Muslim Commercial Bank

Muslim Commercial Bank
Internship Report
Student Name: Hira Khalid
Class: B.B.A (Hons)
Roll no: 820
Collage: Fatima Jinnah Collage Chonah Mandi Lahore
Univeristry: Punjab Univeristy of Lahore
INTERNSHIP REPORT 1
INTERNSHIP REPORT 2
INTERNSHIP REPORT 3
INTERNSHIP REPORT 4
Branch Management Hirerarchy
Branch Manager
Qasir Iqbal
Operational Manager
Umer But
Trade Manager
Miss Sobia
Credit Manger
Nawaz
CSO
Rana Gulraz
General Banking
Abdul Shahkur/Mohsan
INTERNSHIP REPORT 5
EXECUTIVE SUMMARY
MCB is one of the leading banks of Pakistan incorporated in 1947 MCB Bank has made
significant contributions in building and strengthening both corporate and retail banking sector in
Pakistan. This report is an upshot of my Six weeks internship in Muslim Commercial Bank of
Pakistan. MCB of Pakistan possesses an imperative and historical importance in the banking
sector of Pakistan. It always remains the center of hustles in business activities. It always endows
with great covenant of rally round in terms of funds and services at all epochs of its dynamism.
The main purpose of internship is to learn, by working in practical environment and to
apply the knowledge acquired, during the studies, in a real-world scenario in order to tackle the
problems. In this report the detailed analysis of the organization has been done and all the
financial, technical, managerial and strategic aspects have been evaluated to analyze the current
position of the organization. Along with it, the background analysis, the prevailing competition
analysis, the business process analysis, and the internal environment and external environment of
the organization have been discussed and the recommendations & suggestions for the
improvement have been made wherever required. During my eight weeks internship program, I
mainly worked with the following departments: GENERAL BANKING, CREDIT and FOREX,
these departments have been discussed in detail and all the policies and procedures have been
described thoroughly. This report will provide a complete and clear image about Muslim
Commercial Bank.
INTERNSHIP REPORT 6
OBJECTIVES
This internship offers me an incredible opportunity to gain real-world experience in the
high-stakes finance industry. The primary objective of the project is to forecast or determine the
actual financial status and performance of an organization
Following are important objectives of studying the organization:
 To learn about Capital Adequacy, Asset and Liability Management, Interest Rate Risk ,
Liquidity, Asset Quality & Profitability of bank.
 To monitor the adequacy and effectiveness of the internal control system and Financial
Reporting Framework.
 Assessment of the company’s financial condition through the financial statements.
 Analyzing savings and investment trends in banking sector.
 To describe the impact of financial decisions on the health and functioning of the overall
organization.
 To examine the Innovations in customer service in banking.
INTERNSHIP REPORT 7
1. OVERVIEW OF THE ORGANIZATION
1.1 BRIEF HISTORY OF THE ORGANIZATION
The history of MCB can be divided into four main Phases:
 Development Phase
 Nationalization Phase
 Privatization Phase
 Present Position of MCB
1.1.1 DEVLOPMENT PHASE
MCB Bank Limited was incorporated by the Adamjee Group on July 9, 1947, under the
Indian Companies Act, VII of 1913 as a limited company. The bank was established with a view
to provide banking facilities to the business community of the South Asia. After the partition of
the Indo-Pak subcontinent, the bank moved to Dhaka (then the capital of former East Pakistan)
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 64 years
legacy of trust of its customers and the citizens of Pakistan. MCB Bank is not an overnight
success story. It started with a share capital of Rs 30 million which is divided into 3 million
ordinary shares of Rs 10 each.
INTERNSHIP REPORT 8
NATIONALIZATION PHASE
The 1960s decade is stated as the golden era in Pakistan’s economic and financial
development. The banking sector also registered noticeable growth during that period and lent a
strong helping hand to the government to achieve rapid economic growth of the country. But in
early 1970s this scenario changed altogether. The separation of East Pakistan (now Bangladesh)
and induction of the government led by Zulfiqar Ali Bhutto were the most significant events of
early 70s having far reaching effects on the banking system. In the wake of rapidly changing
conditions of the country, the government decided to nationalize all the commercial banks so that
the nation as a whole can benefit from a better use of resources. Consequently, the Muslim
Commercial Bank was nationalized under the Banks (Nationalization) Act, 1974 promulgated on
January 1, 1974. In the banking sector, the then government decided to retain only five major
banks by merging all the smaller banks with the large ones. As a result of this policy, the Premier
Bank was merged into Mus Bank in 1972..
PRIVITIZATION PHASE
This was the first bank to be privatized in 1991 and the bank was purchased by a
consortium of Pakistani corporate groups led by Nishat Group. The banks after nationalization
came under political and bureaucratic control and deviated from normal banking practices. Some
of their senior executives were tempted to nurture a culture of obliging big businessmen, feudal
and political influential. They sacrificed their personal integrity and interest of banking sector for
gaining promotion and accumulating personal wealth. That is how banking sector started losing
its upright and professional institutional image from mid-80s and its downward slide started
INTERNSHIP REPORT 9
which touched new low during 1990s. The then PML government also became conscious of the
falling standard of the banking sector and decided to privatize all the commercial banks. Banks
(Nationalization) (Second Amendment) Ordinance 1991 was also promulgated to pave the way
for privatization of banks in Pakistan. In the wake of above amendments, 26% shares and above
valuing Rs. 149.8 million of the Muslim Commercial Bank, held by the State Bank of Pakistan
were sold and the Bank’s management was transferred to the purchasers of these 26% shares.
Mian Mohammad Mansha is the Chairman of the MCB and has played instrumental role in its
success.
1.1.2 PRESENT POSITION OF MCB
MCB has significant contributions in building & strengthening both corporate and retail
banking sector in Pakistan. MCB Bank Ltd in 2009 delivered a profit before tax of Rs. 23.2
Billion registering a growth of 6% over last year. This growth is directly attributable to an
increase of 14% in CASA deposits, 21% in revenues and a tight control on expense base
enabling to retain position as one of the most profitable banks in the country. In 2009, MCB
delivered a superior return on equity of 27.4% and assets crossed the Rs. 500 Billion mark. This
performance is all the more remarkable keeping in view the economic & political challenges
faced by the country during this past year and miscreant created issues that MCB specifically
grappled with for a large part of the year. MCB fundamental belief is that a financial services
company can only succeed if it meets its customers’ needs. If they can understand customer’s
financial objectives and offer them the right products and services so that they can be financially
successful, then MCB Bank will continue to build on its leadership position and provide requisite
returns to its shareholders. During 2009, MCB took several initiatives that brought even closer to
INTERNSHIP REPORT 10
their customers. With the launch of MCB Privilege, MCB became the first local bank to offer a
dedicated proposition for the affluent segment; to meet the growth and protection needs of
customers, we introduced Bancassurance and Investment Products in many of our branches; to
enhance transactional convenience for customers, MCB became the first Pakistani bank to
launch mobile banking. These coupled with several other initiatives enabled us to continue on
the path of growing customer base and profitability. Last year, to expand and reach customer
proposition, MCB also reached an agreement with RBS Pakistan to acquire their business.
Unfortunately, the
deal did not go through but bank continue to invest organically to further strengthen businesses.
AWARDS & ACHIEVEMENTS
NATURE OF THE ORGANIZATION
MCB Bank Limited is a banking company incorporated in Pakistan and is engaged in
commercial banking and related services. The Bank’s ordinary shares are listed on all the stock
exchanges in Pakistan whereas it’s Global Depository Receipts (GDRs) representing two
ordinary shares are traded on the International Order Book (IOB) system of the London Stock
Exchange. MCB Bank Limited is a Pakistan-based company. The Bank operates in four business
segments
• Corporate finance
• Trading and sales
• Retail and consumer banking
• Commercial banking
CORPORATE FINANCE
Corporate finance includes underwriting, securitization, investment banking, syndications;
initial public offerings (IPO) related activities (excluding investments) and secondary private
placements.
TRADING & SALES
Trading & sales segment includes fixed income, equity, foreign exchange commodities,
lending’s to financial institutions and brokerage debt.
RETAIL & CONSUMER BANKING
Retail & consumer banking includes retail lending and deposits, banking services, private
lending and deposits, banking services and retail offered to its retail customers and small and
medium enterprises.
COMMERCIAL BANKING
Commercial banking segment includes project finance, export finance, trade finance,
leasing, lending, guarantees and bills of exchange relating to its corporate customers. MCB is
one of the leading banks of Pakistan. Its deposit base of Rs. 368 Billion and total assets over
Rs.500 Billion. MCB soon earned the reputation of a solid and conservative financial institution
managed by expatriate executives. In 1974, MCB was nationalized along with all other private
sector banks. The Bank has a customer base of approximately 4 million, a nationwide
distribution network of over 1,000 branches and over 450 ATMs in the market During the last
fifteen years, the Bank has concentrated on growth through improving service quality,
investment in technology and people, utilizing its extensive branch network, developing a large
and stable deposit base.
Revenue Trend
120000000
100000000
BUSINESS
80000000
60000000
40000000 VOLUME
20000000
0
Markup Fee Dividend Income From Gain on sale other income total
interest commission Foreign of securities
return earned and Currencies Business
brokerage
income 2017 2016 2015 2014 2013 volume in
terms of Deposit, Advances and Revenue investments for the last five year as under:
REVENUE
2017 2016 2015 2014 2013
Particulars
Markup interest earned 74090972 67400294 80532000 77269000 65064000
Fee commission and brokerage
income 9353983 7639750 8383000 7225000 6741000
Dividend 1941452 1456326 1267000 1061000 933000
Income from dealing in foreign
currencies 1302826 911520 950000 1061000 917000
Gain on sale of securities 4746658 5677010 4428000 1648000 2130000
Other income 620854 488479 208800 156600 450000
Total 92056745 83573379 95768800 88420600 76235000
Revenue chart
Total Assets (Amount in Mil)
Particulars 2017 2016 2015 2014 2013
Cash and balances with treasury banks 106072 74222 61209 46754 59946
Balances with other banks 4579 4343 3682 3016 1537
Lending to financial institutions 4398 2809 5132 1418 1225
Investments 656963 555928 568803 511137 449006
Advances 469355 348166 314125 303559 248243
Operating fixed assets 39573 32752 32433 31193 28595
Other assets 46368 33639 31246 37555 26956
Net 1327308 1051859 1016630 934632 815508
Net Assets
16%26%
18%
20%20%
2017 2016 2015 2014 2013
Net Liabilities (Rs in Thousand)
Years Net Investments
2017 1169850
2016 910185
2015 879265
2014 804527
2013 705277
Net Amount 4469104
Net Liabilites
1400000
1200000
1000000
800000
600000
400000
200000
0
Net Liabilites
2017 2016 2015 2014 2013
Income Tax Rs: in Million
Years Income tax
2017 77203
2016 16178
2015 16782
2014 12405
2013 10982
Chart Title
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
income tax
2017 2016 2015 2014 2013
NUMBER OF EMPLOYEES
BOARD OF DIRECTORS
Mian Muhammad Mansha Chairman
S.M. Muneer Vice Chairman
Mr.Tariq Rafi Director
Mr. Shahzad Saleem Director
Mr. Sarmad Amin Director
Dr. Muhammad Yaqub Director
Dato Muhammad Hussain Director
Mian Raza Mansha Director
Aftab Ahmad Khan Director
Mian Umer Mansha Director
Mr.M. Ali Zeb Director
Dato Seri Ismail Shahudin Director
Mr .M.U. A Usmani President/ CEO
KEY MANAGEMENT
Audit Committee
Members
 Tariq Rafi – Chairman
 Dr. Muhammad Yaqub
 Dato’ Mohammed Hussein
 Aftab Ahmad Khan
 Muhammad Ali Zeb
 Malik Abdul Waheed
Hira Khalid.
Human Resource Committee
Members
 Mian Mohammad Mansha Chairman
 Mian Raza Mansha
 MR. Shahzad Saleem
 Mr. M.U.A. Usmani
Risk Management and Portfolio Review Committee
Members
 Mian Umer Mansha Chairman
 Mr. Tariq Rafi
 Mr. Sarmad Amin
 Mr. Shahzad Saleem
Business Strategy and Development Committee
Members
 Mian Mohammad Mansha Chairman
 S. M. Muneer
 Mian Umer Mansha
 Mr. M.U.A. Umani
 Dato' Mohammed Hussein
Committee on Physical Planning, IT Systems and Contingency Arrangements
Members
 Mr. Sarmad Amin Chairman
 Mr. Tariq Rafi
 S. M. Muneer
SBP Report Compliance Monitoring Committee
Members
 Mr. Aftab Ahmad Khan
Chief Financial Officer
 Mr. Salman Zafar Siddiqi
Company Secretary
 Mr. Abdus S. Sami
Auditors
 KPMG Taseer Hadi & Co.
 Chartered Accountants
Legal Advisors
 Khalid Anwer & Co.
 Advocates & Legal Consultants
STAFF STRENGHTH
Years Number of permanent Employee
2017
2016
2015
2014
2013
HIERARCHY OF MANAGEMENT
PRODUCT & SERVICES
MCB CORPORATE FINANCING
MCB Corporate Financing provides access to diversified financing options, including
working capital loans, term loans, trade finance services and investment banking.
 Working Capital Loans
Based on the customer’s specific needs, the Corporate Bank offers a number of different
working capital financing facilities including Running Finance, Cash Finance, Export Refinance,
Pre-shipment and Post- shipment etc. Tailor- made solutions are developed keeping in view the
unique requirements of your business.
 Term Loans
MCB offers Short to Medium Term Finance to meet capital expenditure and short term
working capital requirements of our customers. The loans are structured on the basis of
underlying project characteristics and cash flows of the business.
 Trade Finance Services
Under Corporate Banking MCB offers trade finance services that include an entire range of
import and export activities including issuing Letters of Credit (L/Cs), purchasing export
documents, providing guarantees and other support services.
 Cash Management
Cash Management provides a wide range of value added services to large corporations
through its vast network of online branches. Our structured and customized products enable our
customers to realize their sales proceeds swiftly from all over the country, supported by real-time
MIS.
 Transaction Banking Division
Transaction Banking provides wide range of value added services to large corporations
through its vast network of real-time online branches network. Our structured and customized
products enable our customers to realize their sales proceeds swiftly from all over the country,
supported by real-time MIS.
The basic products offered by Transaction Banking Division are as under:
 Collections
 Payments
 Channel Financing
 Local Rupee Drawing Arrangement
 Home Remittances
MCB RETAIL BANKING
DEPOSIT ACCOUNTS
Current Account
MCB Bank offers a variety of current accounts to cater to the everyday transactional
needs of various customers. These accounts ensure ease and freedom to bank from any of the
1,100 branches across the country. The different accounts include: the basic account that has no
minimum balance; Business Account offering free online transactions, Demand Drafts, Pay
Orders and lots more to meet the day to day business requirements; Current Life Account which
offers the security of life insurance free of cost; and for all the others the conventional Current
Account.
 Savings Account
It offers a wide array of savings products that suit short term growth & transactional needs.
Our savings accounts offer attractive profit rates as well as flexibility to transact. Savings Xtra is
targeted for customers having Rs. 5 million deposit, 365 Gold offers profit rate on daily balance
while PLS savings has a lower minimum balance requirement. In addition, a unique product:
Smart Savings is an account run solely via a debit cart, offering a very competitive rate to small
savers.
 Foreign Currency Account
Enjoy the confidence of operating an international account, locally. MCB Foreign Currency
Account offers the option of earning attractive returns on your Foreign Currency Investment.
 Saving 365 Gold
MCB Savings 365 Gold Account offers you a wide range of attractive profit rates. The
MCB Saving 365 calculates profits on a daily product basis and gives you the facility of
unlimited withdrawals.
 Smart Dollar Account
MCB Smart Dollar Account is a sensible way to maintain or grow your US Dollar deposit
across USD Current, Savings or Term Deposits.
 Special Term Deposits
With a wide range of choices and tenors, you can open one or more term deposit accounts
that best suit your current or long term needs MCB Term Deposits offer attractive short to mid-
term investment options with flexibility, convenience and security. With various tenor options
available customers can choose one that suits their needs. This is combined with different profit
payout options and the added facility of being able to avail credit facility against their deposits.
 Business Accounts
MCB Business Account lets you build your business through the accrued savings from
discounted transaction fees, and more.
 Saving Extra Account
MCB Savings Xtra Account offers you a wide range of attractive profit rates. Grow with
MCB Xtra by saving more and earning greater profit.
 Current Life Account
The coverage you need for the life you lead. MCB Current Life gives you the peace of mind
of comprehensive life insurance in a current account and fits right into your lifestyle.
 Mahana Khushali Bachat
MCB Monthly Khushali Scheme provides you with a steady income every month. Just
purchase a Monthly Khushali Certificate and you will enjoy a steady income of your total
deposit every month. Terms deposit.
MCB BANCASSURANCE
Combining the best of banking and insurance solutions, MCB Bancassurance has created a
one-stop shop for all your financial and insurance needs. Whether you want to save for your
child’s education or marriage, for the security of dignity after retirement or gaining maximum
return on savings, MCB Bancassurance has a plan just for you.
MCB’S REMITTANCE
Fast, secure and easy-to-use, MCB's Remittance Services is an efficient way to transfer
money overseas. You can remit funds from any country to Pakistan through Swift System. MCB
Home Remittance provides a seamless inflow of foreign remittances credited in the beneficiary’s
account within minutes. Cash payments can also be made at our designated branches on behalf of
Xpress money, Samba (Speed cash now) and MoneyGram, along with cash payments from other
correspondents all over the world.
MCB LOAN PRODUCTS
 Car4U
MCB Car4U not only gets a car of your own choice but is also affordable with competitive
mark-up, flexible conditions, easy processing and above all, no hidden costs.
 Business Sarmaya
Good cash flow is the key to any successful business. MCB Business Sarmaya offers running
finance facility against your house/ flat, insuring a steady cash flow for your business.
 Pyara Ghar
MCB Pyara Ghar is an ideal Home Finance from your own bank that lets you Purchase,
Renovate or Construct your home the way you have always wanted. Having your own home was
never so easy.
 Easy Personal Loan
MCB Easy Personal Loan provides you with the financial advantage to do things you've always
wanted to but never had the sufficient funds for. Take that much-needed holiday. Buy a car.
Refurnish your house. Purchase a new TV. Finance a better education for your children.
 Instant Finance
With MCB instant Finance get a loan instantly at any MCB branch against liquid collateral at
competitive pricing.
MCB RUPEE TRAVELERS CHEQUE
It is a safe and secure way to make payments nationwide. MCB Rupee Travelers Cheque,
being the market leader, is the most widely accepted way to pay cash for travel-related purposes
MCB Rupee Traveler's Cheques were first introduced in 1993 as safe cash for traveling and
travel related purposes.
MCB ONLINE SERVICES
 ATMs
MCB has one of the nation's largest ATM networks with over 450 ATMs and still growing.
MCB ATMs give you 24-hours convenience of cash withdrawal, mini-statement, utility bill
payment, funds transfer services and much more. With MCB Mobile ATM not only do we
provide you with world class banking service but we also provide convenience. Our innovative
mobile ATMs ensure that you are given service close to you.
 Call Center
The state of the art MCB call center is the right choice to keep you in step with your ever
hectic schedule by providing you services relating to your account and Smart card at any point in
time. There’s no easier way to bank than the new enhanced 24/7 MCB Call Center, which blends
innovation and convenience to provide Banking Services that go beyond expectations. With
MCB Call Centre you can maintain your VISA credit & ATM/Debit cards, check your account
balances, confirm last 5 transactions, pay utility & mobile phone bills, top-up your mobile, pay
MCB Visa Credit Card bill from your MCB account, transfer money within your own accounts
in MCB and register complaint.
 Mobile Banking
At the forefront of technological excellence, MCB proudly introduces MCB MOBILE
BANKING. MCB Mobile is a quick easy and secure way to recharge mobile phones, transfer
money, pay bills and do much more. No need to visit a branch or an ATM anymore, login to
www.mcbmobile.com using your mobile phone and start transacting.
 Bill Payments
MCB easy bill pay offers unmatched convenience to pay your utility and mobile phone bills
or re-charge your prepaid mobile phone accounts anywhere, anytime with security and peace of
mind. MCB is the only bank that offers you 3 convenient options of making bill payments to
PTCL, SSGC, SNGPL, KESC, Mobilink, Supernet, IESCO, HESCO, and Ufone. So, save your
precious time by avoiding long queues and pay your bills through MCB Easy Bill Pay.
 Online Banking
MCB has a fast growing network of over 1,100 online branches in the country providing
customers real time online transaction facilities.
MCB CARDS
 Smart Card
MCB Smart Card is the key that enables access to convenient banking services. Smart Card
allows you to manage your account, withdraw cash, transfer funds, pay utility and mobile bills,
recharge prepaid connections, register for mobile and internet banking services and much more.
The convenience and flexibility of MCB SmartCard will help you live a smarter life. It not only
helps you manage your expenses, but also eliminates undue interest on your day to day credit
card transactions. Your balance is always within your reach and you spend accordingly. MCB
now brings MCB SmartCard -a secure and convenient instrument of payment with unmatched
functionalities. It provides 24-hour direct access to your bank account.
 Debit Card
Now MCB brings a secure, convenient and quick payment facility that enables you to do
purchasing by using your existing MCB ATM / MCB Smart Card as a DEBIT CARD.
 Visa Credit Card
MCB offers a complete suite of Classic, Gold and Platinum Visa Credit Cards focusing on
providing, superior service, travel privileges & shopping pleasure. It also offers comprehensive
insurance & installment plans, reward points and SMS alerts that give a different feel to the
world of Credit Cards. These unique features include i-revolve, which makes variable mark-up
rate available to customers allowing them to repay at affordable rates.
MCB INVESTMENT BANKING
Make the most of your wealth with investment opportunities that match your unique
financial aspirations. MCB Investment Services offer distribution of mutual funds managed by
the leading fund managers of Pakistan. We can suggest the products most suited for your needs,
or work with you to create a personalized solution completely focused on your expectations of
the capital markets MCB goal is to provide best financial solutions to client helping them
achieving their objectives and support economic growth of the Country.
The basic services offered by investment banking are as under:
 Project & Structured Finance
Involves financing complex projects, usually in an SPV structure, where the loan is tightly
structured around the cash flows, risks are allocated amongst various stakeholders, and there is
limited or no recourse to the sponsors.
 Syndicated Loans and Debt Capital Markets
It involves structuring/advisory arrangement, underwriting and placement services for
significant financing requirements by large corporate and institutional clients to other financial
institutions or through the debt capital markets.
 Quasi Equity/Hybrid Instruments
It structures and places a category of debt that has some characteristics of equity such as
being unsecured, subordinated or with a potential equity upside.
 Equity Capital Raising
Equity Services relate to raising capital for clients by offering common or preferred equity
to public or private investors, through initial public offers, offers for sale, rights issues and
private equity placements.
 Advisory Services
Financial and Capital Raising Advisory provides clients with financial advisory services,
commercial structuring support and access to capital resources to help companies successfully
finance their business/project.
 Facility Administration
Management of creditor interests in syndicated transactions in capacities such as facility
agent, security trustee, project monitoring bank, book-runner etc.
 Commercial Banking
Complementary products and services such as revolving lines of credit, trade services and
cash management that may be bundled with our Investment Banking Products.
MCB AGRICULTURE PRODUCTS
MCB has been providing finance to the agriculture sector since 1973. With the help of our
vast branch network, specialized staff posted in the branches, multiple and diversified product
range, we cater to the financing requirements of the farming community spread throughout the
country and facilitate in achieving increased productivity
 Shadabi Plan
Shadabi Plan caters the financing needs for production activities on the farm which mainly
include seed, pesticides and fertilizers along with provisions for miscellaneous expenses like
payment of electricity & diesel bills of tubewells, maintenance expenses for tractors and the like
items as per list of Eligible items.
 Khushali Scheme
Under Khushali Scheme loans/finances are allowed for farm/ non-farm credits which
include fixed investments/working capital requirements. Amount of finances sanctioned depend
upon the credit requirement and collateral.
Financing for land leveling/development, heavy equipments, agriculture machinery,
vehicles/transport for agri purpose are covered under this scheme. There may be other
development projects proposed by the farmers falling with in the ambit of agri financing, which
can be considered under this scheme.
 Tractor Finance Scheme
To boost up the mechanized farming in the country, Tractor Finance Scheme is introduced
to offer specialized services to farmers. Under this scheme, there is no requirement of minimum
land holding because of multipurpose use of tractor for agriculture cum commercial. However,
the repayment capacity and potential use of tractor will be evaluated at the time of loan
processing
 Aabiari Scheme
Under the Aabiari scheme, financing facilities for tube well, other wells, irrigation systems
of all types including sprinklers are covered. The purpose is to facilitate the farmers in
overcoming the shortage of water for cultivation/plantation since water is essential requirement
for crops.
 Grower Finance
Grower Finance is a unique way of financing registered/(bonafide) growers/farmers of
sugarcane, cotton and rice(mills). The special characteristic is that the financing facilities are
extended to farmers against the Mill/Factory guarantee. Fixed/floating charge may be created on
the Mill's assets and the loan is disbursed directly to the growers. This finance is short term in
nature but the tenure may extend to eighteen months in case of growers of sugarcane.
 Dairy & Meat Plan
The plan is aimed at promoting the Dairy sector & meat production in the country. The
farmers are extended financing facilities to purchase dairy animals for milk and for the
establishment of animal fattening stations to increase meat production on commercial line, thus
enabling the farmer to create more income.
 Murghbani Scheme
Murghbani Scheme covers extensively all requirements of the poultry industry with focus
on facilitating the farmers. We offer financing facilities of all types of activities in the value
chain starting from establishment of poultry farms infrastructure to all requirements in the
process till the final out put including marketing of the same by the farmers. Value addition
process by the farmers for poultry processing is also covered under the scheme.
 Baghbani
The scheme aims at facilitating the farmers engaged in horticulture by extending credit
facilities covering the entire range of related activities. The proposals are assessed keeping in
view the market potential and repayment capacity based on the cash flows of the activity. The
farmers are extended all type of credit facilities required to produce fruits & vegetables of better
quality. The repayment of the loan is as per farmer convenience or linked to crop cycle and
timings of cash flows. Facilities like running finance, working capital requirements,
infrastructure development, machinery & equipment, irrigation etc are all covered under this
scheme.Progressive farmers are specially encouraged.
 Mahigeri Scheme
Mahigeri Scheme caters to the credit needs of fish farmers covering entire range of
activities including marketing of their produce. The loans are of short, medium and long
termdepending upon the purpose. Financing for value addition process by the fish farmers is also
covered under the scheme.
VIRTUAL BANKING
MCB provides the convenience of banking via internet, whether at home, office or on
travel, log on to www.mcb.com.pk and enjoy 24 hour access to all your accounts at MCB for
great number of services such as Funds Transfer, Utility Bill Payments, Mobile Top-ups and
much more.
 Detailed Account Summary of all listed accounts.
 Mini-statements of each of the listed accounts showing recent transaction history for that
account(s).
 Statement-by-Period of each of the listed accounts, based on the period specified.
 Immediate or Scheduled Transfer of Funds between your own accounts, as well as to
third-party accounts setup as beneficiaries, maintaining accounts with MCB.
 Scheduling of ‘One-Time’ as well as ‘Recurring’ Funds Transfers.
 Payment of utility bills for registered Utility Companies.
 Immediate or Scheduled Bills Payment. Scheduling of ‘One-Time’ as well as ‘Recurring’
bill payments. Option for ‘Full’ or ‘Partial’ payment based on the payment conditions
specified by a particular Utility Company.
 Bulk Salary Transfer for Corporate Customers, to facilitate them in paying salary to the
corporate employees, who maintain accounts with MCB.
 Bulk Funds Transfer for Corporate Customers.
 Cheque Book Request for any of your listed accounts.
 Payment/Transfer Alerts for reminding, in advance, prior to the processing of specified
payments and transfers.
 Personal Alerts for reminding of pre-specified events and occasions.
ISLAMIC BANKING
With the help of Shariah specialists, lawyers and professional commercial bankers, MCB
Islamic Banking provides Riba Free and Shariah Compliant solutions to various customer
segments in a growing number of cities.
 Deposit Schemes
For customers who are looking for a deposit opportunity where they can purse their funds
and reap halal returns on it, MCB offer the following products.
 Al-Makhraj Saving Account
 Al-Makhraj Ianat Account
 Al-Makhraj Term Deposit
Fund Based Facilities
MCB offers 3 broad Islamic fund-based facilities:
 Ijarah
 Murabahah
 Diminishing Musharika Equipment
Ijarah Products
MCB’s Islamic Ijarah, analogous to the English term 'leasing’, is based on the ‘Ijarah wa
Iqtina’ concept which means the sale of the asset to the lessee after the Ijarah has matured. Under
this scheme, MCB will be the owner of the asset, and the customer (lessee) will be given the
asset to use for a certain period of time in return for monthly rental payments.
MCB will give a separate unilateral undertaking that it will offer to sell the asset to the
customer (lessee) at the maturity of the Ijarah agreement at a price that may be equal to the
security deposit amount, hence the term ‘Wa Iqtina’
Types of Ijarah
 Car Ijarah
 Equipment Ijarah
 Murabahah
It is a contract between a buyer and a seller under which the later first purchases the goods
at the request of the former i.e., customer and then sells it to same customer after adding profit.
Murabah Sale Price = Cost + Expenses incurred + Agreed Profit
Musharika Equipment
It is a contract through which the bank and its client participate in the joint ownership of a
property. The share of the Bank is further divided into a number of units and it is agreed that the
client will purchase the bank’s share periodically, thus increasing his own share until all the units
of the bank are purchased by him so as to make the client the sole owner of the property.
PRIVILEGE BANKING
A first from a local bank, MCB Privilege through its dedicated, world class Privilege
Centers offers a higher level of personalized services, more rewarding in-branch experiences and
a wide array of deposit and investment products that are tailored to meet the financial
expectations for affluent clientele. As members of MCB Privilege, customers experience
unparalleled advantages that put them ahead of others. MCB’s dedicated Privilege Centers a wait
to welcome you in Karachi, Lahore, Islamabad and Multan, with plans to expand to more
locations.
OTHER SERVICES
 MCB MNET
MNET is an electronic inter-bank connectivity platform for online transactions on ATM and
other remote banking channels. It offers other Value Added Services that include a portfolio of e-
banking and payment system products as well as management and day-to-day operations of the
same. Members include 10 local and foreign financial institutions enjoying ATM sharing and
Value Added Services
 MCB Salary Club
A payroll solution designed to make life easy; it simplifies all the monthly payroll related
banking needs of employers and opens the door to a world of special offers for employees.
Salary Club provides the convenience of having an extensive range of financial services
available to employees at their place of work.
 MCB Lockers
MCB Lockers are the best protection for your valuables. Lockers of different capacities are
available nationwide.
 MCB SMS Banking
Banking at your fingertips SMS anytime to get information regarding balance, mini
statements and credit card related information once your card is linked.
 MCB Full Day Banking
Enjoy the convenience of extended banking hours from 9am to 5pm, including Saturdays at
MCB FULL Day Banking branches across the country.
ORGANIZATIONAL STRUCTURE
ORGANIZATIONAL CHART
MEDIOCRE LEVEL MANGEMENT
The organization chart within a department and in different offices as follows:
MAIN OFFICES
 Registered Office
MCB Building, F-6/G-6, Jinnah Avenue, Islamabad.
Shares Registrar
M/s. THK Associates (Pvt.) Ltd., State Life Building No.3
Dr. Ziauddin Ahmed Road, Karachi
Corporate Office
MCB House, Jail Road, Lahore
BRANCHES NETWORK
ORGANIZATIONAL STRUCTURE OF THE BRANCH
A well-developed and properly coordinate structure is an important requirement for the
success of any organization. It provides the basic framework within which functions and
procedures are performed. Any organization needs a structure, which provides a framework for
successful operations. The operation of an organization involves a number of activities, which
are related to decision making, and communication of these decisions. These activities must be
well coordinated so that the goals of the organization are achieved successfully
DEPARTMENTS OF FATIMA JINNAH ROAD BRANCH (0947)
The departments are as under
 General Banking Department
 Clearing Department
 Remittance Department
 Credit Department
 Accounts Department
 Foreign Trade
 Internal Control Department
CLEARING DEPARTMENT
Clearing means collection of cheques receive from our customers but drawn on other banks.
Receiving the instruments deposited by customers Posting the amount of instruments in credit of
customer’s account If cheque returns from the concerned bank, the customer account is debited.
Crossing stamp is put on the instrument and slip given to customer on receipt of the instrument.
Clearing stamp and “payee account credited” are put on the instrument and the voucher. Clearing
House has provided this facility. Clearing house facilitates different banks, in one city, to get
their cheques drawn upon other banks to be cleared.
Cheques lodged in clearing constitute in clearing constitute two types of clearing:
 Outward Clearing
 Inward Clearing
 Outward Clearing
When cheques, TC’s and other negotiable instruments drawn upon other banks like NBP,
ABN AMRO of the same city (as Lahore) are presented in Muslim Commercial bank to deposit
them in the respective payee’s accounts, these instruments are lodged in outward clearing (o/w
clg) of MCB bank.
Procedure of Outward Clearing
 The name of the branch appears on its face where it is drawn
 It should not stale or post - dated or without date.
 Amount in words and figures does not differ.
 Signature of the drawer appears on the face of the instrument.
 Instrument is not mutilated.
 There should be no material alteration, if so, it should be properly authenticated.
 If order instrument suitably indorsed and the last endorsee’s account being credited.
 Endorsement is in accordance with the crossing if any.
 The amount of the instrument is same as mentioned on the paying-in-slip and counterfoil.
 The title of the account on the paying-in-slip is that of payee or endorsee (with the
exception of bearer cheque).
 If an instrument received other than MCB of Pakistan then special crossing stamp is
affixed across the face of the instrument. Clearing stamp is affixed on the face of the
instruments,
 paying-in-slip and counterfoil (The stamp is affixed in such a manner that half appears on
counterfoil and paying-in-slip). The instrument is suitably discharged, where a bearer
cheque does not require any discharge and also an instrument in favor a bank not need be
discharged.
Return Outward Clearing
 Over writing
 No stamp of clearing or if it is not clear
 No stamp of crossing or if it is not clear
Inward Clearing
Inward clearing means cheques drawn on us and presented by other banks. In inward
clearing Branch acts as paying banker. After realization of inward clearing, banks deposits are
decreased as bank makes payment to other banks from the balances held by the branch. This
realization of inward clearing is also referred to as responding to the clearing. Cheques and other
negotiable instruments instruments (PO, DD, PS, CDR etc.) drawn on Muslim bank, sent by
other banks, constitute the inward clearing of MCB.
Procedure of Inward Clearing
 Instruments with schedules are received from NIFT.
 Amount of each instrument entered is in inward clearing register.
 Instruments are detached and handed over to the deposits and other respective department
for checking and payment.
 In case of any instrument is returned, return memo is prepared stating the reason of the
return.
 Entry is made in cheques Return register.
 Cheques return charges are recovered from the party as per charges schedule.
Checking / Return of Instruments
 Over writing
 No stamp of clearing or if it is not clear
 No stamp of crossing or if it is not clear
REMITTANCE DEPARTMENT
The Remittance department deals with the transfer of money from one place to another.
Funds transfer facility or remittance of funds is one of the key functions of the banks all over the
world. Remittances through banking channels save time, costs less and eliminate the risks
involved in physical transportation of money from one place to another. Muslim Commercial
Bank of Pakistan transfers money in the following ways.
 Pay Order
 Demand Draft
 Mail Transfer
 Telegraphic Transfer
 Pay Slip
 Call Deposit Receipt
 Letter of Credit
 Traveler’s Cheque
 Demand Draft
It is used for payment made outside the city. It is writing on the name of head office.
Accounting entry by drawing branch. When the customer purchases a draft, the drawing branch
sends the advice (a copy of DD) to the drawee branch and the original copy of DD is given to the
purchaser. On the arrival of advice the drawee branch debits HO account and credits the DD
payable account. When the customer comes with the original DD to the drawee branch, his
account is credited by debiting the DD payable account. Charges Commission 50/- but if
amount increase or decrease then it will also increase or decrease and FED 8/- also increase or
decrease.
 Pay Order
Payment Orders are issued for the money transfer with in the city. Pay order is made for
local transfer of money. Pay order is the most convenient, simple and secure way of transfer of
money.
 Mail Transfer
A Mail Transfer is a form of remittance in which the amount remitted by a customer or a
non-customer is directly credited to the account of the beneficiary with another branch. Move
your money safely and quickly using MCB Mail Transfer service. And MCB also offer the most
competitive rates in the market. They charges Rs 50/- exchange rate and RS 75/- postage charges
on issuing mail transfer. When the money is not required immediately, the remittances can also
be made by mail transfer (MT). Here the selling office of the bank sends instructions in writing
by mail to the paying bank for the payment of a specified amount of money. Debiting to the
buyer’s account at the selling office and crediting to the recipient’s account at the paying bank
make the payment under this transfer.
 Telegraphic Transfer
Telegraphic Transfer is a form of remittance, which is advised by telegram, telex or fax
machines. The fundamental principles of such transfer are otherwise identical with the Mail
Transfer. It is the message, which is sent from one branch to another on the order of payer to
payee through wire. It is one of the quickest means to transfer fund through the use of
telex/fax/internet or cable.
ACCOUNTS DEPARTMENT
Opening of account is the most important department of the Branch as this is a contract
between the customer and bank. All future transaction/operation are carried out as per this
contract and any deviation may jeopardize the bank’s interest. The opening of a new account is
the establishment of customer banker relationship. By opening an account at a bank, a person
becomes a customer of the bank. The customers can open following accounts:
 Current Account (CD A/C)
 Profit and loss sharing Account (PLS A/C)
 Basic Bank Account (BBA A/C)
 Fixed Deposit (FDR/TDR)
Account Opening
When a client comes to the bank, and makes a request for opening of an A/C. The officer
says that first fill up a prescribed application form. If he/she wants to open a PLS A/C, then
he/she has to fill a form according to the account.
Requirements
 ID Card of applicant
 ID Card of father, mother, brother, sister, husband or wife
 Student card (if applicant is student)
 Two photos for illiterate person or those who use Urdu signatures
Documents Attach with A/C Opening Form
 A/c opening form
 Specimen signature card
 Zakat form (for non-Muslims)
 Deposit slip
 Requisition form
Issuance of Cheque Book
After opening an A/C with the bank, the A/C holder once again makes a request in the name
of bank for the issuance of a cheque book. The A/C holder mentions title of A/C, A/C number,
sign it properly and mentions the no of leaves he requires.
CREDIT DEPARTMENT
The bank is profit seeking institution. It attracts surplus balance from the customer at low
rate of interest and makes advances at a higher rate of interest to the individuals and business
firms. Credit extensions are the most important activity of all the financial institutions, because it
is the main source of earnings. Advances department is one of the most sensitive and important
department of the bank. The major portion of the profit is usually earned through this
department. The job of this department is to make proposals about the loans; the credit
management division of head office directly controls all the advances. The advances Department
receive application from intending borrowers. After receiving application the advance
department processes it further. After analyzing and detailed investigation, they decide whether
to approve the loan or not. Some loan approvals are made by the Manager of the branch within
his powers as prescribed by the bank’s higher authorities, while some loan applications are
submit to higher authorities for their approval. Some advances are of the following nature:
 Loan against Gold
 Agriculture advance to farmers
 Medium term advance for working capital
 Long term advance for setting industry
 Short term advance to businessman
FOREIGN EXCHANGE DEPARTMENT
This department mainly deals with the foreign business. The main functions of this departments
are:
 L/C dealing.
 Foreign currency accounts dealing.
 Foreign Remittance dealing.
 L/C Dealing
MCB is committed to offering its business customers the widest range of options in the area
of money transfer. If you are a commercial enterprise then our Letter of Credit service is just
what you are looking for. With competitive rates, security, and ease of transaction, MCB Letters
of Credit are the best way to do your business transactions.
 Foreign Currency Account Dealing
This department deals with the foreign currency accounts which mainly include dollar account,
euro account etc.
INTERNAL CONTROL DEPARTMENT
Role of branch compliance department is to reconcile the prescribed frequencies, investigate
long pending reconciliation item, and ensure correct treatment every half-year and clearing
system service branch-in major cities. Internal control is the integration of the activities, plans,
attitudes, policies and efforts of the people of the bank working together to provide reasonable
assurance that the organization will achieve its objectives and mission.
DEPARTMENTS OF THE MCB
COMMERCIAL BANKING GROUP
The Group focuses on revenue growth and profitability while through cross sell and
optimization of branch banking platform. With its large network of branches, Commercial
Banking Group posted robust growth by increasing their deposit volume. The Group enhanced
their sales model through the introduction of a direct sales force team and personnel bankers in
many branches while continuing to strengthen their customer services quality. The year
witnessed a successful restructuring of the SME & Mid-market segment with continued
optimism of the benefit accruing in the upcoming times.
CONSUMER BANKING GROUP
The strategic focus of the Group to enhance cross sell, strengthen customer propositions and
improve customer service. Emphasis will be on rapid expansion of the new initiatives such as
MCB Privilege, Bancassurance, Investment Services and Alternate Distribution Channels. In
parallel, the Group will remain committed to product development & refinement of processes for
continuous growth of deposits & customer base. The Consumer Banking Group on its path of
expanding the product suite and customer base. MCB Mobile, the first of its kind, mobile
payment solution was launched enabling customers to access their accounts and make payments
using their mobile phones. With the launch of MCB Privilege, MCB also became the first local
bank in Pakistan to start a dedicated offering for the affluent segment through three dedicated
Privilege Centers in Karachi, Lahore & Islamabad. A specialized Investment Services Unit was
established to develop and distribute specialized investment products catering to the growth
needs of affluent/mass affluent segments. There was increased focus on enhancing cross sell to
deposit customers by expanding the footprint of Bancassurance. Functionality, reach, as well as,
penetration of Alternate Delivery Channels was enhanced. A significant milestone in 2009 was
the transformation of the call center from a service center to a transactional phone banking
facility. Given the high interest rate environment and tight economic conditions, 2009 remained
a cautious year for the consumer financing business. Only selective lending was carried out in
segments that have performed well historically. With close monitoring of NPLs, the focus
remained on collection & recovery and portfolio management during the year.
CORPORATE BANKING GROUP
Corporate Banking Group's scope of work was expanded with the inclusion of International
Division and Investment Banking, which were absorbed to create better control and synergy. The
group managed to maintain the quality of their risk assets and derived comfort from the fact that
corporate non-performing loans constituted only 1% of the total corporate portfolio as compared
to industry percentage of 4%. The group embarks with cautious optimism with strategic thrust
being on building fee based income and trade business by cross selling to the existing customer
base. Information technology led changes in Transaction Banking (TB) related Products led to a
quantum jump in volumes and income, as a result of automation of payments and collections
systems.
ISLAMIC BANKING GROUP
MCB Islamic Banking managed to maintain its profitability while ensuring quality of its
earning assets despite tough market conditions & deterioration in assets quality of banking
industry. Islamic Banking further strengthened its market outreach by increasing its deposit base
and equity. MCB-IB plans to improve its assets & liability product range. Strategic initiative for
further increase in dedicated branches and capitalizing on existing out reach of MCB Bank has
been undertaken for capturing Islamic banking business.
TREASURY AND FOREX GROUP
Treasury & FX remained focused on its customer orientation and enhanced its coverage to a
broader customer base. The portfolio of customers grew not only through the Treasury
Marketing Unit's own efforts but also as a result of a better cross-sell platform fully supported by
the Wholesale, Commercial, Consumer and Financial Institutions businesses. Fixed Income sales
showed substantial improvement over the past year's performance and remained an area of focus.
The Treasury Money Market business worked towards gradually enhancing the investment
portfolio's duration over the course of the year. This effort was granted greater buoyancy by the
stable deposit growth shown by the bank during the year and the portfolio was almost entirely
funded through the bank's own sources and decreased whatever little dependence there was on
the inter-bank money market. The enhanced duration of the portfolio ensured that the deposit-
taking areas of the bank were able to pay superior rates of return to customers and was a key
support factor in the overall growth of the bank's balance sheet. The Foreign Exchange business
continued to grow over the course of the year in spite of substantial volatility in the inter-bank
markets owing to the turbulent economic situation facing the country. Overall the Treasury & FX
Group turned in a very strong performance and ensured its continued support for the rest of the
bank's businesses. The Treasury followed through on the vision of the Bank's management and
deployed a Treasury Marketing Unit in Lahore which supports the bank's client base in key
centers such as Islamabad, Rawalpindi, Lahore, Faisalabad etc. Further efforts in this regard are
continuing and in the coming year Treasury will add at least one more marketing desk in a major
city broadening its coverage even further.
ASSETS MANAGMENT GROUP
Bank's Special Asset Recovery outfit (SAMG) role further prominence. SAMG, posted cash
recovery in excess of Rs. 1 Billion. It is foreseen that the asset remedial management function
would continue to play a visibly pronounced role at least in the medium-term scenario.
AUDIT & RAR GROUP
Audit Group has performed consultative role in addition to the assurance services that it is
geared to provide. The Group has strengthened itself to cater to the requirements of Bank's
Whistleblowing Program. Training & Quality Assurance Department, developed within the
Group, ensures that the audit assignments qualify the high standards that have been defined for
the Group. Audit Group is now equipped both in terms of human resource and methodology, and
is committed towards optimization of its operations.
OPERATIONS GROUP
Operations group made significant progress through centralization, strengthening of the
Bank's processes through compliance with the COSO based Internal Control Framework,
Business Continuity Management and Staff Training & Development. Strong operational support
was provided to the businesses to ensure the launch of new products, channels and services
including Bancassurance, Privilege Banking, Mobile Banking, Phone Banking, Trade Products &
Cash Management as well as in the migration of core banking application across all branches in
the country.
HUMAN RESOURCE GROUP
The Human Resources Group has worked towards instilling systematic processes to build a
performance-based culture based on internal equity. Alongside aligning the bank with best
practices, this is surely to bring about an efficient and motivated workforce. The Group will be
further developing staff through a focus on career development and training to truly brand MCB
as an employee-focused organization.
BUSNIESS DEVELOPMENT AND NEW INITIATIVES
The Group, in close coordination with the Board and senior management, led the bank-wide
strategic planning exercise to refine and revalidate MCB's 2012 strategy. Program Alpha, an
initiative tasked with transforming branches into efficient sales and service centers was very
active. The Group also set-up a bank-wide Central Business Intelligence Unit responsible for
supporting the retail bank in its sales and performance MIS needs. BDNI will continue to ramp
up on Program Alpha and BIU coverage and will work closely with all bank groups to ensure
strategy delivery.
INFORMATION TECHNOLOGY GROUP
The major focus was on the completion of the roll-out of the Core Banking System
(Symbols) which heralds a new era for the bank. Apart from the roll-out, the Group focused on
up gradation of network technology, revision of security framework and provision of disaster
recovery for the critical business applications, deployment of a new Payments and Collection
system moving MCB to the 3rd market position (from 7th) and launched its Mobile Banking
platform fully integrated with MCB systems. Information Technology governance model has
been introduced to ensure quality selection, monitoring and delivery of all high value projects.
COMPLIANCE GROUP
Compliance Group focus on pro-actively identifying and resolving any regulatory gaps,
particularly related to Know Your Customer (KYC) and Anti-Money Laundering (AML). To
create awareness across the bank regarding KYC & AML regulations, over eighty training
sessions were conducted by the group in 39 cities / regions training approximately 2,600 staff.
Other initiatives were undertaken in the shape of “Compliance News Letter” and “Regulatory &
Legal update”.. The Bank is now moving towards a solution based monitoring and has already
acquired “Name filtering” solution while an AML solution is in the process of being finalized for
implementation which will better equip the bank in curbing any unscrupulous transaction.
RISK MANAGEMENT GROUP
Prudent and effective risk management is and has always been a significant success factor
in steering the Bank's march towards strong profitability and market leadership. The Bank
employs the function of risk management as an important tool in implementation of its long term
vision. MCB has successfully created a culture based on modern techniques that allows risk
management and business units to create more shareholder value through a better understanding
of our Bank and our customers. The Risk Management framework combines core policies, by
procedures and process design with oversight and is supported by risk monitoring across the
bank. Elements of risk management framework are reviewed and updated in order to align our
long-term strategy in the field with lessons learned through the Bank's own experiences and
international best practices also kept compliant with the local regulations and selected
international best practices, particularly those relating to implementation of Basel-II. The group
controls the review and administration of lending solutions offered to our clients through a
dedicated team of experienced professionals. Specific functions of the group ensuring particular
risk management are:
 Credit Review and Credit Risk Control ensure that lending decisions are in line with the
Bank's strategy, lending is prudently given, and that recoveries are actively monitored;
 Credit Risk Management identifies target markets through economic research and data
analysis, defines how the Bank lends to its customers through detailed policies and
procedural product manuals and coordinates with business units to ensure that targeted
lending activity is in line with the Bank's overall risk appetite and strategy;
 Market Risk Management ensures that the Bank's exposures in financial markets are
actively managed within reasonable limits;
 Operational Risk Management helps the Bank understand risks and improve mitigating
controls so as to minimize operational risks that are inherent in almost all areas of the
Bank;
 Basel II Projects monitors the implementation of various projects in the areas of credit,
market and operational risk that have been initiated to allow the Bank to adhere to, and
adopt, the internationally accepted best practices of Basel II;
 In addition to the internal Compliance unit within the Risk Management Group, the Risk
Management & Portfolio Review Committee provides oversight and direction to the
activities of the Group. These elements of risk management within MCB Bank
collectively ensure that the Bank's risk profile is actively monitored and adjusted
according to the Bank's strategy and the operating environment in a manner which
ensures protection to the depositor and value to the shareholder.
INVESTMENT GROUP
The principal purpose of an investment group is the underwriting of new securities issued
by an investment bank's clients. An investment bank may also provide other services, such as
professional advice, working with mergers & acquisitions, and private wealth management.
INTERNAL CONTROL GROUP
The Bank's internal control structure comprises of the Board of Directors, Senior Management,
Risk Management Group, Compliance & Control Group, Financial Control Group, Self-
Assessment Process within business groups and Internal Audit. The Management is responsible
for establishing and maintaining a system of adequate internal controls and procedures for
implementing strategy and policies as approved by the Board of Directors, designed to provide
reasonable assurance as to the integrity and reliability of those controls and reports produced
there from; developing processes that identify, measure, monitor and control risks incurred by
the Bank; maintaining an organizational structure that clearly assigns responsibilities, authority
and reporting relationships; ensuring that delegated responsibilities are effectively carried out.
STRUCTURE AND FUNCTIONS OF THE ACCOUNTS / FINANCE
DEPARTMENT
FINANCE & ACCOUNTING OPERATIONS
The finance department of a bank takes responsibility for organizing the financial and
accounting affairs including the preparation and presentation of appropriate accounts, and the
provision of financial information for managers. The finance team manages the internal finances
of the firm. They are the banks internal management accountants. The main operations covered
by the financial department include:
 Anticipation of fund.
 Acquisition of fund, coordinating financing and fund raising activities.
 Allocation of fund.  Assessment of fund.
 Assessment and appraisal of financial activities.
 Preparation of budgets and financial reports.
 Managing the general ledger.
 Investment of funds and manage associated risks, Involve in direct investment activities.
 Implement long term financial plan.
 Liaising with external auditors.
 Developing strategies of capital budgeting, capital structure and Debt Financing
 Decisions involving capital investment, equity, and debt, along with paying dividends to
shareholders. Maintain cash management.
 Credit risk management.
 Capital structure and debt financing.
 Managing cost of capital, establish credit-rating criteria.
 Determine credit ceilings.
 Monitor the collections of past-due accounts.
 Credit control.
 Monitoring expenditure and liquidity.
 Managing investment and taxation issues.
 Reporting financial performance to the board.
 Providing timely financial data to the CEO.
 Implement Annual business planes, cash flow projection, monitoring and interpreting
cash flows.
 Quarterly operating results of the bank as a whole and in terms of its operating divisions
or business segments.
Finance department records values from financially relevant transactions of valueadding
processes. It enables to maintain a consistent, reconciled, auditable set of books for statutory
reporting, and for consolidation and management support. At the same time, the data gathered
serves as one source for other analytic scenarios such as Regulatory Compliance or for scenarios
groups such as Portfolio & Risk Management.
ACCOUNTS DEPARTMENT WORKING PROCESS
Every branch has its own Accounts Department which is responsible to record and process
each & every business transaction taking place during the working day. This Department
consolidates the position of the branch at the day end in the shape of Assets, Liabilities,
Revenues and Expenses. This position is daily sent to the Finance Department of Head Office
which consolidates all these Statement of Affairs bank wise. This position is sent to the State
Bank of Pakistan (SBP). The main function of Finance Department of Head Office is to maintain
smooth liquidity of bank by arranging funds from SBP and other banks if required. This
Department is also responsible for making physical investment on behalf of bank into
government securities and other corporate securities.
THE ROLE OF FINACIAL MANAGER
FINANCIAL MANAGER
Finance manager organizes and manages an organization's financial portfolio. A finance
manager is a professional who oversee the preparation of financial reports as required by law and
approved by the organization's board of directors, direct investment activities, and implement
cash management strategies. The finance manager also develops financial strategies to meet the
needs of the organization's short- and long-term goals. Responsibilities also include evaluating
data to appraise the current and future financial condition of the organization, and supervising
investment activities.
FINANCIAL MANAGER RESPONSIBILITIES
A financial manager is responsible for supervising and handling financial reports,
investment portfolios, accounting, and all kinds of financial analysis for an organization.
Additionally, he oversees cash management strategies and financial legislation and regulation.
He manages the cash flow for an organization by supervising balance sheets, income statements,
and the costs and revenue model. The responsibilities of a financial manager also involve
supplying an efficient financial blue print and elucidating all the financial data for an
organization, while minimizing costs and maximizing profits. The primary objective is to
generate future revenue streams for an organization, while effectively managing the existing
investments. He is also responsible for budgetary decisions and planning. Additionally, he must
be well versed in the technical aspects of all kinds of financial decisions. This requires an in
depth knowledge of various statuary litigation and legal regulations.
Financial manager responsibilities can be divided into two broad categories:
 Managerial financial responsibilities
 Corporate financial responsibilities
Managerial financial responsibilities
Managerial finance involves assessment and appraisal for all kinds of financial activities
happening in an organization. Managerial finance does not involve drafting and implementation
of financial techniques or strategies. Rather, its primary focus is on the regulation and
administration of the existing projects.
Corporate financial responsibilities
Corporate finance, on the other hand, delegates a task to maximize corporate value to a
financial manager. A financial manager in has to deal in decisions involving capital investment,
equity, and debt, along with paying dividends to shareholders. In addition, a corporate finance
manager deals in decisions related to investment banking to raise capital for the company. He
achieves this by trading in securities and bonds.
DIVERSIFIED ROLE OF FINANCIAL MANAGER
Financial managers typically of banks; it is one of the most diverse of the financial
management. They have myriad responsibilities including controller, treasurer, credit or cash
management , risk management, capital budgeting, supervising other employees, soliciting
business, directing bank investments, complying with banking laws, and authorizing and
approving loans and other business ventures.
Controller is in charge of preparing financial reports and helping others to prepare financial
reports. These reports include balance sheets, income statements income analysis projections,
expense analytics that summarize and forecast the organization's financial position. Controllers
also are in charge of preparing special reports required by regulatory authorities. Often,
controllers oversee the accounting, audit, and budget departments.
Treasurers
Are responsible for handling money. They organize the creation of the budget and help to
allocate their money toward different business goals. Direct their organization's budgets to meet
its financial goals. They oversee the investment of funds, manage associated risks, supervise cash
management activities, execute capital-raising strategies to support the firm's expansion, and deal
with mergers and acquisitions.
Cash Management
Control cash disbursements and review receipts to account for distributed cash. Cash
managers monitor and control the flow of cash receipts and disbursements to meet the business
and investment needs of their firm.
Credit Management
Grant and review credit accounts or lines of credit to customers. This could mean
evaluating a customer's credit risk, granting them a line of credit, and monitoring that line of
credit for on-time payments. Credit managers oversee the firm's issuance of credit, establishing
credit-rating criteria, determining credit ceilings, and monitoring the collections of past-due
accounts.
Risk Management
Is another important role considered to be a financial manager? Risk managers ensure that
the risk of a financial transaction is in line with corporate or individual goals. Risk managers
control financial risk by using hedging and other techniques to limit a company’s exposure to
currency or commodity price changes. Managers specializing in international finance develop
financial and accounting systems for the banking transactions of multinational organizations.
Risk managers are also responsible for calculating and limiting potential operations risk.
Manage International Banking
Financial managers play an important role in mergers and consolidations and in global
expansion and related financing. These areas require extensive, specialized knowledge to reduce
risks and maximize profit. Financial managers increasingly are hired on a temporary basis to
advise senior managers on these and other matters. In fact, some small firms contract out all their
accounting and financial functions to companies that provide such services.
Capital budgeting plays an important role in allocating resources in enterprises. Through a
well-structured process of capital budgeting done by financial manager , an enterprise can
compare the profitability of its divisions, assess the feasibility of new business proposals, decide
which projects to expand, construct a corporate portfolio to maximize returns, such as ROA,
ROE and RAROC (risk-adjusted return of capital), and minimize risk.
FINANCIAL MANAGER ROLE IN CASH MANAGEMENT
Bank cash management services include local and cross border payments, collections,
information management, account services, liquidity management and investment services for
both corporate and institutional clients. Cash management is a broad term that covers a number
of functions that help individuals and businesses process receipts and payments in an organized
and efficient manner. Administering cash assets today often makes use of a number of automated
support services offered by banks and other financial institutions. The range of cash management
services range from simple checkbook balancing to investing cash in bonds and other types of
securities to automated software that allows easy cash collection. When it comes to cash
collections, there are a few popular options today that can make the process of receiving
payments from customers much easier. Automated clearing houses make it possible to transact a
business to business cash transfer that deducts the payment from the customer account and
deposits the funds in the vendor account. Generally, this service is available for a fee at local
banks.
Basically, there are five principles to cash management
1) Invest your idle cash assets
2) Plan investments and expenditures to maximize operational efficiency
3) Hold accounts payables until the latest date without taking a penalty
4) Keep inventory levels as low as possible
5) Increase the speed of collection of accounts receivables
FINANCIAL MANAGER ROLE IN CREDIT MANAGEMENT
The finance manager successfully creates credit management framework combines core
policies, by procedures and process design with oversight and is supported by risk monitoring
across the bank. Elements of credit management framework are reviewed and updated in order to
align our long-term strategy in the field with lessons learned through the Bank's own experiences
and international best practices also kept compliant with the local regulations and selected
international best practices, particularly those relating to implementation of Basel-II.
Banks tend to put very strict lending limits into practice in order to ensure that the stable
profits of the business are not exceeded by the risk of the loans. Credit management is a term
used to identify accounting functions usually conducted under the umbrella of Accounts
Receivables. Essentially, this collection of processes involves qualifying the extension of credit
to a customer, monitors the reception and logging of payments on outstanding invoices, the
initiation of collection procedures, and the resolution of disputes or queries regarding charges on
a customer invoice. When functioning efficiently, credit management serves as an excellent way
for the business to remain financially stable.
The process of credit management begins with accurately assessing the credit-worthiness of
the customer base. This is particularly important if the company chooses to extend some type of
credit line or revolving credit to certain customers. Proper credit management calls for setting
specific criteria that a customer must meet before receiving this type of credit arrangement. As
part of the evaluation process, credit management also calls for determining the total credit line
that will be extended to a given customer. Credit risk management is a logical process or
approach that seeks to eliminate or at least minimize the level of risk associated with a business
operation Several factors are used as part of the credit management process to evaluate and
qualify a customer for the receipt of some form of commercial credit.
This includes gathering data on the potential customer’s current financial condition,
including the current credit score. The current ratio between income and outstanding financial
obligations will also be taken into consideration. Competent credit management seeks to not only
protect the vendor from possible losses, but also protect the customer from creating more debt
obligations that cannot be settled in a timely manner. After establishing the credit limit for a
customer, credit management focuses on providing the client with accurate and timely statements
or invoices.
The invoices must be delivered to the customer in a reasonable amount of time before the
due date, thus providing the customer with a reasonable period to comply with the purchase
terms. The period between delivery of the invoice and the due date should also allow enough
time for the customer to review the invoice and contact the vendor if there are any questions or
concerns about a line item on the invoice. This allows all parties concerned time to review the
question and come to some type of resolution.
Financial Institutions that have a diversified portfolio may be more likely to survive a
crashing market. Credit risk management is a complicated that often requires excellent
professional expertise. Excel is a software product used to analyze and visualize data. Credit risk
management departments in banks large and small utilize Excel spreadsheets to organize the tens
of thousands of pieces of their clients' risk information profiles into manageable and actionable
data items.
CHIEF FINANCIALOFFICER (CFO)
Chief financial officers (CFO) direct the organization’s financial goals, objectives, and
budgets. They oversee the investment of funds and manage associated risks, supervise cash
management activities, execute capital-raising strategies to support a firm’s expansion, and deal
with mergers and acquisitions.
As the Chief Financial Officer (CFO) of bank, he is responsible to the company’s Board of
Directors for all accounting and financial matters. He must establish company-wide objectives,
policies, procedures, processes, programs, and practices to assure the company of a continuously
sound financial accounting structure.
The Role of CFO in bank
The Top Ten Responsibilities for the CFO:
1) Cash Flow
2) Company Liabilities
3) Company Performance
4) Department Supervision
5) Budgeting and Expense Control
6) Financial Relationships
7) Finance or Raising Capital
8) Financial Obligations
9) Record Control
10) Shareholder Relations
1. Cash Flow
As a CFO, his job is to control the cash flow position throughout the company,
understand the sources and uses of cash, and maintain the integrity of funds, securities and
other valuable documents. You receive, have custody of, and disburse the company’s monies
and securities. CFO responsibility includes the authority to establish accounting policies and
procedures for credit and collections, purchasing, payment of bills, and other financial
obligations. Cash is king and the flow of cash, or cash flow, is the most important job a CFO
has in any bank
2. Company Liabilities
After cash flow, the CFO must understand all of the company’s liabilities. A company has
many legal contracts, statutory & tax obligations, hidden liabilities in the form of contingencies,
leases, or insurance summaries, and expectations from loan covenants and/or the board of
directors.
3. Company Performance.
The CFO must understand the company business model for generating customer value and
translate the operational metrics into measures for performance. The CFO is the bank
scorekeeper using tools like the balanced scorecard, dashboards, and financial statement ratio
analysis to communicate both the company’s expected and actual financial performance.
4. Department Supervision
In a small organization, the CFO is the supervisor of Accounting, Finance, HR, and IT. In a
larger company, the CFO may only be responsible for the Accounting and Finance functions.
Either way, the CFO supports the company’s accounting and financial functions using job
descriptions, policies, and procedures.
5. Budgeting and Expense Control
Budgets are a fact of life, and the CFO is responsible for overseeing the budget process,
collecting the inputs, and comparing the company’s actual performance with estimates (the
budget). It is an ugly process that falls within the CFO area of control.
6. Financial Relationships
As a CFO, you establish and maintain lines of communication with investment bankers,
financial analysts, and shareholders in conjunction with the President. You administer banking
arrangements and loan agreements and maintain adequate sources for the banks current
borrowings from commercial banks and other lending institutions. In addition, you invest the
banks funds and administer incentive stock option plans.
7. Finance or Raising Capital
Finance is one of the key roles of the Chief Financial Officer. The CFO will establish and
execute programs for the provision of capital required by the company, including negotiating the
procurement of debt and equity capital and maintaining the required financial arrangements. As
the CFO, coordinate the long-range plans of the company, assess the financial requirements
implicit in these plans, and develop alternative ways in which financial requirements can be
satisfied.
8. Financial Obligations
As the CFO, need to approve all agreements concerning financial obligations, such as
contracts for raw materials, IT assets, and services, and other actions requiring a commitment of
financial resources.
9. Record Control
The CFO is responsible for the financial aspects of all company transactions including real
estate bids, contracts, and leases. The CFO also provides insurance coverage, as required,
ensures the maintenance of appropriate financial records, prepares required financial reports,
insures audits are completed in time and statutory book closing occur. The CFO has primary
responsibility for ensuring company compliance with financial regulations and standards
10. Shareholder Relations
A CFO analyzes company shareholder relations policies, procedures, and information
programs, including the annual and interim reports to shareholders and the Board of Directors, as
well as recommends to the President new or revised policies, procedures, or programs when
needed.
USE OF ELECTRONIC DATA IN DECISION MAKING
The financial control department makes sure that all financial transactions comply state all
laws, rules and regulations. This departmant is responsible for centrally processing and recording
the transactions. This department also ensure that enough funds available before the bank
engages in a commitment. This department is also responsible for generation the annual reports
in compliance with the company’s ordinance 1984.
ORACLE GL
Oracle GL is a product of the Oracle E- Business suite which the organization has acquired
as its plateform for managing its business transactions and maintaing Oracle General ledger
works seamlessly with other Oracle E-Business Suite products to drive better decision making,
sustainable financial discipline, regolatory compliance, and optimized bsiness process. The MCB
Financial Control Department before switching over to Oracle E-Business Suite’s Oracle GL
system used an in-house developed system called “Financial Control System”.
This was implemented so as to meet the business needs of the company at that time, however as
the company expanded and it’s branches increased at a phenomenal rate and it started to offer
new services, the Financial Control System could no longer meet the complex needs of the
department. Apart from this, there were the usual system break downs which resulted in
increased cost (time cost because it required some time to repair the system and monetary cost
because it required having separate personnel for training new employees).A need was felt that a
new system had to be brought in to the department that would integrate smoothly with the
organization and the departments information management needs and at the same time also be
reliable. Therefore, after a period of searching and evaluating various information systems, the
company bought a new information system, the “Oracle Financial Suite” and one of the elements
of this financial suite was Oracle GL which was perfectly suited for the Financial Control
Departments requirements. This system was adopted by the organization because it allowed the
company to cope with its changing requirements and this software gave the company several
options that were not previously available in the previous system. This system also enables the
organization to better organize its operations than before. The biggest advantage of this system
over the previous one was that it is compatible with other elements of the Oracle Financial Suite,
hence the work done in other departments can be smoothly integrated with Financial Control
Departments tasks and vice versa.
BENEFIFTS OF “ORACLE GL” TO ORGANIZATION
The Oracle GL provides to its end users a friendly interface and hence the end user does not
require specialized training to operate this system (The end users can know how to user this
system with minimum of training.)This system enables the department to generate accounting
reports according the accounting standards of Pakistan and according to the specific
requirements of the bank. The system makes it easy to customize reports the way they are needed
which helps the bank and the department adjust to any procedural or any other changes that may
need to be implemented. For example, if there are any changes in accounting laws or procedures
that the bank may need to implement, the system easily facilitates that. This system also has the
capability to fulfill most of the requests of the end users by default.
The Oracle GL provides high Data Integrity by making sure that the data that is saved will
be available for future use and will not have any errors. Data retrieval or data recovery is also
made easy by the system and the end users of the system are saved from spending too much time
or effort in trying to recover data that may normally be hard to find in other systems. It also
reduces the occurrence of a system failure to almost ZERO as there hardly are any cases of
system crashes or any other issues with the system. It also has a Relational Database
Management System that stores data in the form of related tables. Relational databases are
powerful database management systems because they require few assumptions about how data is
related or how it will be extracted from the database. As a result, the same database can be
viewed in many different ways.
“ORACLE FINANCIAL SUITE” HELPS IN PREPARATION OF REPORTS
This system enables MCB financial department to generates the following financial statements:
 General Ledgers for the branch
 Completing its all transactions
 Maintaining & balances accounts
 Balance Sheet
 Profit and Loss account
 Cash Flow statement
 Non-performing loan report
 Statement of Changes in Equity
 List of new accounts
 Consolidated income/expenditure
 Bank Scroll
 Zakat exemption report
The system then saves and documents all these reports and financial statements into its
database for future use and referencing. This information is not only useful for preparing reports
and financial statements for the bank but is also used in times such as making audit reports,
company reports, etc.
ORACLE CATERS MCB FINANCIAL NEEDS
The Oracle E-Business Suite is a top of the line application software used by businesses
around the world. Oracle is a software company renowned for providing its customers with
excellent software’s that provide fast, easy and efficient business information and support
systems which play a vital part in operational running of a business and coming up with
improved business solutions. Since Oracle GL is financial software system designed to for an
organization’s financial needs and caters to an organization like MCB’s financial needs. Its end
users will be people related to finance. In this case, employees in MCB’s Financial Control
Division are the end users of the system. All the employees in this department have been
properly trained to use this system. The system itself has also been highly customized to suit all
the needs of the department and meet its requirements in an efficient and cost effective manner.
MCB aims to keep its business in line with the top banks and corporations of the country and
therefore, it has chosen Oracle E-Business Suite as the application software that manages and
supports its business applications. The Oracle GL has the important task of maintaining General
Ledger Balances of the bank from around the country and generating reports and financial
statements on a daily basis.
TECHNICAL SPECIFICATIONS
1) Hardware
2) HP Blade Server Software
3) Oracle e-Business Suite R12 Operating System
4) Linux Environment Input
5) Financial data Output
6) financial statements like ledgers, balance sheet etc.
7) Processing
8) Batch processing Storage
9) both Hot-sites and Cold-sites
SOURCES & GENERATION OF FUNDS
Main sources and generation of funds for the bank are as under:
1. Deposits from Customers.
2. Borrowings from Financial Institutions.
DEPOSITS FROM CUSTOMERS
Bank deposits consist of money placed into banking institutions for safekeeping. These
deposits are made to deposit accounts such as savings accounts, checking accounts and money
market accounts. The account holder has the right to withdraw deposited funds, as set forth in the
terms and conditions governing the account agreement. The deposit itself is a liability owed by
the bank to the depositor. Bank deposits refer to this liability rather than to the actual funds that
have been deposited. When someone opens a bank account and makes a cash deposit, he
surrenders legal title to the cash, and it becomes an asset of the bank. In turn, the account is a
liability to the bank.
COMMENTS
Total deposits from customers have been increased 59% in 2009 as compared to 2005. This
increase is due to major increase in Fixed & Saving deposits of the bank. Deposits to customers
and financial institutions, was the main contributor.
Borrowing from financial institute 2017 2016
COMMENTS
Borrowings under Export refinance scheme the bank has entered into agreements with the State
Bank of Pakistan (SBP) for extending export finance to customers. As per the terms of the
agreement , the bank has granted SBP the right to recover the outstanding amount from the bank
at the date of maturity of finance by directly debiting the current account maintained by the bank
with SBP .Export refinance loans from SBP are at the rate of 7.00% per annum (2008 7.5%per
annum) According to agreements with SBP, locally manufactured machinery loans from SBP are
at the rate of 8 % to 9.5% per annum for 2005 (11% per annum 2006) providing finance
machinery. to customers against locally manufactured Secured borrowing under the head of
“others” from SBP are interest free Call borrowing carry interest ranging from 11.25% to
12.65% per annum (2008: 12% to16.5% per annum) The repurchase agreement borrowings are
secured against market treasury bills and carry mark-up at rates ranging from 9.25%to 12.1% per
annum (2008: 8.75%to15% per annum), under the head of unsecured borrowing “others” carry
interest rate 10% per annum and overdrawn nostro account carry interest rate 1% to 5 % per
annum.
ALLOCATION OF FUNDS
Banking deposits are used and allocated in the following channels:
 Lending to Financial Institutions
 Investments (In Securities)
 Advances
LENDING TO FINACIAL INSTITUTIONS (Amount in Millions)
Years Amount
2017 1588
2016 1555
2015 5132
2014 1418
2013 1225
Lending to financial Instititions

6000
5000
4000
3000
2000
1000
0
Lending to financial institutuins
2017 2016 2015 2014 2013
Investments
Comments
Investments include certain approved / government securities which are held by the Bank to
comply with the Statutory Liquidity Requirement determined on the basis of the Bank's Under
the head of Federal government securities these include Pakistan investment bond held by SBP
as pledge against demand loans Investments other than those categorized as held-for-trading are
initially recognized at fair value which includes transactions costs associated with the
investments. Investments classified as heldfor-trading are initially recognized at fair value, and
transaction costs are expensed in the profit and loss account. All regular way purchases/sales of
investment are recognized on the trade date, i.e., the date the bank commits to purchase/sell the
investments. Regular way purchases or sales of investment require delivery of securities within
the time frame generally established by regulation or convention in the market place. MCB
objectives were targeted towards investments, strong policy framework, strategic investment
initiatives and implementation of cost effective measure across bank.
The investment structure of the bank individually worked hard in achieving the milestones
under continuous monitoring and supervision of the senior management and Board. The bank
investment has diversified in different segments, diversified portfolios are generally more
resilient in the face of unforeseen events, and diversification strategies can be stated simply and
implemented clearly. The Bank, however, does not have an affirmative policy on risk
diversification in its portfolio but MCB maintain diversified investment portfolios. MCB made a
major portion of investments in Federal Government Securities. Federal government securities
consist on Market Treasury Bills, Pakistan Investment Bonds, federal securities, govt
compensation bond, Euro bond, sukuk bond, UTFC unlisted term finance certificates. Bank
makes investments in ordinary as well as preference shares. According to investment policies of
MCB the investments made in both listed and unlisted companies, to overcome investment risk
all listed companies are well reputed and holding strong financial position, selected in this
regard. Unlisted listed companies recommended to be listed for future further investments.
Unlisted companies are stated at carrying value. Sukuk & NIT units these are Government of
Pakistan guaranteed securities in which bank have major investments. MCB holding Term
Finance Certificates of Askari Bank Limited, Bank Al–Habib Limited, Bank Alfalah Limited,
United Bank Limited, Allied Bank Limited, Soneri Bank Limited, Pak Arab Fertilizers Limited.
During the year, the Bank has incorporated “MCB Leasing” Closed Joint Stock Company in
Azerbaijan to undertake leasing business.
Advances 2017 2016
COMMENTS
Advances are stated net off specific and general provisions. Provisions are made in
accordance with the requirements of Prudential Regulations issued by SBP and charged to the
profit and loss account. These regulations prescribe an age-based criterion (as supplemented by
subjective evaluation of loans by the banks) for classification of nonperforming loans and
advances and computing provision / allowance there against. SBP also requires the bank to
maintain general provision / allowance against consumer advances at specified percentage of
such portfolio. Provision in respect of overseas branches is made in accordance with the
respective central bank's requirements. Advances are written off where there are no realistic
prospects of recovery The bank reviews its loan portfolio to assess amount of non-performing
loans and advances and provision required there against on a quarterly basis. While assessing
this requirement various factors including the delinquency in the account, financial position of
the borrower and requirements of prudential regulations are considered. The amount of general
provision against consumer advances is determined in accordance with the relevant prudential
regulations and SBP directives. During the year, the management has changed the method of
computing provision against non-performing loans consequent upon the revision in prudential
regulations.
CRITICAL ANALYSIS OF THEORETICAL CONCEPTS RELATING TO
PRACTICAL EXPERIENCES
Amount in Pakistani Rupee Amount in Millions
4.1 FINANCIAL ANALYSIS OF BALANCE SHEET
Assets 2017 2016 2015 2014 2013
Cash and 106072084 7422347 61209 46754 59946
balances
with treasury
banks
Balances 4579275 4343841 3682 3016 1537
with other
banks
Lending to 4398114 2809752 5132 1418 1225
financial
Institutions
Investments- 656963632 555928553 588803 511137 449006
net
Advances- 469355849 348116617 314125 303559 248243
net
Operating 39537932 32752672 32433 31193 28595
Fixed assets
Other assets 46368154 33639899 31246 37555 26956
Total Assets
Amount in Pakistani rupee Amount in Millions
Labilities
2017 2016 2015 2014 2013
Bills Payable 22608667 12843552 11975 16628 10139
Borrowings 133069556 74515383 118459 59543 38543
Deposits and 968482635 781429823 708091 688330 632330
other
accounts
Sub- 3892578 - - - -
Ordinated
loans
Liabilities - - - - - -
Against
assets
Deferred tax 4625035 11274728 11377 10397 4201
Liabilities
Other 40994232 12010424 28927 29630 20064
Liabilities
Represented by
2017 2016 2015 2014 2013
Share capital 11850600 11130307 11130 11130 10118
Reserves 70866473 53346861 51309 48830 46601
Unappropriated 53776057 53469072 50464 46948 40552
profit
Surplus on 53776057 23680385 24987 23196 12959
revaluation of
assets net of tax
Total Liabilities
& share Capital
FINANCIAL ANALYSIS OF PROFIT & LOSS ACCOUNTS
RATIO ANALYSIS
ABBREVIATION USED IN FOLLOWING CALCULATIONS

CALCULATION OF RATIOS
Profitability Ratios
Profitability Ratios
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Profit before Gross Yield Gross Yield Gross Non interest Return on Return on Return on Cost to Cost to
tax ratio on Average Avg. Earning Spread income to average average Capital income ratio income ratio
Earning Assets (incl. total income equity (ROE) assets (ROA) Employed (excluding pf
Assets dividend & (ROCE) reversal)
Investment Ratio capital
gains)
2015 2014 2013 2012 2011

Investment Ratios (2015 to 2011)
140
120
100
80
60
Market
40 Ratios 2015 2014 2013 2012
20
0
Earning per share (after Earning per share (before Breakup value per share net assets
tax) tax)
2015 2014 2013 2012 2011
Market Ratios (2015 to 2011)

This Graphs shows the values of cash dividend, Bonus Shares issued and Dividend Yield ratio
Market Ratios
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
cash Dividend Bonus shares issued Dividend Yeild ratio
2015 2014 2013 2012 2011

Assets Quality & Liquidity Ratios (2015 to 2010)

Liquidity Ratio and Assets Quality
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Gross Net Invesment Weighted CASA to NPLs to Coverage Coverage Earning
Advances to Advances to Ratio average cost total Gross Ratio Ratio asses to
Deposits Deposits of deposits Deposits advances interest ratio
Ratio Ratio ratio
2015 2014 2013 2012 2011

EXPLANATION OF FINANCIAL RATIOS
 PROFITABILITY RATIOS
Profitability ratios measure a company’s financial performance and its ability to increase its
shareholders value and generate profits. Profitability ratios provide insight into the profits made
by the company in relation to its size, assets, and sales and also measure the company’s
performance in relation to itself. Having past data as a benchmark, the firm can start to make
conclusions as to why profitability is increasing or decreasing.
The net profit margin Net profit after tax measure profit remaining after deducting all
expenses including tax. It should be maximum. Markup/return/interest earned and non markup
interest income increased throughout the period i.e. year 2015 up to year 2010. While
markup/return/interest expensed was increased throughout from 2010 as a result of net profit
after tax ratio decreasing. The income & expenses have direct relation, that’s why it affects net
profit ratio.
The gross spread ratio relationship between Net Markup income & Gross markup income.
Gross spread ratio is continuously increasing from 2010 to 2015.
Income expense ratio as shows the percentage of expenses it should be lower. In bank
income expense ratio has decreasing trend from 2011to 2015.
Return on equity measures a corporation's profitability by revealing how much profit a
company generates with the money shareholders have invested. A company with high return on
equity is more successful to generate cash internally. But in this bank return on equity is
throughout decreasing trend (2010 to 2015) due to increase in borrowing /debt its means the

bank generate low profit with the money shareholder have invested So if the firm takes on too
much debt, the cost of debt rises as creditors demand a higher risk premium, and ROE decreases.
It is generally accepted that a company with a higher ROE is a better investment than one with a
lower ROE since it has a stronger ability to generate cash flows internally; however, this is not
completely accurate.
Return on assets (ROA) return on assets of commercial banks reflects the effectiveness and
efficiency of the use of resources is the embodiment of its operating efficiency and management
level of the important comprehensive index. In year 2012 ROA is higher in all five years due to
increase in earnings after tax so the bank is better at converting its investment into profit. But in
the year 2013 return on asset is decrease because net income in this year is also decrease.
Loan deposit ratio if the ratio is too high, it means that banks might not have enough liquidity to
cover any unforeseen fund requirements; if the ratio is too low, banks may not be earning as
much as they could be. So in this bank in year 2009 this ratio is decreased as compared with
previous year.
 ACTIVITY RATIOS
These ratios also known as efficiency or turnover ratios, measure how effectively the
Organization is using its assets.
Total asset turnover represents the amount of revenue generated by a company as a result of its
assets on hand. One general rule of thumb is that the higher a company's asset turnover, the
lower the profit margins, since the company is able to sell more products at a cheaper rate. In this
bank total assets turnover ratio is increasing trend throughout (2010 to 2015) because total assets
are increase in every year.

Fixed assets turnover ratio establishes a relationship between net sales and net fixed
assets. This ratio indicates how well the fixed assets are being utilized. This ratio expresses the
number to times the fixed assets are being turned over in a stated period. It measures the
efficiency with which fixed assets are employed. A high ratio means a high rate of efficiency of
utilization of fixed asset and low ratio means improper use of the assets. In this bank fixed asset
turnover ratio have increasing trend throughout In year 2013 this ratio is decrease means the
bank have not utilized its fixed assert properly
MARKET RATIOS
These ratios are calculated to analyze the market position of a business
Earnings per share (EPS) are the amount of earnings per each outstanding share of a company's
stock. In the bank earnings per share ratio are showing increasing trend from 2010 due to
increase in earnings after tax. It is an accepted fact that earnings per share ratio can help us know
the financial strength of a company. The more the earnings per share ratio, more would be the
profitability of the company. Earnings per Share represent the measurement, which is used to
calculate earnings.
Book value per share shows value of share as per books. It should be maximum. Book value
per share of the bank has increased due to increase in shareholders’ equity.
 LEVERAGE RATIOS
Debt to Total Asset measure of a firm assets financed by debt and, therefore, a measure of
its financial risk. The lower this ratio, generally the better off the firm.

The higher the ratio, the greater risk will be associated with the firm's operation. In addition, high
debt to assets ratio may indicate low borrowing capacity of a firm, which in turn will lower the
firm's financial flexibility. Like all financial ratios, a company's debt ratio should be compared
with their industry average or other competing firms. The debt/asset ratio shows the proportion
of a company's assets which are financed through debt. If the ratio is less than 1%, most of the
company's assets are financed through equity.
Debt to Equity Ratio
It indicates how much the company is leverage (in debt) by comparing what is owned, if the
ratio is greater than one the majority of assets are finance through debt, if answer is smaller than
one asset is primarily finance through equity.

HORIZONTAL ANALYSIS OF BALANCES SHEETS
Particulars 2015 2014 2013 2012 2011
Assets
Cash and balances 31% -22% 4% 8% 17%
with treasury
banks
Balances with 22% 96% 29% -48% 54%
other banks
Lending’s to 262% 16% -21% 62% -78%
financial
institutions
investments 11% 14% 12% 27% 49%
Advances 3% 22% 4% 5% -11%
Operating fixed 4% 8% 20% 8% 5%
assets
Other assets -17% 39% -35% 33% 13%

Liabilities
Bills payable -28% 64% 2% 5% -8%
Borrowings 99% 54% -51% 102% 52%
Borrowings 3% 9% 16% 11% 14%
Deferred tax -2% 48% -5% 15% 14%
liabilities
Other liabilities -2% 48% -5% 15% 14%
Net Assets 6% 18% 8% 15% 13%
Represented By
Share capital 0% 10% 10% 10% 10%
Reserves 5% 5% 5% 5% 5%
Unappropriated 7% 16% 14% 23% 34%
profit
Surplus on 7% 79% -5% 37% -1%

revaluation of
assets - net of tax
Profit and loss account (All values in percentage)
2015 2014 2013 2012 2011
Mark-up 4 19 -5 0 24
earned
Mark-up -8 24 -1 16 31
expensed
Net mark- 13 5 -7 -8 21
up income
Provisions -137 -35 -1093 -93 13
& write off
Net mark- 7 11 0 1 22
up income
after
provisions
Non- 32 16 22 13 29

mark-up
income
Non-mark- 8 10 9 6 29
up
expenses
Profi 15 14 2 1 20
t before
taxation
Taxa 35 15 -2 -9 29
tion

Vertical analysis of Balance sheet
2015 2014 2013 2012 2011
Assets
Cash and balances 6% 5% 7% 7% 8%
with treasury banks
Balances with other 0% 0% 0% 0% 0%
banks
Lending’s to 1% 0% 0% 0% 0%
financial institutions
investments 56% 55% 55% 55% 52%
Advances 31% 32% 30% 31% 35%
Operating fixed 3% 3% 4% 3% 3%
assets
Other assets 3% 4% 3% 5% 5%
Liabilities
Bills payable 1% 2% 1% 1% 1%
Borrowings 12% 6% 5% 10% 6%

Deposits 70% 74% 78% 71% 75%
Deferred tax 1% 1% 1% 1% 1%
liabilities
Other liabilities 3% 3% 2% 3% 3%
Net Assets 14% 14% 13% 14% 14%
Represented By
Share capital 1% 1% 1% 1% 1.28%
Reserves 5% 5% 6% 5.8% 6.45%
Unappropriated 5% 5% 5% 4.6% 4.34%
profit
Surplus on 2% 2% 2% 1.8% 1.51%
revaluation of assets
- net of tax
Vertical analysis of profit and loss account

2015 2014 2013 2012 2011
Mark-up 82% 86% 85% 88% 89%
earned
Mark-up -32%% -37% -36% -35% -31%
expensed
Net mark-up 51% 48% 50% 53% 58%
income
Provisions & -1% 2% 4% 0% -5%
write off
Net mark-up 50% 50% 50% 53% 52%
income after
provisions
Non- 18% 14% 15% 12% 11%
mark-up
income
Non-mark-up -24% -24% -26% -23% -22%
expenses
Profit 43% 41% 42% 41% 41%
before
taxation
Taxati -17% -14% -14% -14% -14%
on

Commentary on Six Years Horizontal and Vertical Analysis
Horizontal Analyses
Asset base of the bank has increased considerably over the past 6 years; highest increase
was observed in 2012 where assets increased by 17%, mainly contributed by investments in
terms of volume. On an annualized basis, the asset base has recorded an increase of 12% over the
last six years. Highest increase in investment base was reported in 2011 of 49%, followed by
27% increase reported for 2012.
The deposit base of the Bank has increased considerably over the years growing from Rs.
431 billion in 2010 to Rs. 708 billion in 2015 translating into an annual growth of 10% over past
6 years. Equity of the bank has also posted healthy increase due to higher profitability in past 6
years, translating into 10% average growth. On to Profit and Loss side, gross markup earned has

posted an average increase of 8% over a span of six years. Corresponding to the shift in asset
mix, contribution from income on investments has increased over the years.
The increase in markup expense on deposits is on account of regulatory revisions enacted
by the Central Bank and volumetric increase in deposit base. Despite the regulatory revisions
enacted during the period, the cost of deposit was strategically managed by reducing high cost
deposits and increasing the CASA base of the Bank. However, the cost of deposit of the Bank
has increased by 12% over the six year period under coverage. Non Markup income block has
shown enormous growth in recent years and the growth rate in past six years is 22%, whereas
non markup expense has grown by an average of 12% which is justifiable on account of growing
operational infrastructure and inflationary patterns. Provision against advances and investments
has been on a declining trend, apart from the year 2015 reversals have been made in 2014 and
2013 on account of our prudent risk management framework and aggressive provisioning
strategy. Despite have charged provision expense in last quarter of 2015, provision of above Rs.
4 billion have been reversed in last 4 years. Profit Before Tax (PBT) and Profit After Tax (PAT)
have increased by an average of 10% and 9%, respectively, marking MCB as one of the most
profitable bank in the industry and highest RoA in the region.

Vertical analysis
Vertical analysis depicts higher concentration levels of investments and advances in the
asset base of the Bank. The advances base o the Bank has posted moderate growth over the last
few years due to the lack of credit opportunities and intense competition. This has resulted in the
decrease of advances concentration in the asset mix from 45% in 2010 to 31% in 2015. During
the past few years, government credit demands have increased and bank has investment its
excess cash in risk free government securities i.e. Market Treasury Bills and Pakistan Investment
Bonds. Hence investment concentration level had increased from 38% in 2010 to 56% in 2015.
Corresponding to the infrastructural and operational growth registered by the Bank, the
deposit base has increased considerably over the period of six years. Improved quality service
levels and tailored products have earned the loyalty of our customers. This can be substantiated
by the fact that the CASA base of the bank has been above 80% over the last many years and
currently it is at the highest level in peer banks. Concentration on deposits remained at similar
levels over past 6 years i.e. 70% for 2015 (2010 : 76%)

Markup income growth has been steady over the last 6 years. On an average, the
contribution from markup income approximates 82% of the total revenue. Markup expense has
increased over the last 6 years, based on regulatory revisions enacted over the period and growth
registered in the deposit base. Concentration of Non-markup income in total income has
increased significantly over the years due to innovative solutions offered to our customers, new
products launched, and gain on sale of securities. With the growth in business non-markup
expense has also increased from 22% in 2010 to 24% in 2015, which is well within the reach on
budgetary limits.

ORGANIZATIONAL ANALYSIS
(COMPARISON WITH OTHER BANKS)
Particulars MCB UBL NBP
Deposits 968,482,635 1,179,887,048 50,051,476
Advances 469,355,849 510,110,924 68,833,523
Profit 21,890,896 27,730,112 31,700,786
Liabilities 1,173,744,703 1,425,764,162 1,981,416,561

Deposits
Chart Title
1.4E+09
1.2E+09
1E+09
800000000
600000000
400000000
200000000
0
Deposits
MCB UBL NBP
Advances
Advances
600000000
500000000
400000000
300000000
200000000
100000000
0
Advances
MCB UBL NBP

Profit
Profit
35000000
30000000
25000000
20000000
15000000
10000000
5000000
0
profit
MCB UBL NBP
Liabilities
2.5E+09
2E+09
1.5E+09
1E+09
500000000
0
Liabilities
MCB UBL NBP

FUTURE PROSPECTS OF MCB
MCB team committed to taking the Bank to the next levels of success. Key features of
multi-pronged plan are as follows
 MCB wants to be viewed as the leader in transactional convenience. To get top market
share, they will continue to invest in alternate channel payment capabilities and services
as well as getting a larger share of transaction driven businesses like remittances, cash
management, payroll and trade.
 Managements want to continue to invest in branches to make them more sales and service
oriented. Through introduction of new sales and service model, strengthened transaction
processing and leading financial products menu, aspire to achieve this ambition.
 Management core focus on mass, mid-market and corporate segments, continue down the
path of further segmenting customer needs and developing focused customer
propositions, particularly in Privilege, Islamic & SME.
 Not any organization can deliver without investing in its employees. In order to achieve
growth targets, management have to further strengthen reserve of talent and leadership
powered by a strong performance culture and training.
 Finally, for an organization, controls and efficiency is central to existence. Management’s
strategy to build stronger controls, develop a unit cost culture.

CONCLUSION
The banking system, as a whole, remains healthy despite the economy going through a
period of economic difficulty. The banking sector absorbed the build-up of non-performing loans
in the system while maintaining profitability and robust balance sheets. Much of the credit for
this must go to the SBP for the policies it has pursued over the last decade to ensure that banks
are adequately capitalized and adhere to prudent risk management. The objectives were targeted
towards customers, improved management policies, strong policy framework, improved
governance structure, strategic investment initiatives and implementation of cost effective
measure across bank. The group structure of the bank individually worked hard in achieving the
milestones under continuous monitoring and supervision of the senior management and Board.
The bank displayed extraordinary results in both financial and non-financial terms. With the
banking industry recovering at a steady pace since the 2010 crisis, MCB ensured availing all
possible positive opportunities and delivered substantial profits ensuring sound asset growth
Financial year 2012MCB stood up to the challenges and produced significant increases in major
areas of its business while maintaining higher profitability, stronger asset base with
corresponding increase in equity. The sector also made positive recoveries while heading
towards its actual position prior to 2010 and 2012 financial market crisis.

RECOMMENDATIONS
Following are some of the suggestions and recommendations that I want to give on the basis
of shortfalls / weaknesses found in the bank.
 The target rate of return on assets (ROA) of commercial banks reflects the effectiven ess
and efficiency of the use of resources is the embodiment of its operating efficienc y and
management level of the important comprehensive index. Emphasis on return on assets,
and continuously improve the return on assets and achieve an operating pr ofit
maximization should be the primary objective of Muslim commercial bank.
 A strong ROE is a solid signal that management is doing a good job of generating returns
for shareholders' investments. Active capital management activities will provide better
ROEs. Bank that manages larger reserves due to recent or future investment projects will
stymie their ROEs. Another determinant of the ROE is the operating profit margin of
banks. Recently, this tends to converge towards noninterest income as net interest
margins tend to cause net interest income to be squeezed over time due to rising
competition. Muslim Commercial Bank should enable to raise their operating profit
margins can smoothly enhance their ROEs. Loans with higher returns will produce better
profit opportunities. Alternatively, may diversify earnings through transaction and
recurring non-interest income activities. MCB’s can expand more differentiated products,
such as wealth management and insurance to improve their ROE position.

 The Bank's controlled budgeting and diligent monitoring on operating expenditure block.
Effective monitoring at management level ensured managed increase in administrative
charge within the approved budgetary limits.
 MCB’s lead over rivals if they more emphasis on its aggressive investment strategy and
capital strength, the investments may bolster MCB’s.
 MCB Bank Ltd Pakistan’s largest lender by market value should plans to expand
overseas and add branches and employees at home even as economic growth slows after
the worst floods in the nation’s history. Increase staff as it expands trade financing,
remittances management and mobile-banking operations.
 Better managed expense-to-income ratios will then produce higher operating profit
margins. Banks that use capital more efficiently will have better financial leverage and
thus, higher ROEs. A higher financial leverage multiplier would show that banks are able
to leverage on a smaller base of stakeholders funds to produce interest bearing assets that
optimize earnings.
 Efficient cost-control procedures may limit the growth of operating expenses leading to
higher operating profit margin. Banks poorly managed their operating expenses. Further
improvement may be necessary to enhance ROE development.
 MCB Islamic Banking needs a research, which should be engaged in evaluating and
interpreting the ways in which the bank can flourish more and more.
 In Agriculture loan Sector, MCB mainly serving in Punjab province. Agriculture loans
facility should be provided to all other provinces of Pakistan as well.

 The bank should emphasis on the organization of effective training and development
programs for its new as well as existing employees so that these are gradually updated
regarding the recent developments in the field of banking.

ANNEXES
ORGANIZATIONAL STRUCTURE

Finance Department

REFERENCES
All of the references and sources from where the data gathered for this report are mentioned
herewith for your kind concern.
ORGANIZATION
Annual Reports of MCB Bank Limited of Pakistan.
MCB Credit Policy
http://www.mcb.com.pk.
WEB PORTALS


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Muslim Commercial Bank

The main purpose of internship is to learn, by working in practical environment and to

This internship offers me an incredible opportunity to gain real-world experience in the

actual financial status and performance of an organization

Following are important objectives of studying the organization:

Liquidity, Asset Quality & Profitability of bank.

 Assessment of the company’s financial condition through the financial statements.

 Analyzing savings and investment trends in banking sector.

 To examine the Innovations in customer service in banking.

1.1 BRIEF HISTORY OF THE ORGANIZATION

The history of MCB can be divided into four main Phases:

 Present Position of MCB

1.1.1 DEVLOPMENT PHASE

ordinary shares of Rs 10 each.

Bank was merged into Mus Bank in 1972..

1.1.2 PRESENT POSITION OF MCB

customers, we introduced Bancassurance and Investment Products in many of our branches; to

MCB Bank Limited is a banking company incorporated in Pakistan and is engaged in

• Trading and sales

• Retail and consumer banking

Corporate finance includes underwriting, securitization, investment banking, syndications;

TRADING & SALES

lending’s to financial institutions and brokerage debt.

and stable deposit base.

2017 2016 2015 2014 2013

Markup interest earned 74090972 67400294 80532000 77269000 65064000

Fee commission and brokerage

income 9353983 7639750 8383000 7225000 6741000

Dividend 1941452 1456326 1267000 1061000 933000

Income from dealing in foreign

currencies 1302826 911520 950000 1061000 917000

Gain on sale of securities 4746658 5677010 4428000 1648000 2130000

Other income 620854 488479 208800 156600 450000

Total 92056745 83573379 95768800 88420600 76235000

Total Assets (Amount in Mil)

Particulars 2017 2016 2015 2014 2013

Balances with other banks 4579 4343 3682 3016 1537

Lending to financial institutions 4398 2809 5132 1418 1225

Investments 656963 555928 568803 511137 449006

Advances 469355 348166 314125 303559 248243

Operating fixed assets 39573 32752 32433 31193 28595

Other assets 46368 33639 31246 37555 26956

Net 1327308 1051859 1016630 934632 815508

2017 2016 2015 2014 2013

Years Net Investments

Net Amount 4469104

2017 2016 2015 2014 2013

Years Income tax

2017 2016 2015 2014 2013

Mian Muhammad Mansha Chairman

S.M. Muneer Vice Chairman

Mr.Tariq Rafi Director

Mr. Shahzad Saleem Director

Mr. Sarmad Amin Director

Dr. Muhammad Yaqub Director

Dato Muhammad Hussain Director

Mian Raza Mansha Director

Aftab Ahmad Khan Director

Mian Umer Mansha Director