PREFACE

Prerequisite of B.Com(Hons.) study is to undergo internship. I got the opportunity

to join the MCB Ghallah Mandi Branch, Bahawalnagar for the said purpose for a
period of 6 weeks.

Practical involvement was a great experience as interactions both with the

experienced executives and clients cemented the base of knowledge I have been
acquiring in the classroom.

This internship report includes the material about MCB and different departments
along with their working procedure.

For the completion of this project I met the various persons of these organizations.
As far as my knowledge and hard work is concerned this report will provide a good
in sight of MCB.

I have special thanks for following persons who have encouraged & guide me lot. I
learned very much under their guidance.

Mr. Ahmad Jabbar Watto Branch Manager.

Mr. Sagheer Officer.

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 Acknowledgements

Praise is to Allah, the most Gracious and Merciful, who blessed me with the
knowledge and wisdom and enabled me to overcome this task. Heartiest
gratitude to my parents without their continuous encouragement and love I
could not have accomplished this task.

I am very grateful to my advisor Mr.Syed Javed Iqbal for their continuous

help, support and time during the entire course of my internship. I am also
very grateful to all the staff members at MCB Ghallah Mandi Branch,
Bahawalnagar especially Ahmad jabbar watto and Mrs. Asma for their
guidance and encouragement

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 Dedication

I dedicate this internship report to my parents. Because of their prayers and

encouragement I have been able to complete this report

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TABLE OF CONTENTS

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EXECUTIVE SUMMARY

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Pakistan after getting its independence, did not inherit a strong banking industry
and since then saw a number of events in the industry, like the nationalization of
banks in the 1970’s. However today, the banking industry of Pakistan has been
growing over the past few years, mainly because of the consistent policies
implemented by the Government of Pakistan, including the privatization of banks
in Pakistan. Also the State Bank of Pakistan’s, monetary policy has been very
friendly toward the banking industry.

There are a number of different banks established in Pakistan, including local

incorporated commercial banks, foreign incorporated commercial banks,
development financial institutions, investment banks, discount & guarantee
houses, housing finance companies, venture capital companies, micro finance
banks and Islamic banks.

MCB Bank was incorporated in 1947 and was later privatized by the Government
of Pakistan. MCB Bank has implement different policies to make it one of the
best banks of Pakistan, which included introducing new products and services
and increase its operations by opening new branches in Pakistan.

Today MCB is one of the leading banks of Pakistan with a deposit base of about
Rs. 280 billion and total assets of around Rs.300 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 and a nationwide

distribution network of 1,026 branches, including 8 Islamic banking branches,
and over 300 ATMs, in a market with a population of 60 million.

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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. The increase in the number of employees joining MCB Bank shows that people
feel confident in MCB Bank as a prospect employer.

The stock prices and earning per share of the bank have also increased over the
years. MCB Bank promotes its products and services through print and
electronic media. MCB Bank also promotes itself by sponsoring different events.

During the course of internship I learned about documentation

requirements and record keeping for different activities and processes,
especially the documentation requirement for different kinds of financing
facilities, and documents for the product and services

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MUSLIM COMMERCIAL BANK
LIMITED

8
INTRODUCTION:

9
HISTORY

This bank was incorporated under companies’ act 1913 on 9th July, 1947
(just before partition) at Calcutta. But due to changing scenario of the
region, the certificate of incorporation was issued on 17th August, 1948
with a delay of almost 1 year; the certificate was issued at Chitagong. The
first Head office of the company was established at Dacca and Mr. G.M.
Adamjee was appointed its first chairman. It was incorporated with an
authorized capital of Rs. 15 million.
After some time the registered office of the company was shifted to Karachi
on August 23rd, 1956 through a special resolution, now recently the Head
office of MCB has been transferred to Islamabad in July, 1999 and now
Head office is termed as Principle Office.
This institute was nationalized with other on January 1st, 1974. At that time
it had 506 branches and deposits amounting to Rs. 1,640 million. Although.
MCB has a reputation of a conservative bank but nationalization also left its
effects on this institute as well and by end of year 1991 in which it was
privatized the total number of branches were 1.287 and deposits amounting
to as high as Rs. 35,029 million.
When privatization policy was announced in 1990, MCB was the first to be
privatized upon recommendations of World Bank and IMF. The reason for
this choice was the better profitability condition of the organization and
less risky credit portfolio which made'' it a good choice for investors. On
April 8th, 1991, the management control was handed over to National
Group (the highest bidders). Initially only 26% of shares were sold to
private sector at Rs. 56 per share.

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MCB is one of the leading banks of Pakistan with a deposit base of about
Rs. 280 billion and total assets of around Rs.300 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 and a nationwide

distribution network of 1,026 branches, including 8 Islamic banking
branches, and over 300 ATMs, in a market with a population of 60 million.

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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 VISION STATEMENT

To be the leading financial services provider, partnering with our

customers for a more prosperous and secure future.

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 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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 Products and Services

Personal Banking
Deposit Accounts

Khushali Bachat Account

Khushali Bachat Account, a Rupee savings account is one of MCB Bank’s

most popular products. Due to the low initial deposit, the account can be
opened by people from all walks of life and still avail the facility of daily
product profit calculation.

Mahana Khushali Bachat

MCB Monthly Khushali Scheme provides you with a steady income every
month. Just purchase a Monthly Khushali Certificate and you will enjoy a
steady income of your total deposit every month.

Pak Rupee Savings Account

MCB’s Pak Rupee Savings Account offers you attractive returns on your Pak
Rupee investment.

In addition, you have access to a countrywide ATM network convenient

cash accessibility 24 hours a day. The facility also provides you with
unlimited daily transactions with a limit on maximum withdrawal amount
through the ATM machines.

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Pak Rupee Current Account

MCB’s Pak Rupee Current Account offers you the convenience of unlimited
withdrawals i.e. access to your funds whenever you want without any
notice. There is no limit on the number of transactions you make in a day
plus you can avail finance facility up to 75% of the total deposit.

In addition, you have access to a countrywide ATM network convenient

cash accessibility 24 hours a day. The facility also provides you with
unlimited daily transactions with a limit on maximum withdrawal amount
through the ATM machines.

Pak Rupee Term Deposit

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

Saving 365

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

Foreign Currency Savings Account

MCB’s Foreign Currency Savings Account offers you attractive returns on

your Foreign Currency investment.

§ You can invest in any of the four currencies i.e. US Dollar, UK Pound
Sterling, Japanese Yen or Euro

§ Your foreign currency account is exempted from Zakat and withholding

tax

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Foreign Currency Current Account

MCB’s Foreign Currency Current Account offers you the convenience of

unlimited withdrawals i.e. access to your funds whenever you want without
any notice. There is no limit on the number of transactions you make in a
day.

　　

MCB Foreign Currency Term Deposit

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

Dollar Khushali Account

The Dollar Khushali Account, a Dollar based account was introduced in

1993 at selected MCB Bank branches. Today, you can open a Dollar
Khushali Account at over 200 branches in Pakistan.

Loan Products
MCB Business Sarmaya

“MCB Business Sarmaya” is the best Running Finance facility against

your residential property which empowers you to manage your
business dealings better. So act today and get MCB Business Sarmaya
and thus improve your business, avail lucrative opportunities and expand
your business, with absolute satisfaction of cash flows.

MCB Car4u
Life is like a chess board. You plan your career options. You analyze your
business moves. But when you really want to improve your life, you make a power
move. MCB CAR4U Auto Finance is the power move that assists you in more
ways than you ever imagined. It is affordable, with lowest mark up, flexible
conditions, easy processing and above all, no hidden costs.

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MCB Pyara Ghar
Some destinations require a long wait. Like waiting for a home of your own. But
with MCB Pyara Ghar it is now easy to step into your home and start living a real
life.

MCB Pyara Ghar is an ideal Home Finance from your own bank that lets you
Purchase, Renovate or Construct your home the way you have always wanted.
Having your own home was never so easy

Easy Personal Loan

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

MCB Master Card

Since the beginning of time, people have tried to find more convenient ways to
pay, from gold to paper money and cheques. Today, money is moving away from
distinct hard currencies and towards universal payment products that transcend
national borders, time zones, and, with the Internet, even physical space. Plastic
or "virtual" money, credit, debit, and electronic cash products, inevitably will
replace cash and cheques as the money of the future.

MCB Rupee Traveler's Cheques

MCB Rupee Traveler's Cheques 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 traveling and in all walks of life.

MCB Rupee Traveler's Cheques- The safest way to Carry Cash

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 Corporate Banking
Cash Management Services
MCB’s network of over 900 branches in Pakistan enables it to collect and
disburse payments efficiently with its cash management services. This also
enables it to offer you a choice of paper based or electronic fund transfer
solutions including collection amounts, cross branch on- line transactions etc.

Working Capital Loans

Based on the customer’s specific needs, the Corporate Bank offers a number of
different working capital financing facilities including Running Finance, Cash
Finance, Export Refinance, Pre-shipment and Post- shipment etc. Tailor- made
solutions are developed keeping in view the unique requirements of your
business.

Term Loans
MCB offers Short to Medium Term Finance to meet capital expenditure and short
term working capital requirements of our customers. The loans are structured on
the basis of underlying project characteristics and cash flows of the business.

Trade Finance Services

Under Corporate Banking MCB offers trade finance services that include an
entire range of import and export activities including issuing Letters of Credit
(L/Cs), purchasing export documents, providing guarantees and other support
services.

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 Online Services
MCB ATM Services
With a solid foundation of over 50 years in Pakistan, with more than 750
automated branches, 269 online branches, over 222 MCB ATMs in 41 cities
nationwide and a network of over 12 banks on the MNET ATM switch, MCB is
positioned at the forefront of the banking industry in Pakistan. This success has
been possible because of a never-ending drive to achieve higher levels of
excellence, constantly striving to raise the level of performance.

MCB Mobile Banking

At the forefront of technological excellence, MCB proudly introduces MCB
MOBILE BANKING. The convenience of accessing your account balance
information and mini statements whenever you want or wherever you may need
them, with comfort and peace of mind.

MCB Call Center

Keeping up with banking services can be tedious but not with MCB Bank, where
phone service is at your fingertips. Just dial our Call Centre from the comfort of
your home or office or wherever you happen to be. It offers basic banking services
for your convenience, eliminating the need for you to make unwanted trips to
your branch.

MCB Smart Card

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

The convenience and flexibility of MCB SmartCard will help you live a smarter
life. It not only helps you manage your expenses, but also eliminates undue
interest on your day to day credit card transactions. Your balance is always within
your reach and you spend accordingly.

MCB Debit Card

Now MCB brings a secure, convenient and quick payment facility that enables
you to do purchasing by using your existing MCB ATM / MCB Smart Card as a
DEBIT CARD.

　
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 Virtual Banking
MCB Virtual Internet Banking offers you the convenience to manage and control
your banking and finances – when you want to, where you want to. MCB’s Virtual
Internet Banking facility is simple and secure. And its free of cost. With MCB
Virtual Internet Banking you can access any of the banking services, 24 hours a
day, 7 days a week and throughout the year.

MCB Virtual Internet Banking offers a wide range of online services which makes
your banking accessible anytime and from anywhere.

ü Detailed Account Summary of all listed accounts.

ü Mini-statements of each of the listed accounts showing recent transaction

history for that account(s).

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

specified.

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

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

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

ü Payment of utility bills for registered Utility Companies.

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

‘Recurring’ bill payments. Option for ‘Full’ or ‘Partial’ payment based on the
payment conditions specified by a particular Utility Company.

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

salary to the corporate employees, who maintain accounts with MCB.

ü Bulk Funds Transfer for Corporate Customers.

ü Cheque Book Request for any of your listed accounts.

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

specified payments and transfers.

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

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 Islamic Banking
Deposit Schemes
For customers who are looking for a deposit opportunity where they can purse
their funds and reap halal returns on it, we offer the following products:

· Al-Makhraj Saving Account

· Al-Makhraj Ianat Account

· Al-Makhraj Term Deposit

Fund Based Facilities

Ijarah Products
MCB’s Islamic Ijarah, analogous to the English term 'leasing’, is based on
the ‘Ijarah wa Iqtina’ concept which means the sale of the asset to the
lessee after the Ijarah has matured. Under this scheme, MCB will be the
owner of the asset, and the customer (lessee) will be given the asset to use
for a certain period of time in return for monthly rental payments. MCB
will give a separate unilateral undertaking that it will offer to sell the asset
to the customer (lessee) at the maturity of the Ijarah agreement at a price
that may be equal to the security deposit amount, hence the term ‘Wa
Iqtina’.

Types of Ijarah
o Car Ijarah

o Equipment Ijarah

21
CORPORATE STRATEGIES

22
CORPORATE INFORMATION
Corporate Information
Board of Directors

Mian Mohammad Mansha

Chairman

S.M.Muneer

Vice Chairman

Members
Tariq Rafi
Mohammad Arshad
Shahzad Saleem
Sarmad Amin
Mian Raza Mansha
Aftab Ahmad Khan
Dato’s Mohammad Hussein

President & Chief Executive

Atif Bajwa

Advisor

Raza Mansha

Audit Committee

Tariq Rafi
Chairman
Mian Raza Mansha
Member
Aftab Ahmad Khan
Member
Dato’s Mohammad Hussein
Chief Financial Officer

Ali Munir

Company Secretary

23
 Abdus S. Sami

Auditors

KMPG Taseer HAdi& Co.

Chartered Accountants

Riaz Ahmed & Co.

Chartered Accountants

Legal Advisors

Mandiwalla & Zafar

Advocates & Legal Consultants

Registered Office

MCB Building, F-6 / G-6,

Jinnah Avenue, Islamabad.

Principal Office

MCB Tower
I.I. Chundrigar Road, Karachi.

Registrar's and Share Registration Office

THK Associated (Pvt.) Ltd.

Shares Department, Ground Floor,
Modern Motors House
Beaumont Road, Karachi.

24
 STRUCTURE OF MCB
PRESIDENT AND CEO

EXECUTIVE EXECUTIVE
DIRECTOR DIRECTOR

INT SAMG INSPECTION OPERATION GSD

DIV &
FRAUD
FORGERY

CONSUMER CORPORATE HRD

BANKING BANKING
GROUP GROUP

(continued)

25
CONSUMER CORPORATE
BANKING BANKING
GROUP GROUP

GENERAL
MANAGER

REGIONAL
MANAGER

CHIEF
MANAGER

MANAGER

26
STRUCTURE OF MCB – GHALLAH
MANDI BRANCH BAHAWALNAGAR

B r a n c h M a n a g e r

A s s is t a n t
M a n a g e r

A c c o u n t a n t

O ffic e r s

C a s h ie r

M e s s e n g e r

G u a r d

27
 ORGANIZATIONAL STRUCTURE

As MCB is a banking company listed in stock exchange therefore it follows

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

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

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

C) CONSUMER BANKING
These are the branches which have exposure up to Rs. 20 million and these include
all the branches which are neither corporate nor commercial branches.
Recently the organizational structure was re-designed as follows:
Province wise branches Corporate ,Consumer, Commercial
20 branches 637 branches 383 branches

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 PERFORMANCE OVERVIEW

MCB Bank Ltd. reported earnings results for the first half ended June 30,
2009. Profit before tax was PKR 11.7 billion registering a significant growth
of 10% over the reported profit before tax of corresponding period last year.
Profit after tax was at PKR 7.76 billion translating into an EPS of PKR 11.22.
During the period under review the bank's deposits showed a growth of 10%
from December 31, 2008 and closed at PKR 362 billion. Net mark-up interest
income in creased by 44%, due to a growth in CASA, which kept the increase
in cost of funds subdued in comparison to increase in interest revenues

During the year the Bank continued to make strong progress in

spite of the difficult market conditions. Revenues grew strongly
and considerable advancement has been achieved in expanding
our asset base. In addition to close focus on P&L and liquidity
situation in 2008, the Bank continued to invest in human
resources, enhancing customer segments and product portfolios
and further strengthening our controls and credit risk
management, a number of strategic action have been taken to
ensure that we are well positioned for the future and are able
excel in the years to come. The Bank has reviewed its governance
structures and has further strengthened the roles of the board,
management and staff ensure strict compliance to good
governance.

In 2008 MCB was given the award as the Best Bank in Asia by
Euro Money. This was a significant milestone for the Bank and
reaffirms the efforts and vision of the management to position
MCB at par with the best international banks.
Another key development of MCB in 2008 was the acquisition of
20%shareholding in BCB by Malayan Banking Berhad, the largest
financial institution in Malaysia. This partnership will further
improve and enhance our business processes and will strengthen
our footings on domestic and international frontiers.

Commercial Branch Banking Group, with its large network of

branches continued to drive MCB growth in 2008. they enhanced
their sales model through the introduction of a direct sales force
team and personal bankers in many branches while continuing to
strengthen their customer service quality. The year witnessed a
successful restructuring of the agriculture division and this led to
29
considerable portfolio growth. Going forwarded the group will
continue to provide support to the Bank in achieving revenue
growth and profitability while focusing on retaining strength of
credit portfolio.

Wholesale Banking Group has posted strong growth in volumes

and revenues in 2008,supported by the increase in corporate
advances by Rs.47 billion(45%). The focus in 2009 will remain on
carefully managing and extending the credit portfolio and
deriving fee income growth through its Trade products and cash
management businesses. Trade precuts division was setup in
2008 to increase Bank’s share of local and international trade and
will assist in identifying and developing new businesses,
supporting existing relationships, offering structured trade finance
solutions and launching new products.

Consumer Banking Group took the lead in broadening our

product and customer suite in 2008, as evidenced by the launch
of Banc assurance and privilege Banking businesses and further
strengthening of our alternate distribution channels. Given the
high interest environment, growth was carefully managed on
consumer assets and credit quality scrupulously monitored. The
strategic emphasis for 2009 will remain on closely monitoring
NPLs and driving rapid growth of the consumer depositing base,
Alternate Delivery Channels and Banc assurance.
Islamic Banking group has strengthened its outreach through new
branches and the development of specialized liability teams. The
group remains committed to broaden its reach in new sectors and
will offer new products to serve the needs of sits customers.

Due to the tough economic environment Treasury maintained a

defensive investment strategy in Bank’s proprietary securities
portfolio. Despite the liquidity constraints faced by the bank in
the latter half of 2008, Treasury ensured that the bank’s balance
sheet was adequately funded. Information Technology group
continued to focus on enhancing stability of our current
infrastructure. Standardization of equipment was introduced to
boost productivity and promote savings. Credit card alerts on
mobiles, utility bill payment through Virtual banking were new
applications that were introduced as well as rollout of symbols to
663 branches by the end of 2008(63% of business coverage).

The HR Group has remained active in its endeavors to attract new

employees and develop existing personnel. Recognizing its
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people as the true competitive advantage steps have been taken
to promote employee engagement and satisfaction. Areas of
focus for 2009 remain training and development, internal
relationship management and an improved performance
management system to bring our organization closer to
international standards.

Operation Group continued to focus on centralization of processed

and business continuity. Internal control Division was
strengthened and led the Bank wise efforts for compliance to the
COSO based internal control framework.

The Board of Directors continued to take steps to improve

governance in the Bank. The reform and revision in policies
initiated in 2007 on the basis of the guidelines provided by the
State Bank of Pakistan were carried further and consolidated. The
demarcation between the Board and management functions were
further clarified, the Board began to focus on its role in the
formulation of policies and monitoring of the progress of the Bank
while leaving the operational matters in the hands of the
management and staff. The coordination between the staff,
management and board was further enhanced to improve
effectiveness and cohesiveness of Bank operations. The Board
expects to continue to improve governance, strengthen financial
controls, enhance transparency, promote professionalism,
increase customer service, promote work efficiency and expand
Bank business.

31
Employees: 10,488

Shareholders: 43290

Shareholding: 628276843

32
 Financial analysis

Despite the slowdown in the economy during 2008, the Bank registered
healthy revenues for the year and witnessed a significant growth in Balance
sheet the profit before and after taxation, available for appropriation together
with the recommended appropriation is as under;

Rs.in million
Profit before taxation 21,868
Taxation 6,493
Profit after taxation 15,375
Un-appropriated profit brought forward
Transfer from surplus on revaluation of asset(net of tax) 15,375

Profit available for appropriation 20,527

Appropriations

Statutory Reserve 1,537

General Reserve 1,000
Final cash dividend-Dec.2007 3,141
Interim dividend-March 2008 1,885
Interim dividend-June 2008 1,885
Interim dividend-September 2008 1,885
Total appropriations 11,333
Un-appropriated profit carried forward 9,193

33
Due to the sudden down turned in the economy and the sharp decline in ;equity
prices, Karachi Stock Exchange placed a floor mechanism on individual security
prices whereby they could vary within the normal circuit breakout limit but not
below the floor price. This mechanism remained in place from August 28,2008 to
December15,2008, consequent to the removal of floor mechanism the KSE 100-
index fell to the level of 6,037 points against its all time high level of about 15,676
points. This resulted into significant diminution in the value of Bank’s investment
in equity share held under “Available for Sale” (AFS)category. Keeping in view
this deteriorated situation, SBP&SECP issued instructions whereby they gave the
option to companies to charge the diminution directly to equity without routing it
through profit &loss account and then while adjusting the future prices, amortize
the same on quarterly basis during 2009. total impairment loss on the basis of
market values of Dec. 31,2008 of all equity shares under AFS came to 4893.73
million.

As for as the current financials under review are concerned, profit before tax has
registered an increase of Rs.560 million over 2007 and is reported at
Rs.21.9jbillion for 2008. the Bank’s profit after tax for the year 2008 was Rs. 15.4
billion, and increase of Rs. 109million over the profit reported for the year 2007.
Interest income remained the main contributor towards the Bank’s total income.
Markup income has gained momentum in 2008 with an increase of 26% over the
previous year.

The share of markup on loans and advances (30 billion) continued to dominate the
overall composition of the markup income for the Bank(Rs.40 billion).

In non-markup income, the major contribution of 2.86 billion was from fee,
commission and brokerage income which increased by 8.8% over 2007. however,
the total non-markup income for the Bank registered a decline of Rs.657 million in
2008 compared to the previous year. This decrease was primarily due to lower
returns from equity investments.

34
Due to high inflation the cost to income ration has gone up to 24.47% from 18.57%
in 2007. however, this ration still remains one of the lowest in the industry.

Despite the challenging times faced by the Bank in 2008, the balance sheet has
witnessed considerable improvement over 2007. assets increased by Rs.34
billion-8% over the previous year whereas liabilities increased by R.30 billion-
8.4% over the previous year,=. This has resulted in an increased in shareholder’s
equity before surplus of Rs.52 billion –up by 15%over 2007.

The increase in assets was driven primarily by the increase in Advances and
lending to financial institutions which grew by 19% and 290% respectively. The
Advance portfolio showed a remarkable growth with the corporate portfolio taking
the lead. Performance was strong both I volumes and rated of return. To ensure
optimal segmental diversification the Bank executed strategic monitoring of
portfolio expansion through diversification. Adverse economic conditions and
increased discount rates have contributed to a ramp rise in non-performing loans in
the overall Banking sector. Consequently, Bank’s classified portfolio was also
adversely affected by a sharp increase in NPLs of 70% from Rs10.7 billion in 2007
to Rs. 18.3 billion in 2008. This has also been reflected in the gross NPL to
Advances ratio which has increased from4.67% in 2007 to 6.63% in 2008.

Similar to the previous yea, in 2008 Bank’s major concentration of investment

remained in Government securities, followed by shares in listed companies and a
portion in debentures &TFCs. Due to the strong and extensive branch network,
deposits of the bank have registered a growth of Rs.38 billion. This increase is
primarily driven by the growth in current deposits of 13.3% and fixed deposits
growth of 92%. The favorable deposits mix has been instrumental in maintaining
the cost of funds on the lower side.

Reported earnings per share grew from 24.30 in 2007 24.47 in 2008. The return on
Equity and return on assets have decr3eased mainly due to the increase in equity
(35%) and an increase in assets of 20%. Due to the collapse of the stock market in
2008, MCBH share price registered a blow and closed significantly lower than the
same period last year. However, despite these circumstances, the performance of

35
 MCB shares was still significantly better than other ;layers in the market
reaffirming the trust of its investor base in
SWOT ANALYSIS
STRENGTHS
1. MCB has the highest ROE amongst its
competitors
2. MCB has the highest Net Interest
Margin compared to HBL, NBP, etc.
3. It has lowest average deposit rates.
4. It has a high consumer loan growth
rate.
5. It has an extensive branch network
6. It has less exposure to textile sector as
compared to peer banks.
OPPORTUNITIES
1. MCB can focus on consumer banking
to increase yields
2. It can work to improve the conditions
of NPLs
3. During recession, it can take advantage
of decreased Cash Reserve
Requirement.
4. It can expand its Islamic banking.
WEAKNESSES
1. It has an increasing rate of NPLs
2. Its EPS growth rate is decreasing over
the past years.
3. Does not have international
recognition.
4. Though its investments are increasing
but 40% are confined to investment in
government securities only. This
reduces its returns.
5. Its return on average assets is
decreasing
THREATS
1. MCB has threat from banks like UBL
which has low cost deposit base
2. It also has threats from banks
including NBP and UBL that are
increasing their branch network to
encourage deposit raising.
3. Threats from Government if it raises
CRR and SLR.
4. It has threats from Al-falah and UBL
as far as Car Financing is concerned
5. Similarly NBP is a threat in house
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 financing.

CONCLUSION:

37
The economy of the country is booming and with the investment favorable policies
and their smooth implementation, the role of banks in today’s economy have
become an important one.
The banking industry is also reaping the fruits of this economic boom by growing
rapidly over the past few years. There are a number of mergers happening in the
economy with foreign investments coming into the banking sector.
In conclusion I would like to say that currently MCBs stock seems to be a
profitable one to invest in. This decision is supported by the thorough Fundamental
and Technical Analysis. Muslim Commercial Bank is a financially strong company
and its past & recent performance shows favorable trend in prices which may give

38
investors an opportunity to make capital gains by buying its stock or by taking long
positions for their stocks in the market.

RECOMMENDATIONS

39
 Technological Advancements
Bank Alfalah should develop a modern connectivity architecture to effectively
maintain an online connection of the branch with other branches and also the ATM
link, which may include using modern technologies like fiber cables, routers etc.
Also backup links should also be developed,
Also a proper IT department should be established in all branches, with
professional having the knowledge to maintain a secured connection with other
banks. Also scheduled backups of data should be done with in the bank.

Workshops and Counseling

Work shop programs should be conducted in every city, rather than just two
centers, for all Bank Alfalah employees. These workshops should relate to all
aspects of banking and may also be conducted with other banks as a joint program.
Also as parts of the human resource training, counseling programs should be
started for junior executives or new entrants into the bank, introducing them to
their prospects in this industry.
The lower staff employed at Bank Alfalah should also be given a chance to
succeed in life by training them in different simple jobs at the bank, which my
include sorting of cheques, phone banking etc.

Incentives
Incentive schemes should be developed for the employees that can help motivate
them, which might include:
• Personal loans and car financing facilities for all ranks of employees.
• Scholarship programs for all employees.

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 • Introducing employee awards at branch and regional levels.
• Job rotation programs to enhance the skills of employees.

Priority Banking and Business

Development Department
There is no priority banking department at Bank Alfalah, like that of other bank. A
priority banking department should be developed so as to give even more exclusive
and customized services to high end customers with large deposit accounts. Also
Business Development Department should be developed in all branches, so that
they can actively find prospect customers to take up products from Bank Alfalah.

Innovative Products
New and innovative products should be introduced by Bank Alfalah, like other
bank such as Citibank and Standard Chartered Bank develops for their customer.
For this purpose, special teams should be developed that include professional from
all departments of the banks to come with ideas. This process will increase the
number of ideas generated and even produce innovative products for the bank that
might give them the edge.

Placements of Employees
There are some departments in the bank that do not have enough employees, while
some have more than needed. All this creates inefficiencies and so the operations
manager should look at the department of the branch and see where inefficiencies
lie, in consultation of with the heads of the departments and hire individuals where
there are less employees or rotate employees from other departments.

Amenities in Branch
There should be a prayer room developed in all branches as many employees want
to pray, but do not have the proper place to do it. Also work like sorting, which

41
takes up a lot of space should be done in a separate place and amenities like
television and internet connection should be placed in the common room, so as to
give employees a relaxing environment when they have a break.

Internship Report
On

Submitted to:
Mr. Syed Javed Iqbal

Submitted by:
Abdul Majid

Department of commerce
The Islamia University of Bahawalpur
Bahawal Nagar Campus

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