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& the most merciful

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MBA

Finance



Introduction to MCB

A bank is a financial institution which deals with money and credit. It is an intermediate between two parties. A

bank is a firm that takes deposits from household, firms and makes loans to

household and firms.


History

Muslim Commercial Bank Ltd. Unfold 57-years’ growth. MCB is not an overnight success story. The

bank started corporate life in Calcutta on July 9, 1947. 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 it Registered office to Karachi, where the Head Office is presently located. Main

Muhammad Mansha Chairman and chief executive of MCB


P

oAuto LoanoBusiness SarmayaoTractor finance schemeoMORTGAGE

S

oMCB ATM ServicesoMCB Mobile BankingoMCB Call Center

oBasic Banking Account (BBA)oCurrent AccountoSaving Account oBusiness Account

D


Allied Bank Limited

United Bank Limited

Askari Bank Limited

Add Your Add Your TitleTitle


6500 6500 6500

292,098 330,274 367,604

218,960 262,510 253,149

113,089 96,256 167,134

394,068 22,663 44,662

5,130 9,193 15,779

15,265 15,374 15,495

2007 2008 2009

Authorize capital

Deposits

Advances

Investment

Borrowing

Reserve

Profit after tax

Description


Organizational Hierarchy Chart

President

Chairman

Vice president

Chief Financial Advisor

Audit Committee

Regional Manager

Branch Manager

Senior Vice President


15-10-2010 30-11-2010

Joining Adjoining


Working Departments

Remittance

1st week

2nd week

3rd week

Customer service

Account

4th week

5th week

6th week Collect External information

Cash

Clearing Department Department


Activity

Leverage

Liquidity

Ratios

MarketProfitability



Current Ratio

Ratio Analysis

Muslim Commercial Bank LimitedCurrent Ratio = Current assets

Current Liability

2007 2008 2009

CurrentRatio

62411535/222015512.81

67584827/318972492.11

70824959/240201722.94

2.94

2.11

2.81

0 0.5 1 1.5 2 2.5 3 3.5

2007

200

8

20

09


Quick Ratio (Acid Test)

Ratio Analysis

Muslim Commercial Bank LimitedCurrent Ratio = Current assets- prepaid Expenses

Current Liability

2007 2008 2009

Quick Ratio 62411535/222015512.81

67584827/318972492.11

70824959/240201722.94

2.94

2.11

2.81

0 0.5 1 1.5 2 2.5 3 3.5

2007

200

8

20

09


Working Capital Ratio

Ratio Analysis

Muslim Commercial Bank Limited

Working Capital ratio = Current Assets - Current Liability

2007 2008 2009

Working Capital Ratio

62411535-2220155140209984

67584827-3189724935687578

70824959-2402017246804787Working Capital Ratio

40209984

35687578

46804787

2007 2008 2009


Working of Current Assets

Current Assets 2007(Rs)

2008(Rs)

2009(Rs)

Cash and balances with treasury banks

39683883 39,631,172 38,774,871

Balances with other banks

3807519 4,043,100 6,009,993

Landings to financial institutions

1051372 4,100,079 3,000,000

Other assets – net 17868761 19,810,476 23,040,095

Total 62411535 67584827 70824959


Working of Current Liabilities

Current Liabilities2007(Rs)

2008(Rs)

2009(Rs)

Bills payable 10479058 10,551,468 8,201,090

Other liability 11722493 21,345,781 15,819,082

Total 22201551 31897249 24020172



Debt Ratio

Ratio Analysis

Muslim Commercial Bank Limited Debt Ratio = Total Debt / Total Assets

2007 2008 2009

Debt Ratio

355365842/410485517

0.86 385179850 /443615904

0.868 439483714/509,223,727

0.86 Debt Ratio

0.86

0.86

0.86

0 0.2 0.4 0.6 0.8 1

2007

2008

2009


Working of Total (Liability) Debt

Total debt 2007(Rs)

2008(Rs)

2009(Rs)

Bills payable 10479058 10,551,468 8,201,090

Borrowing 39406831 22,663,840 44,662,088

Deposit and other account

292098066 330,181,624 367,604,711

Other liability 11722493 21,345,781 15,819,082

Deferred tax

liabilities – net

1180162 437,137 3,196,743

Sub-ordinate loan

479232 - -

Total 355365842 385,179,850 439,483,714


Working of Total Assets

Total Assets 2007(Rs)

2008(Rs)

2009(Rs)

Cash and balances with treasury banks

39683883 39,631,172 38,774,871

Balances with other banks 3807519 4,043,100 6,009,993

Lending to financial institution

1051372 4,100,079 3,000,000

Investment 113089261 96,631,874 167,134,465

Advances 218960598 262,135,470 253,249,407

Other asset 17868761 19,810,476 23,040,095

operating fixed Assets 16024123 17,263,733 18,014,896

Deferred tax Assets - - -

Total 410485517 443615904 509223727


Debt / Equity Ratio

Ratio Analysis

Muslim Commercial Bank LimitedDebt to Equity Ratio: = Total liabilities (Debt) / Shareholder equity

2007 2008 2009

Debt / Equity Ratio

355365842 /551196756.44

385179850 / 584360546.59

439483714 / 697400130.63

Debt to Equity Ratio

6.44

6.59

0.63

0 1 2 3 4 5 6 7

2007

2008

2009


Working of Shareholder Equity

Share Holder Equity = Total Assets – Total Liabilities


Times Interest Earned

Ratio Analysis

Muslim Commercial Bank LimitedTime Interest Earned Ratio = (EBIT) / Interest expenses

2007 2008 2009

Time Interest Earned

29173568 / 7,865,533 3.70

33428306 /11,560,740 2.89

38996408 /15,841,463 2.46

2.46

2.89

3.7

2007

20

08

200

9


Working of EBIT

EBIT 2007(Rs)

2008(Rs)

2009(Rs)

Profit before tax 21308035 21,867,566 23,154,945

Add) interest / markup expenses

7865533 11,560,740 15,841,463

Total 29173568 33428306 38996408

Interest / markup Expenses are available in P&L Account


TOTAL CAPITALIZATION RATIO

Ratio Analysis

Muslim Commercial Bank LimitedTotal Capitalization Ratio = Long term debt / Long term debt + Share holder equity

2007 2008 2009

Total Capitalization ratio

1659394 / 1659394+5511967516

59394 / 567790690.02

437137 / 437137+58436054437137 / 58873191

0.13

3196743 / 3196743+ 69740013

3196743 / 729367560.04

TOTAL CAPITALIZATION RATIO

0.02

0.13

0.04

0 0.02 0.04 0.06 0.08 0.1 0.12 0.14

2007

2008

2009


Working of long term liabilities

Long term Liabilities

Year 2007(Rs)

Year 2008(Rs)

Year 2009(Rs)

Sub-ordinates

loans 292098066 - -

Deferd tax liability 1180162 437,137 3,196,743

Liabilities against assets subject to finance lease

479232 - -

Total 293757460 437,137 3,196,743



Total Assets Turnover

Ratio Analysis

Muslim Commercial Bank Limited Total Assets Turnover = Sales / Total Assets

2007 2008 2009

Total Asset Turnover

31786595 /410485517 0.07

40043824 /443615904 0.09

51616007 /509223727 0.10

0.07

0.09

0.1

0 0.05 0.1

1

20

07

20

08

20

09

Total Asset Turnover

2009 51616007/509223727

2008 40043824/443615904

200731786595/410485517


Fixed Assets Turnover

Ratio Analysis

Muslim Commercial Bank Limited Fixed Assets Turnover = Sales / Total Fixed Assets

2007 2008 2009

FixedAssets Turnover

31786595 /160241231.98

40043824 / 17263733 2.31

51616007 / 180148962.86

1.98

2.31

2.86

0 1 2 3

1

2007 2

008 2

009

Fixed Asset Turnover

2009 51616007 /18014896

2008 40043824 /17263733

2007 31786595/16024123


Sale is the value of "Net Sales" or "Sales" from the company's income statement

Total Fixed Assets Total fixed assets are the value of all the assets which is not current assets. Total Fixed assets are available in the balance sheet.



Net Profit Margin

Ratio Analysis

Muslim Commercial Bank LimitedNet Profit Margin = Net Income / sales *100

2007 2008 2009

Net profit Margin

20,808,390 / 317865950.65 or 65.4%

20,526,669 / 400438240.51 or 51.2%

24,710,953 / 51616007 0.47 or 47.8%

65.40%

51.20%

47.80%

0.00% 20.00% 40.00% 60.00% 80.00%

1

2007

2008

2009

Net Profit Margin

2009 24,710,953 /51616007

2008 20,526,669 /40043824

2007 20,808,390 /31786595


Working of Net Income

Net Income 2007 2008 2009

Net mark–up / interest income after provisions

20856011 24,463,963 28,452,223

Add) Non–mark–up / interest income

6011291 5,791,440 5,642,885

Less)Non–mark–up / interest expenses

26867302 8,387,837 10,940,163


Less) taxes 6042473 6,492,966 7,659,648

Profit after tax 15265562 15,374,600 15,495,297

Less) other expenses 5542828 5,152,069 9,215,656

Net income 20808390 20,526,669 24,710,953


Return on Assets

Ratio Analysis Muslim Commercial Bank LimitedReturn on Assets = Net income after tax / Total Assets * 100

2007 2008 2009

Return on Assets

15265562/410485517*100

3.71%

15374600/443615904*100

3.46%

15495297/509223727*100

3.04%

3.71%

3.46%

3.04%

0.00% 1.00% 2.00% 3.00% 4.00%

1

2007 2

008 2

009

Return on Assets

200915495297/509223727*100

200815374600/443615904*100

200715265562/410485517*100


Working of Net income after tax

Net income after tax

2007 2008 2009

Net mark–up / interest income after provisions

20856011 24,463,963 28,452,223

Add) Non–mark–up / interest income

6011291 5,791,440 5,642,885

Less)Non–mark–up / interest expenses

26867302 8,387,837 10,940,163


Less) taxes 6042473 6,492,966 7,659,648

Net income after tax 15265562 15,374,600 15,495,297


Operating Income Margin

Ratio Analysis

Muslim Commercial Bank LimitedOperating margin = operating Income / Net sales*100

2007 2008 2009

Operating income margin

24,369/31786595 7.66 %

25,910 / 400438246.47%

30,620 / 516160075.93%

7.66

6.47

5.93

0 2 4 6 8

1

2007

2008

2009

Operating income Margin

2009 30,620 / 51616007

2008 25,910 / 40043824

2007 24,369/ 31786595


Operating Income = Available in Six year Analysis of the company


Return on Operating Assets

Ratio Analysis


Return on operating Assets = sales / operating assets

2007 2008 2009

Return on operating Assets

31786595/16082781 1.97

40043824 / 173204852.31

51616007 / 180990102.85 Return on Operating Assets

1.97

2.31

2.85

0 0.5 1 1.5 2 2.5 3

2007

2008

2009


Working of operating Assets

Operating Assets 2007 2008 2009

Capital work–in–progress

233390 510,226 1,099,749

Property and equipment

15607660 16,562,309 16,666,905

Intangible asset 183073 191,198 248,242

Total 16024123 17,263,733 18,014,896


Return on Equity

Ratio Analysis


Return on Equity = Net income after tax / Total Equity* 100

2007 2008 2009

Return on equity

15265562/45414156*100

33.6%

15374600/52244865*100

29.4%

15495297/61075932*100

25.4%

33.60%

29.40%

25.40%

0.00% 10.00% 20.00% 30.00% 40.00%

1

2007 2008 2009

Return on Equity

200915495297/61075932*100

200815374600/52244865*100

200715265562/45414156*100


Working of Total Equity

Total equity 2007 2008 2009

Share capital 6282768 6,282,768 6,911,045

Reserves 34000638 36,768,765 38,385,760

Un appropriated profit

5130750 9,193,332 15,779,127

Total 45414156 52,244,865 61,075,932


Gross profit Margin

Ratio Analysis

Muslim Commercial Bank LimitedGross Profit Margin Ratio = Gross Profit / Net Sales

2007 2008 2009

Gross Profit Margin

23921062 / 31786595 0.75

28483084 / 40043824 0.71

35774544 / 51616007 0.69

0.75

0.71

0.69

0.66 0.68 0.7 0.72 0.74 0.76

1

2007

2008

2009

Gross Profit Margin

2009 35774544 /51616007

2008 28483084 /40043824

2007 23921062 /31786595


Working of Gross Profit

Gross Profit 2007 2008 2009

Mark–up / return / interest earned

31786595 40,043,824 51,616,007

Less) Mark–up / return / interest expensed

7865533 11,560,740 15,841,463

Total 23921062 28,483,084 35,774,544


DuPont Return on Assets

Ratio Analysis


DuPont Return on Assets = Net Income * Sales_____

Sales Total Assets

2007 2008 2009

DuPont return on assets

20,808,390/31786595 *

31786595/4104855170.65*0.07

0.04

20,526,669 / 40043824 *

40043824 /443615904 0.41*0.09

0.03

24,710,953 / 51616007 *

51616007 /5092237270.47*0.10

0.04

0.04

0.03

0.04

0 0.01 0.02 0.03 0.04

1

2007 2

008 2

009

DuPont Return on Assets

2009 24,710,953 /51616007 * 51616007/509223727 0.47*0.10

2008 20,526,669 /40043824 * 40043824/443615904 0.41*0.09

2007 20,808,390 /31786595 * 31786595/410485517 0.65*0.07



Dividend Per Share

Ratio Analysis


Dividend per share = Dividend paid to share holder

Average common share outstanding

2007 2008 2009

Dividend per share

4728496/ 691104527400.0

9834175/ 691104527125.9

6735510 / 691104527219.7

Dividend Per Share

400.0

125.9

219.7

0 100 200 300 400 500

2007

2008

2009


Dividend paid to share holder Source: Cash flow statement of MCB Average common share outstanding

source: financial statement analysis notes of MCB

Note # 32 page # 106


Earning Per Share

Ratio Analysis


Earning Per share = Profit Available to shareholders or Net income after tax

No of shares outstanding

2007 2008 2009

Earning per share

20,808,390 / 1102183 22.09

20,526,669 / 92130422.25

24,710,953 / 111864822.42

Earning Per Share

22.09

22.25

22.42

21.9 22 22.1 22.2 22.3 22.4 22.5

2007

2008

2009


No of shares outstanding = Net income after tax EPS EPS is available in balance sheet Net income is available in P&L account of the MCB


Price Earning Ratio

Ratio Analysis


Price Earning Ratio = Current market Share price / Earning Per Share 2007 2008 2009

Price Earning ratio

18.11 * 22.09400.0

5.66 *22.25125.9

9.80 * 22.42219.7PRICE EARNING RATIO

400.0

125.9

219.7

0 100 200 300 400 500

2007

2008

2009


Working of Price Earning Ratio

EPS is available in balance sheet PE Ratio is available in year analysis of the company.

Current market Share price = PE * EPS


Conclusion

The overall analysis shows that MCB is in good condition throughout the analysis years 2007

In the next year 2008 & 2009, there is decrease in the value of profit as compare to previous year. During this year the operating cost was max and its operational profit was minimum as compare to previous year .The reason behind this due to uncertainty in the process of increase in payables, increase in capital work in progress and less investment during this year.

Earning per share is also increase during these years for the stocks holders and the persons interested in MCB investment.

Insufficient Staff in branches


Recommendation

MCB Should focus more on training needs of staff in line with practical banking, especially IT based products

Bank should acquire modern automation system to provide efficient and prompt service to the customers

Before lending loan to the client or financing a project a team of expert should physically visit the site and then evaluate its feasibility for investment. If the investment and project is profitable then should go on otherwise should not invest.

Increase in Mobile Banking including ATM , online Banking etc.

Take step to increase the profit. Investment in assets should be appropriate.

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