1

Contents
Chapter # 1...........................................................................................................................3
Introduction..........................................................................................................................3
1.1. Background of the study.......................................................................................3
1.2. Purpose..................................................................................................................3
1.3. Scope.....................................................................................................................4
1.4. Objectives..............................................................................................................4
1.5. Methodology.........................................................................................................5
1.6. Organization..........................................................................................................5
1.7. Summary...............................................................................................................5
Chapter # 2...........................................................................................................................7
Company Information..........................................................................................................7
2.1. Corporate Profile......................................................................................................7
2.2. Overall respective sectors in Pakistan......................................................................9
2.3. Role of the MCB in Pakistan..................................................................................10
2.4. Functions of MCB in Pakistan................................................................................12
2.5. MCB Muridke Branch............................................................................................13
2.6. Summary.................................................................................................................13
Chapter # 3.........................................................................................................................15
Background and History....................................................................................................15
3.1 Brief History............................................................................................................15
3.2. Vision Statement.....................................................................................................16
3.3. Mission Statement..................................................................................................16
3.4. Relationship of head office to the branch offices...................................................16
3.4. Number of departments..........................................................................................16
3.5. Current staff............................................................................................................17
3.6. Workload.................................................................................................................18
3.7. BRANCHES OF MCB...........................................................................................18
3.8. Nature of the Organization.....................................................................................20
3.9. Business Volume.....................................................................................................20
3.10. Revenue................................................................................................................21
3.11. Deposits................................................................................................................22
3.12. Advances:..............................................................................................................23
3.13. Salary structure.....................................................................................................24
3.14. Promotion system.................................................................................................25
3.15. Incentives & motivation.......................................................................................25
3.16. Responsibilities/duties performed........................................................................26
3.17. Organizational Hierarchy within the branch:........................................................26
3.17.1. Duties of Branch Manager:................................................................................26
3.17.2. Duties of Operations Manager:..........................................................................27
3.17.3. Remittance Officer:............................................................................................27
3.17.4. Advances officer:...............................................................................................27
3.17.5. Duties of cash officer:........................................................................................27
3.17.6. Duties of Customer service officer (CSO):........................................................28

2
3.18. Critical analysis of the branch..............................................................................28
3.18.1. Communication system.....................................................................................28
3.18.2. Hiring system.....................................................................................................28
3.18.3. Morale of staff...................................................................................................28
3.18.4. Physical facilities...............................................................................................29
3.18.5. Performances.....................................................................................................29
3.19. Summaries............................................................................................................31
Chapter # 4.........................................................................................................................32
Policy.................................................................................................................................32
4.1. Customers secrecy:................................................................................................32
4.2. Strategies.................................................................................................................37
4.2.1. Marketing Mix of MCB Bank Limited................................................................37
4.3. Product Mix & Prices of MCB Bank......................................................................38
4.4. Organizational Structure.........................................................................................47
4.6. Promotion Strategies OF MCB BANK..................................................................48
4.7. FIELDS OF ACTIVITIES......................................................................................49
4.8. Mobilization of Fund..............................................................................................53
4.9. Generation of Funds...............................................................................................56
4.10. Sources of Funds...................................................................................................56
4.11. Allocation of Funds...............................................................................................59
4.12. Ratio Analyses......................................................................................................68
4.12. Horizontal Analysis of Five Years Balance Sheet.....................................................................................86
4.13. Vertical Analysis of Five Years Balance Sheet.....................................................92
4.14. Organization Analysis with Stock Exchange......................................................101
Description..................................................................................................................102
4.15. Future Prospects of the Organization (MCB).....................................................105
Chapter # 5.......................................................................................................................107
Analysis...........................................................................................................................107
5.1. Swot analysis........................................................................................................107
5.2. Pest Analysis.........................................................................................................112
5.3. Porter model..........................................................................................................112
Chapter # 6.......................................................................................................................115
Recommendations............................................................................................................115
References........................................................................................................................120
BIBLOGRAPHY.............................................................................................................121

Chapter # 1
Introduction
As part of the academic requirement for completing Master of Business Administration at
Allama Iqbal open University Islamabad internship is necessary. The students are
required to undergo for six weeks of internship with an organization. The internship is to
serve the purpose of acquainting the students with the practical knowledge of the
discipline.
I did my internship in Muslim Commercial Bank Ltd. The purpose of selecting MCB was
first of all my interest in banking profession, experiencing of the oldest and one of the
largest network of branches in Pakistan having the challenging career of 64 years in
banking and to come to know how various operation are done in a complicated banking
network and to experience how the tense situations are handled at work place, how to
works in group or team and to learn how work is done in formal procedures at work
place.

1.1.

Background of the study

Internship training program during MBA program is necessary for the partial fulfillment
of the completion of Degree of MBA.I am also a student of MBA thats why it is
necessary for me to complete an internship session of about 6 weeks in some
manufacturing or service industry relevant to my area of interest and specialization.

1.2.

Purpose

The purpose of this study is to explore the functions, operations and services of MCB by
taking MCB branch G.T Road Muridke as a model. The readers of this report will quickly
understand the way MCB Branch works and through this concise report they might get
the full-fledged idea of working of banking industry of Pakistan.
The purpose of this Internship Report is to share the process of learning and experience
through which I undergone during the course of my Internship with MCB. The major

4
reason behind choosing this bank was to grasp the idea of how a particular department in
a MCB with over 1000 branches, having worked for 64 years for bringing development
and innovation in banking industry and overall sector of the country as well. My
internship mainly consisted of work related to the general banking as I was working in all
departments of branch. However, during the 2 month of internship I was also able to
grasp the procedures, processes and basic functions of overall banking.

1.3.

Scope

This report related to the working pattern of over all banking sector of Pakistan. So this
study will facilitate the students regarding the working of Banking sector of Pakistan
because most of the teachers during their lectures use the examples of Banks like Muslim
Commercial Bank, National Bank, UBL, Bank Alfalah and many others, students should
study this report so that they must grasp the functioning of such Banks. It also cover the
over all functions of general banking.

1.4.

Objectives

To know how the work is being done through formal procedures to at workplace.

How to manage the workforce diversity.

How to works in groups and teams in challenging and dynamic environment.

To prepare myself to handle the work load and stress situations at workplace.

Apply academic knowledge in practical field.

Discuss thorough study of MCB Limited.

To understand the various operations and to equip with practical knowledge of the
MCB Limited.

To know the Accounting system adopted by banking sector.

To analysis the pros and cons of the conventional ideas about banking industry.

To compare the services of MCB with other organization in the same industry.

1.5.

Methodology
There are mainly two methods that are used for the collection of data

Primary Data:

Interviews from my immediate supervisor and management personnel such as

managers and different officers in the branch.

Observation of functions and procedures of Branch operations on the spot.

Observation of different processes of Branch on the spot.

Secondary Data:

Official website of the MCB.

Credit rating agencies.

Annual public reports.

State Bank of Pakistan.

News and articles.

Copies of the reports of Bank operations such as computerized statements which

includes different type of records about the customers and the bank.

Internet is also very helpful for me to study more about banking sector of
Pakistan.

1.6.

Different type of booklets of the Bank.

Organization

For the purpose of internship I selected MCB branch Muridke . This branch is established
1963. This branch is working in best interest of customer from their establishment.

1.7.

Summary

As an academic requirement to complete the MBA (banking & Finance), this type of
practical knowledge is broad my understanding about practical field. Everyone have to
undergone through six week internship. This internship basically the training programme
and provide the student relative experience to the profession and provide the opportunity

6
to explore the market before entering into professional life and analyzing that whats
forming on in market. I had selected MCB to fulfill this practical requirement for the
dedicated and challenging career of 63 years of the MCB. Internship is an also healthy
programme because its provide opportunity to learn about how to work in professional
life, the formal procedures of completing work. This provides the opportunity to
acquiring the practical knowledge of the field.

Chapter # 2
Company Information
According to the banking companies ordinance banks are the companies, which transit
the business of banking in Pakistan. Banking is one of the most sensitive businesses all
over the world. Banks play very important role in the economy of a country and Pakistan
is no exemption. Banks are custodian to the assets of the general masses. The banking
sector plays a significant role in a contemporary world of money and economy. It
influences and facilitates many different but integrated economic activities like resources
mobilization, poverty elimination, production and distribution of public finance. Central
bank is the bank which play roll as regulatory authority for all types of financial
institutions. In Pakistan all the commercial banks are headed by the state bank of Pakistan
which founded in July 1948.

2.1. Corporate Profile

Board of Director
Mian Mohammad Mansha

Chairman

Mr. S. M. Muneer

Vice Chairman

Members
Mr. Tariq Rafi
Mr. Shahzad Saleem
Mr. Sarmad Amin
Dr. Muhammad Yaqub
Mian Raza Mansha
Dato' Mohammed Hussein
Mr. Aftab Ahmad Khan
Mr. Abdul Farid Bin Alias
Mian Umer Mansha

8
Mr. Muhammad Ali Zeb

President/CEO
Mr. Atif Bajwa
Human Resources Committee
Mian Mohammad Mansha

Chairman

Members
Dr. Muhammad Yaqub
Mian Raza Mansha
Mr. Shahzad Saleemn
Mr. Atif Bajwa
Mr. Abdul Farid Bin Alias
Mr. Atif Bajwa

Business Strategy & Development Committee

Mian Mohammad Mansha
Members
Mr. S. M. Muneer
Mr. Shahzad Saleem
Mian Raza Mansha
Dr. Muhammad Yaqub
Dato' Mohammad Hussein
Mian Umer Mansha
Mr. Atif Bajwa

Chairman

9
Chief Financial Officer
Mr.Salman Zafar Siddiqi
Principal Office
MCB 15 Main Gulberg, Lahore
Registrar's and Share Registration Office
MCB 15 Main Gulberg, Lahore
M/s. THK Associates (Pvt.) Limited
State Life Building No.3,
Dr. Ziauddin Ahmed Road, Karachi

2.2. Overall respective sectors in Pakistan

Pakistan has a well-developed banking system, which consists of a wide variety of
institutions ranging from a central bank to commercial banks and to specialized agencies
to cater for special requirements of specific sectors. The country started without any
worthwhile banking network in 1947 but witnessed phenomenal growth in the first two
decades. By 1970, it had acquired a flourishing.
SBP acts as a nucleolus in the financial system of the country. Today, a central bank is the
central arch of the monetary and fiscal framework in many countries of the world and its
activities are essential for the proper functioning of the economy and critical for the fiscal
operations of the government and Pakistans banking system is no exemption. Will Roger
(1992) describe a central bank as one of the great inventions of the 20th century. State
Bank of Pakistan was established on the first of July 1948 under the SBP order 1948 as
the central bank of the country.
State Bank of Pakistan reins the monetary and credit system in Pakistan. The SBP is
performing many useful functions like custodian of cash reserve of commercial banks,
custodian of foreign currency reserves, bank of rediscount, central clearance, settlement
and transfer, and conducting monetary policy for the stability of the entire banking
industry of Pakistan.

10
At the time of partition total number of Banks was 38 only. Out of these Banks the
Pakistani Banks were only 2, Indian Banks 29 & Exchange Banks were 7. The total of
deposits of Pakistani Banks was Rs.880 Million & Advances were Rs: 198 Million.
According to banking companies ordinance Banks are the companies, which transacts the
business of Banking in Pakistan. Commercial Banks have constituted the most important
part of the intuitional credit in the economy of Pakistan. Being the largest source of
credits, Banking Industry is a pivot of whole the economic activities in Pakistan. At the
time of independence Bank services was badly affected. But with the passage of time
these are improving. The government of Pakistan nationalized all Banks in early 1974.
This act was done to minimize control of few hands over banking. But this step was
proved futile for the Banking in Pakistan. So the Govt. had to revise its decision in1990.
Two Banks (Allied Bank of Pakistan Limited & Muslim commercial Bank Of Pakistan
Limited has been denationalized. Since then Banks were working well. Now slogan of
the Banks is to serve their customers in the best possible manner.

2.3. Role of the MCB in Pakistan

MCB play vital role in our economy because MCB is one of the strong financial services
provider group of Pakistan. MCB provide almost all type of financial services to
customers e.g. time deposit, transfer money, ATM, online banking, foreign exchange,
remittances, mobile banking, loan for personal and business purpose and other banking
services. MCB have more than 1000 branches in all over Pakistan serve from 5 to 9 in six
days of week and over 450 ATM machines which have 24 hour services to customers.
MCB has larger network in all areas of Pakistan.
MCB has been focused towards Corporate Lending and more recently it has shifted
towards consumer lending. The share of individual loan is only 8.9% of the total loans.
The bank is reasonably well diversified and not heavily dominated by a particular type of
loan. Loans to textile sector form 13.78%of the total loans, while loans to sugar industry
form 4.34% of the total.

11
MCB plays an important role in the economic development of Pakistan. The bank is
bringing a rapid growth in various sectors of the Pakistani economy by their efficient,
effective and disciplined mechanism in banking systems.
Few of its roles are following:
1. Rising Financial Resources:
The bank encourages its customers' saving habit by giving various types of incentives on
their savings. The bank is gaining more and more recourses by spreading its network
throughout Pakistan, and it has over 1000 branches in the countrys rural and urban areas.
The bank is also supporting the business communities which make use of resources for
productive purposes in Pakistans economic development.
2. New Investment Opportunities:
Businessmen usually hesitate to invest their money in new enterprises. The MCB of
Pakistan provides the opportunities to the businessmen to invest their money in new
enterprise where the bank's financial analyst guides them about which sector suite them.
For adopting new technologies and production method, the bank also provides short-term
and medium-term loans on very low interest rate along with financial assistance. This
provision of timely credit increases the productive capacity of the Pakistan economy.
3. Promotion of Trade Industry:
The bank always seeks to promote the country's trade industry by providing many
facilities such as a MCB online, bank demand draft, cheques over drawn facility, bill of
exchange, foreign currency account, MCB master card, etc to revolutionized both
national and international trade.
4. Development of Different Regions:
It plays a key role in development of various regions in Pakistan. The bank helps the
government transfer the surplus capital from one region to another by announcing
different schemes. Then traders and industrialists of less developed region are able to get

12
adequate capital for meeting their business needs. This, in return, increases investment,
trade and production in the country.
5. Export Promotion Cell:
The bank set up its export promotion cell to increase the country's export. They provide
information about general trade and economic condition of the country and government
policies about customers' interest both inside and outside. The bank's management
understands the demand of global customers. To rectify their difficulties, they introduce
online banking services along with latest information network into international banking.

2.4. Functions of MCB in Pakistan

Basically there are two basic categories on the basis of functioning of MCB Bank, which
are
Principal function
Auxiliary function
The principal functions are basically the core functions of the bank that is their lifeblood
of bank.
Acceptance of deposits
Investments
Discounting of bills
There are basically two types of deposits and their nature vary due to time factor.
Demand deposits
Time deposits
The demand deposits have no legal restriction on drawing of the deposited amount and
the cash is readily available on demand without any conditions.
On the contrary the time deposits are deposits for a particular period of time and cannot
be easily withdrawn on demand and if the amount is withdrawn certain penalty is levied
on withdrawal before time.
Demand deposits are further classified into two categories.
Current deposits

13
saving deposits
The current deposits are non-interest bearing deposits and earn the most for banks as
there is no cost for the banks but the depositor can claim no interest whatsoever.
The saving deposits are the interest bearing deposits and although there are no such
restrictions but it is mostly preferred for saving and salaried class and similar class clients
deposit in this category to earn interest so no regular withdrawal takes place in this type
of deposits.
Time deposits are further categorized into two categories that are
Notice time deposits
Fixed term deposits

2.5. MCB Muridke Branch

I worked in selected MCB branch Muridke. It covers the industry area in which Muridke
Branch is situated, like industries of Surgical, leather, Gloves industry and merchants
comes as well. This branch provides the complete working environment of banking
sector. Most of the customers come from the area near to the bank.

2.6. Summary
Banking is one of the most sensitive all over the world. Banks are custodian to the assets
of the general masses. Pakistan started its journey after partition without any
infrastructure in banking sector and until now Pakistan have a well developed
institutional arrangement to cater for special requirement of specific sector. All these
institution are headed by the State Bank of Pakistan founded in July 1948.
MCB has deep roots in the development of Pakistan economy. It was one of the initial
bank who takes birth with the birth of Pakistan and work have to hand for the prosperity
and development of Pakistan and banking sector as well. It brought innovations and
introduces the new services and set a model for the banking industry in Pakistan. I
selected the MCB branch because it was at the heart of the industrial areas of Muridke.

14
It has customer from all rephrases of life but its major industrialists and provide the
opportunity to learn more and to solve the difficult projects.

15

Chapter # 3
Background and History
MCB is one of the leading bank of Pakistan with a deposit base of Rs. 368 Billion and
total assets over Rs.500 Billion. Incorporated in 1947, MCB soon earned the reputation of
a solid and conservative financial institution managed by expatriate executives. In 1974,
MCB was nationalized along with all other private sector banks.
The Bank has a customer base of approximately 5 million, a nationwide distribution
network of over 1,200 branches and over 550 ATMs in the market.
During the last sixty three years, the Bank has concentrated on growth through improving
service quality, investment in technology and people, utilizing its extensive branch
network, developing a large and stable deposit base.

3.1 Brief History

History of MCB
Muslim commercial Bank (MCB) is not an overnight success. It started corporate life in
Calcutta on July 9, 1947. After the partition of the indo-Pak sub continent the Bank
moved to Dacca (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 63-year legacy to trust in its
customer and the citizens of Pakistan.
Nationalization
In January 1974, the government of Pakistan nationalized MCB following the banks
(Nationalization) Act 1974, subsequently, in June 1974, Premier Bank limited merged
with MCB.
Privatization:
A wave of economic reforms swept Pakistan in the late 1990s introducing the need for
privatization of state owned banks and companies in April 1991, MCB because Pakistans
first privatized Bank, the government of Pakistan transferred the management of the

16
Bank to a national group group of leading industrialists of the country by selling 26%
shares of the Bank. With a view to broaden equity holding the government sold 25% of
the paid up capital to the general public.In terms of agreement between the government
of Pakistan and the national group additional 24% shares have been purchased by the
group making their holding 50%. 25% was retained by the government. Now it is fully
privatized.

3.2. Vision Statement

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

3.3. Mission Statement

We are a team of committed professionals, providing innovative and efficient financial
solutions to create and nurture long-term relationships with our customers. In doing so,
we ensure that our shareholders can invest with confidence in us.

3.4. Relationship of head office to the branch offices

The communication process between head office and branch is take place through email,
by post and fax. Firstly any urgent communication to branch through email to manger
and then head office send hard copy of letter by post. There is little bit use of fax for
communication by head office to branch.

3.4. Number of departments

In MCB G.T Road Muridke branch (0193) the following types of departments are located.

Advances Department

Remittance Department

Foreign Exchange Department

Cash department

17

deposit department

3.5. Current staff

The total staff of the branch has 11 employees including chef and sweeper employees.

Current staff of branch according to qualification and experience

Mr. Muhammad Mustafa is a branch manager of the MCB (0193); he had done M.A Economics
from Karachi University. He has 22 years experience in the banking sector. Before joining
banking sector he was an armed officer.
Mr. Majid iqbal is an operation manager of the MCB (0193); he had done B.com from Govt
College of commerce, Sialkot. And he has 15 years experience in the banking sector.

Name of employees

Position in organization

Qualification

Experience

Mr. Muzamil

Branch manager

M.A

22 years

Mehmood
Mr.Mohsin Ur

Operation manager

Economics
B.com

12 years

Rehman
Mr. Taimoor Butt
Mr. Jawad Mir
Miss sadia khawja

Advances Officer
Remittances Officer
Foreign exchange officer

M.Com
MBA
B.Com

6 years
5 years
3 years

Mr. Nawaz Ali

Miss Sumera Majeed
Mr. Shamas Ali
Hafiz Yasir
Mr. Numan
Adrees Masi

Clearing Officer
Customer service officer
Chief cashier
Cashier
chef
Sweeper

F.A
M.Com
B.A
Bsc
Matric
Primary

15 years
1 year
4 years
2years
10 years
2 years

Training received by no of people or no of employees

18
When MCB luanched coputerized system for operations the old employees of bank received
training about coputerized banking. The branch in which I did interanship have four persons who
get training.

3.6. Workload
Bank staff and their internees performs customer services from 9:00AM to 5:00PM in six days of
week including Friday ,just 2 hour interval for Jumma Prayer but at start and end week of month
staff perform more works than routine work. After perfuming customer services staff daily posted
all transaction to head office and retain hard copy of daily transactions in branch for future
verification of audit and other usage. In MCB (.....) work load on employees is more as compared
to the other branches of MCB which is located in small cities or rural areas because this area in
which branch is situated have many manufacturing industries of leather, surgical, gloves and rice
mills. Employees of MCB bank take full attempt to satisfy their customer.
And also for driven the summary of the whole month transaction, and it closing figures
considered opening figure for the next month.

3.7. BRANCHES OF MCB

Pakistan
Here is a list of the Banks locations in Pakistan accordance to each province or territory;
Source: http://www.mcb.com.pk

19
Punjab:
Bahawalpure, Dera Ghazi Khan, Rahim Yar Khan, Faisalabad, Gunjranwala, Gujrat,
Muridke, Kamoki, Hafizabad, Chakwal, Sialkot, Narong, Sargrodlha, Sheikhpure.Mandi
Bahuddin, Phalia, Malakwal, Narowal, Jhang, Jhelum, Arifwala, Boraywala, Okara,
Gujrat, Chakwal, Bhakkar, Lahore, Kasur, Multan, Muree, Sahiwal, Attock, Gilgit,
Rawlapindi, Islamabad.
Sindh:
Dadu, Sanghar, Hyderabad, Shikarpur, Karachi, Larkana, Mirpurkhas, Badin,
Nawabshah, Sukkur, Khairpur, Tharparkar, Jacobabad, Sehwan Sharif, Kandhkot,
Kashmore, Ghandawa, Umerkot, Khipro,
Khyber Pakhtunkhwa:
Abbottabad, Mansehra, Bannue, Dera Ismail Khan, Kohat, Mingora, Mardan, Peshawar,
Toppi, Tank, Haripur, Karak, Sawabi, Malakand, Battagram, Nowshera, Lakki, Marwat,
Kohistan,
Baluchistan:
Quetta, Chaman, Sibbi, Loralai, Khuzdar, Pishin, Qilah Saifullah, Chaghi, Nushki, Bolan,
Qila Abdullah, Jafarabad, Dera Bugti, Bolan, Awaran, Kalat,
Azad Kashmir:
Muzaffarabad, Mirpur, kotli, Bagh, Bhimber,

International Branches of MCB:

Sri Lank
Bahrain
Epz
UAE (Rep. Office)

20

3.8. Nature of the Organization

MCB is in its over 50years of operation .it has a network of 1026 branches nationwide
and abroad with business establishments in srilanka, ,bargain , Colombo main ,petthah ,
maradana,

wellwatte.the branch break-up province wise is Punjab (57%),Sindh

(21%),NWFP (19%) and Baluchistan (3%) respectively.

MCB has restricted the number of branches that can be opened by foreign banks, an
advantage that MCB capitalizes because of its extensive branch network. Eighteen years
after privatization, MCB is now in a consolidation stage designed to lock in gains made
in recent years and prepare the groundwork for future growth .the bank has restructured
its assets portfolio and rationalized the cost structure in order to remain a low cost
producer.

3.9. Business Volume

MCB having large number of network over 1116 branches is arrogantly operating all over the
nation. MCB one of the leading bank of the of Pakistan with a deposit base of about Rs. 290
billion and total asset of around Rs.400 billion MCB has earned the reputation of concrete
financial institution over the sixty years of achievements and growth MCB always focus on
growth through improving service quality, investment in technology and people utilizing broad
branch network and developing a large and constant deposits.
MCB now focuses on following central parts of businesses namely
o Retail Banking
o Corporate Banking
o Virtual Banking
o Privilege Banking
o Agriculture Banking
MCB also focuses on Islamic banking system

21

3.10. Revenue
Particulars

2010

2011

2012

2013

2014

-------------------Rupees in Million---------------------Mark-up / Return Earned

31,787

40,044

51,616

54,821

68,147

Mark-up / Return Expensed

(7,866)

(11,561)

(15,841)

(17,988)

(23,620)

Fund Based Income

Fee, Commission,

23,921

28,483

35,775

36,834

44,526

4,328

4,537

4,409

5,310

6,373

2,120

1,255

1,234

956

1,793

30,369

34,275

41,418

43,099

52,639

Brokerage & FX Income

Dividend and Capital Gains
Total Revenue

(Reference: Financial data 2008 to 2012)

Comments:
Year 2012 has been an outstanding year with the bank recording the highest earnings in
its history. The wide range of products offering, large branch network and committed
workforce are some of the fundamental strengths that enabled the bank to achieve
exceptional results in a very competitive market.
The above figures of the revenue portion of the profit and loss account shows that
markup / return earned increased up to Rs.68.15 billion in 2014 as compared to the
financial year 2010 while fee, commission, brokerage and FX income increased to
Rs.4.33 billion in 2014 as compared to 2010. Dividend and capital gains figure was at
Rs.1.79 billion in 2014 which was at Rs.2.21 billion in 2010. In 2014 ultimately the total
revenue is Rs. 52.64 billion which is healthy as compare to 2008 which was Rs. 30.70
billion.

22

3.11. Deposits

Particulars

2010
2011
2012
2013
2014
-----------------------------(Rupees in 000)------------------------------

Customers
32,202
Fixed Deposits

,230

61,680

62,651

,332

,531

80,073,848

91,501,846

150,927,938

173,797,078

196,015,123

225,920,953

105,310,862

123,898,324

144,454,488

161,680,596

3,137,434

2,910,655

3,482,526

3,511,830

,288
282,318,4

563

767
363,258,3

22

321,057,129

55

424,117,075

482,615,225

5,197,969
3,926

2,258,295

4,128,090

6,319,827

,526

2,088,061

3,126,772

2,253,658

151,555
Saving Deposits
Current Accounts Non-

,718

Remunerative

,877

95,966
2,589

Margin Accounts

,309
4

Others
Total

Customers

Deposits

Financial Institutions
9,233
Remunerative Deposits
Non-Remunerative

,602

Deposits
Total

,042

546

Financial

9,779,

Institutions Deposits

644
292,098,0

9,124,495
257,461,8

4,346,356
229,345,1

7,254,862

8,573,485

Total Deposits

66

38

78

431,371,937

491,188,710

Reference: Financial data (2010 to 2014)

Comments:
As shown in the above portion of deposits from the balance sheets of last five
years the deposits has the increasing trend throughout the period from 2008 to
2012. Total deposits from customer come to Rs.491.18 billion in 2014 from
Rs.292.10 billion of 2010. This was due to healthy campaigns for funds
generation from customers by offering attractive and profitable products of
various types like deposit accounts for different terms, profit availability on

23

monthly basis etc. Deposits from customers include fixed and saving deposits,
current accounts, margin accounts and others.

3.12. Advances:

2010
Particulars
Loans, Cash Credits,

2011

2012

2013

2014

-----------------------------(Rupees in 000)------------------------------

R.F etc.
In Pakistan

208,587,014

252,012,594

250,283,213

223,963,444

6,989,947

8,910,253

7,788,234

9,129,006

10,511,019

215,576,961

260,922,847

255,506,444

259,412,219

234,474,463

In Pakistan

6,904,399

5,358,475

3,867,943

2,333,037

1,226,014

Outside Pakistan
Total In & Outside

67,710

90,733

65,492

212,860

593,796

6,972,109

5,449,208

3,933,435

2,545,897

1,189,810

bills)
Payable in Pakistan

2,949,228

2,364,211

4,519,520

1,274,149

722,522

Payable outside Pakistan

4,234,574

4,111,059

5,762,777

10,925,541

11,111,385

Total Payable

7,183,802

6,475,270

10,282,297

12,199,960

11,833,907

Advances - gross
Provision
Against

229,732,872

272,847,325

269,722,176

274,157,806

248,128,180

(7,326,953)

(9,895,889)

(15,678,345)

(18,930,571)

(21,896,401)

General Provisions
General
Provisions

(2,749,815)

(273,222)

(269,722)

(274,144)

(248,135)

Against

(688,665)

(533,693)

(494,434)

(257,352)

(198,340)

(6,841)

(9,051)

(30,268)

( 30,268)

(17,566)

Outside Pakistan
Net Investment

in

Finance Lease

Pakistan
Bills discounted and
purchased

247,718,210

(excluding

government

treasury

Advances
Specific Provision

Consumer

Loans
General Provisions for
Potential Lease Losses
(In

Sri

Operations)

Lanka

24

Advances

Net

Provision

(10,772,274)

(10,711,855)

(16,472,769)

(19,592,335)

(22,333,442)

218,960,598

262,135,470

253,249,407

254,565,471

225,794,738

(Reference: Financial data 2010 to 2014)

Comments:
The total advances net of provisions shows the figure of Rs.225.79 billions in 2014 and
these were at Rs.218.96 billions in 2008, an increase of Rs.16.83 billions was seen in this
portion of balance sheet. It generates the healthy mark-up / interest income for the bank
which added value of the revenues of the bank in the corresponding periods.

3.13. Salary structure

Names

Salaries

Mr. Muzamil Mehmood

70000

Mr. Mohsin ur Rehman

42000

Mr. Taimoor Butt

22000

Mr. Jwad Mir

20000

Miss sadia khawja

17000

Mr. Nawaz Ali

23000

Miss Sumera Majeed

18000

Mr. Shamas Ali

18750

Hafiz Yasir

15000

Mr. Numan

12000

Adrees Masi

7000

Mostly salaries structure is based upon performance which is assessed by manager of

branch and audit committee who visited annually.

Experience, responsibilities, duties also considered in salary structure

25

8 to 10 percent per year increase in the salary

Follow the minimum wage rate for first 3 months for the lower and operating workers.

3.14. Promotion system

Promotion system is based upon performance of employees and experience, qualification
and duties perfumed is also keep in mind in employee promotion.

3.15. Incentives & motivation

Bonus is paid two times in a year.

Social security

MCB give car to manager of branch

Beside of the monetary and material incentive to motivate the workers they also follow
an unbiased promotion system.

Team goal-based incentive systems;

Team discretionary bonus systems; team skill incentive systems;

Team member skill incentive systems;

Team member goal-based incentive systems;

Team member merit incentive systems.

A safe and healthy working environment is provided to enhance the productivity and
efficiency of employees.

Annual increment is also motivated to employees

Employees get a loan from bank at very minor interest rate for the purchasing of the houses, Cars
and property.

26

3.16. Responsibilities/duties performed

The operations of any branch are performed with full cooperation of employees. In MCB
G.T Road Muridk Branch work is divided into employees according to their qualification
and job descriptions. For efficient completion of the operations by the employees having
relevant knowledge and abilities as well as expertise is very necessary.

3.17. Organizational Hierarchy within the branch:

Branch Manager

Operational Manager

Remittance officer

Advances officer

Foreign exchange officer

Cash Officer (cash operations)

Cash officer (cash operation)

customer service officer (CSO)

3.17.1. Duties of Branch Manager:

The responsibililities of branch manager is performed by Mr. Muzamil Mehmood Branch
Manager is responsible for the supervision of all the departments and overall operations
of the branch. He also has the duty to meet the target which is given by head offices in
term of deposits and advances. He can use his personal relations for this purpose to meet
the targets. He has also responsible for the performance of the branch. In short he is
responsible for the development of the branch.

27

3.17.2. Duties of Operations Manager:

Operation manager is responsible after the branch manager. The name shows that
operations manager is responsible for the operations of the branch. Duties of operations
manager are being performed by Mr. Mohsin Ur Rehman. He is responsible of passing
cheques and vouchers and also controls internal working of the branch.

3.17.3. Remittance Officer:

Mr. Muhammad Jawad is performed the duties of remittance officer at MCB Timber
Market Branch. He is responsible for issuance of Demand Draft and Pay Order and also
makes online payments. He also arrange cheque books and responsible for locker
operator.

3.17.4. Advances officer:

The duties of advances manager is performed by Mr. Taimoor Alam Butt. He is
responsible for all operations related to give advances to customer he also prepares credit
proposals and passing limits. He is responsible for collecting interest from customer on
credit. For this purpose he also assesses the credit worthiness through applying different
analysis.

3.17.5. Duties of cash officer:

In MCB Timber Market Branch cash officers are Mr.Shamas Ali and Mr. Hafiz Yasir.
Both are responsible for all cash entries, cash deposits and withdrawals and utility bills.
They have the duty to maintain all cash books within the branch.

3.17.6. Duties of Customer service officer (CSO):

Duties of CSO are being performed by Miss. Sumera Majeed. She has the duties of
accounts opening, issuance of ATMs Cards (automated teller machine) and also deals
with customers with smiling face. He also is filling the deposit slips and online slips.

28

3.18. Critical analysis of the branch

The MCB branch Muridke is making good step forward and contributing much in the economy as
well as society in which it is working. The customer of the area in which bank is located are much
satisfied because employees of bank are very cooperative and behave friendly with the customer.

But the most critical thing observed is the dissatisfaction of staff with this organization
due to poor promotion strategy and much work load. They complaint that there are too
little incentives are paid and most of the incentives are enjoyed by the upper as well as
middle managers and there is no profit bonuses are paid. Overcrowded or overloaded
workload in many departments of the organization is just an extra burden for the
employees.

3.18.1. Communication system

In the branch communication is taking place between employee through computerized
network and for manual work direct communication is take place.

3.18.2. Hiring system

There is no hiring and firing system at branch but branch manager send application about
employees behavior about work and performance to regional manager of Lahore
Regional Office.

3.18.3. Morale of staff

I have observed and experienced that staff of the branch where I have spent 2 months for
internship; the behavior of the staff towards customers is much cooperative and lenient.
The staff has high self-confidence. They work with loyalty. As muridke is
underdeveloped city and have many industries of sports, leather, surgical, and others. So
these industries are important customers for bank so employees cooperation is very
important to retain these types of customer. The staff is not only sympathetic to the
customers but also it follows the rules and regulations that are directed by the Head
Office. At the end I would like to say that they are much cooperative and sympathetic
with me.

29

3.18.4. Physical facilities

The environment of the branch which is provided to the employees is much comfortable
for the efficient working of employees. There is provided much better physical facilities
to employees and customer. As for as physical facilities are concerned MCB has excellent
buildings especially in cities. As for as MCB Muridke Branch is concerned I would like
to say that it is only best branch with respect to working as well as environment.
Required furniture is available and make separate cabin for different departments of
branch. These cabins are made in a big hall and two rooms at ground floor and also two
rooms are constructing on Ist floor. The branch ground floor rooms are used for lockers,
keeping records of branch and for cash. And staff of the bank performs their duties by
sitting in the hall in their cabins. Proper ventilation system is there and hall and rooms are
air conditioned.

3.18.5. Performances
In term of customers satisfaction
MCB has network of over 1200 branches across Pakistan, of which, around 750 are
automated. The bank offers various services to its consumers including personal banking,
corporate banking, virtual banking, Islamic banking and other services. In this rapid
expanding banking sector, MCB has been performing well to compete with its rivals.
MCB has won the "Best Bank of Pakistan" award for the 5th time from 2001 to 2006.
MCB has a principle
During the year 2008 the bank continued to make strong progress in spite of the difficult
market conditions and full attempt to satisfy their customers. Revenues grew strongly and
considerable advancement due to expanding our assets base. A number of strategic
actions have been taken ensure that MCB is having well position for the future and are
able to escell in the year to come. In 2008 bank awarded best bank in Asia by Euro
money.

30
Further the BOD of the bank tasken steps to improve governance in the bank introducing
good policies for easy operations for customer. MCB Privilege is a specialized service for
the high net worth/affluent segment with rewarding in-branch experiences, a wider array
of deposit/ investment products and a bundle of life style privileges. Dedicated
relationship advisors provide expert advice and open the doors to charge free banking in
the privacy and comfort of exclusive Privilege Centers. The unique blend of customer
centric core values at MCB and an intimate understanding of customers lead to the
creation of a truly unique customer experience.
After enjoying much success in ten cities across Pakistan, MCB is launching it credit
card, MCB VISA, in Muridke. This is yet another endorsement of the bank's commitment
to be the market leader in offering innovative, convenient and affordable financial
solutions for increased customer satisfaction. Bringing a different and higher level of
customer convenience to the customers, the card shall cater to the needs of the existing
and rapidly growing business community of Muridke. MCB Visa Credit Card, with its
unique and innovative features such as I-party, i-revolve, i-insure and many other
features, is all set to become the most wanted payment solution.
Consumer banking is crucial strategically for business growth and therefore MCB has
concentrated on it accordingly and has made quantum leaps in expanding it by
continuously providing innovative product and services to a larger customer base. MCB
has a solid foundation of over 50 years in Pakistan, has easily accessible 1200 plus
branches, more than 5 million customers; complete suite of consumer products, not to
mention one of the largest ATM networks and has the most comprehensive Internet
Banking solution is consequently the leading issuer of plastic money in the country.
MCB is providing quality services to its customers. It have also introduced online
banking that has made transfer of money and funds much easy and comfortable.
Customers are satisfied with its services. Rupees travelers Cheques are also performing
important role by satisfying customers needs. Quick services performed by staff also
satisfy customers.MCB has huge networking throughout the Pakistan. SYMBOL
software is vey speedy for online services.

31
MCBs motto is
One Bank One Customer
The G.T Road Muridke Branch also provides better services provide to customers to
complete the motto of MCB. This branch also adding values to fulfill the mission of
MCB.

In term of accounts and budgets

There are more than 13000 thousand accounts which are activated.

3.19. Summaries
In this chapter basically organizational attitude towards its employees and employees
satisfaction and attachment is discussed.

MCB has the used traditional way of

communication while communicating with its offices or branches.

MCB performs

several functions and have many departments in order to retain and maintain their
customers some of these departments are the collections department, Advance
department, Bill department, clearing department etc. MCB has very affective training
department and every employee of bank has received the basic training of banking
course. MCB has the different structure of salary for its employees. To motivate the
employees MCB provide many allowances and facilities to its employees such as medical
facility, huge amount of bonuses and also motivate the employees through promotions. In
MCB some time hiring system is influenced by the politicians because it a government
backed bank. The branch in which I have done my internship is providing the very
satisfactory services to its customers and large numbers of customers are satisfied with
the attitude and the services provided the branch.

Chapter # 4
Policy
This chapter covers the policies, strategies and success of the MCB. A policy is typically
described as a deliberate plan of action to guide decisions and achieve rational outcome
MCB implemented some policies to ensure the goals, strategies are systematic plan of

32
action that an organization follows. This chapter also focuses on the successes that are the
result from those policies and the strategies.

4.1. Customers secrecy:

It is so much important for every bank to maintain the secrecy of their customers because
its builds the goodwill of customer and make trust on bank. So MCB has policy to
maintain the secrecy of their customer and not tell the secrecy of account holders to any
third party. MCB is also legally bound by the State Bank of Pakistan to secure all types of
information about customers account.
Whole Bank Policy Mechanism
Following are the policy mechanism of MCB.

Pakistani statutory and regulatory obligations to prevent money laundering are to

be met in full.

Positive management action will be exercised in order to minimize the risk of the
Bank's services being abused for the purposes of laundering funds associated with
drug trafficking, terrorism and other serious crime, as defined by SBP.

The Bank will not continue established relationships with customers whose
conduct gives rise to suspicion of involvement with illegal activities. Any
customer relationship where the customer's conduct gives the Bank reasonable
cause to believe or suspect involvement with illegal activities will be reported by
the Group Head Compliance to the FMU at SBP after proper scrutiny / enquiry in
consultation with the respective Business Group Head. Thereafter, action will be
undertaken in conjunction with the law enforcement agencies to avoid any risk of
the Bank committing a tipping-off offence. Wherever possible, the relationship
will be terminated.

The Bank's policy and procedures will be based upon the requirements of the
Money Laundering Regulations issued by SBP.

PROCEDURES WILL BE MAINTAINED TO ENSURE THE FOLLOWING:

That the identities of all persons conducting business with the Bank are properly
verified and sufficient information gathered and recorded to permit the Bank to
"know its customer" and predict the expected pattern of business.

33

Prospective business where all of the required information cannot be obtained

without a justifiable reason is declined.

Potential new relationships that do not appear to be legitimate are declined

Transactions offered by non-account holders or by counter-parties that do not

appear legitimate are declined. (See Section 4).

Cash remittances for non-account holders of MCB Ltd. are monitored and will be
subject to additional controls that includes identifying and verifying the ID of
walk in customers conducting transactions above the limit prescribed by the bank.
(This limit is Rs.500,000).

Established relationships are regularly monitored, to ensure that they fit the
customer's profile, especially in respect of large or abnormal transactions.

Records are retained to provide an audit trail and adequate evidence to the law
enforcement agencies in their investigations. (See Section 6).

All suspicions are reported promptly to the Region Compliance Officers for
onward advice to the Regional Compliance Head after having investigated the
transaction independently and full co-operation is extended to the FMU at SBP
and other law enforcement authorities. (See Section 7 and Section 8).

SENIOR MANAGEMENT IS RESPONSIBLE FOR:

The day to day compliance with money laundering obligations within all
segments of the Bank for which they are responsible.

Ensuring that the RCO / Regional Compliance Head is provided with prompt
advice of unusual/suspicious transactions and other matters of significance.

Seeking from the Compliance Division, at least annually, a report relating to the
Banks compliance with its anti-money laundering obligations and acting on the
findings and recommendations.

Internal Audit to report deviations to the respective GMs / RMs (with copy to
Regional Compliance Head and Group Head Compliance) to ensure rectification
of exceptions found during their audit.

THE REGIONAL COMPLIANCE HEAD / GROUP HEAD COMPLIANCE ARE

RESPONSIBLE FOR:

Developing and maintaining policy in line with evolving statutory and regulatory

34
obligations.

Developing internal procedures. The RCH / GROUP HEAD COMPLIANCE will

have
available copies of the current SBP regulations on Anti Money Laundering and
the
GROUP HEAD COMPLIANCE will ensure that he is kept up to date with new
money
laundering requirements and developments.

Ensuring that staff is aware of their obligations and the Banks procedures, and
that staff
are adequately trained in money laundering prevention. RCH / GHC will ensure
that Staff

Colleges are advised with the current changes so that training courses offered on
anti
money laundering are modified accordingly.

Representing the Bank to all external agencies in Pakistan (SBP, NAB, FIA and
Customs), and in any other third party enquiries in relation to money laundering
prevention or compliance.

Ensuring that all segments of the Bank are complying with the stated policy and
therefore
monitoring operations and development of the policy to this end.

Preparing regular compliance reports to the Board and Senior Management.

Ensuring that all branch managers complete the Annual Acknowledgement Form
for the
Prevention of Money Laundering (See Section 9 )

Undertaking the internal review of all suspicions and determining whether or not
such

35
suspicions have substance and require disclosure to FMU at SBP.

Obtaining and making use of national and international findings concerning

Countries
with serious deficiencies.

ALL EMPLOYEES ARE RESPONSIBLE FOR:

Remaining vigilant to the possibility of money laundering.

Complying fully with all anti money laundering procedures in respect of customer
identification, account monitoring, record keeping and reporting.

Reporting all suspicions of money laundering to the Regional Compliance Officer

/
Regional Compliance Head (RCO / RCH).

Promptly completing, every year, Annual Acknowledgement Form for the

Prevention of
Money Laundering (see Section 9 for Specimen) confirming that they had no
suspicions
during the prior year or that any suspicions have been reported and
acknowledging that
they have re-read this Handbook.

Employees who violate any of the anti money laundering regulations or the
policies and
procedures outlined in this Handbook will be subject to disciplinary action.

COMPLIANCE GROUP IS RESPONSIBLE FOR:

To review compliance by the Bank with money laundering statutory and

regulatory
obligations, in respect of the Banks money laundering policy and procedures.

Advising Senior Management of any deviations from the Banks policies and
procedures

36
that have been noted by Compliance Group during their reviews.
PROVISION OF EDUCATION AND TRAINING

All members of management and field staff are responsible to have initial training
on anti
money laundering at least once a year. Compliance Group will coordinate with
Training
Centers / HRD to ensure that respective directives from regulatory bodies are
covered in
these training sessions.

To try to become equal or if not then try to minimize their Gap.

To create a sound base and brought efficient system to achieve modern

banking throughout Pakistan

To create unit banking network in all the branches of their branch.

To capture more multinational market next year.

To increases significant deposits every year.

4.2. Strategies
4.2.1. Marketing Mix of MCB Bank Limited
Marketing is the task of creating, promoting and delivering goods and services to
consumers and businesses. Organizations identify and profile distinct group of buyers
who might prefer or require varying products and marketing mixes. The customer seeks

37
for value and satisfaction. The organizations can increase the value of the customer
offering in several ways e.g. raising benefits, reducing costs etc. marketing mix is a set of
marketing tools that the firm uses to pursue its marketing objectives in the target market.
These marketing tools are known as 4 ps of marketing. These four marketing tools are
viewed as 4cs by the consumers.
4 Ps

4 Cs

Product/ Service

Customer

Solution
Price

Customer Cost

Place

Convenience

Promotion

Communication

To identify the customer needs and fulfilling hem is the basic objective of an
organization. Marketing is not just satisfying your customers, you have to delight them
and this can be done by acting upon this phrase.
Under Promise and Over Deliver

MCB Bank provides a winning combination of products and services to its prime
customers. It is one of the countrys leading commercial banks, which ensures complete
security, and reliability in all-financial transactions.

4.3. Product Mix & Prices of MCB Bank

MCB Rupee Traveler Cheque

MCB Rupee Travelers Cheques are as good as cash, infact better. Better because with
Rupee Travelers Cheques you have the power to purchase and a feeling of security that
should you lose them, you will get a refund.

38
MCB Rupee Travelers Cheques are accepted at major shops, travel agents, hotels,
business establishments and MCB branches all over Pakistan. You don't have to be an
MCB account holder to buy the Rupee Traveler Cheques. Anybody can purchase them.
It's a safe and convenient way to conduct everyday business. At a time when thefts and
robberies are on the increase, you are better off carrying Travelers Cheques rather than
money.

Mahnama Khushali Scheme

A 5- year fixed Deposit Scheme, targeted to persons with small savings who would desire
a regular monthly return on their investment.
Salient Features

Minimum amount of investment shall be Rs.0.010m and the maximum amount of

investment would be Rs. 1.000m.

Khushali Certificates can be purchased by individuals (singly or jointly) or by the

Proprietorship/Partnership concerns or Companies, etc. in their name

The Khushali Certificate will be of five years maturity.

The interim rate of profit offered will be minimum 1% per month. If the profit
declared by the bank is higher, additional profit will be paid.

Zakat will be deducted wherever applicable on yearly basis whether you will be
receiving your profit or encashing your certificates.

As per Government Directions, tax on the profit / return is to be deducted by

MCB branches at the time of payment.

MCB Khushali Bachat Account

Salient Features

8% rate of return per annum.

Returns calculated on daily.

Average balance and paid half yearly.

39

Introduced first time in Pakistan.

The facility of helping account holders pays utility bills (electricity, telephone and
gas) through their account. No queues. No delays.

Prime Currency Account Scheme

Launched to attract deposits in foreign currencies. US Dollars, Pound Sterling, Euro and
Japanese Yen.
Salient Features

Owing foreign currency account under the Prime Currency Scheme allows you to
earn attractive rates of interest in foreign currency.

You have a choice between opening this account in your personal name and
opening it under joint names.

Whether you are a resident or a non-resident Pakistan, MCB Prime Currency

Scheme invites all to operate a foreign currency account.

Foreign nationals and foreign companies can also open a foreign currency account
under the Prime Currency Scheme.

Your foreign currency account can be opened in four global currencies: The
United States Dollar, the Pound Sterling, the Japanese Yen and the Euro.

Travelers Cheques and Foreign Currency Notes can also be issued to holders of
persona! and Joint accounts.

Rupee Loan facility will also available against this account.

You can draw any amount of foreign exchange from your foreign currency
account and transfer or remit the amount freely to any part of the world without
any restrictions.

The restrictions imposed by the State of Pakistan for the opening of foreign
currency accounts in case of passport; Work-permit and resident Visa have been
withdrawn. Your account will be restriction free.

40

The Prime Currency Scheme is exempt from al! forms of taxes including Income
Tax, Wealth Tax and Zakat deductions.

MCB Prime Currency Scheme is a world in itself.

Hajj Mubarak Scheme

A saving scheme, of 2/3 years duration, for the convenience of persons, with a limited
income, who desire to perform Hajj was introduced.
Under the 2 years scheme, a monthly deposit of Rs.1800 is required, whereas under the 3
years scheme, the required monthly deposit is only Rs.1200

Capital Growth Certificate Scheme

For long term depositors under which the amount deposited almost doubles at the end of
5 years. For the scheme, the minimum amount of deposits is Rs. 10000 while there is no
maximum limit. In case of premature encashment of the certificate, the depositor will
profit at the same rates as that of PL Saving Account.

Fund Management Scheme

This scheme is offered to corporate and customers and is aimed at providing better rate of
return up to 15% per annum. One of the objectives of the scheme is to develop secondary
market for Government Securities.

Consultancy Services

In the process of privatization of public sector units, prospective buyers need professional
assistance and MCB, with its expertise, offers to them specialized service for valuation of
the market value of the industrial unit, preparing bid documents and arranging finance for
the purchase of the unit.

Self Supporting Scheme

For the benefits of genuine worker/borrowers who are poor and needy and for small
entrepreneur the bank as evolved a self supporting scheme: maximum amount of loan
Rs.25000 and minimum Rs.5000 per individual. Loan will be totally free of mark-up.

41

Fax Press

This product was first of its kind introduced by using modem technology of The Fax
Machine. It facilitates speedy transfer of funds within Pakistan. The service guarantees
transfer of from one city to another, within an hour.

Night Banking Service

For the convenience of the account holder, service has, especially, been introduced at
busy commercial centers. Traders and other clients can now make deposit, with case, at
such centers up to 8.00PM.

Utility Bill Collection

With the aim of extending this service to wider range of customers, the number of MCB
branches collecting Utility Bills more than 900.

MCB Mobile Banking

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

BANKING*. The convenience of accessing account balance information and mini
statements whenever want or wherever may need them, with comfort and peace of mind.
MCB Mobile Banking service is available to all MCB ATM cardholders, 24 hours - 365
days.

Mobile Banking at a Glance

MCB Mobile Banking gives easy and quick access to account(s) at a time find
convenient, including all holidays.

With MCB Mobile Banking

Check balance

View the last 4 transactions of your MCB account(s).

42

A free service

MCB Mobile Banking is a free service for MCB account holders who have an ATM card
of an SMS message if charged by the service provider.

Banking at fingertips

Dial in anytime to get information regarding balance and mini statements.

MCB Islamic Banking Services

Islamic banking services through exclusive units/branches offering a range of liability

and asset based Sharia compliant products like Musharika, Murabaha, Ijara and Istasana.

MCB Car Cash

Car financing and leasing at competitive rates with flexible options Car cash finances
both semi-commercial and non-commercial vehicles for personal and business use.

MCB Locker

The best protection for your valuables. Lockers of different capacities are available
nationwide.

MCB Master Card

The Future of Money

Since the beginning of time, people have tried to find more convenient ways to pay, from
gold to paper money and checks. Today, money is moving away from distinct hard
currencies and towards universal payment products that transcend national borders, time
zones, and, with the Internet, even physical space.
Plastic or "virtual" money, credit, debit, and electronic cash products, inevitably will
displace cash and checks as the money of the future. MasterCard International has
expanded globally in more locations in the world than any other card. The card was

43
introduced by MCB Bank Limited in 1995 and now offers card members over 15 million
outlets in 232 countries.

Photo security- The first bank in Pakistan to introduce the enhanced feature of
photograph on the card limiting fraud in case of card loss.

Welcomed at over 3, 000 outlets in Pakistan.

Provides up-to 45 days Free Credit.

Joining and Annual Fees to suit you.

24 Hour Customer Services- Call 111-700-700 and you can get information
from our customer services representatives

On new card application or have your queries resolved anytime of the day.

Cash Advance Facilities

Available in Pakistan and worldwide with a network of over 1,200 branches and a
team of dedicated professionals, MCB is Pakistans largest private sector commercial
bank.

Our Consumer Banking provides customers with innovative saving schemes, products
and services. Our ATM network is the largest in Pakistan and our Pak Rupee Travelers
Cheques are market leaders. We were the first to introduce the photo card with the
introduction of the MasterCard.
Our Corporate Banking ensures assistance from a dedicated team of professional
financial advisors for underwriting, project finance or corporate advisory services.When
it comes to banking practices, you can depend on us. Weve been around for over fifty
years.

MCB Smart Card

MCB now brings you MCB SmartCard -a secure and convenient instrument of
payment with unmatched functionalities. It provides 24-hour direct access to your bank
account

44
The convenience and flexibility of MCB SmartCard will help live a smarter life. It not
only helps you manage your expenses, but also avoids undue interest on your day to day
credit card transactions.
Your balance is always within your reach and you spend accordingly.
MCB is the only bank to introduce a debit card that gives the option to choose from
domestic and international card for local and global usage respectively

Remit Express

Fastest to Pakistan. Anywhere in Pakistan.

The fastest way of getting your money across to Pakistan. Remit Express offers low cost
remittance from U.A.E. and Saudi Arabia. Your relatives, friends or business associates
receive drafts within 72 hours.MCB Remit Express has been specifically designed to
meet the needs of the expatriate Pakistani community residing in the Gulf countries.

Easy Personal Loan

Helping You Do More

MCB Easy Personal Loan provides you with the financial advantage to do things you've
always wanted to but never had the sufficient funds for. Take that much-needed holiday.
Buy a car. Refurnish your house. Purchase a new TV. Finance a better education for your
children.
Salient Features

MCB will lend you any amount, from Rs 30,000 to Rs 490,000, depending upon
your net monthly income

You can choose tenure of 1 to 3 years for the repayment of the loan

Bank to Bank Balance transfer

Credit Card balance transfer s

Loan Protector Shield- insurance coverage of balance loan amount in case of

death or permanent and total disability

45

Availability of early repayment option

Repayment of principal and mark-up is monthly and can repaid using either one
of the following modes:

Direct Salary Transfers

Eligibility Criteria

Minimum net monthly income Rs 10,000

25 to 55 years of age

Pakistani national

At least 2 years of employment with current employer.

Processing fee of 1% of the principal loan amount to be charged at the time of

loan disbursement.

MCB Pyara Ghar

MCB gives dream home at the lowest and best possible mark-up rates. You can choose
either one of our two mark-up rate options- fixed or variable.
Early repayment option tailor-made to allow making partial prepayments at dates that
suit.
Who Can Apply?s
Anyone who fulfills the following criteria is eligible to apply:

Pakistani national residing in the city and area where the product is launched.

25 years old or above when you apply and under 60 at the time of maturity of the
applied financing period.

Salaried person, self-employed professional or a businessman with a verifiable

monthly income stream.

Net take -Home income not less than Rs. 25,000 per month.

Have 5 years or more of business or professional experience.

46

Employed with the present employer for 2 years with a total employment history
of 5 years.

Home Purchase Home Renovation Home Construction

Tenure 3 years to 15 years 2 years to 5 years 3 years to 15 years

MCB Virtual MCB Virtual provides the continence of banking on internet

whether at office or home or traveling. Log on at www.mcb.com.pk and enjoy 24
hours access of all your accounts for the largest array of service.

MCB Business Sarmaya

MCB Business Sarmaya is a running finance against your residential property. It offers
running finance up to 20 million with low markup.
General Manager

MCB Car 4 U

Regional
Manager
MCB car 4 u auto finance is a power
move
that gets you not only a car of your own

choice but leads you best in life. It is affordable with competitive markup, flexible
Branch Manager

conditioning and easy processing and above all no hidden cost.

Branch Credit Committee

Credit Department

Internal Auditor

Customer Service Department

General Banking

Account Opening
Department

4.4. Organizational Structure

Cash Deposit
Department

General Manager

Foreign Exchange
Department
Regional Manager
Branch Manager

Bills Remittances
Department

Branch Credit Committee

Credit Department

Internal Auditor

Clearing
Account
Bills
Cash
Remittances
Deposit
Opening
Foreign
Exchange
Department
Customer Service Department
General Banking
Department

47

(Source: www.mcb.com.pk)

4.5. Placing Strategies of MCB Bank

The location of the bank plays a vital role in making its operations profitable. If the bank
is located in some business center then it will be very easy for it to attract business people
as its customers. Therefore MCB has most of its branches at places where it can reach its
targets customer easily. The branch network of MCB is approximately 1200.

48

4.6. Promotion Strategies OF MCB BANK

MCB Bank is actively participating in promotion of its products and services through
advertisement and other promotional schemes.
Initially, the bank focused on the upper class customers only and offered products for a
limited class of people. But now the strategy has been changed and the bank is now
targeting the middle market also. The products offered are of diverse nature to cater the
needs of maximum number of people.
Customer Oriented Attitude
MCB Bank values its customers. Customers complaints are encouraged because it gives
an opportunity to know the needs of the customer and build more confidence in them.
Most of the promotional efforts are done through

Direct marketing

Public relations

MCB bank sometimes gets suggestions and recommendations from its good customers.
Branch layout is being designed in such a way that more and more customers are
attracted. Some of the branches of MCB Bank have a very good entrance and outlook but
many still need to be improved.

4.7. FIELDS OF ACTIVITIES

The purpose of banks is to provide some services to the general public. And for this
purpose different banks provide different services to the people in different forms. The
MCB Bank is a commercial bank, in modern time commercial banks play a very

49
important role and their functions are manifold. The main functions and services which
MCB Bank Limited provides to different peoples are as follows.

Open Different accounts for different peoples

Accepting various types of deposits

Accepting various types of deposits

Granting loans & advances

Undertaking of agency services and also general utility functions, few of those are
as under

Collecting cheques and bill of exchange for the customers.

Collecting interest due, dividend, pensions and other sum due to customers.

Transfer of money from place to place.

Acting an executor, trustee or attorney for the customers. Providing safe

custody and facilities to keep jewellery, documents or securities.

Issuing of travelers cheques and letters of credit to give credit facilities to

travel.

Accepting bills of exchange on behalf of customers.

Purchasing shares for the customers.

Undertaking foreign exchange business.

Furnishing trade information and tendering advice to customers.

For proper functioning of branches and the overall bank has been divided in different
departments. These departments handle different jobs so that division of work is there for
improvement of functions and also it is easy to control the situation. The general division
in a branch is as follows:

Cash department

Deposit department

50

Advances & credit department

Remittance department

Foreign exchange department

Technology department (new addition in order to cope with the growing needs
of day to day technology requirements)

Success

51
AWARDS & ACCOLADES
Our pillars of strength stand on a foundation of leadership

Strongest Bank in Pakistan award 2010 by Asian Banker

Leadership achievement award 2010 by Asian Banker

Euro money Awards

Best Bank Award 2008

Best Bank Award 2006

Best Bank Award 2005

Best Bank Award 2004

Best Bank Award 2003

Best Bank Award 2001

Best Domestic Bank Award 2000

Asia Money Award

Best Domestic Commercial Bank Award 2005

Best Domestic Commercial Bank Award 2004

Mobile World Congress has nominated MCB Mobile, a service launched by the MCB
Bank in 2009, as the best across the world.

52
The nomination was an acknowledgment for the recently launched innovative mobile
banking solution by the MCB Bank and GSM Association (GSMA), said a press release.
MCB Bank Limited President and Chief Executive Officer Atif Bajwa said that the bank
remains committed to broaden the access of financial services to a sizable population in
Pakistan owning mobile phones and without bank accounts.
This nomination is a source of great pride not just for the MCB bank, but for the
country, as well,

Summary
The above chapter is about polices and the strategies that are implemented by the MCB to
achieve the visionary goals. MCB has strong policies which easily achieve their goals.
Policies provide the direction and strategies are ways to follow the goals. MCB
implemented many polices some of that polices are discussed. MCB has strong marketing
mix which helps MCB to achieve long term goals. MCB provides all types of banking
products to satisfy customer need easily. MCB gain much success on the basis of strong
policies and better marketing mix strategies. MCB get different awards on the basis of
best performance in banking sector. Recently MCB get world best Mobile banking
services.

4.8. Mobilization of Fund

53
As mentioned before, MCB basically make money by lending money at rates higher than
the cost of the money they lend. More specifically, MCB collect interest on loans and
interest payments from the debt securities they own, and pay interest on deposits, CDs,
and short-term borrowings. The difference is known as the "spread," or the net interest
income, and when that net interest income is divided by the bank's earning assets, it is
known as the net interest margin.

Deposits
The largest source by far of funds for MCB banks is deposits; money that account holders
entrust to the bank for safekeeping and use in future transactions, as well as modest
amounts of interest. Generally referred to as "core deposits," these are typically the
checking and savings accounts that so many people currently have.
In most cases, these deposits have very short terms. While people will typically maintain
accounts for years at a time with a particular bank, the customer reserves the right to
withdraw the full amount at any time.

Wholesale Deposits
If a bank cannot attract a sufficient level of core deposits, that bank can turn to wholesale
sources of funds. In many respects these wholesale funds are much like interbank CDs.
There is nothing necessarily wrong with wholesale funds, but investors should consider
what it says about a bank when it relies on this funding source. While some banks deemphasize the branch-based deposit-gathering model, in favor of wholesale funding,
heavy reliance on this source of capital can be a warning that a bank is not as competitive
as its peers.

Debt
MCB Banks will also raise capital through debt issuance. Banks most often use debt to
smooth out the ups and downs in their funding needs, and will call upon sources like

54
repurchase agreements or the Federal Govt. system, to access debt funding on a short
term basis.
There is frankly nothing particularly unusual about bank-issued debt, and like regular
corporations, bank bonds may be callable and/or convertible. Although debt is relatively
common on bank balance sheets, it is not a critical source of capital for most banks.
Although debt/equity ratios are typically over 100% in the banking sector, this is largely a
function of the relatively low level of equity at most banks.

Use of Funds
The use of funds as under

Loans
MCB banks, loans are the primary use of their funds and the principal way in which they
earn income. Loans are typically made for fixed terms, at fixed rates and are typically
secured with real property; often the property that the loan is going to be used to
purchase. While banks will make loans with variable or adjustable interest rates and
borrowers can often repay loans early, with little or no penalty, banks generally shy away
from these kinds of loans, as it can be difficult to match them with appropriate funding
sources.

Consumer Lending
Consumer lending makes up the bulk of MCB bank lending, and of this, residential
mortgages make up by far the largest share. Mortgages are used to buy residences and the
homes themselves are often the security that collateralizes the loan. Mortgages are
typically written for 30 year repayment periods and interest rates may be fixed,
adjustable, or variable.

Senior Secured Debt (Covered Bonds)

55
MCB Bank also issued Covered bonds are backed by cash flows from mortgage
securities. All four of the major banks have issued covered bonds over the past two years.

Term Deposits
Term deposits are also a very low-risk investment. However, a bank is not required to
repay term deposit holders should the bank collapse.

Senior Debt
Senior debt is a form of corporate debt that has priority with respect to interest and
principal over other classes of debt (except senior secured debt) and over all classes of
equity by the same issuer.
A bank cannot defer its coupon payment to senior or subordinated debt holders.

Subordinated Debt
Subordinated debt transactions rank below senior debt. If a bank becomes insolvent,
subordinated debt is not paid until all senior debt and unsecured creditors are paid first.
Therefore, banks tend to pay more interest for their subordinated debt.

Hybrids
Hybrids are essentially a mix of debt and equity features. The major banks are large
issuers of these types of securities.
However, when it comes to hybrid securities that are non-cumulative, if a company
cannot pay its dividends, the payments are simply foregone.

Shares
Shares have the highest risk in the capital structure of the bank. This is because dividends
are not necessarily guaranteed, and in the event of a wind-up, shareholders are the last
group of investors to be repaid.
In other words, there is no guarantee of dividend payment or return of capital.Investors
are, of course, duly rewarded for these risks. And with dividends around some percent
mark, there is no doubt bank shares reign supreme when it comes to income.

56

4.9. Generation of Funds

A banking organization generates its funds by interest income, non-interest income,
income from brokerage, dividend income, etc.
Funds Generated (In Rs. millions)
Interest earned
Noninterest income
Dividend income
Foreign Currency dealing income

2008
43,789
6,145
2,892
1,334

2009
50,569
6,782
3,263
1,043

2010
60,943
7,925
2,879
3,969

2011
36,834
6,256
3,191
2,895

2012
44,526
8,112
3,383
4,125

Data Source Annual Report of the MCB Bank (2008 to 2012)

Comments
From generation of funds statement we can see that non-interest income of Muslim
Commercial Bank limited increased to larger extent as compared to non-interest income.
Dividend income of Muslim Commercial Bank limited falls in year 2012 that occur due
to collapse of business in Pakistan.

4.10. Sources of Funds

The MCB Bank has the two main sources of funds which are as under:
1. Deposits from Customers.
2. Borrowings from other Financial Institutions.

57

Deposits from Customers

Particulars

2008
2009
2010
2011
2012
-----------------------------(Rupees in 000)------------------------------

Customers
32,202
Fixed Deposits

,230
151,555

Saving Deposits
Current Accounts

,718

Non-Remunerative

,877

61,680,332
150,927

62,651,531
173,797

80,073,848

91,501,846

,938

,078

196,015,213

225,920,953

144,454,488

161,680,596

95,966

105,31
0,862

2,589
Margin Accounts

,309

123,89
8,324

3,137

2,910

,434

,655

3,482,526

3,511,830

,288
282,318,4

563
321,057,1

767
363,258,3

22

29

55

424,117,075

482,615,225

4
Others
Total

Customers

Deposits

(Reference: Financial Data (2008 to 2012)

Analytical Remarks
Deposits of the Bank have registered a growth of Rs 58 billion due to the strong and
extensive branch network. The reasons are the growth in current deposits by 17.23% and
fixed deposits growth of 11.4% as compared to last corresponding year. The good and
healthy deposits mix has play its role for diminishing the funds cost.
In the financial year 2012, deposits from customers have been increased 74.37% as
compared to 2008. Fixed and saving deposits are shared major to this increase. Further
the strong and upward expansion in the deposits represents the strong confidence and
belief of the customers on the performance and decision making of management. Thats
why the bank got the award of the bank of the year. This was a big achievement for
management and team work of the employees of the bank.

58

II-Borrowings from Financial Institutions

Particulars
2008
2009
Details of borrowings from ----------------------------Financial institutions
Secured
Borrowings from SBP under:

2010

2011
(Rupees

2012
in

000)

--------------------------- .

Export refinance scheme

5,593,462
Long-term financing facility
Long-term financing-export oriented

9,217,004
2,044,460

8,829,527
80,220

9,880,240
721,000

9,903,657
2,026,175

projects scheme
2,473,077
Financial facility for storage produce
Scheme for revival SME &

56,291

2,018,330

1,444,542

949,375

219,932

Agriculture flood affected Areas

450

Total
8,066,539
Borrowings from other financial

11,317,755

10,928,077 12,045,782 13,099,589

institutions
2,932,600
Repurchase agreement borrowings 26,931,342

2,932,817
6,325,021

452,398
618,163
293,113
31,606,331 12,027,499 24,781,254

Total

37,930,481

17,642,776

42,986,806 24,691,444 38,173,596

Call borrowings
Overdrawn nostro Accounts

500,000
976,350
1,476,350

4,418,990
602,074
5,021,064

1,146,092
529,190
1,675,282

Total Borrowings

39,406,831

22,663,840

44,662,088 25,684,593 39,100,627

Unsecured
449,860
543,289
993,149

816,139
110,532
926,671

Data Source Annual Report of the MCB Bank (2008 to 2012)

Analytical Remarks
Under the head of borrowings from financial institutions in balance sheet liabilities side
the secured borrowing from the SBP under export refinance scheme shows that Bank has
entered into agreements for financing to extend export finance to customers. According to
the terms and conditions of agreement, the SBP is authorized to recover the outstanding
amount at the date of maturity of finances by directly debiting the current account
maintained with SBP.

59
The amount of long-term financing under export oriented projects have been obtained
from SBP for providing financing facilities to customers for import of machinery, plant,
equipment and accessories by export oriented units. According to the agreement the bank
has granted the right to recover the outstanding amount by directly debiting the current
account at the date of maturity.
Further such borrowings under the export refinance and long term financing for export
oriented projects schemes are secured against the banks cash and security balances held
by the SBP.

4.11. Allocation of Funds

Banking deposits are used and allocated in the following channels:
1. Lending to Financial Institutions.
2. Investments (In Securities).
3. Advances

I-Lending to Financial Institutions

Particulars
Call Money Lendings

2008
2009
2010
2011
2012
----------------------------(Rupees in 000)---------------------------1,700,000
3,000,000 1,500,000 -

60
1,051,372

Repurchase Agreement Lendings -

2,400,079

Total

4,100,079

1,051,372

2,901,781

955,087

3,000,000 4,401,781

955,087

Data Source Annual Report of the MCB Bank (2008 to 2012)

Analytical Remarks
Here the Call money lendings carry mark-up at rates ranging from 7% to 11.90% per
annum (2011: 12.80% to 12.85% per annum) and are due to mature latest by January
2012. Securities held as collateral against repurchase agreement lendings to financial
institutions include the Market Treasury Bills and Pakistan Investment Bonds. These
carry mark-up at rates ranging from 12.50% to 19.33% per annum (2012: Nil) and are
due to mature latest by January 2013.

II-Investments (In Securities)

Particulars
Investments by segments
Federal
Government
Securities:
Market Treasury Bills

2008

2009
2010
2011
2012
----------------------------(Rupees in 000)----------------------------

85,481,869

36,872,804

139,569,7746

185,955,198

256,590,502

61
Pakistan Investment Bonds
Federal Government Securities
Government
Compensation

5,104,072
704,928

3,791,439
825,719

7,699,324
171,583

6,936,417
-

35,798,381
-

870,771

870,771

286,557

3,299,630
1,585,475

3,019,135
1,573,478

684,810
1,503,702

1,542,470
4,500,000

14,646,590
2,500,000

3,000,000

3,000,000

2,250,000

97,046,745

86,197,638

152,915,750

198,934,085

311,785,743

118

118

118

118

118

70,000

3,155,635

2,300,297

1,321,816
1,391,816

3,387,148
3,387,148

3,155,635

2,300,297

1,384,432

1,384,432

1,384,826

1,468,965

1,541,629

Shares / Certificates / Units:

Listed Companies

7,557,700

8,306,012

7,071,612

6,619,033

7,771,349

Unlisted Companies

415,333

415,724

413,843

423,915

423,951

Total
Units of Open Ended Mutual

7,973,033

8,721,736

7,485,455

7,042,948

8,195,300

1,662,063

661,909

442,981

182,981

4,000,000

61,602
100,000
161,602

61,602
100,000
161,602

61,602
100,000
161,602

61,602
100,000
161,602

61,602
100,000
161,602

1,136,821

1,404,384

1,831,777

1,672,200

3,064,783

1,223,068

897,448

1,129,096

1,758,446

714,183

Bonds
Euro Bonds
Skunk Bonds
Unlisted
Term
Certificate
Total
Provisional

Finance

Government

Securities
Overseas

Governments

Securities:
Government

of

Sri

Lanka

Treasury Bonds
Market Treasury Bills
Total
Subsidiaries and Associated
Undertakings
Fully
Paid-up

Ordinary

Fund

Fully

Paid-up

Preference

Shares:
Listed Companies
Unlisted Companies
Total
Term Finance Certificates,
Debentures,

Bonds

Participation

and
Term

Certificates:
Listed

Term

Certificates
Unlisted
Term
Certificates

Finance
Finance

62
Debentures,

Bonds

&

Participation Term Certificates

123,498

129,589

121,618

91,364

246,459

(PTCs)
Certificates of Investments
Total

500,000
2,983,387

250,000
2,681,421

3,082,491

3,522,010

4,025,425

Skunk Bonds

600,000

1,337,727

1,650,227

1,027,762

NIT Units

5,253

5,253

5,253

5,253

Total
Total Investments at Cost
Less: Provision for Diminution

605,253
111,816,633

1,342,980
102,543,652

1,655,480
170,515,851

1,003,015
215,655,479

837,217
319,492,941

(468,288)

(3,044,962)

(3,686,520)

(3,116,292)

(3,327,065)

111,348,345

99,498,690

166,829,331

212,539,187

316,165,876

1,754,021

(2,763,618)

305,134

521,695

485,737

(13,105)

(103,198)

1,634

Other Investments:

in value of Investments
Investments
(Net

of

Provisions)
(Deficit)
/

on

Surplus

Revaluation of Available for

Sale Securities-Net
Deficit on Revaluation of Held
for Trading Securities-Net

831,964
5,253

63

Total Investments at Revalued

13,089,261

Amounts-Net of Provisions

96,631,874

167,134,465

231,060,882

316,651,613

Data Source Balance Sheet & Profit & Loss of MCB (2008 to 2012)

Analytical Remarks
In this section of Investments include certain approved / government securities which are
held by the Bank to comply with the Statutory Liquidity Requirement determined on the
basis of the Bank's demand and time liabilities as set out under section 29 of the Banking
Companies Ordinance, 1962.
In this segment Available for sale" Market Treasury Bills and Pakistan Investment
Bonds are eligible for rediscounting with the State Bank of Pakistan (SBP). The market
value of Pakistan Investment Bonds and Market Treasury Bills classified as 'held to
maturity' as at December 31, 2012 amounted to Rs. 2,565.905 million and Rs. 1,859.552
million (2011: Market Treasury Bills Rs. 32.87 million and Pakistan Investment Bonds
Rs. 863.356 million) respectively.
Investment of the Bank in Adamjee Insurance Company Limited is carried at cost
amounting to Rs. 943.600million (2011: Rs. 943.600million) as at December 31, 2012 in
accordance with the treatment specified in International Accounting Standard (IAS) 28
"Accounting for Investments in Associates". The market value of the investment in
Adamjee Insurance Company Limited as at December 31, 2012 amounted to Rs.
1675.927 million (2011: Rs. 3,152.948 million).

III-Advances
Particulars
Loans, Cash Credits, R. F
etc.
In Pakistan
Outside Pakistan
Total
Net Investment in Finance
Lease
In Pakistan
Outside Pakistan
Total

2008

2009

2010

2011

2012

-----------------------------(Rupees in 000)-----------------------------208,587,014
6,989,947
215,576,961

252,012,594
8,910,253
260,922,847

247,718,210
7,788,234
255,506,444

250,283,213
9,129,006
259,412,219

223,963,444
10,511,019
234,474,463

6,904,399
67,710
6,972,109

5,358,475
90,733
5,449,208

3,897,184
65,492
3,933,435

2,333,037
212,860
2,545,897

1,226,014
593,796
1,189,810

64
Bills

discounted

purchased

and

(excluding

government treasury bills)

Payable in Pakistan
Payable outside Pakistan
Total
Advances gross

2,949,228
4,234,574
7,183,802
229,732,872

2,364,211
4,111,059
6,475,270
272,847,325

4,519,520
5,762,777
10,282,297
269,722,176

1,274,149
10,925,541
12,199,690
274,157,806

722,522
11,111,385
11,833,907
248,128,180

(7,326,953)
(2,749,815)

(9,895,889)
(273,222)

(15,678,345)
(269,722)

(18,930,571)
(274,144)

(21,896,401)
(248,135)

Against Consumer Loans

- General Provisions for

(688,665)

(533,693)

(494,434)

(357,352)

(198,340)

Potential Lease Losses (In

(6,841)

(9,051)

(30,268)

(30,268)

(17,566)

(10,772,274)
218,960,598

(10,711,855)
262,135,470

(16,472,769)
253,249,407

(19,592,335)
254,565,471

(22,333,442)
225,794,738

Provision

Against

Advances
- Specific Provision
- General Provisions
General
Provisions

Sri Lanka Operations)

Advances Net Provision

Data Source Balance Sheet & Profit & Loss of MCB (2008 to 2012)

Analytical Remarks
Advances of the Bank increased throughout the period from 2008 to 2012. The major
contribution to the advances is seen in loans, cash credits, running finance etc. inside
Pakistan and outside Pakistan. Rs.215, 575 million was booked in loans, cash credits,
running finance etc. inside Pakistan in year 2008 and it increased to Rs.218, 960 million
in year 2012. Rs.225,794 million increase in the five years under this head and Rs.6,834
million increased in outside Pakistan loans, cash credits, running finance etc. the other
heads under the advances are also increase proportionately and added their share in the
total amount of advances.

65
The total amount of advances include Rs. 26,664.873 million (2011: Rs. 24,543.807
million) which have been placed under the non-performing loans status. This also
represents non-performing portfolio of agricultural financing classified as OAEM as per
the requirements of the Prudential Regulation for Agricultural Financing issued by the
State Bank of Pakistan.

IV- Critical Analysis of the Theoretical Concepts Relating To

Practical

Experiences
Financial Analysis:
Particulars

Balance Sheet of Five Years

2008

2009

2010

2011

2012

---------------------(Rupees in Millions)----------------------

Assets
Cash

and

balances

with

treasury banks

39,684

32,466

38,775

45,407

53,123

Balances with other banks

Lending
to
financial

3,808

6,577

6,010

1,479

2,281

institutions

1,051

21,082

3,000

4,402

955

Investments - net

113,089

63,486

167,134

213,061

316,652

Advances net

218,961

198,239

253,249

254,552

225,801

Operating fixed assets

16,024

9,054

18,015

20,948

22,008

Deferred tax asset net

172

192

Other assets - net

17,869

11,031

23,040

27,706

32,413

Total Assets

410,486

342,107

509,223

567,553

653,233

Bills payable

10,479

7,090

8,201

10,226

9,467

Borrowings

39,407

23,943

44,662

25,685

39,100

Deposits and other accounts

292,098

257,462

367,605

431,372

491,189

Sub-ordinated loans

479

1,597

Deferred tax liabilities - net

1,180

3,197

4,934

18,380

Other liabilities

11,722

11,171

15,819

16,092

6,295

Total Liabilities

355,365

301,263

275,470

488,349

564,431

Liabilities

66

Represented By:
Share capital

6,283

5,463

6,911

7,602

8,362

Reserves

34,001

24,662

38,386

40,163

42,186

Un-appropriated profit

5,131

5,531

15,779

21,416

28,366

45,415

35,656

61,076

69,1814

78,914

assets - net of tax

9,706

5,188

8,664

10,024

9,887

Total
Total Liabilities & share

55,121

40,844

69,740

79,205

88,801

Capital

410,486

342,107
509,224
567,553
653,233
Data Source Balance Sheet of MCB (2008 to 2012)

Surplus on revaluation of

V-Profit & Loss Accounts of Five Years

Particulars

2008

2009
2010
2011
---------------------(Rupees

2012
in

Millions)---------------Mark-up / return / interest earned

31,787

40,044

51,616

54,821

68,147

Mark-up / return / interest expensed

-7,866

-11,561

-15,841

-17,988

-23,620

Net mark-up / interest income

23,921

28,483

35,775

36,833

44,527

Provision & write off

Net mark up / return / interest income

3,061

4,042

7,465

3,685

4,168

after Provisions

20,860

24,441

28,310

33,149

40,358

4,328

4,537
1,255

4,409
1,234

5,310
956

6,319
1,793

Non Mark up / Interest Income

Fee, commission, brokerage & fix income
Gain on sale of securities net

67
2,120
Total non mark-up / return / interest
income

6,448

5,792

5,643

6,265

8,112

27,308

30,233

33,953

39,414

48,470

Operating expenses

6,000

8,365

10,797

13,160

16987

Total nom mark-up / interest expenses

6,000

8,365

10,797

13,160

16987

Profit Before Taxation

21,308

21,868

23,156

26,254

31,483

Taxation

6,042

6,493

7,660

9,380

12,058

Profit After Taxation

15,266

15,375

15,496

16,873

19,425

Non Mark-up / Interest Expenses

Data Source Profit & Loss of MCB (2008 to 2012)

4.12. Ratio Analyses

Ratio Analysis for Last Five Years

Abbreviation Used in Ratio Calculations
Words

Abbreviation

Earning before tax

Earning after tax
Net Markup income
Gross markup income
Total income
Operating income
Operating expenses
Total Share holder Equity
Surplus on Revaluation
Net Sales
Market price per share
Earning per share
Earning before tax

EBT
EAT
NMI
GMI
T.I
OP
OE
TSE
SOR
N.S
MPS
EPS
EBT

Total outstanding shares

TOS

68
Book Value

BV

Dividend per share

DPS

Total debt

T.D

Total liabilities

T.L

Interest Earned

I.E

Total Assets

T.A

Definition of the Ratio

Ratio simply means one number expressed in terms of another. A ratio is a statistical
yardstick by means of which relationship between two or various figures can be
compared or measured. The term accounting ratio is used to describe significant
relationship between figures shown on a Balance Sheet, in a Profit and Loss Account, in a
Budgetary Control System or in any other part of accounting organization. Accounting
ratio thus shows the relationship between accounting data. Ratio can be found out by
dividing one number by another number. Ratio shows how one number is related to
another.
It may be expressed in the form of:
(1.) Co-efficient,
(2.) Percentage,
(3.) Proportion,
(4.) Rate.

Ratio Analysis
Ratio analysis is an excellent method for determining the overall financial condition of
company. It puts the information from a financial statement into perspective helping to
sport financial patterns that may threaten health of company. Ratio analysis is also useful
for making comparisons between companies relevant the same industry. The analysis of
financial statement can provide reasonable insight into a firms state of affairs. But
statements have inherent limitations, which require care & prudence in their uses.
Ratio means one number expressed in term of another a ratio is statistical yardstick by
mean of which relationship between two or various figures can be compared or measured.

69
Here we are going to explain the ratio analysis of MCB. Ratio analysis is an important
and age-old technique of financial analysis. The following are some of the advantages of
ratio analysis:
1) Simplifies financial statements
2) Facilitates inter-firm comparison
3) Helps in planning
4) Makes inter-firm comparison possible
5) Helps in investment decisions
Financial ratios can be divided into the following Six Parts.
A. Liquidity ratios
B. Activity ratios
C. Leverage ratios
D. Profitability ratios
E. Investor ratios

Bank special ratios

A. Liquidity ratio
Current ratios
Quick ratios
Absolute Liquid ratio
B. Activity ratios
Inventory turnover ratio
Average collection period
Average payment period
Total assets turnover ratio
C. Leverage ratios
Proprietary ratio
Debt ratio
Debt to Equity ratio
Debt to Tangible net worth ratio
Debt to Funds ratio
External-Internal Equity ratio

70
D. Profitability ratio
Return on total assets
Return on-equity
Return on investment
Return on fixed assets
Average profit per branch
Net profit Margin
Interest income to total income
Interest expense to total expense
Return on advances
E. Investor Ratios
Earning per share
P/E ratio
Dividend per share
Dividend yield ratio
Dividend payout ratio
Break up value/Book value per share
F. Bank special Ratios
Earning assets to total assets
Return on earning assets
Net margin to earning assets
Loan loss coverage ratio
Equity to total assets
Deposit time equity
Loan to deposit ratio

Financial Ratios
There are some ratio with calculation and formulas, which are as follow

LIQUIDITY RATIOS

71
A:

CURRENT RATIO
Current Asset
Formula = __________________
Current Liability

2012

2011

2010

2009

2008

Current Asset

56,280,129

51,360,563

47,852,225

47,837,824

44,602,846

Current Liability

43,812,262

35,950,130

52,863,178

33,215,308

49,885,889

1.284

1.428

0.905

1.44

0.894

RATIO

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION
Current ratio is equal to current assets divided by current liabilities. This ratio is used to
measure the ability of an enterprise to meet its current liabilities out of current assets. By
comparing the results of analysis years it is known that for Each 1 rupee in liability the
company has 1.284 up to 1.428, 1.44 times in current assets.
Muslim Commercial Bank Limited current ratio is very high which is 0.894, 1.44, 0.905,
1.428, 1.284 in 2012,2011, 2010, 2009 and 2008 respectively. Because of increase in
current Ration in 2009, Its presents the better working capital position of the organization
and also represents that the organization is in a position to meet the short term liabilities
out of current assets within the year. Increase in current ratio in 2009 and 2011 means that
management has so much cash on hand; they may be doing a poor job of investing it.

B: ACID TEST RATIO OR QUICK RATIO

Acid Test ratio or Quick ratio means extent of which a firm can meet its short term
obligations. With help of this ratio the firm plans his monthly, quartily, six monthly or
annually of receivable and payments.
Current Asset-Inventory

72

Formula = __________________________
Current Liability

Current

Asset

2012

2011

2010

2009

2008

38,359,295

33,851,662

29,946,557

32,929,220

28,219,205

43,812,262

35,950,130

52,863,178

33,215,308

49,885,889

Inventory
Current Liability
RATIO

0.87

0.94

0.56

0.99

0.56

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION
The quick ratio, also known as the acid-test ratio or quick ratio is strongest test of
liquidity. In it more liquid current assets are divided by current liabilities. By comparing
the figures of analysis years, the ratio is declining in 2008 as compared to 2010. The
quick ratio is strongest test of liquidity. In it more liquid current assets are divided by
current liabilities Quick ratio, this is because it removes inventory from the equation.
Inventory is the least liquid of all the current assets. A business has to find a buyer if it
wants to liquidate inventory, or turn it into cash. Finding a buyer is not always easy. This
is obviously not a good position for the Bank to be in. It also indicates the poor position
of the Bank to meet it current liabilities with most liquid assets. Because of quick ratio
less than 1.00X, So the Bank would have to sell inventory to meet its obligations So, a
quick ratio great than 1.00X is better than a quick ratio of less than 1.00X with regard to
maintaining liquidity and not being forced into the position of having to sell inventory.

II- LEVERAGE RATIOS

It shows the ratio funds provided by the creditors versus by owners. A high debt to equity
ratio could indicate that the company may over-leverage and should look for ways to
reduce its debts.
A: DEBT TO EQUITY RATIO

73
Long Term Debt
Formula = __________________________
Share Holding Equity

2012

2011

2010

Long Term Debt

491,530,204

488,348,404

Share Holding Equity

79,351,310

RATIO

6.19

2009

2008

439,483,714

385,153,625

355,353,519

79,204,209

69,740,013

60,132,133

57,547,322

6.16

6.30

6.40

6.17

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION
Company is facing heavy net losses every year due to financial expenses, low sales and
high input costs. In order to give cover to these losses sponsors have to extend the credit
facility to keep the Bank operational and due to avoid insolvency. For that reason debt to
equity ratio is rising year to year.
The debt/equity ratio is a significant measure of solvency since the high degree of debt in
capital structure makes difficult for organizations. Excessive debt will result in less
financial flexibility .Debt/equity ratio equals to total liabilities divided by equity.
A low debt equity ratio implies that low proportion of long term financing is from debt
sources, that Bank did not sign great deal of financial leverage. Long term creditor
prefers to see modest debt equity ratio, since it means greater protection and a great stake
in the Bank future for equity holders. A high debt/equity ratio generally means that a firm
has been aggressive in financing its growth with debt. This can result in volatile earnings
as a result of the additional interest expense. Muslim Commercial Bank Limited Equity
ratio is satisfactory since it less than maximum limits. Therefore Bank can increase its
long-term borrowing.

B: DEBT TO TOTAL ASSET RATIO

It shows the ratio of total funds that are provided by the creditors.
Total Debts
Formula =

______________________

Total Assets

74

2012

2011

2010

2009

2008

Total Debts

491,530,204

488,348,404

439,483,714

385,153,625

355,353,519

Total Assets

556,633,945

567,552,613

509,223,727

445,285,785

412,900,841

0.883

0.860

0.863

0.864

0.860

RATIO

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION
Debt to Equity ratio shows leverage position of the company and define that how much
company should have optimum leverage to avoid insolvency problems and issue. It
measure how much the capability the company has to pay off its debts to assets ratio is
almost constant for these five years.
Muslim Commercial Bank Limited Debt to total assets is very poor which do creditors
not prefer, it imply the loss protection of their position. The higher debt ratio means that
company must pay higher rate of interest on its borrowing beyond some points, the
company will not able to borrow at all. This ratio analysis about the in case of abnormal
losses than the Muslim Commercial Bank Limited able to pay his debts to sales the
Assets, The ratio of 0.860, 0.860 0.883 in 2008, 2011,2012 years respectively are not
satisfactory.

III-COVERAGE RATIOS
This ratio reflects that no. of time before tax earning cover interest Expense, It is safety
margin indicator in the sense that it shows how much of a decline in earning the company
can absorb.
A: Interest Cover Ratio
EBIT (Earning before interest & Tax)
Formula = ___________________________________

75
Interest Charges

2012

2011

2010

EBIT

27,533,098

26,253,075

Interest Charges

12,356,852

2.23

RATIO

2009

2008

23,154,945

21,886,740

22,576,311

13,240,643

10,944,304

8,511,413

6,079,342

1.98

2.11

2.57

3.7

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION
A ratio used to determine how easily a company can pay interest on outstanding debt. The
interest coverage ratio is calculated by dividing a company's earnings before interest and
taxes (EBIT) of one period by the company's interest expenses of the same period. The
lower the ratio, the more the company is burdened by debt expense. When a company's
interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may be
questionable. An interest coverage ratio below 1 indicates the company is not generating
sufficient revenues to satisfy interest expenses.
In the year ratio 3.7, 2.57, 2.11, 1.98, 2.23, 2008 to 2012 respectively, It means that the
ratio decrease yearly. It is usually quoted as ratio and indicates how much company can
cover its interest charges on a pretax basis. In the case of Muslim Commercial Bank
Limited the interest coverage ration of all the years are not satisfactory, it clear indicate
that the bank is not generating sufficient revenues to satisfy interest expenses.

B: Dividend Coverage Ratio

Preference Stock Dividend
Formula =

__________________________

EBIT

2012
Preference
Dividend
EBIT

Stock 0
27,533,098

2011
0
26,253,075

2010
0
23,154,945

2009
0
21,886,740

2008
0
22,576,311

76
RATIO

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION
A coverage ratio that measures a company's ability to pay off its required preferred
dividend payments, a healthy company will have a high coverage ratio, indicating that
it has little difficulty in paying off its preferred dividend requirements. Not only does this
ratio give investors an idea of a company's ability to pay off its preferred dividend
requirements, but it also gives common shareholders an idea of how likely they are to be
paid dividends. If the company has a hard time covering its preferred dividend
requirements, common shareholders are less likely to receive a dividend payment on their
holdings.
In case of Muslim Commercial Bank Limited its clear indicates from the table that all the
year the dividend coverage ratio is 0 this mean that bank have not in a position to pay off
the preferred dividend.

IV-ACTIVITY RATIOS
A: Account Receivable Turnover Ratio
Credit Sale
Formula =

__________________________

Average Debtors

Credit Sale

2012

2011

2010

58,956,157

54,821,296

51,616,007

2009

2008

40,0495,505

31,791,754

77
Average Debtors
RATIO

56,521,329

57,320,317

62,126,218

39,936,306

39,300,427

1.06

0.956

0.830

10.02

0.808

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION
Companys assets turnover ratio showing not enough increasing year by year due to the
depreciation charges on various assets reducing assets book value sales the almost
stagnant because of stagnant demand in the market.
This ratio shows that how the bank is efficient while using its assets. The receivables
turnover ratio is an activity ratio, measuring how efficiently a bank uses its assets. By
maintaining accounts receivable, banks are indirectly extending interest-free loans to
their clients. A high ratio implies either that a bank operates on a cash basis or that its
extension of credit and collection of accounts receivable is efficient. A low ratio implies
the bank should re-assess its credit policies in order to ensure the timely collection of
imparted credit that is not earning interest for the firm. In the following years the Muslim
Commercial Bank Limited the receivable turnover ration is low in 2009, 2011, and 2012
which indicate that the credit and collection of accounts receivable is efficient.

B: Average Collection Period Ratio

Account Receivable
Formula =

__________________________

Average Credit Sale per Day

Account Receivable

2012

2011

2010

42,625,767

49,250,351

37,345,647

2009

2008

28,972,851

48,990,348

78
Average Credit Sale Per 89,341
Day
Ratio

477.11

82,824

79,984

68,887

60,554

571.85

466.91

420.59

809.04

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION
The average collection period indicates that Muslim Commercial Bank Limited is not
efficient in collection matter. But longer period not necessary bad, faster pay policy can
be reducing customers. So the bank policy is right to some extent.

C: Total Assets Turnover

Net Sale

Formula =

__________________________
Total Assets

2012

2011

2010

2009

2008

Net Sale

58,956,157

54,821,296

51,616,007

40,0495,505

31,791,754

Total Assets

556,633,945

567,552,613

509,223,727

445,285,785

412,900,841

Ratio

0.105

0.096

0.101

0.899

0.076

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION:
The total asset turnover is a means of determining the relationship

between the total

assets of a company and the net sales produced with those assets. In case of Muslim
Commercial Bank Limited the total assets turnover ratio is very low in 2008, 2012
respectively.

V-PROFIBILITY RATIOS
A: Net Profit Margin
EAT (Earning After Tax)

79
Formula =

__________________________
Net Sale

2012

2011

2010

2009

2008

EAT

16,986,306

16,872,126

15,665,403

15,323,227

16,441,670

Net Sale

58,956,157

54,821,296

51,616,007

40,0495,505

31,791,754

Ratio

0.288

0.307

0.303

0.038

0.517

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION:
The net profit margin ratio tells us the amount of net profit of turnover a business has
earned. That is, after taking account of the cost of sales, the administration costs, the
selling and distributions costs and all other costs, the net profit is the profit that is left, out
of which they will pay interest, tax, dividends and so on..
With the help of net profit margin ratio the Muslim Commercial Bank the investors in
and outside the Pakistan easily investments in it but its bed for MCB Bank that the ratio
decrease from passing the time but the people interested in that Bank for investment for
long term strategy.
We saw that the Muslim Commercial Bank Limited gross profit margin was the lowest in
2009, 0.038 but look, its net profit margin is 0.038%, only a little bit lower than its gross
profit margin. But its net profit margin is a lot less than that at 0.038%, in 2008 ratio high
at 0.517 its suitable for bank. As we just said, the bank gives us a great insight into the
cost structure of these businesses.

B: Operating Profit Margin

EBIT (Earning before Interest & Tax)

Formula =

__________________________________
Net Sale

2012

2011

2010

2009

2008

EBIT

27,112,256

26,509,636

23,249,146

21,886,470

22,526,311

Net Sale

58,956,157

54,821,296

51,616,007

40,0495,505

31,791,754

Ratio

0.459

0.483

0.450

0.054

0.708

80
Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION:
In the review period bank made some improvement in this. The operating profit margin
indicates how much profit a bank makes after paying for variable costs of production
such as wages, etc. It shows the efficiency of a bank controlling the costs and expenses
associated with its business operations. Increase in the operating profit margin shows that
bank profit after paying the various expenses such as wages etc.

C: Return on Equity (ROE)

Net Income to Shareholder

Formula =

__________________________________
Common Stock Equity

2012
Net

To 11,981,246

Income

2011

2010

2009

2008

10,084,037

12,700,315

9,646,549

5,763,404

Shareholder
Common Stock Equity

690,000

690,000

690,000

690,000

690,000

Ratio

17.361

14.614

18.410

13.980

8.352

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION:
This ratio indicates that there is no return on equity. The ratio of 8.352,13.980,14.614 in
2008, 2009, 2011, is low rate of return but in the year of 2010, and 2012 is rate 18.41,
17.361 is best its shows that in near future the bank will be in a position to make some
return on equity rather than there is no return.

VI-MARKET RATIOS
A: Earning Per Shares
EAT (Earning After Tax)

Formula =

__________________________________
Number of Ordinary Shares

EAT

2012

2011

2010

16,986,306

16,872,126

15,665,403

2009

2008

15,323,227

16,441,670

81
Number

of

Ordinary 690,000

Shares
Ratio

24.617

690,000

690,000

690,000

690,000

24.452

22.703

22.207

23.828

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION:
Earnings per share indicate the amount of earnings for each common share held. Earnings
per share are useful indicator of the operating performance of the bank. Earning per share
serve an indicator of a banks profitability, the firms earning per share are generally of
interest to present or prospective stockholders and management. The Earning per Share
(EPS) represent the number of rupees earned on behalf of each outstanding share of
common stock. They are closely watched by the investing pMCBic are considered an
important indicator of corporate success. The value of EPS is maximum in all the years in
pre tax and after tax cases.

B: Dividend Payout Ratio

DPS (Dividend per Share)

Formula =

__________________________________
EPS (Earning Per Share)

2012

2011

DPS

2010

EPS

24.617

24.452

22.703

22.207

23.828

Ratio

0.00

0.00

0.00

0.00

0.01

2009

2008

0.0030

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION:
The dividend payout ratio Indicates the percentage of each Rupee earned that is
distributed to owners in the form of cash, calculated by dividing the firm cash dividend
per share by its earning per share. Creditors and investors use the following ratios to see
if the company has adequate cash flow for invest or dividend. There exists a rise in

82
percentage in every year from 2011 to 2012. But in 2009 and 2010 sudden decreases of
value exist. This decrease of percentage is very low as compared to previous years from
2009 to 2010.

C: Earning Yield Ratio

EPS (Earning Per Share)

Formula =

__________________________________
M.P (Market Price of Shares)

2012

2011

2010

EPS

24.617

24.452

22.703

22.207

2009

2008

M.P

201

203

197

176

134

Ratio

0.122

0.120

0.115

0.125

0.177

23.828

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION:
The earnings per share for the most recent 12-month period divided by the current market
price per share, the earnings yield (which is the inverse of the P/E ratio) shows the
percentage of each rupee invested in the stock that was earned by the bank.
In case of Muslim Commercial Bank Limited the earning yield ration in 2009, and 2010
is 0.125, 0.1156 respectively which is very low as compared to the years 2008, 2011 and
2012. Its indicate that the money invested in stock exchange is very low as compared to
the years 2009, 2010.

D: Dividend Yield Ratio

DPS (Dividend per Share)

Formula =

__________________________________
M.P (Market Price of Shares)

DPS

2012

2011

2010
0

2009

2008

0.0030

83
M.P

201

203

Ratio

0.00

0.00

197

176

0.00

134

0.00

0.00

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION:
Labeled YLD % is the dividend yield. This is found by dividing the stated dividend by
the closing share price. The dividend yield is the yield a company pays out to its
shareholders in terms of dividends. Dividend yield ration is calculated divided the
Dividend per share to Market Price of the shares. In Muslim Commercial Bank Limited
the Dividend yield Ratio is zero which indicates that the bank is not efficient to payout
the dividend in all the years.

E: Price Earning Ratio

M.P (Market Price of Shares)
Formula = ______________________________
EPS (Earning Per Shares)

2012

2011

2010

2009

2008

M.P

201

203

197

176

134

EPS

24.617

24.452

22.703

22.207

23.828

Ratio

8.165

8.301

8.677

7.974

5.0623

Data Source Annual Report of the MCB Bank (2008 to 2012)

CONCLUSION:
The market price per share of a firms common stock divided by the most recent 12
months of earning per share. Table shows the P/E ratio of years from 2008 up to 2012.
This ratio is maximum during the year 2010 and minimum during the year 2012.

84
EPS is usually from the last four quarters (trailing P/E), but sometimes it can be taken
from the estimates of earnings expected in the next four quarters (projected or forward
P/E). A third variation uses the sum of the last two actual quarters and the estimates of the
next two quarters. With the passing of time the Muslim Commercial Bank Price earning
ratio increase, due to that help people to investment in Bank 2008 the ratio 5.0623 and in
2012, 8.165.

4.12. Horizontal Analysis of Five Years Balance Sheet

Comparison of two or more years financial data is known as the Horizontal Analysis, of
trend analysis. It is the division of every expense item in a specific year by an identical
expense item derived from the base year. Calculation enables measurement of
changes in the comparative importance of expense items over the years. Also
evaluates how expense items influences changes in sales.
The Balance Sheet shows the firms assets and the claims against those assets. It portrays
the financial condition at a point in time. Balance Sheet, are typically shown in the order
of their liquidity claims. Horizontal Analysis Balance Sheet compares and with help of
them to whether the firms financial situation is improving, holding constant, or
deteriorating.
1. Assets
2. Liabilities
3. Share Capital

Horizontal Analysis =
( C u r r e n t Yea r Val u e X 1 0 0 ) / B a s e Yea r Val u e

85
Horizontal Analysis of Five Years Balance Sheet:
2008
2009
2010
2011
2012
--------------- (Figures in Percentage - %) ------Assets
Cash and balances with treasury

100

115.54

119.45

167.31

200.76

100
100
100
100
100
100
100

118.81
16.62
82.03
136.46
153.97
56.61
101.70

114.73
54.31
64.82
167.49
200.60
342.62
13.69

115.85
28.9
72.90
182.94
165.97
85.73
184.13

96.29
97.21
108.22
197.25
191.00
189.80
220.39

100

106.94

116.36

129.66

150.82

100
100
100

117.59
84.23
104.95

90.99
95.41
115.52

149.36
158.11
121.93

270.52
165.20
141.60

100

105.14

109.31

114.37

143.42

100
100
100

56.66
1065.20
233.08

56.66
941.90
332.61

56.66
1028.56
652.93

56.66
1139.33
853.78

of tax

100

120.56

113.25

109.38

107.24

Total Liabilities & share Capital

100

106.94

116.36

129.66

150.82

banks
Balances with other banks
Lending to financial institutions
Investments net
Advances net
Operating fixed assets
Deferred tax asset net
Other assets net
Total Assets
Liabilities
Bills payable
Borrowings
Deposits and other accounts
Sub-ordinated loans
Deferred tax liabilities - net
Other liabilities
Represented By:
Share capital
Reserves
Un-appropriated profit
Surplus on revaluation of assets - net

Data Source Balance Sheet of MCB (2008 to 2012)

Comments on Horizontal Analysis of Last Five Years Balance Sheet Of

MCB Bank Limited

86
Annual Report data from 2008 to 2012
Comments with Respect to Assets side of Balance Sheet
The horizontal analyses of the balance sheet show that the total assets of the bank
have increasing trend throughout the period from 2008 to 2012. The above figures are
obtained by considering the 2008 as base year and these were 106.94%, 116.36%,
129.66%, 150.82% in 2009, 2010, 2011 and 2012. Now we see that what assets items
conclude these figures and on what basis in the following interpretation.
Cash and balances with treasury banks of MCB reflect that during year 2008 to 2010
remained low as compared with the year 2005. However it substantially increased in year
2011 & 2012.Position of MCB reflects that during year 2012 it remained highest as
compared with the previous years. However, its a better position of a bank, Advances are
increased after decline because of quality lending of MCB by introducing attractive
products. Advances are increase till 2011 and after 2011 advances portfolio decrease in
2012 & 2013 due to non-performing loans. The figures of MCB are showing mixture
trends in year 2009 it was highest while in layer years it remained consistent. At last, in
year 2012 it became low as compared to initial year.
Increase in investment shows the liquidity position of the MCB is strong and MCB have
more ability to pay its short terms liabilities. MCB deposits are increasing every year and
bank prefers to borrow from the depositors which are less costly than borrowing from
banks. MCB deposit stable form 2009- 2011 but after 2012 deposits are going to decrease
in 2011 & 2012 as a percentage. MCB deposits are increasing every year and bank
prefers to borrow from the depositors which are less costly than borrowing from banks.
MCB deposit stable form 2008- 2010 but after 2011 deposits are going to decrease in
2012 as a percentage.
Comments with Respect to Liabilities side of the Balance Sheet
The horizontal analyses of liabilities side of the balance sheet shows that the
increasing tendency throughout the period. In 2009 total liabilities were 106.94% and

87
jumped to 150.82% during the period. The following discussion will help us to
understand the reasons which conclude these figures.
Bills payable increased in the period and were at 117.59% in 2009 after the difference of
270.52% from 2010 to 2012. These bills were payable in and outside Pakistan.
Borrowings figure were at 84.23% in 2009 as compared to 2012, 165.52% through
horizontal analyses. It increase 81.29% change in borrowing form State Bank of Pakistan
because of increase in deposits. 204% increase seen in 2012, 270.52% as compared to
previous year and figure was at 81.29% after change. Again increase of 81.29% seen in
2012 as deposits increased and SBP higher the discounting rate,36.65% increase is seen
in deposits as they were at 104.95 in 2009 and 2012, 141.60% total liabilities. This
increase was due to increase in fixed and saving deposits, current accounts and margin
accounts. The breakup shows that they were increased in 2009 by 16% and in 2009 by
32% as compared to base year of 2008.
Other liabilities include markup / return / interest payable in local currency and foreign
currency, accrued expenses and unrealized loss on derivative financial instruments etc.
Other liabilities were at 143.42% after increase of 36.65% in 2012 and have the
increasing trend throughout the period from 2009 to 2012 as compared to the base year of
2008.
Comments with Respect to Total Share Capital: (Owners Equity)
Share capital of the MCB shows a declining trends and continuously constant
from 2008-2012, 56.66%.Its alarming for the MCB to stable and competition with other
banks in the current market.
Whereas capital reserve increase in 2012 as compare to the base year 2008. In 2008
1065.2% and in 2012, 1139.33% total Increase in capital reserve 74.13% its fruitfully for
the MCB shows healthy financial position and liquidity position of the MCB. Reserves
analyses show that there was increase of 1065.2% from 2009 to 2012 as compare to
2008. These changes were occurred due to movement in share premium, exchange
translation reserves, statutory reserves and general reserves.

Horizontal Analysis of Five Years Income Statement

88

2008

2009

2010

2011

2012

--------------------- (Figures in Percentage - %) -------------Mark-up / return / interest earned

100

89.73

161.07

218.72

250.84

Mark-up / return / interest expensed

100

118.92

220.59

317.57

Provision against non Performing Loan &

100

Advance
Provision against off Balance Sheet

38.88

61

58.63

167.22

100

obligation & Others

Provision against in Diminution in value

126.34

28.49

(10.05)

(12.08)

100

of investment
Bad debts return off directly

(98.87)

(53.98)

(8.96)

(55.12)

100

133.30

262.08

330.67

274.91

100

117.42

137.69

182.53

160.91

100

139.19

39.53

22.49

25.87

100

94.12

123.74

102.68

132.80

100

160.90

144.97

181.15

205.14

100

130.79

92.45

98.85

102.73

ADMIN Expenses

100

133.26

136.67

166.67

177.42

Other Provisions/ Write offs net

100

76.71

77.94

38.37

(86.47)

Other Charges

100

36.71

3301.07

2605.40

411.66

100

131.28

135.21

162.91

169.58

100

14051

240.67

329.61

240.02

Current Year

100

77.91

825.60

1435.14

1373.55

Prior Year
Deferred Year

100
100

(2438.95)
147.21

(8034.98)
27.21

9815.26
(101.30)

(265148.7)
(342.07)

Profit After Taxation

100

146.11

22.92

299.93

200.15

Net mark up / return / interest

income after Provisions
Fee, Commission, Brokerage & FX
Income
Income /Gain on Investment
Income from dealing in

Foreign

Currencies
Other Income

Total non-mark-up / interest income

Non Mark-up / Interest Expenses

Total

non-mark-up

expenses
Profit Before Taxation
Taxation

interest

Data Source Profit & Loss of MCB (2008 to 2012)

Comments on Horizontal Analysis of Five Years Income Statement

89
Horizontal analysis of last five year profit and loss account shows that there are
major changes in the all the sectors of the statement of income. The overview shows that
mark-up / return / interest earned reached at 102.73% after changes as compared to base
year 2012 while profit after taxation comes to 130.79% after healthy movements as
compared to the base year. The following discussion elaborates the movements in the
earnings and expenses of the organization to understand its position in the market.
In 2009 the mark-up / return / interest earned at 130.79% as compared to 2012 and with
the positive change of 28.06% comes to at 92.45% in 2009,28.06% increase as compare
to previous year lead the figure to 98.85% in 2010 and further increase of 91% in 2011
show the figure of 3.88% as compare to 2012. All changes represent the high fluctuations
in the interest rates of the industry which affect the profits of the bank. These changes
were due to mark-up / interest earned on loans and advance to customers and financial
institutions, on investments for sale securities.
Total Mark-up / return / interest expenses shows that they were at 131.28% in 2009,
135.21% in 2010, 162.911% in 2011 and 169.58% in 2012. There are gradual changes in
the last five years period but abnormal movements in 2009 and 2012 which shows the
high interest rates in the market which bank paid on its borrowing from financial
institutions and on the deposits from customers in different ways. There is an increasing
trend seen in the figure for the five years and figures were 89.73%, 161.07%, 218.77%,
and 250.84%, in 2009, 2010, 2011 and 2012 respectively.
Non mark-up / interest expenses at 169.58% in 2012 but the figure was in minus in 2009
131.28% which is 38.3%.The breakup shows the administrative expense decrease
(44.16%) in the both 2009 and 2010 and further increased in 3.41% in 2010 but an
increase of 30% is seen in 2011. Other charges include the penalties of SBP, workers
welfare fund and VAT Sri Lanka and others. They also increased for the period. These
changes concluded the final figures for non-mark-up / interest expenses as compared to
base year of 2008.
The investigative eye is always seen on the figures of profit after taxation from the
investors side. The reason is the calculation of different ratios like EPS etc. The bank has
the healthy figures in this respect and horizontal analyses shows the figure of 200.15% in
the financial year of 2012 as compared to 2008 base year. The figure was at 146.11% in

90
2009, 221.92% in 2010, 299.93 in 2011 and 200.15% in 2012. The net change of 54.04%
for the period is seen this was the reason market price of the share of the MCB jumped to
more than 54.04% in the last five years. This position also attractive for the foreign
investors and May Bank of Malaysia purchased the 5% shares of the bank in 2012. The
bank also obtained the award of The best bank of Pakistan in this period through
positive and strong investment policies.

4.13. Vertical Analysis of Five Years Balance Sheet

A method of financial statement analysis in which each entry for each of the three
major categories of accounts:
1. Assets
2. Liabilities
3. Equities
In a balance sheet is represented as a proportion of the total account. The main
advantages of vertical analysis are that the balance sheets of businesses of all sizes can
easily be compared. It also makes it easy. Vertical analysis also called component
percentages indicate the relative size of each item included in a total. For example each
item on a balance sheet could be expressed as a percentage of total assets.
The Balance Sheet shows the firms assets and the claims against those assets. It portrays
the financial condition at a point in time. Balance Sheet, are typically shown in the order
of their liquidity claims. Vertical Analysis Balance Sheet compares and with help of them
to whether the firms financial situation is improving, holding constant, or deteriorating.
This shows quickly the relative importance of each type of Assets as well as the relative
amount of financing obtained from current creditors, long term creditors and
stockholders. Another application of vertical analysis is to express all items in an income
statement as a percentage of net sales. Such a statement is called a common size income
statement.
Formula for vertical analysis% change = Particular Item value *100 Base Value

91

Vertical Analysis of Five Years Balance Sheet

Particulars

2008

2009

2010

2011

2012

------------------- (Figures in Percentage - %) --------------

Assets
Cash and balances with treasury banks
Balances with other banks
Lending to financial institutions
Investments net
Advances net
Operating fixed assets
Deferred tax asset net
Other assets net
Total Assets

6.35
4.67
5.20
36.53
42.23
1.63
0.74
2.65
100

6.87
5.16
0.81
28.02
53.88
2.35
0.39
2.52
100

6.52
4.60
2.42
20.35
60.78
2.82
2.18
0.31
100

8.2
4.17
1.16
20.54
59.58
2.09
0.49
3.76
100

8.46
2.98
0.25
26.21
55.23
2.07
0.93
3.87
100

1.44
7.27
82.92
2.92
94.55

1.58
5.72
81.38
2.87
91.55

1.13
5.96
82.32
2.74
92.15

1.66
8.86
77.98
2.58
91.08

2.50
7.96
77.85
2.78
91.09

2.80
0.38
0.68

1.48
3.74
1.48

1.36
3.04
1.94

1.22
2.98
3.42

1.05
2.84
3.84

of tax

1.54

1.74

1.50

1.30

1.10

Total Liabilities & share Capital

100

100

100

100

100

Liabilities
Bills payable
Borrowings
Deposits and other accounts
Other liabilities
Total Liabilities

Represented By
Share capital
Reserves
Un-appropriated profit
Surplus on revaluation of assets - net

Data Source Balance Sheet MCB (2008 to 2012)

Comments on Vertical Analysis of Last Five Years Balance Sheet

92
The vertical analyses of last five years balance sheet from 2008 to 2012 show that
total assets come to at Rs100 million in 2012 from Rs.100 million which in 2008. Total
liabilities figure was Rs.100 million in 2008 and comes to Rs.100 million in 2012. The
share capital, reserves and un-appropriate profit also increasing trend and total equity was
1.54 million in 2008 while it was 1.10 in 2012. In nutshell an increasing tendency is seen
in the whole period of five years analyses. Now we will discuss the changes for this
increase in detail as follows:
Comments with Respect to Total Assets
The bank total assets includes cash and bank balances with treasury banks,
balance with other banks, lending to financial institutions, investments, advances, fixed
asset and other assets. The major change is seen in investments which were at 36.53%
2008 and comes to 26.21% in the year of 2012 with the decrease change of 10.32% but
the interesting thing is that they have the increasing trend from 2008 to 2010 and figure
was 26.21% in 2012 decrease. The reason for decrease in 2012 is the bad capital market
conditions that market was at floor rates from August 2012 to December 2012 so the
values of investments (securities, bonds etc.) decreased.
Advances were at 55.23% in 2012 with the net increase of 13% from 2008 which was at
42.23%. Advances increased in 2009 up to 53.88%, and 60.78% & 59.58% in 2010&
2011. This shows the trust of customer on bank which cause to get the award of best
performance in 2010. This increase is due to increase in the all heads of assets which are
loans, cash credits, running finance in and outside Pakistan and net investment in finance
lease. The particular change is seen in these head of advances which concludes the final
figure at the end of year of 2010.
The operating fixed assets also increased as the new branches opened throughout the
country and figure comes to at 2.07% in 2012 from 1.63% of 2008. Other assets also
show the increasing movements for the period of five years and figure comes to at 3.87%
in 2012 from 2.65 of 2008 with the change of 1.22%. Increase in mark-up accrued in
local and foreign currencies is the reason of this change, During this period MCB n e e d
to increase its fixed operating assets due to IT & renovation
r e v o l u t i o n i n t h e banking industry.

93
Comments with Respect to Total Liabilities
The vertical analysis of the five years balance sheets shows that the portion of
liabilities has the decreasing trend from 2008 to 2009 and was stable in 2010,2011 2012
increasing trend. The figures were 94.55%, 91.55%, 92.15% and 91.08% from 2008 to
2011 respectively and 91.09% in the year 2012. (3.46%) net change is seen for the period.
The reason for this change is increase in bill payable, deposits, other accounts and subordinated loans. Bills payable figure was 1.44% in 2008 and 2.5% in 2012 with the
change of 1.06%. Bills payable increasing trend 2008 to 2009 and 2010 decrease and then
in 2011 and 2012 increased. The figure of borrowings shows that this was increased in
2008 up to 7.27% and 2009 up to 5.72% decreased in 2009 was at 5.72% and in 2011 at
8.86%. And then in 2012 at 7.96% total decreased in 2008 to 2012, (1.75%)
Deposits and other accounts also decreased in the period from 2008 to 2012 and come to
82.92% with the change of (5.07%).The other liabilities are decreased in the period and
were at 2.92% in 2008, but come to 2.78% in 2010 with the change of (0.14%). Increase
in markup / interest payable in local currencies, accrued expenses, unclaimed dividend,
unrealized loss on derivative financial instruments and security deposit received in
respect of finance lease are the reasons for change in this portion of the balance sheet.
Comments with Respect to Owners Equity or Share Capital
Owners equity or share capital consists of share capital, reserves and unappropriated profit. Share Capital in the vertical analyses of this portion and decreasing
trend is seen from 2008 to 2012 and figures were 2.8%, 1.48%, 1.36%, 1.22% and 1.05%
respectively. Increase in reserves and un-appropriated profit of the organization.
The reserves were at 0.38% in 2008 and come to 2.84% in the year 2012 with the
increase of 2.46% in this period. Same trend is in the figures of un-appropriated profit of
the bank 0.68% in 2008 and increase in 2012 at 3.84% and total increase 3.16%. We can
analyze the position of organization from these vertical analyses of this portion of balance
sheet which is in strong position.

Vertical Analysis of Five Years Income Statement

94

Particulars

2008

2009

2010

2011

2012

--------------------- (Figures in Percentage - %) -------------Mark-up / return / interest earned

100

100

100

100

100

Mark-up / return / interest expensed

28.59

24.57

22.66

29.66

37.24

Net Interest Income

73.56

75.98

78.28

70.34

62.76

10.7

9.20

6.78

16.88

3.14

0.4

0.108

0.11

0.83

0.26

0.0325

0.17

42.62

62.75

68

63.69

46.17

Fee, Commission, Brokerage & FX Income

10.73

13.79

9.08

8.56

6.58

Income /Gain on Investment

18.45

23.77

5.34

1.87

1.88

Income from dealing in Foreign Currencies

5.61

6.02

4.34

2.60

2.94

Other Income

5.94

11.1

5.53

5.16

5.09

Net non-mark-up / interest income

40.32

58.69

23.11

18.2

16.49

ADMIN Expenses

51.35

75.73

43.58

38.7

35.9

Other Provisions/ Write offs net

1.68

1.35

0.77

0.29

0.57

Other Charges

0.11

0.04

0.21

0.13

0.17

Net non-mark-up / interest expenses

60.35

76.84

44.09

39.12

35.51

Self-Welfare Fund

1.51

5.16

4.08

Profit Before Taxation

Taxation

28.71

39.82

42.40

42.77

27.15

7.62

8.15

12.95

14.18

10.52

Profit After Taxation

21.09

31.67

29.83

28.59

16.63

Minority Interest

0.03

0.49

0.26

Earnings Per Share

5.82

8.35

13.98

18.41

14.61

Provision against non-Performing Loan &

Provision

Advance
against off Balance

Sheet

obligation & Others

Provision against in Diminution in value of

25.61
2.37
0.8

investment

Net mark up / return / interest

income after Provisions

Non Mark-up / Interest Expenses

Data Source Balance Sheet MCB (2008 to 2012)

Comments on Vertical Analysis of Last Five Years Income

Statement

95
The comparison of vertical analyses of the last five years profit and loss account
shows that the following changes occurred during this period.
Comments with Respect to Profit Available for Appropriation:
The figures of profit available for appropriation show the increasing tendency
from the year 2008 to 2010. In the financial year 2011 to 2012 a decrease is seen which is
due to crises in the financial sector.
The first item of Income statement is mark-up / returns / interest earned shows the figure
of 73.56% in the financial year 2008 which increases to 75.98% in 2009. With the
increase of 78.28% in 2010 highest figure, which indicate to the boom of banking sector /
industry in Pakistan, in 2010 the figure was at 78.28% with an increase of 4.72% and was
at 70.34% in 2011 with a decrease of 7.94% and in 2012, 62.76% total decrease in 2008
to 2012, 10.8%. The all above figures shows the strong market position of the bank and
its strong investment strategies by its management.
The second item of Income Statement is mark-up / returns / interest expense shows the
figure of 28.59 in 2008 which comes to 24.57% in the year 2009 which shows the
decrease in mark-up rates in the said period. In 2010 the figure was 22.66% with the
decrease of 1.91% due to the stability in the mark-up rates almost. In 2012 when the
financial crises were going to start the interest rate jumped and the figure was 37.24%
with the increase of 8.65%. The financial year 2012 suffer the great depression period
and an increase of 8.65% is seen in the mark-up / return / interest expenses of MCB Bank
and figure goes to 37.24%. This shows the effects of financial crises.
Net mark-up / interest income was 73.56% in the year 2008 and it jump to 75.98% in the
year 2009 when there was boom in the financial industry of Pakistan. It increased in 2010
and was 78.28%. Further decreased in 2011 and was 70.34% and after a decrease of
7.58% it was at 62.76% in 2012 the reasons were same as shown above.
Net mark-up / return / interest income after provisions figure was 73.56% in 2008 but it
increased in 2009 and 2010 which is 75.98% and 78.28%. In 2011 and 2012 the figures
were 70.34% and 62.76% which show the increasing trend in 2009 but stability in 2010.
Non mark-up / interest income has the decreasing trend and it gradually decreased from
2011 to 2012. The figures were 73.56%, 75.98%, 78.28%, 70.34% and 62.76%

96
respectively total decrease in 2008 to 2012 10.8%. This income includes the income from
fee, commission and brokerage income, dividend income, income from dealing in foreign
currencies, gain on sale of securities and other income. All the heads have decreasing
movements as shown in the analyses chart of vertical analyses give above.
The important and analytical point for the investor is the figure of profit after taxation.
Profit of MCB is constantly increasing till 2008 and amount of tax is also increasing
simultaneously, MCB administrative expenses are also increasing constantly till 2009 and
after 2009 administrative expenses in 2011 decrease till 2012.
This increasing and decreasing trend of administrative expenses vary with the increasing
and decreasing trends of the MCBs profitability. As the world financial crises hit all over
the world the MCB bank also effected and net profit after taxation also decreased and
figure was 16.63% in the year 2012. All the sources of income effected due to these crises
which cause to decrease in the figure of profit after taxation. Earning per Share 5.82% is
the figure for year 2008 and it increased to 8.35% in the year 2009 due to healthy
increase in Earning per Share amount. 13.98% and at highest figure in the year of 2011
18.41% relates to the financial year 2010 which is due to the increase in the last year
profit brought forward and small decrease in transfer from surplus on revaluation of fixed
assets.
Total increase 2008 to 2012 of 8.79% is seen in the financial year 2010 and figure comes
to 13.981% and finally in the year 2011 the figure was 18.41% with an increase of
4.43%. This was due to major increase in the Earning per Share. Now we analyze that
what changes / reasons in the other items of income statement result the figures of profit
available for appropriation.

Organizational Analysis: (Comparison with Other Banks)

MCB Comparison with HBL, MBL and ABL
Particulars

MCB

HBL

MBL

ABL

97
----------------------Rupees in Million----------------------Deposits & Other Accounts

491,188,170

488,198,657

452,895,326

472,965,789

Investments net

551,326,265

529,787,421

498,898,321

533,698,712

Advances net

225,794,738

205,689,289

221,547,895

217,256,365

Operating Fixed Assets

463,629,245

432,589,562

456,885,754

449,325,965

Net Profit Before Tax

27,533,098

28,489,128

28,935,852

25,989,265

Net Profit After Tax

16,986,306

17,589,258

17,621,228

16,923,852

Earnings Per Share after tax

14.61

14.98

14.65

14.32

Branches

1182

1160

1230

1178

Data Source Balance Sheet & Profit & Loss of MCB, HBL, MBL, ABL (2012)

Figures in Numbers
The above figure shows the comparison of MCB with HBL, MBL and ABL. We
observe that HBL is a big banking group as compare to others. Deposit wise HBL is in
front of MCB, MBL and ABL. Although MCB is in good position as compare to ABL in
deposit situation but MBL deposit figure is more than MCB. More than deposit in MCB
due to best marking in markets and due to that more Accounts in Bank and more deposit
in Banks and the profit rate high due to that reason, HBL and MBL again ahead in case of
advances portfolio as compare to MCB and ABL. The advances figure also greater in the
column of HBL and MBL and MCB again back in this segment. In fourth level of
comparison of net profit after tax provide the lead to MCB and MCB is on front of all at
first glance in 2012. The Earning per Share (EPS) also greater as compare to all others
Banks and it is Rs. 14.61 in 2012. Branches of HBL are greater than MCB, MBL and
ABL. In this respect the MCB is stand in 2 nd number. MCB has greater number of
branches as compared HBL.
These figures show that HBL and MBL are in much better position than MCB. After the
privatization business of MCB took high growth. The Bank's long term and short term
ratings are AA + and A1+ as assigned by the PACRA which support its stable outlook and
denotes good credit quality. Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions. The short-term rating is A1+,
which denotes the highest certainty of timely payment.

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Short-term liquidity, including internal operating factors and / or access to alternative
sources of funds, is outstanding and safety is just below risk free Government of
Pakistan's short-term obligations. The risk management within MCB bank collectively
ensures that the banks risk profile is actively monitored and adjusted according to the
banks strategy and the operating environment in a manner which ensures protection to
the depositor and value to the share holder.
The MCB improves his computerized online systems but the HBL better improving on
the way and the MBL. These days the bank catches the customer who is the better
facilities to their customer such as the online, demand draft, pay order, Cheques free of
cost. And the computerized deposit slips. With help of that facilities computerized slip,
online free in city online Cheques cash free the customers of MCB more transcription in
Bank.
But the bank staff permanently and aged due to that the customer go another banks who
corporative them. Due to that reason the customers avoid to more transitions of Business
in Banks, to remove of problem MCB ladies hear in Bank. With the help of that problem
remove and the customers of MCB easy feel to use the Account transitions during the
banking hours.
The bank is increasing resource mobilization through regular deposit campaigns and
accelerating the process of recovery of outstanding advances and non-performing assets.
The Bank is making every effort to meet the up-coming challenges through strategic
planning and making the best use of the resources at its command. These financial figures
and improving condition of the bank shows that MCB is among the leading commercial
banks of Pakistan.

4.14. Organization Analysis with Stock Exchange

MCB Bank earned Rs11.89 billion during the semi-annual period, 6% higher than
what it made in the corresponding period of 2012. The banks management also decided
to pay Rs3.5 per share to its shareholders, taking the cumulative payout for the half year
to Rs7. The analyst from Global Securities, attributes the growth in earnings to higher

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non-core income and provisioning reversals, which negated the effect of declining
revenue from core operations of the bank i.e., lending at higher rates and borrowing
cheaply.
The banks core-income head suffered a drop like the whole of the banking sector to
Rs18.81 billion during the period, 10% lower than the Rs20.91 billion it made in the
corresponding half-year of 2012, as the State Bank of Pakistan continues its expansionary
monetary policy hiking interest rates keeping in line with rising inflation which in
return shrinks banking spreads.
Reversals in advances the bank made also supported the growth in earnings as provisions
against bad loans and investments, totaling Rs1.31 billion, were added to the interest
income as the bank was repaid most of the bad loans it made during this and the previous
period.
The highlight for the bank was a 12% rise in non-core operations (earnings from fees,
dividends and sales of securities) to Rs5.84 billion. The bank managed to boost its
earnings from advisory services as the fee, commission and brokerage income rose 9% to
Rs3.27 billion.
MCB Banks profits from selling shares and bonds in the first half of 2013 doubled to
Rs1.55 billion, compared to Rs725 million in the corresponding period of 2012.
According to Global Securities Naseem, the sharp surge in non-interest income was
largely due to realized gains of Rs800 million from the sale of Unilever Pakistans shares
the bank held a one-off gain.
Since privatization, MCB's growth has been phenomenal. Today, MCB in one of the
largest foreign banks in Sri Lanka, the first bank in Pakistan to launch Global Depository
Receipts (GDR) in 2006, has strategic foreign partnership with Maybank of Malaysia
which holds 20% shares in MCB through its wholly owned subsidiary Mayban
International Trust (Labuan) Berhad since 2008, has international indirect regional
presence in Dubai (UAE), Bahrain, Azerbaijan, Hong Kong and Sri Lanka and serving
through a domestic network of over 1,150 branches and over 690 ATMs across Pakistan
with a customer base of 4.96 million (apprx.)
MCB is reputed as one of the most sound financial institution and as one of the leading
banks in Pakistan with a deposit base of PKR. 545 bln (apprx.) and total assets of PKR

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766 bln (apprx.). The bank is versed as one of the oldest and most responsible banks in
Pakistan and has played pivotal role in representing the country on global platforms while
being one of the few institutions that are recognised and traded in the international
market.

Allocation of Various funds To Different Assets

Asset Allocation and Management Company (AAM) is an investment advisory
firm that manages fixed income, convertible bond, and equity portfolios for small to
medium sized insurance companies
Asset allocation is an investment strategy that attempts to balance risk versus reward by
adjusting the percentage of each asset in an investment portfolio according to the
investor's risk tolerance, goals and investment time frame.

Description
Many financial experts say that asset allocation is an important factor in
determining returns for an investment portfolio. Asset allocation is based on the principle
that different assets perform differently in different market and economic conditions.
A fundamental justification for asset allocation is the notion that different asset classes
offer returns that are not perfectly correlated, hence diversification reduces the overall
risk in terms of the variability of returns for a given level of expected return. Asset
diversification has been described as "the only free lunch you will find in the investment
game". Academic research has painstakingly explained the importance of asset allocation
and the problems of active management.
Although risk is reduced as long as correlations are not perfect, it is typically forecast
(wholly or in part) based on statistical relationships (like correlation and variance) that
existed over some past period. Expectations for return are often derived in the same way.

Summary

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MCB Bank activity has provided a more favorable risk asset environment for
2013.
Economic fundamentals will remain subdued as the deleveraging cycle continues.
Strategic cash allocation has been reduced in favor of bond exposure, given the
opportunity costs of holding cash. Cash exposure will be utilized tactically to preserve
capital if required.

How Strategic Allocation Set by MCB?

The process for setting our annual strategic asset allocations is both quantitative
and qualitative. it starts with revisiting our capital market expectations and the
implications for individual assets class risks and returns. Risks and returns vary over
time; asset classes that represented good value in the past will not necessarily do so in the
future.
Long-term, full economic cycle return expectations are based on the anticipated
economic environment, trends, relative valuations, mean reversion and historic returns.
asset class correlations and volatility expectations are based on long-term historic
measures.
Return, volatility and correlation assumptions are then fed into an asset allocation
optimizer that sets efficient portfolio asset weights for portfolio return and risk objectives.
The output from this quantitative process acts as a guide and a qualitative overlay is then
used to make pragmatic strategic asset allocation decisions. Consideration is made to
asset class concentrations, maximum potential draw downs and liquidity.

Objectives
To ensure that our managed Portfolio range meets the risk and return appetites of
investors, we have slightly revised the return and volatility objectives of each Portfolio.
most notably we have increased the risk and return expectation for our lowest risk
portfolio and revised lower our volatility targets for Portfolios 4-8. additionally we have
increased the return objectives and respective volatilities of Portfolios 9 and 10. These
changes will increase the differentiation between our Portfolios and offer investors an

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enhanced choice at the upper end of the risk spectrum, whist maintaining asset class
diversification.

Equities
Over the long-term we expect equities to have one of the highest return potentials
of all asset classes, but with a commensurately higher level of risk. For this reason
managed Portfolios at the higher end of the risk spectrum will have greater weightings to
equities. At subsector level we have budgeted equity risk between developed and
emerging markets the latter of which has greater return expectations over the long term.
In the present environment equity returns will be torn between positive policy responses
and subdued economic fundamentals. developed market equities could continue to re-rate
higher on lower risk premiums, but sustainability depends on better growth. Strategically
we favour Em equities and we expect them to outperform in 2013. large cap, high
dividend companies with exposure to Em will continue to offer tremendous opportunities.

Bonds
Aside from cash, bonds provide the lowest risk return exposure within our multiasset Portfolios. at subsector level we have made allocations within the bond universe
between global government bonds, investment grade corporate debt, emerging market
debt and high yield, which have increasing risk and return profiles.
In the current environment we believe government bond valuations are stretched and
offer a less attractive investment opportunity. They do however provide a higher level of
yield relative to cash, whilst providing safety. We believe investment grade, emerging
market and high yield debt will offer better investment opportunities in the low growth,
low interest rate environment. Investment grade and high yield borrowers are likely to
hold and possibly strengthen their enhanced credit profile throughout the year therefore
offering good risk adjusted returns. We have increased the strategic allocation to bonds on
this basis.

Commodities

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Commodities will provide valuable diversification benefits in a multi-asset
portfolio and can be viewed as a good hedge against inflation and currency debasement.
We view their risk attributes as too high for our lower risk Portfolios, but suitable for the
higher risk portfolios.

Absolute Return
Absolute return covers a variety of strategies, investment styles and forms of
implementation. Absolute return funds, if carefully selected and monitored, can provide
excellent risk adjusted returns, particularly in uncertain and volatile market environments.

Cash
We expect developed market Central Banks will maintain effective zero interest rate
policies for some time, therefore significant sustained cash exposure represents an
opportunity cost, especially if inflation picks up. We have therefore chosen to establish
strategically low levels of cash, but will continue to utilise the safety of cash tactically if
market uncertainty increases and we need to preserve capital.

4.15. Future Prospects of the Organization (MCB)

The banking industry of Pakistan has growth thats why a number of new banks enter in
the this industry like Barclays Pakistan Bank Limited, Samba Bank Limited, Arif Habib
Bank Limited, Silk Bank Limited and Khushali Bank Limited. The Previous bank also
added new branches in the existing network and they also increase their Islamic banking
branches throughout the country.
MCB included in the catalogue of leading banks in Pakistan due to its market share, wide
branch network, regular and value added services through IT assistance. A large number
of new branches launched by the bank in the last years to increase its branch network and
only in 2012 added 41 branches including 8 Islamic banking branches (2012: 1172
branches including 41 Islamic banking branches) with in Pakistan and 7 branches outside
the country.

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Management is focusing on converting the manual branches into online branches system
and also to expend their branch network domestically and internationally so that the
customer can get services at their door. Management is also keen to increase the ATM
network in future and plans have prepared for it. Management believes the bank is well
positioned to take advantage of the next economic upsurge.
The coming era looking well for the local banking industry as key macroeconomic
fundamentals going to stabilize after the economic and financial crises in the world which
hit the banking sector in Pakistan also. The bank is continuing to invest further in banking
innovations which include Islamic banking, leasing, SME, home loans and other areas of
product development to provide higher levels of services and value to its corporate and
consumer clients.

Chapter # 5
Analysis

105

Analysis of the environmental factor, internal and external is the effective tool for
strategy, planning at MCB. To learn from mistakes and not repeating these is the
culture at MCB. It helps the organization to focus where the organization is strong and
where the greatest opportunity lies. Then developing the plan of action and performing it
on services and overall organization. Such analysis gives the broader picture of the most
important factor that can influence survival and prosperity of the organization.

5.1. Swot analysis

Strengths

Brand image because of "Muslim" word in the name in an Islamic country

MCB Mainly operated by manshas group.

Offers a wide variety of services t its customer bank of round about 4 million.

The bank has efficient and experienced management making significant

The bank has efficient IT infrastructure and networ4k of on line branches.

Has strong market presence

MCB is in its over 63 years of operation. It has a network of over 1,200 branches
all over the country with business establishments in Bangladesh, Sri Lanka and
Bahrain.

Being the senior bank in Pakistan it is highly recognized all over Pakistan and it is
very well known among its customers

MCB has a large number of Branches all over Pakistan where other banks still
cannot be able to provide their services and that is a point of difference for the
bank. Bank is continuously focusing on developing a new and innovative products
attract their target market.

Strong customer relationship.

Assets utilization is very good.

GPRS enabled banking.

MCB is also providing mobile banking for best satisfaction of customer.

At present it has the largest ATM network in Pakistan.

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The launch of MCB switch allows other banks to utilize MCBs ATM network.

The bank has huge amount of assets

The bank is involved in different investing activities where there is a huge amount
of output available for the bank that bank can use for its growth

MCB has a very senior and dedicated work force as well as young and creative
staff which is a very big asset for the bank.

MCB has an edge over other local banks, as it was the first privatized bank. The
State Bank of Pakistan has restricted the number of branches that can be opened
by foreign banks, an advantage that MCB capitalizes because of its extensive
branch network.

After privatization, MCB is now in a consolidation stage designed to lock in the

gains made in recent years and prepare the groundwork for future growth.

MCB looks with confidence at year 2001 and beyond, making strides towards
fulfillment of its mission, "to become the preferred provider of quality financial
services in the country with profitability and responsibility and to be the best
place to work".

Weaknesses
With the strengths the Bank has also some weaknesses which are as under

The staff of the branches located in the for areas of the country is not so much
educated.

Though Muslim Commercial Bank installed computer yet the system has not
totally shifted on computer. Manual procedure is still there hence computer
facility is not fully availed. It should be fully availed and system should be fully
computerized.

The large number of customers of MCB is uneducated.

The staff of MCB is not too much cooperative.

The old staff resists adopting change like adoption of new technology.

Less job satisfaction of employees.

Actual gains lead to boost the administrative expenses due to decreasing discount
rate.

107

Promotions generally on seniority basis.

Attitude of senior managers at head office has to change towards junior staff.

Competent staff unwilling to serve in the audit due to an absence of firm rotation
policy.

As most of the employees are young they have more tendencies to switch the
organization and to seek more opportunities.

A lot of productive time is wasted by the staff in unproductive pursuits and tea
and lunch breaks are not voluntarily extended and the time spent in corridors,
courtyards, depends on the staff will. This tendency of late must be eliminated
which reflect adversely on the image of the institution and has posed a serious
problem.

It should not be like that a person who may be a very good worker but possessing
lack of managerial capabilities should be posted as manager. But as second place
in command or some heavy working department wished persons together with
managerial qualities and manners in the same fashion should be posted and placed
as manager.

People have to wait for re-cashing their cheques for about 10 to 12 minutes,
which is not good for the reputation of bank.

It is human nature one goes behind reward and incentives while and try to avoid
from punishment. Likewise in commercial institution like bank this system be
introduced with full force means active smart, educated skilled, self spoken and
well versed staff personal, should be reward and appreciates, while on the other
hand lazy, lethargic, heard, rough dealers and ill mannered must be warned
penalized and punishes

Opportunities
The bank has a lot of opportunities which includes

108

Since the Bank has an extensive networks of branches so if the bank can be able
to computerize all of its branches then it can be able to capture the market more
efficiently

The bank has already large number of customers by providing better and better
services to their existing customers, but word of mouth can also be helpful in
increasing the number of customers to have a competitive advantage over its
growing number of competitors.

Since the Bank is earning a lot of profit per annum so by increasing the
employees salaries and providing incentives the Bank can produce more loyal
employees that can increase the productivity.

To go global fully.

Emergence of Islamic banking in the country and MCB is increasing its Islamic
banking operations.

SBP policy to allow Islamic banking business separately.

Bank has earned a good name by introducing innovative products like car
financing home financing credit cards these products can easily enhance the
market share.

Bank introduces Islamic banking in country that attracts large number of people.

Free staff training facilities offered.

Greater profitability can be achieved through strong internal control

Elimination of risk of fraud through professional training

Opportunity to open branch in ruler area to increase its branch network and gain
more profit.

The bank can earn more profit by advancing to farmers and industrialist at low
rates.

New schemes for deposits and finances should be introduced regularly.

Low exposure to consumer banking providing opportunity to explore the segment.

Threats
With opportunities the Bank has also some threats which includes

109

Due to increasing number of foreign banks in Pakistan which offer a very

attractive package for their employees the very key employees of the bank are
more likely to resign which is a very major threat.

Not all branches are computerized neither providing ATM services and no online
banking and the customers demand for these services is increasing day by day so
Bank should computerize all its branches.

At some places, the Muslim Commercial Bank Limited is over-employed. which

is causing over expenditure

Current economic crunch

Political instability

Strong completion

Rising deposit rates

Foreign banks in market having more marketing budgets

People losing trust in banks

The market is already saturated uncertainty in Pakistan and poor law and order
situation are also big threat for bank

Restructuring of privatized banks

The stiff completion also causes switching of employee bank have to pay more
salaries to their employees

Cost of doing business is day to day due to energy crises so its very hard to
complete with financial sector

Government policies are changing day by day and government stability is also not
there.

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5.2. Pest Analysis

Political:
Political instability in Pakistan can lead to changes in laws and policies which can

be in

favor or against the banking sector.

Economic:
Economy of Pakistan is facing issues about employment, inflation, illiteracy, which
hinders business growth.
Social:
Cultural issues can be there but still as there are a number of multinational companies
there, therefore,cultural

issues

are

not

prominent.

Technology:
People are highly skilled and MCB can introduce new technology to increase
competencies.

5.3. Porter model

Bargaining power of the buyers
The banking industry is confronted with diversified customer. Keeping in view the
customer needs and differential customer oriented products and services, policies have
been designed in a way that to meets the requirements of the customer. In consideration
of these services, customer has a lot of options and can obviously shift to other bank
voluntarily if he is not satisfied with the bank he is dealing with. It is important for
bankers should keep his customers well-informed regarding their offerings because on the
basis of which customer decides that which bank should be chosen with regards to
interest rate and mark up ect.

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Bargaining power of suppliers

The depositors perform the function of suppliers for the bank as they keep their money
with the bank whereas on the other hank it enhances the banks lending ability which is
then invested in some other business activities like providing personal and business loans
ect. The profit earned from these is then paid back to the customers In the name of
interest. The bargaining power of the suppliers is high because they move where they find
the maximum interest rate. The banks need to concentrate on devising and making
policies so as to draw and grab more customers.

Threat of new entrants

Market always has a room for new entrants. Different Islamic banks have entered the
market claiming that their banking system is according to the shariah complaint
solutions commonly known as Islamic banking, certified by a distinguished shariah
board. Along with this their infrastructure deals with all kinds of solutions for the
customers such as consumer banking and corporate banking. If the culture, norms and
religious values are given consideration then they can attract a considerable percentage of
target market, which believes that the existing banking system is against shariah.

Threat of substitute products or services

The leasing companies and other financial institutions (e.g. Adamjee Insurance ect)
currently operating are also dealing in consumer products proving them on different
terms and conditions. These can as a substitute for the customers.
Therefore it is important to keep an eye on these companies and revise the policies
accordingly.

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Intensity of rivalry among competitors

In traditional banking system, competition among rival banks turns down the profit, but
competition is not perfect and banks are not unsophisticated passive price takers. Rather
banks strive for a competitive advantage over their rivals. The intensity of rivalry among
banks varies according to products and services they offer to their target market, whereas
strategic analysts are interested in these customer oriented differences.

Summary
Using various types of analysis such as swot analysis is an effective tool of the strategic
planning of the, because it covers the wide spectrum of the business environment. In the
growing economy of Pakistan with broad vision and dream like destination, MCB has the
areas where they proud and have the edge on the competitors, such as being the oldest
and largest network and the first mover advantage in banking industry.
No one is complete or perfect in this world. Every picture has two views where the
strengths exist, there are also areas where opportunity exists but MCB lacks to entertain
itself with these opportunities. These are the areas where MCB have thought about like
culture, working environment and resistance while adopting the new technology which
left the roam for competitors to lead the market.

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Chapter # 6
Recommendations
Shortage of Staff:
Almost in all branches of Muslim Commercial the problem of Shortage of Staff is
very common. There are only few employees who are the be all and end all of the whole
branch resulting in burden of work. Basically the main idea behind it is that whenever
there is shortage of staff in any organization it always result in lot of work and also boots
up the destructiveness as well because people working over there feel like that they can
do whatever they feel like so are least bothered about the rules and regulations as
implemented by the head office and mostly it results in corruption.
This problem result in more corruption because there are less number of people to keep
check and balance and more work load so when they got to do lot of work they wont be
creative and imaginative enough to take part in the evolution of new products and wont
be satisfied with their job as well.
Staff Is Not Adequately Trained:
Staff in almost all branches of Muslim Commercial bank is not adequately trained
with the contemporary era. Basically Muslim Commercial Bank is from the very
beginning, is pioneer of new products including ATMs, Mobile Banking and Online
banking as well but as they developed the new systems and products in order to satisfy
the customers want they didnt get their staff trained in relation with those innovations.
Muslim commercial bank having two staff colleges one in Lahore and One in Karachi but
both make you aware of the systems and procedures but are not training or can say
emphasizing on these innovated products. This problem seems to be quiet minor but
result in major destruction because it takes a lot of time to make employees aware of
these systems and when they dont know about these systems they wont be able to help
their customer out and when they wont be able to do so means they are no more going
through their mission.

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Online Banking
This problem is related to the previous problem as well because when the staff is
not adequately trained then how can they satisfy their customers needs, which is the
basic theme or mission of Muslim Commercial Bank. When Muslim Commercial bank
started their online banking, there were only one or two banks (foreign Banks) doing this
practice because of having a larger network as compared to all other domestic banks
Muslim Commercial Bank started doing this practice but not successful in it because of
the above two problems.
Others

A lot of productive time is wasted by the staff in unproductive pursuits and tea
and launch breaks are not voluntarily extended and the time spent in corridors,
depends on the staff will. This tendency of late must be eliminated which reflect
adversely on the image of the institution and has posed a serious problem.

No proper allocation of duties, suitable person for suitable job. Distribution of

work is not on equity basis, work has not been allocated properly some workers
have to work hard in late hours without any extra reward. So I suggest that steps
should be taken to allocate the work properly.

Overall Suggestions for Improvement

From the quantum of the profit and its financial data it can easily judged that after
privatization Muslim Commercial Bank is performing well. Its deposits are growing dayby-day and so is profitability. The controlling body is responsible for the productive
performance of the bank.
Following are my observation and suggestion to improve the efficiency for the
development of the economy.

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Introduce Various Profitable Investment Schemes
MCB always lead from the front and always introducing new things. A big portion
of the home remittance is sent by Pakistan working capital through Muslim Commercial
Bank Limited. As we know a big portion of this amount is wasted purchasing of luxuries.
The people motivated to save money by offering the deposit through various investment
schemes. The rate of profit should increase 1% or 2% than the other banks and it would
be profitable step for bank.
Training Staff
Staff turnover particularly of trained staff result in financial and other losses. The
amount spent by the bank on employment, induction and training of an outgoing officer
constitutes to beat till another officer should ready prove his work. The exodus of bank
officer in the past has worsened the situation.
Change the Nature of Work
Most of the bank employees are sticking to one seat only with the result that they
become master of one particular job and lose their grip on other banking operation. In my
opinion all the employees should have regular job experience all out-look towards
banking. The promotion policy should be adjusted.
Refresher Courses
Refresher courses for the staff are most important in any international
organization. All the employees should have these courses according to their requirement.
Foreign experts can also be called for this purpose.
Special Training In Abroad
Every year some of the employees should be sent for training to other countries
and employees from other branches should be brought here. Some more reading material
should be provided the purpose should be to educate the employees with the advance
studies in their field. The employees should be provided the opportunities to attend and
participate in seminars and lectures on banking.

116
Incentive to Employees
Bank should give some more incentive to its employees in order to remove the
conflict between lower and higher officers and should try to improve the working
condition of the bank. Bank should develop an incentive system according to the needs of
employees.
Such system should be designed that every employee who has some problems
with his officers can communicate it to the higher management and some steps must be
taken to improve that.
Computer System
Though Muslim Commercial Bank installed computer yet the system has not
totally shifted on computer. Manual procedure is still there hence computer facility is not
fully availed. It should be fully availed and system should be fully computerized.
Others
The period of internship should be divided into the number of department of the
Muslim Commercial Bank Ltd. The internee should be given timetable mentioning the
number of days he has to work at different places in the bank. On the 1 st 4 day in each
department internee should be given a lecture by the officer of the department concerned
about working of the department.
A lot of productive time is wasted by the staff in unproductive pursuits and tea and lunch
breaks are got voluntarily extended and the time spent in corridors, courtyards, depends
on the staff will. This tendency of late must be eliminated which reflect adversely on the
image of the institution and has posed a serious problem.
Distribution of work is not on equity basis, work has not been allocated properly
some workers have to work hard and have to work in late hours without any extra reward.
So I suggest that steps should be taken to allocate the work properly.

117
Reward and Punishment
It is human nature one goes behind reward and incentives while and try to avoid
from punishment. Likewise in commercial institution like bank this system be introduced
with full force means active smart, educated skilled, self spoken and well versed staff
personal, should be reward and appreciates, while on the other hand lazy, lethargic,
heared, rough dealers and ill mannered must be warned penalized and punished. But this
all should be on merit and considering the policy of honesty is the best policy and mot
due to some personal liking, disliking prejudice and patrimonial. It is therefore suggest
certain schemes and checks may be introduced in banks to increase efficiency through
reward and punishment system.
Survival Of The Fittest
It is not nearly a sentence or idiom right person for the right job according to his
qualifications, profession skills and experience with the job specification must be
considered while posting and placing the employees.
It should not be like that a person who may be a very good worker but possessing
lack of managerial capabilities should be posted as manager. But as second place in
command or some heavy working department wished persons together with managerial
qualities and manners in the same fashion should be posted and placed as manager.
Over Employed
At some places, the Muslim Commercial Bank Limited is over-employed, which
is causing expenditure. I think that the best way out for this problem is to open new
branches in remote areas and encourages the employees to work for inculcating the habit
of saving in the people.
Customer Problems
People have to wait for re-cashing their cheques for about 10 to 12 minutes, which is not
good for the reputation of bank. This delay is due to manual work. Therefore I suggest that
computers and other electronic machine should be installed in the bank so that time could be
saved.

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References
file:///C:/Documents%20and%20Settings/08031020-014/Desktop/amcy41.htm
http://www.scribd.com/doc/21694200/Internship-Report-Sajid-MCB-Bank-Ltd
http://www.mcb.com.pk/careers/reg.asp
http://www.mcb.com.pk/ir/pdf/Singapore-notes%202.pdf
http://www.blurtit.com/q471340.html
http://www.riazhaq.com/2009/03/financial-services-sector-in-pakistan.html
http://www.docstoc.com/docs/24367425/11Internship-Report-on-Muslim-Commercial-Bank(MCB)

119

BIBLOGRAPHY
http://www.mcb.com.pk/virtual_banking/
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http://www.mcb.com.pk/psc/online_services/atm_card.asp
http://www.mcb.com.pk/islamic_banking/introduction.asp
http://www.brecorder.com/
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