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www.vustudents.ning.com
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Internship ReportMuslim Commercial Bank(MCB
Bank Limited)
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Brief Introduction of MCB BANK

• MCB is one of the leading banks of Pakistan with
  a deposit base of Rs. 368 billion and total asset
  turnover Rs. 500 billion. Incorporated in 1947,
  MCB soon earned the reputation of a solid and
  conservative financial institution managed by
  expatriate executives. In 1974, MCB was
  nationalized along with all other private sector
  banks.
•  
• The Bank has a customer base of approximately 4
  million, a nationwide distribution network of
  over 1,000 branches and over 450 ATMs in the
  market.
•  
• During the last fifteen years, the Bank has
  concentrated on growth through improving service
  quality, investment in technology and people,
  utilizing its extensive branch network,
  developing a large and stable deposit base.
• .

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Business volume of MCB Bank Limited
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Competitors

• Local Private Banks

My Bank Limited
Bank Al-Falah Limited
Bank Al Habib Limited
Askari Bank
Faysal Bank
Soneri Bank Limited
Allied Bank of
Atlas Bank
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Competitors
Foreign Banks
ABN Amro Bank
Al Baraka Islamic Bank
American Express
CITI Bank
Mashreq Bank PJSC
Standard Chartered Bank
Silk Bank
HSBC Bank
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Training Program

• During my internship I learned about different
  segments which are as follow

• Opening of different Accounts of different
  customers.
• Recording the Inward Dak of the bank.
• Record the Outward Dak of the bank.
• Clearance of cheques in different.
• Worked as Customer Service Officer (CSO)
• Learnt about the procedure of opening of the
  Letter of Credit.
• Drawing of Demand Drafts, Pay Order and Call
  Deposit Receipt.
• Making of Outward Bills for Collection. (OBC)

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Inward Dak of the Bank

• Inward Dak is the Dak that is received in the
  bank
• There is a register that is called inward dak
  register. In this register every inward dak is
  registered and recorded.
• Recording
• Serial Number
• Reference Number
• Separation and Disbursement Department wise
• Disburse Dak as quickly as it is received

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Outward Dak of the Bank

• Outward dak of the bank is the opposite to inward
  dak of the bank. In outward dak we send to the
  outsiders.
• There is a register that is called outward dak
  register. In this register all those daks that
  will be sent out from the bank are recorded.
• Recording
• Recording of Address
• Serial Number
• Then these daks are handed over to the courier
  services with which the bank has the agreement
  like MCB Muree Road branch has the agreement with
  OCS couriers.

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Acknowledgement Receipt by Courier Service
Correspondent

• When the dak is handed over to the person he
  gives the receipt against each dak this receipt
  contains the acknowledgement of receipt of dak
  and the serial number this serial number is
  recorded in the outward register for proof. If
  any dak is misplaced, we can confirm them from
  the couriers by this number for our dak.

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Customer Service Officer (CSO)

• Customer Service Officer is the person whose
  primary function is to facilitate and entertain
  the customers needs.
• As CSO I performed the following functions
• Issuing of cheque book request form
• Issuing of the deposit slips
• Issuing of ATM Cards form
• Issuing of form for online funds transfer, DD
  form, and PO form.
• Issuing of Bank Statements
• Entertain the Balancing inquiry of the
  customers.

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Inward Clearing

• Inward clearing means those cheques that are
  drawn on us but they are presented for payment at
  any other branch of any bank and are sent by that
  bank to us through NIFT for clearance.
• NIFT (NATIONAL INSTITUTIONAL FACILITATION
  TECHNOLOGY)
• The institution that has the network all over the
  Pakistan of collecting the cheques from different
  banks branches and then allocates the cheques to
  the relevant banks for clearance.
• This institution acts as clearing house which was
  previously performed by the State Bank of
  Pakistan and if there is no branch of SBP then
  this function was performed by the National Bank
  of Pakistan. Now this institution performs this
  function.

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Procedure of Inward Clearing

• Scrutiny of Cheques
• Signature Verification
• Balance Verification
• Debiting the account
• Return/Dishonor of cheque
• Advice preparation
• Notification to NIFT

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Scrutiny of Cheques

• Scrutiny of cheque means verifying the cheques
  validity in different angles.
• Signature Verification
• Once the scrutiny of cheque is done next stage
  comes to verify the signature of person on the
  cheque with the signature that is stored in the
  bank computer system.
• Balance Verification
• Here each customers balance inquiry is made for
  honoring the cheques. This balance verification
  is mandatory.

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Debiting the Account
If there is sufficient balance in the account
then the customers account is debited. It means
the amount is deducted from the account of the
customer. Dishonor/Return of Cheque we divide
this point in two sub categories, i.e. Dishonor
and Return. Dishonor of cheque If there are
insufficient funds in the account of customer
then cheque is dishonored and a cheque return
memo is also attached with it and bank charges
the fee named as bank charges. Return of
Cheque Here other than insufficient balance bank
can return the cheque for several different
reasons
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Advices Preparation
Advice is a document that is directed to the
regional head quarter of bank notifying about the
clearing of the cheques. Notification to NIFT
As we send the advice to our regional head
quarter similarly we send a notification to the
NIFT not the advice. NIFT then hands over this
notice to the banks. On receiving this
information the banks that had sent the cheques
to us will credit the accounts of the customers
if the cheques are honored by us otherwise the
bank will hand over the cheque to the customer
along with the cheque return memo.
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Outward Clearing

• Outward clearing is the opposite of the inward
  clearing
• These cheques are collected throughout the
  banking hours
• In this section bank only hands over the cheques
  to the NIFT and NIFT separates the cheques with
  respect to branch names
• Here only number of instruments are counted and
  handed over to the NIFT

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Features of Outward Clearing

• In outward clearing the person must be the
  account holder of the bank
• The cheque must relate to different branch of
  different bank
• person giving the cheque for collection must
  first fill in the slip and then present the
  cheque to the clearing officer
• Clearing officer signs and stamps the deposit
  slip and handover the counter slip to the person
  and keeps the cheque
• The cheques that were received after 300 PM are
  also collected but they are sent for clearing
  next day for clearing and remaining part of the
  deposit slip

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Steps involved in Outward Clearing

• First we differentiate the cheques with respect
  to the bank on whom they are drawn
• Different stamps are pasted on the face and back
  of the cheque
• Stamps Used in Outward Clearing
• Clearing Stamp This stamp is pasted on front of
  the cheque for clearing
• Payees Account will be credited on Realization
  This is used to stamp on the back of cheques.
  This stamp is normally used when the cheque is in
  the name of the customer
• Received Payment for MCB This stamp is used
  where the cheque is in the name of the MCB Bank.
  This stamp is also pasted on the back of the
  cheque.

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Outward Bills for Collection (OBC)

• Outward bill for collection is a procedure by
  which cheques are collected (realized) by the
  bank.
• The need for the OBC occurs when there is no
  facility of NIFT
• Procedure for Issuing the OBC
• OBC Form
• This OBC form is in duplicate containing the name
  of the bank on whom the cheque is drawn

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OBC Register

• In OBC register first we write the OBC number
  which is written on the OBC form
• On OBC form OBC number is taken from this
  registers
• Next column we write the name of the account
  holder who has the account in our bank
• In next column the amount that is written on
  cheque is recorded
• Realization of OBC
• If there are sufficient funds in the account of
  the customer they make a demand draft in the
  favor of our bank and deliver to us. This demand
  draft is ultimately transferred to the account of
  the customer.

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Demand Draft, Pay Orders and Call Deposit Receipt

• Demand Draft
• A method used by individuals to make transfer
  payments from one bank account to another. Demand
  drafts are marketed as a relatively secure method
  for cashing checks.
• Demand drafts are made for the beneficiary for
  payments, funds transfers etc... These are made
  for outstation branches of the concerned banks
• Pay Orders
• Pay orders are issued by the bank that are paid
  or realized within the city of issuing bank. It
  means MCB of Muree road branch Rawalpindi will
  issue the pay order in the favor of any branch of
  MCB that is located in only in Rawalpindi

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Procedure for the issue of DD

• Customer request for fund transfer form is
  filled.
• Credit and Debit vouchers are made
• we divide it in two shapes
• Debit and Credit vouchers against cash payment
• Cash account Dr.
• DD Payable Cr.
• Debit and Credit vouchers against amount drawn
  from the account
• Customer Account Dr.
• DD Payable Cr.

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Advice Preparation

• Advice is prepared if the value of the DD is less
  than the Rs. 100,000
• If the value exceeds the Rs.100,000 then the
  amount is transferred by online funds transfer
  method.
• After doing all the documentation the DD is
  issued

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Account Opening

• The process of opening an account is very simple
  and anybody who would like to open his account
  can do it easily without any difficulty
• Types of Accounts
• CURRENT ACCOUNT
• SAVING ACCOUNT
• TERM DEPOSITS ACCOUNT

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Procedure for Account Opening
Application Form

• Green color-coded Application Form is available
  for each type of account
• Form is given to the customer to fill in for
  opening a related account.
• Signature Specimen Card (SS)
• SIGNATURE SPECIMEN CARD is the card is
  compulsory for opening the account.
• Without getting the signature of the customers
  you cannot open the account
• These are the signatures that verify the cheque
  because these cheques are kept by the bank
• This card contains
• four signatures of an applicant
• applicant account number
• account type

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• Branch code
• title of account
• Banker uses this card at the time when he
  receives the cheque he compares customers
  signature with the signature on the cheque for
  avoiding fraud
• Account Opening Register
• The person who is opening the account of the
  persons records the necessary details into this
  register and allots an account number from this
  account opening register
• This register is maintained for each type of
  account and the account numbers are allotted
  serially
• Cheque Book
• Cheque book is issued to the customer when the
  bank accepts the account opening application form

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Letter of Thanks

• Bank prepares two LETTER OF THANKS one for the
  new customer and the other for his introducer.
  This act promotes good will among the customer
  and the introducer.

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Letter of Credit

• A letter of credit is a written instrument
  issued by a bank authorizing the seller to draw
  in accordance with certain terms and stipulations
  legal forms, that all such bill will be honored.
• Parties involved in Letter of Credit
• Account party
• Issuing party
• Exporter
• Paying or negotiating bank

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Operation of a letter of credit

• The importer or buyer contacts the seller in
  foreign country for the purchase of a particular
  good or goods.
• He settles with the seller the quantity and
  quality of the goods to be imported.
• The sale contract also includes the method of
  payment.
• The importer then submits an application to his
  bank for the issuing of an individual letter of
  credit.
• The form on which the importer employees for a
  letter of credit is supplied by the bank.

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• This form contains all the necessary details
  discussed between the importer and exporter for
  the shipment of goods which include the
  description of merchandise, port of shipment,
  port of unloading, the documents against which
  the bank is to honor the draft, the total value
  of the goods etc.
• If the documents supplied by the seller conform
  to the terms of contract the exporter will be
  paid.
• The issuing bank will not be responsible if there
  is any fraud or the merchandise does not conform
  to the sales contract.
• The obligation of the buyers bank is,
• To issue letter of credit on agreed terms and
  condition with the buyer.
• To have a proper examination of the documents.

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Structure of Finance Department
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Functions of Finance Department

• Finance Department performs following functions
• Borrowing from State Bank of Pakistan.
• Lending to Commercial Banks
• Lending to Investors.
• Lending to General Public for multi-business.

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USE OF ELECTRONIC DATA IN DECISION MAKING

• Making crucial, timely, strategic decisions is a
  must to stay a head in todays competitive
  environment
• Up to date information enabling the banks to make
  timely and prudent decisions
• Banks strength in the area of information
  technology based services has always been an edge
  in the competition

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• Technology support provides an alternate service
  delivery channels higher customer satisfaction
  levels
• MCB customer care center e dedicated customer
  call center, was formally inaugurated during 2004
• During 2005 MCB achieved a successful launch of
  mobile ATM solutions for banks valued customers

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SOURCES OF FUNDS
SOURCES OF FUNDS 2009 2008
DEPOSITS AND OTHER ACCOUNTS (Rupees in 000) (Rupees in 000)
Customers
Fixed deposits 62,651,531 61,680,332
Saving deposits 173,797,078 150,927,938
Current accounts 123,898,324 105,310,862
Margin accounts 2,910,655 3,137,434
Others 767 563
Total 363,258,355 321,057,129
Financial Institutions Financial Institutions Financial Institutions
Remunerative deposits 2,258,295 5,197,969
Non-remunerative deposits 2,088,061 3,926,526
4,346,356 9,124,495
367,604,711 330,181,624
Particular of deposits Particular of deposits Particular of deposits
In local currency 336,180,581 312,829,233
In foreign currency 31,424,130 17,352,391
Total 367,604,711 330,181,624
BILLS PAYABLE BILLS PAYABLE BILLS PAYABLE
In Pakistan 8,131,031 10,522,565
Outside Pakistan 70,059 28,903
Total 8,201,090 10,551,468
BORROWINGS BORROWINGS BORROWINGS
In 43,658,408 17,742,776
Outside 1,003,680 4,921,064
Total 44,662,088 22,663,840
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ALLOCATION OF RESOURCES Deposits and Other
Accounts
Customer 2009 2008 Customer 2009 2008 Customer 2009 2008 Customer 2009 2008 Customer 2009 2008 Customer 2009 2008 Customer 2009 2008
Fixed deposits 62,651,531 62,651,531 62,651,531 61,680,332 61,680,332 61,680,332
Saving deposits 173,797,078 173,797,078 173,797,078 150,927,938 150,927,938 150,927,938
Current accounts 123,898,324 123,898,324 123,898,324 105,310,862 105,310,862 105,310,862
Marginal accounts 2,910,655 2,910,655 2,910,655 3,137,434 3,137,434 3,137,434
Others 767 767 767 563 563 563
Total 363,258,355 363,258,355 363,258,355 321,057,129 321,057,129 321,057,129
Financial Institutions Financial Institutions Financial Institutions Financial Institutions Financial Institutions Financial Institutions Financial Institutions
Remunerative deposits 2,258,295 2,258,295 2,258,295 5,197,969 5,197,969 5,197,969
Non-remunerative deposits 2,088,061 2,088,061 2,088,061 3,926,526 3,926,526 3,926,526
4,346,356 4,346,356 4,346,356 330,181,624 330,181,624 330,181,624
367,604,711 367,604,711 367,604,711 330,181,624 330,181,624 330,181,624
Assets Assets Assets Assets Assets Assets Assets
Cash and balances with treasury banks 38,774,871 38,774,871 38,774,871 39,631,172 39,631,172 39,631,172
Balances with other banks 6,009,993 6,009,993 6,009,993 4,043,100 4,043,100 4,043,100
Lending to financial instructions 3,000,000 3,000,000 3,000,000 4,100,079 4,100,079 4,100,079
Investments 167,134,465 167,134,465 167,134,465 96,631,874 96,631,874 96,631,874
Advances 253,249,407 253,249,407 253,249,407 262,135,470 262,135,470 262,135,470
Operating fixed assets 18,014,896 18,014,896 18,014,896 17,263,733 17,263,733 17,263,733
Deferred tax assets - - - - - -
Other assets 23,040,095 23,040,095 23,040,095 19,810,476 19,810,476 19,810,476
Total 509,223,727 509,223,727 509,223,727 443,615,904 443,615,904 443,615,904
Investment Investment Investment Investment Investment Investment Investment
Held by bank Given as collateral Total Held by bank Given as collateral Total
Held for trading securities Held for trading securities Held for trading securities Held for trading securities Held for trading securities Held for trading securities Held for trading securities
Shares in listed companies - - - 177786 - 177786
Market Treasury Bills - - - 19588 - 19588
Total - - - 197374 - 197375
Availableforsale securities Availableforsale securities Availableforsale securities Availableforsale securities Availableforsale securities Availableforsale securities Availableforsale securities
Market Treasury Bills 108,056,249 31,513,525 139,569,774 64,205,902 6,287,636 70,493,538
Investment Bonds 5,454,941 - 5,454,94 2,370,664 - 2,370,664
Shares in listed companies 7,133,214 - 7,133,214 8,189,828 - 8,189,828
Units in open ended mutual fund 442,981 - 442,981 661,909 - 661,909
Shares in unlisted companies 513,843 - 513,843 515,724 - 515,724
NIT units 5,253 - 5,253 5,253 - 5,253
Sukuk bonds 400,000 - 400,000 400,000 - 400,000
Listed Term Finance Certificates (TFCs) 1,831,777 - 1,831,777 1,172,384 - 1,172,384
123,838,258 31,513,525 155,351,783 77,521,664 6,287,636 83,809,300
Heldtomaturity securities Heldtomaturity securities Heldtomaturity securities Heldtomaturity securities Heldtomaturity securities Heldtomaturity securities Heldtomaturity securities
Market Treasury Bills 3,251,110 136,038 3,387,148 1,321,816 - 1,321,816
Investment Bonds 2,244,383 - 2,244,383 2,312,812 - 2,312,812
Federal Government Securities 171,583 - 171,583 392,216 - 392,216
Provincial Government Securities 118 - 118 118 - 118
Government Compensation Bonds 286,557 - 286,557 870,771 - 870,771
Sukuk Bonds 2,753,929 - 2,753,929 2,776,260 - 2,776,260
Euro Bonds 684,810 - 684,810 4,969,516 - 4,969,516
TFCs, Debentures, Bonds and Participation - - - - - -
Term Certificates (PTCs) 4,250,714 - 4,250,714 4,259,037 - 4,259,037
Certificates of Investment - - - 250,000 - 250,000
Total 13,643,204 136,038 13,779,242 17,152,546 - 17,152,546
Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries
MNET Services (Private) Limited 49,975 - 49,975 49,975 - 49,975
MCB Trade Services Limited 77 - 77 77 - 77
MCB Asset Management Company Limited 299,980 - 299,980 299,980 - 299,980
MCB Leasing Closed Joint Stock Company 394 - 394 - - -
MCB Financial Services Limited ( Formerly Muslim - - - - - -
Commercial Financial Services (Private) Limited) 27,500 - 27,500 27,500 - 27,500
377,926 - 377,926 377,532 - 377,532
Associates Associates Associates Associates Associates Associates Associates
Adamjee Insurance Company Limited 943,600 - 943,600 943,600 - 943,600
First Women Bank Limited 63,300 - 63,300 63,300 - 63,300
Total 1,006,900 - 1,006,900 1,006,900 - 1,006,900
Investments at cost 138,866,288 31,649,563 170,515,851 96,256,016 6,287,636 102,543,652 Investments at cost 138,866,288 31,649,563 170,515,851 96,256,016 6,287,636 102,543,652 Investments at cost 138,866,288 31,649,563 170,515,851 96,256,016 6,287,636 102,543,652 Investments at cost 138,866,288 31,649,563 170,515,851 96,256,016 6,287,636 102,543,652 Investments at cost 138,866,288 31,649,563 170,515,851 96,256,016 6,287,636 102,543,652 Investments at cost 138,866,288 31,649,563 170,515,851 96,256,016 6,287,636 102,543,652 Investments at cost 138,866,288 31,649,563 170,515,851 96,256,016 6,287,636 102,543,652
Less Provision for diminution in
value of investments (3,686,520) (3,686,520) (3,044,962) (3,044,962)
Surplus / (deficit) on revaluation of available for sale securities 331,588 (26,454) 305,134 (2,761,998) (1,620) (2,763,618)
Deficit on revaluation of held for Trading securities (103,198) (103,198)
Investments at revalued amounts net of provisions 135,511,356 31,623,109 167,134,465 90,345,858 6,286,016 96,631,874
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Critical Analysis of MCB BANK Limited

• Ratio Analysis
• Liquidity Ratios
• Leverage Ratio
• Profitability Ratios
• Activity Ratios
• Market Ratios
• Statements of Cash Flow

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Liquidity Ratios
Current Ratio Current Assets / Current
Liabilities
2009 226,656,076 / 420467889 0.541   2008
204,801,921 / 363396932 0.561   2007
198,525,463 / 342463187 0.581
Quick Ratio Current Assets Investment /
Current Liabilities
2009 468,160,736 167,134,465 / 420,467,889
0.72 1 2008 406,541,695 96,631,874 /
363,396,932 0.85 1 2007 376,592,633
113,089,261 / 342,463,187 0.77 1
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Sales to Working Capital Revenue earned /
Working Capital
2009 51,616,007 / 47,700,847 1.08 2008
40,043,824 / 43,144,763 0.93 2007 31,786,595
/ 34,129,446 0.93
Working Capital Current Assets Current
Liabilities
2009 47,700,847 2008 43,144,763 2007
34,129,446
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Leverage Ratio
Time Interest Earned Ratio EBIT / FIXED INTERST
CHARGES
2009 38,519,581 / 15,364,636 2.51 2008
32,764,741 / 10,843,175 3.01 2007 28,769,732
/ 7,461,697 3.86
Debt Ratio Total liabilities / total assets
2009 439,483,714 / 509,223,727 0.86   2008
385,179,850 / 443,615,904 0.87   2007
355,365,842 / 410,485,517 0.87
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Debt to Equity Ratio total liabilities/
shareholders equity
2009 439,483,714 / 61,075,932 7.20 2008
385,179,850 / 52,244,865 7.37 2007
355,365,842 / 45,414,156 7.83
Debt to tangible net worth total liabilities /
net worth net
intangible assets
2009 439,483,714 / 69,740,013 6.30 2008
385,179,850 / 58,436,054 6.59 2007
355,365,842 / 55,119,675 6.45
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Total Capitalization Ratio Long term debts /
capital employed
2009 19,015,825 / 80,091,757 0.24 2008
21,782,918 / 74,027,783 0.29 2007 12,902,655
/ 46,704,422 0.28 Shows the proportion of
companys debt in capital structure supported by
companys operation.
Fixed Asset Ratio / Equity Ratio (Fixed asset/
total assets) / (shareholders equity / total
assts)
2009 (282,567,651 / 509,223,727) / (61,075,932
/ 509,223,727) 0.55/ .12 4.6 2008
(238,813,983 / 443,615,904) / (52,244,865 /
443,615,904) 0.54 / 0.12 4.5 2007
(211,960,054 / 410,485,517) /(454,141,456 /
410,485,517) 0.52 /0.11 4.7
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Long term assets versus long term debts Long
term assets / long term debts
2009 41,054,991 / 19,015,825 2.16 2008
37,074,209 / 21,782,918 1.70 2007 33,892,884
/ 12,902,655 2.63
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Profitability Ratios
Net Profit Margin Net Profit / Mark up Interest
Earned 100
2009 15,495,297 /51,616,007 100 30.02
008 15,374,600 / 40,043,824 100 38.39
2007 15,265,562 / 31,786,595 100 48.03
RETURN ON ASSETS NET INCOME/ TOTAL ASSETS
2009 15,495,297 / 509,223,727 0.03 2008
15,374,600 / 443,615,904 0.03 2007
15,265,562 / 410,485,517 0.04
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DuPont Return on Assets Net income / Total
Assets
2009 15,495,297 / 509,223,727 0.03 2008
15,374,600 / 44,361,5904 0.03 2007
15,265,562 / 4,104,855 0.04
Operating Assets Turnover net mark up /
operating assets
2009 51,616,007 / 1,926,183,632 0.03 2008
40,043,824 / 423,805,428 0.09 2007
31,786,595 / 392,616,756 0.08
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Return on Operating Assets Net income /
operating assets
2009 15,495,297 / 196,183,632 0.01 2008
15,374,600 / 423,805,428 0.04 2007
15,265,562 / 392,616,756 0.04
Return on Total Equity Net income after Tax /
Shareholder Equity
2009 15,495,297 / 61,075,932 0.34 2008
15,374,600 / 52,244,865 0.29 2007 15,265,562
/ 45,414,156 0.25 Indicates how much return in
age is earned by investing amount equal to equity
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Operating Income Margin Operating Income / Mark
up interest earned 100
2009 3,154,945 / 51,616,007 100 44.86
2008 21,867,566 / 40,043,824 100 54.61
2007 21,308,035 / 31,786,595 100 67.03
Gross Profit Margin Net mark up / mark up
interest earned 100
2009 35,774,544 / 51,616,007 100 69.31
2008 28,483,084 / 40,043,824 100 71.13
2007 23,921,062 / 31,786,595 100 75.25
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Return on Investment Net profit after tax/Total
assets
2009 15,495,297 / 50,9223,727 0.03 2008
15,374,600 / 443,615,904 0.03 2007
15,265,562 / 410,485,517 0.04
Asset turnover Ratio mark up interest earned /
Total Assets
2009 51,616,007 / 509,223,727 0.10 2008
40,043,824 / 443,615,904 0.09 2007
31,786,595 / 410,485,517 0.08
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Activity Ratios
Total asset turnover markup interest earned /
total assets
2009 51,616,007 / 509,223,727 0.10 2008
40,043,824 / 443,615,904 0.09 2007
31,786,595 / 410,485,517 0.08
Fixed asset Turnover markup interest earned /
fixed assets
2009 51,616,007 / 41,054,991 1.26 2008
40,043,824 / 37,074,209 1.08 2007 31,786,595
/ 33,892,884 0.94
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Dividend per share dividend / number of shares
2009 6,735,510,000 / 691,104,527 9.75 2008
9,834,175,000 / 628,276,843 15.65 2007
4,728,496,000/ 628,276,843 7.53
Earning per share net income / number of shares
2009 15,495,297,000 / 691,104,527 22.42 2008
15,374,600,000 / 628,276,843 24.47 2007
15,265,562,000 / 628,276,843 24.30
53
Price earning ratio market value per share /
earning per share
2009 244 / 22.42 10.88 2008 494.8 / 24.47
20.22 2007 434.6 / 24.30 17.88
Percentage of earning retained Net income All
dividend / Net Income
2009 15495297-6735510/ 15495297 8759787 /
15495297 0.57 2008 15374600 -
9834175 / 15374600 5540425 / 15374600
0.36 2007 15265562 4728496 / 15265562
10537066 / 15265562 0.67
54
Dividend payout ratio dividend per share /
earning per share 100
2009 11.36 /22.42 100 50.67 2008
13.20 / 24.47 100 53.94 2007 13.67 /
24.30 100 56.26
Dividend yield ratio dividend per share /
market price per share 100
2009 11.36 / 244 100 4.66 2008 13.20 /
494.80 100 2.67 2007 13.67 /434.6 100
3.15
55
Book value per share share holders equity /
number of shares
2009 61,075,932 / 619,104,527 0.04 2008
52,244,865 / 628,276,843 0.08 2007
45,414,156 / 628,276,843 0.07
56
Statements of Cash Flow
Operating cash flow to debt operating cash flow
/ total debts
2009 78,148,082 / 4,394,83714 0.18 2008
2,031,538/ 385,179,850 0.005 2007 61,899,299
/ 355,365,842 0.174
Operating cash flow to shares operating cash
flow / number of share issued
2009 78,148,082 /619,104,527 0.11 2008
2,031,538 / 628,276,843 0.003 2007 61,899,299
/ 628,276,843 0.10
57
Operating cash flow to cash dividend operating
cash flow / cash dividend
2009 78,148,082 / 2,418,865,845 0.032 2008
2,031,538 / 1,570,692,108 0.001 2007
61,899,299 / 3,141,384,215 0.02
58
Horizontal Analysis
2009 09 Vs 08 2009 09 Vs 08 2008 08 Vs 07 2008 08 Vs 07 2007 07Vs 06 2007 07Vs 06
Rs M Rs M Rs M
Balance Sheet Balance Sheet Balance Sheet Balance Sheet Balance Sheet Balance Sheet Balance Sheet
Assets Assets Assets Assets Assets Assets Assets
Cash and balances with treasury banks 38,775 -2 39,631 0 39,684 22
Balances with other banks 6,010 49 4,043 6 3,808 -42
Landings to financial institutions 3,000 -27 4,100 290 1,051 -95
Investments - net 167,134 73 96,632 -15 113,089 78
Advances - net 253,249 -3 262,135 20 218,961 10
Operating fixed assets 18,015 4 17,264 8 16,024 77
Deferred tax assets - net - - - - - -100
Other assets - net 23,040 16 19,810 11 17,869 62
509,224 15 443,616 8 410,486 20
59
Liabilities Liabilities Liabilities Liabilities Liabilities Liabilities Liabilities
Bills payable 8,201 -22 10,551 1 10,479 48
Borrowings 44,662 97 22,664 -42 39,407 65
Deposits and other accounts 367,605 11 330,182 13 292,098 13
Sub-ordinate loan - - - -100 479 -70
Deferred tax liabilities - net 3,198 632 437 -63 1,180 100
Other liabilities 15,818 -26 21,346 82 11,722 5
439,484 14 385,180 8 355,366 18

Net assets 69,740 19 58,436 6 55,120 35
60
Represented by Represented by Represented by Represented by Represented by Represented by Represented by
Share capital 6,911 10 6,283 0 6,283 15
Reserves 38,386 4 36,769 8 34,001 38
Unappropriated profit 15,779 72 9,193 79 5,131 -7
Surplus on revaluation of assets - net of tax 8,664 40 6,191 -36 9,706 87
69,740 19 58,436 6 55,120 35
61
Profit Loss Account Profit Loss Account Profit Loss Account Profit Loss Account Profit Loss Account Profit Loss Account Profit Loss Account
Mark-up / return / interest earned 51,616 29 40,044 26 31,787 23
Mark-up / return / interest expensed (15,841) 37 (11,561) 47 (7,866) 74
Net mark-up / interest income 35,775 26 28,483 19 23,921 13
Provisions write off (7,465) 85 (4,042) 32 (3,061) 156
Net mark-up / interest income after provisions 28,309 16 24,441 17 20,860 4
Non-mark-up / interest income 5,643 -3 5,791 -10 6,448 29
Non-mark-up / interest expenses 10,797 29 (8,365) 39 (6,000) -8
Profit before taxation 23,155 6 21,868 3 21,308 15
Taxation (7,660) 18 (6,493) 7 (6,042) -5
Profit after taxation 15,495 1 15,375 1 15,266 26
62
Vertical Analysis
2009 2009 2008 2008 2007 2007
Rs M Rs M Rs M Rs M Rs M Rs M
Balance sheet Balance sheet Balance sheet Balance sheet Balance sheet Balance sheet Balance sheet
Assets Assets Assets Assets Assets Assets Assets
Cash and balance with treasury banks 38,775 8 39631 9 39,684 10
Balance with other banks 6,010 1 4,043 1 3,808 1
Lending to financial institutions 3,000 1 4,100 1 1,051 0
Investment 167,134 33 96,632 22 113,089 28
Advances 253,294 50 262,135 59 218,961 53
Operating fixed assets 18,015 4 17,264 4 16,024 4
Deferred tax assets - - - - - -
Other assets 23,040 5 19,810 4 17,869 4
Total 509,224 100 443,616 100 410,486 100
63
Liabilities Liabilities Liabilities Liabilities Liabilities Liabilities Liabilities
Bills payable 8,201 2 10,551 2 10,479 3
Borrowings 44,662 9 22,664 5 39,407 10
Deposits and other accounts 367,605 72 330,182 74 292,098 71
Deferred tax liabilities - - - - 479 0
Other liabilities 15,819 3 21,346 5 11,722 3
Total 439,484 86 385,180 87 355,366 87
Net assets 69,740 14 58,436 13 55,120 13
64
Represented by
Share capital 6,911 1 6,283 1 6,283 2
Reserves 38,386 8 36,769 8 34,001 8
Inappropriate profit 15,779 3 9,193 2 5,131 1
Surplus on revaluation of assets 8,664 2 6,191 1 9,706 2
Total 69,740 14 58,436 13 55,120 13
65
Profit Loss Account Rs.(m) 2009 Rs. (m) 2008 Rs. (m) 2007 Profit Loss Account Rs.(m) 2009 Rs. (m) 2008 Rs. (m) 2007 Profit Loss Account Rs.(m) 2009 Rs. (m) 2008 Rs. (m) 2007 Profit Loss Account Rs.(m) 2009 Rs. (m) 2008 Rs. (m) 2007 Profit Loss Account Rs.(m) 2009 Rs. (m) 2008 Rs. (m) 2007 Profit Loss Account Rs.(m) 2009 Rs. (m) 2008 Rs. (m) 2007 Profit Loss Account Rs.(m) 2009 Rs. (m) 2008 Rs. (m) 2007
Mark-up / return / interest earned 51,616 100 40,044 100 31,787 100
Mark-up / return / interest expensed (15,841) -31 (11,561) -29 (7,866) -25
Net mark-up interest income 35,775 69 28,483 71 23,921 75
Provision Write off (7,465) -14 (4,042) -10 (3,061) -10
Net mark-up / interest income after provisions 28,309 55 24,441 61 20,860 65
Non-mark-up interest income 5,643 11 5,719 14 6,448 20
Not-mark-up interest expense (10,797) -21 (8,365) -21 (6,000) -19
Profit before taxation 23,156 45 21,868 54 21,308 66
Taxation (7,660) -15 (6,493) -16 (6,042) -19
Profit after Taxation 15,495 30 15,375 38 15,266 47
66
SWOT analysis of MCB Bank Limited
SWOT stands for Strengths, Weaknesses,
Opportunities, and Threats. SWOT analysis of MCB
is as under
Strengths

• One of the main strength of MCB that I think is
  the faster banking services and more prominent in
  banking industry especially in operations and
  Foreign Exchange. Speedy services and reasonable
  services charges are attracting the people to do
  their business with MCB.

• MCB has fully computerized control on its banking
  system due to this facility the MCB is in the
  list of highly automated bank.
• Internal control and monitoring of the MCB Bank
  is very effective Quality Control Expert visits
  twice a week at bank branches which helps the
  employees to improve their work.
• Due to fast banking services, prominent banking
  services and fully computerized computer system
  resulted in joining of experienced people,
  advanced management, advance setup and facilities
  gave MCB an edge over its competitors.

67
Strengths

• Most private banks have still not online all of
  their branches in Pakistan but the MCB has all
  its branches online. They have wide area network
  in all over the Pakistan, so that they cover a
  lot of portion of cash transactions and make
  customer satisfied
• The Bank has very strict rules and regulations
  about the customer's complaints. The customers
  are treated as very special persons in the Bank.
• MCB has got the Strongest Bank in Pakistan Award
  2010.
• MCB also got the Leadership Achievement Award
  2010.
• MCB has been awarded as Euro money Award 2008 for
  the Best Bank in Asia.
• Best Bank In Pakistan Award MCB has been awarded
  the best bank in Pakistan since 2000, 2001, 2003,
  2004, and 2006

68
Weaknesses

• MCB offers different types of products to the
  customers therefore majority of people are not
  well aware about the products of MCB. For
  examples if a person wants to open an account
  with MCB say it is current but he does not know
  what type of Current Account he should open does
  not know this the major weakness for the MCB.
• No entertainment facilities are available in the
  bank when customer visits Bank and wait for at
  longer time. These facilities can be the
  Newspaper. Magazines, etc.
• Out look of the MCB branches is not attractive to
  the people.
• In this era of competition most of the banks
  advertising their different products and services
  but no commercial I have seen on any channel
  regarding their products and services.

69
Weaknesses

• Equality should be observed throughout banking
  system. There should no discrimination among the
  customers. As I observed at the branch where I
  worked wealthy customers were given the more
  entertaining services while the customers who
  have low investment with the bank waited for long
  for their turn.
• At private local banks there is normally transfer
  of employees after a normal period of one and a
  half years or two years while at MCB branch where
  I did my internship most of the employees are
  working more than three years. Job Rotation help
  the employees to learn about different segments
  of the business which I think is missing at MCB.

70
 Opportunities

• MCB has got the Strongest Bank in Pakistan Award
  2010. MCB also got the Leadership Achievement
  Award 2010. MCB has been awarded as Euro money
  Award 2008 for the Best Bank in Asia.
• Best Bank in Pakistan Award MCB has been awarded
  the best bank in Pakistan since 2000, 2001, 2003,
  2004, and 2006.
• These awards create an edge in the mind of people
  to invest and borrow from this bank.
• Before privatization people were not satisfied
  with the services of the bank. After the
  privatization people have different alternatives
  to invest and borrow from. The MCB due to its
  over 10 years performance it has the
  opportunities to attract the customers

71
The primary function of the government is to
uplift the economy and then it depends on the
banks how they utilize the policies announced by
the government and the MCB is well aware of it.
That is the main reason that MCB has been awarded
the best in Pakistan in 2000, 2001, 2003, 2004,
and 2006.They have wide area network in all
over the Pakistan- if MCB can make it possible
the fast delivery of fund from abroad through
online banking, it can cover the major market of
Pakistan which still is capturing by Bills of
Exchange. 

•  Opportunities

72
Threats

• The decreased purchasing power of consumer in the
  current economic situation of the country
  affecting the business activity speed too much
  and the result is the low investment from the
  investors in new projects can create problem for
  the hank because it is working a lot in trade.
• The Competition has become severe by the entrants
  of so many banks. So to exist one will have to
  prove himself in its services through excellent
  management and will have to satisfy its
  shareholders. Otherwise it will he out the market
• New Privates Bank coped with emerging new
  Technology of IT. This ease of entry in the
  market is the threat to the MCB bank.
• Change in government policies has affected the
  banking business. Still banks have to wait to get
  permission from the State Bank of Pakistan. The
  freezing of foreign currency accounts is a vital
  example of letting people not to trust on banks.

73
Conclusion

• The profits of MCB have grown considerable during
  the last few years and this trend is expected to
  continue into the future.
• Continuously change in the economic conditions of
  the country has affected the business of the MCB.
  No doubt the profit of the business is
  increasing but it is not increasing as such rate
  as the inflation rate is increasing.
• The other major drawback at MCB bank is the
  dissatisfaction of the employees
• Currently the MCB is the leading bank in ASIA but
  the advertisement campaign of the bank is not so
  much satisfactory if they do their advertisement
  campaign as other banks are conducting they can
  be in the better position in the world.
• Therefore, we conclude the MCB has a very
  prosperous present and future, which assures the
  shareholders of wealth maximization.

74
Recommendations for improvement at MUSLIME
COMERCIAL BANK LIMITED

• MCB Bank can improve its Marketing strategies to
  acquire more promotion and mass media publicity
  by the use of effective channels of promotions
  like TV, Newspaper Advertisements. It can also
  improve its magazine publication that it releases
  each month.
• There is a criticism on the banking management
  that the salaries of the employees are decreasing
  in every succeeding year. And I think this will
  shake the confidence and working of the
  employees.
• Staff turnover particularly of trained staff
  result in financial and other losses. The amount
  spent by the bank on employment, induction and
  training of outgoing officers constitutes to beat
  till another officer should ready prove this
  work. The exodus of bank officer in the past has
  worsened the situation.
• The bank should try to give more loans to the
  small borrows as the past history shows that most
  of the loans given to the corporate borrowers
  have converted into bad debts.
• Sitting arrangement, air conditioning and new
  furniture should be facilitated

75
Recommendations

• Currently the MCB has launched the Mobile banking
  which provides the loyalty to the customers,
  where you can check your statements, check the
  balances and you can pay your bills and many more
  but there is no effective advertisement in this
  regard the bank must provide the all the
  information in this area to all the customers.
• Where I did my internship there were no parking
  facilities. Any one has to park his/her vehicle
  on the road. Parking area for the bank must be
  specified or it must be hired from some property
  owner.
• All Branches of the Bank must be online
• For improvement of internal control the system of
  compliance wing and surprise inspection system
  should work more effectively.
• I done internship, I recommend that security
  level in the bank should be enhanced especially
  where I got internship and operation of Mobile
  phones must not be allowed inside the Bank.
• Working environment, equipment, furniture, and
  staff dressing should be according to the modern
  banking style.

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• Thank You