University of Education

UNIVERSITY OF EDUCATION

LOWER MALL CAMPUS, LAHORE

DEPARTMENT OF MANAGEMENT SCIENCES

Internship Report
MCB Bank Limited

A REPORT SUBMITTED TO THE DEPARTMENT OF ECONOMICS AND

BUSINESS ADMINISTRATION, UNIVERSITY OF EDUCATION, LOWER MALL
CAMPUS, LAHORE IN THE PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (3.5 YEARS)

Submitted by:
Roll No MBA-F15-120
Mohsan Raza
Session: Fall(2015-2019)
Submission Date : __________
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University of Education Lower Mail Campus Lahore

UNIVERSITY OF EDUCATION

LOWER MALL CAMPUS, LAHORE

DEPARTMENT OF MANAGEMENT SCIENCES

LETTER OF UNDERTAKING
This internship report was submitted by Mohsan Raza S/o Muhammad Baqar Roll No
MBA-F15-120 For the partial fulfillment of the requirement for the degree of

MBA (3.5 years)

Session (2015-2019)
With Specialization in Finance

and is hereby accepted by the evaluation committee.

Internship supervisor __________

Principal __________

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Scanned copy of the internship certificate (provided by the organization )

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4 DEDICATION
My report is dedicated to my parents and teachers and who are always with me
in Every Hardships of life and has Waited for me to be here at Final stage.

My ! Allah Give them Long Life (AMIN)

5 ACKNOWLEDGEMENT

In the name of ALLAH, the most kind and most merciful.

First of all, I’m grateful to ALLAH ALMIGHTY, who bestowed me with health, abilities
and guidance to complete the project in a successful manner, and without HIS help I was
unable to perform this task.

More than anybody else, I would like to acknowledge my project advisor, Sir Faran Ali
for his never ending support and untiring efforts. He was always there to guide me
whenever I felt stuck off and his encouragement always worked as morale booster for
me. I have found him very helpful while discussing the tricky issues in this dissertation
work.

I would also like to thank Mr. Abdul Khaliq (Operations Manager of MCB) for providing
me the opportunity to have an excellent learning experience during my internship. His
critical comments on my work have certainly made me think of new ideas and
techniques.

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6 EXECUTIVE SUMMARY

MCB is one of the leading banks of Pakistan incorporated in 1947 MCB

Bank has made significant contributions in building and strengthening both
corporate and retail banking sector in Pakistan.

This report is an upshot of my six weeks’ internship in MCB of Pakistan.

MCB of Pakistan possesses an imperative and historical importance in the
banking sector of Pakistan. It always remains the center of hustles in business
activities. It always endows with great covenant of rally round in terms of
funds and services at all epochs of its dynamism.

The main purpose of internship is to learn, by working in practical

environment and to apply the knowledge acquired, during the studies, in a
real world scenario in order to tackle the problems. In this report the detailed
analysis of the organization has been done and all the financial, technical,
managerial and strategic aspects have been evaluated to analyze the current
position of the organization. Along with it, internal environment and external
environment of the organization have been discussed and the
recommendations & suggestions for the improvement have been made
wherever required. During my six weeks’ internship program, I mainly
worked with the following departments:

GENERAL BANKING, ACCIUNT, these departments have been discussed

in detail and all the policies and procedures have been described thoroughly.

This report will provide a complete and clear image about MCB.

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N0 Table of Contents Page

1 Title page 01
2 Letter of undertaking 02
3 Scanned cope of internship certificate 03
4 Dedication 04
5 Acknowledgment 04
6 Executive summary 05
7 Brief introduction to the organization 07
8 Over view of the organization 08
9 Organization Structure 25
10 Plan of your internship program 32
11 Training Program 34
12 Structure of your concern finance department 34
13 Marketing function 35
14 Human Resource Management 36
15 Financial Analysis 36
16 Critical Analysis 38
17 SWOT Analysis 44
18 Conclusion 45
19 Recommendations 47
20 Reference 48
21 Annexes 48

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7 Brief Introduction to the Industry

MCBwas incorporated by the Adamjee Group on July 9, 1947. The bank was
established to provide banking facilities to the business community of South
Asia. The bank was nationalized in 1974 during the government of Zulfikar
Ali Bhutto. This was the first bank to be privatized in 1991 and the bank was
purchased by a consortium of Pakistani corporate groups led by Nishat Group.
As of June 2008, the Nishat Group owns a majority stake in the bank. The
president of the bank is Imran Maqbool.

The group has a presence in business sectors of the country such as banking,
textile, cement and insurance. Mian Muhammad Manshais chairman of both
the group and MCB.

The bank has also established an Islamic Banking unit to offer Shariah compliant
products and services, with dedicated Islamic banking branches in six cities.

The Wholesale Banking Group caters to local and multinational companies.

Areas such as Bancassurance set newer records as well by crossing the Rupees
1 billion benchmark in 2011. Islamic Banking outperformed in terms of
improved profitability and volumes with introduction of additional 11 products
and expansion with 8 new branches in 2011 and Privilege Banking, an elite
setup, is a benchmark in the industry. They have nine branches across major
cities.

In 2005, the management of the bank abbreviated its name from Muslim
Commercial Bank Limited to MCB Bank Limited to explore international
markets; they were facing resistance due to the word Muslim especially from
Western Countries to avail license. In 2008 the head office of MCB was shifted
from Karachi to Lahore in a newly constructed building, namely MCB House
located at Sharea Ghous-ul-Azam, commonly known as Jail Road.

MCB, advised by Merrill Lynch, became the fourth Pakistani Company (the
other three being Hubco, PTCL and Chakwal cement - they all have been
delisted) to list on the London Stock Exchange when it raised US$150 million
global depositary receipts.

In May 2008, Malaysian bank, Maybank and MCB signed an agreement,

whereby Maybank acquired 20% of the ordinary shares in MCB from Nishat
Group. The acquisition is in-line with Maybank’s strategy, as Malaysia’s financial
services leader in the region, to build its presence in key growth markets across
the region. It also paves the way for MCB, one of Pakistan’s premier financial

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services groups, to engage Maybank as its exclusive foreign commercial bank

strategic partner.

8 Overview of the organization

8.1Vision & Mission
Vision Statement

To be the leading
financial services
provider, partnering
with our customers for
a 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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8.2History of MCB Bank

MCB Bank Limited, is one of the oldest and leading banks in Pakistan. It was
incorporated on July 9 in 1947. MCB Bank was nationalized along with other private
banks in 1974 as part of Government of Pakistan's economic reform movement and was
later privatized in 1991. The Bank has journeyed a remarkable tenure of more than half
a century of competitively edged and well positioned heights of success by deploying
quality banking, heads on technological developments, professionally leading
management and prudent and ethical work methodologies.

MCB Bank in one of the largest foreign banks in Sri Lanka; the first bank in Pakistan
to launch Global Depository Receipts (GDR) in 2006 and has strategic foreign
partnership with Maybank of Malaysia which holds 20% shares in MCB Bank through
its wholly owned subsidiary Mayban International Trust (Labuan) Berhad since 2008.

The Bank is versed as one of the oldest and most responsible Banks in Pakistan and has
played pivotal role in representing the country on global platforms while being one of
the few institutions that are recognized and traded in the international market.

MCB Bank is actively involved in various CSR activities as well and constantly strives
to contribute towards the country’s betterment. It has played a key role in enhancing
the role and value of service and technology in the banking industry through its
customer centric objectives. The Bank has also

been acknowledged though prestigious recognition and awards by Euro money, World
Finance, MMT, Asia Money, SAFA (SAARC), The Asset Triple A, Finance Asia,
NFEH, CFA, Pakistan Centre of Philanthropy and The Asian Banker.

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8.3 Top Competitors

9.4 BUSINESS VOLUME

Business volume in terms of Deposit, Advances and Revenue investments for the last five
years as under:

ADVANCES
Particulars 2017 2016 2015 2014 2013

---------Rupees in 000---------

Total Advances 253,249,407 262,135,470 218,960,598 198,239,155 180,322,753

INVESTMENTS
Particulars 2017 2016 2015 2014 2013

---------Rupees in 000---------

Investment-net 167,134,465 96,631,874 113,089,261 63,486,316 69,481,487

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8.5 PRODUCT & SERVICES

1 Personal 2 Business
3 Corporate
1 Personal
PRODUCTS
Deposit Accounts

Home Remittance

Consumer Loans

MCB Lite

Investment Services

Rupee Travelers Cheque

SERVICES
MCB Internet Banking

ATM / CDM Services

Call Center

E-Statements

SMS Alert

MCB Loyalty & Discounts

Lockers

Deposit Accounts
MCB Bank offers a wide range of local and foreign currency deposit products to best suit
your needs.
Whether you want to save for that rainy day or something special, our

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SAVING DEPOSIT portfolio is designed to provide you with ease and comfort for all your
saving needs.
For those seeking to grow their savings over the longer term with guaranteed returns, we at
MCB Bank have our
TERM DEPOSIT products offering various tenor options with different profit pay-out
frequencies.
For complete day-to-day banking needs, MCB Bank
CURRENT DEPOSIT menu is designed to provide you with transactional convenience and
flexibility for all your financial dealings.
Home Remittance
Send FREE, Receive FREE
MCB Home Remittances offers an unmatched service for overseas Pakistanis to send money
home FAST and FREE across Pakistan within our large network of over 1400 plus branches.
MCB Home Remittance Service is FREE & INSTANT throughout our network of
international send-agents like "MoneyGram", "Xpress Money" and ""RIA-IME". Pick up
your remittances from any MCB Bank branch displaying these logos.
MCB Burqraftaar Transfer (Straight to Account!) enables you, the Non-Resident-
Pakistanis, to send money to your loved ones in Pakistan through our hassle free straight to
account credit service.
MCB Burqraftaar Cash (Cash in Hand!) is available via MCB's entire branch network.
Payments can be made at any MCB Bank branch to walk-in customers simply with the
provision of their Pin code and CNIC (No account number is required for such transactions).

Consumer Loans
MCB Bank offers following consumer loans:

Car4U
Student Personal Loan
Personal Loan
Home Loan
Cash4Cash

Car4U
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Life in The Fast Lane Can Be Really Slow Without a Car!

MCB Car4U, provides a one-stop financing solution to help you own a car of your dreams.
Whether you are a salaried professional or a self-employed businessman, MCB Car4U has a
complete solution for you. In addition, MCB offers a specially designed Car4U product
for agriculturists as well as landlords.
All MCB account holders who receive overseas remittances regularly from any closely
related family member are also eligible to apply for a Car4U finance facility.

MCB Car4U offers competitive rates for all car variants and tenors. Enjoy even a lower
mark-up rate if you are already a MCB Bank customer.
*Car4U Low Markup High Speed - Special pricing for salaried individuals from select
companies:
A special pricing of 1 Year KIBOR + 2.5% is being offered to the salaried individuals from
select companies. This rate is coupled with highly competitive insurance rates..

Student Personal Loan

Customer Segment
This product has been developed to offer financial assistance to students enrolled in Higher
Education Programs. Currently, MCB Bank has formed a partnership with Lahore University
of Management Sciences (LUMS) and is offering Student Personal Loans to all MBA and
Executive MBA students of the University.
Age
Minimum 21 years and maximum 45 years at the time of loan/first trance approval
General Criteria
Generally, the student meeting the following criteria shall be eligible for the loan:
Be a Pakistani National.
Has got at least 50% marks (or equivalent) in the last public examination (i.e. other than
admission tests, e.g. GMAT, SAT, LMAT, etc.) The same must be confirmed by LUMS in
writing.
Must have a valid admission in and has provided admission acceptance to LUMS.
Confirmation of finalized admission must be provided by LUMS in writing.

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Maximum 80:20 of only Admission, Registration, Tuition, On-Campus Residence, and any
other part/head/item of the fees that is payable in advance by the student to LUMS
Moreover, the loan shall not cover any amount that is refundable to the student later on.
Loan Amount
Maximum PKR 1 million only

Personal Loan
MCB Personal Loan Calculator
MCB Personal Loan is a Fast, Affordable and Easy option to meet your immediate financing
needs.
Key Features
Minimum Loan Amount: PKR 50,000
Maximum Loan Amount: Up to PKR 2 Million
Tenure: 1 year to 5 years
No collateral required
No processing fee if loan is not approved

Home Loans
A home of your own is a blessing and a long held aspiration of many. Now with MCB Home
Loan fulfilling this dream has never been so easy. MCB Home Loan opens doors to numerous
sensible financing options to help you purchase, build or renovate your new / existing
home. After all, your home is where your heart is.
Purpose
Home Purchase: Purchase of ready property.
Home Construction: Construction of house on land owned by borrower(s) where the loan is
disbursed in tranches.
Home Renovation: Renovation/improvement of existing home where the loan is disbursed
in tranches.
Plot Purchase and Construction: Purchase of land / plot and construction on it where the
loan is disbursed in tranches.

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Cash4Cash
Financing secured against cash/near cash collateral allowed to individuals for meeting their
personal, family, and household needs.
Eligibility
21 years and above.
Resident Pakistani national.
Salaried, self-employed, retired individuals and house-wives.
Financing
PKR 0.050M – PKR 5.000M.Media Center

MCB Lite
We have demonetized digital payments and made them absolutely free of bank charges so
that you and your inner circle enjoy the benefits of being on the Mobile Payments Grid
without the worry of paying a charge every time you make a payment or access your money.
You only pay an annual fee and there are zero bank charges when you make payments and
conduct transactions using your Mobile Wallet or VISA card.
You can apply for the Mobile Wallet either through phone; or face-to-face and the starter
pack will be delivered to you shortly thereafter

Investment Services
MCB Investment Services has a range of financial solutions to help you make the most of
your wealth.
We can suggest products most suited for your needs, or work with you to create a
personalized solution. These products offer you financial liquidity with comfort and ease and
assist you meet both short and long term investment needs.
Our product menu comprises of a range of Mutual Funds, Single Premium Insurance Plans,
Voluntary Pension Schemes and Separately Managed Accounts, available in Conventional as
well as Shariah Compliant variants.

MCB Investment Services – Product Menu

GoP Voluntary
Single Premium
Mutual Funds Securities/Corporate Pension Schemes
Insurance plans
Securities (VPS)

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Adamjee Invest
MCB Cash
for Life Pakistan Pension
Management Treasury Bills (T-Bills)
(Investment Fund
Optimizer
Diversifier Fund)

Adamjee Invest
Pakistan Cash for Life Pakistan Investment Bonds Pakistan Islamic
Management Fund (Investment (PIBs) Pension Fund
Secure Fund)

Adamjee Wealth
Pakistan Income Optimizer
GoP Ijarah Sukuks
Fund (Investment
Multiplier Fund)

Adamjee Wealth
MCB Pakistan Term Finance Certificates
Optimizer
Sovereign Fund (TFCs)
(Amanat Fund)

MCB DCF Income

Fund

Now you can also invest in mutual funds through digital savings platform, using this facility
you can open an online account for mutual funds investment without any paperwork.

Rupee Travelers Cheque

MCB Bank has been at the forefront of providing its customers with new and innovative
products and financial instruments that are safe, secure and
profitable.
MCB Bank Rupee Traveler's Cheques (RTC) were first
introduced in 1993 as safe cash for traveling and travel related
purposes. The product has been extremely popular and is
preferred over cash by customers while travelling and in all walks
of life.
MCB Bank Rupee Traveler's Cheques- The safest way to Carry
Cash

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SERVICES
MCB Internet Banking
MCB Internet Banking offers you the convenience to manage and control your bank account
and finances; whenever and wherever you want!
MCB Internet Banking is:
Smart
Secure
What We Offer
MCB Internet banking is available to Retail and Corporate* customers and it offers the
following services:
Account summary of all your listed accounts
Mini-statements (last 10 transactions) of each of your listed accounts
Statement-by-period of each of your listed accounts, based on the period specified
Enhanced security by dual security mechanism that authenticates you at different levels
Immediate or scheduled transfer of funds between your own accounts, as well as to third-party
accounts within MCB Bank
Cheque book request for any of your listed accounts (online branches only)
Alerts on Login, Account status, Funds transfer & Bill payments on your Mobile and Email.

SMS Banking
 Check your account balance
 Check your account mini statement
 Reset your SMS Banking PIN

Send
Options Code
to

Balance Inquiry of Primary

BAL(Space)<PIN> 6222
Account

Balance Inquiry of any other BAL(Space)<PIN>(Space)Full Account

6222
linked account Number

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Mini-Statement of Primary
MS(Space)<PIN> 6222
Account

Mini-Statement of any other linked MS(Space)<PIN>(Space)Full Account

6222
account Number

Change Pin Code CP(Space)<Old PIN>(Space)<New PIN> 6222

Media Center ATM / CDM Services

ATM Network

MCB Bank has the Second largest ATM network with 1100+ ATMs including more than 100
off-site ATMs placed at commercial locations like malls, hospitals etc. for consumer’s
convenience. The network covers more than 430+ cities across the country and is constantly
growing. MCB Bank has one of the best ATM up times across the industry, ensured by the
presence of ATM monitoring teams working 24/7. We are also proud to be the one of the few
banks to have our entire network installed with anti-skimming devices which helps in
safeguarding customers.

MCB ATMs provide our customers with 24-hours of convenience to withdraw cash (up to your
daily limit), transfer money between your accounts, make bill payments, and credit card
payments (for MCB Credit Cards only), get mini-statements for your bank and credit card
accounts, and much more.
CDM Network

MCB Bank is also proud of the fact that it is one of the few selected banks in Pakistan that
offer its customers with the services of Cash Deposit Machines (CDM). They are a quick, easy
and time saving alternative to standing in queues for making deposits in branches. All our
CDMs are available 24 hours a day and offer instant credit to your account. At our CCDM’s,
you can make deposits, withdraw cash (up to your daily limit), transfer money between your
accounts, make bill payments, and credit card payments (for MCB Credit Cards only), get mini-
statements for your bank and credit card accounts, and much more.

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Call Center
The state of the art MCB call center is the right choice to keep you in step with your ever hectic
schedule by providing you round the clock services
relating to your Bank Accounts, Visa cards and MCB
Lite at any point in time.
Our well-abreast and dedicated call center team is
available 24 x 7, 365 days a year to ensure that your
daily financial obligations are taken care of
guaranteeing you a good night’s sleep.
Welcome to the MCB Phone Banking Experience:
111-000-MCB (622)
Lockers
Ensuring security to your valuables, we offer deposit lockers that you can operate in the privacy
and comfort of your own MCB Bank branch.

 Available at selected branches in

cities / towns all over the country. For
details, please visit your MCB Bank
branch
 Lockers available in Small, Medium
and Large sizes*
 Fixed sum assured as per size of
locker
 Locker can be operated in single or
joint capacity

Business
PRODUCTS
Deposit Accounts
Lending Products
Trade
MCB eGate

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SERVICES
Agriculture Financing

Deposit Products
MCB Bank offers a wide range of local and foreign
currency deposit products to best meet your needs.
Whether you want to save for that rainy day or
something special, our SAVING DEPOSIT portfolio
is designed to provide you with ease and comfort for
all your saving needs.

For those seeking to grow their savings over the

longer term with guaranteed returns, may resort to
our TERM DEPOSIT product offering with various
tenor options and different profit pay-out.

For complete day-to-day banking needs, MCB

CURRENT DEPOSIT menu is designed to provide you with transactional convenience and
flexibility for all your financial dealing

Lending Products
MCB Bank offers an array of lending products catering to your business needs in affordable &
convenient ways, under international & local regulatory framework. We provide funded & non-
funded finance facilities to take care of short-term & long-term business needs of all segments
including Small and Medium Enterprises (SMEs), middle-markets & agriculture sector.
Funded Facilities
Working Capital Financing
Export Re-Financing (under State Bank of Pakistan Scheme)
Agriculture Financing
Term Loans
Non-Funded Facilities
Letters of Credit
Standby Letter of Credit
Guarantees
Rely on us as your business partner.
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Trade
MCB Bank offers wide range of trade products catering to your business needs in affordable
& appropriate ways, under international & local regulatory framework. These products are
offered

through a wide network of branches. A large correspondent network across the globe and
strong Treasury further enhance the strength of Trade Services.
Trade sale activities are being carried out through specialized trade desks in trade specific
branches where a dedicated team of professionals, well equipped to deal with conventional as
well as advanced features of International trade, is available. This process includes
proactively seeking out business opportunities and handling end to end customer requests.
These trade desks play a pivotal role in ensuring the fact that MCB Bank has a strong
connection with its customers.
Trade operations are processed through 8 structured Trade Services Centers across Pakistan
technologically equipped to manage large volumes of transactions with minimum turnaround
time.
We provide funded & non-funded finance facilities to take care of short-term & long-term
business needs of all segments including SMEs, middle-markets.
Introduction
MCB Bank Limited is the largest private sector bank in
Pakistan with over 1200+ branches nationwide.
Currently MCB is the largest issuer of cards in Pakistan,
with an astounding card base of 2.5 million cards (debit,
credit, prepaid and smart cards) in the market. MCB has
been in the card acquiring business since 2003 and
currently has a merchant base of around 10,000 where
all international & local Visa/ MasterCard/ China
Union Pay credit & debit cards are accepted.
MCB now offers payment gateway for the rising
Pakistani e-Commerce Industry, by providing our
existing and new merchants with a secure and efficient
card processing service online through MCB eGate.
MCB eGate is a service designed to offer online shopping convenience to the card holders and
merchants whereby, card holders can make online real-time purchases through the merchant’s
website. A cardholder can use any Visa or MasterCard issued by any bank both locally or
international for making payments to the online merchants. MCB eGate is backed by MIGs
(MasterCard Internet Gateway Services) that provides 3D secure solution.

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SERVICES
Agriculture Financing
MCB Bank is financing agriculture sector since 1973.
Due to large branch network and specialized staff
posted in the branches, MCB Bank caters to the
financing requirement of the farming community
spread throughout the country and facilitates in
achieving increased productivity.
MCB Bank has reinvigorated its agri financing
products. Agri financing facilities are available
throughout the country at designated Lending
Branches. All types of financing are available for
short, Medium and Long term depending upon
farmer’s choice and the nature of finance. MCB Bank
gives top priority to small & medium size farmers so
that they could be protected from the exploitation of private money lenders and could get better
yield of crops.
Farmers are advised to contact nearest MCB Branch for information & facilitation.

Corporate

Corporate Banking
Transaction Banking
Trade
Investment Banking

Corporate Banking
Our specialized corporate finance teams offer credit solutions tailored to meet working
capital and term loan requirements for corporates. We are committed to understand financing
needs of our customers and to deliver cost effective and practical solutions to your banking
needs in the shortest time possible.
We provide a wide array of business financing solutions including but not limited to the
following:
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Working Capital Finance

Term Loans
Bank Guarantees/Letters of Credit

Transaction Banking
Provides a wide range of solutions designed to meet the needs of our corporate and
institutional business partners. At MCB Bank, we understand how important it is for you to
access your funds and utilize the MIS to enhance your business needs. It is around these
fundamental concepts that we have customized our product solutions.
Trade
MCB Bank offers trade finance services that comprise of an entire range of import and export
activities including issuing Letters of Credit(L/Cs), purchasing export documents, providing
guarantees and other support services.
Investment Banking
Our Investment Banking (IB) arm has played a dynamic role in the local market space in
Pakistan through innovative structured solutions for its customers and is regarded as one of the
leading investment banking house in the country. Our IB team has strong origination and
distribution capabilities and a successful track record for efficient execution. During the last
four years, we have led or participated in deals of approx. USD 3 billion, of which 76% are in
the energy & refinery sector, 8% in fertilizer and chemicals, 6% in telecom and 10% in other
industries.Media Center
MCB Visa Gold Credit Card
MCB Visa is not just another card in your wallet. It
not only provides the conventional credit card services
in a manner that is superior in comparison, but goes
an extra mile. Introducing unique, innovative and state
of the art services, MCB Visa is the most secure,
affordable and rewarding credit card... turning your
shopping into a much more exciting experience.

MCB Visa is accepted at all Automated Teller

Machine (ATM)s across Pakistan as well as at 27
million acceptance locations worldwide.

Your card comes packed with the most amazing

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features and is the only card that truly lives up to your expectations.

So, enjoy the power of your MCB VISA - the card that goes anywhere… from the bank that
is everywhere!

MCB Visa Platinum Debit Card

Welcome to the world of MCB VISA Debit Platinum.
The card that’s built around unmatched convenience
with enhanced security and round-the-clock
accessibility to your funds in Pakistan and from
around the world. Matching the persona and lifestyle
of high-net-worth customers, the VISA Debit
Platinum card is a status symbol. Its elegant product
packaging, dedicated services and complimentary
benefits ensure that you feel privileged! Together with
world class services and features, you can now enjoy
the best that life has to offer in a truly deserving way.

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9 Organizational Structure

9.1 ORGANIZATIONAL HIERARCHY OF MCB

PRESIDENT

SENIOR EXECUTIVE
VICE PRESIDENT

EXECUTIVE VICE
PRESIDENT

SENIOR VICE
PRESIDENT

VICE PRESIDENT

ASSISTANT VICE
PRESIDENT

OFFICERS GRADE
I II III

ASSISTANTS

CASHIER

PEONS

10JJ

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JB 9.2 STAFF STRENGHTH

2018 2017 2016 2015

Number of Permanent Employee 9397 10160 9721 9011

9.3 Main Offices MCB Building, 15 - Main Gulberg

9.4Brief Introduction of all Department

DEPARTMENTS OF Warburton Branch (0360)

 The departments are as under

 General Banking Department

o Clearing Department

o Remittance Department

 Accounts Department

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CLEARING DEPARTMENT
Clearing means collection of cheques receive from our customers but drawn on other banks.
Receiving the instruments deposited by customers Posting the amount of instruments in credit
of customer’s account If cheque returns from the concerned bank, the customer account is
debited. Crossing stamp is put on the instrument and slip given to customer on receipt of the
instrument. Clearing stamp and “payee account credited” are put on the instrument and the
voucher. Clearing
House has provided this facility. Clearing house facilitates different banks, in one city, to get
their cheques drawn upon other banks to be cleared.

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

1. Outward Clearing
2. Inward Clearing

Outward Clearing

When cheques, TC’s and other negotiable instruments drawn upon other banks like NBP,
ABN AMRO of the same city (as Lahore) are presented in Muslim Commercial bank to
deposit them in the respective payee’s accounts, these instruments are lodged in outward
clearing (o/w clg) of MCB bank.

Procedure of Outward Clearing

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

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

• Amount in words and figures does not differ.

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

• Instrument is not mutilated.

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

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

• Endorsement is in accordance with the crossing if any.

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

counterfoil.

• The title of the account on the paying-in-slip is that of payee or endorsee (with
the exception of bearer cheque).
• If an instrument received other than MCB of Pakistan, then special crossing stamp
is affixed across the face of the instrument. Clearing stamp is affixed on the face
of the instruments, paying-in-slip and counterfoil (The stamp is affixed in such a
manner that half appears on counterfoil and paying-in-slip). The instrument is
suitably discharged, where a bearer cheque does not require any discharge and also
an instrument in favor a bank not need be discharged.
Return Outward Clearing

• Over writing

• No stamp of clearing or if it is not clear

• No stamp of crossing or if it is not clear

Inward Clearing
Inward clearing means cheques drawn on us and presented by other banks. In inward
clearing Branch acts as paying banker. After realization of inward clearing, banks deposits
are decreased as bank makes payment to other banks from the balances held by the branch.
This realization of inward clearing is also referred to as responding to the clearing.
Cheques and other negotiable instruments drawn on Muslim bank, sent by other banks,
constitute the inward clearing of MCB.

Procedure of Inward Clearing

• Instruments with schedules are received from NIFT.
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• Amount of each instrument entered is in inward clearing register.

• Instruments are detached and handed over to the deposits and other respective
department for checking and payment.
• In case of any instrument is returned, return memo is prepared stating the reason
of the return.
• Entry is made in cheques Return register.
• Cheques return charges are recovered from the party as per charges schedule.

Checking / Return of Instruments

• Over writing

• No stamp of clearing or if it is not clear

• No stamp of crossing or if it is not clear

REMITTANCE DEPARTMENT
The Remittance department deals with the transfer of money from one place to another.
Funds transfer facility or remittance of funds is one of the key functions of the banks all
over

the world. Remittances through banking channels save time, costs less and eliminate the
risks involved in physical transportation of money from one place to another. Muslim
Commercial Bank of Pakistan transfers money in the following ways.

 Pay Order

 Letter of Credit

Pay Order
Payment Orders are issued for the money transfer with in the city. Pay order is made for
local transfer of money. Pay order is the most convenient, simple and secure way of
transfer of money.

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L/C Dealing

MCB is committed to offering its business customers the widest range of options in the
area of money transfer. If you are a commercial enterprise then our Letter of Credit service
is just what you are looking for. With competitive rates, security, and ease of transaction,
MCB Letters of Credit are the best way to do your business transactions.

ACCOUNTS DEPARTMENT
Opening of account is the most important department of the Branch as this is a contract
between the customer and bank. All future transaction/operation are carried out as per this
contract and any deviation may jeopardize the bank’s interest. The opening of a new
account is the establishment of customer banker relationship. By opening an account at a
bank, a person becomes a customer of the bank. The customers can open following
accounts:

 Current Account (CD A/C)


 Profit and loss sharing Account (PLS A/C)

 Basic Bank Account (BBA A/C)

 Fixed Deposit (FDR/TDR)
Account Opening
When a client comes to the bank, and makes a request for opening of an A/C. The officer
says that first fill up a prescribed application form. If he/she wants to open a PLS A/C,
then he/she has to fill a form according to the account.

Requirements
• ID Card of applicant

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

• Student card (if applicant is student)

• Two photos for illiterate person

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Documents Attach with A/C Opening Form

• A/c opening form

• Specimen signature card

• Zakat form (for non-muslims)

• Bio Matric Form

• Letter pade
• Terms and Condition

Issuance of Cheque Book

After opening an A/C with the bank, the A/C holder once again makes a request in the
name of bank for the issuance of a cheque book. The A/C holder mentions title of A/C,
A/C number, sign it properly and mentions the no of leaves he requires

• Deposit slip

• Requisition form
9.5 Governance
Board of Director
Board Sub committees

BOARD OF DIRECTORS

 Mian Mohammad Mansha. Chairman

 S. M. Muneer. Vice Chairman. ...
 Tariq Rafi. Director. ...
 Yahya Saleem. Director. ...
 Mian Umer Mansha. Director. ...
 Muhammad Ali Zeb. Director. ...
 Mohd Suhail Amar Suresh. Director. ...
 Mrs. Iqraa Hassan Mansha. Director.

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Board Sub Committees

Audit Committee

1 Mr. Yahya Saleem Chairman

2 Mian Umer Mansha Member

3 Mr. Muhammad Ali Zeb Member

4 Mr. Nor Hizam bin Hashim Member

10 Plan of your Internship program

10.1 Introduction of the Branch

Branch Name Warburton

Address Ghalla Mandi Warburton Tehsil & District Nankana Sahib

Phone 056-2794022, 2794021

Fax 056-2794922

Email mcb0360@mcb.com.pk

Branch Code 0360

10.2 Starting and Ending date of the Internship

From 16 August 2018 To 27 September 2018
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10.3 Department In which you get training

1. General Banking Department

a. Clearing Department

b. Remittance Department
2. Account Department

11 Training Program
My job experience
&
FIELDS OF ACTIVITIES
Which I observed and done
The purpose of banks is to provide some services to the general public. And for this purpose
different banks provide different services to the people in different forms. The MCB Bank is
a commercial bank, in modern time commercial banks play a very important role and their
functions are manifold. The main functions and services which MCB Bank Limited provides
to different peoples are as follows.
Open Different accounts for different peoples
Accepting various types of deposits
Undertaking of agency services and also general utility functions, few of those are as under
 Transfer of money from place to place.
 Issuing of travelers cheques and letters of credit to give credit facilities to travel.
 Undertaking foreign exchange business.

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12 Structure of your concern specialization Department Finance

Hierarchy Chart of the Branch

Branch
Manager

Operation
Manager

Officers of Officere of Officer of

Account cheque tellers and
opening clearing cashiers

13 Marketing Function
Marketing is the task of creating, promoting and delivering goods and services to consumers
and businesses. Organizations identify and profile distinct group of buyers who might prefer
or require varying products and marketing mixes. The customer seeks for value and
satisfaction. The organizations can increase the value of the customer offering in several
ways e.g. raising benefits, reducing costs etc. marketing mix is a set of marketing tools that
the firm uses to pursue its marketing objectives in the target market. These marketing tools
are known as 4 p’s of marketing.

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To identify the customer needs and fulfilling hem is the basic objective of an organization.
Marketing is not just satisfying your customers, you have to delight them and this can be
done by acting upon this phrase.
“Under Promise and Over Deliver”
MCB Bank provides a winning combination of products and services to its prime customers.
It is one of the country’s leading commercial banks, which ensures complete security, and
reliability in all-financial transactions.

14 Human Resource Management

HRM PROCESS IN MCB
1. Human resource planning and forecasting
2. Employee Recruitment
3. Selection Training And Development
4. Performance Management
5. Employee Compensation And Benefits

Human resource planning and forecasting

Human resource planning and forecasting includes the specific and interrelated activities that
together constitutes HRP system: • HRP Process: • These are steps of HRP in MCB •
Determining the Objectives. • Defining skills required to meet the objectives. • Determine
additional human resource requirements. • Develop actions to meet the anticipated HR needs.

Employee Selection and Recruitment “

People are at the heart of our success” “Recruitment is the discovering of potential applicants
for actual and anticipated organizational vacancies”
MCB recruit’s candidates in three cadres• 1. Probationary Officers (entry point for fresh
graduates) • 2. Management Trainees• 3. Contractual Appointments

Training And Development

“Trainings the organized procedure by which people learn knowledge and/or skills for a
definite purpose”.MCB has a mix of training methodologies for its employees. We can
broadly categorize these methods into five groups: •

Needs analysis

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: Identify job performance skills needed, assess prospective trainee’s skills, and develop
objectives. • Instructional design: Produce the training program content, including
workbooks, exercises, and activities.
Because needs assessment is the first step in the instructional design process: • If it is poorly
conducted, training will not achieve the outcomes or financial benefits the company expect.

15 Financial Analysis
Ratios Analysis

PROFITABILITY RATIOS
Profit before tax ratio % 4.86%
Gross Yield on Average Earning Assets 7.10%
Gross Yield on Avg. Earning Assets (incl. dividend & capital gains) 7.74%
Gross Spread 57.24%
Non interest income to total income 29.75%
Return on average equity (ROE) 17.65%
Return on average assets (ROA) 1.89%
Return on Capital Employed (ROCE) 17.65%
Cost to income ratio 45.31%
Cost to income ratio (excluding pf reversal) 46.26%
Admin Exp to Profit before Tax 88.20%
Investment ratios:
Earnings per share (after tax) 19.56
Earnings per share (before tax) 27.02
Breakup value per share (excl. surplus on rev. of assets) 115.18
Net assets per share 129.59

Profit before tax ratio

Profit before tax (PBT) is a measure that looks at a company's profits before the company has
to pay corporate income tax. It deducts all expenses from revenue including interest
expenses and operating expenses except for income tax

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Gross Yield on Average Earning Assets

The gross yield on average earning assets measures the total average return on the banks
earning assets. The gross yield on earning assets is computed as follows:
GYEA = Total Interest Income / Total Average Earning assets
Essentially, the gross yield on earning asset ratio is really just the rate paid on funds
(RPF) plus the net interest margin which equals the GYEA.
Rate Paid on Funds + Net Interest Margin = Gross Yield on Earning Assets

Gross Yield on Avg. Earning Assets (incl. dividend & capital gains)
The yield on assets is a popular financial solvency ratio that compares a financial institution’s
interest income to its earning assets. Yield on earning assets (YEA) indicates how well assets
are performing by looking at how much income they bring in. As a measure of effectiveness,
yield on assets can be useful for comparing different managers relative to their asset bases.

Gross Spread
Gross spread ratio looks at the spread of interest between borrowing and lending. Banks
make money by borrowing short-term money from depositors and then using these funds to
make long-term loans to businesses, consumers and homeowners. One way to analyze gross
profit rates of banks is to look at the spread between the loan rates and deposit rates. Further,
through ratio analysis, you can use the gross spread ratio to determine the profitability,
liquidity and leverage of a bank.

Return on Capital Employed

Return on capital employed (ROCE) is a financial ratio that measures a company's
profitability and the efficiency with which its capital is employed. ROCE is calculated as:
ROCE = Earnings Before Interest and Tax (EBIT) / Capital Employed

Cost to income ratio

The cost-to-income ratio is a key financial measure, particularly important in valuing banks.
It shows a company’s costs in relation to its income. To get the ratio, divide the operating

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costs (administrative and fixed costs, such as salaries and property expenses, but not bad
debts that have been written off) by operating income.
The ratio gives investors a clear view of how efficiently the firm is being run – the lower it is,
the more profitable the bank will be. Changes in the ratio can also highlight potential
problems: if the ratio rises from one period to the next, it means that costs are rising at a
higher rate than income, which could suggest that the company has taken its eye off the ball
in the drive to attract more business

Breakup value per share (excl. surplus on rev. of assets)

The breakup value is the sum-of-parts value of a publicly traded company. Investors derive
this value by analyzing each business segment of a company independently. Breakup value is
usually applied to large cap stocks that are likely to operate in several different markets or
industries. Investors may decide to conduct a more in-depth breakup value analysis if the
company’s market cap is less than the breakup value for a prolonged period of time.

Net Asset Value Per Share - NAVPS'

The net asset value per share (NAVPS) is an expression for net asset value that represents the
value per share of a mutual fund, exchange-traded fund (ETF) or a closed-end fund. It is
calculated by dividing the total net asset value of the fund or company by the number of
shares outstanding. The formula for the NAVPS is simply:
NAVPS = Net Asset Value (NAV) / Number of Shares Outstanding
where NAV = Assets - Liabilities
NAVPS is also referred to as the book value per share.

16 Critical Analysis
Three years’ Vertical Analysis
2017 2016 2015
Rs. Mln % Rs. Mln % Rs. Mln%

Statement of Financial Position

Assets
Cash balances with treasury banks 106,072 8% 74,222 7% 60,568 6%
Balances with other banks 4,579 0% 4,344 0% 3,611 0%
Lendings to financial institutions 4,398 0% 2,810 0% 3,080 0%
nvestments 656,964 49% 555,929 53% 565,696 56%

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Advances 469,356 35% 348,117 33% 304,122 30%

Operating fixed assets 39,574 3% 32,753 3% 29,950 3%
Other assets 46,368 3% 33,640 3% 37,384 4%

1327311 100% 1051812 100% 1004410 100%

Liabilities
Bills payable 22,681 2% 12,844 1% 11,889 1%
Borrowings 133,070 10% 74,515 7% 118,040 12%
Deposits 968,483 73% 781,430 74% 696,805 69%
Sub-ordinated loan 3,893 0% - - - -
Deferred tax liabilities 4,625 0% 11,260 1% 11,377 1%
Other liabilities 40,994 3% 30,138 3% 28,498 3%

1173745 88% 910187 77% 866608 86%

NET ASSETS 153566 12% 141627 13% 137802 14%

Represented by
Share capital 11,851 1% 11,130 1% 11,130 1%
Reserves 70,866 5% 53,347 5% 51,309 5%
Unappropriated profit 53,776 4% 53,469 5% 50,747 5%
Surplus on revaluation of assets - net of tax 17,073 1% 23,680 2% 24,616 2%
153566 12% 141627 13% 137802 14%
Profit & Loss Account
Mark-up earned 74,091 80% 67,400 81% 80,393 83%
Mark-up expensed (31,684) -34% (23,586) -28% (31,077) -32%
Net mark-up income 42,407 46% 43,814 52% 49,316 51%
Provisions & write off (1,236) -1% (925) -1% (659) -1%
Net mark-up income after provisions 41,171 45% 42,889 51% 48,658 50%
Non-mark-up income 17,960 20% 16,175 19% 16,566 17%
Non-mark-up expenses (28,117) -31% (22,989) -28% (22,895) -24%
Profit before taxation 31,014 34% 36,075 43% 42,329 44%
Taxation (8,555) -9% (14,184) -17% (16,782) -17%
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Profit after taxation 22,459 24% 21,891 26% 25,546 26%

Three Years’ Horizontal Analysis

Statement of Financial Position / Profit & Loss
2017 17 Vs 16 2016 16 Vs 15 2015 15 Vs 14
Rs. Mln % Rs. Mln % Rs. Mln %
Statement of Financial Position
Assets
Cash and balances with treasury banks 106,072 43% 74,222 23% 60,568 30%
Balances with other banks 4,579 5% 4,344 20% 3,611 20%
Lendings to financial institutions 4,398 57% 2,810 -9% 3,080
117%
Investments 656,964 18% 555,929 -2% 565,696 11%
Advances 469,356 35% 348,117 14% 304,122 0%
Operating fixed assets 39,574 21% 32,753 9% 29,950 -4%
Other assets 46,368 37% 33,640 -10% 37,384 0%

1,327,311 26% 1,051,814 5% 1,004,410 7%

Liabilities
Bills payable 22,681 77% 12,844 8% 11,889 -29%
Borrowings 133,070 79% 74,515 -37% 118,040 98%
Deposits 968,483 24% 781,430 12% 696,805 1%
Sub-ordinated loan 3,893 100% - - - -
Deferred tax liabilities 4,625 -59% 11,260 -1% 11,377 9%
Other liabilities 40,994 36% 30,138 6% 28,498 -4%

1,173,745 29% 910,187 5% 866,608 8%

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Net Assets 153,566 8% 141,627 3% 137,802 6%

Represented by
Share capital 11,851 6% 11,130 0% 11,130 0%
Reserves 70,866 33% 53,347 4% 51,309 5%
Unappropriated profit 53,776 1% 53,469 5% 50,747 8%
Surplus on revaluation of assets - net of tax 17,073 -28% 23,680 -4% 24,616 6%

153,566 8% 141,627 3% 137,802 6%

Profit & Loss Account

Mark-up earned 74,091 10% 67,400 -16% 80,393 4%
Mark-up expensed (31,684) 34% (23,586) -24% (31,077) -8%
Net mark-up income 42,407 -3% 43,814 -11% 49,316 13%
Provisions & write off (1,236) 34% (925) 40% (659) -135%
Net mark-up income after provisions 41,171 -4% 42,889 -12% 48,658 7%
Non-mark-up income 17,960 11% 16,175 -2% 16,566 28%
Non-mark-up expenses (28,117) 22% (22,989) 0% (22,895) 6%
Profit before taxation 31,014 -14% 36,075 -15% 42,329 15%
Taxation (8,555) -40% (14,184) -15% (16,782) 35%

Profit after taxation 22,459 3% 21,891 -14% 25,546 5%

Commentary on Six Years Horizontal and Vertical Analysis:

Horizontal Analyses
Asset base of the bank has increased considerably over the past 6 years and crossed many
milestones i.e. PKR 1 trillion; highest increase in the asset base is observed in 2017 where
assets increased by 26%, mainly contributed by advances in terms of volume. This increase
also includes assets transferred under merger of NIB Bank into MCB Bank Limited. On an
annualized basis, the asset base has recorded an increase of 13% over the last six years.
During the past 6 years, highest increase in investment base was reported in 2012 i.e. 27%.
Highest growth in advances is observed in 2017 primarily due to portfolio transferred on
account of merger of NIB Bank with and into MCB Bank Limited. The deposit base of the
Bank has increased considerably over the years growing from Rs. 545 billion in 2012 to Rs.
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968 billion in 2017 translating into a CAGR of 12% over past 6 years. Highest increase was
reported in 2017, primarily on account of splendid growth in deposits coupled with deposits
transferred under merger of NIB Bank into MCB Bank Limited. Equity of the bank has also
posted healthy increase due to higher profitability in past 6 years, translating into 9% average
growth in past 6 years.
On to Profit and Loss side, gross markup earned has posted an average increase of 1% over a
span of six years. Corresponding to the shift in asset mix, contribution from income on
investments has increased over the years. The increase in markup expense on deposits is on
account of regulatory revisions enacted by the Central Bank and volumetric increase in
deposit base. Despite the regulatory revisions enacted during the period, the cost of deposit
was strategically managed by reducing high cost deposits and increasing the CASA base of
the Bank. However, the cost of deposit has increased by 5% over the six year period under
coverage.
Non Markup income block has shown enormous growth in recent years and the growth rate
in past six years is 14%, whereas non- markup expense has grown by an average of 9% which
is justifiable on account of growing operational infrastructure and inflationary patterns. One
of the key strength of the Bank has been its recovery of classified portfolio which is clearly
reflected by the reduced / reverse credit charge over the last few years. Provision charge in
2017 is primarily on account of Provision made against equity portfolio of the bank based on
the volatility observed in the equity market. MCB enjoys one of the highest spreads in the
banking industry which are duly reflected in the profitability ratios of the Bank.

Vertical Analyses
Vertical analysis depicts higher concentration levels of investments and advances in the asset
base of the Bank. The advances base of the Bank has posted moderate growth over the last
few years dueto lack of credit opportunities and intense competition. However, based on the
credit uptick in the private sector, the advances base of MCB has increased considerably over
the last two years. The concentration level of advances in the total assets stands improved
from 31% in 2012 to 35% in 2017.
The IDRs of the banking industry registered a huge spike in the year 2013 -2015 on account
of higher yielding longer term bonds being offered. However, based on the call that interest
rate cycle has bottomed out, a gradual shift to shorter term securities with increased focus on
credit was observed. Resultantly, the concentration levels of investments have decreased
from 52% in 2012 to 49% in 2017.
Corresponding to the technological, infrastructural and operational spend by the Bank, the
deposit base has increased considerably over the period of six years. Improved service quality
levels and tailored products have earned the loyalty of our customers. This can be
substantiated by the fact that the CASA base of the bank has been above 80% over the last

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many years. For the year 2017, CASA base has been over 90% for the entire year, reflecting
focus of the management.
Markup income growth has been steady over the last 6 years. The contribution from markup
income approximates 80% of the total revenue. Markup expense has increased over the last 6
years, based on regulatory revisions enacted over the period and growth registered in the
deposit base. Concentration of Non markup income in total income has increased
significantly over the years due to innovative solutions offered to our customers, new
products launched, and gain on sale of securities. With the growth in business non markup
expense concentration level has also increased from 23% in 2012 to 31% in 2017, which is
well within the budgetary limits.

Competitive Analysis
MCB
2017
PROFITABILITY RATIOS
Profit before tax ratio % 4.86%
Gross Yield on Average Earning Assets 7.10%
Gross Yield on Avg. Earning Assets (incl. dividend & capital gains) 7.74%
Gross Spread 57.24%
Non interest income to total income 29.75%
Return on average equity (ROE) 17.65%
Return on average assets (ROA) 1.89%
Return on Capital Employed (ROCE) 17.65%
Cost to income ratio 45.31%
Cost to income ratio (excluding pf reversal) 46.26%
Admin Exp to Profit before Tax 88.20%
Investment ratios:
Earnings per share (after tax) 19.56
Earnings per share (before tax) 27.02
Breakup value per share (excl. surplus on rev. of assets) 115.18
Net assets per share 129.59

Competitive Analysis
HBL
2017
Advance deposit 45.2%
Asset quality 8.2%
Coverage 91.4%
Capital adequacy 13.6%
Yield on advance 7.4%
Cost of deposit 2.4%
Net interest margin 3.9%
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Return on average asset 0.1%

Return on shareholders equity 1.3%
Spreads 3.3%

17 SWOT Analysis
STRENGTHS
1- Source of employment & GDP growth: There is a consensus among economists that
development of the financial system contributes to economic growth. Financial development
creates enabling conditions for growth through either a supply-leading (financial
development spurs growth) or a demand-following. It is this industry which continuously
works to secure financial stability, facilitate international trade, promote employment, &
reduce poverty around the world.
2- Hedge from risk: Whether it is natural calamity or man-made calamity banks mitigate the
after effect of the destruction by providing financial support to the victims to stand –up &
lead a peaceful life again.
3- Diversified services: Banking industry offers services from CASA to insurance, to loan,
to investment.
4- Connecting People: With the advent of new age technological advancement, banks have
made the life of the common man easier. People can transact on real time basis in many
places.
5- Changing from mere savings & loan facilitator role: Top priorities of banks now days
include regulatory compliance, improving asset quality, enhancing customer centricity,
focusing on digital convergence, and tackling competition from non-banks. Banks are
therefore making business and technology investments to change their business models.

WEAKNESSES
1- Lack of coordination: The global banking industry faces short-term uncertainty due to the
debt crises that challenge several major economies. Volatility in different market/Currencies
has created problems for the banks in order to work properly across the borders.
2- Vulnerable to risk: Since this sector deals with finances, it is the riskiest sector which can
change the fate of any business/Industry.
3- High NPA’s: Rise in retail &corporate NPA’s (Non-performing assets) is the single major
issue this sector is going through worldwide.

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4- Can’t reach under-penetrated market: Due to several conflicting objectives of

government & banks which goes hand in hand, rural areas of developing nations are still not
in the shadow of banks. Although efforts are being made for promoting financial inclusion in
the country.
5- Structural weaknesses: Such as a fragmented industry structure, restrictions on capital
availability and deployment, lack of institutional support infrastructure, restrictive labor laws,
weak corporate governance, political pressure and ineffective regulations.

OPPORTUNITIES
1- Expansion: Penetrating to the rural markets & bringing the rural masses under the
purview of organized banking will be the objective of the banks in decades to come.
2- Changing socio-cultural & demographic factors: Given the demographic shifts resulting
from changes in age profile and household income, consumers will increasingly demand
enhanced institutional capabilities and service levels from banks.
3- Rise in private sector banking: Banking industry across the world is highly regulated
&lead by their respective central banks. With the advent of private sector banks this sector is
going through structural & functional changes mainly due to the adaptation of the advanced
technologies & increased competition thereby benefiting the end customers.

THREATS
1- Recession: It is one of the major threats to the financial system of the nation. Traumatic
shock of economic crises & collapse of several businesses can affect the banks and vice-
versa.
2- Stability of the system: Failure of some weak banks has often threatened the stability of
the system.
3- Competition: Competition from NBFC’s (Non-banking financial companies) like
insurance companies & mutual fund companies can affect the business of banks.

18 CONCLUSION
MCB Bank Limited reported Profit Before Tax (PBT) of Rs. 31.01 billion and Profit After
Tax (PAT) of Rs. 22.46 billion. In comparison with the last year, Profit Before Tax has
decreased by 14.03% whereas Profit After Tax has increased by 2.59% on account of
reversal of prior year tax charges. Net markup income of the Bank was reported at Rs.
42.41 billion, down by 3.21% over last year owing to the maturity of high yielding bonds
and comparative low-interest rate environment. On the gross markup income side, the
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Bank reported an increase of Rs. 6.69 billion whereas on the interest expense side, the
Bank registered an increase of Rs. 8.09 billion over last year. To supplement its net
interest margins, the Bank remained focused on increasing its low-cost deposit base and
venture in higher-yielding assets.
On the non-markup income front, the Bank reported a base of Rs. 17.96 billion with the
growth of 11% over last year despite significant capital market volatility in the latter half
of the year. Major contributions to non-markup income growth were operational in nature
with fees & commissions increasing by 22.44% YoY and income from dealing in foreign
currencies increasing by 42.93% YoY.
The administrative expense base (excluding pension fund reversal) recorded an increase of
23.62% over last year mainly on account of amalgamation of NIB Bank Limited (NIB)
with and into MCB Bank Limited. On the provision against advances front, the Bank
continued with its recovery trajectory and posted a significant reversal of Rs. 2.90 billion.
Based on the volatility in the equity markets, net impairment on equity investments was
recorded to the tune of Rs. 3.57 billion.
The total asset base of the Bank on a standalone basis was reported at Rs. 1.33 trillion
reflecting a healthy increase of 26.19% over December 2016. Analysis of the asset mix
highlights that net investments have increased by Rs. 101.04 billion (+18.17%) with net
advances increasing by Rs. 121.24 billion (+34.83%) over December 31, 2016. The
coverage and infection ratios of the Bank were reported at 93.74% and 9.47% respectively.
On the liabilities side, the deposit base of the Bank registered a splendid increase of Rs.
187.05 billion (+23.94%) over December 2016, including Rs. 61 billion contribution from
Ex-NIB Bank Limited. The significant increase in deposits resulted in MCB achieving an
all-time high deposit base of Rs. 968 billion on a standalone basis with deposits crossing
Rs. 1 trillion mark on a consolidated basis. MCB Bank Limited continued to enjoy one of
the highest CASA mixes in the banking industry of 92.86% with current deposits
increasing by 27% and savings deposits by 19% over December 2016. Strategic focus on
current accounts resulted in an increase in concentration level to 38.94% of the total
deposit base. The market share of domestic deposit has increased from 6.79% as at
December 31, 2016 to 7.59% as at December 31, 2017.
Earnings per share (EPS) for the year was Rs. 19.56 as compared to Rs. 19.67 for 2016.
Return on Assets and Return on Equity were reported at 1.89% and 17.65% respectively,
whereas book value per share stood at Rs. 115.18.
MCB Mobile Banking continued to grow at a much faster pace with an active customer
base exceeding One million showcasing an increase of 32% over 2016.
With one of the largest ATM networks in the industry, the Bank continued to expand and
added 186 ATMs in 2017 (including transferred from Ex. NIB) crossing a mega network
size of 1,350+ ATMs, ensuring strong footprint and convenience for all its customers
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nationwide. During the year, the Bank also added 206 branches (including 170 branches
under merger) to its wide network of Branches.
The Bank also played a major role in facilitating the flow of remittances through the
banking channels in Pakistan. The Bank handled home remittances of Rs. 252 billion in
2017 with a market share of 11.64%.
Detailed analysis covering performance and achievements of respective groups against
their targets for 2017 is included in the Groups’ review section of this annual report.

19. RECOMMENDATIONS
1. Following are some of the suggestions and recommendations that I want to give on
the basis of shortfalls / weaknesses found in the bank.
2. The target rate of return on assets (ROA) of commercial banks reflects the
effectiveness and efficiency of the use of resources is the embodiment of its operating
efficiency y and management level of the important comprehensive index. Emphasis
on return on assets, and continuously improve the return on assets and achieve an
operating profit maximization should be the primary objective of Muslim commercial
bank.

3. A strong ROE is a solid signal that management is doing a good job of generating
returns for shareholders' investments. Active capital management activities will
provide better ROEs. Bank that manages larger reserves due to recent or future
investment projects will stymie their ROEs. Another determinant of the ROE is the
operating profit margin of banks. Recently, this tends to converge towards non-
interest income as net interest margins tend to cause net interest income to be
squeezed over time due to rising competition. Muslim Commercial Bank should
4. enable to raise their operating profit margins can smoothly enhance their ROEs.
Loans with higher returns will produce better profit opportunities. Alternatively, may
diversify
5. earnings through transaction and recurring non-interest income activities. MCB’s can
expand more differentiated products, such as wealth management and insurance to
improve their ROE position.
6. MCB’s lead over rivals if they more emphasis on its aggressive investment strategy
and capital strength, the investments may bolster MCB’s.
7. MCB Bank Ltd Pakistan’s largest lender by market value should plans to expand
overseas and add branches and employees at home even as economic growth slows
after the worst floods in the nation’s history. Increase staff as it expands trade
financing, remittances management and mobile-banking operations.

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8. Better managed expense-to-income ratios will then produce higher operating profit
margins. Banks that use capital more efficiently will have better financial leverage
and thus, higher ROEs. A higher financial leverage multiplier would show that banks
are able to leverage on a smaller base of stakeholders funds to produce interest
bearing assets that optimize earnings.
9. Efficient cost-control procedures may limit the growth of operating expenses leading
to higher operating profit margin. Banks poorly managed their operating expenses.
Further improvement may be necessary to enhance ROE development.
10. MCB Islamic Banking needs a research, which should be engaged in evaluating and
interpreting the ways in which the bank can flourish more and more.
11. In Agriculture Loan Sector, MCB mainly serving in Punjab province. Agriculture
loans facility should be provided to all other provinces of Pakistan as well.
12. The bank should emphasis on the organization of effective training and development
programs for its new as well as existing employees so that these are gradually updated
regarding the recent developments in the field of banking.

20. REFERENCES
All of the references and sources from where the data gathered for this report are mentioned
herewith for your kind concern.

ORGANIZATION
Annual Reports of MCB Bank Limited of Pakistan.
MCB Credit Policy
http://www.mcb.com.pk.

WEB PORTALS
http://www.sbp.com.pk
http://www.ibp.org
http://www.thebankers.com
http://www.finance.gov.pk

21 Annexes

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