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CHAPTER 1

INTRODUCTION

1.1 Background of Study

For the first time banking system was started in 2000 B.C. In these Greek
banking institutions were popular, and with the passage of time the need was felt to
establish banks and so in the middle of 12 th century banks were established at Venice
and Geneva. The origin of modem banking started in Europe in the 14th century.

Internship at banks has almost become a cliché. Over the past decade the business and
public administration students regarding internships at banks have established a trend.
Thus it can be very convenient for anybody to view this report as any other report on
any other bank. This misconception has been the biggest challenge and motivating
force to take up this study. My efforts have been directed at maintaining a qualitative
difference from a routine study.

The picture of the banking sector in Pakistan is not a rosy one like the overall economy.
There have several intermittent socio-political crises over the past few years. Banks in
general have had to bear the brunt of the polices of politicians and economic managers
of our country. Banks have been largely used as an instrument of manipulation rather
than as a tool for financial stabilization. The liquidity crunch of our banks has been a
direct consequence of loan defaults by the high and might of our society.

These rough conditions provide me with an excellent opportunity to explore the path to
survival for a financial institution while all the others around it are falling like ninepins.
The study is particularly aimed at the contributions of MCB to an unstable economy
and at the urgent need of whole scale rationalized reforms.

1.2 Purpose of Report:

Commercial banks are profit-seeking institutions. They have been the most
effective mobilizes of saving and have been providing short-term requirements of profit
earnings concerns. The purpose of his report is to explain the various operations of
MCB Melody Branch and how day-to-day activities are performed.

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1.3 Scope of Report:

This report explains the operations of only one of the branches of MCB, which
is MCB Melody Branch, located in Melody Islamabad

1.4 Limitations of Report:

It is to admit that the study attempts only those aspects, which are closely
relevant to the purpose of the study. Facts and figures, which otherwise might be
equally important, but not having a direct bearing on the conclusions arrived at is this
study, have been ignored.

The most important limitation from which the study suffers is the non-availability of
information in a manner required for analysis and the secrecy of the Bank. Another
important limitation of the study is time constraint. Six months period, with intervals, is
too less to study the operations of the Bank thoroughly.

1.5 Methodology of Report:

The report is aimed at tow level, the first at the branch level and the second for
the organization as whole. No secondary data is available at the branch level hence all
the observation of the report are the result of primary data gathered from the bank from
the following sources.

The secondary data is collected from the following source.

I. Interviews.

2. Personal Observations.

3. Brochures.

4. Review of annual report 2009 - 2012

5. Bank Manuals.

6. Journals & Newspapers

7. Internet

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1.6 Scheme of Report:

This report is partitioned in four sections containing following chapters.

Section I:

Chapter I: Introduction.

In this chapter background of banking, history of MCB, purpose, scope, methodology and
scheme of the report is described.

Section II:

Chapter 2: MCB Historical Background

Chapter 3: Organizational Structure.

Chapter 4: Products and Services.

Chapter 5: Departmentation.

Section III:

Chapter 8: Financial Analysis

Section IV:

Chapter 9: Findings and Recommendations.

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CHAPTER 2

History of Organization

2.1 Brief History of Organization

Muslim Commercial Bank Ltd. is 64 years' movement in strategy. MCB completing


their commitments with part of potential and consistent work .MCB is undeniably not a
medium-term example of beating trouble. The bank started corporate life in Calcutta on
July 9, 1947. After the load of the Indo-Pak Subcontinent, the bank moved to Dhaka
from where it started business in August 1948, Mr. M. Adamjee was appointed its first
official. It was met with a bolstered capital of Rs. 15 million. In 1956, the Bank traded
it Registered office to Karachi, where the Principal Office is immediate found. In that
limit, the bank gets a 57-years legacy of trust in its customers and the occupants of
Pakistan.

2.1.1 Nationalization

This foundation was nationalized with various relies on first January, 1974 after the
banks (nationalization) Act, 1074. (Around then it has 506 branches and stockpiles to
Rs. 1640 million).

2.1.2 Privatization

A surge of money related changes cleared Pakistan in the late 1990, appearing basic for
privatization of state authenticated banks affiliations. In April 1991, MCB changed into
Pakistan's starting late privatized bank. The social gathering of Pakistan traded the
relationship of the Bank to National Group, a party of driving industrialists of the
country by selling 26% considerations of the bank. In term of insight between the

4
association of Pakistan and the National amassing, the Group, making their holding
half has obtained extra 24% offers.

After privatization, MCB is before long in an affiliation compose expected to confirm


in the additions made beginning late and set up the foundation for future improvement
with various achievable approaches. The bank has changed its favorable position
portfolio and ensured the cost structure to remain a straightforwardness maker.

Today MCB has a huge course of action of more than 1116 branches wherever all
through the nation with business foundations in Sri Lanka and Bahrain. The branch
division zone insightful is Punjab (57%), Sindh (21%), NWFP (19%) and Baluchistan
(3%) freely. MCB now bases on four center affiliations unequivocally Corporate,
Commercial and Consumer Banking and virtual Banking. Corporate customers
solidifies open zone affiliations correspondingly as broad neighborhood and by and
large concerns. MCB is comparatively obliging the making office class by giving new
resource and peril things. The Bank outfits 24 hour money related comfort associations
with the best ATM arrange in Pakistan

MCB has a strong establishment of more than 63 years in Pakistan, with a plan of more
than 1116 branches, more than 750 of which are Automated Branches, more than 400
MCB ATMs in 70 urban systems the country over.

MCB has transformed into the principle bank to get the Euro money concede for the
fourth time over the latest five years. MCB won the "Best Bank in Pakistan" in 2000,
2001, 2002, 2003,2004,2005,2006,2008,2009,2010 the "Best Domestic Bank in
Pakistan and Asia" gifts. Also, MCB furthermore has the refinement of winning the
Euro Money 2003, 2004,2005,2006,2008 Asia Money 2004, 2005, 2006, 2008, 2009
respect for being "The Best Domestic Commercial Bank in Pakistan". Also, MCB
similarly has the refinement of winning the Award the Asian Banker as most grounded
bank in Pakistan in 2010 and moreover win the Leadership Achievement Award in

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2010 and win Best Bank Led MMT Service in 2010, won SAFA (Certificate of
authenticity Award)

2.2 Nature of the Organization

MCB Bank Limited is a budgetary association combined in Pakistan and is busy with

Business banking and related organizations. The Bank's regular offers are recorded on
all the stock Exchanges in Pakistan while its Global Depository Receipts (GDRs)
addressing two Ordinary offers are traded on the International Order Book (IOB) game
plan of the London Stock Exchange.

MCB Bank Limited is a Pakistan-based association. The Bank works in four


associations

Segments:

1. Corporate cash

2. Trading and bargains

3. Retail and buyer banking

4. Commercial banking

6
2.2.1 Corporate Finance

Corporate reserve consolidates ensuring, securitization, hypothesis banking, and


syndications;

Starting open commitments (IPO) related activities (excepting theories) and helper
private positions.

2.2.2 Trading and Sales

Trading and arrangements part fuses fixed pay, esteem, outside exchange products,

crediting's to budgetary foundations and business commitment.

2.2.3 Retail and Consumer Banking

Retail and customer banking joins retail crediting and stores, banking organizations,
private advancing and stores, banking organizations and retail offered to its retail
customers and little and medium undertakings.

2.2.4 Commercial Banking

7
Business banking section consolidates adventure account, convey support, trade cash,
leasing, advancing, confirmations and bills of exchange relating to its corporate
customers.

MCB is one of the essential banks of Pakistan. Its store base of Rs. 368 Billion and full
scale resources over Rs.500 Billion. MCB before long earned the notoriety of a strong
and preservationist money related foundation directed by untouchable supervisors. In
1974, MCB was nationalized near to all other private division banks. The Bank has a
client base of around 4 million, a the nation over dispersing game plan of more than
1,000 branches and more than 450 ATMs in the market.During the most recent fifteen
years, the Bank has focused on progress through improving

2.3 Business volume of MCB:


Particulars 2013 2012 2011 2010 2009

interest 51,616,007 40,043,824 31,786,595 25, 778,061 17,756,232


earned/Mark-
up / return

Fee, 3,331,856 2,953,394 2,634,610 2,311,235 2,448,950


commission

Brokerage 459,741 617,554 632,300 811,801 480,344


Income
Dividend

Gain on sale 773,768 740,429 1,500,865 605,865 851


of securities

Other 736,118 855,697 567,213 570,505 1,084,576


income

Total 57,258,892 45,938,462 37,814,991 30,769,477 22,302,499


Revenue

Table: 2.1 Revenue

Table: 2.2 ADVANCE

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Particulars 2013 2012 2011 2010 2009

Total 253,249,407 262,135,470 218,960,598 198,239,155 180,322,753


Advances

Table: 2.3 INVESTMENTS

Particulars 2013 2012 2011 2010 2009

Investment- 167,134,465 96,631,874 113,089,261 63,486,316 69,481,487


net

Table: 2.4 DEPOSITS

Particulars 2013 2012 2011 2010 2009

Customers 626,515,531 61,680,332 32,202,230 33,297,203 13,293,121

Fixed
deposits

Current 173,797,078 150,927,938 151,555,718 136,872,38 13,7067,311


Accounts
Saving
deposits

Non- 123,898,324 105,310,862 95,966,877 81,658,304 74,331,042


Remunerative

Margin 2,910,655 3,137,434 2,589,309 2,447,944 2,568,306


Accounts

Total 363,257,588 321,056,566 282,314,134 254,275,835 227,262,780


Customers

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Deposits

Financial 2,258,295 5,197,969 9,233,602 249,506 183,338


Institutions

Remunerative
deposits

Non- 2,088,061 3,926,526 546,042 2,932,161 1,857,664


remunerative

deposits

Total 4,346,356 9,124,495 9,779,644 3,181,667 2,041,002


Financial

Institutions
Deposits

Total 367,603,944 330,181,061 292,093,778 257,457,502 229,303,782


Deposits

2.6 Introduction of branch where I did my internship

I did my temporary position in Muslim business bank office jabber SIRSINAI SWAT
branch. Branch code is 1373. I see amid my temporary position that branch is doing
incredible business and branch staff is exceedingly qualified, administrator of the
branch guided diverse capacity working with in the association and sub trough ensure
that all assumes liability that staff doing work productively. All offices have separate
spot with in the association. Branch give cordial condition to its clients. Staff of the
branch is dependable and corporative.

Branch staff incorporates

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1. Mr. Ajmal Anwar Branch and Operational Manager

2. Mr. Akhter Hussain Remittance and Account dpartment

3. Mr. Afzal Naeem Customer Services Officer and Clearing


office

4. Mr. Sher Muhammad Cashier

Section 3

Authoritative STRUCTURE

3.1 Organizational Structure of MCB

The authoritative structure gives the premise to separating exercises into suitable
offices, divisions, segments or different units and at last into occupations. The division
of exercises serves to build up the obligations of each activity and, thusly, the duties of
the representatives who are appointed to the activity.

Figure: 3.1 Organizational Structure

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3.1.1 Management of MCB:

MCB have the accompanying Board of Directors, . The names of individuals from the
Board of Directors alongside their assignments are given beneath:

STAFF STRENGHTH

2012 2010 2007 2006

Number of Permanent Employee 9397 10160 9721 9011

3.4 Main Offices of MCB:

Head Office:

MCB Bank Limited

MCB Tower, I.I Chundrigar Road, Karachi, Pakistan

Telephone: +92-21-111-000-622

Lahore Branch:

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Address:Main Market Gulberg Lahore, Pakistan

Close Abouts:

City: Lahore

Telephone: +92-42-36364697

Islamabad Branch:

Address:Aabpara Market, Hameed Chambers, Main Double Road, Sector G-6,


Islamabad, Pakistan

Close Abouts:

City: Islamabad

Telephone: +92-51-2603030

Rawalpindi Branch:

Address:Murree Road, Faizabad, Rawalpindi, Pakistan

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Close Abouts:

City: Rawalpindi

Telephone: +92-51-4409017

Peshawar Branch:

Address:3A-Park Avenue Road,University Town, Peshawar, Pakistan

Close Abouts:

City: Peshawar

Telephone: +92-91-5702025

Quetta Branch:

Address:M.A Jinnah Road, Quetta, Pakistan

Close Abouts:

City: Quetta

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Telephone: +92-81-2835379

Faisalabad Branch:

Address:1389/B, Main Road Samanabad, Faisalabad, Pakistan

Close Abouts:

City: Faisalabad

Telephone: +92-41-2660584

Sialkot Branch:

Address:Khasra No.1130 Khewat No.160, Khatooni No.550-551 Kashmir Road,


Sublime Chowk Sialkot, Pakistan

Close Abouts:

City: Sialkot

Phone: +92-52-3253587

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3.5 Introduction to all divisions

3.5.1 Cash Department

Cash division plays out the going with limits

3.5.2 Receipt

The money, which either comes or goes out from the bank, its record should be kept.
Cash office plays out this limit.

3.5.3 Payments

It is a merchant's basic contract to remunerate money got for this present customer's
record typically by regarding his checks.

3.5.4 Deposit office

Store office is a champion among the most basic and central division of the bank since
it deals with the supply of money to the bank. Stores are the commitments of a bank.
Store division limits is attempt to manufacture bank stores.

Its control the accompanying exercises

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1. Account opening

2. Current record

3. Saving record

4. Term stores account

5. PLS sparing records

6. Other record

7. Issuance of check book

8. Cheque abrogation

3.5.5 Advances office

The basic role of this division is to urge the private venture to take credits and help
them in their business. Bank gains from the headway of credit to the general population
or association and charges a specific level of enthusiasm on it and bank procures
benefit. This capacity of the bank contributes incredible arrangement to the incomes of
the bank. Bank additionally makes advances to little size business and development
organizations and so forth. MCB branches are having office for giving advances to the
borrowers.

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3.5.6 Remittance Department

Settlement office manages either the exchange of cash from one bank to other bank or
starting with one branch then onto the next branch for their clients. This office gives
client a protected method of cash move in the structure

1. Demand Draft

2. Telegraphic Transfer

3. Pay Order

4. Mail Transfer

5. This division manages

6. Inward settlement

7. Outward settlement

8. Inland settlement

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9. Foreign settlement

3.5.7 Foreign trade division

This division of MCB manage outside trade exchanges, this bureau of MCB manage:

1. Imports

2. Exports

3. Foreign money accounts

4. Letter of credit managing.

5. Foreign Remittance managing

3.5.8 HRM Department

This office primary errand is guaranteeing audit of existing strategies and amendment
in these approaches as esteemed vital, legitimate characterization and renaming of
representatives' compensation scales, set of working responsibilities and techniques for
periodical surveys, improvement of in house ability. HRM division contract and train
laborers and MCB give on occupation preparing and off occupation preparing to its
representatives.

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The principle reason for human asset division is to contract and terminate the workers
from the associations, HR office occupied with the exercises, for example, enrollments
of the representatives and choice of the workers.

3.6 Function of the division I worked in:

1. Cash division

2. Account opening division

3. Clearing division

4. Remittance division

3.6 Detail depiction of the errand that is allocate to me amid my internship

3.6.1 Cash division:

In genuine cash office, I work multi week in this division and in this period. Directly
off the bat I deal the customer with dazzling aura and after that get its stores slips and
checks the title of the slip and check the digits of the whole and Account number check
it are everything right. In like manner check the record equality of the customers and
associate with the modifying requesting of the clients in this structure Mr. Ajmal
Akhter helped me a great deal and guided me about in all points of view.

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This office direct cash receipt and cash bundle I see that how delegate leveling the part

Opening difference in cash + receipts of section of that day – package in that day =
closing consistency of that day

In this office, another errand that appropriates to me is the receipt of the association
charges, I make looks of the association bills, there are confined sweep for power
charge, Sui gas bill and for telephone charges, I enter the successive number purchaser
id and degree of the bills and find the total of these materials. Bank take commission on
bills, bank commission for receipt of each bill is 8 RS. In the wake of making scrolls
operator make the credit voucher and credit to the branch these commission.

3.6.2 Account Opening Department:

In the midst of my short business period in MCB I served me my second week in


record opening division which is the one of the central bit of bank. So Mr., Akhter
Hussain helped me and give me heaps of information about the record opening method
so he guided me with the help of him .task focus on me in this division is filling of
record opening structure ,

I fill account-opening sort of the customer. Basic bit of the record opening structure in
KYC (know your customer) in the wake of filling account-opening structure I take the
sign of the customer on the SS card . I structure date customer name and take sign of
the customer on the SS card. Additionally, fill beginning store slip for record
opening .In this division another errand conveys to me is helping customer in filling of
store slip. I help customer in filling cash store slip and see store slips I played another
errand that is Filling of Check book request slips.

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Verisys (request structure) authentication of CNIC from NADRA is another essential
bit of record opening , bank check the customer CNIC by verisys a site is give by
NADRA to bank to customer CNIC watch that customer CNIC fake or not or customer
is using more than one CNIC, customer nationality . After all check, customer account
is open. Expel print from the versisys of customer and joined record opening structure,
SS Card and versisys together for record opening.

3.6.3 Clearing division:

In the midst of my section level position period in MCB I experience my two weeks in
clearing office I adjusted gatherings. The errand dole out to me is this division is
Maintain the records of clearing checks in register. I structure the check number with
date and record number on the record.

This office oversee clearing of the check, spread city and close-by breathing room.

Absolutely when customer came in bank and presents a watch that is cross watch that
check is store in customer account regardless in the wake of clearing. Bank receipt
check from customer some check are of neighborhood office which bank send to
coterminous office for possibility of the check when check return after space by then
bank store that total in customer account. Right when customer store's check of branch
that are working in other city. By then bank will send the check to that branch for
situation and after slack of the check bank direct the customer account. I watch this
strategy of the room of check. Some check is sending for room through NIFT. The
clearing division fundamentally charges one record and credits the other one.Clearing
division makes diff

Current ratio=current assets /current liabilities

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Table: 4.1 Current Ratios

Year 2011 Year 2010 Year 2009


438,055,296/473,754, 383,724,636/425,221, 329,655,815/372,207,
539=0.924 031=0.902 358=0.885
Working: Calculation of current assets: (rupee in thousands)
Table: 4.2 Current Assets

Items Year 2011 Year 2010 Year 2009


Cash and balances with treasury banks 45,407,183 38,774,871 39,631,219
Balances with other banks 1,478,569 6,009,993 4,106,526
Lending to financial institutions 4,401,781 30,00,000 4,100,079
Investment 195,651,545 147,434,70 82,099,385
3
Advances 177,109,599 176,203,57 186,534,891
2
Other assets 14,006,626 12,301,497 13,183,715
TOTAL 438,055,296 383,724,63 329,655,815
6

Calculations of current liabilities :( rupee in 000)

Table: 4.3 Current Liabilities

Items Year 2011 Year 2010 Year 2009


Bill payable 10,265,537 8,201,090 10,551,468
Borrowings 24,601,822 43,612,813 21,613,465
Deposit and other 426,476,908 361,695,513 322,785,631
accounts
Other liabilities 12,410,272 11,711,615 17,257,794
Total 473,754,539 425,221,031 372,207,358

Interpretations:

As the current ratio from the year 2008 to 2010 is 0.885, 0.902 and 0.924 respectively.
The ratio is declining during these years. This graph showing that the bank current

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ratios are declining. In all three years current ratio is not slight more than is standard
ratio. It must be 2:1

4.1.2 Acid test ratio:

A stringent indicator that determines whether a firm has enough short-term


assets to cover its immediate liabilities without selling inventory. The acid-test ratio is
far more strenuous than the working capital ratio, primarily because the working capital
ratio allows for the inclusion of inventory assets.

Acid test ratio:=Current assets-advances/current liabilities

Table: 4.4 Acid test Ratio

Year 2011 Year 2010 Year 2009


260,945,704/473,754, 207,521,064/425,221, 143,120,924/372,207,
539=0.550 031=0.488 358=0.384
Working: I calculated all these values from maturities table of assets and liabilities and
added those values that are current (fall in one year).

Current assets-advances=quick assets

2011 438,055,296-177,109,592=260,945,704

2010 383,724,636-176,203,572=207,521,064

2009 329,655,815-186,534,891=143,120,924

Interpretations:

As the Acid test ratio from year 2008 to 2010 is: 0.384, 0.488 and 0.550 respectively. .
The ratio is consistently is declining even in 2010.This graph is showing that the bank
acid test ratio decrease. In all three years acid test ratio is not slight more than is
standard ratio. It must be 1:1

4.1.3 Working capital

A measure of both a company's efficiency and its short-term financial health. The
working capital ratio is calculated as:

24
This ratio indicates whether a company has enough short term assets to cover its short
term debt. Anything below 1 indicates negative W/C (working capital). While anything
over 2 means that the company is not investing excess assets. Most believe that a ratio
between 1.2 and 2.0 is sufficient.

Also known as "net working capital", or the "working capital ratio".

Working capital=Current assets-current liabilities

Table: 4.5 Working Capital

Year 2010 Year 2009 Year 2008

438,055,296-73,754,539=-35, 383,724,636-425,221, 329,655,815-372,207358=-42,


699,243 031= 41,496,395 551,543
Working: to figure working capital I included every single current resource and
current liabilities than subtract current liabilities from current resources.

Translations:

Working capital of the MCB bank is negative in year 2008 to 2010.The current
liabilities of MCB are more noteworthy than its benefits. So in this diagram the
working capital is negative in every one of the three years. Working capital measure the
money related position of the bank and momentary budgetary wellbeing. Working
capital of Muslim business bank is negative its methods the bank as of now is unfit to
meet its momentary liabilities.

4.2 Leverage Ratio:-

4.2.1 Debt to Total Asset:

It is the 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

25
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. If the ratio is greater than 1%, most of the company's assets are
financed through debt. In this bank years (2009 to 2011) this ratio have been less than
1% so this bank assets are finance through equity.

Debt Ratio = Total liabilities/total assets

Table: 4.6 Debt Ratio

2009 2010 2011


Total 439,428,598 488,482,736 564,670,502
liabilities
Total Assets 511,741,878 570,481,863 666,324,807

Debt Ratio 439,428,598/511, 488,482,736/570,481,86 564,670,502/666,324,80


741,878 3 7
=0.86 Times =0.86 Times =0.85 Times

Interpretation

MCB have 0.86time debt of its total assets in two years and slightly decrease in 2011,
in 2011 MCB have 0.85 debt of firm total assets. Graph show slightly decreasing trend
in 2011, slightly decrease in debt ratio may be due not efficiently use of assets to
generate revenue or decrease in the deposits.

4.2.2 Debt To Equity Ratio:

It indicate 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 assets are primarily finance through equity This ratio of bank
throughout the years 2009 to 2011 greater than one.

Debt to Equity ratio = Total liabilities / total shareholder equity

Working 2011

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Total shareholder equity =Share capital + Reserves +Unappropriated profit

Total shareholder equity = 8,362,365+42,412,588+30,259,449

Total shareholder equity =81,034,402

Working 2010

Total shareholder equity =Share capital + Reserves +Unappropriated profit

Total shareholder equity = 7,602,150 +40,164,526+23,458,429

Total shareholder equity =71,225,105

Working 2009

Total shareholder equity =Share capital + Reserves +Unappropriated profit

Total shareholder equity = 6,911,045+38,387,656+17,821,670

Total shareholder equity =63,120,371

Table: 4.7 Debt To Equity Ratio

2009 2010 2011


Total 439,428,598 488,482,736 564,670,502
liabilities
Total 63,120,371 71,225,105 81,034,402
shareholder
equity
Debt to 439,428,598/63,120,37 488,482,736/71,225,10 564,670,502/81,034,40
equity ratio 1 5 2
=6.97 times =6.86 times = 6.97 times

Interpretation

Ratio show that 6.97 time debt is use for finance bank assets relative to equity finance
in 2009 and 2011 while 6.86 time debt is use to finance bank assets. Slightly decrease
in 2010 ratio is due to decrease in deposits and again slightly increase in ratio is due to
increase in customer deposits and decrease in equity.

4.3 Coverage Ratio

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It proportion of an organization's capacity to meet its monetary commitments. In
expansive terms, the higher the inclusion proportion, the better the capacity of the
venture to satisfy its commitments to its loan specialists. The pattern of inclusion
proportions after some time is additionally examined by investigators and speculators
to discover the adjustment in an organization's budgetary position. Regular inclusion
proportions incorporate the intrigue inclusion proportion, obligation administration
inclusion proportion and the advantage inclusion proportion

4.3.1 Interest Coverage Ratio

A ratio used to determine how easily a company can pay interest on outstanding debt.
The interest coverage ratio is calculated by dividing a company's earnings before
interest and taxes (EBIT) of one period by the company's interest expenses of the same
period:

Coverage ratio of MCB for 2009,2010,2011 are:

Working 2011

EBIT=profit before tax + interest expense

EBIT= 31,321,782+23,632,615

EBIT=54,954,397

Working 2010

EBIT=profit before tax + interest expense

EBIT=26,509,636+18,027,372

EBIT=44,537,008

Working 2009

EBIT=profit before tax + interest expense

EBIT=23,349,146+15,839,722

EBIT=39,188,868

Table: 4.8 Time interest earned

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2009 2010 2011
EBIT 39,188,868 44,537,008 54,954,397
Interest 15,839,722 18,027,372 23,632,615
expense
Time interest 39,188,868/15,8 44,537,008/18,027,372 54,954,397/23,632,6
=2.48 times 1
earned 39,722 =2.48
times 5 =2.33 times

Interpretation

The intrigue inclusion proportion of MCB has demonstrated an improvement over the
time of three years. In the year 2011, the proportion is 2.23. Which demonstrates that
the pay in 2011 spreads 2.23 occasions the intrigue cost comprise the fundamental cost
of the business, it is the reason the intrigue cost is so higher and the proportion is so
lower.

4.4 Profitability Ratio:

Benefit proportions measure an organization's budgetary act and its capacity to build its
investors esteem and produce benefits. Gainfulness proportions give understanding into
the benefits made by the organization in connection to its size, resources, and deals and
furthermore measure the organization's execution in connection to itself. Having past
information as a benchmark, the firm can begin to make ends regarding why
gainfulness is expanding or diminishing.

4.4.1 Net overall revenue:

Net benefit after duty measure benefit staying in the wake of deducting all costs
including charge. It ought to be most extreme. Markup/return/premium earned and

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nonmarkup premium salary expanded all through the period for example year 2009 up
to year 2011.

While markup/return/intrigue expensed was expanded all through from 2005 because
of net benefit after assessment proportion diminishing. The pay and costs have direct
connection, that is the reason it influences net benefit proportion. Net Profit Margin =
Net profit after taxation /Net sales * 100

Table: 4.9 Net Profit Margin

2009 2010 2011


Net profit after 15,665,403 16,872,126 19,302,483
taxation
Net sales 51,621,911 54,829,365 68,215,902
Net Profit Margin 15,665,403/51,62 16,872,126/54,829, 19,302,483/68,215,902*10
1,911*100 365*100 =30.78% 0 =28.29%
=30.35%

Interpretation

In 2011, 28.29% of the interest income has been contributed in the total bank profit
which is low as compare to other year.30.35% & 30.78% of the interest income has
been contributed in the total bank profit in 2009and 2010. In 2011 ratio show slightly
decreasing trend the decline in ratio in 2011 as compare to other year is due to increase
in expenses in this year. And in 2010 management is managing expenses well as
camper to 2009 and 2011.

4.2.2 Return on assets (ROA):

It is the 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 2009 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 2011 return on asset is decrease because net
income in this year is also decrease.

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Net income / Totals assets * 100

Table: 4.10 Return on assets

2009 2010 2011


Net income 15,665,399 16,872,126 19,302,483
Total assets 511,741,878 570,481,863 656,324,807
Return on 15,665,399/5 16,872,126/570,481,86 54,954,397/666,324,807*
assets 11,741,878*10 3*100=2.96% 100= 8.25 %
0=3.07%

Interpretation

MCB is getting higher return of its assets in 2011 which is 8.25%. Results show
decrease in ratio in 2010 the decrease in ratio in 2010 is due to decrease in net Income
of the firm. In 2011 firm is using its assets efficiently to get favorable return on its
assets. Increase in ratio in 2011 is due to increase in net income of the firm.

4.4.3 Return on equity:

It is the 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 (2005 to 2009) 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 total Equity =Net profit after taxation /total equity x 100

Total equity = Share Capital + Reserves + Inappropriate profit

Working 2011

Total shareholder equity =Share capital + Reserves +Unappropriated profit

Total shareholder equity = 8,362,365+42,412,588+30,259,449

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Total shareholder equity =81,034,402

Working 2010

Total shareholder equity =Share capital + Reserves +Unappropriated profit

Total shareholder equity = 7,602,150 +40,164,526+23,458,429

Total shareholder equity =71,225,105

Working 2009

Total shareholder equity =Share capital + Reserves +Unappropriated profit

Total shareholder equity = 6,911,045+38,387,656+17,821,670

Total shareholder equity =63,120,371

Table: 4.11 Return on total equity

2009 2010 2011


Net profit 15,665,403 16,872,126 19,302,483
after taxation
Total equity 63,120,371 71,225,105 81,034,402
Return on 15,665,403/63,120,371 16,872,126/71,225,105 19,302,483/81,034,402*10
total equity *100 =24.82% *100=23.69 % 0=23.83 %

Interpretation

24.82% is the return that bank is earning on shareholder equity in 2009 which is higher
as compare to other two years. Graph show that return on equity is slightly decreased in
2010 and increase in 2011. Net profit of MCB is slightly decline due to increase in
taxes and net profits slightly increases in 2011 and slightly increase in return on equity
in 2011 due to increase in net income of MCB.

4.4.4 Du Pont Return on Assets Ratio

Profit for resources (ROA) is a level of the after-charge salary when contrasted with the
complete resources of the organization. The executives at Du Pont thought of Return on
Assets (Du Pont), a methodology that decides the effect of benefit turnover and net
revenue on benefits. This intuitive instructional exercise clarifies the idea by strolling
32
you through the counts, including where to discover the numbers on the budget
summaries.

(Net income/Sales) x (Sales/Total Assets) x100

2011

Net income: 19,302,483

Sales: 68,215,902

Total assets: 666,324,807

2010

Net income=16,872,126

Sales= 54,829,365

Total assets= 570,481,863

2009

Net income= 15,665,403

Sales=51,621,911

Total assets=511,741,878

Table: 4.12 DuPont return on asset ratio

2009 2010 2011


(Net (15,665,403/51,621,911) (19,302,483/68,215
income/Sales) x (51,621,911/511,741,878)* (16,872,126/54,829,36 ,902) x
(Sales/Total 100 5) (68,215,902/666,32
Assets) x100 (54,829,365/570,481,8 4,807) x 100
63)*100
DuPont return on =3.07 % = 2.96 % =2.90 %
asset ratio

4.4.5 Gross Profit Margin Ratio

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A financial metric used to assess a firm's financial health by revealing the proportion of
money left over from revenues after accounting for the cost of goods sold. Gross profit
margin serves as the source for paying additional expenses and future savings.

Gross Profit x 100

Net Revenue

This ratio tells that the profit of the firm relatively to sales, after we deduct the cost of
producing the goods.

Ratio for 2009 = 14,975/ 17,756X 100 = 55.70%

Ratio for 2010 = 21,252/ 25,778 X 100= 60.51%

Ratio for 2011 = 23,922/ 31,787 X 100 = 71.72%

Interpretation

MCB net overall revenue per rupee has appeared rising pattern over a year. This
demonstrates the productivity of the bank in controlling expense of offer and better
stately of valuing item.

CHAPTER 5

SWOT ANALYSIS

5.1 Strengths

34
1. One of the principal thought of MCB that I recognize is the speedier money
related affiliations and incessantly clear in banking industry especially in errands and
Foreign Exchange. Realistic affiliations and reasonable affiliations charges are
attracting the extensive system to do their business with MCB.

2. MCB has totally modernized control on its budgetary structure due to this office
the MCB is in the snappy review of through and through automated bank.

3. Internal control and checking of the MCB Bank is conceivable Quality Control
Expert visits on different occasions each week at bank working conditions which urges
the delegates to improve their work.

4. Due to shrewd money related affiliations, clear budgetary affiliations and totally
automated PC structure achieved joining of experienced people, moved the board,
advance setup and workplaces gave MCB an edge over its adversaries.

5. Most private banks have still not online most of their branches in Pakistan but
instead the MCB has most of its branches on the web. They have wide zone form in
wherever all through the Pakistan, with the objective that they spread a huge amount of
part of cash trades and make customer satisfied

6. The Bank has particularly authentic fundamentals and rules about the
customer's protests. The customers are treated as fascinating individuals with respect to
the Bank.

7. MCB has the Strongest Bank in Pakistan Award 2010.

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8. MCB other than got the Leadership Achievement Award 2010.

9. MCB has been yielded as Euro money Award 2008 for the "Best Bank in Asia.

10. Best Bank In Pakistan Award: MCB has been yielded the best bank in Pakistan
since 2000, 2001, 2003, 2004, and 2006

1.2.1 Weakness

1. MCB offers gathered sorts of things to the customers along these lines
pervasive piece of people are not particularly cautious about the possible results of
MCB. For models if an individual needs to open a record with MCB state it is available
yet he doesn't have the foggiest thought what kind of Current Account he should open
does not know this the genuine weakness for the MCB.

2. No insincerity workplaces are open in the bank when customer visits Bank and
keep it together for at longer time. These workplaces can be the Newspaper.
Magazines, etc.

3. Out look of the MCB branches isn't captivating to the extensive system.

4. In this period of debate a wide part of the banks publicizing their shifting things
and affiliations yet no business I have seen on any channel regarding their things and
affiliations.

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5. Equality should be observed all through budgetary structure. There should no
repression among the customers. As I saw at the branch where I functioned admirably
off customers were given the other than exciting affiliations while the customers who
have low endeavor with the bank kept it together for long for their turn.

6. At private connecting banks there is routinely trade of masters after a standard


time of one and a half years or two years while at MCB branch where I did my way
level position most by far of the operators are working more than three years.
Occupation Rotation help the specialists to locate a couple of arrangements concerning
different zones of the business which I recognize is missing at MCB.

5.3 Opportunities

1. MCB has the Strongest Bank in Pakistan Award 2010. MCB in like manner got
the Leadership Achievement Award 2010. MCB has been yielded as Euro money
Award 2008 for the "Best Bank in Asia.

2. Best Bank in Pakistan Award: MCB has been yielded the best bank in Pakistan
since 2000, 2001, 2003, 2004, and 2006.

3. These refinements impact an edge in the cerebrum of people to contribute and


get from this bank.

4. Before privatization people were not content with the relationship of the bank.
After the privatization people have shifting decisions to contribute and get from. The
MCB in light of its over 10 years execution it gets the odds to pull in the customers

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5.4 Threats

1. The diminished getting impact of buyer in the present money related condition
of the country influencing the business improvement speed unnecessarily and the result
is the low theory from the examiners in new premiums can make issue for the hank
since it is working a ton thusly.

2. The Competition has ended up being astounding by the people from such
unending. So to exist one ought to substantiate himself in its relationship through
stunning affiliation and ought to satisfy its cash related specialists. Else it will he out
the market

3. New Privates Bank accustomed to growing new Technology of IT. This


straightforwardness of segment in the market is the peril to the MCB bank.

Change in government approaches has influenced the financial business. Still banks
need to grasp get assent from the State Bank of Pakistan. The setting up of outside cash
accounts is a central instance of letting people not to trust on banks

Section 6

End AND RECOMMENDATIONS:

6.1 Conclusion

38
MCB is most conspicuous business bank working in Pakistan and wide branch organize
working in Pakistan and abroad. In the midst of my brief work I see that MCB is
endeavoring to give better customer affiliation structure its adversaries to pull in and
hold the customers.

Staff of MCB is particularly qualified and self actuated, without one specialist, other
operator can manage his work, since laborers of MCB are train in more than one
business. MCB is giving 24-hour working conditions to its customers by ATM. staff of
MCB are extraordinarily fulfilling and trustworthy. Structure the degree examination I
decipher that general execution of MCB is strikingly unrivaled.

1. MCB is using its central focuses attainably and MCB have extending return on
assets

2. Market idea of MCB is low in 2011

3. Non premium pay of bank is 0.11 time of full scale compensation

4. MCB can offer consistently progress and additional advances to its customers

5. MCB working activities increase in 2011

6. Ratio presentation that unrivaled expense of the bank is creating

7. Over all execution of MCB is well.

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6.2 Recommendation for improvement

1. MCB should give Visa office to its customers

2. Internee should be give totally thought and give them some fit work is
supervision of division officer.

3. MCB should give some extra focal concentrations to its administrators to ask
them

4. MCB should improve its offer expense in market to improve its cost/getting
degree

5. To improve net spread degree MCB should need to improve its net interest
edge.

6. MCB is in position to offer advances, MCB should offer credits/advance to its


customer to win more

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LITERATURE CITED

MCB web site

http://www.mcb.com.pk/

MCB ANNUAL REOROT 2011

http://www.mcb.com.pk/uploads/FCG/docs/MCB%20Annual%20Report-2011.pdf

MCB ANNUAL REPORT 2010

http://www.mcb.com.pk/uploads/FCG/docs/Annual%20Report%202010_1.pdf

http://jobsntalent.blogspot.com/2011/09/muslim-commercial-bank-projec-t.html

http://ypages.pk/branches/mcb-bank-limited/karachi/pakistan/1944.html

http://www.scribd.com/doc/21694200/Internship-Report-MCB-Bank-Ltd

http://www.managementparadise.com/rajeshsekar/documents/9183/internship-report-
of-mcb/

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