annualized basis, the asset base has recorded an increase of 13% over

the last six years with major contributions coming from investments. Highest increase in

investments was posted in 2009 summing up to 73%, followed by 49% increase reported for

2011.

The deposit base of the Bank has increased considerably over the years growing from Rs. 330

billion in 2008 to Rs. 632 billion in 2013 translating into an annual growth of 14% over past

6 years. Equity of the bank has also posted healthy increase due to higher profitability in past

6 years, translating into 14% average growth over 6 year period.


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Moving on to Profit and Loss side, gross markup earned has posted an average increase of

10% over a span of six years.

Corresponding to the shift in asset mix, contribution from income on investments has

increased over years. The increase in markup expense on deposits is on account of regulatory

revisions enacted by the Central Bank and increased deposit base. In 2008, minimum deposit

rate (MDR) was set at 5% by the Central Bank. In 2012, the MDR was revised to 6% on all

local currency saving and fixed deposit products. In 2013, two regulatory revisions were

enacted; computation of interest on average balance basis and pegging of MDR with the floor

rate of the repo corridor.

Non Markup income have shown steady growth of 14% average over 6 years while PBT and

PAT have shown 8% and 7% average growth in past 6 years. Non markup expense has

shown 19% average growth over past 6 years which is in-line with the operational growth

and inflationary surge over the past few years. Provision against advances and investments

has been on the decreasing trend with reversal to the tune of Rs. 2.8 billion recorded for 2013.


101

Chapter No-3

Findings,

Conclusions and

Recommendations


102

16 Weaknesses of the Organization

The efficiency of banks can be measured through the use of the return-on-equity (ROE)

ratio, which shows to what extent banks use reinvested earnings to produce future profits.

MCB (ROE) decreasing consecutively from 2012 to 2013

Return on Equity 2.192 2.441 2.320 2.349 2.395

Gross Spread ratio decreased from 63.32% to 55.20%.

Gross Spread 58.20% 59.77% 65.34% 67.19% 69.32%

Advertisement:

The majority of people are not well aware about the products of MCB. Therefore it

should advertise extensively especially RTC and Master Cards.

Accommodate Behaviorally:

A behavior has been noted that bank tries to feel at ease with good looking, rich and educated

people and the poor looking customers feel some bit strange in the environment of the bank.

The bank employees should try to accommodate behaviorally all type of customers.

Mismanagement Of Time:

Mismanagement of time is another big mistake in MCB branches, the bank official time of

closing is 5:30pm but due mismanagement of time allocation and work the staff is normally

on their seats till 7:00 or 8:00 clock.

2013 2012 2011 2010 2009

2013 2012 2011 2010 2009


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Reward System

Better reward system is one of the most important requirements in order to reduce the

problem of Employee retention and improve Employee motivation. But MCB does not pay

good reward to their employees.

And Also,

Costly documents are required for loan sanctioning.

Sometimes bank also never meets stated rate of profit.


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17 Summary

MCB was incorporated in 1997 and was later privatized by the Government of Pakistan. The

Nishat Group bought the majority shares of the bank and so got the rights to control the

bank’s operations. Since the privatization of the bank, MCB has implement different policies

to make it one of the best banks of Pakistan, which included introducing new products and

services and increase its operations by opening new branches in Pakistan.

I did my six weeks internship at MCB Model Town Bahawalpur Branch (Regional Branch),

and worked at specific project Dormant Account Activation Project.

Some of the work that I did in these departments included, phone calls to dormant account

holder and activation of dormant account.

Although there were no such big problems found in the working of MCB, there were some

problems in training of the employees, incentive schemes and product innovation.

Some of the recommendations include workshops for employees, job rotation, teams work to

find innovative products and scholarship programs for employees.

Lastly MCB has seen a rapid growth in its activities by introducing a range of products and

services and showing its presence in the country by opening new branches and in future

should keep this momentum and always strive to become the best.

The main purpose of internship is to learn, by working in practical environment and to apply

the knowledge acquired, during the studies, in a real world scenario in order to tackle the

problems. In this report the detailed analysis of the organization has been done and all the

financial, technical, managerial and strategic aspects have been evaluated to analyze the

current position of the organization. Along with it, the background analysis, the prevailing

competition analysis, the business process analysis, and the internal environment and external

environment of the organization have been discussed and the recommendations &

suggestions for the improvement have been made wherever required.


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18 Conclusions

With Cooperation of all branch members, I have been able to learn and experience many new

things related to the banking sector and the banks workings. I am able to handle the public as

my project is to Dormant Account Activation Project.

Finally I concluded that MCB is a good organization for a person for his long term career

workings. Overall working and environment of the bank is very comfortable and the staff is

very helpful and respectful of each other and it still maintains a professional environment.

Management of the bank is very strong.

Employees of MCB Dubai chowk branch work more than their working hours and all the

workings take place in a very friendly atmosphere that does not induce pressure on the person

working there. It also shows their loyalty and commitment to the organization. This is a

regional branch of MCB which climbed its way up very quickly and all that only because of

the employee’s efforts and consideration for each other.

Understanding and the effective management of the human resources is the most difficult

challenge faced not only by the bank but by all the organizations. Even though the people

have been sacrificed in the new organizational developments, it is becoming clear that the

true lasting competitive advantage comes through human resources and how they are

managed. MCB seems to not focusing on this highly critical issue as the job satisfaction level

of the employees working at MCB, was quite low.


106

19 Recommendations

After doing a deep study and witnessing everything that goes on in a branch, I would then

like to make the recommendations that;

First of all, the management needs to overlook the major problems that the organization is

currently facing and then develop strategies to eradicate them. Some of the suggestions that I

would like to give at the end are:

1. Promotion And Mass Media Publicity

MCB Bank can improve its Marketing strategies to acquire more promotion and mass media

publicity by the use of effective channels of promotions like TV, Newspaper Advertisements

in conjunction with direct mail, window displays, leaflet in branches and in appropriate other

locations (such as hotels, shops, etc.) and including leaflets in statement of accounts sent to

existing customers in the hope that they will tell potential customers about the services

provided by our bank. It can also improve its magazine publication that it releases each

month.

2. Need Introduce Friendly Products

In order to compete in the ever-expanding market both nationally and internationally,

introducing new and efficient products is one of its major requirements. One way to retain the

customers is to offer a wide range of services such as tax advice, free life insurance

equivalent to amount deposited, shares portfolio management, fund management facility, etc.,

complimentary to the core services. Banks must have a slightly different mix of services and

mean of providing these such that customers can choose the mix that suits them best.

3. Centralized Structure

Centralized Structure that enables employee involvement needs to be formed.

4. Better Reward System

Better reward system is one of the most important requirements in order to reduce the

problem of Employee retention and improve Employee motivation.


107

5. Continuous Training Of Employees

Creation of enhanced performance appraisal system

Implementation of enhanced Marketing system

Continuous lecture on better communication of staff with customers

6. Management Of Time:

There should be a good management of time for the sake of employees i.e. offering them free

break hours instead of making them work in this time as well

7. Atm Machines Maintained

ATM machine must be maintained properly to make it more convenient for the customers

and to decrease the load of work to the employees of the bank especially in the salary days.

8. Staff Member

I have observe during working that there need of more staff due to pressure of work MCB

should hire more employees for better performance even any employee when take leaves

Manager has no choice to his work to other employee so this situation built high pressure.

9. SYMBOL SYSTEM

To make the SYMBOL system more efficient and make sure its connectivity all the time in

order to provides more convenience to customers.

10. Job Rotation And Promotions:

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


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20 Glossary

MCB Muslim Commercial Bank

ATM Automatic Teller Machine

FED Federal Excise Duty

WHT with Holding Tax

TDR Term Deposit Receipts

CDR Call Deposit Receipts

PBA Personal Banking Advisor

BBA Basic Banking Account

PLS Profit and Loss A/C

TD Term Deposit

AOF Account opening Foam

AMO Account maintenance officer

KYC Know your customers

SSC Specimen Signature card

GBO General banking officer

ICO Internal control officer

CSO Customer service officer

DD Demand Draft

PO Pay Order

FTA Fund Transfer Application

CPD Central Processing Division

NIFT National Institute of Facilitation Technology

TDR Term Deposit Receipt

RTC Rupee Travel Cheque

IBC Inward Bills for Collection

OBC Outward Bills for Collections

MO Main Office

HO Head Office


109

eferences

Introduction: http://MCB.com.pk/MCB/about_MCB.asp

Vision / Mission: http://MCB.com.pk/MCB/mission_vision.asp

Corporate information: http://MCB.com.pk/MCB/corporate_information.as

Internship Activities:

HR (Miss Shakila)

BOM (Mr. Shabir Hussain Bajwa)

NPL Officer (Mr. Fawad ul hasnain)

Financial Statement: Google.com.pk

For Market Summary: http://ksestocks.com/marketsummary

Financial statement analysis of financial sector 2009-2013

Annual Report of MCB Bank

http://mcb.com.pk/mcb/about_mcb.asp

http://ksestocks.com/marketsummary


110

21 Annexure

Education

Intern ship report report final