Professional Documents
Culture Documents
1
2.9 Main Departments and Their Jobs---------------------------------- 24
2.10 Divisions of MCB Bank -------------------------------------------- 31
Summary of the Chapter ------------------------------------------------- 32
CHAPTER 3 ------------------------------------------------------------------ 33
PRODUCTS AND SERVICES OF MCB Bank ------------------------- 33
Introduction to Chapter --------------------------------------------------- 33
3.1 MCB Salary Club ----------------------------------------------------- 33
3.2 Current Account------------------------------------------------------- 33
3.3 Savings Account ------------------------------------------------------ 34
3.4 MCB Advisory Services --------------------------------------------- 34
3.5 MCB Islamic Banking ----------------------------------------------- 34
3.6 MCB Agri Products -------------------------------------------------- 35
3.7 MCB Home Remittance --------------------------------------------- 35
3.8 MCB Corporate Financing ------------------------------------------ 35
3.9 MCB Channel Financing -------------------------------------------- 35
3.10 MCB Local Correspondent Banking ----------------------------- 36
3.11 MCB Rupee Traveler Cheque ------------------------------------- 36
3.12 MCB Investment Services ----------------------------------------- 36
3.13 MCB Visa Credit Card --------------------------------------------- 37
3.14 Mahnama Khushali Scheme --------------------------------------- 37
3.15 MCB Khushali Bachat Account ----------------------------------- 38
3.16 MCB Investment services ------------------------------------------ 38
3.17 Capital Growth Certificate Scheme ------------------------------- 38
3.18 Fund Management Scheme ---------------------------------------- 38
3.19 Consultancy Services ----------------------------------------------- 39
3.20 Self Supporting Scheme -------------------------------------------- 39
3.21 MCB Mobile Banking ---------------------------------------------- 39
3.22 MCB Car 4 U -------------------------------------------------------- 40
3.23 MCB Master Card --------------------------------------------------- 40
2
3.24 MCB Smart Card ---------------------------------------------------- 41
3.25 Remit Express-------------------------------------------------------- 41
3.26 MCB Pyara Ghar ---------------------------------------------------- 42
3.27 MCB Virtual --------------------------------------------------------- 42
Summary of the Chapter ------------------------------------------------- 43
CHAPTER 4 ------------------------------------------------------------------ 44
ANALYSIS OF MCB Bank ------------------------------------------------ 44
Introduction to Chapter --------------------------------------------------- 44
4.1 Ratio Analysis --------------------------------------------------------- 44
4.2 Financial Ratio of MCB Bank -------------------------------------- 46
4.3 SWOT ANALYSIS -------------------------------------------------- 54
4.4 PEST Analysis -------------------------------------------------------- 56
Summary of the Chapter ------------------------------------------------- 58
CHAPTER 5 ------------------------------------------------------------------ 59
FINDING AND RECOMMENDATIONS ------------------------------- 59
Introduction to chapter ---------------------------------------------------- 59
5.1 Findings ---------------------------------------------------------------- 59
5.2 Recommendations: --------------------------------------------------- 62
Summary of the chapter -------------------------------------------------- 64
3
List of Acronyms
TD Term Deposit
LC Letter of credit
4
List of Tables
5
Executive Summary
MCB Bank Limited (Formerly Muslim Commercial Bank Limited) has
a solid foundation of over 60 years in Pakistan, with a network of over
1165 branches, over 850 of which are Automated Branches, over MCB
690 ATMs in 41 cities nationwide and a network of over 12 banks on
the MNET ATM Switch.
MCB Bank offers different products and services to its customers .The
main types of accounts are the current and savings accounts, the loan
schemes offers by MCB Bank are also much attractive with less
Markup rates and also with easy terms and conditions. Besides these
MCB Bank offers different types of services to their customers just
like MCB home remittance, MCB rupee traveller cheque etc.
6
Some of the finding or problems of MCB Bank Limited are given
bellow:
MCB Bank introduce easy and cheap way for home remittance.
7
CHAPTER 1
INTRODUCTION
Introduction to Chapter
In this chapter general introduction of the report is discussed, which
includes background of the study , scope of the study .More over the
chapter tells regarding the purpose of study foe which I conducted the
study ,methodology of study that how data was acquired ,and at the
end scheme of study is discussed.
1.2 Purpose
Internship is the capstone experience that provides me with hands-on,
real-world experience in a work setting. Ideally, internship will enable
interns to:
(a) Integrate and use my knowledge and skills from the classroom.
(d) Become better acquainted with the types of work settings in which
such competence can be applied.
8
1.3 Limitation
The study is done with the sole purpose of doing the best work but
there were certain limitation faced during the internship period. The
most important limitation from which the study suffers are:
1.4 Objectives
I worked as an internee in MCB Bank Ashraf Road branch Peshawar.
The main objectives to study in MCB Bank were:
1.5 Methodology
There are mainly two methods that are used for the collection of data.
Primary Data
9
Secondary Data
Chapter 1
Chapter 1 is introduction to report which encompasses the background
of the study. It also looks into the purpose, scope, limitation,
objectives, methodology and scheme of the study.
Chapter 2
Chapter 2 is review of the organization which consist of brief
introduction of overall banking sector, the banking sector in Pakistan.
This chapter further elaborate about the history of MCB Bank and their
overall functions across the country and also brief introduction about
the management and hierarchal structure of MCB bank.
Chapter 3
Chapter 3 consists of different products and services offered by MCB
bank. The different types of accounts offered by MCB bank, the
different types of loan schemes offered the credit cards and master
cards etc.
10
Chapter 4
Chapter 4 consists of the analysis of MCB bank which contains the
SWOT analysis their strength, weaknesses, opportunities and threats,
and also the financial analysis of MCB bank through different types of
ratio analysis like the current ratio, debt to equity ratio and so on.
Chapter 5
Chapter 5 consists of the findings through the different types of
analysis based and then according to these findings I have given the
concerned
Summary of Chapter
It is sufficed to say that this chapter is about the background, and
importantly the purpose of the study which is that to learn about the
banking work and also to analyze the financial position of the
organization. Similarly this chapter also tells regarding the
methodology of the study that what the source of data is. Now in the
coming chapter the history and importance of banking is discussed
,this chapter also includes the history of banking in Pakistan.it further
elaborates about the historical background of MCB bank, their overall
performance and their present status .It will also discuss about the
management and about different departments of MCB bank.
11
CHAPTER 2
REVIEW OF ORGANIZATION
Introduction to Chapter
First chapter was about the introduction of the report. This chapter
consists of brief introduction of overall banking sector, the banking
sector in Pakistan. This chapter further elaborate about the history of
MCB Bank and their overall functions across the country and also brief
introduction about the management and hierarchal structure of MCB
Bank.
Different authors define the term bank in different terms some are:
12
According to Timothy j. Gallagher 2003
13
2.1.2 Overall Respective Sector In Pakistan
Banking is one of the most sensitive businesses all over the world.
Banks play very important role in the economy of a country and
Pakistan is no exemption. Banks are custodian to the assets of the
general masses. The banking sector plays a significant role in a
contemporary world of money and economy. It influences and
facilitates many different but integrated economic activities like
resources mobilization, poverty elimination, production and
distribution of public finance
14
the value of Rs. 125.02 crores with the help the Pakistan notes
( Faheem, 2010).
15
growth in the first two decades. By 1970, it had acquired a flourishing
banking sector.
In 2008 the head office of MCB was shifted from Karachi to Lahore in
a newly constructed building, namely MCB House located at Sharia
Ghous-ul-Azam, commonly known as Jail Road. (MCB bank, 2012).
16
2.2.1 Nationalization
In January 1974, the government of Pakistan nationalized MCB
following the banks (Nationalization) Act 1974, subsequently, in June
1974, Premier Bank limited merged with MCB.
2.2.2 Privatization
A wave of economic reforms swept Pakistan in the late 1990s
introducing the need for privatization of state owned banks and
companies in April 1991, MCB because Pakistans first privatized
Bank, the government of Pakistan transferred the management of the
Bank to Nishat Group group of leading industrialists of the country
by selling 26% shares of the Bank. With a view to broaden equity
holding the government sold 25% of the paid up capital to the general
public. In terms of agreement between the government of Pakistan and
the Nishat Group additional 24% shares have been purchased by the
group making their holding 50%.
17
Introduction of Rupee Traveler Cheques & Photo Credit Card
for the first time in Pakistan.
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. (MCB bank, 2012).
Providing innovative
18
2.5 Values of MCB Bank
Integrity
We are the trustees of public funds and serve our
community with integrity. We believe in being the best
at always doing the right thing. We deliver on our
responsibilities and commitments to our customers as
well as our colleagues.
Respect
We respect our customers values, beliefs, culture and
history. We value the equality of gender and diversity of
experience and education that our employees bring with
them. We create an environment where each individual
is enabled to succeed.
Excellence
We take personal responsibility for our role as leaders
in the pursuit of excellence. We are a performance
driven, result oriented organization where merit is the
only criterion for reward.
Customer Centricity
Our customers are at the heart of everything we do. We
thrive on the challenge of understanding their needs and
aspirations, both realized and unrealized. We make
every effort to exceed customer expectations through
superior services and solutions.
Innovation
We encourage and reward people who challenge the
status quo and think beyond the boundaries of the
conventional. Our teams work together for the smooth
and efficient implementation of ideas and initiatives.
19
Employee Respect & Dignity
We treat each of our employees with fairness, which
includes giving constructive feedback for their
development. We celebrate diversity and seek
suggestions from all employees for improvement. We
ensure that responsibility & fairness in all our decision-
making.
Team Based Approach
We work towards achievement of our vision & mission
as a combines group. We encourage inter & intra-
departmental communications. We treat our colleagues
as our internal customers & ensure that the requirements
of internal customer focus are always met.
Quest For Quality
We ensure that each moment of our time is spent on
value adding activity. We always seek ways for
exceeding expectations of customers & colleagues. We
also ensure that we do things right, first time every time
(MCB Bank, 2012).
20
2.6 MCB Banks Performance Overview
MCB is Pakistans fourth largest bank by assets having an asset base of
770,283 million as at December , 2012, and the largest by market
capitalization having a market capitalization recorded at USD 1.2
billion at year end 2012 which was comparatively lower than USD 1.8
billion the year before, mainly on account of lower market value.
The Banks asset quality is strong with a gross NPL ratio of 8.64%.
During the last two decades, 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 and managing its non-performing loans via
improved risk management processes .MCB Bank has 1165 branches
(December 31, 2011) including local branches, and business
establishments in Sri Lanka and Bahrain including newly established
Rep. Office in Dubai, UAE. The Bank has also formed a private
company in Hong Kong (fully owned subsidiary of MCB) in
partnership with Standard Chartered Bank, handling trade transactions
of select countries in the Asia-Pacific region. MCB has been successful
in turning around its operations since its privatization and is moving
forward to set high performance standards with the continuous support
21
of its customers and leadership in banking technology. To further
strengthen its financial services base, MCB has also incorporated an
Asset Management Company in the year 2005 known as MCB Asset
Management Company. MCB has also incorporated a leasing company
in Azerbaijan in 2009. (MCB bank, 2012).
ICAP and ICMAP: 2nd Best Corporate Report Award 2011- Banking
Sector
1 Corporate finance
4 Commercial banking
22
2.7.1 Corporate Finance
Corporate finance includes underwriting, securitization, investment
banking, syndications; initial public offerings (IPO) related activities
(excluding investments) and secondary private placements.
23
Table 2.1 Board of directors
General banking
Foreign exchange
Advances/credit
2.9.1.1 Remittance
It is transfer of funds. Funds can be transferred in shape of pay orders,
demand draft, mail telegram and telegraph transfer. Payments of fees
of different organizations, fulfillment of tenders, and collection of
24
funds are the main functions of remittance. Maximum part of general
banking depends on this department.
Pay Order
Pay order is the property of person/company that has to take the benefit
of the amount being pay ordered by the concerned person. Pay orders
are made for the payment of fees, tender or issued for the payments of
dealings. These are required for the proof of payments made between
the bank and the customer in the favor of beneficiary. These are noted
in printed block letters and yearly serial numbers are issued from
computerized system.
Demand drafts are made for the beneficiary for payments, funds etc,
these are made for outstation branches of the concerned banks. An
advice is also made for the confirmation of the draft send. These are
also approved and safe way of sending amount to the beneficiary.
Mail Transfer
25
transferred in the beneficiary account. In case of physical payment
authorized signature of beneficiary are taken for the proof of amount
being paid to him and in case of transferring of amount authorized
signature of the beneficiary are checked and verified for reducing risks.
2.9.1.4 Vouchers
Vouchers are made for records and they should be completed in all
respects, the amount, date, its head, particulars, amount in words,
authorized signatures and contra advice or voucher should be present.
Vouchers are advice either debit or credit slips. They are contra of each
other. If any voucher of debit is passed its contra credit voucher should
also be passed for the balancing of accounts, their respective sheets.
It depends on those checks that are cleared inter branch and with in the
city. As the concerned branch receive any type of clearing check first
of all physical checking is taken place. For clearing procedure there
should be two days margin. These cheques have their vouchers and the
amount of the cheque and voucher should be identical. Than these
cheques are stamped and noted on receiving sheet as well as feed in to
the computerized system.
It depends on those cheques that are cleared outside the city. For
outward clearing cheques are send because the home branch has their
26
accounts but checks are of other banks. Contras of these cheques are
vouchers that are recorded in the home branch.
Any account holder that has opened the account he/she could credit
his/her account and for this purpose there should be a cheque book, so
he/she could be able to credit the needed amount whatever he/she
wishes. For the issuance of the cheque book a person is advised to fill a
requisite slip with his/her full names and the account number with two
verified signatures. These signatures are checked and then another
requisite slip prepared by the bank staff send to the NIFT, and it issues
the printed cheque books after completion of the procedure in two or
three days.
Head office issues ATM (Auto Teller Machine) cards with their PIN
(Personal Identification Number) codes and when the customer claims
for their ATM card they are checked from the list that is also issued
from the head office, and the claim is checked from the list and if the
name is found than the cards are issued by taking a signature and their
PIN codes are given to them by taking signatures on their ATM card
forms. The ATM card has been activated by the number provided at or
with the specific card.
27
2.9.2 Foreign Exchange
2.9.2.1 Lcs Establishment
Payment or Retirement
Foreign Remittances
28
2.9.3 Advances / Credit
This department deals with the approval of different kinds of loans to
different business entities. The loans, which are being approved by the
department, are kept with some securities such as bonds, properties and
any other type of asset, which is equally valuable or more than this as a
guarantee. Every branch has its own limit, if the amount of loans is
within the limit of the branch then it is being approved by the branch
but if the amount of loan is exceeding the limit then it has to make it
approved by the head office. In this case the branch stored all the
required papers and sent them to the head office for necessary action.
If the head office approved the loan then mostly the period contains a
year. And if the party requires more loan than after a year the loan has
been re-approved required that they should have the limit. In case if the
head office do not approve the loans then the return letter came back
with the reasons of not approval of loan and if the reasons have been
made approved by the concerned party then it could be sent again for
approval. This whole process is recorded in the back remain with the
bank until the party has not refunded all the amount of loan and bank
has the authority to liquidate those assets for preventing it from loss.
Types Of Advances
MCB Bank provides advances, which are of two types. These are as
following:
29
ensuring an equitable distribution of bank credit among various sectors
of the countrys economy.
1) Industrial loan
2) Commercial loan
3) Agricultural loan
30
2.10 Divisions of MCB Bank
2.10.1 Agriculture Division
Agriculture division deals with the loans and development of
agriculture sector. It has the responsibility to manage all the affairs
related to agriculture sector. This division works for the development
of agriculture in the country.
31
also directly controls all those branches, which are designed as
corporate branches.
32
CHAPTER 3
Introduction to Chapter
In the previous chapter a brief introduction/history and different types
of MCB departments are discussed this chapter consists of different
products and services offered by MCB bank. The different types of
accounts offered by MCB bank, the different types of loan schemes
offered the credit cards and master cards etc.
33
3.3 Savings Account
MCB Bank offers a wide array of savings products that suit short-term
growth and transactional needs. Our savings accounts offer attractive
profit rates as well as flexibility to transact. Savings Extra is targeted
for customers having Rs. 5 million + deposit and 365 Gold offers profit
rates on daily balances with no minimum balance requirements. In
addition, two unique products, i.e. Smart Savings and Savings
Maximizer, are special saving accounts run solely via debit cards and
other remote banking channels, offering a very competitive rate to both
high and low-end savers
34
3.6 MCB Agri Products
MCB is committed to the farming community to support their national
objectives of self-sufficiency and food security to the people of
Pakistan. Dedicated and specialized staff, supervised by the Agri
Credit Division, is posted in lending branches to cater for strong
business relationships and facilitation. The banks extensive branch
network in all the provinces and diversified product range extends our
reach of agri credit facilities to encompass both crop and non-crop
sectors.
35
themselves and increase their business capacity with their respective
business partners.
36
3.13 MCB Visa Credit Card
MCB offers a complete suite of Classic, Gold and Platinum Visa
Credit Cards focusing on providing superior services, travel privileges
and shopping pleasures. It also offers comprehensive insurance and
instalment plans, reward points and SMS alerts that give a different
feel to the world of credit cards. These unique features include i-
revolve, which makes variable mark-up rates available to customers
allowing them to repay at affordable rates
Salient Features
37
3.15 MCB Khushali Bachat Account
Salient Features
38
objectives of the scheme is to develop secondary market for
Government Securities.
Fax Press
39
3.22 MCB Car 4 U
MCB car 4 u auto finance is a power move that gets you not only a car
of your own choice but leads you best in life. It is affordable with
competitive markup, flexible conditioning and easy processing and
above all no hidden cost.
40
Cash Advance Facilities
41
3.26 MCB Pyara Ghar
MCB gives dream home at the lowest and best possible mark-up rates.
You can choose either one of our two mark-up rate options- fixed or
variable. Early repayment option tailor-made to allow making partial
prepayments at dates that suit.
25 years old or above when you apply and under 60 at the time
of maturity of the applied financing period.
Net take -Home income not less than Rs. 25,000 per month.
42
Summary of the Chapter
It is suffice to say that this chapter elaborate about the different
products and services offered by MCB bank .just like the different
types of accounts their minimum balance, their procedure and criteria
and their silent features .This chapter further discussed the different
types of loans offered by MCB bank, their markup rate ,their advance
payment and criteria etc. further this chapter includes about the
different schemes offered by MCB for home and car etc. This chapter
also includes about the different types of credit cards offered by MCB
bank .In the proceeding chapter I have done the analysis of MCB bank
through different methods just like financial analysis ,SWOT analysis
and pest analysis
43
CHAPTER 4
44
The various stakeholders of business are all interested in the analysis
of financial statements. But the focus of interest of all is not the same.
For example creditors and credit reporting agencies are interested in
finding out the credit worthiness of the firm to which they have
extended credit or intend to extend credit. Short term creditors are
interested in the short term liquidity of the business and long term
creditors are interested in the long run cash flow which the firm can
generate over the long period of time. Investors are interested in the
firms ability to sustain profitability over a period of time. Government
agencies analyze financial data for tax purposes. The internal users of
financial statement like management also analyze financial data for
planning and control.
2. Ratio Analysis
45
show a decrease percentage if the total has increased at a greater rate
than the individual item or vice versa. .
One may ponder that why there is a need to mingle with these ratios
and not take the actual figures straightforwardly. Among various
reasons one cogent reason can be put forward that ratios help in
comparison. When ratio analysts are to compare the internal
performance of the organization in relation to time, only ratios are the
viable option for them. Similarly, comparison with the other
competitors in the same industry can only be carried out with the help
of financial ratios.
46
4.2.1 Assets Turnover Ratio
Net sale (advances + investment)
Total Assets
Interpretation
This shows revenue generated per rupee investment in total assets. The
Ratio increased from 2010 to 2012.The graph shows a high increase
from 2010 to 2011as 0.82 to 0.862 and then grows slowly to 2012. So
we can interpret that MCB is effectively utilizes its resources.
47
4.2.2 Current Ratio
Current Assets
Current Liabilities
Its shows the firms ability to meet its short term obligations. The
higher the ratio, the greater is the companys ability to meet its short
term obligation as the come due. Current ratio is calculated by dividing
current assets by current liabilities
Interpretation
Current Ratio of MCB for the last three years shows an increasing
trend. In the year 2010 it was 1.12 and then it increased to 1.130 in the
year 2011 mainly due to an increase in current assets of the bank. But
in the year 2012 it just increased from 1.130 to 1.134. .This rise in the
current ratio of MCB shows the defensive approach of MCB towards
working capital. This surely improves profitability as the percentage of
current assets.
48
4.2.3 Debt To Equity Ratio
Total Debt
Shareholder Equity
Interpretation
MCBs High ward trend of Debt to Equity ratio shows that the bank is
relying in debt financing for the purpose of expansion of businesses
and investments. The ratio of 2012 as compared to 2010 has increased.
49
4.2.4 Interest Earned Ratio:
Interest Expense
This ratio shows that number of time a company can cover or meet its
financial charges or obligation.
Interpretation
The interest coverage ratio of MCB serves as one measure of the firms
ability to meet interest payments and thus avoid bankruptcy. In general
the higher the ratio, the greater the likelihood that the company cover
its interest payment without difficulty. The interest coverage ratio of
MCB has shown a decrease over the period of three years. In the year
2012, the ratio is 1.16 which show that the income in 2012 cover only
1.16 times the interest expense.
50
4.2.5 Net Profit Margin Ratio
Net sale
Interpretation
Net profit margin of MCB has shown a fluctuating trend in the year
2010 it was 3.60% but in the year 2011 it was decreased to 3.56% and
again slightly dropped to 3.26% in the year 2012. This means that
through the selling price has increased the other expenses of the bank
like operating, general administration or selling expenses has shown a
slight decrease.
51
4.2.6 Debt to Total Asset Ratio
Total Debt
Total Assets
Debt ratio shows the fraction of the companys assets that is financed
by debt. The ratio is derived by dividing a firms total debt by its total
assets.
Interpretation
52
4.2.7 Return On Equity Ratio
Total Equity
Interpretation
The ROE of MCB has shown a mix trend. In the year 2010 the ROI is
21.30% but increased in the year 2011 to 21.90% but in 2012 it comes
to 20.60%. This decrease in ROE is due to un improvement in Net
Profit Margin.
53
4.3 SWOT ANALYSIS
SWOT is an acronym for organization, strengths, weaknesses,
opportunities and threats. SWOT analysis consists of sizing up a firms
internal strengths and weaknesses and its external opportunities and
threats .It is a tool to get a quick overview of firms strategic situation.
Kotler 2001
4.3.1 Strengths
i. MCB bank has the ability to cope with pressure of competition
successfully.
ii. MCB RTCs (Rupee Traveler Cheques) are widely accepted
iii. Maximum rate of Debt Recovery.
iv. Maximum use of latest technology in banking that is
v. Having the strongest Equity Base.
vi. MCB has the most developed (Information Technology) IT
Division among the other banks in the country.
viii. Asset turnover Ratio is also increasing that shows that MCB is
utilizing its resources effectively
54
4.3.2 Weaknesses
i. Employees are lacking motivation.
ii. The borrowings has shown a tremendous increase from
Rs.25685 Million to Rs.78951 Million in just 3 years which is
not a good sign. Shows its relying on borrowings.
iii. Communication gap between different levels of management.
vi. MCB bank advances decrease bank of its high interest rate
4.3.3 Opportunities
i. By giving them attractive schemes. The bank can easily make a
remarkable growth in the Mobile banking industry and also
Remittance share it can increase which can increase its fee-
based income as trend is shifting towards that.
ii. The bank can also take advantage of the potential hydal power
of the province Now that the government has decided to build
small dams in the province the bank can invest in this field .It
will not only boost the agriculture sector in the country, but
also provide a great source of electricity which is the basic
requirement for development.
iii. As a result of the different steps taken by the Government
regarding the betterment of the economy, small borrowers are
attracted to get the financing and start small businesses. So
MCB has an opportunity to attract the customers
55
4.3.4 Threats
i. Global technological advancement.
ii. Weak Political and economic situation of the country.
iii. Reduction in the business activities in the country because of
electricity shortage and terrorism.
iv. Reduction the rate of saving in different segments of people
this is because of inflation in the country. People prefer to hold
property and gold in place of saving in the bank
v. The political interference in the bank regarding the decision of
loan and advances, promotion and appointment is a great threat
for the bank in its long-term existence.
4.4.2 Economical
i. Inflation is very high which will decrease the demand as
purchasing power is decreasing.
ii. Staff cost is increasing as basic wage rate has increased and
inflation has compelled to will compel to increase salaries.
56
iv. Interest rate is increasing so loan taking has decreased.
iii. Declining work ethics is also our problem which is mainly due
to poverty, lack of training.
4.4.4 Technical
i. Shortage of electricity is a big problem,
ii. Employees of each organization need IT training and
organization has this trend. MCB Bank will have to follow it.
57
Summary of the Chapter
A s we know that financial analysis is the backbone of any finance
students internship report so in this chapter I have done the financial
analysis of MCB bank through different financial ratios just like the
current ratio, debt to equity ratio ,asset turnover ratio, net profit margin
ratio, gross profit margin ratio etc. so that to analyze the financial
position of MCB bank and to judge their financial performance. This
chapter further elaborates about the SWOT analysis of MCB bank and
after this the PEST analysis of MCB bank is discussed on this chapter
.In the next chapter the finding of this chapter are discussed and
according to the finding I have given the concern recommendations.
58
CHAPTER 5
Introduction to chapter
In the previous chapter analysis of MCB bank are done through
different methods .this chapter consists of the findings through the
different types of analysis based and then according to these findings I
have given the concerned recommendations.
From the quantum of the profit and its financial data it can easily judge
the after privatization Muslim Commercial Bank is performing well.
Its deposits are growing day-by-day and so its profitability. The
controlling body is responsible for the productive performance of the
bank. Following is my observations and suggestion to improve the
efficiency for the development of the bank
5.1 Findings
First of all I will discuss some of the financial findings that I have find
from the financial analysis.
Asset turnover ratio has been increased from 2010 to 2012 i.e.
from 0.82 to 0.87, this shows that MCB bank is effectively
utilizing its resources.
Current ratio of MCB increase from 2010 to 2012 i.e. from 1.12
to 1.34,this rise shows the defensive approach of MCB towards
working capital.
59
The decreasing trend of interest earned ratio shows that MCB
Bank has low operating income to pay for its interest which
shows insufficiency.
Besides the financial findings there are also some general findings
from the SWOT and PEST analysis of MCB bank which are:
60
There were all latest computers in the branch. The advance
computers were increasing the efficiency of the branch and
members because all the works were completed in proper time
with no delay.
61
5.2 Recommendations:
5.2.1 Increase Deposits and decrease Borrowings
If we look at the balance sheet of the financial years 2010 to 2012,the
increase in deposits are relatively low to increase in the borrowings.
MCB bank should develop strategy, employee policies and emphasize
to increase the deposits reserves that will enable to reduce borrowings
because its not a sign of healthy speculations
MCB should start online banking throughout the country as they are
the pioneers in it, still they do not have all the branches online. They
should try to improve this area and to diminish the entire book keeping
62
methods. Online banking is impossible without the modern IT
technology. Also, in a branch having one computer, there is a lot of
work to do with it, needs more and modern computers to handle the
situations, along with the trained staff. MCB Bank is moving towards
that and is using new and advanced software but still it has to make
abrupt changes.
63
specialize services so MCB Bank can get maximum benefit from it in
order to increase net profit margin.
64
Bibliography
65
Paget, S. J., 1904. Definition of Bank. Available at:
http://notes4students.webs.com/apps/forums/topics/show/1246517
[Accessed 11th November 2013]
66
Annexures
Annexure 1:
Organization Hierarchy of MCB Bank
67
Annexure 2:
Income Statement of MCB
For the period ended 2010, 2011, and 2012
(Rs in million) 2010 2011 2012
54821 68,147 68,356
Mark-up/return/interest earned
Mark-up/return/interest expensed 17988 23,620 27,500
Net mark-up/ interest income 36833 44,526 40,856
Provision
Provision for diminution in the 444 778.526 (23.4)
value of invest
Provision against loan and 3101 2,846.52 481
advances
Bad debts written off directly 52 28.565 21
Total Provision 3597 3,654 478
Net mark-up/interest income after 33236 40,873 40,378
provision
Non-mark-up / interest income:
Fee, commission & brokerage 4130 5,117.2 5,934.5
income
Dividend income 544 1,003.272 1,197.7
Income from dealing in foreign 632.3 921.262 822.9
Currencies
Gain on sale of securities-net 411.8 735.639 824.6
Other income-net 547.7 334.8 373.89
Total non-mark-up/interest 6285 8,112 9,153
income
Non-mark-up / interest expenses
Administrative expenses 12174 15,585 17,065
(reversal) other provision-net 88.26 514.65 (187.31)
Other charges 966.440 1,402.38 599.974
Total non-markup / interest 13249 17,502 17,478
expenses
Profit before taxation 26253 31,483 32,054
Taxation-current year 8027 9,724 9,601
Taxation-prior years - 1,038 117
Taxation-deferred 1352 1,296 1,396
Subtotal Tax 9380 12,058 11,113
Profit after taxation 16,874 19,425 20,941
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Annexure 3:
69
Annexure 4:
Pattern of Share Holdings
70
Annexure 5:
Annexure :6
CURRENT RATIO
1.133
1.135
1.13
1.13
1.125
RATIOS 1.12
1.12
1.115
1.11
2010 2011 2012
YEARS
71
Annexure 7:
Annexure 8:
72
Annexure 9:
3.50%
3.40%
3.26%
RATIO 3.30%
3.20%
3.10%
3.00%
2010 2011 2012
YEARS
RATIO 0.862
0.86
0.86
0.858
0.856
2010 2011 2012
YEARS
73
Annexure 11:
ROE
21.90%
22.00%
21.30%
21.50%
21.00% 20.60%
RATIOS
20.50%
20.00%
19.50%
2010 2011 2012
YEARS
74
Branch Network Of MCB Bank Limited
Annexure 12:
Principal Office
Sindh Baluchista
n
Punjab NWFP
5 Circles 1 Circle
2 Circles
10 Circles
7 Regions 2 Regions
25
Regions 12 Regions
199
710 Branches 262
Branches Branches 38 Branches
75