MCB Bank Limited

EXECUTIVE SUMMARY
MCB Bank Limited (Formerly Muslim Commercial Bank Limited) has a solid foundation of over 50 years in Pakistan, with a network of over 900 branches, over 750 of which are Automated Branches, over 222 MCB ATMs in 41 cities nationwide and a network of over 12 banks on the MNET ATM Switch. MCB's operations continued to be streamlined with focus on rationalization of expenses, re-alignment of back-end processing to increase productivity, enhancement of customer service standards, process efficiency and controls. The Bank has taken the lead in introducing the innovative concept of centralizing Trade Services in the country by providing centralized foreign trade services to branches with a view to improve efficiency, expertise and reduce delivery cost. During my internship in MCB I worked in Remittances, Clearing, Advances, Foreign Exchange and Customer Service Office department and I successfully completed all the task/duties that were assigned to me. During the course of internship I learned about different functions performed by Remittances, and Customer Service Office department and bank as a whole. I also learned banks correspondence with their customers and within branches. I learned about documentation requirements and record keeping for different activities and processes, especially the documentation requirement for different kinds of financing facilities. To open an account the customer has to meet the general banking manager with an introducer. The procedure begins with the punching of account opening form to the customer file i.e. customers master file. Before closing any account, bank send letter to the account holder for informing him that his account is going to be closed. There is need an approval from higher authority to close any account. Current deposits are those which are payable to bank whenever demanded by the customer. Bank does not pay any profit on current deposits. The following are the financial products/services of MCB, PLS Account, Saving 365 Account, Capital growth certificate scheme, Fund Management Scheme, Khushali Bachat Account, Term/ Fixed Deposits and others like night banking, credit cards, traveler cheques.
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HISTORY OF BANKING
The term 'bank' is being used for a long time, yet it has no precise definition. The basic reason is that the commercial banks perform not just one but many types of functions. The term bank has been defined differently by different authors. Some are as follows: ACCORDING TO CROWTHER, "Bank is a dealer in debtshis own and of other people." ACCORDING TO G.W. GILBERT, "A banker is a dealer in capital or more properly a dealer in money. He is an intermediate party between the borrower and the lender. He borrows from one party and lends to another." ACCORDING TO BANKING COMPANIES ORDINANCE 1962 "Banker means person transacting the business of accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise and includes any Post Office Savings Bank." At the time of independence, there were 631 offices of scheduled banks in Pakistan, of which 487 were located in West Pakistan alone. As a new country without resources it was very difficult for Pakistan to run its own banking system immediately Bank of India should continue to function in Pakistan until 30th September 1948, so that problems of time and demand liability, coinage currencies, exchange etc. are settled between India and Pakistan. The non-Muslims started transferring their funds and accounts to India. By the end of June 1948 the number of officers of scheduled banks in Pakistan declined from 631 to 225. There were 19 foreign banks with the status of small branch offices that were engaged solely in export of crop from Pakistan, while there were only two Pakistani institutions, Habib Bank of Pakistan and the Australian Bank. The customers of the bank are not satisfied with the uncertain condition of banking. Similarly the Reserve Bank of India was not in the favor of Govt. of Pakistan. The Govt. of Pakistan decided to establish a full-fledge central bank. Consequently the Governor-general of Pakistan Quaid2| Page

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I-Azam inaugurated the State Bank of Pakistan on July 1, 1948. Thus a landmark was made in the history of banking when the state bank of Pakistan assumed full control of banking and currency in Pakistan. The banking structure in Pakistan comprises of the following types. 1 2 3 4 5 State Bank of Pakistan Commercial Bank of Pakistan Saving banks. Cooperative banks Specialized credit institutions. Commercial banks have been the most effective mobilizers of savings and have been providing short-term requirements of working capitals to trade, commerce and industry. Up to December 31, 1973, there were 14 Pakistan commercial banks that functioned all over the country and in some foreign countries through a network of branches. All these commercial banks were nationalized in January 1, 1974, and were recognized and merged into the following five banks: 1 2 3 4 5 National Bank of Pakistan Muslim commercial bank limited Habib Bank Limited United Bank Limited Allied Bank of Pakistan The state bank of Pakistan is the Central bank of the country and was established on July 1, 1948. The separation of East Pakistan and its repercussion in the form of economic depression has caused a lot of difficulties to the banking system in Pakistan. The network of bank branches now covers a very large segment of national economy. The numbers of branches have increased appreciably and there is now on branch of bank for every 3000 heads of population approximately. There is done reasonable growth in deposits from the establishment of Pakistan. Besides this growth, specialized credit and financial institutions have also developed over the years.
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The Government of Pakistan in the late 90s introducing the need for the privatization of state owned banks and companies. The private sector has accepted the challenge and most of the banks are privatized today. The State Bank of Pakistan issues the shares of these periodically. Bank employees and other common peoples can also purchase these shares and earn profit. Throughout the period of banking history the banks have been expanding rapidly and achieved the desired goal of progress.

THE MUSLIM COMMERCIAL BANK

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

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

PRIVATIZATION
In the late 1990 after long period of time newly established Democratic Government of Pakistan have decided to sell nationalized assets of country for better utilization. In April 1991, MCB became Pakistans first privatized bank. The government of Pakistan transferred the management of the Bank to National Group, a group of leading industrialists of the country by selling 26% shares of the bank. In terms of agreement between the Government of Pakistan and the National Group, the group, making their holding 50% has purchased additional 24% shares. Now, 25% is purchased by the Government, which shall be sold in the near future.

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

PHILOSOPHY
MCB relies on strong, lasting relationship with its customers and on its reputation for stability and security for its continued process. Its philosophy has been to adopt steady course. It has pursued small, less risky loans to consumers and business, and shied away from risky loans. MCB extends its philosophy to its technology strategy but not perusing technology for technology's sake. However, MCB learns from the mistakes of others especially in "consumer banking". We let others get in first, take the hit, and find out the flows. Said MCB officials - and has installed efficient and effective system for processing and delivering information. The board of directors has the authority in guiding Bank affairs and in making general policies. Some directors are the personnel of the MCB Bank and others are successful businessperson and executives of other major organization. Nineteen members are included in board of directors.

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

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.

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MCB Bank Limited

HEAD OFFICE Chudrigor road of Karachi has same importance in Pakistans economy as of the Wall Street world economy .the division working under MCB head office is as followings

administration credit management investment banking human resources information technology corporate planning & budgeting finance and treasury international division inspection & audit law division marketing & development trustee division

CIRCLE OFFICE
The working of circle office is to control and regulate the function of branches which are under in its control. The functions of circle office are to mobilize the deposits and received reports from branches. Circle office is like a mini head office .Agents and correspondents of MCB are in all commercial cities of the world .Circle office is divided in the following division:

Credit Management Audit & Inspection Human Resources

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MCB Bank Limited

Marketing &Development

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MCB Bank Limited

ORGANIZATIONAL STRUCTURE OF MCB BANK LTD

As MCB is a banking company listed in stock exchange therefore it follows all the legalities which are imposed by concerned statutes Mr. Muhammad Mansha is chairman & chief executive of the company with a team of 10 directors and 1 vice chairman to help in the business control and strategy making for the company. Operational Management of the bank is being handled by a team of 10 professionals. This team is also headed by Mr. Muhammad Mansha. The different operational departments are Consumer Banking & IT div; Financial & Inter branch div; Banking operations div; HR & Legal div; financial control & Audit div; Credit management div; Commercial Banking div; Corporate Banking div; Treasury management & FX Group and lastly Special Assets Management (SAM) Group. For effective handling of branches, it has been categorized into three segments with different people handling each category. These categories are: Corporate Banking Commercial Banking Consumer Banking

CORPORATE BANKING
These are branches, which have an exposure of over Rs. 100 million. Usually includes multinational & public sector companies.

COMMERCIAL BANKING
The branches which has a credit exposure of less than Rs. 100 million but having a credit portfolio of more than Rs. 20 million (excluding staff loans). Usually branches in large markets and commercial areas come under this category.

CONSUMER BANKING
These are the branches that have exposure up to Rs. 20 million and these include all the branches that are neither corporate nor commercial branches.

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MCB Bank Limited

MCB has restructured their Branch structure as follows: Province Punjab Sindh K.P.K Balochistan Azad J. Kashmir Domestic Total Overseas EPZ Grand Total 673 246 106 39 21 1,085 6 1 1,092 Branches

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MCB Bank Limited

PRODUCTS AND SERVICES

1. DEPOSIT ACCOUNTS
KHUSHALI BACHAT ACCOUNT Khushali Bachat Account, a Rupee savings account is one of MCB Banks most popular products. Due to the low initial deposit, the account can be opened by people from all walks of life and still avail the facility of daily product profit calculation. PAK RUPEE SAVINGS ACCOUNT MCBs Pak Rupee Savings Account offers you attractive returns on your Pak Rupee investment. In addition, you have access to a countrywide ATM network convenient cash accessibility 24 hours a day. The facility also provides you with unlimited daily transactions with a limit on maximum withdrawal amount through the ATM machines. SAVING 365 The MCB Saving 365 calculates profits on a daily product basis and gives you the facility of unlimited withdrawals. FOREIGN CURRENCY SAVINGS ACCOUNT MCBs Foreign Currency Savings Account offers you attractive returns on your Foreign Currency investment. You can invest in any of the four currencies i.e. US Dollar, UK Pound Sterling, Japanese Yen or Euro Your foreign currency account is exempted from Zakat and withholding tax

FOREIGN CURRENCY CURRENT ACCOUNT MCBs Foreign Currency Current Account offers you the convenience of unlimited withdrawals i.e. access to your funds whenever you want without any notice. There is no limit on the number of transactions you make in a day.

MCB FOREIGN CURRENCY TERM DEPOSIT

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MCB Foreign Currency Term Deposit gives a higher rate of return. It gives the choice of 1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5 year term deposits.

2. LOAN PRODUCTS
MCB CAR4U Life is like a chess board. You plan your career options. You analyze your business moves. But when you really want to improve your life, you make a power move. MCB CAR4U Auto Finance is the power move that assists you in more ways than you ever imagined. It is affordable, with lowest mark up, flexible conditions, easy processing and above all, no hidden costs. EASY PERSONAL LOAN MCB Easy Personal Loan provides you with the financial advantage to do things you've always wanted to but never had the sufficient funds for. Take that much-needed holiday. Buy a car. Refurnish your house. Purchase a new TV. Finance a better education for your children. MCB MASTER CARD Since the beginning of time, people have tried to find more convenient ways to pay, from gold to paper money and cheques. 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 replace cash and cheques as the money of the future.

3. CORPORATE BANKING
CASH MANAGEMENT SERVICES MCBs network of over 900 branches in Pakistan enables it to collect and disburse payments efficiently with its cash management services. This also enables it to offer you a

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choice of paper based or electronic fund transfer solutions including collection amounts, cross branch on- line transactions etc. WORKING CAPITAL LOANS Based on the customers specific needs, the Corporate Bank offers a number of different working capital financing facilities including Running Finance, Cash Finance, Export Refinance, Pre-shipment and Post- shipment etc. Tailor- made solutions are developed keeping in view the unique requirements of your business. TERM LOANS MCB offers Short to Medium Term Finance to meet capital expenditure and short term working capital requirements of our customers. The loans are structured on the basis of underlying project characteristics and cash flows of the business. TRADE FINANCE SERVICES Under Corporate Banking MCB offers trade finance services that include an entire range of import and export activities including issuing Letters of Credit (L/Cs), purchasing export documents, providing guarantees and other support services.

4. ONLINE SERVICES
MCB ATM SERVICES With a solid foundation of over 50 years in Pakistan, with more than 750 automated branches, 269 online branches, over 222 MCB ATMs in 41 cities nationwide and a network of over 12 banks on the MNET ATM switch, MCB is positioned at the forefront of the banking industry in Pakistan. This success has been possible because of a never-ending drive to achieve higher levels of excellence, constantly striving to raise the level of performance. MCB MOBILE BANKING At the forefront of technological excellence, MCB proudly introduces MCB MOBILE BANKING. The convenience of accessing your account balance information and

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mini statements whenever you want or wherever you may need them, with comfort and peace of mind. MCB CALL CENTER Keeping up with banking services can be tedious but not with MCB Bank, where phone service is at your fingertips. Just dial our Call Centre from the comfort of your home or office or wherever you happen to be. It offers basic banking services for your convenience, eliminating the need for you to make unwanted trips to your branch. MCB SMART CARD MCB now brings you MCB SmartCard -a secure and convenient instrument of payment with unmatched functionalities. It provides 24-hour direct access to your bank account. The convenience and flexibility of MCB SmartCard will help you live a smarter life. It not only helps you manage your expenses, but also eliminates undue interest on your day to day credit card transactions. Your balance is always within your reach and you spend accordingly. MCB DEBIT CARD Now MCB brings a secure, convenient and quick payment facility that enables you to do purchasing by using your existing MCB ATM / MCB Smart Card as a DEBIT CARD.

5. VIRTUAL BANKING
MCB Virtual Internet Banking offers you the convenience to manage and control your banking and finances when you want to, where you want to. MCBs Virtual Internet Banking facility is simple and secure. And its free of cost. With MCB Virtual Internet Banking you can access any of the banking services, 24 hours a day, 7 days a week and throughout the year. MCB Virtual Internet Banking offers a wide range of online services which makes your banking accessible anytime and from anywhere. Detailed Account Summary of all listed accounts. Mini-statements of each of the listed accounts showing recent transaction history for that account(s).
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Statement-by-Period of each of the listed accounts, based on the period specified. Immediate or Scheduled Transfer of Funds between your own accounts, as well as to third-party accounts setup as beneficiaries, maintaining accounts with MCB.

Scheduling of One-Time as well as Recurring Funds Transfers. Payment of utility bills for registered Utility Companies. Immediate or Scheduled Bills Payment. Scheduling of One-Time as well as Recurring bill payments. Option for Full or Partial payment based on the payment conditions specified by a particular Utility Company.

Bulk Salary Transfer for Corporate Customers, to facilitate them in paying salary to the corporate employees, who maintain accounts with MCB.

Bulk Funds Transfer for Corporate Customers. Cheque Book Request for any of your listed accounts. Payment/Transfer Alerts for reminding, in advance, prior to the processing of specified payments and transfers.

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

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MCB Bank Limited

INFORMATION ABOUT BRANCH

I did my internship in Muslim Commercial Bank Limited Allah Hoo Bank, Lahore. And some information about my branch which I observed is as follow;

MANAGEMENT OF THE BRANCH:

Branch Manager Operational Manager Cashier Peon Mr.Omer Iftikhar Mr.Ishfaq Ahmed Mr. JABBAR Sardar

GENERAL BANKING
It is backbone of banking it is one of the major department of MCB .it is further consists of following departments: Operation department Current department Remittance department Clearing departments Cash departments Technology departments

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MCB Bank Limited

DEPARTMENTS WHERE INTERNSHIP WAS CARRIED OUT

1.

PERSONAL BANKING AVDISOR (PBA)

This department deals in account opening, there were two PBAs one is male Mr.Akram and other is female Miss. Maryum. But I worked with male PBA, he guide me very well about all Accounts which bank deals in it. These are the following Account. Savings Account Foreign Currency Account Current Life Account Smart Savings Smart Dollar Account Business Account Savings Extra Mostly my branch was opened SAVINGS and CURRENT ACCOUNTS in those days which I spend there.

2.

CLEARING DEPARTMENT

In clearing department I worked under supervision of Miss Amna .in clearing department and learned about inward and outward clearing and I also learnt about MEANING OF CLEARNING The word clearing has been derived from the word of CLEAR and is defined as A system by which banks exchange cheque and other negotiable instruments drawn on each other with in a specific area and there by secure payment for their clients through the clearing Housing at specified time in an efficient way. CLEARING HOUSE
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It is a place where cheque are presented, collected from bank branch .it is one of the service provided by NIFT to other commercial banks. NIFT acts as a clearing house.

NIFT
NIFT stands for National Institutional Facilitation Technologies. clearing house of SBP has shifted a tiresome part of its work to a private institution named NIFT.NIFT collects cheques, demand draft, pay order travelers cheques, etc from all the branches of different banks with in a city through its carriers and send them to the branches on which these are drawn for them to the branches on which these are drawn for clearing. After the branches approve the instrument drawn on them ,NIFT prepares a sheet for each branch showing the number for its instruments and amount in its favor and drawn on it to each branch .is also sent to clearing house of SBP where account of banks are settled in the same manner.

3.

REMITTANCE DEPARTMENT

REMITTANCE Remittance is transfer of fund from one place to another or from one person to another. It is important service provided by banks to customers as well as non-customers since it is not a free service it is a source of income for the bank. PARTIES INVOLVED IN REMITTANCE Four parties involved in remittance; Remitter, remittee, issuance bank, paying bank REMITTER One who initiates, or requests for remittance, the bank charge him a commission for this service. He may or may not be the branchs customer. REMITTEE A remittee is also called the beneficiary, or the payee. The person in whose name the remittance is made. A remittee is also who receive the payment.
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ISSUING OF BANK: The bank sends or affects the remittance, demand drafts, transfer, or mail transfers. Paying bank also knows as the drawee branch .the branch from where the instrument is drawn. TYPES OF REMITTANCE Remittance is classified in to following four types Inward remittance, instruments received for payments Outward remittance, issuing instrument to the responding branch. Inland remittance, within same country Foreign remittance, from one country to another country.

INSTRUMENTS USED IN REMITTANCE: Demand Draft (DD) Telegraphic Transfer (TT) Pay Order(PO) Call Deposit Receipt(CDR) Rupees Traveler Cheque(RTC) 4. OTHER DEPARTMENTS

There are some other departments where I have spent few days in each section to gain experience about that department, these department are: Cash Departments Customer Service Officer

CASH DEPARTMENTS
The cash department is the most important department of the bank. In cash department both deposits and withdrawals go side by side. This department deals with cash deposits and payments.
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The following books are maintained in the Cash Department: Cash Receipt Book Cash Payment Book Cash Balance Book The officers in this department are called teller and there was 1 teller Mr. Jabbar at the counter. This department is involved in two activities: Cash Deposits, Cash Payments. CASH RECEIPT BOOK The cashier is responsible to receive both the paying- in-slip and cash from the depositor. For depositing the cash into customer accounts, there is need to fill in the paying-in-slip giving the related details of the transaction. The cashier check the necessary details provided in the paying- in-slip and accounts the cash and tallies with the amount declared in the slip then cashier fills in the Cash voucher received Record Sheet and assign a voucher no. to both the transaction being made in the sheet and the slip. The 2nd cashier posts the transaction entries in computer ledger. After posting these entries, computer display before posting balance and after posting. Cashier assigns the stamp POSTED on the voucher to show voucher transaction entries are posted. CASH PAYMENT BOOK The only instrument that can be used to withdraw an amount from an account is the Cheque book. No payments are made by another instrument. When cheque is valid in all respects, the cashier enters the necessary inputs in the computer and posts the entry so that account balance is updated. When cashier posts these entries, computer automatically display the balance before posting the transaction amount, balance after posting. The cashier at the same time maintains the Cash Voucher Received Record Sheet. Then inspects the signature of the customer, cancellation mark of checking officer and stamp of POSTED is placed on cheque before he hands over the cash to customer.

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CASH BALANCE BOOK At the end of the working day cashier is responsible to maintain the cash balance book. The cash book contains the date, opening balance, detail of cash payment and received in figures. The consolidated figure of receipt and payment of cash is entered in the cash book and the closing balance of cash is drawn from that i.e. Opening Balance of Cash + Receipts - Payments = Closing Balance

CUSTOMER SERVICE OFFICER (CSO)

Attended phone calls Attended customer inquiries Received ATM forms Received and entered daily DAK Issued balance Certificates and Bank Statements

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FINANCIAL ANALYSIS OF MCB

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VERTICAL ANALYSIS Balance Sheet Muslim Commercial Bank, Limited As on 31st Dec. 2010
Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments net Advances net Operating fixed assets Deferred tax assets net Other assets net Total assets Liabilities Bills payable Borrowings Deposits and other accounts Subordinated loan Liabilities against assets subject to finance lease Deferred tax liabilities net Other liabilities Total liabilities Represented by: Share capital Reserves Un appropriated profit 1.33 7.08 3.77 12.18 1.36 7.54 3.09 12 1.42 8.29 2.07 11.78 1.53 8.28 1.25 11.06 1.59 7.21 1.62 10.42 0.87 2.83 86.02 1.80 4.52 76 1.61 8.77 72.19 2.38 5.11 74.43 2.55 9.60 71.16 0.12 2.07 6.99 75.26 0.47 4.88 100% 2010 8 2009 7.61 2008 8.93 2007 9.67 2006 9.49

0.26 0.78 37.54 44.85 3.69 -

1.18 0.59 32.82 49.73 3.54 4.52 100%

0.91 0.92 21.78 59.09 3.89 4.47 100%

0.93 0.26 27.55 53.34 3.90 4.35 100%

1.92 6.16 18.56 57.97 2.65 0.05 3.22 100%

0.63 3.10 86.30

0.10 4.81 86.83

0.29 2.86 86.57 3.27 88.06

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Surplus on revaluation of assets net of tax Sub-total Total liabilities & equity 1.76 13.94 100% 1.70 13.70 100% 1.39 13.17 100% 2.36 13.42 100% 1.52 11.94 100%

HORIZONTAL ANALYSIS BALANCE SHEET

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Assets Cash and balances with treasury banks Balances with other banks Lendings to financial Investments net institutions Advances net Operating fixed assets Deferred tax assets net Other assets net Total assets Liabilities Bills payable Borrowings Deposits and other accounts Subordinated loan Liabilities against assets Deferred tax liabilities net subject to finance lease Other liabilities Total liabilities Represented by:

2010 39.86

2009 19.43

2008 22.07

2007 22.23

2006 100%

(77.52) (79.12) 235.60 28.41 131.36 151.15 65.89 44.79 7.27 67.55 44.05 62.09

(8.62) (85.76) 163.26 277.45 98.97 108.85 48.84 15.68 86.53 42.78 131.12 45.88

(38.52) (80.55) 52.21 32.23 90.67 79.58 29.67 48.83 (5.34) 28.24 (62.96) 91.07 27.85

(42.11) (95.01) 78.13 10.45 76.98 61.98 19.99 47.81 64.58 13.45 4.93 17.96

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

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Share capital Reserves Un appropriated profit Surplus on revaluation of Sub-total of tax assets net Total liabilities & equity

39.15 62.85 287.18 94.02 93.23 93.91 65.89

26.50 55.64 185.29 71.29 67.01 70.75 48.85

15 49.09 66.22 46.52 19.35 43.07 29.67 37.86

15 (7.24) 27.36 87.09 34.95 19.99

100% 100% 100% 100% 100% 100% 100%

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HORIZONTAL ANALYSIS OF PROFIT &LOSS ACCOUNT

Markup / return / interest Markup / return / interest Net markup / interest income Provision for diminution in the value of investments net Provision against loans and Bad debts written off directly Net markup / interest income after provisions Nonmarkup / interest Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities net Unrealized loss on revaluation of investments classified as held for trading Other income Total nonmarkup / interest income Nonmarkup / interest expenses Administrative expenses Other provision net Other charges Total nonmarkup / interest expenses Extra ordinary / unusual item Profit before taxation Taxation Current year Prior years Deferred Profit after taxation Un appropriated profit brought forward
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2010 112.67 297.49 73.31 266.74 20.56 10.74 204.13 65.60

2009 100.23 249.97 68.34 1124.63 471.35 (11.54) 519.10 41.79

2008 55.34 155.47 34.02 2114.57 31.60 239.82 21.89

2007 23.31 73.81 12.55 (13.14) 191.72 (99.58) 159.148 3.916

2006 100% 100% 100% 100% 100% 100% 100% 100%

231.12 (33) 8.62 32.03 -

49.53 (43.37) (50.67) (27.71) -

27.78 (23.93) 5.14 22.21 -

13.99 (22.05) 0.20 147.72 -

100% 100% 100% 100% 100%

4728.65 25.52 57.62 87.79

7.28 13.05 36.06 3.63

49.98 16.03 20.73 16.42 102.74 1125.97 27.85 18.19 28.76 (245.72) (73.89) 2.12 26.62 2.82

(1.28) 20.43 7.21 (21.33) 132.80 710.38 (15.26) 15.17 12.99 (318.11) 1312.54 (4.97) 25.72 10.83

100% 100% 100% 100% 100% 100% 100% 100%

673.47 1151.63 44851.79 934.58 101.94 66.81 41.90 40.08 2035.52 47.52 38.96 216.20 25.16 35.11 (476.11) 3355.71 20.47 27.61 84.23

100% 100% 100% 100% 100% 100% 100%

MCB Bank Limited

Transfer from surplus on revaluation of fixed assets net of tax Profit available for appropriation Basic and diluted earnings per share after tax

(32.25) 214.61 0.90 15.02

(30.59) 83.49 43.96 15.96

(33.72) 2.58 19.58

63.14 10.36 21.23

100% 100% 100%

Vertical ANALYSIS OF PROFIT &LOSS ACCOUNT

2010
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2009

2008

2007

2006

MCB Bank Limited

Markup / return / interest

Markup / return / interest expensed Net markup / interest income

Provision for diminution in the value of investments net Provision against loans and advances net Bad debts written off directly Net markup / interest income after provisions Nonmarkup / interest income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities net Unrealized loss on revaluation of investments classified as held for trading Other income Total nonmarkup / interest income Nonmarkup / interest expenses Administrative expenses Other provisionnet Other charges Total nonmarkup / interest expenses Extra ordinary / unusual item Profit before taxation Taxation Current year Prior years Deferred
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% 100.00 32.81 67.18 0.18 5.65 0.09 6.56 60.62

% 100.00 30.68 69.31 2.87 11.23 0.08 14.18 55.13

% 100.00 28.87 71.13 6.70 3.33 10.04 61.09

% 100.00 24.74 75.25 0.33 9.31 0.18 9.64 65.61

% 100.00 17.55 82.44 0.47 3.93 0.18 4.58 77.85

7.53 0.99 1.15 0.75 -

6.69 0.89 0.66 1.49 -

7.38 1.54 1.82 1.85 (0.26)

8.28 1.98 2.18 4.72 (0.04)

8.96 3.14 2.68 2.35 -

50.24 11.42 72.05

1.18 10.93 66.06

2.14 14.46 75.55

1.77 18.91 84.52

2.21 19.36 97.21

22.20 0.16 54.69 24.16 -

19.58 0.27 1.33 21.20 -

18.84 0.06 2.04 20.94 -

15.80 (0.01) 1.70 17.48 -

25.14 0.04 0.25 25.45 -

47.88 14.64 2.46 17.10

44.86 14.92 4.32 4.24 14.83

54.61 18.33 2.16 0.04 16.21

67.03

71.76 22.11 2.36 0.24 24.66

20.26 (4.07) 2.81 19

MCB Bank Limited

Profit after taxation Un appropriated profit brought forward Transfer from surplus on revaluation of fixed assets net of tax Profit available for appropriation

30.77 28.78 0.039

30.02 17.81 0.04

38.39 12.81 0.05

48.02 17.40 0.037

47.10 19.358 0.12

28.82 59.60

17.85 47.87

12.86 51.26

17.44 65.46

19.48 66.59

FINANCIAL ANALYSIS OF MCB

FINANCIAL RATIO ANALYSIS

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The information contained in the four basic financial statements is of major significance to the various interested parties who regularly need to have relatives measure of the company operating activities efficiency. Relative is a key word here, because the analysis of financial statements is based on the use of ratio or relative values.

WHAT IS RATIO ANALYSIS?

Ratio analysis involves method of calculating and interpreting financial ratio to analyze and monitor the firms performance. Financial ratios can be divided for convenience into five basic categories: Liquidity ratios Activity ratios Debt ratios Profitability ratios Market ratios LIQUIDITY RATIOS A firms ability to satisfy its short-term obligations as they come due is called liquidity. Liquidity refers to the ability of an individual, business, or institution to convert assets to cash without significant loss at a particular point in time. These ratios are viewed as a good indicator of cash flow problems. Some of the liquidity ratios are: CURRENT RATIO A measure of liquidity calculated by dividing the firms current assets by its current liabilities. It measures the firms ability to meet its short-term obligations. It is expressed as follow: Current Ratio = Current Assets Current Liabilities

Calculation of Ratios
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Current Ratio Current Ratio = Current Assets /Current Liabilities Current Ratio (2010) = RS. 51,287,533/RS.35,950,130 = 1.42 times Years Times
2 . 5 2 1 . 5 1 0 . 5 0 20 06 20 07 20 08 20 09 21 00

2006 1.93

2007 0.87

2008 1.43

2009 .90

2010 1.43

Interpretation From the above data we come to know that current ratio is in variation by increasing and decreasing as in year 2009 MCB is not in good position as compare to other years. But In 2010 current ratio is high which shows that MCB is in better position to pay its obligation. Net Working Capital Working Capital refers to that portion of total found, which finances day to day working expenses during the operating cycle and Net Working Capital is the difference between current assets and current liabilities. Working capital is often considered a measure of liquidity by itself. This ratio shows the amount of liquidity. Working capital is used to check liquidity of the organization.

Net Working Capital = Current Assets Current Liabilities Net Working Capital (2010) = RS.51287533 - RS.35950130 = RS.15,337,403
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Years Rupees
3, 0, 0 5 0 0 0 0 3, 0, 0 0 0 0 0 0 2, 0, 0 5 0 0 0 0 2, 0, 0 0 0 0 0 0 1, 0, 0 5 0 0 0 0 1, 0, 0 0 0 0 0 0 5 0, 0 , 0 0 0 0

2006 29,091,638

2007 (5,343,115)

2008 14,559,043

2009 (5,078,314)

2010 15,337,403

0 - , 0, 0 5 0 0 0 0 - 0 0, 0 1, 0 0 0 0 20 06 20 07 20 08 20 09 21 00

Interpretation Working Capital of MCB is increasing or decreasing in each year. In the last year net working capital was 15,337,403 which is the highest amount from the previous 4 years which shows that MCB is utilizing its assets in a better way. Account receivable turnover The account receivable turnover ratio gives the number of times account receivable collected during the year Account receivable turnover = Annual sale/ Account receivable Account receivable turnover (2010) = RS.54,821,296/RS.4,401,781,000 = 12.45 times Years Times 2006 1.22 2007 30.23 2008 9.7 2009 17.2 2010 12.45

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3 5 3 0 2 5 2 0 1 5 1 0 5 0 20 06 20 07 20 08 20 09 21 00

Interpretation Account receivable turn shows how much cash can be quickly collected from customer. It is increased in 2007 but in 2008 it is again decreased then in 2009 rise but fall down in 2010. Average collection period It is the no. of days it takes to collect on receivables. ACP = 365/Account receivable turn over ACP (2010) = 365/12.45 times = 29.3 days Years Days
30 5 30 0 20 5 20 0 Sre1 e s i 10 5 10 0 5 0 0 20 06 20 07 20 08 20 09 21 00

2006 299

2007 12.07

2008 37.6

2009 21.2

2010 29.3

Interpretation
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ACP is increased as A/R turnover increased due to their inverse relation .In 2010 the days for the collection of money from customer increased as compare to previous year 2009 which shows that more time will be required for collection which is not good. Total Asset turn over Total Asset turnover ratio is helpful is evaluating a companys ability to use its asset base efficiency to generate revenue. Total Asset turn over = sale/Total assets Total Asset turn over (2010) = RS.54,821,296/RS.567,552,613 = 0.096 times Years Times
02 . 1 0 . 1 08 . 0 06 . 0 04 . 0 02 . 0 0 20 06 20 07 20 08 20 09 21 00

2006 0.07

2007 0.08

2008 0.090

2009 0.10

2010 0.096

Interpretation Total asset turnover indicates how efficiently the firm uses its assets to generate sales. The higher a firms total asset turnover, the more efficiently its assets have been used. TATO is decreasing means that assets are not generating sales in a good way.

Debt Ratio Debit Ratio =Total Liabilities/ Total Assets

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Debit Ratio (2010) = RS.488,348,404/RS.567,552,613= 0.860*100 = Years %

8. 8 5 8 8 8. 7 5 8 7 8. 6 5 8 6 8. 5 5 8 5 20 06 20 07 20 08 20 09 21 00

86% 2007 86 2008 86.82 2009 86.30 2010 86

2006 88

Interpretation Debt ratio is the extent to which affirm is financed with debt. But here we see that bank is not going down in fact its improving because the ratio is decreasing. Debt to Equity Ratio Debt-to-Equity ratio shows the extent to which debt financing is used relative to equity financing. Debt equity is calculated by dividing total liabilities of the bank by the total owner equity. Debt to equity = Total liabilities/Share holder equity Debt to equity (2010) = RS. 488,348,404/RS.7,602,150,000 = 64.23 Years % 2006 55.14 2007 56.56 2008 61.30 2009 63.59 2010 64.23

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6 6 6 4 6 2 6 0 5 8 5 6 5 4 5 2 5 0 20 06 20 07 20 08 20 09 21 00

Interpretation Debt to Equity ratio shows how the firms stockholders bear the risk of the firm. Greater the debt greater risk for the firms shareholders financing. The data shows that the risk is continuously increasing not so well. Gross Profit Margin Gross Profit = Gross Profit/Sales Gross Profit (2010) = 36833529/54821296 = 67% Years %
9 0 8 0 7 0 6 0 5 0 4 0 3 0 2 0 1 0 0 20 06 20 07 20 08 20 09 21 00

2006 82

2007 75

2008 71

2009 69

2010 67

Interpretation
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By considering the data we see that gross profit is decreasing each year. Net Profit Margin Year %
6 0 5 0 4 0 3 0 2 0 1 0 0 20 06 20 07 20 08 20 09 21 00

2006 47

2007 48

2008 38

2009 30

2010 30

Interpretation Just like gross profit net profit is also decreasing but constant in the last two years.

Return on Total Assets (ROA) It is also called the return on investment measures the overall effectiveness of management in generating profit with its available assets. The higher the firms return on total assets the better the firm is. ROA = Net income/ Total assets ROA (2010) = RS.16,873,175/RS.567, 552,613 = 2.97 % Years % 2006 3.5 2007 3.7 2008 3.46 2009 3.04 2010 2.97

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4 3 .5 3 2 .5 2 1 .5 1 0 .5 0 20 06 20 07 20 08 20 09 21 00

Interpretation An indicator of how profitable a company is its analysis of total assets. Only in 2007 it is increased otherwise it is decreasing. In 2010 productivity of assets to generate income is deteriorated. Return on equity (ROE) The return on common equity measures the return earned on common stockholders investment in the firm. It is calculating as follow. Return on equity (ROE) = Earning available for common stockholders/ Common stock equity ROE (2010) = 32,674,094/79,204,209 = 41.25% Years % 2006 29 2007 27.6 2008 35.12 2009 35.43 2010 41.25

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4 5 4 0 3 5 3 0 2 5 2 0 1 5 1 0 5 0 20 06 20 07 20 08 20 09 21 00

Interpretation A good position can be seen as in year 2010 ROE is highest as compare to previous years. After falling in 2007 then ROE is increased each year.

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SWOT

ANALYSIS OF MCB

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SWOT ANALYSIS
The overall evaluation of a companys strength, weakness, opportunities, and threats is called SWOT analysis.
Strengths Image or Repute of the MCB Technical Management Skills Customers Satisfaction Continuous Improvement Diversify in Products Employees respect and dignity Faster Banking Opportunities Globally branch network Explore the consumer banking Segment Diversification in products and services Expand Islamic Banking Weakness Low Job Satisfaction Human Resource Issues Lack of advertisement Centralization Manual Book-Keeping Multifaceted procedure of Account opening Threats Economic Crunch Political Instability New entrance of domestic and foreign banks Increase in Non-Profit Loans

STRENGTH:
The main strength of the bank lies in its services. The other fact that contributes is approaching to each segment of society. Another positive issue that because the strength its innovation. Some others are as follows: Bank reputation Technical management skills Customer satisfaction Promotion effectiveness Team based approach. Continuous improvement.

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Quest for quality. Employees respect and dignity. Good corporate citizenship

WEAKNESS:
Competition pressure: bank has tough competition pressure. We are having very well established and well reputed competitor in the market having addressing the same community as we are dealing and is having good services. Financial pressure: no doubt MCB has a lot of finance but due to competition pressure they have a need of finance.

OPPORTUNITIES:
For more amelioration there is a need of new market. the tendency to grow in size. We also have this opportunity. Extra advertising support will enable us to improve our services. Almost every organization has

THREATS:
Weak economic conditions of Pakistan Unregistered business concerns New entrance of domestic and foreign bank

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PEST ANALYSIS OF MCB

PEST analyses tell How Political, Economical, Social and technological factors affect MCB. These are the external factors which affects the whole organization.

POLITICAL AND LEGAL ENVIRONMENT

Banks are strongly affected by the political and legal consideration. This environment is composed of regulatory agencies and government law that influence and limit various organizational and individuals. Mostly these laws create new opportunities for business. In Pakistan there is uncertainty about the government and their policies change dramatically like a policy for withdrawn is that if anyone withdraws more than Rs.25000 then he will be charged 0.30% on withdrawal. The law and order situation are not well which create uncertainty for the investor. purposes: To protect banking companies from unfair competition To protect consumer from unfair business practices adopted by banking companies To protect the interest of the unbridled business behavior Business legislation has following main

ECONOMIC FACTORS
Pakistan's economy is going weaker and weaker. 9/11 has a great influence on the economic crisis of all over the world. Law and order situation also affect the economy of Pakistan due to hesitation of investors in the bank. With economic factors the bank influenced very much that are as under: Impact of WTO force to cost reduction methodology Low interest rate Inflation Low GDP growth

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Budget deficit Increase in Govt. duties Fluctuation in exchange rates

SOCIO-CULTURAL ENVIRONMENT
Social environment includes family, friends, a person's role and status. An individuals life directly by society and the person acts according to his or her society. Cultural environment includes norms, values, religion, conception and perception. If we see the religion point of view then interest is not allowed that's why most of the people hesitate to invest their savings in banks and yet they are not aware of ISLAMIC BANKING Traditional business men do not like the business with bank. They pay their creditors through cash not through cheque. They do not want to get the bank facilities.

TECHNOLOGICAL FACTORS
Today is the era of technology. In the every aspect of life technology plays an important role. Due to rapid change in technology every bank has to change its technology to compete other ones. Increasing issue of securities due to technology resulted increase in cyber crime. Cyber crime means manipulation. One person can easily transfer amount from any other's account to his account.

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APPLICATION OF CLASS ROOM LEARNING

It was my magnificent internship experience of eight weeks in MCB Bank Ltd. Main Civic Centre G-6, Islamabad. The knowledge given by my respected and devoted teachers proved to be very helpful in understanding the environment in the organization and working practically. Following are some key points about application of my class room learning in the organization:

The knowledge achieved from the subject Understanding Psychology and

Business Communication helped me in understanding customer dealing i.e. how to deal with them? How to understand their problems? Etc. It also helped me in understanding the inter Organizational Communication

i.e. circulars, notices etc.

Also the Knowledge which I got from the subject Computer application in

Business especially Excel skills help me very much. Financial Management and Principles of Accounting helped me in

understanding the accounting terminologies which are used in bank e.g. what is debit and credit vouchers? What are these for? And also in understanding that how entries are made against certain heads.

Math and statically courses helped me very much in understanding the some

stats analyses in the banks report.

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WHAT I HAVE LEARNT IN MCB

In MCB Bank Ltd. I really enjoyed working with the staff of Main Civic Centre Branch, Islamabad. It was almost impossible to work in all the departments within that limited time. But the staff of the branch provided me the opportunity to work in the different departments for the sake of practical knowledge. I feel highly indebted to work in the Main Civic Centre Branch, Islamabad with the experienced supervisor and a young Operating Manager, because I have learnt a lot in that branch. During my internship training in the MCB as I early mentioned that I have worked in different departments & seats and learnt the following things: How to deal with different customers How to overcome the pressure How to manage your time with respect to work Collections of Cheques Opening Account Inward Outward clearing Different form of filling Vouchers Changing behavior with respect to the situation

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IF I AM THE MANAGER AT MCB BANK LTD.

If I would be a manager at MCB Ill take following steps: I will apply such a communication system specially designed for employees

trough they can share the problems regarding work environment. Complete working and break hours will be offered so that employees can

work efficiently. I will make it sure that some of the employees should be sent for training to

other countries and employees from other branches should be brought here. I will make promotions, job rotation and bonuses, an important part of

policies of MCB. At every months closing when employees stay at branch even after

working hours, a Dinner from bank will be offered.

To retain potential customers certain services will be provided and let them

know with advertising. I will make it sure that Working environment, equipment, furniture and staff

dressing should be according to the modern banking style.

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RECOMMENDATION
Firstly I recommend that the better facility to customer because in my internship period most of the customer not satisfy with services of the bank. Software should be upgraded, because some time our branch go offline and customer faces not shows that they are satisfy.

The ATM machine, ATM should work properly 24 hours. Shortage of staff, 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.

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.

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REFERENCES
http://mcb.com.pk/ http://www.sbp.org.pk/ Sittara Muzamil MBA from BZU Sub Campus Sahiwal Interview with key person at MCB Allah HOO Chowk Branch LAHORE

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ANNEXURES

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