Internship Report MCB Bank Ltd

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CHAPTER NO. 1

1.1 OBJECTIVE OF STUDYING THE ORGANIZATION

Following are the main objectives of selecting MCB Bank Limited for studying.

To observe the finance system of the bank, to know how banks support the

economy of the country.

To implement theoretical knowledge in practical field.

To understand the management system of the bank which consists of

experienced professionals of the bank.

Want to scrutinize newly and highly integrated computerized system for

doing banking transactions.

To know banks activities i.e. its services and products.

The bank is certainly one of the leading banks in Pakistan, the reason being I

selected it for Internship and learning purpose.

1.2 ABOUT MCB

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. This led to deterioration in the quality of the Bank’s loan portfolio and

service quality. Eventually, MCB was privatized in 1991.

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 and managing

its non-performing loans via improved risk management processes.

1.3 BRIEF HISTORY

At the time of independence in 1947 the banks services were very badly affected and

by June 30, 1948, the number of offices of scheduled banks came down to only 81 in

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the territories comprising Pakistan; but by December 31, 1973 there were following

14 scheduled Pakistani commercial banks with 3323 offices all over the Pakistan

and 74 offices in foreign countries.

1. National Bank of Pakistan

2. Habib Bank Limited.

3. Habib bank (Overseas) Limited.

4. United Bank Limited.

5. Muslim Commercial Bank Limited.

6. Commerce bank limited.

7. Standard bank Limited.

8. Australasia bank limited.

9. Bank of Bahawalpur Limited.

10. Premier bank limited

11. Pak bank limited.

12. Sarhad Bank limited

13. Lahore commercial banks limited.

14. Punjab Provincial Cooperative bank limited.

MCB was founded by ISFHANI and ADAMJEE families in Calcutta on July 9,

1947. MCB is not an overnight success story rather good track of services are

responsible for the leaps and bounds progress. After the partition of the Indo-Pak

Subcontinent, the bank moved to Dhaka from where it commenced business in

August 1948.In 1956,the Bank transferred its registered office to Karachi, where the

Head Office is presently located. Thus, the bank inherits a 52 year legacy of trust in

its customers and the citizens of Pakistan.

MCB Bank Limited is one of the leading banks of Pakistan and continuously

awarded “Best Domestic Bank in Pakistan” from 2002-2006 and also ranked in AA

+ Rating. The Management of the Bank maintained its strategy of concentrating on

growth through improvement in quality services, investment in technology &

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people, utilizing its extensive branches network, large & stable deposit base and

managing its non-performing loans.

MCB Bank Limited is the only Bank in Pakistan who listed on London Stock

Exchange and issued Global Depository Receipts (GDRs) worth 150 Million

Dollars. MCB Bank is first ever in the history of the country to be listed on the

London Stock Exchange for trading on the Professional Securities Market which is

now being followed by NBP & Others. The Bank’s Registered Office is at MCB

Building, F-6/G-6 Jinnah Avenue, Islamabad and Principal Office at MCB Tower, I.

I. Chundrigar Road Karachi.

Subsidiaries:

The bank has two subsidiaries:

Adamjee Insurance Company Ltd.

First Women Bank Ltd

In the late 1990 after long period of time newly established Democratic Government

of Pakistan have decided to sell nationalized assets of country for better utilization.

In April 1991, MCB became Pakistan’s first privatized bank. The government of

Pakistan transferred the management of the Bank to National Group, a group of

leading industrialists of the country by selling 26% shares of the bank.

In terms of agreement between the Government of Pakistan and the National Group,

the group, making their holding 50% has purchased additional 24% shares. Now,

25% is purchased by the Government, which shall be sold in the near future.

The name of bank has been changed from MUSLIM COMMERCIAL BANK LTD

to MCB BANK LTD. The name to change was felt due to the reasons that bank was

mainly known and popular as a MCB BANK.

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1.4 NATURE OF THE ORGANIZATION

MCB is in it’s over 50 years of operation. It has a network of over 1026 branches all

over the country with business establishments in Sri Lanka and Bahrain. The branch

break-up province wise is

Punjab (57%)

Sindh (21%)

NWFP (19%)

Baluchistan (3%) respectively

Over 750 of which are automated branches, Over 197 MCB ATMs in 35 cities

nationwide and a network of Over 12 banks on the MNET ATM switch.

In 2005 the total No. of Employees are 9,377 and No. of Accounts are 4,248,399.

In (2005, 2004, 2003, and 2001) MCB has received the Euro money award for the

4th time in the last 5 years. MCB won the "Best Bank in Pakistan".

In 2000 and 2007 win the award of “Best Domestic Bank.” In 2004, 2005 also has

win Asia Money awards for being "The Best Domestic Commercial Bank in

Pakistan".

Vision Statement

“Challenging and Changing the Way you Bank”.

Mission Statement

“MCB Bank’s team of committed professionals is dedicated to maintaining long

term customer relationships through outstanding service and convenience”.

OUR VALUES

Trust “We are the trustees of public funds and serve with integrity & commitment. Ethical

behavior is of critical importance to us. We adopt full compliance with internal and

external policies and procedures, operating within the legal framework”.

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Customer Focus

‘We continuously seek to exceed our customer’s expectations, forging and

maintaining long term relationships”

Innovation

“We strive to be the market leaders in innovative products and services offering

customized financial solutions with flawless execution”

Teamwork

“The diversity of our people is our strength. We inspire and challenge each other –

working together to achieve synergy”

Achievement

“Our people are our most valuable asset. We are committed to a result oriented

culture. Our goals are clear and merit is the only criterion for reward” Social Responsibility

“As responsible citizens we contribute to the social welfare of the community we

live in.”

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1.5 Business volume of Muslim Commercial Bank:

Rupees in million 2003 2004 2005 2006 2007

Profits

Operating profit 6,656 6,746 13,830 20,069 20,856

Profit before taxation 3,612 4,057 13,018 18,500 21,308

Profit after taxation 2,230 2,431 8,922 12,142 15,266

Balance sheet

Shareholders fund 11,108 14,552 23,307 40,844 55,120

Deposits from customers 211,511 221,069 229,345 257,461 292,098

Investments 128,276 67,194 69,481 63,486 113,089

Advances to customers 97,200 137,317 180,322 198,239 229,732

Total assets 272,323 259,173 298,776 342,108 410,485

Information per ordinary shares

Earnings (Rs) 7.28 7.21 21.36 23.40 24.30

Cash dividend (Rs) 1.25 1.50 1.50 2.00 2.50

Dividend payout ratio (%) 37.80 34.65 19.22 32.61 51.45

Net asset value at the year end(Rs) 36.24 43.16 55.64 74.76 87.73

Market value at the year end (Rs) 51.40 58.70 167.80 246.10 399.95

Capital adequacy ratio (%) 0.00 9.64 12.54 18.65 17.88

Reference:

The abovementioned data is taken from Annual reports of MCB and

www.mcb.com.pk

Analysis of Business volume of MCB:

As we see last five years progress, the bank made substantial progress, recording

strong growth in revenues and earnings. The profit is increased year by year due to

vast business activities done by MCB i.e. deposits from customers, investments, as

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well as advances to customers and shareholders fund due to these funds the return is

increased year by year.

Due to increase in return share market value is also increased and earnings per share

are also increased. This means people are more interested in investing in MCB due

to high return. As we see year 2003, profit after tax was Rs. 2230/- but in 2007, this

profit increases up to Rs. 15266/- only because of high investments and advances to

customers.

On other hand due to increase of business volume the dividend payout ratio as well

as capital adequacy ratio also increases. So we can say the business volume of

Muslim Commercial Bank increases year after year due to its good establishment

and maintaining of adequate internal control and procedures for implementing

strategies and policies by its management.

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1.6 NUMBER OF EMPLOYEES

MCB bank since its incorporation has the more potential bank not only for its

customers but also for its employees. MCB bank offering great working

opportunities for all the people who are interested to do job in MCB bank and with

passage of time employees is increasing as its business volume is increasing because

MCB bank provide enhanced career opportunities with dynamic work employees

are motivated with higher salaries according to their education and experience level

currently round about 9946 employees are working in MCB bank including

contractual and permanent staff

Total numbers of employees = 9946

STAFF OF THE BRANCH CONSISTS OF 13 MEMBERS

DESIGNATION NO OF EMPLOYEES

Branch Manager 01 Grade I Operation Manager 01 Grade I Customer Service Officer 01 Credit Manager 01 Grade III General Banking Officer 02 Grade III Cashier 01 Grade III Cash Officer 01 System Administrator 01 Gun Man 02 Peons 02

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1.7 PRODUCTS AND SERVICES

MCB ATM Services

(a) MCB ATM Card

MCB ATM Network is the largest and most advanced of its kind in the country, and

is part of MCB's continuing efforts to provide customers with convenience that suits

all requirements most. MCB ATM has operated globally.

Card Categories

MCB ATM Regular Card

The MCB ATM Regular Card allows withdrawal of up to Rs. 10,000 per day and a

maximum of 3 withdrawals per day per card.

MCB ATM Gold Card

The MCB ATM Gold Card allows withdrawal up to Rs. 25,000 per day and a

maximum of 6 withdrawals per day per card. The cardholder has to make at least

two transactions to withdraw the full amount of Rs. 25,000

BILL PAYMENTS:

MCB easy bill pay offers unmatched convenience to pay utility and mobile phone

bills or re-charge prepaid mobile phone accounts.

MCB is the only bank that offers coustomers, 3 convenient options of making bill

payments to PTCL, SSGC, KESC, Mobilink, and Ufone. MCB Smart Card or MCB

ATM Card Holder can easily pay their bills or re-charge their prepaid mobile phone

account.

ACCOUNTS Saving Account MCB’s Rupee Savings account is the most convenient way to manage savings. Its

basic features are:

Low average balance required

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Profit is paid on customers account on a half yearly basis

Cash deposit and withdrawal facility at hundreds of MCB branches

across Pakistan (conditions apply)

Withdraw cash through Pakistan’s largest ATM network.

Customer can use an account to pay bills 24 hours a day, 7 days a week

through Virtual Banking

Current Account

MCB’s Rupee Savings account is the most convenient way to manage savings. Its

features are given as below:

Low average balance is required. Unlimited free of cost transaction facility at

concern branch. Profit is paid on account on a half yearly basis.

Term Deposit

A MCB term deposit scheme is also valuable to suit customer’s requirement.

Customer can avail on choice of 01 month, 3 months, 1 year, 2 years, 3 years, 4

years, and 05 years term deposit. Its benefit includes half yearly profit payment.

Customer can avail credit facility up to 75% of total deposit.

Basic Banking Account

In compliance with the directives of State Bank of Pakistan via BDP Circular No.

30, issued on November 29, 2005, the Basic Banking Account has been launched

with effect from February 27, 2006. This product has been introduced to facilitate

the low income group as well as the existing account holders who wish to convert

their regular savings or current account into Basic Banking Account.

The Basic Banking Account is a current account and can be opened with a minimum

initial deposit of Rs. 1000/- only. Account holders will be allowed 2 deposit

transactions (either cash or through clearing) and 2 withdrawals (cash or clearing)

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each month. All customer-initiated transactions over and above this limit will be

charged a transaction fee.

Foreign Currency Accounts

This account offers very attractive returns on Foreign Currency investment.

Customer can open a foreign currency Savings account in any of the four currencies

i.e. US Dollar, UK Pound Sterling, and Euro. Its features are as below:

Unlimited transaction facility.

Low balance requirement .

Profit credited to account on a half yearly basis.

Account holder can avail a credit facility up to 75% of the total deposit

value.

A foreign currency account can be opened at any of MCB foreign exchange dealing

branches.

SMART CARD / DEBIT CARDS

By using of this product customer can manage expenses. MCB is the only bank to

introduce a debit card that gives the option to choose from domestic and

international cards for local and global usage respectively.

MCB VISA:

It provides the conventional credit card services in a manner that is superior in

comparison. MCB Visa is the most secure, affordable and rewarding credit card.

MCB Visa is accepted at all ATMs across Pakistan as well as at 27 million

acceptance locations worldwide.

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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.

LOANS

Term Loans:

An individual can gain and benefit the most through MCB Consumer Banking.

MCB provide friendly, efficient and attentive personalized banking services - a

unique banking relationship experienced by each MCB client.

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.

FINANCING

Trade Finance

MCB corporate banking provides a 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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INVESTMENT BANKING

MCB’s Investment Banking Team has emerged as a leading player in Pakistan's

Investment Banking arena. The Team handles advisory, corporate finance and

capital markets related transactions. Within these areas, the team has developed

expertise in:

Private Placements

Debt/Equity Underwriting

Term Finance Certificates

Loan Syndication

Arrangement of Non- Fund Facilities

Mergers and Acquisitions

Corporate Advisory

MCB VIRTUAL BANKING

MCB Virtual Internet is to manage and control customer’s banking and finances –

when they want to, where they want to. MCB’s Virtual Internet Banking facility is

Simple

Secure

Free of cost.

Individual Users/ Corporate Users

MCB Virtual Banking - is a safe and convenient way to manage and control banking

and finances. This service meets customer’s both (individual’s and corporate)

essential banking needs. MCB Virtual Internet Banking is a fully Internet-based

service, so customers are not required to download any additional software.

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CHAPETR No. 2

2.1 ORGANIZATIONAL STRUCTURE

MCB relies on strong, lasting relationship with its customers and on its reputation

for stability and security for its continued process. MCB extends its philosophy to its

technology strategy but not perusing technology for technology's sake. However,

MCB learns from the mistakes of others especially in "consumer banking". We let

others get in first, take the hit, and find out the flows. Said MCB officials - and has

installed efficient and effective system for processing and delivering information.

Some directors are the personnel of the MCB Bank and others are successful

business person and executives of other major organization. Nineteen members are

included in board of directors.

2.2 MAIN OFFICE DEPARTMENTS (HEAD OFFICE)

The head office is operationally in charge of central affairs including the delegation

of powers and authority to the regional head quarters throughout the country. All the

senior management team works in the Head office of MCB bank is situated in

Karachi. And it’s all branches, regional offices, corporate branches and overseas

branches and online branches and representative offices work according to rules and

regulation set by the head office.

Following are the departments that are working at head office:

Administration

Credit Management

Investment Banking

Human Resource

Information Technology

Corporate Planning & Budgeting

Finance & Treasury

International Division

Inspection & Audit

Law Division

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Marketing & Development

Trustee Division

Local Branch Network:

MCB Bank Limited has a vast network of 1026 branches within Pakistan. The

network of 1026 branches enables the Bank to generate a substantial and stable

deposit base, provide a wide range of banking products and other financial services

and diversify lending risks geographically, as well as on the basis of credit and

customer type. (Annexure-I attached)

BOARD OF DIRECTORS OF MCB:

An executive board comprises of 10 members in total Mr. Mian Muhammad Mansha

is the Chairman of the board while Mr. Atif Bajwa has been designated as the

President and the Chief Executive. The board supervises the affairs of the bank and

also provides future guideline for progress and prosperity.

Board of Directors

Mian Mohammad Mansha Chairman

S.M.Muneer Vice Chairman

Tariq Rafi Member

Shahzad Saleem Member

Sarmad Amin Member

Dr. Muhammad Yaqub Member

Mian Raza Mansha Member

Dato' Mohammad Hussein Member

Aftab Ahmad Khan Member

Atif Bajwa President / CEO

Audit Committee

Tariq Rafi Chairman


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Human resource Committee




Shahzad Saleemn Member

President Member

Risk Management & Portfolio Review Committee

Shahzad Saleem Chairman

Tariq Rafi Member

Sarmad Amin Member



Committee on Physical Planning, IT System & Contingency Arrangements

Sarmad Amin Chairman

S. M. Muneer Member


President Member

Business Strategy & Development Committee


S. M. Muneer Member

Shahzad Saleem Member




President Member

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Chief Financial Officer

Ali Munir

Auditor’s

Riaz Ahmed & Co

KPMG Taseer Hadi & Co

Principle Office

MCB 15 main Gulberg, Lahore

Registrar's and Share Registration Office

MCB 15 Main Gulberg, Lahore

M/s. THK Associates (Pvt.) Limited

State Life Building No.3,

Dr. Ziauddin Ahmed Road,

Karachi

2.3 ORGANIZATIONAL STRUCTURE OF MCB BRANCH AABPARA:

Mr. Abdul Basit is acting as a branch Manager in Aabpara Branch Islamabad.

Operational Manager Mr. Kaleem of the branch handled the 10 subordinates. This

team is also headed by Mr. Abdul Basit.For effective handling of branch; it has been

categorized into three segments with different people handling each category. These

categories are:

a) Foreign Trade Manager

b) Operations Manager

c) Credit Manager

A) FOREIGN TRADE MANAGER:

Foreign trade manager is to responsible for exports and imports of funds. He is to

responsible in front of branch Manager.

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B) OPERATIONAL MANAGER;

Operational Manager is to be responsible of :

Accounts Department

System

Remittances

Clearing

General Services

C) CREDIT MANAGER:

Credit Manager is to look after all credit facilities like , Term Loans, Running

Finance facilities etc.

FIELDS OF ACTIVITIES OF MCB BRANCH AABPARA:

The purpose of banks is to provide some services to the general public. The main

functions and services which MCB Bank Limited Aabpara Branch provides to

different peoples are as follows.

1) Open Different accounts for different peoples

2) Accepting various types of deposits

3) Accepting various types of deposits

4) Granting loans & advances

5) Undertaking of agency services and also general utility functions, few of those are

as under:

a) Collecting cheques and bill of exchange for the customers.

b) Collecting interest due, dividend, pensions and other sum due to customers.

c) Transfer of money from place to place.

d) Acting an executor, trustee or attorney for the customers. ‘Providing safe custody

and facilities to keep jewellery, documents or securities.

e) Issuing of travelers cheques and letters of credit to give credit facilities to travel.

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f) Accepting bills of exchange on behalf of customers.

g) Purchasing shares for the customers.

h) Undertaking foreign exchange business.

i) Furnishing trade information and tendering advice to customers.

* Annexure III attached

2.4 DEPARTMENTS OF MCB BANK

Organizations cannot function without proper arrangements for its specific takes and

duties. “The process of grouping jobs according to some logical arrangements” is

called departmentalization. MCB Bank Ltd is divided into five departments.

Following are five types of the departments established in the said branch to

facilitate the customers.

Deposits Department

Remittances Department

Clearing Department

Advances Department

Foreign Exchange Department

Deposits Department:

Deposit department is one of the most important and main department of the bank. It

performs the vital function in the bank because it deals with the supply of money to

the bank. Deposits are the inputs of a bank. Deposits department is just like a heat,

as it function other department also run, otherwise the whole system paralysis.

Each and every bank tries its best to increase their deposits. Deposits depict the

financial strength of a bank. Muslim Commercial Bank Limited is a unique and

crucial institution, which is able to increase credit in the country.

Current account.

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Saving account

Fixed account

Remittances Department:

Remittance department performs the function of remitting funds i.e. to transfer funds

for customers from one location to another. The transfer of funds may be from one

branch to another or from one bank to another

Remittances mean “the transfer of money or fund from one place to another place

through bank”. It may be “inland remittance” or “Remittance”

Within locality.

Out side locality.

Within Locality:-

When a branch situated in Islamabad is required to send the draft to any other branch

situated in the same locality, the process will say to be within locality. I.e. MCB

corporate branch Islamabad, send any draft to MCB Aabpara branch, this is known

as within locality.

Pay Order

Pay order is used for payment within the cities; the main purpose of pay order is to

make payment in record this payment in the bank as evidence. Bank charge the

commission for its services. The purchaser fill an application form, which includes

the amount of payment or order, the name of the payee and complete address of

purchaser and payee application form is also singed by the purchaser.

Outside locality:-

Outside locality is an important type of inland remittances. Outside locality means

the transfer of money payable outside the city i.e. MCB corporate branch Islamabad,

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sent any draft to a branch situated in Peshawar city. It is commonly done through the

following three means.

(This report has been written on the experience and knowledge gained and applied

for the analysis of MCB Bank Branch Islamabad.)

Telegraphic transfer.

Demand draft

Mail transfer

Bank Draft

Telegraphic Transfer:

Telegraphic transfer is an important mode of remittance. It is the quickest mean of

transferring the funds from one place to another place by the use of telephone or

telegraphic.

Now a day, new technology is used for this purpose i.e. fax, e-mail. The big traders

and businessman use this method of remittance in this method of remittance the

purchaser is not responsible for the dispatch.

Demand Draft & Pay Order:

For safe, speedy, and reliable way to transfer money, Muslim commercial bank

Demand Drafts and pay orders are available for customers at very reasonable rates.

Any person whether an account holder of the bank or not, can purchase a Demand

Draft from a bank branch. A demand draft is an order drawn by a bank on its branch

or on another bank in a different place requiring the later to pay on demand the sum

of money specified in the draft. Pay order is just like demand draft except the pay

order is made for local transfer of money whereas demand draft is meant for

remittances of funds from one city y to another.

Mail Transfer:

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Mail transfer draft is one of the bank modes of remittance. Mail transfer is issued by

one branch of bank to another branch of the same bank by instructing to branch to

pay the other branch by issuing mail transfer receipts.

In M.T the purchaser is not responsible for dispatch, but the bank will be responsible

for dispatch.

Bank Draft:

Bank draft is the most important type of remittance. Draft is an instrument issued by

a bank. Draft is issued by one branch to another branch out of the city. The

difference branches of same bank can issue the bank draft to each other and it is also

called the banker cheques i.e. the main branch of MCB in Islamabad issued the draft

to the MCB Peshawar.

CLEARING DEPARTMENT:

It is an association of banks; usually setup in a given locality for the purpose of

inter-changing credit claims. Nearly, everywhere this function is performed the

Central Bank of country. In Pakistan, the areas where there is no Central Bank

branch the function of clearing house is performed by NBP.

In undertaking the process of interchanging credit the following procedure is adopt

in banking business, when a creditor ask for same payment, it is always the Cheque

through which the payment is asked for, but there arise two situation when the payee

asks for payment through Cheque. The payee may be account holder in the same

bank.

When the payee is an account holder in the same bank, then the Cheque is directly

transferred from one A/c to other, and the total assets and liabilities of the bank

remain the same. But in practice, it is often that the payee has A/c in some other

bank. Then in such cases the payee deposits Cheque in his bank drawn on some

other bank. The bank with which the Cheque is deposited becomes the creditor of

the drawer’s bank. The debtor bank will pay this amount of the Cheque by

transferring it from cash reserves if there is no offsetting transaction.

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The clearance house is the branch of Central Bank of Pakistan or NBP in case of

area where no Central Bank Branch is available. The messengers of the various

commercial banks gathered at the clearance house and transferring Cheque payable

by other banks while collecting drawn on their banks. A summary sheet is prepared

describing the number of Cheques received and delivered by a bank at the clearance

house. Total of these in and out Cheques are collected. Then the difference with a

given bank is paid or received from the account maintained at the Central Bank.

Normally, the banks maintain two books for clearing house.

Inward clearing book

Outward clearing book

FINANCES / ADVANCES DEPARTMENT:

Besides deposits the other major function of the bank is to advance money to the

client. This function of the bank contributes great deal to the revenues of the bank.

Due to its importance for the banker’s success, this area is given special importance

and attention.

The primary purpose of this department is to encourage small business to take loans

and help them in their business. The bank earns from the advancement of loan to the

people or organization and charges a certain percentage of interest on it and bank

earns profits. Besides deposits the other major function of the bank is to advance

money to the client. This function of the bank contributes great deal to the revenues

of the bank. Due to its importance for the banker’s success, this area is given special

importance and attention.

The bank also makes advances to small size businesses and construction companies

etc. Many MCB branches are having department for granting advances to the

borrowers.

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By Cash Credit:

Through this credit facility, the bankers advances loan to the borrower after having

tangible asset as a security. Main characteristics of this facility is that the total

amount is not given to the borrower at one rather it is given in installments, or

whenever required. The borrower has to pay the interest only on the amount

outstanding against him. This credit facility is very liked by large commercial and

industrial enterprises.

The cash credit facility is given through hypothecation or pledging of goods. Some

requirements in hypothecation:

Custody of stock remains with the borrower.

Banks lien on the stock.

Stock hypothecated must be insured against ire etc.

Customer must submit the stock report on monthly basis.

Frequent stock verification to be done by MCB.

Bank may sent officers or staff in order to supervise verification.

Some characteristics of pledging assets against loan.

Stocks are pledged with the bank under banks lock and key.

Stock must be duly insured against fire and burglary.

On monthly basis stock report has to be prepared by the borrower duly

incorporating delivery of goods, if any during the months.

Delivery of Goods / stock is made against cash payments.

By Discounting Bills Of Exchange:

This credit is a very advanced form of advancing money / credit to the borrower. It

is also termed as factoring. In this facility the bank purchases the bills of exchange

from the borrower. The bank gives face value of the bill to the borrower after

deducting interest on the remaining period required for the bill to mature.

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FOREIGN EXCHANGE DEPARTMENT:

For international Business Transaction the banks utilize the services of its foreign

exchange department. This plays very crucial and important role in International

trade. The services which Foreign Exchange Department of the bank offer is the

parallel banking with general banking, an additional function of important and

export business controlled by State bank of Pakistan.

After the closing down of the London operations prior to privatization, MCB was

left with no foreign branches and operations. In 1994 as planned the bank opened up

its international operations by inaugurating its branches in Dhakha and Colombo.

More branches are operating in Pettah, Srilanka and Chittagang. Access to Middle

East and Africa is in progress.

In MCB its Foreign Exchange Department as per State Bank of Pakistan regulations

carries out the Intentional Banking. The State Bank of Pakistan exercise full control

over the Foreign Exchange Business. No transaction can be considered effective

without permission from the State Bank of Pakistan under Foreign Control Act,

1947. Foreign Exchange Regulations are issued through the Exchange control

Department of the State Bank of Pakistan.

Any transaction in the International Banking shall be carried out at rates determined

by the State Bank of Pakistan. For this purpose the State Bank of Pakistan fix the

rate of US dollar. This is done by formula approved by State Bank of Pakistan and

was published daily by Foreign Exchange Rate Committee in Karachi Head Offices.

It also makes sure that the rates approved are conveyed to the branches on the same

day.

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2.5 STRUCTURE AND FUNCTION OF THE ACCOUNTS

DEPARTMENT:

* Annexure IV attached “Hierarchy of Accounts Department” .

Accounts department is responsible to keep the record of each and every transaction

and prepare reports about the amount of deposits and advances and sent to Head

office or State Bank of Pakistan on monthly, quarterly and yearly basis.

Functions of Accounts Department of MCB Branch :

The accounts department of MCB Branch Aabpara deals with various routine

activities for the bank. The main activities performed by it are:-

a) Budgeting

b) Reporting

c) Maintenance & depreciation of fixed assets

d) Miscellaneous functions

Budgeting

Accounts department of a MCB Branch Aabpara, for a year makes budget of

branch. Fiscal year of bank starts from January 01 and ends on December 31. The

accounts department starts preparing budget from October for the next year.

Reporting:

The accounts department, in the form of reports, clubs the details of various

departments together. Each and every minute detail is provided in weekly, monthly

and annual reports. The reports are submitted to head office, SBP and to the

government. The accounts department prepares many reports, of which the most

common are:-

27

Statement Of Affairs

Income & Expenditure

Business Report

SBP Report

Outstand Receipt Report

Currency Wise Deposits Report

Maintaining of Fixed Assets & their Depreciation:

Accounts department maintains the record of all the assets and charges depreciation

on them. The bank normally uses the straight-line method to compute the

depreciation.

It is calculated on monthly basis and charged yearly. Bank not only depreciates the

existing assets but also the assets but also the assets transferred in and transferred

out.

Miscellaneous Functions:

The accounts department also performs some other miscellaneous functions like

Closing Entries

Daily activity checking

Report Generation

Minor expense recording

Closing Entries:-

Accounts department also passes the closing entries on monthly, 6 monthly and

yearly bases to calculate the profit and analyze the overall performance for a certain

period.

28

ii. Daily Activity Checking:-

All the operations performed in various departments of MCB Bank Aabpara Branch

Islamabad are computerized. The functions are performed through the customized

software. In order to facilitate double-checking of all the transactions done, every

concerned official also passes vouchers and cheques manually. At the day end all the

vouchers passed by various officers working in different departments are given to

Accounts Department. Furthermore the I.T. department also prints a very bulky

report of all the transactions / entries which have been fed into the computer system

of the branch that day. When both of these things are at the desk of concerned

officer, he performs the job of tallying the daily activity report with all the

corresponding vouchers and cheques, in order to track down any discrepancy.

iii. Report Generation:-

The reports generated by the accounts department on a daily, weekly, monthly, bi-

yearly and yearly are written in a proper format. It is neither necessary nor possible

to get acquainted by all of these reports in a short period of time. Some of the

common reports are:-

Daily Advance and Deposit Position:-

Daily Exchange Position

Daily Fund Management

Closing Reports

Monthly Assets & Liabilities

Monthly Budget Review Report

Monthly Monitory Statement

Monthly Performance Review Report

Monthly fixed investment

29

From these statements, five reports carry extreme importance. The five reports are:-

Daily position of advances and deposits

Statement of affairs

Daily exchange position report

Fixed assets statement

Monthly review of performance.

Minor Expense Recording:-

The account department of MCB Bank Aabpara Branch has to record even the minor

expenses of the branch like tea for the staff, stationery for the branch.

30

C HAPTER N O. 3

3.1 FINANCE AND ACCOUNTING OPERATIONS

General Banking:

It is backbone of banking. It is one of the major departments of MCB. It consists of

following departments:

Accounts Department

Current Department

Remittance Department

Clearing Department

Cash Department

Accounts Department:

Every transaction which takes place recorded in the computer so all transactions in

different departments are forwarded to account department. Since all vouchers from

different departments are forwarded to current department. Following are different

functions performed by this department:

Preparation of Financial Statements for different time span

Maintain all accounts of different departments

Calculation of profit on different schemes

Calculation of markup on different advances

Preparation Different types of reports for State Bank

Daily position of cash & every accounts

Matching daily summaries of all departments with ledger

31

Current Department:

This department maintains all formalities of the accounts and account holders like it

account name, account holder’s name, code number and full address. Different

cheques debit and credit voucher come form different departments like Token,

Clearing, Remittances, Cash, Foreign Exchange, Advances and posted against

different accounts. The fund deposited in the MCB bank can be classified under the

main heads:

Current account

Saving account

Term /call deposits

Account Opening:

To open an account the customer have to meet the general banking manager with an

introducer (the person who is going go introduce that person in the bank) and get an

application form used for account opening. Different color-coded application forms

are available for each type of account. Along with the form a card for specimen

signature is also supplied to customer.

Accounts Types :

Though in theory there many types of accounts but commonly account operators can

be classified in one of the following categories, each have different documentation

requirements:

Single

Joint

Partnership

Private Limited

Public Limited

32

Current Accounts:

Current deposits are those which are payable to bank whenever demanded by the

customer. Bank does not pay any profit on current deposits. There are of different

scheme of saving deposits, which are classified under different duration purpose and

rate of interest. Fixed deposits are those deposits which are by the bank under the

conditions that they will not be payable on demand but will be payable under fixed

or determinable future time date.

Activities Of The Organization Remittances:

The need of remittance is commonly felt in commercial life particularly and in every

day life general. By providing fund transfer service to the customer the bank earns a

lot of income in the form of service charges. This department deals with local

currency remittance i.e. remittance from one city to another without actually

carrying the currency.

Inland Remittances:

The term inland remittance means transfer of funds from one branch to another

within country through following instruments:

(TTs) or-Demand Draft (DDs) or

Telegraph/Telex Transfers

Mail Transfer (MTs).

Pay Order (PO)

Cash Department:

In cash department both deposits and withdrawals go side by side. This department

works under the accounts department and deals with cash deposits and payments.

This department maintains the following sheets, books, ledger of account:

33

Cash received voucher sheet.

Cash paid voucher sheet.

Paying-in-slip

Cheque Book

Cash balance book

Cash department is performing its job completely through computers. Only two

peoples are working in cash department named Mr. Raheem OG-III and Basit Aftab.

The only instrument that can be used to withdraw an amount from an account is the

Cheque book. Cashier manually inspects the Cheque for following:

Signature & date

Cross cutting

Drawee's a/c title

Amounts in words & figures

Two signatures at the back

The cheques should not be stated as post dated. If in the Cheque there May

discrepancy regarding any of the aspects described above the Cheque is returned to

the customer for rectification. On other hand if the Cheque is valid in all respects,

the cashier enters the necessary inputs in the computer and posts the entry so that

account balance is updated.

The cashier at the same time maintains the “Cash Voucher Received Record Sheet".

Then inspect the signature of the customer cancellation mark of checking officer and

stamp of “POSTED” is placed on Cheque before hand over the cash to customer.

Cash Received:

For depositing the cash into customer’s accounts, there is need to fill in the paying-

in-slip giving the related details of the transaction. This paying-in-slip contains the

date, a/c/no, a/c title, particulars, amount being deposited and details of the cash.

There are two portion of the paying-in-slip. The depositor signs the one part of the

paying-in-slip one is retained by the bank to show an acceptance of the entries made

34

in the slip. The paying-in-slip serves as a voucher to update to computerized

transaction ledger.

The cashier is responsible to receive both the paying-in-slip and cash from the

depositor. The cashier checks the necessary details provided in the paying-in-slip

and counts the cash before he/she tallies with the amount declared in the slip. If the

amount does not tally with the cash given, the deposit is not entertained until the

customer removes the discrepancy. On the other hand if the two amounts tally, the

cashier fills in the “Cash voucher received Record Sheet” and assigns a voucher no.

Accountant verifies all the entries in the two documents, if the entry in the two

documents tally with one another, the accountant authenticates the two by singing on

the two documents and posting stamps on the slip. One part of the slip is then

returned to the customer and other is given to the computer operator.

The 2nd cashier posts the transaction entries in computer ledger. This ledger contains

the a/c no, a/c title, voucher no, voucher date, transaction code, transaction amount.

After posting these entries, computer display before posting balance and after

posting. On every transaction computer generates an output of transaction ledger. He

assigns the stamp “POSTED” on the voucher to show voucher transaction entries are

posted.

Cash Book Balance:

At the end of the working day cashier is responsible to maintain the cash balance

book. The cash book contain the date, opening balance, detail of cash payment and

received in figures, closing balance, denomination of government notes (Currency).

It s checked by manager. The consolidated figure of receipt and payment of cash is

entered in the cash book and the closing balance of cash is drawn from that i.e.

Opening Balance of Cash + Receipts - Payments = Balance

The closing balance of today will be the opening balance of tomorrow.

35

Clearing Department:

All the external functions of clearing are carried by NIFT (National Institute of

Facilitation Technology) while the internal operations are performed by clearing

department which would be discuss later. NIFT is providing tremendous facilitation

having error rate of 0.3%. It is just like any courier service which takes the cheques

of other banks and delivers the cheques of that branch to it.

Each bank has collected cheques as behalf of their customer but these cheques are

not drawn on their own bank so in the clearinghouse, they hand over these cheques

to respective banks on which these cheques are drawn. Similarly each bank receives

cheques from other banks if any.

The operation of clearing refers to the collection of cheques drawn on other banks.

These cheques may be drawn on UBL, HBL, NBP, or any other bank of Pakistan.

The respective clerk collects all cheques and enters them in clearing Register. Then

he affixes stamps on these cheques and sorts out cheques of different banks and

prepares schedule for them. These cheques are sent to clearing house. State Bank of

Pakistan has extended the service of Clearing House. MCB will receive all the

cheques drawn by other banks. Finally they exchange their cheques mutuality. MCB

representative will give cheques of UBL, HBL, ABL, NBP, and SBP to their

representatives, and get the cheques drawn on MCB from these representatives.

Outward Clearing:

Clearing cheques received during the day are meant to be presented for clearance in

the next days clearing. Clearing cheques must bear clearing stamp. Necessary

endorsement must be completed such as payee’s account credited etc. All the

cheques must be sorted out as of the same city and of the other cities.

Schedules showing the total number of instruments and amount must be mentioned.

Voucher and voucher sheets and retained one copy of schedules will be kept by the

accountant for overnight. The copy of the schedules retained must be preserved for a

period of 3 moths and then destroyed.

36

3.2 ROLE OF THE FINANCIAL MANAGER

Financial manager is concerned with acquisition financing and management of

assets with some overall goals in mind

The financial manager of MCB bank limited like all other financial manager has

responsibility to make decision about three major areas.

Investment decision

Financing decision

Asset management decision

Investment decision:

The investment decision is the most important decision of the bank s three major

decisions. Ali Munir Chief financial officer of Muslim commercial bank limited

begins with determination of total amount of assets needed to be held by the bank. In

2007 total assets are 410,485,517,000 and the amount, which is invested in different

areas, is 113,089,261,000.

Financing:

The second major decision of any organization is financing decision. Financial

manager of MCB view dividend policy as an integral part of bank s financing

decision. Dividend payout ratio determines the amount of earning that can be

retained in the firm. Retained a greater amount of the current earnings in the firm

means that the fewer dollars will be available for current dividends payments. The

value of dividends paid to the shareholder must therefore be balanced against the

opportunity cost of retained earnings cost as means of equity financing. Financial

manager know the mechanics of short-term loans, entering into the long-term

arrangement or negotiating a sale of bond or stock.

37

Asset management decision:

The third important decision of any organization is assets management decision.

Once the assets have been acquired and appropriate financing provided these assets

must still be managed efficiently. The financial manager is charged with varying

degrees of operating responsibility requires that the financial manager be more

concerned with management of current assets then with that of fixed assets. A large

share of responsibilities for management of fixed assets would reside with operating

manager who employs these assets.

38

3.3 USE OF ELECTRONIC DATA IN DECISION-MAKING

Making crucial, timely, strategic decisions is a must to stay a head in today’s

competitive environment. Work continues on the banks date warehouse, which is

being equipped for providing the management with accurate, up to date information

enabling them to make timely and prudent decisions.

The bank remains focused on using technology for improving customer services

standard and expanding the range of products being offered and other technology

based solutions.

Banks strength in the area of information technology based services has always been

an edge in the competition and has been a source of considerable strength in the

expansion and the management of the customer base of the bank.tecnology support

provides an alternate service delivery channels higher customer satisfaction levels.

During 2004 various technology initiatives were successfully implemented. The 07

branches were open during the year. Most of branches were operational with on line

banking from day one of their respective operations. After the soft opening during

2004, MCB customer care center – e dedicated customer call center, was formally

inaugurated during 2004. Its primary objective is to provide one window service to

our valued customer in terms of their telephonic enquiries.

During 2005 MCB achieved a successful launch of mobile ATM solutions for banks

valued customers. Using wireless GPRS technology, these ATM on wheels can be

placed at strategic locations at peak times to server the customer needs.

39

3.4 SOURCES OF FUNDS Deposits and Other Accounts

2003 2004 2005 2006 2007 (Rupees '000) Customers Fixed deposits 21,451,676 14,081,390 13,296,121 33,297,203 32,202,230 Saving deposits 127,413,624 133,538,585 137,067,311 136,872,384 151,555,718 Current accounts_non

remunerative 58,583,576 69,722,193 74,331,042 81,658,304 95,966,877

Marginal accounts 2,351,820 2,011,324 2,568,306 2,447,944 2,589,309 Others 75,439 121,994 41,396 4,336 4,288

209,876,135 219,475,486 227,304,176 254,280,171 282,318,422 Financial institutions

Remunerative deposits

1,634,167 442,983 183,338 249,506 9,233,602

Non-remunerative deposits

1,091 1,150,689 1,857,664 2,932,161 546,042

1,635,258 1,593,672 2,041,002 3,181,667 9,779,644 Total 211,511,393 221,069,158 229,345,178 257,461,838 292,098,066 Particulars of deposits In local currency 200,435,978 209,328,090 217,017,086 213,494,049 278,068,722 In foreign currency 11,075,415 11,741,068 12,328,092 13,967,789 14,029,344 Total 211,511,393 221,069,158 229,345,178 227,461,838 292,098,066

Bills Payable

Bills payable 2003 2004 2005 2006 2007 In Pakistan 8,384,794 7,560,165 8,510,322 7,075,421 10,447,928 Outside Pakistan 11,526 6,519 26,352 14,258 31,130 8,396,320 7,566,684 8,536,674 7,089,679 10,479,058 Borrowings from financial Institutions In Pakistan (local currency) 32,294,560 6,095,476 24,693,569 20,304,629 35,497,881 Outside Pakistan (foreign currency) 333,391 1,495,388 2,683,933 3,638,847 3,908,950

32,627,951 7,590,864 27,377,502 23,943,476 39,406,831 Particulars of borrowings from financial institutions Secured Borrowing from State Bank of Pakistan 3,639,631 4,493,473 4,980,519 9,040,700 8,066,539

Others - 1,782,900 1,970,562 2,932,817 2,932,600 3,639,631 6,276,373 6,951,081 11,973,517 10,999,139 Repurchase agreement borrowings 27,463,192 498,901 19,473,049 11,263,929 26,931,342

Unsecured Agent balances 327,690 685,202 494,007 - - Others 591,737 617,027 976,350 Call borrowings 605,701 130,388 459,365 89,003 500,000 1,525,128 815,590 953,372 706,030 1,476,350 32,627,951 7,590,864 27,377,502 23,943,476 39,406,831 *Reference: Data obtained from Annual statements of MCB and www.mcb.com.pk.

40

3.5 GENERATION OF FUND

2003 2004 2005 2006 2007 (Rupees '000) Markup/return/ interest earned

On loan and advances to: - Customers 4,599,015 4,927,838 12,086,305 19,144,743 21,952,387 - Financial Institutions 268,566 185,386 284,972 86,455 141,613

On Investments in: 4,867,581 5,113,224 12,371,277 19,231,198 22,094,000 - Available for sale securities 4,420,162 3,162,828 4,337,124 3,911,514 7,519,820

- Held to maturity securities 714,494 543,167 643,328 1,025,963 856,023

5,134,656 3,705,995 4,980,452 4,937,477 8,375,843 On deposits with financial institutions - - - 82,445 133,972

On securities purchased under resale agreement 298,502 190,172 261,478 689,962 548,202

On money at call - - - 589,536 291,940 Others 69,255 74,472 143,025 247,443 342,638 10,369,994 9,083,863 17,756,232 25,778,061 31,786,595

Gain on sale of seurities Federal Government Securities - Market treasury bills - - 686 686 1,228 - Pakistan investment bonds - - 54,670 6,089 2,709 - Other Federal govt.

securities - - 811,539 2,350 -

Shares/ certificates/ units - Listed - - - 560,381 1,496,928 - Unlisted - - - 36,009 -

Term finance certificates - - - 350 - 2,041,260 804,419 866,895 605,865 1,500,865

Other Income Rent on property/ lockers 40,511 41,751 42,886 53,435 51,999 Net profit on sale of property and eqpt 41,914 39,324 - 24,903 13,032

Gain on sale of non-banking assets - - 24,664

Exchange income on import/ export bills purchased 52,879 65,341 55,477 60,732 64,161

Liability no longer required written back - - -

Bad debts recovered 667,454 60,053 54,906 51,872 28,135 Compensation for delayed income tax refunds - - 495,234 44,802 -

Others 540,841 369,538 411,409 334,761 405,886 1,343,599 576,007 1,084,576 570,505 563,213

41

3.6 ALLOCATION Of FUNDS

Deposits and Other Accounts 2003 2004 2005 2006 2007 (Rupees '000) Customers Fixed deposits 21,451,676 14,081,390 13,296,121 33,297,203 32,202,230 Saving deposits 127,413,624 133,538,585 137,067,311 136,872,384 151,555,718 Current accounts_non

remunerative 58,583,576 69,722,193 74,331,042 81,658,304 95,966,877

Marginal accounts 2,351,820 2,011,324 2,568,306 2,447,944 2,589,309

Others 75,439 121,994 41,396 4,336 4,288 209,876,135 219,475,486 227,304,176 254,280,171 282,318,422 Financial institutions Remunerative

deposits 1,634,167 442,983 183,338 249,506 9,233,602

Non-remunerative deposits

1,091 1,150,689 1,857,664 2,932,161 546,042

1,635,258 1,593,672 2,041,002 3,181,667 9,779,644

Total 211,511,393 221,069,158 229,345,178 257,461,838 292,098,066

Particulars of deposits

In local currency 200,435,978 209,328,090 217,017,086 213,494,049 278,068,722 In foreign currency 11,075,415 11,741,068 12,328,092 13,967,789 14,029,344 Total 211,511,393 221,069,158 229,345,178 227,461,838 292,098,066

Assets

2003 2004 2005 2006 2007

(Rupees '000)

Assets Cash and balances with treasury banks 24,053,669 23,833,253 23,665,549 32,465,976 39,683,883

Balances with other banks 1,302,592 5,708,323 1,469,333 6,577,017 3,807,519

Lending to financial instutions 10,430,450 10,965,297 9,998,828 21,081,800 1,051,372

Investments 128,276,842 67,194,971 69,481,487 63,486,316 113,089,261 Advances 97,200,179 137,317,773 180,322,753 198,239,155 218,960,598 Operating fixed assets 4,582,823 7,999,821 8,182,454 9,054,156 16,024,123 Deffered tax assets - - 191,967 172,373 - Other assets 6,477,064 6,154,370 5,464,426 11,031,450 17,868,761 272,323,619 259,173,808 298,776,797 342,108,243 410,485,517

*Reference:

Data obtained from Annual statements of MCB and www.mcb.com.pk.

42

Investments

2003 2004 2005 2006 2007 (Rupees '000) Held-for-trading securities Shares in listed companies - - 66,056 - 230,752

Available-for-sale-securities Market treasury bills 87,819,612 3,186,553 24,429,260 36,872,804 85,264,988 Federal Investment bonds 1,251,444 - - - - Pakistan investment bonds 24,155,518 4,721,435 2,039,818 1,352,350 2,726,418 Federal Government securities - - - - - Shares in listed companies 3,415,532 3,833,352 5,034,777 5,810,827 7,388,550 Units in open ended mutual funds - - - 118,595 1,662,063 Shares in unlisted companies 491,124 461,100 443,369 537,012 515,333 NIT units 453,938 9,557 83 5,253 5,253 Sukuk Bonds - - - - 400,000 Listed term finance certificates 748,455 608,862 1,173,320 1,450,659 1,136,821

118,335,623 12,820,859 33,120,627 46,147,500 99,099,426 Held-to-maturity securities Market treasury bills - 39,388,049 22,570,514 - 216,881 Federal Investment bonds - 480,500 - - - Pakistan investment bonds - 2,532,406 2,467,983 2,439,089 2,377,654

Federal Government securities 1,429,852 1,097,199 992,861 825,719 704,928 Provincial govt. securities 15,118 118 118 118 118 Government compensation bonds 870,771 870,771 870,771 870,771 870,771 Sukuk Bonds - - 759,767 1,573,478 1,785,475 Euro bonds 605,606 3,286,190 2,971,758 3,019,135 3,299,630 TFCs, debentures, bonds and

PTCs 3,314,467 3,580,526 1,876,119 2,387,836 1,346,566

Certificate of investment - 1,100,000 1,500,000 3,550,000 500,000 6,235,814 52,335,759 34,009,891 14,666,146 11,102,023 Subsidiaries MNET Services (Pvt) Ltd 49,975 49,975 49,975 49,975 49,975 MCB Trade service Ltd - - 77 77 77 MCB asset Management Co. - - - 299,980 299,980 Muslim commercial financial

services (Pvt) Ltd 7,500 7,500 7,500 7,500 27,500

57,475 57,475 57,552 357,532 377,532 Associates Adamjee Insurance Company

Limited 943,600 943,600 943,600 943,600 943,600

First Women bank limited 63,300 63,300 63,300 63,300 63,300 1,006,900 1,006,900 1,006,900 1,006,900 1,006,900 Investment at cost 125,635,812 66,220,993 68,194,970 62,178,078 111,816,633 Less: Provision for diminution in the value of investment

(868,852) (695,976) (547,424) (363,019) (468,288)

Add: Surplus/ deficit on revaluation 3,509,882 1,669,954 1,767,885 1,671,257 1,740,916

Investment at revalued amounts 128,276,842 67,194,971 69,481,487 63,486,316 113,089,261

*Reference: Data obtained from Annual statements of MCB and www.mcb.com.pk.

43

CHAPTER NO. 4

4.1 CRITICAL ANALYSIS OF MCB BANK IN THE LIGHT OF

PRACTICAL EXPERIENCE

Internship gives me the exposure to the world by meeting and dealing with the

different kind of people every day, which has given boost to my confidence and

experience. So first of you enter in to any organization for Internship/or for job most

important thing is your communication skill. So which thing helped me and boosts

my confidence was communication skill. As we have studied in our course about the

communication skills and presentations during MBA gave me the confidence to

speak with the employees and customers and communicate effectively and

efficiently with the customers.

Similarly as in marketing we told about the importance of the customer I observed it

in my internship. In my observation I have seen how the Manager and other

employees deal the customers. And as a student it was best opportunity for us to

study the behavior of the employees inside the organization, their dealing with the

customers and relationship between them and employees as all these things we only

studied in the Organization Behavior and Human Resource Management. We can

say that internship is basically the practical implementation of the entire theoretical

course which we have studied during our course of MBA.

44

4.2 FINANCIAL ANALYSIS:

BALANCE SHEET

Financial Statement Muslim Commercial Bank Limited Balance Sheet As on 31st December 2003 2004 2005 2006 2007 (Rupees '000) Assets Cash and balances with treasury banks

24,053,669 23,833,253 23,665,549 32,465,976 39,683,883

Balances with other banks

1,302,592 5,708,323 1,469,333 6,577,017 3,807,519

Lending to financial intuitions

10,430,450 10,965,297 9,998,828 21,081,800 1,051,372

Investments 128,276,842 67,194,971 69,481,487 63,486,316 113,089,261 Advances 97,200,179 137,317,773 180,322,753 198,239,155 218,960,598 Operating fixed assets 4,582,823 7,999,821 8,182,454 9,054,156 16,024,123 Deferred tax assets - - 191,967 172,373 - Other assets 6,477,064 6,154,370 5,464,426 11,031,450 17,868,761 272,323,619 259,173,808 298,776,797 342,108,243 410,485,517 Liabilities Bills payable 8,396,320 7,566,684 8,536,674 7,089,679 10,479,058 Borrowings 32,627,951 7,590,864 27,377,502 23,943,476 39,406,831 Deposits and Other accounts

211,511,393 221,069,158 229,345,178 257,461,838 292,098,066

Sub-ordinated loans 1,599,360 1,598,720 1,598,080 1,597,440 479,232 Liabilities against assets subject to finance lease - - - - -

Deffered tax liabilities

707,306 269,499 - - 1,180,162

Other liabilities 6,372,596 6,525,999 8,611,600 11,171,496 11,722,493 261,214,926 244,620,924 275,469,034 301,263,929 355,365,842 Net assets 11,108,693 14,552,884 23,307,763 40,844,314 55,119,675 Represented by: Share capital 3,065,273 3,371,800 4,265,327 5,463,276 6,282,768 Reserves 4,379,255 5,661,553 13,408,005 24,662,426 34,000,638 Unappropriateed profit

281,636 165,208 210,662 5,530,973 5,130,750

7,726,164 9,198,561 17,883,994 35,656,675 45,414,156 Surplus on revaluation of assets

3,382,529 5,354,323 5,423,769 5,187,639 9,705,519

11,108,693 14,552,884 23,307,763 40,844,314 55,119,675

*Reference:

Data obtained from Annual statements of MCB on MCB website.

45

PROFIT AND LOSS

Financial Statement Muslim Commercial Bank Limited Profit and Loss Account As on 31st December 2003 2004 2005 2006 2007 (Rupees '000) Markup/ return/ interest earned 10,369,994 9,083,863 17,756,232 25,778,061 31,786,595 Mark up/ return/ interest expense 2,932,693 2,057,640 2,781,468 4,525,359 7,865,533 Net mark up/ interest income 7,437,301 7,026,223 14,974,764 21,252,702 23,921,062 - Provision for dimininution in the value of investment (150,000) (172,876) (98,982) 121,197 105,269

- Provision against loans and advances 705,787 442,595 1,242,153 1,014,540 2,959,583

- Provision for potential lease losses 862 1,200 - - -

- Bad debts written off directly 224,432 8,771 1,184 47,000 199 781,081 279,690 1,144,355 1,182,737 3,065,051 Net mark up/interest income after provisions 6,656,220 6,746,533 13,830,409 20,069,965 20,856,011

Non mark up/interest income Fee, commission and brokerage income 1,042,437 1,992,356 2,448,950 2,311,235 2,634,610

Dividend income 372,821 378,908 480,344 811,801 632,300 Income from dealing in foreign currencies 331,694 492,738 531,455 692,010 693,408

Gain on investment 2,041,260 804,419 866,895 605,865 1,500,865 Unrealized gain/ loss on revaluation of investment - (11,440) 851 - (13,105)

Other income 743,599 576,007 1,084,576 570,505 563,213 Total non mark up interest income 4,531,811 4,232,988 5,413,071 4,991,416 6,011,291

11,188,031 10,979,521 19,243,480 25,061,381 26,867,302 Non mark up/interest expense - Administrative expenses 6,587,369 7,244,200 6,459,490 6,482,592 5,022,416 - Restructuring expenses 878,704 - - - - - Other proposition/write off 50,000 149,593 (72,740) 11,411 (3,743) -Other charges 59,034 41,864 178,841 66,708 540,594 Total non mark up/ interest expense 7,575,107 7,435,657 6,565,591 6,560,711 5,559,267

Extra ordinary/unusual items - 513,852 340,598 - - Profit before taxation 3,612,924 4,057,716 13,018,487 18,500,670 21,308,035 Taxation-Current year 1,212,579 1,555,764 4,611,359 5,701,443 6,442,356 -Prior years - - (149,763) 593,497 (1,294,473) -Defferd 170,200 70,420 (365,524) 63,332 894,590 1,382,779 1,626,184 4,096,072 6,358,272 6,042,473 Profit after taxation 2,230,145 2,431,532 8,922,415 12,142,398 15,265,562 Unappropriate profit brought forward 621,985 195,966 165,208 4,990,260 5,530,973

Transfer from surplus on revaluation of fixed assets 25,012 25,839 83,749 32,166 11,855

646,997 221,805 248,957 5,022,426 5,542,828 Profit available for appropriation 2,877,142 2,653,337 9,171,372 17,164,824 20,808,390

Basic/diluted earning per share 7.28 7.21 21.36 23.40 24.30

46

RATIOS ANALYSIS:

Liquidity Ratios

Liquidity ratios measure the short-term solvency of a firm. Liquidity ratios present

the picture of the ability of the firm to pay its short-term obligations. The ratio holds

different meaning for creditors and owners of the firm. For owner, high liquidity

means inefficiency of the management and vice versa, while high liquidity of the

firm is considered favorable by the creditors as they see it as that the firm can pay

their obligations and vice versa. Following are most common type of liquidity ratios

used by analysts to determine the liquidity of the firm.

1. Current Ratio:

The current ratio measures the number of items of the firm s current assets cover its

current liabilities.

The current ratio should be part of your business' basic financial planning, meaning

it should be tracked monthly or quarterly. By keeping a close eye on this figure, you

will recognize if it begins to get out of line. This will allow you to take early action

to prevent your business from ending up in a difficult position.

Current assets divided by current liabilities

Current ratio=current asset/ current liabilities

2003

Current asset 261,263,732

Current liabilities 254,135,024

Current ratio 102.81%

2004




47

2005




2006




2007




Current Ratio

Years 2003 2004 2005 2006 2007

Percentage 102.81% 103.02% 106.80% 111.00% 110.00%

Chart of current ratios:

95

100

105

110

115

2003 2004 2005 2006 2007

48

Analysis of current ratios of MCB:

Current ratio shows a firm’s ability to cover its current liabilities with its current

assets. It is obtained by dividing current assets of the firm by its current liabilities.

Current ratio of 1 or higher means that the firm can pay all its current liabilities from

its current assets, while a value less than 1 means that the firm will be unable to pay

its current liabilities completely by its current assets. A lower value means

aggressive approach of the management toward business, but has opposite meaning

for creditors, who don’t like aggressive approaches of the management.

In MCB bank limited 2006s current ratio is strong than other four years. It shows

that this year’s liabilities could be recovered with its assets. After 2006, a bank has

maintained good current ratio in 2007 but 2003 and 2004 has weak current ratio

because the difference between assets and liabilities decreased in these years.

Current ratio does not show the true picture of the organization. Sometimes it shows

that organization has ability to pay its obligations but its profitability ratio tells that

it has not ability to pay its obligation. But still it is very useful for the analysts

especially for the creditors.

2. Quick ratios:

Quick ratio shows a firm’s ability to meets it current liabilities with its current assets

excluding inventories and prepaid expenses, which are least liquid portion of the

current assets. Since banks don’t have any sorts of inventories, therefore only

prepaid expenses are subtracted from the current assets of the bank.

This is an important planning tool, especially for businesses that can tie up a lot of

assets in inventory. By tracking it monthly, management can keep an eye out for

negative trends that could hamper their business' ability to meet its obligations.

Quick ration can also use to evaluate the financial health of potential customers,

since it also indicates whether a business can pay off its debts quickly. A firm with a

low quick ratio may be more likely to delay payments because its assets are tied up

elsewhere.

Current assets - inventories divided by current liabilities

49

Quick ratio= current assets-inventories/current liabilities

2003

Current assets 261,263732

Inventories 128,276,842


Quick ratios 52.33

2004

Current assets 245,019,617


Current liabilities 237,825426

Quick ratios 74.77

2005




Quick ratios 80.74

2006




Quick ratios 89.06

2007

Quick ratio

Years 2003 2004 2005 2006 2007

Percentage 52.33% 74.77% 80.74% 89.06% 76.94




Quick ratios 76.94

50

0102030405060708090

100

2003 2004 2005 2006 2007

Quick ratio

Analysis of the quick ratio:

Inventories are considered as current assets so they are included in current ratio

calculation. Inventories are less liquid. Normally it is not easily converted into cash

on short notice. In 2006 quick ratio is better than other years it show that bank can

easily recover its liabilities on short notice.

3. Working capital:

Working capital is the difference between current assets and current liabilities.

Working capital is often considered a measure of liquidity by it self. This ratio

shows the amount of liquidity.

Working capital is used to check liquidity of the organization.

Working capital=current asset-current liability

2003



Working capital 7,128,708

51

2004




2005




2006




2007




Working capital

Years 2003 2004 2005 2006 2007

Percentage 7,128,708 7,194,191 18,080,516 31,757,831 34,129,446

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

2003 2004 2005 2006 2007

working capital

52

Analysis of the working capital:

Working capital is better in 2007, which is 34,129,446 .it means that assets are

utilized more economically in 2007 as compared to 2003, 2004, 2005 and 2006.

4. Cash ratio:

Cash and cash equilent/total assets

Cash and equilent are the most liquid assets. The cash ratio shows the proportion of

the assets held in the most liquid possible form.

It is used to check the liquidity of the organization.

2003

Cash equivalent 25,356,261

Total assets 272,323,619

Cash Ratio 9.31

2004



Cash Ratio 11.40

2005



Cash Ratio 8.41

2006



53

Cash Ratio 11.41

2007



Cash Ratio 10.60

Cash ratio

Years 2003 2004 2005 2006 2007

Percentage 9.31% 11.40% 8.41% 11.41% 10.60%

-1

1

3

5

7

9

11

13

15

2003 2004 2005 2006 2007

cash ratio

Analysis of cash ratios of MCB:

Higher cash ratio also shows the higher rate of satisfaction like other liquidity

ratios. Cash ratio is more important liquidity ratio. In 2003 cash ratio was 9.31%, it

increased very quickly in 2004 by 11.40%, but in 2005 it declined by 2.99. 2006 was

the best year as it shows 11.41% ratio, In 2007, it declined by 10.60%.

In short working capital and cash ratio are more realistic and more important ratios,

which describe the true picture of any organization. In MCB 2006 is the year in

54

which the liquidity ratios are shown better than other years. So 2006 is mentioned a

good year of the Muslim Commercial Bank.

Leverage Ratios:

Leverage ratios of a firm show the extent to which a firm finances its operation from

the outside sources and money. The leverage can be determined from analysis of

owner equity in business, total liabilities, current and long-term liabilities, long-term

assets and total assets of the business. Following are the common leverage ratios to

show the degree of leverage the bank is using to finance its activities and assets by

liabilities.

5. Debt-To-Total-Assets Ratio

It shows that how much assets have been financed by liabilities and it also shows the

margin of protection available for the creditors.

Debt ratio

Debt ratio=Total debt/ Total assets

55

2003

Total debt 261,214,926


Debt Ratio 95.92

2004



Debt Ratio 94.38

2005



Debt Ratio 92.20

2006



Debt Ratio 88.06

2007



Debt Ratio 86.57

56

Debt ratio

Years 2003 2004 2005 2006 2007

Percentage 95.92% 94.38% 92.20% 88.06% 86.57%

80

82

84

86

88

90

92

94

96

2003 2004 2005 2006 2007

leverage ratio

Analysis of leverage ratio:

Financial leverage is the extent to which a firm is financed with debt. The amount

of the debt a firm uses has both positive and negative effects. The more debt the

more it is that the firm will have trouble meeting its obligations. Thus the more debts

higher profitability of the financial distress and even bankruptcy. Further more the

chance of the financial distress and debt obligation generally may create conflicts of

interest among the stakeholders. In Muslim Commercial bank, year 2003 was

heavily financed because debt was the major source of financing in 2003. Debt also

had lower transaction cost. But better year was 2007 because Muslim Commercial

Bank in this year was not heavily financed and had not trouble to pay its obligations.

57

6. Debt-To-Equity Ratio:

Debt-to-Equity ratio shows the extent to which debt financing is used relative to

equity financing. Debt equity is calculated by dividing total liabilities of the bank by

the total owner equity.

Total debt divided by shareholders equity

Debt to equity ratio=Total debt / shareholders equity or Debt ratio/1-Debt ratio

2003


Shares holder equity 3,065,273

Debt to equity Ratio 85.22

2004




2005




2006




2007


58


Debt to equityRatio 56.56

Debt to equity ratio

Years 2003 2004 2005 2006 2007

Percentage 85.22 72.55 64.58 55.14 56.56

0102030405060708090

2003 2004 2005 2006 2007

Debt to equityratio

Analysis of the Debt to equity ratio:

The debt equity ratio is a simple rearranged of the debt ratio. Debt equity ratio

shows how the firm’s stockholder bears the risk of the firm. Greater the debt greater

risk for the firm s shareholders .In 2006 risk for the share holders was very low as

compared to the other years decrease debt to equity ratio was very small on the

contrast risk was very high in 2003 because of heavy financing.

59

7. Equity multiplier:

Owner equity to fixed assets ratio:

“Owner equity to fixed assets ratio” shows that how much money does owner in

relation to fixed assets invest. If the owner equity exceeds the fixed assets, it means

that owner finances a part of current assets. When owner equity is less than fixed

assets it means that creditor’s obligations have been used to finance a part of fixed

assets.

Total owner equity divided by fixed assets

Equity multiplier=Total assets /shareholders equity

2003

Total Assets 272,323,619

Shares Holder equity 3,065,273

Equity Multiplier 88.84

2004




2005




2006




60

2007




Equity multiplier

Years 2003 2004 2005 2006 2007

Percentage 88.84 76.87 70.05 62.62 65.34

0102030405060708090

2003 2004 2005 2006 2007

Equity multiplier

Analysis of the equity multiplier:

Equity multiplier is yet another representation of the same information. It shows

how much total assets the firm has for each dollar of equity. In MCB it is better in

2003 it means that bank has about 88.84 in total assets of 100 of equity.

Coverage Analysis:

Coverage ratios analyze the ability of a firm to cover or service its financial

obligations. Most common coverage ratios are explained below.

61

8. Interest Coverage Ratio

Interest coverage ratio shows the ability of a firm to cover up its interest charges on

the income before interest and taxes. The ratio is obtained through dividing earning

before interest and taxes (EBIT) of the bank by its interest expenses.

EBIT divided by interest expense

Interest coverage ratio=EBIT/Interest expense

2003

EBIT 3,162,924

Interest expense 2,932,693

Interest coverage ratio 107.85

2004

EBIT 4,057,716



2005

EBIT 13,018,487



2006

EBIT 18,500,670

Intrest expense 4,525,359

Intrest coverage ratio 408.82

2007

EBIT 21,308,035



62

Interest coverage ratio

Years 2003 2004 2005 2006 2007

Percentage 107.85% 197.20% 468.04% 408.82% 270.90%

050

100150200250300350400450500

2003 2004 2005 2006 2007

Interestcoverage ratio

Analysis of the interest coverage ratio:

Coverage ratio shows the number of the times a firm can recover or meet particular

financial obligations. The interest coverage ratio, which is also called the time

interest earned ratio, measure the coverage of the firm s interest expense.2005 is the

best comparative better coverage of its interest and fixed charged obligations. After

2005, 2006 is better than other three but 2003 is worst than all.

Profitability Analysis:

Profitability ratios are of two types those showing profitability in relation to sales

and those showing profitability in relation to investment. Together, these ratios

indicate the bank’s overall effectiveness of operation. It creates a relationship

between income statement and balance sheet of the firm. Following are the some

typical profitability ratios used to analyze the profits of firms.

63

9. Cost To Sales Ratio:

Cost to sales ratio determines the cost incurred in generating the sales of the bank.

The net sales of banks are its interest/mark up earned while costs of sales are its

interest/mark up expense incurred. The ratio is obtained by dividing cost of sales by

net sales. The following table shows the cost of sales of MCB over five years of

operations.

Interest or mark up expensed divided by interest or mark up earned

2003


Interest earned 10,369,994

Cost to sales ratio 28.28

2004




2005




2006




2007




64

Cost to sales ratio

Years 2003 2004 2005 2006 2007

Percentage 28.28% 22.65% 15.66% 17.56% 24.74%

0

5

10

15

20

25

30

2003 2004 2005 2006 2007

Cost to salesratio

Analysis of the cost to sales ratio:

Cost to sales ratio shows the cost incurred in generating the sales of the bank. In

2003 the cost to generate the sales is higher with respect to other financial years.

After 2003, 2007 had also higher cost. Year 2005 is best one for MCB but 2003 is

worst than all.

10. Return On Investment:

Return on investment measure the ratio of profit generated in relation to the total

assets employed. Net profit after tax divided by total assets gives the return on

investment.

Return on investment is an indicator of how profitable a company is. By using this

ratio annually, we compare business' performance to industry's norms.

Net profit after tax divided by Total assets

Return on investment= Net profit after tax/Total assets

65

2003

Profit after tax 2,230,145


Return on Investment 0.82

2004




2005




2006




2007




Return on investment

Years 2003 2004 2005 2006 2007

Percentage 0.82% 0.94% 2.99% 3.55% 3.72%

66

00.5

11.5

22.5

33.5

4

2003 2004 2005 2006 2007

Return onInvestment

Analysis of the return on investment ratio

Profitability ratios focus on the profit generating performance of the firm. These

ratios measure how effectively the firm is generating its profit. They reflect its

performance, its risk ness and the effect of leverage. Muslim commercial bank was

heavily financed in 2007 that financing was used in investment that’s why return on

investment is high in 2005 as compare to the other years.

11. Return On Equity:

Return on equity is another summary measure of overall bank’s performance. It can

be calculated by dividing the net profit by the owner equity. This ratio tells us the

earning power on shareholder’s book value investment and is frequently used in

comparing two or more firms in any industry. A high return one quite often reflects

the firm’s acceptance of strong investment opportunities and effective expense

management.

67

2003


Sharesholders equity 3,065,273

Return on Equity 72.76

2004




2005




2006




2007




Return on Equity

Years 2003 2004 2005 2006 2007

Percentage 72.76% 72.11% 209.18% 222.25% 242.98%

68

0

50

100

150

200

250

300

2003 2004 2005 2006 2007

price earning ratio

Return on equity is an indicator of how profitable a company is. Use this ratio

annually to compare your business' performance to your industry's norms. In year

2007, MCB has a strong investment opportunities’ which reflects a high return, after

this 2006 and 2005 also depicts a high return, whereas, 2003 and 2004 are not

satisfied.

12. Market value ratios:

1-P/E ratio

Price earning ratio=Market price per share/ earning per share

69

2003

Market price per share 51.40

Earning per share 7.28

P/E ratio 706.04

2004



P/E ratio 814.15

2005



P/E ratio 785.58

2006



P/E ratio 1,051.71

2007



P/E ratio 1,645.88

70

Price earning ratio

Years 2003 2004 2005 2006 2007

Percentage 706.04% 814.15% 785.58% 1051.71% 1645.88%

0200400600800

10001200140016001800

2003 2004 2005 2006 2007

price earning ratio

Analysis of the price-earning ratio:

Price earning ratio of MCB bank is high in 2007 as compared to the other years.

Because the market price per share is high in 2007. Because in this year MCB

generate an excellent profit. 2006 is also good but 2003 is worst all of them.

13 Earning yield:

Earning yield=Earning per share/Market price per share

2003



Earning Yeild 14.16

71

2004



Earning Yeild 12.28

2005



Earning Yeild 12.73

2006



Earning Yeild 9.51

2007



Earning Yield 6.08

Earning yield

Years 2003 2004 2005 2006 2007

Percentage 14.16% 12.28% 12.73% 9.51% 6.08%

72

0

2

4

6

8

10

12

14

16

2003 2004 2005 2006 2007

Earning yeild

Analysis of the earning yield:

Earning yield of MCB bank is high in 2003 as compared to the other years. Because

the market price per share and earning per share is low in 2003. Earning yield in

2004 and 2005 is also high. Earning yield is unsatisfied in 2007.

14 Earning Per Share:

This ratio determines the amount of income that has been earned on each share

outstanding. Net profit after tax divided by total numbers of shares outstanding gives

the amount earned on each share.

Net profit after tax divided by total number of shares outstanding

Earning per share=Net profit after tax/ Total no of shares

73

2003


Total number of shares 306,527


2004




2005




2006




2007




74

Earning per share

Years 2003 2004 2005 2006 2007

Percentage 7.28 7.21 21.00 22.23 24.30

0

5

10

15

20

25

2003 2004 2005 2006 2007

Earning per share

Analysis of the earning per share:

Earning per share mostly depends upon return on investment means ratio of profit

generated. Earning per share is better in 2007 because in this year return on

investment was also satisfied. 2003 and 2004 were unsatisfied as earning per share.

15 Gross spread ratio:

This ratio indicate the firms overall effectiveness of operation. Gross profit divided

by net sales.

2003

Net markup/ interest income 7,437,301


Gross spread ratio 71.72

2004


75



2005




2006




2007




Years 2003 2004 2005 2006 2007

Percentage 71.72% 77.35% 84.34% 82.44% 75.26%

76

646668707274767880828486

2003 2004 2005 2006 2007

Gross spreadratio

Analysis of gross spread ratio:

This ratio tells the profit of the firm relative to sales, after deduction of cost of

production. It is a measure of the efficiency of the firm’s operation. Gross spread

ratio of MCB bank is high in 2005 as compared to the other years. Only because of

low expenses during the year. After this 2006 is good but not satisfied as of 2005.

16 Income/ expense ratio:

2003

Total Income 14,901,805

Total expenses 11,288,881

Income/ expense ratio 1.32

2004




77

2005




2006




2007




Income /expense ratio:

Years 2003 2004 2005 2006 2007

Percentage 1.32 times 1.36 2.21 2.51 2.29

78

0

0.5

1

1.5

2

2.5

3

2003 2004 2005 2006 2007

Incomeexpense ratio

Analysis of Income/ expense ratio:

Income/ expense ratio of MCB bank is high in 2006 as compared to the other years.

Because in this year the expenses as compared to earnings are very low. After this

2005 and 2006 also depicts an excellent income/ expense ratio. But 2003 was the

worst one for Muslim Commercial Bank.

79

4.3 HORIZONTAL ANALYSIS:

Horizontal Analysis of Balance Sheet

Horizontal/ Index Analysis Muslim Commercial Bank Limited

Balance Sheet As on 31st December

2003 2004 2005 2006 2007 Assets Cash and balances with treasury banks 100 99 98 135 167

Balances with other banks 100 438 113 505 292 Lending to financial instutions 100 105 96 202 10

Investments 100 52 54 49 88 Advances 100 141 186 204 225 Operating fixed assets 100 174 178 198 350 Deffered tax assets - - - - - Other assets 100 95 84 171 276 95 110 126 151 Liabilities Bills payable 100 90 102 84 125 Borrowings 100 23 84 73 121 Deposits and Othe accounts 100 105 108 122 138 Sub-ordinated loans 100 100 100 100 30 Liabilities against assets subject to finance lease - - - - -

Deffered tax liabilities 100 38 - - 167 Other liabilities 100 102 135 175 184 94 105 115 136 Net assets 100 131 210 368 496 Represented by: Share capital 100 110 139 178 205 Reserves 100 129 306 563 776 Unappropriateed profit 100 59 75 1,964 1,822 100 298 520 462 588 Surplus on revaluation of assets 100 158 160 153 287

100 131 210 368 496

Horizontal/Index size analysis:

Cash and balances with treasury banks: Index size analysis is clearly showing that cash and balances with treasury banks

are increasing 2006 and 2007. The biggest reason behind this inclusion is

deposits are increasing in these years. Including foreign and local both types of

deposits.

80

Balances with other banks: There is gradual increase in balances with other banks. MCB bank limited has

maintained two types of accounts, current and fixed within the Pakistan and

outside the Pakistan.

Lending to the financial institutions: Lending to the financial institution decreased in 2005 because in this period

MCB Bank it self need of financing. There were again decrease in 2007.

Lending to the financial institution include call money landings, repurchase

agreement lending and purchase under resale agreement of listed equity security,

trade related deals.

Advances: Index size/horizontal analysis is showing that advances are increasing every year

because of increase in deposits.

Other assets: Other assets are increasing in year 2006 and 2007. Other assets include income

/mark up accrued in local currency, in foreign currency, advances, deposits,

advance taxation, suspense accounts, stationery and stamps, dividend receivable,

Operating fixed assets: Operating fixed assets like others are also increasing because every year capital

work in progress increased. Property and equipment of MCB Bank are also

increasing every year.

Liabilities:

Bills payable: Bills payable is increasing in 2005 and 2006 with in the Pakistan.

Deposits and other accounts: Deposits include current deposits, fixed deposits, saving deposits, special exporter’s

accounts remunerative accounts, deposit in local currency and deposit in foreign

currency are increasing every year. Te reason behind this is MCB Bank is offering

higher deposit s rates to its customer every year.

81

Liabilities against asset subject to finance lease: There was no liability against assets subject to finance lease.

Other liabilities: Other liabilities consist of interest payable in local currency, interest payable in

foreign currencies unearned income commission, accrued expenses advance

payments, unclaimed dividend, proposed dividend, unrealized loss, branch

adjustment account, payable to defined contribution plan, payable against purchase

of listed shares, with holding taxes payable and other are increasing every year.

Share capital: Share capital of MCB bank limited is increasing every year because profit is

increasing year by year.

Reserves: Reserves for the contingencies have been created for risk assets comprising

advances and investment excluding government securities. The reserves have been

created as matter prudence, exclusive to provide sufficient cushion for any future

losses in the banks risk assets portfolio. Reserves of every five years are increasing.

82

Horizontal Analysis of Profit and Loss

Horizontal/ Index Analysis Muslim Commercial Bank Limited

Profit and Loss Account As on 31st December

2003 2004 2005 2006 2007 Markup/ return/ interest earned 100 88 171 249 307 Mark up/ return/ interest expense 100 70 95 154 268 Net mark up/ interest income 94 201 286 322 Provision for dimininution in the value of investment 100 115 66 (81) (70)

Provision against loans and advances 100 63 176 144 419 Provision for potential lease losses 100 139 - - - Bad debts written off directly 100 4 1 21 - 100 36 147 151 392 Net mark up/interest income after provisions 100 101 208 302 313

Non mark up/interest income - Fee, commission and brokerage 100 191 235 222 253 - Dividend income 100 102 129 218 170 - Income from dealing in foreign

currencies 100 149 160 209 209

- Gain on investment 100 39 42 30 74 - Unrealized gain/ loss on

revaluation of investment - - - - -

- Other income 100 77 146 77 76 Total non mark up interest income 100 93 119 110 133 100 98 172 224 240 Non mark up/interest expense

Administrative expenses 100 110 98 98 76 Restructuring expenses 100 - - - - Other proposition/write off 100 299 (145) 23 (7) Other charges 100 71 303 113 916

Total non mark up/ interest expense 98 87 87 73 Share of profit from associated undertaking - - - - -

Extra ordinary/unusual items - - - - - Profit before taxation 100 112 360 512 590 Taxation-Current year 100 128 380 470 531 -Prior years - - - - - -Defferd 100 41 (215) 37 526 Share of tax of associated undertaking - - - - - - 100 118 296 460 437 Profit after taxation - 109 400 544 685 Unappropriate profit brought forward 100 32 27 802 889 Transfer from surplus on revaluation of fixed assets 100 103 335 129 47

100 34 38 776 857 Profit available for appropriation 100 92 319 597 723

Basic/diluted earnings per share- 6.61 99 293 321 334

83

Horizontal/index analysis:

Mark up/return/Interest earned: It remains the constant in 2003 and 2004 because MCB Bank earn same interest on

loans and advances to customers. But it increased in 2005, 2006 and 2007.

Mark up /return/Interest expense: Mark up /return/Interest are low in 2004 because of the low rates of deposits. One of

the biggest things, which made these figure of 2004 low, is a subordinated loan.

Other income: There is gradual increase in other income in year 2005. The reason is rent on

property, gain on sale of non banking assets and bad debts are recovered.

Administration expenses: With the passage of time as the profit of the bank is increasing Administration

expenses are also increasing. Which include salaries, allowances, rent, taxes,

insurance, electricity, legal and professional charges, brokerage and commission,

repair and maintenance, Advertising and publicity.

Other charges: In 2006 there heavy amount of other charges imposed. Other charges are penalties

imposed by state bank of Pakistan.

Taxation: Taxation system is linked with the profit of the bank that s why taxes increase with

the ratio of profit.

84

4.4 VERTICAL ANALYSIS

Vertical Analysis Balance Sheet

Vertical/ common Size analysis Muslim Commercial Bank Limited

Balance Sheet As on 31st December

2003 2004 2005 2006 2007 (Rupees '000)

Assets Cash and balances with treasury banks 8.83 9.20 7.92 9.49 9.67

Balances with other banks 0.48 2.20 0.49 1.92 0.93 Lending to financial instutions 3.83 4.23 3.35 6.16 0.26 Investments 47.10 25.93 23.26 18.56 27.55 Advances 35.69 52.98 60.35 57.95 53.34 Operating fixed assets 1.68 3.09 2.74 2.65 3.90 Deffered tax assets - - 0.06 0.05 - Other assets 2.38 2.37 1.83 3.22 4.35 100 100 100 100 100 Liabilities Bills payable 3.08 2.92 2.86 2.07 2.55 Borrowings 11.98 2.93 9.16 7.00 9.60 Deposits and Other accounts 77.67 85.30 76.76 75.26 71.16 Sub-ordinated loans 0.59 0.62 0.53 0.47 0.12 Liabilities against assets subject to finance lease - - - - -

Deffered tax liabilities 0.26 0.10 - - 0.29 Other liabilities 2.34 2.52 2.88 3.27 2.86 95.92 94.38 92.20 88.06 86.57 Net assets 4.08 5.62 7.80 11.94 13.43 Represented by: Share capital 1.13 1.30 1.43 1.60 1.53 Reserves 1.61 2.18 4.49 7.21 8.28 Unappropriateed profit 0.10 0.06 0.07 1.62 1.25 2.84 3.55 5.99 10.42 11.06 Surplus on revaluation of assets 1.24 2.07 1.82 1.52 2.36

4.08 5.62 7.80 11.94 13.43

Vertical/common size analysis:

Cash and cash balances: Cash and cash balances are increasing every year but in 2005 it decreases.

Balances with other banks: Balances are increased in 2004 and 2006 and heavily decreases in 2005 and 2007. The

reason behind the decrease of balances with other banks is advances and investment.

85

These two years MCB Bank used these funds in investment and advances rather then

keeping balances with other banks.

Lending to the financial institutions: MCB Bank lending to the financial institutions was 3.83% after one year in 2004

increased by 1% and in 2005 decreased very quickly by 3.35% because repurchase

agreement landings was low in this year. It increased in 2006 but decline in 2007 that

is 0.23%. Lending to the financial institution was in 2006 (21,081,800) in 2007 figure

was (1,051,372). Because in 2007 there were no repurchase agreement lending and

call money lending is very low.

Investment: MCB Bank 2003 investment are satisfied rather than other 4 years that was 47% of

total assets. It decreases in 2004, which was 26% of the total assets. The reason is less

funds are used as investment in fully paid up ordinary shares of listed companies and

unlisted term finance certificates in 2004. At that time period there were no investment

in government of Pakistan sukuk bonds. Little bit increase in investment was in 2005.

But in 2007 it will again increased up to 28%.

Advances: In MCB Bank there were increase in advances year by year.

Operating fixed assets: Operating fixed asset are increasing year by year but are same with total assets of 2%

to 3% throughout the year.

Other assets: Ratio of the other assets remains the same in 2003 with 2004. Other assets increased in

2006 and 2007 because receivable from pension fund as well as income/ markup

accrued on advances are increased in these years.

Liabilities:

Bills payable: In MCB Bank five year comparison of the bills payable declare that all five years ratio

are lies between 2.5%and 3.00% there are change or increase in bills payable every

year but the ratio is the same because of the comparison with the total assets.

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Deposits with other accounts: Deposits with the other accounts decreased in 2004 but simultaneously it increased up

to 2007 with the comparison of the total assets.

Subordinated loans: The subordinated loans are decreased year by year as I 2007 it remain up to 0.125 of

total assets.

Liabilities against assets subject to the finance lease: There were no such liabilities.

Other liabilities: Other liabilities remains the same throughout the five years. It does not mean that

other liabilities are not increasing year by year but are same with total assets of 3%

throughout the year.

Reserves: Reserves of the MCB bank limited are increasing every year

Share capital: In MCB bank limited share capital was same in 2003 and 2004. It increases gradually

in 2005, 2006, and 2007.

Surplus on revolution of assets: Increased year by year.

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Vertical Analysis of Profit and Loss

Vertical/ common Size analysis Muslim Commercial Bank Limited

Profit and Loss Account As on 31st December

2003 2004 2005 2006 2007 (Rupees '000) Markup/ return/ interest earned 69.6 68.2 76.6 83.8 84.1 Mark up/ return/ interest expense 19.7 15.5 12.0 14.7 20.8 Net mark up/ interest income 49.9 52.8 64.6 69.1 63.3 Provision for dimininution in the value of investment (1.0) (1.3) (0.4) 0.4 0.3

Provision against loans and advances 4.7 3.3 5.4 3.3 7.8

Provision for potential lease losses 0.0 0.0 - - -

Bad debts written off directly 1.5 0.1 0.0 0.2 0.0 5.2 2.1 4.9 3.8 8.1 Net mark up/interest income after provisions 44.7 50.7 59.7 65.2 55.2

Non mark up/interest income - Fee, commission and

brokerage income 7.0 15.0 10.6 7.5 7.0

- Dividend income 2.5 2.8 2.1 2.6 1.7 - Income from dealing in

foreign currencies 2.2 3.7 2.3 2.2 1.8

- Gain on investment 13.7 6.0 3.7 2.0 4.0 - Unrealized gain/ loss on

revaluation of investment - (0.1) 0.0 - (0.0)

- Other income 5.0 4.3 4.7 1.9 1.5 Total non mark up interest income 30.4 31.8 23.4 16.2 15.9

75.1 82.4 83.1 81.4 71.1 Non mark up/interest expense

Administrative expenses 44.2 54.4 27.9 21.1 13.3 Restructuring expenses 5.9 - - - - Other proposition/write off 0.3 1.1 (0.3) 0.0 (0.0) Other charges 0.4 0.3 0.8 0.2 1.4

Total non mark up/ interest expense 50.8 55.8 28.3 21.3 14.7

Extra ordinary/unusual items - 3.9 1.5 - - Profit before taxation 24.2 30.5 56.2 60.1 56.4 Taxation-Current year 8.1 11.7 19.9 18.5 17.0 -Prior years - - (0.6) 1.9 (3.4) -Defferd 1.1 0.5 (1.6) 0.2 2.4 9.3 12.2 17.7 20.7 16.0 Profit after taxation 15.0 18.3 38.5 39.5 40.4 Unappropriate profit brought forward 4.2 1.5 0.7 16.2 14.6

Transfer from surplus on revaluation of fixed assets 0.2 0.2 0.4 0.1 0.0

4.3 1.7 1.1 16.3 14.7 Profit available for appropriation 19.3 19.9 39.6 55.8 55.1

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Vertical analysis of the profit and loss account:

Mark up /return/interest expense: There is decrease in 2004 2005 and 2006 in the mark up/return/interest expense

because return on deposits is very low due to the low rates on deposits. Return on

subordinated loans is satisfied that was the reason of the reason of decline in the return

on expense. Again increase in 2007 because rate on deposits increased in 2007.

Administration expense: Administration expenses are decreasing every year as approved pension fund as well

as post retirement benefits are low. Moreover, there were no self retrenchment costs.

Other charges: Other charges include penalties imposed by the state bank of Pakistan that increased

every year. Its vertical ratio is 0 because amounts of the penalties imposed by the bank

are very small as comparison to the Interest/ income earned but in 2007 it will reach

up to 3.54%.

Taxation: Taxes are increasing every year except of 2007 taxes, their ratio are lowered than 2006

because of taxes for the prior year .

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4.5 ORGANIZATIONAL ANALYSIS WITH REFERENCE TO THE

INDUSTRIES LISTED ON THE STOCK EXCHANGE: DEPOSITS COMPARSION OF FIFTEEN BANK'S IN PAKISTAN

Rs. In Billion DEPOSITS GROWTH

RANK BANK NAME 31-12-2006 31-12-2007 VOLUME %AGE 1 HABIB METROPOLITAN 56.71 102.49 45.78 80.73 2 BANK OF PUNJAB 88.47 137.73 49.26 55.68

3 MEEZAN BANK LIMITED 22.77 34.45 11.68 51.3 4 BOLAN BANK (MY BANK) 12.86 19.17 6.31 49.07 5 AL-BARAKA BANK 10.31 13.82 3.51 34.04 6 BANK AL-HABIB LIMITED 75.8 91.42 15.62 20.61 7 UBL BANK LIMITED 283.02 321.73 38.71 13.68 8 MCB BANK LIMITED 221 211 28.12 12.26 9 SOONRI BANK LIMITED 47.61 53 5.39 11.32

10 PICIC COMMERCIAL BANK 53.47 59.47 6 11.22 11 ASKARI BANK LIMITED 118.79 131.84 13.05 10.99 12 NATIONAL BANK LIMITED 463.43 501.87 38.44 8.29 13 BANK AL-FALAH LIMITED 222.35 239.51 17.16 7.72 14 HABIB BANK LIMITED 432.55 459.14 26.59 6.15 15 FIRST WOMAN BANK LTD 8.72 9.02 0.3 3.44

*Reference: Data obtained from Annual statements of abovementioned Banks on net on their respective website. Ad va n c e s C o mp a ri so n

ADVANCES COMPARSION OF FIFTEEN BANK'S IN PAKISTAN Rs. In Billion

ADVANCES GROWTH RANK BANK NAME 31-12-2006 31-12-2007 VOLUME %AGE

1 HABIB METROPOLITAN 43.52 83.32 39.8 91.45 2 BANK OF PUNJAB 63.62 101.32 37.7 59.26 3 BOLAN BANK (MY BANK) 9.29 13.49 4.2 45.21 4 BANK AL-HABIB LIMITED 55.3 77.8 22.5 40.69 5 MEEZAN BANK LIMITED 19.74 27.03 7.29 36.93

6 AL-BARAKA BANK LIMITED 7.42 9.69 2.27 30.59

7 BANK AL-FALAH LIMITED 118.16 150 31.84 26.95 8 FIRST WOMAN BANK 2.46 3.02 0.56 22.76 9 UBL BANK LIMITED 200.6 238.32 37.72 18.8 10 NATIONAL BANK LIMITED 268.84 316.11 47.27 17.58 11 ASKARI BANK LIMITED 85.98 99.18 13.2 15.35 12 HABIB BANK LIMITED 316.88 349.43 32.55 10.27 13 SOONRI BANK LIMITED 32.05 35.41 3.36 10.48 14 MCB BANK LIMITED 198 218 17.92 9.94 15 PICIC COMMERCIAL 33.16 34.89 1.73 5.21

*Reference: Data obtained from Annual statements of abovementioned Banks on net on their respective website.

90

Net P ro f i t a f te r t ax NET PROFIT AFTER TAX COMPARSION OF FIFTEEN BANK'S IN PAKISTAN

Rs. In Billion Net Profit GROWTH

RANK BANK NAME 2006 2007 VOLUME %AGE 1 BOLAN BANK (MY BANK 0.27 0.49 0.22 2 BANK OF PUNJAB 2.35 3.8 1.45 61.7 3 UBL BANK LIMITED 5.89 9.05 3.16 53.65 4 MEEZAN BANK LIMITED 0.42 0.6 0.18 42.86 5 HABIB METROPOLITAn 1.51 2.1 0.59 39.07 6 MCB BANK LIMITED 12.14 15.26 3.22 36.1 7 NATIONAL BANK LIMITED 12.71 17.02 4.31 33.91 8 HABIB BANK LIMITED 9.65 12.7 3.05 31.61 9 BANK AL-HABIB LIMITED 1.46 1.76 0.3 20.55

10 ASKARI BANK LIMITED 2.02 2.25 0.23 11.39 11 FIRST WOMAN BANK 0.13 0.14 0.01 7.69 12 BANK AL-FALAH LIMITED 1.7 1.76 0.06 3.53 13 SOONRI BANK LIMITED 1.39 1.42 0.03 2.16 14 PICIC COMMERCIAL BANK 1.5 0.97 -0.53 -35.33 15 AL-BARAKA BANK LIMITED 0.35 0.14 -0.21 -60 *Reference: Data obtained from Annual statements of abovementioned Banks on net on their respective website. Ea r n in g p e r sh a r e

EARNING PER SHARE COMPARSION OF FIFTEEN BANK'S IN PAKISTAN

EPS GROWTH RANKI

NG BANK NAME 31-12-2006

31-12-2007 VOLUME %AGE

1 UBL BANK LIMITED 6.84 13.68 6.84 100

2 BANK OF PUNJAB 8.13 13.14 5.01 61.62 3 HABIB BANK LIMITED 12.92 20.69 7.77 60.14

4 BOLAN BANK (MY BANK) 1.23 1.89 0.66 53.66

5 MCB BANK LIMITED 23.4 24.3 5.97 34.25 6 NATIONAL BANK LIMITED 17.92 24.01 6.09 33.98

7 MEEZAN BANK LIMITED 1.46 1.88 0.42 28.77 8 HABIB METROPOLITAN 7.24 9.32 2.08 28.73 9 BANK AL-HABIB LIMITED 5.57 6.69 1.12 20.11

10 ASKARI BANK LIMITED 10.09 11.23 1.14 11.3

11 FIRST WOMAN BANK LTD 4.71 4.88 0.17 3.61 12 BANK AL-FALAH LIMITED 3.92 3.86 -0.06 -1.53 13 PICIC COMMERCIAL BANK 5.5 3.54 -1.96 -35.64 *Reference: Data obtained from Annual statements of abovementioned Banks on net on their respective website.

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4.6 Future Prospects Of The Organization

Vision:

Challenging and Changing the Way you Bank.

Mission Statement

“MCB Bank’s team of committed professionals is dedicated to maintaining long

term customer relationships through outstanding service and convenience”.

Objectives:

To achieve sustained growth and profitability in all areas of business.

To build and sustain a high performance culture, with a continuous

improvement focus.

To develop a customer service oriented culture with special emphasis on

customer care and convenience.

To effectively manage and mitigate all kinds of risks inherent in the banking

business.

To maximize use of technology to ensure cost effective operations, efficient

management information system, enhanced delivery capability and high

service standards.

To manage the bank portfolio of the business to achieve strong and

sustainable shareholders return and to continuously build shareholders value.

To explore new avenue for growth and profitability.

Strategic planning:

To comprehensive plan for future to ensure sustained growth and

profitability.

To facilitate alignment of the vision, mission, corporate objective and with

the business goals.

To provide strategic initiatives and solutions for projects, products, policies

and procedures.

92

To provide strategic solutions to mitigate weak areas and to counter threats

to profits.

To identify strategic initiatives and opportunities for profits.

To create and leverage strategic assets and capabilities for competitive

advantage.

For developing a forward-looking perspective, strategic planning driven by quality

research is essential. Strategic planning helps to set short, medium and long term

business plans in order to achieve the banks longer term goals, objectives and vision.

Strategic planning division headed by an experienced economist has been

established. It is mandated to conduct economic research and present detailed sect

oral analysis of Pakistan economy. It will also make assessment of overall outlook

for the banking sector that should assist senior management in decision-making

process.

Future prospects of the Muslim Commercial bank are to increase market shares,

mobilize resources, developed retail, agriculture and Islamic banking, introduce

fresh initiatives for corporate and investment banking, capitalize on the new

business opportunities and implement various technology initiatives.

Muslim Commercial bank limited is continuously focused on building long-term

shareholders value, as primary objective. The strength of its brand name, supported

by strategic expansion and the depth of its customer relationship, gives a strong

foundation on which to build and continue growth in the times ahead.

Future prospectus is to improve risk management, which considered being one of the

essentials for sustainable success in the business. Based on the risk management

guidelines issued by state bank of Pakistan; a risk management strategy has been

developed for accessing and mitigating/controlling risk.

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4.7 SHORTFALLS/ WEAKNESSES IN THE ORGANIZATION

Following are the shortfall/ weakness in the organization as per my opinion:

Manual Book-Keeping: Although the bank has computerized accounting system but, still the bankers use to

make their entries in the accounting register.

Low Job Satisfaction: Understanding and the effective management of the human resources is the most

difficult challenge faced not only by the bank but by all the organizations. Even

though the people have been sacrificed in the new organizational developments, it is

becoming clear that the true lasting competitive advantage comes through human

resources and how they are managed. MCB seems to not focusing on this highly

critical issue as the job satisfaction level of the employees working at MCB, was

quite low.

Lack Of Specialization: This famous and useful concept given by Adam Smith in 1776 seems to be missing

in the bank. The employees are constantly rotated from one job to another job of

totally different characteristic in the view of giving them the know-how of the

working in all the departments. But I think this is not a very good tactics used by the

management. Otherwise the situation might be like this ‘Jack of all and master of

none.’

Centralization: There is a high degree of centralization in the bank. Almost all the decision-making

is in the hands of the upper management. But centralization is effective up to a

certain level otherwise it becomes inefficient and at times costly too. I personally

94

observed that delay occurred in the operations of the employees only due to the fact

that they had not got any instructions from the head office.

Lack Of Training Facilities: Presently there is no specific training program arranged for the new recruiters. They

have to learn based on their observations and also their mistakes. It takes a bit time

for the fresh one to learn the banking the result is huge amount of blunders, mistakes

etc. resulting in monetary and non-monetary losses for the bank. There is pressure

not only on the new learner but also on the person placed upon with this

responsibility.

High charges:

The schedules of charges indicate that the fees charged by the bank on the various

services it provides are extremely high. It may result in decrease in the number of its

exiting customers. Further more, this could be very alarming situation for the bank

in case some of the competitors grasped the opportunity and lowered its rates. The

result would be either the lost of market share or decrease in the charges resulting in

lowering the bank’s income.

Less attractive rate of return:

Commercial banks face considerable competition in attracting deposits from

individuals or small investors. In contrast, the Govt. of Pakistan national saving

scheme offers attractive rates of return (approx. 16 to 18 percent annually) on 10-15

year fixed accounts, which banks find difficult to match.

Stiff Competition:

MCB is currently facing strict competition from the foreign banks especially the

American who banks enjoy a good market position. Collectively U.S. banks hold

approximately 9 percent of all commercial banks' assets. At present, three American

banks are operating in Pakistan: American Express Bank; Bank of America and

Citibank.

95

Less Experienced Staff:

Owing to huge turnover of the employees, the no. of experienced and well trained

staff is very low. Majority of the staff working in the bank branches is quite young

and inexperienced. If the bank failed to bring down its high employees turnover,

then it would be lacking the most important resources of any organization i.e. the

experienced staff.

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CONCLUSION

The emerging banks of the private sector of Pakistan like MCB have proven to be

helpful in improving the overall economy of Pakistan. MCB has been declared 07

times “Euromony award” and “Asia Money Award” for the last five years, which is

a very big achievement for Pakistan. Muslim Commercial Bank is heading towards

the right direction and it possesses the necessary potential to improve in all of its

sectors. Thus Muslim Commercial Bank Limited is one of the best banks of

Pakistan.

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RECOMMENDATIONS

First of all, the management needs to overlook the major problems that the

organization is currently facing and then develop strategies to eradicate them.

Some of the suggestions that I would like to give at the end are:

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.

In order to compete in the ever-expanding market both nationally and

internationally, introducing new and efficient products is one of its major

requirements.

Centralized Structure that enables employee involvement needs to be

formed.

Better reward system is one of the most important requirements in order to

reduce the problem of Employee retention and improve Employee

motivation.

There is lack of proper and continuous training of employees that needs to be

solved.

Creation of enhanced performance appraisal system.

Proper use of stationary.

Implementation of enhanced Marketing system.

Job rotation for employees.

There should be more parking place outside the branch for the convenience

of clients.

There should be cold drinking water facility separately available at each

section.

Common room for working ladies is very much essential in each floor so that

they may offer prayers conveniently.

Canteen facility needs to be improved.

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RE F FRE NC ES

www.mcb.com.pk

Annual report of MCB bank

Staff of MCB Aabpara branch Islamabad

Business Record August 15,2008

99

ANNEXURE - I

BRANCHES NETWORK

100

ANNEXURE - IIi

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