INTERNSHIP REPORT ON

MCB BANK
HAVELLIAN BRANCH ABBOTTABAD (0588)

Submitted by
Usman Ali

Roll # S-2015-005
Supervised by
Sardar Muhammad Arshad

Government College of
Management Sciences Abbottabad
SESSION
2015-2018

i
 INTERNSHIP REPORT ON
MCB BANK
HAVELLIAN BRANCH ABBOTTABAD (0588)

Submitted by:Usman Ali

Roll # S-2015-005

Supervised by: Sardar Muhammad Arshad

This internship report is submitted in partial fulfillment of the

requirements for the degree Bachelor of Business Administration
awarded by the Hazara University Manshera

Government College of
Management Sciences Abbottabad
SESSION
2015-2018

ii
 Government College of Management Sciences
Abbottabad

APPROVAL SHEET

Approval Committee

1. External Examiner

Mr.______________________ Signature______________________

2. Supervisor

Sardar Muhammad Arshad Signature______________________

Designation Associate Professor GCMS Abbottabad

3. Head of department

Mr. Mushtaq Ahmad____________ Signature_____________________

Designation Principal GCMS Abbottabad

iii
 DEDICATION

I dedicate my Internship Report to my Loving Parents, my

friends & my Respected Teachers

iv
 ABSTRACT

Internship training program during BBA Programs necessary for the partial fulfillment of the
completion of Degree of BBA. It is necessary for me to complete an internship session
of about 8 weeks in some manufacturing or service industry relevant to my area of interest
and specialization. So, I choose the Banking field because I have the interest in this sector
because my study background is related with this sector.

As a compulsory requirement of Professional Degree BBA opted to join MCB Bank Limited,
to fulfill my degree requirement. My reason for choosing MCB was to enhance my skills in
Management Finance and Accounts, so that to provide myself the opportunity to cope with
real life situation. To better understand the report my recommendation would be to look into
different parts mainly covering the overview of MCB, overall management of Finance and
Accounts.
The bank staff was very much cooperative to me, they have provided me relevant material to
write a report.

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 Table of Contents

APPROVAL SHEET..............................................................................................................iii
DEDICATION..........................................................................................................................iv
Chapter 1....................................................................................................................................1
Introduction to the Report..........................................................................................................1
1.1 Introduction......................................................................................................................1
1.2 Background of the study..................................................................................................2
1.3 Purpose of the Study........................................................................................................2
1.4 Scope of the study............................................................................................................2
1.5 Limitation of the study.....................................................................................................2
1.6 Objectives.........................................................................................................................3
1.7 Methodology....................................................................................................................3
1.7.1 Primary Data:............................................................................................................3
1.7.2 Secondary Data:........................................................................................................3
1.8 Organization.....................................................................................................................3
1.9 History of MCB Bank Limited........................................................................................4
1.10 Vision And Mission Of MCB......................................................................................13
1.11 Values of MCB............................................................................................................14
Chapter 2..................................................................................................................................19
ROLE OF SECTOR AND ORGANIZATION........................................................................19
2.1 Introduction....................................................................................................................19
2.2 Overall respective sectors in Pakistan............................................................................19
2.3 Commercial Banking In Pakistan...................................................................................19
2.4 ACCOUNTING PRACTICE FOLLOWED BY MCB..................................................23
Chapter 3..................................................................................................................................25
ORGANIZATIONAL STRUCTURE OF MCB......................................................................25
3.1 Introduction....................................................................................................................25
3.2 Structure On The Basis Of Executives...............................................................................26
3.3Departmentation On The Basis Of Employees’ Designation..........................................27
3.4 Geographical Departmentation of MCB........................................................................28
3.5 Structure On The Basis Of Geographical Location.......................................................29
3.6 Structure On The Basis Of Functions............................................................................30
3.7 Departmentation On The Basis Of Functions................................................................30
CHAPTER 4.............................................................................................................................32
DEPARTMENTALIZATION OF MCB AND ITS FUNCTION...........................................32

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 4.1 Cash Department............................................................................................................33
4.1.1 Cash Receipt:...........................................................................................................33
4.1.2 Payments:................................................................................................................33
4.2 Account Opening Department:.......................................................................................33
4.3 Clearance Department:...................................................................................................34
4.4 Remittance Department..................................................................................................35
4.5 Advances Department....................................................................................................35
4.6. Forms of lending:..........................................................................................................36
4.6.1 Cash Finance:..........................................................................................................36
4.6.2 Overdraft:................................................................................................................36
4.6.3 Fixed loans:.............................................................................................................37
CHAPTER 5.............................................................................................................................38
PRODUCT AND SERVICES..................................................................................................38
5.1 Deposits:.........................................................................................................................38
5.1.1 Demand Deposits (DD):.....................................................................................38
5.1.2 Term DEPOSITS/Fixed Deposit:............................................................................39
5.1.3 Savings Deposits:....................................................................................................39
5.2 Services and Products................................................................................................39
5.2.1 Khushali Bachat Account (KBA):...........................................................................39
5.2.2 Hajj Mubarak Savings Scheme:..............................................................................40
5.2.3 Khanam Bachat Account Scheme (KBA):..............................................................40
5.2.4 PLS Savings............................................................................................................40
5.2.5Export Promotion Scheme:......................................................................................41
CHAPTER-6............................................................................................................................44
FINANCIAL ANALYSIS.......................................................................................................44
6.1 Balance Sheetss..............................................................................................................44
6.2 Vertical Analysis of Balance Sheet................................................................................46
6.3 Horizontal Analysis........................................................................................................48
6.4 Interpretation..................................................................................................................49
6.4 Ratio Analysis..............................................................................................................53
6.4.1 Liquidity......................................................................................................................54
CHAPTER 7.............................................................................................................................69
FINDINGS AND RECOMMENDATIONS............................................................................69
7.3 SUGGESTIONS............................................................................................................75
References................................................................................................................................76

vii
 ACKNOWLEDGEMENT

All praise is for ALLAH, the most merciful and His Prophet Muhammad for every torch of
guidance and knowledge for humanity. I offer humblest and sincerest words of thanks to
ALLAH Almighty WHO blessed me with potential and ability to make material contribution
to already existing ocean of knowledge

I deem it as a great opportunity to offer my heartiest gratitude to my venerable teacher Sardar

Muhammad Arshad , for his great efforts to make us understand and to conduct this kind of
activities of giving the great opportunity for learning beyond your existing area of scope. I am
thankful to bank manager of MCB bank HAVELLIAN BRANCH ABBOTTABAD Mr.
Yasir Saleem for his nice co-operation and proper guidance throughout my internship.
Express my heartiest and sincerest sense of gratitude to all of them for providing megrand
exposure to gain multifarious experience, May Allah The Almighty bless my parents and
well-wishers who are the permanent source of prayers for me and my successes in this world.

Usman Ali

viii
 LIST OF ABBREVIATIONS

ADBP Agricultural Development Bank of Pakistan

ATM Auto Teller Machine
APD Assets Product Division
AIGP American International Group Pakistan
BTF Balance Transferred Facility
ETD Electronic Technology Department
FC Foreign Currency
FDD Foreign Demand Draft
FS Financial Statement
IDBP Industrial Development Bank of Pakistan
IT Information Technology
IPD Investment Product Division
L/C Letter of Credit
L/G Letter of Guarantee
MNCs Multi-National Companies
MCB Muslim Commercial bank
MIS Management Information System
MT Mail Transfer
NIT National Investment Trust
NDFC National Development Finance Corporation
PLS Profit & Loss Sharing
RTCs Rupee Travelers Cheques
SBP State Bank of Pakistan
SBU Strategic business unit

ix
 EXECUTIVE SUMMARY

MCB is an equal opportunity employer. It offers great incentives and benefits of their
employees throughout the country and out of country. It provides full opportunities for
improving their careers and skills; it also gives more incentives to their employees and
increasing the rank of the smart and hard workers. In this report the methodology is use as
primary data and secondary data. Primary data is collected through observation and
interviews and secondary data is collected through annual report, circulars, brochures,
newspaper, manuals, internet and relevant books.

As part of the academic requirement for completing BBA of the students are required to
under go eight weeks of internship with an organization. The internship is to serve the
purpose of acquainting the students with the practice of knowledge of the discipline of
banking administration.

On April 8th, 1991, the management control was handed over to National Group (the highest
bidders). Initially only 26% of shares were sold to private sector at Rs. 56 per share.

During my internship in MCB, I worked in All departments and I successfully completed all
the task/duties that were assigned to me.

During the course of internship, I learned about different functions performed by

Finance Department as a whole. I also learned bank’s correspondence with their employees
and within branches. I learned about documentation requirements and record keeping
for different activities and processes, especially the documentation requirement for different
kinds of activities.

x
 Chapter 1
Introduction to the Report

1.1 Introduction

The basic objective of this study is to know about the current position of the
MCB in sphere of its overall analysis and to suggest meaningful and feasible
recommendations for the bank so as to improve its performance and to restain
its previous position in banking sector.

The objective of this report is to studying and analyzing the MCB Bank in
general and HAVELLIAN Branch (0588) ABBOTTABAD, in particular, as
the partial fulfillment for the degree of BBA from Government College of
Sciences Abbottabad, this report is prepared and submitted to the Hazara
university Manshera.

MCB is an equal opportunity employer. It offers great incentives and benefits

of their employees throughout the country and out of country. It provides full
opportunities for improving their careers and skills; it also gives more
incentives to their employees and increasing the rank of the smart and hard
workers. In this report the methodology is use as primary data and secondary
data. Primary data is collected through observation and Management
interviews and secondary data is collected through annual report, circulars,
brochures, newspaper, manuals, internet and relevant books.

As part of the academic requirement for completing BBA of the students are
required to under go eight weeks of internship with an organization. The
internship is to serve the purpose of acquainting the students with the practice
of knowledge of the discipline of banking administration.

1
1.2 Background of the study

Internship training program during BBA Programs necessary for the partial
fulfillment of the completion of Degree of BBA. It is necessary for me to
complete an internship session of about 8 weeks in some manufacturing or
service industry relevant to my area of interest and specialization. So, I choose
the Banking field because I have the interest in this sector because my study
background is related with this sector.

1.3 Purpose of the Study

Internship is the capstone experience that provides me with hands-on, real-

world experience in a work setting. Ideally, internship will enable interns to:

(a) Integrate and use my knowledge and skills from the classroom
(b) Discover where further competence is needed
(c) Take steps to gain that competence under educational supervision,
and
(d) Become better acquainted with the types of work settings in which
such competence can be applied.

1.4 Scope of the study

This study will facilitate the students regarding the working of Banking
sector of Pakistan because most of the teachers during their lectures use the
examples of Banks like MCB, National Bank, UBL, Bank Al Falah and many
others, students should study this report so that they must grasp the
functioning of such Banks.

1.5 Limitation of the study

The study is done with the sole purpose of doing the best work but there were
certain limitation faced during the internship period. The most important
limitation from which the study suffers 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 and space constraint.

2
1.6 Objectives

I worked as an internee in MCB Abbottabad HAVELLIAN Branch. The main

objectives to study in MCB were:

•To get some experience in working with well reputed organization.

•To gain knowledge about the professional environment of the bank.

•To know about the technology utilized in the banks.

•To deal and manage with the situation of stress.

1.7 Methodology

There are mainly two methods that are used for the collection of data.

1.7.1 Primary Data:

•Observation of functions of organization on the spot.

•Observation of different processes of organization on the spot.

1.7.2 Secondary Data:

•Internet is very helpful for me to study more about banking sector of

Pakistan.

•Different type of booklets of the Bank.

•Annual reports

•Journals

•Newspapers

1.8 Organization

MCB is one of the leading banks of Pakistan with a deposit base of

about Rs.280 billion and total assets of around Rs.300 billion. Incorporated in
1947, MCB soon earned the reputation of a solid and conservative financial

3
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 1,190 branches nationwide.

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.

1.9 History of MCB Bank Limited

This bank was incorporated under companies’ act 1913 on 9th July 1947
(just before partition) at Calcutta. But due to changing scenario of the region,
the certificate of incorporation was issued on 17th August, 1948 with a delay
of almost 1 year; the certificate was issued at Chittagong. The first Head office
of the company was established at Dacca and Mr. G.M.Adamjee was
appointed its first chairman. It was incorporated with an authorized capital of
Rs. 15 million. After some time the registered office of the company was
shifted to Karachi on August 23rd, 1956 through a special resolution, now
recently the Head office of MCB has been transferred to Islamabad in July,
1999 and now Head office is termed as Principle Office. This institute was
nationalized with other on January 1st, 1974. At that time it had 506 branches
and deposits amounting to Rs. 1,640 million. Although. MCB has reputation
of a conservative bank but nationalization also left its effects on this institutes
well and by end of year 1991 in which it was privatized the total number of
branches were 1.287 and deposits amounting to as high as Rs. 35,029 million.
When privatization policy was announced in 1990, MCB was the first to
be privatized upon recommendations of World Bank and IMF. The reason for
this choice was the better profitability condition of the organization and less
risky credit portfolio which made'' it a good choice for investors.

4
On April 8th, 1991, the management control was handed over to National
Group (the highest bidders). Initially only 26% of shares were sold to private
sector at Rs. 56 per share.

Privatization:

A wave of economic reforms swept Pakistan in the lattes introducing the Need
for privatization of state owned banks and companies. 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. Nishat Group is one of the
leading and most diversified business groups in Pakistan. The group has strong
presence in the most important business sectors of the country such as
banking, textile, cement and insurance. Mian Mohammad Mansha is the
Chairman of the group (and also MCB) and has played instrumental role in its
success. In recognition of Mr. Mansha’s contribution, the Government of
Pakistan has conferred him with "Sitara-e-Imtiaz", one of the most prestigious
civil awards of the country.

Developments:

After privatization, the growth in every department of the bank has been
observed. Following are some key developments:

1. launching of different deposit schemes to increase saving level.

2. Increased participation on foreign trade.

3. Betterment of branches and staff service level.

4. Introduction of Rupee Traveler Cheques & Photo Credit Card for the first
time in Pakistan.

MCB as an Organization:

5
Over the years MCB has developed strong relationships with its customers by
understanding their needs and treating them with respect, dignity and
importance. The driving force behind its commitment and services is its focus
on customers ensuring that it not only meets, but also exceeds their
expectation. The Bank has a customer base of approximately 4 million.

They strive to achieve excellence by ensuring that every moment of their time
is spent in adding value, making sure that they do things right, first time, and
every time. With the quest of quality MCB has always taken initiatives
bringing banking into a new arena; from cash to the convenience of plastic;
from branch banking to internet banking and from face to face customer
interaction to online accessibility.

MCB now focuses on three core businesses namely Corporate, Commercial

and Consumer Banking. Corporate clientele includes public sector companies
as well as large local and multinational concerns. MCB is also catering to the
growing middleclass by providing new asset and liability products. MCB Bank
Limited has a solid foundation of over 63 years in Pakistan, the Bank provides
24 hour banking convenience with a network of over 1000 branches, the
largest ATM network in Pakistan over 450 ATM locations in the market.

Profitability:

With exceptional performance for 2016, the excitement for 2017 builds up as
the Bank positions itself to gain from its strengths and exploit opportunities
that exist. The weakened law and order situation coupled with severe energy
crisis are the main challenges for us to encounter on our road to success. The
volatility in interest rates and regulatory revisions remain a key risk to our
profitability. The market dynamics have changed radically over years with the
need for every institution to perform to its full potential. In spite of
challenging environment; we are committed to deliver exceptional financial
performance in 2017. Our dedicated team of professionals would take every

6
possible opportunity to serve our esteemed customers. We are confident that
our expanding network of branches would impressively contribute to meet our
valuable shareholders expectations.
Increasing international footprint, improvement in asset quality, low cost
deposit base, deployment of cost efficient techniques and increased
contribution from non-markup income would be our key areas of focus. We
will continue to tap the unbanked segments through our operational network
and branchless banking proposition as financial inclusion is the dire need of
the time ahead. We would remain dynamic and committed in retail banking,
corporate banking, Islamic banking, SME financing and agricultural credit.
Our vigorous efforts would continue for recoveries against our classified
portfolio.
Development of branch less banking agent network, expansion in E-commerce
Business, introduction of M-POS merchant terminals and deployment of cash
deposit machine would also make significant contribution to non-markup
income in 2017.
The Bank re-affirmed its commitment to Islamic Banking Customers by
incorporating its Islamic Banking subsidiary for which statutory approvals are
awaited to start commercial operations. This initiative will help to enhance
Islamic
Banking Business and to serve its valued customers by offering a complete
range of Sharia compliant products.
We are committed in maintaining our status of one of the leading banks
operating in Pakistan through enriched service quality, financially viable
tailored products to meet requirements of our esteemed customer and
translating the underlying financial strength of the entity into profits.
MCB Bank reported Profit before Tax (PBT) of Rs. 42,788,640 and Profit
after Tax (PAT) of Rs. 25,035,112 with an increase of 15% and 5% over 2016,
respectively. This was primarily contributed by 13% increase in Net Markup
Income and 32% increase in Non-Markup Income.
In 2017, through strategic placements and focused reduction in high cost
deposits, spread of the Bank was reported at 5.15% (2016: 5.42%) despite a

7
major reduction of 300 bps in the discount rate. On the cost side, the Bank
reported an increase of 8% in administrative expense base (excluding PF
reversal) which signifies the deployment of cost efficient techniques.

The total asset base of MCB Bank Limited was reported at Rs. 10,20,98,0021
signaling a healthy growth of 8% over December 2016. Analysis of the asset
mix witnessed a 11% increase in Investments to Rs. 56,42,99,568 and 3%
increase in Gross Advances to Rs. 315,310,587. The quality of asset base
registered continuous improvement as NPLs of the Bank decreased by Rs.
1.539 billion during the year and closed at Rs. 20.369 billion. Coverage ratio
of the Bank was reported at 90.83% with infection ratio improving to 6.12%
as compared to 6.80% as at December 2016. On the liabilities side, the Bank
deposits increased by 3% to Rs. 706239715 as on December 31, 2017. Tax on
transactions introduced for non-filers had an impact on the deposit growth rate
registered in the preceding years. However, overall deposit growth remained
satisfactory despite the reduction in high cost deposits.
On the expansion front, our Dubai branch became operational in 2017. The
Bank has injected additional equity in “MCB Leasing” Closed Joint Stock
Company, Azerbaijan & MCB Sri Lanka Operation during 2017.
On the Islamic business front, The Bank incorporated MCB Islamic Bank
Limited (MCBIBL), a wholly owned subsidiary, with an authorized share
capital of Rs. 15 Billion in 2016. During the year, the Bank has injected equity
of Rs. 10 billion in the said subsidiary. SBP has granted “Certificate of
commencement of Banking Business” to MCBIBL effective September 14,
2017.
MCB Mobile Banking has also continued to grow at a fast pace with an active
customer base exceeding 650,000 showcasing an increase of 16% from the
year 2016.

With one of the largest ATM networks in the industry, the Bank continued to
expand and added 136 new ATMs in

8
2017 crossing a mega network size of 1,070+ ATMs, ensuring strong footprint
and convenience for all its customers nationwide. Another important pillar
strengthening the Digital Banking presence is the Merchant Acquiring
Business.
Point of Sale (POS) terminals is a key element in ensuring MCB’s presence in
simplifying payments and the POS network grew by more than 50% in 2017.
During 2017, the Bank also played a major role in facilitating the flow of
remittances through the banking channels in Pakistan. The Bank handled
home remittances in excess of USD 2Bn in 2017 with double digit percentage
increase over the previous year.
Detailed analysis covering performance and achievements of respective
groups against their targets for 2017 is included in the Director’s Report.
Source: Annual report 2017 Page#50-60

Business Strategy:

The business strategy of MCB is to provide financial solutions to

major segments of its customer base, namely retail and corporate. Separate
business groups have been set up to ensure a more focused approach in
satisfying the diversified customer segments. The Bank has also established an
Islamic Banking unit to offer Shariah compliant products and services, with
dedicated Islamic banking branches in six cities. The plan for future is to
further realize the capacity of Islamic Financial Systems and to bring Shariah
compliant network parallel to current retail network of traditional banking.
Wholesale Banking Group caters to the top tier local and multinational
companies. As a result of organizational restructuring, including
reinvigorating Investment Banking and beefing up relationship teams, the
Group is in line with the industry’s best practices. MCB has closed some large
deals and is currently working on a number of large transactions including
advisory business. It is a strong competitor in cash management and structured
financing activities. Retail Banking Group focuses on trading and middle
market segment primarily for building risk assets and trade related business.
MCB caters to their needs of financing foreign and local trade, funds transfer

9
and other seasonal requirements. The Bank has renovated a large number of
branches and staff has been trained for meeting the requirements of SMEs and
other retail customers. A separate SME Financing Division has been set up to
provide customized financing solutions to this very important segment of the
economy. The Group also focuses on the development of innovative consumer
asset products for satisfying the personal needs of the customers. MCB has a
significant share of consumer financing business with its House and Car
Financing schemes. The recently launched running financing facility against
the mortgage of property is also expected to go a long way in increasing the
quality consumer credit portfolio of the bank. With the experience gained in
the past few years, the Bank is fast progressing towards becoming the leading
bank in consumer business.

Information Technology:

MCB’s name is synonymous with ATM facility in the country as the Bank
has been a pioneer in introducing 24-hour cash withdrawal facility and on-
screen transactions. MCB ATM/Debit Card, the most multifunctional card of
the country, with its collaboration with Cirrus and Maestro can be used
globally. The Bank has also deployed an extensive network of Point of Sale
Terminals at thousands of merchants in major cities of the country, thus
having the privilege of being the first and only bank with full-fledged card
acquiring and issuing systems. The Bank also pioneered the idea of sharing its
ATM network with other banks by establishing an electronic platform for
enhanced network accessibility and secure son-line transactions. MCB mobile
banking was launched in mid-CY09, and volumes on the platform have
already crossed the PKR 1 billion mark. While the services are free for now,
going forward this entails improvement in fee income as well as generation
of sticky zero-cost deposits. Technological leadership has helped the Bank in
providing multiple delivery channels to the customers and satisfying their
needs anytime & anywhere in the world.MCB offers the most comprehensive
Internet banking solution in the country. MCB Virtual-Internet Banking with
its wide ranging banking solutions for the customers for individual as well as

10
corporate customers has become the most preferred Internet banking solution
in the country. 

MCB & NIB Merger

The board of MCB Bank approved the bank’s merger into NIB Bank at a share
swap ratio, which was vehemently opposed by the minority shareholders of
the latter’s financial institution.   

“The shareholders of MCB at their extra-ordinary general meeting, held on 23

January, have unanimously approved and adopted the scheme of
amalgamation of NIB Bank Limited with and into MCB… through a share
swap arrangement,” said MCB, in a notice issued to the Pakistan Stock
Exchange on Tuesday.

“The shareholders of MCB have also unanimously approved the swap ratio of
one new ordinary share of MCB Bank for every 140.043 shares of NIB for the
scheme of amalgamation. 

The bourse filing said the decision of the shareholders of MCB are subject to,
amongst others, sanction of the State Bank of Pakistan, approval of the
Competition Commission of Pakistan and receipt of other requisite regulatory
authorisations, consents and approvals.

As a consequence of the approved amalgamation, 73,569,197 ordinary shares

of MCB would be issued in favour of the shareholders of the NIB Bank. 
Minority shareholders group of NIB Bank rejected the existing swap
arrangement. 

“The proposed swap ratio bears no relationship to the real value of NIB shares
and if approved the merger will significantly deprive NIB shareholders of
almost 30 percent value,” the group said in an appeal, published in media on
January 22.  

“The proposed swap ratio values each share of NIB at approximately Rs1.58
whereas the book value of each NIB share is Rs1.84 and the market price of

11
each NIB share was Rs2.21 on 6 December 2017, just a day before the
announcement of the proposed merger.”

The group asked the shareholders of NIB Bank to reject the proposed swap
ration and merger, “by writing their objections to the president of NIB Bank
Limited, the State Bank of Pakistan, the Securities and Exchange Commission
of Pakistan and other forums.”

NIB’s board meeting is yet to take place to approve the amalgamation scheme.
Sindh High Court issued a status quo order preventing the holding of
extraordinary general meeting of NIB scheduled for 23 January.

Fullerton Fund Management Company Ltd, a subsidiary of Singaporean state

investor Temasek Holdings, was trying to exit from Pakistan through divesting
its majority stake in NIB Bank. It initiated divestment process in 2011. NIB
sustained a net loss of around Rs17 billion since Temasek acquired the bank
back in 2005.

Analysts said alone State Life Insurance Corporation and Pakistan

Reinsurance, which together own 228 million shares of NIB Bank, would
sustain a loss of Rs215 million on book and Rs139 million on market value on
completion of ‘undervalued sale of NIB Bank’s stakes.’  In the past five years,
MCB, the country’s third biggest lender, has been a laggard in branch
expansion and has opened only 125 branches since 2010, showing a
cumulative 11 percent growth in branch network. Acquisition of NIB offers
MCB a chance to grow its network by 14 percent, analysts said.

 For NIB Bank, the country’s 12th largest bank by market capitalisation, the
possible merger could be a great chance to get out of losses. The bank was
struggling to be profitable, and it posted profit after tax of Rs2.617 billion in
2016 as against loss after tax of Rs508 million in the year 2014.

Source: https://www.thenews.com.pk/print/181464-MCB-approvesNIB-
Banks-swap-ratio-merger

12
 1.10 Vision And Mission Of MCB

Vision Statement:

“To be the obvious choice for financial services in the region and beyond” 

To be the leading, financial services provider, and partnering with our

customers for amore prosperous and secure future. Our vision statement
underlies our aspirations to establish the MCB group as the benchmark
reference for the provision of financial services in the region and even further,
in line with the increased needs of our customers operating in the global
economy.

Mission Statement:

“Pursuing the voyage towards excellence”

We are a team of committed professionals, providing innovative and efficient

financial solutions to create and nurture long-term relationships with our
customers. Indoing so, we ensure that our shareholders can invest with
confidence in us.

•Providing innovative

•Efficient financial solutions

•Long-term relationships with our customers

•Shareholders invest with confidence Our mission statement testifies to our

unrelenting commitment to best practices in the provision of financial services
throughout the group against the backdrop of creating shareholder value.

13
1.11 Values of MCB

Integrity:

We are the trustees of public funds and serve our community with integrity.
We believe in being the best at always doing the right thing. We deliver on
our responsibilities and commitments to our customers as well as our
colleagues.

Respect:

We respect our customer’s values, beliefs, culture and history. We value the
equality of gender and diversity of experience and education that our
employees bring with them. We create an environment where each individual
is enabled to succeed.

Excellence:

We take personal responsibility for our role as leaders in the pursuit

of excellence. We are a performance driven, result oriented organization
where merit is the only criterion for reward.

Knowledge:

A strong commitment to nurture our human capital through life long

development & learning toward achieving our goal described in our mission.

Customer Centricity:

Our customers are at the heart of everything we do. We thrive on the challenge
of understanding their needs and aspirations, both realized and unrealized. We
make every effort to exceed customer expectations through superior services
and solutions.

14
Innovation:

We encourage and reward people who challenge the status quo and
think  beyond the boundaries of the conventional. Our teams work together for
the smooth and efficient implementation of ideas and initiatives.

Customer Care:

 The assurance of providing quick, dedicated and unrivalled services to

our valuable customers.

Team Work:

Our approach, towards synergistic potential among our people between the
companies of the group alongside leveraging individual skills & competencies.

15
1.12

16
Awards Of MCB

Year 2017

The Asset Triple a Best Bank - Pakistan

The Asset Triple ABest Domestic Bank - Pakistan
CFA 11th Excellence AwardsBest Bank of the year 2013 – Large Bank

Year 2016

CFA 11th Excellence AwardsBest Bank of the year 2013 – Large Bank
CFA 11th Excellence AwardsMost Stable Bank of the year 2013
Asiamoney AwardsBest of the Best Domestic Bank
The Asian Banker (USA)Strongest Bank in Pakistan 2016
ICAP and ICMAP1st - BCR Award 2013 - Banking Sector
SAFA1st Runner up - BCR 2013 in Banking Sector Category

17
Year 2013

The Asset Triple ABest Domestic Bank - Pakistan

The Asset Triple ABest Islamic Deal
ICAP and ICMAP1st - BCR Award 2012 - Banking Sector
LK Domain Registry Sri LankaBest Website Award
Lanka Clear Pvt. LimitedT+1 Cheque Clearing Award

Year 2012

The Asset Triple ABest Domestic Bank - Pakistan

EuromoneyBest Bank in Pakistan
NFEHCSR Business Excellence Award “Best Media Coverage”
ICAP and ICMAP2nd Best Corporate Report Award 2011- Banking Sector
World FinanceBest Commercial Bank - Pakistan
Pakistan Centre for PhilanthropyPCP Corporate Philanthropy Award

Year 2011

CFA Association PakistanMost Stable Bank of the Year

CFA Association PakistanBest Bank of the Year
EuromoneyBest Bank in Pakistan
ICAP / ICMAP1st - BCR Award 2010 - Banking Sector
SAFAJoint 2nd Runner-up for BCR 2010

Year 2010

The Asian BankerStrongest Bank in Pakistan

The Asian BankerLeadership Achievement Award
MMTBest Bank Led MMT Service

18
ICAP / ICMAP1st - BCR Award 2009 - Banking Sector
SAFACertificate of Merit Award for BCR 2009

Year 2009

AsiamoneyBest Domestic Bank in Pakistan

The AssetBest Domestic Bank in Pakistan

Year 2008

EuromoneyBest Bank in Asia

EuromoneyBest Bank in Pakistan
AsiamoneyBest Domestic Bank in Pakistan

Year 2006

EuromoneyBest Bank in Pakistan

Year 2005

EuromoneyBest Bank in Pakistan

Asia MoneyBest Domestic Commercial Bank in Pakistan

Year 2004

EuromoneyBest Bank in Pakistan

Asia MoneyBest Domestic Commercial Bank in Pakistan

Year 2003

EuromoneyBest Bank in Pakistan

19
Year 2001

EuromoneyBest Bank in Pakistan

Year 2000

EuromoneyBest Domestic Bank in Pakistan

Source: https://www.mcb.com.pk/about-mcb/bank-for-life

20
 Chapter 2
ROLE OF SECTOR AND ORGANIZATION

2.1 Introduction
This chapter will summarize that what’s the current situation of the banking
sector in Pakistan. What elaborate the importance of MCB in the banking
sector of Pakistan? This chapter will explore the role of MCB in the economic
& social development of Pakistan. Moreover this will also tells you about the
functions that’s the organization is performing and about the internship office.

2.2 Overall respective sectors in Pakistan

Banking is one of the most sensitive businesses all over the world. Banks play
very important role in the economy of a country and Pakistan is no exemption.
Banks are custodian to the assets of the general masses. The banking sector
plays a significant role in a contemporary world of money and economy. It
influences and facilitates many different but integrated economic activities
like resources mobilization, poverty elimination, production and distribution
of public finance.

2.3 Commercial Banking In Pakistan

The interesting point which I observed during the span of mine internship was
the historical background of Banking & Financial sector which is the one in
which great improvement and growth is observed since the formation of
Pakistan. For studying the growth of this sector we can divide it into three
stages, which are as follow:

a) Pre-Nationalization Era 

b) Nationalization Era

c) Post Nationalization Era

21
a) Pre Nationalization Period:
There were only two Muslim banks in Indo Pak before partition, they were;
Habib Bank Ltd. (estd. in 1941 at Bombay) & Australia Bank Ltd. (estd. In
1944 at Lahore). All other banks, at that time, were either owned by Hindus or
Foreigners. At the time of partition there were 631 bank branches in area
which came under Pakistani control. But due to bloodshed and violence at
large scale, mostly branches were closed and the disparity can be assessed
from the fact that on July 1948 there were195 branches with deposits of Rs.88
crore (880 million) only. Also a factor lagging in Pakistani industry was a
central bank of its own, by that time Reserve Bank of India was acting as
central bank for both countries and same currency notes were used in both
territories. But Reserve Bank of India was biased and Set down Pakistan on
many occasions such as the issue of funds transfer etc. In this period drastic
steps were taken in government sector for the improvement of overall position.
The private sector also responded to these changes and some very positive
changes were observed. Some of the steps taken by the government in this
regard were as under:

Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948.2) Setting up

of National Bank of Pakistan in November, 1949 to control the'jute' export in
East Pakistan and to act as agent of SBP.3) Larger powers were given to SBP
through SBP Act (1956) for controlling purposes.4) Banking Companies
Ordinance 1962 for protection and guidance to banks.5) Establishment of
specialized banks, such as ADBP (1952);

a) HBFC (Nov, 1952);

 b) P1CIC (Oct, 1957);

c) IDBP (Aug. 1961);

d) NDFC (Jan, 1973).

22
These were the steps, which built a strong banking sector in Pakistan. This is
also obvious from the facts that by 1973 there were almost 10 foreign banks
were working in Pakistan and all over deposit position was around Rs.2300
crore (23,000million).

MCB, NIB bank Merger

The board of MCB Bank approved the bank’s merger into NIB Bank at a share
swap ratio, which was vehemently opposed by the minority shareholders of
the latter’s financial institution.   

“The shareholders of MCB at their extra-ordinary general meeting, held on 23

January, have unanimously approved and adopted the scheme of
amalgamation of NIB Bank Limited with and into MCB… through a share
swap arrangement,” said MCB, in a notice issued to the Pakistan Stock
Exchange on Tuesday.

“The shareholders of MCB have also unanimously approved the swap ratio of
one new ordinary share of MCB Bank for every 140.043 shares of NIB for the
scheme of amalgamation. 

The bourse filing said the decision of the shareholders of MCB are subject to,
amongst others, sanction of the State Bank of Pakistan, approval of the
Competition Commission of Pakistan and receipt of other requisite regulatory
authorisations, consents and approvals.

As a consequence of the approved amalgamation, 73,569,197 ordinary shares

of MCB would be issued in favour of the shareholders of the NIB Bank. 
Minority shareholders group of NIB Bank rejected the existing swap
arrangement. 

“The proposed swap ratio bears no relationship to the real value of NIB shares
and if approved the merger will significantly deprive NIB shareholders of
almost 30 percent value,” the group said in an appeal, published in media on
January 22.  

23
“The proposed swap ratio values each share of NIB at approximately Rs1.58
whereas the book value of each NIB share is Rs1.84 and the market price of
each NIB share was Rs2.21 on 6 December 2017, just a day before the
announcement of the proposed merger.”

The group asked the shareholders of NIB Bank to reject the proposed swap
ration and merger, “by writing their objections to the president of NIB Bank
Limited, the State Bank of Pakistan, the Securities and Exchange Commission
of Pakistan and other forums.”

NIB’s board meeting is yet to take place to approve the amalgamation scheme.
Sindh High Court issued a status quo order preventing the holding of
extraordinary general meeting of NIB scheduled for 23 January.

Fullerton Fund Management Company Ltd, a subsidiary of Singaporean state

investor Temasek Holdings, was trying to exit from Pakistan through divesting
its majority stake in NIB Bank. It initiated divestment process in 2011. NIB
sustained a net loss of around Rs17 billion since Temasek acquired the bank
back in 2005.

Analysts said alone State Life Insurance Corporation and Pakistan

Reinsurance, which together own 228 million shares of NIB Bank, would
sustain a loss of Rs215 million on book and Rs139 million on market value on
completion of ‘undervalued sale of NIB Bank’s stakes.’  In the past five years,
MCB, the country’s third biggest lender, has been a laggard in branch
expansion and has opened only 125 branches since 2010, showing a
cumulative 11 percent growth in branch network. Acquisition of NIB offers
MCB a chance to grow its network by 14 percent, analysts said.

 For NIB Bank, the country’s 12th largest bank by market capitalization, the
possible merger could be a great chance to get out of losses. The bank was
struggling to be profitable, and it posted profit after tax of Rs2.617 billion in
2016 as against loss after tax of Rs508 million in the year 2014.

24
2.4 ACCOUNTING PRACTICE FOLLOWED BY MCB
The financial statements of MCB have been prepared in accordance
with the directives issued by the State Bank of Pakistan, the requirements of
the Banking Companies Ordinance (1962), Companies Ordinance (1984), the
accounting standards issued by the International Accounting Standards
Committee (IASC) and its interpretations issued by Standing Interpretations
Committee of the IASC, as adopted in Pakistan.

These statements have been prepared under the historical cost convention
except that certain fixed assets and investments have been included at revalued
amounts. Historical cost convention refers to the practice of recording assets at
their original value at which they were acquired.

Mark-up on advances and returns on investments are recognised on an

accrual basis except the mark-up on classified advances, which is recognized
on receipt basis, in accordance with the Prudential Regulations issued by the
State Bank of Pakistan. Commission income too is recognized on receipt
basis.

Accrual basis of accounting refers to the practice of recording revenue

for the period in which it is earned while, receipt basis calls for recognition of
revenue for the period in which it is actually received, no matter when it is
earned.

Investments are recorded in accordance with the requirements of State

Bank of Pakistan.

Advances are stated net of provisions for doubtful debts. Provision for
doubtful debts is determined on the basis of Prudential Regulations issued by
the State Bank of Pakistan and charged to the income statement.

Property and equipment, other than land which is not depreciated, are
stated by deducting the accumulated depreciation from the original cost or the

25
revalued amounts. Any assets or liabilities that are in foreign currencies are
shown at their equivalent in Pakistani rupee at the exchange rate prevalent on
the balance sheet date. In case they are covered by forward exchange
contracts, i.e. contracts for the sale or purchase of a given amount of foreign
currency at a future time at a rate of exchange that is fixed when the contract is
made, then contracted rates are used.

Provisions for current taxation are based on taxable income at the

current rates of taxation after taking into consideration tax credits and rebates
available. For deferred taxes, liability method is used.

26
 Chapter 3
ORGANIZATIONAL STRUCTURE OF MCB

3.1 Introduction
An organizational structure defines how activities such as task allocation,
coordination and supervision are directed toward the achievement of
organizational aims It can also be considered as the viewing glass or
perspective through which individuals see their organization and its
environment. An organization can be structured in many different ways,
depending on its objectives. The structure of an organization will determine
the modes in which it operates and performs.

Organizational structure allows the expressed allocation of responsibilities for

different functions and processes to different entities such as
the branch, department, workgroup and individual.

Structure refers to designate relationships among resources of the management

system. The purpose of structure is to facilitate the use of each resource, both
individually and collectively, as the management system attempts to attain its
objectives. Two basic types of structures exist within management systems;
formal structure and informal structure. Formal structure is defined as
relationships between organizational resources as outlined by management.
On the contrary, informal structure is defined as patterns of relations that
develop because of the informal existence of organizational members.
Informal structure evolves naturally and tends to be molded by individual
norms, values and/or social relationships. Informal structure coexists with
formal structure but is not necessarily identical to it.

Formal structure can be made on different basis which are as follows:

27
3.2 Structure On The Basis Of Executives

Source: (MCB Annual Report 2017)

28
Board Of Directors
(As of August 05, 2017)

1 Mian Mohammad Mansha Chairman

2 S. M. Muneer Vice Chairman

3 Tariq Rafi Director

4 Shahzad Saleem Director

5 Mian Umer Mansha Director

6 Aftab Ahmad Khan Director

7 Ahmad Alman Aslam Director

8 Muhammad Ali Zeb Director

9 Mohd Suhail Amar Suresh Director

10 Mrs. Iqraa Hassan Mansha Director

11 Imran Maqbool President & CEO

3.3Departmentation On The Basis Of Employees’ Designation

A board of directors under the chairmanship of Mr. Main Muhammad Mansha

runs the bank. It has a Chief Executive, who is answerable to the board and
responsible for the activities of the five Senior Executive Vice Presidents
(SEVP). Four SEVPs manage the activities in each province and the fifth one
is responsible for the overseas operations. The Executive Vice Presidents are
answerable to the SEVP and responsible for their subordinate Vice Presidents.
Under each Vice President are the Assistant Vice Presidents (AVP), Officers
Grade 1 (OG1), Officers Grade 2 (OG2), and Officers Grade 3 (OG 3) with
decreasing level of authority as we move down the list.

29
3.4 Geographical Departmentation of MCB

The Head Office of the bank is located in Karachi. Then we have two Area
Offices namely:

 Area Office South

 Area Office North

Area Office, South manages the operations in Sindh and Balochistan while
Area Office North is responsible for the activities in Punjab, N.W.F.P, and
AJK. Each Area Office is in turn divided in to circles. To make administration
easier, each circle is divided into various regions. The regional offices are
responsible for the affaires of the branches operating in their domain.

30
 3.5 Structure On The Basis Of Geographical Location

HEAD OFFICE
(Karachi)

Area Of Area Office Overseas

The Office South Branches

Punjab NWFP Bahrain Sri

Sindh Balochista
Lanka
n

10 2
Circles Circle 5 1
Circles Circle

25 7
Regions 12 2
Regions Regions
Regions

601 112
Branches 217 35
Branches
Branches Branches

Source: (MCB Annual Report 2017)

31
3.6 Structure On The Basis Of Functions

Manager Branch Operations (O.G. 1

Cash Deptt. Bills Deptt. Forex Credit Remittances Accounts Deptt.

R/F D/F C/F

Inward Outward
Source: (MCB Annual Report 2017)
Foreign Foreign
Remittances Currency A/C
Saving Bank Demand Fixed
Deposits Deposits Deposits

Clearing Outward Inward

Bills Bills
Offered
Schemes
3.7 Departmentation
Payments Collections ATC
On
ATM
The Basis Of Functions

MCB performs its functions in accordance with its memorandum and articles
of association in the same manner as do other banks in Pakistan.

The important functions performed by the Bank are:

Acceptance of Deposits
To receive deposits is a basic function of all commercial banks because the
entire banking system is based on the funds borrowed from the public, as
bank’s own capital is not enough to sure the operations.

MCB accepts main deposits such as Current, Savings and Fixed deposits and
offers different schemes such as MCB Saving-365, MCB Saving-365 Gold,

32
Mahana Khushali Scheme, Khushali Bachat Scheme and many more in order
to increase customers attraction.

Providing Funds
A bank is a profit-seeking institution. It attracts surplus balances from the
customers at low rate of interest and makes advances at a higher rate of the
individuals and business firms. MCB, while providing funds, aims at both
liquidity and profitability. There are three types of advances provided by
MCB:
 Running Finance
 Demand Finance
 Cash Finance
Working as an Agent
MCB performs the following agency functions:
 Dividends Collection
 Cheques Collection
 Acting as a trustee or executor
 Execution of standing instructions
General Utility Services
This include the following areas:
 Clearance of utility bills
 Providing locker facility
 Accepting Bills of Exchange
 Supply of information

33
 CHAPTER 4
DEPARTMENTALIZATION OF MCB AND ITS
FUNCTION

Organizing is something which is to decide how best to group Organizational

activities and resources. There are a lot of things which comes under the
head of organizing’ departmentalization is one of that’ the question is that
what is departmentalization according to Griffin “Departmentalization is the
process of grouping jobs according to some logical arrangement
When the organization is small, the owner-manager can personally oversee
everyone
Who works there. As an organization grows ,however, personally supervising
all the employees becomes more and more difficult for the owner-manager,
consequently ,new manager position are created to supervise the work of other
employees are not assigned to particular managers randomly. rather, jobs are
grouped according to some plan. The logic embodied in such a plan is the
basis for all departmentalization.

With respect to MCB bank every one knows that this bank is a huge
organization and this organization needs departmentalization and in MCB
bank there is functional departmentalization. With in each Branch Office,
including MCB HAVELLIAN BRANCH ABBOTTABAD , the commonly
maintained departments include the cash department, remittances department,
advances department, account opening department, clearing department and in
some cases there is a foreign exchange department too. Some of the
departments and their activities are as follows:
 Cash department

 Accounts opening department

 Clearance department

 Advances department

 Remittance department

34
4.1 Cash Department
A well known economist says that banker is dealer in capital or more precisely
dealer in money. As the bank deals in money its mean that the most important
department of the bank is cash department. There are two basic functions of
the cash departments that are;

 Cash receipt

 Cash payment

4.1.1 Cash Receipt:

There are different types of accounts in MCB bank and cash department
receives money from different customers and crediting to their respective
accounts .for depositing the money in accounts it is necessary for every
customers to fill the slip named pay-in-slip which contains different
information which has to fill e.g. account number’ name of the account holder
‘date’ amount deposited’ etc.

4.1.2 Payments:
According to the banking company ordinance it is the function of the bank that
bank pays the money to the depositors on demand and the money can
be withdrawn through cheques drafts or otherwise. Bank want to satisfy
himself before paying the cash but what type of satisfaction, bank satisfy
himself that the instrument is valid and there is sufficient balance In the
account holder to support the payment. There is formal procedure to
receive the payment this formal procedure is’ to present the cheque to the
signature verification department then cashier and cashier makes the payment
to the customers.

4.2 Account Opening Department:

In order to operate with bank, a customer has to open an account. In large

branches, grade I, grade II or grade III officers are responsible for opening
new accounts. In opening the account with the MCB bank there is a formal

35
procedure and there is a special account opening form called SF-1AA which
contain information

1) Type of account

2) Currency

3) Nature of account

4) Particular of deposits

5) Operational instructions

6) Other services

7) Zakat deduction

8) Particulars of accounts

9) Authority to contact

10) Details of others bank accounts

11) Special instructions

12) Personal accounts

13) Acknowledgement

14) Specimen signature card

4.3 Clearance Department:

The concept of the clearance is taken from the State Bank who perform the
function of clearing house .A clearing house is a place where the
representative of commercial banks meet to exchange the cheques drawn on
each other and then settle the difference owned to each other.when there is no
State Bank in a specified region then National Bank of Pakistan perform the
duties of clearing house. Why there is need of clearance house for the banks
because there is a huge development in the banking system in the 20 th century
and with increase the peoples confident on banks there is increased in the use

36
of banking instruments and these instruments are settled through the function
of clearing house.

If the person receive Cheque from another person and he is not a client of that
bank then that customer give this cheque to his bank and that bank collect
money on his behalf from the bank of other person. MCB bank is also the part
of that circle .The representative of the local commercial banks meet a fixed
time once a day on all the working day of week. The meeting is held in the
office of the National bank which officially performs the duties of clearing
house.
The clearing activities are recorded in two types of books

1) Inward clearing book

2) Outward clearing book

4.4 Remittance Department

Today the business are scattered all over the world and businessman wants to
transfer its funds safely to other place. This function of transferring the funds
are performed by the Remittance department .The instruments used by MCB
bank to transfer money from one bank to other are;

1) Telegraphic Transfer (TT)

2) Mail transfer (MT)
3) Pay order (PO)
4) Demand draft (DD)

4.5 Advances Department

According to banking companies ordinance 1962 banker mean, a person
transacting the business of accepting for the purpose of lending and
investment .its mean that the primary function of the bank is to receive for the
purpose of lending .same is the function of Muslin Commercial Bank it

37
receive cash from customers and invest it in different ways .Before giving the
credit to the client whether it is a business or personality the bank wanted to
satisfy himself with respect of
1. Safety
1. Character of the customer
2. Capacity of customer
3. Capital

 Liquidity

 Dispersal

 Suitability

4.6. Forms of lending:

The various forms of advances by MCB bank are

4.6.1 Cash Finance:

This is very common form of borrowing by commercial and industrial
concerns and is made available either against pledge or hypothecation of
goods, produce or merchandise. In cash finance, a borrower is allowed to
borrow money from the banker up to a certain limit, either at once or as and
when demand. The buyers prefers this form of lending due to the facility of
paying markup only on the amount he actually utilize

4.6.2 Overdraft:
By this method, bank allowed his reliable customer to draw over and above
the money actually deposited by them in their account .This facility is allowed
through cheques only to current account holders this facility of overdraft is not
provided to all account holders, but only those who have good financial and
credit standing. The interest on overdraft is charged on the basis of daily debt
balance on actual amount drawn from the date

38
4.6.3 Fixed loans:
In case of fixed loans, MCB bank advances fixed amount repayable either in
fixed monthly or yearly installments or in lump sum. It is usually borrowed to
meet with the long term requirement of the capital .Interest is charged on the
full amount of the loan sanctioned for whole of the period whether utilized or
not by the borrower .This type of loan are granted against the security like real
estate machinery etc. These securities are put to cover the risk for the return of
the loan.

39
 CHAPTER 5
PRODUCT AND SERVICES

Commercial banking is regarded as a “Conservative” business because the

rewards are modest and the penalties of bad banking are many. As a trustee of
the public funds, they have a greater responsibility for safety and prudence.
Many businesses can enjoy some slack in their affairs, commercial banks
cannot afford this, since commercial banks must make a living by putting the
money at their disposal to work, they are faced with the problem of making a
living without jeopardizing the safety of their institution. The art of
commercial banking is solving this basically conflicting requirements, that of
being safe and yet profitable

5.1 Deposits:
Deposits are the main source of bank’s funds and without them banks cannot
exist. It is very important for an individual bank to get funds and to put them
to work safely and profitably. The larger the difference between the rates at
which these deposits are borrowed and lent out, the greater will be the profit
margin of the bank.
Deposits are broadly divided into the following:
 Demand Deposits

 Fixed Deposits

 Saving deposit

5.1.1 Demand Deposits (DD):

Demand Deposits are also called Current Deposits. These are payable to the
customer whenever they are demanded. Bank does not allow any profit or
return on these deposits, and customers are required to maintain a minimum

40
balance, failing which incidental charges are deducted from such accounts.
Most of the depositors of these accounts are businessmen.

5.1.2 Term DEPOSITS/Fixed Deposit:

Term Deposits are also called Fixed Deposits. These can be withdrawn after a
specified period of time.. The rate of return varies with the duration for which
the amount is kept with the bank.

5.1.3 Savings Deposits:

Savings Deposits refer to deposits which are made-up of thrift and are kept by
the customer to ill-effects of an unexpected outlay or a failure of receipts to
safeguard financial outlay. Profit is paid at a flexible rate calculated on half-
yearly basis under the interest-free banking system. There is no restriction on
the withdrawals from the deposit account but the amount of money withdrawn
is deleted from the amount to be taken for calculation of products for
assessment of profit to be paid to the account holder.

5.2 Services and Products

The Bank provides a complete range of domestic and international services to
its customers. Additionally, the following products have been developed:

5.2.1 Khushali Bachat Account (KBA):

This scheme has been introduced to inculcate the habit of savings among the
people.

Salient Features:

 Introduced for the first time in Pakistan.

 Expected profit is as high as 2.76% percent per annum.

 Profit is paid on half yearly basis and calculated on daily products.

 Provides the facility to pay accounts holder’s utility bills through

 His/her accounts, without making queues and delays.

41
  Customers can pay its utility bills from his account

 The minimum initial deposit is 3600 rupees

5.2.2 Hajj Mubarak Savings Scheme:

This is a Term Deposit Scheme started for fulfilling the life-time ambition of
every Muslim to perform Hajj.
Salient Features:
 Duration of the scheme is 2 years and 3 years.

 Under Hajj Mubarak 2 years and 3 years schemes, a monthly deposit

of Rs. 1800 and Rs. 1200 is required respectively.

 Upon maturity of 2&3 years schemes, the Bank will pay

approximately Rs. 48,160 and Rs. 51,200 respectively2.

 Account may be opened by an intending Hajji, who will also nominate

his/her successor.

 Premature encashment is permissible subject to commensurate

adjustment in profit.

 Deduction of withholding Tax and Zakat as per government rules in

force.

5.2.3 Khanam Bachat Account Scheme (KBA):

Under this scheme, the customer is required to deposit a sum of Rs. 1,000
regularly for 10 years. Profit is paid on or before the 6th of each month and at
maturity. According to the average prevailing rate of profit, it is expected that
the total amount would be around Rs. 257,000 subject to deduction of Zakat
and Withholding Tax. Account may be opened in the personal name of an
individual or in joint names of two persons with proper introduction in the
manner prescribed for opening other deposit accounts.

42
5.2.4 PLS Savings
This is a specially designed PLS Savings Account Scheme which gives the
depositor a very high profit with complete flexibility and convenience of a
Current Account. Under this scheme, profit will be paid on daily product basis
at the same rate as for PLS Saving Scheme.

Salient Features:

 Account may be opened in personal or joint names in four global

currencies namely US dollar, Pound Sterling, Japanese Yen and
Deutsche Mark.

 No restrictions on withdrawals and transfer or remitting the amount to

any part of the world.

 Expected profit is as high as 2.76% per annum3.

 Exempted from all forms of taxes.

 PLS saving account-366 is opened with minimum balance of 600000

rupees

 Profit is calculated on daily basis

5.2.5Export Promotion Scheme:

This scheme deals with financial matters relating to exports and extension of
export credit at confessional rates in order to boost up the exports of the
country.

5.2.6 Credit Cards:

The Bank offers the largest and most comprehensive credit facility to its
customers who may have Master Card, Cirrus and Maestro local or
international Credit Cards at their choice. With worldwide acceptability and a

43
wide range of ancillary services to the cardholder, these are the world’s
foremost credit cards.

5.2.7 Rupee Travelers Cheques (RTC):

The Bank also offers Rupee Travelers Cheques to its customers which are as
good as cash and are accepted at the major shops, travel agents, hotels,
business establishments and MCB branches across the country and abroad.
MCB Rupee Travelers Cheques bear multiple benefits to the users such as
wider acceptability, safety, convenience, validity without anytime limit and
easy refund in case of loss etc.
Rupee Travelers Cheques of the Bank can be purchased from about 400
branches in denomination of Rs. 1,000, Rs. 6000 and Rs. 10000.

5.2.8 Automated Teller Machines (ATM):

The Bank has the largest network of Auto Teller Machines in Pakistan. These
ATMs have been installed at airports, major business centers, leading gas
stations and other important places all over the country. This facility is
provided for extending round the clock money withdrawals facility to Bank’s
clients.
Currently, 550 ATMs are in operation and over 465, 0008 ATM card have
been issued.

5.2.9 Capital Growth Certificate Scheme (CGC):

This is a Term Deposit Scheme under which the growth of deposit is quite fast
accelerating with the passage of time. The amount would be more than double
in 5 years.

Salient Features:
 Account may be opened with a minimum initial deposit of Rs. 10,000
with no limit on maximum amount4.

44
 Deposit may be placed for a minimum period of five years.

 Profit is paid on maturity of the deposit.

 Growth of deposit accelerates with the passage of time. A deposit of

Rs. 100,000 is expected to grow (at current rates) as under:

 The rate of interest on capital growth certificate are 6.6% per annum5

 The account holder can use its money up to 76% of its account
 Premature encashment is permissible subject to commensurate
adjustment is profit.

 Deposit may be placed by individuals, proprietorship concerns,

partnership firms, public or private companies, corporations,
institutions, trusts, funds etc.

 Deductions of Withholding Tax & Zakat as per government rules in

force.

45
 CHAPTER-6
FINANCIAL ANALYSIS

6.1 Balance Sheetss

BALANCE SHEET
AS AT 31 December 2016-17

  2017 2016
  (Rs. In '000') (Rs. In '000')
ASSETS
Cash and balances with treasury banks 109462902 75732185
Balances with other banks 7348882 7201459
Lending to financial institutions 5273524 2809752
Investments 660070246 556770384
Advances 500965801 364333516
operating fixed assets 42565448 35225865
Other Assets 47743647 34480303
  1373430450 1076690236
LIABILITIES
Bills payable 22994877 13291328
Borrowings from financial institutions 140462138 77438993
Deposits and other accounts 1001146162 795689546
Sub-ordinate loans 3892578 --
Deffered Tax Liabilities 5661073 12889649
Other liabilities 42730541 31420650
  1216887369 930730166
NET ASSETS 156543081 145960070
REPRESENTED BY:
Share capital 11850600 11130307
Reserves 71027912 53512633

46
Unappropriated profits 55221069 55509013
  138099581 120151953
Non controlling interest 580656 509331
138680237 120661284
Surplus/ (deficit ) on revaluation of securities 17862844 25298786
  156543081 145960070

47
6.2 Vertical Analysis of Balance Sheet

  2017 2017% 2016 2016%

ASSETS RS (000) RS (000)
Cash and balances with 109462902 7.9 7.0
treasury banks 75732185
Balances with other banks 7348882 0.53 7201459 0.6
Lending to financial 5273524 0.38 0.2
institutions 2809752
Investments 660070246 48 556770384 51.7
Advances 500965801 36.4 364333516 33.8
operating fixed assets 42565448 3.09 35225865 3.2
Other Assets ---- -----
  1373430450 100 1076690236 100
LIABILITIES
Bills payable 22994877 1.8 13291328 1.4
Borrowings from financial 140462138 11.5 8.3
institutions 77438993
Deposits and other accounts 1001146162 82.2 795689546 35.4
Sub-ordinate loans 3892578 0.3 -- --
Deffered Tax Liabilities 5661073 0.4 12889649 1.3
Other liabilities 42730541 3.5 31420650 3.3
  1216887369 100 930730166 100

Interpretation

Vertical analysis is the proportional analysis of a financial statement,

where each line item on a financial statement is listed as a percentage of
another item. Typically, this means that every line item on an income

48
statement is stated as a percentage of gross sales, while every line item on
a balance sheet is stated as a percentage of total assets.

The most common use of vertical analysis is within a financial statement

for a single time period, so that one can see the relative proportions of
account balances. Vertical analysis is also useful for timeline analysis, to
see relative changes in accounts over time, such as on a comparative basis
over a five-year period. For example, if the cost of goods sold has a
history of being 40% of sales in each of the past four years, then a new
percentage of 48% would be a cause for alarm.

Cash and balances with treasury banks increased from 7% to 7.9 % in 2017,
Balances with other banks decreased 0.6% to 0.53% in 2017, Lending to
financial institutions is Increase 0.2% to 0.38% 2017, Investments little
decreased from 51% to 49% in 2017. Advances increased from 33% to 35 %
operating fixed assets are same in both years Other Assets decreased from 3%
to 3.2%.

Bills payable is increased1% to 2% in 2017 Borrowings from financial

institutions increased from 8% to 10%. Deposits and other accounts decreased
from 85% to 73%. Deferred Tax Liabilities are same in both years 2016 &
2017. Other liabilities decreased 3.3% in 2016 and 3% 2017.

49
6.3 Horizontal Analysis

2016 vs
  2017 2016 2017 %
  (Rs. In '000') (Rs. In '000')
ASSETS
Cash and balances treasury banks 109462902 75732185 44.5
Balances with other banks 7348882 7201459 2.0
Lending to financial institutions 5273524 2809752 12.3
Investments 660070246 556770384 18.5
Advances 500965801 364333516 37.4
operating fixed assets 42565448 35225865 2.0
Other Assets 47743647 34480303 61.5
  1373430450 1076690236 27.5
LIABILITIES
Bills payable 22994877 13291328 73.0
Borrowings financial institutions 140462138 77438993 31.3
Deposits and other accounts 1001146162 795689546 2.8
Sub-ordinate loans 3892578 --
Deffered Tax Liabilities 5661073 12889649 56.0
Other liabilities 42730541 31420650 35.9
  1216887369 930730166 30.7
NET ASSETS 156543081 145960070 7.2
REPRESENTED BY:
Share capital 11850600 11130307 6.4
Reserves 71027912 53512633 32.7
Unappropriated profits 55221069 55509013 0.5
  138099581 120151953 14.9
Non controlling interest 580656 509331 14.0
138680237 120661284 14.9
Surplus/on revaluation of securities 17862844 25298786 29.3
  156543081 145960070 7.2

6.4 Interpretation

Horizontal analysis is the comparison of historical financial information

over a series of reporting periods, or of the ratios derived from this
financial information. The intent is to see if any numbers are unusually
high or low in comparison to the information for bracketing periods, which
may then trigger a detailed investigation of the reason for the difference.
The analysis is most commonly a simple grouping of information that is
sorted by period, but the numbers in each succeeding period can also be

50
expressed as a percentage of the amount in the baseline year, with the
baseline amount being listed as 100%.

A common problem with horizontal analysis is that the aggregation of

information in the financial statements may have changed over time, due
to ongoing changes in the chart of accounts, so that revenues, expenses,
assets, or liabilities may shift between different accounts and therefore
appear to cause variances when comparing account balances from one
period to the next.

From the above mentioned analysis following are my Result about the
Operations of branches of MCB for the year 2017, Assets are things that a
company owns and are sometimes referred to as the resources of the company.
An asset is a resource with economic value that an individual, corporation or
country owns or controls with the expectation that it will provide future
benefit. Assets are reported on a company's balance sheet, and they are bought
or created to increase the value of a firm or benefit the firm's operations.

Assets are things that a company owns and are sometimes referred to as the

resources of the company. An asset is a resource with economic value that an

individual, corporation or country owns or controls with the expectation that it

will provide future benefit. Assets are reported on a company's balance sheet,

and they are bought or created to increase the value of a firm or benefit the

firm's operations. The Horizontal analysis result for Assets in MCB’s Balance

sheet are explained below. Cash & balences with treasury bank in creased 0.3

%.Balances with other banks increased 0.02% while lending to financial

institutions increased 0.4% which indicates the increase in profit for the bank

advances increased 0.2% operating fixed assets in 0.1% other assets decreased

0.2. A firm's assets that do not include cash, securities, receivables, inventory

51
and prepaid assets, and can be convertible into cash within one business cycle,

which is usually one year. Other assets are listed on a firm's balance sheet, and

are a component of a firm's total assets

Due to its sound financial policies MCB’s borrowing from financial

institutions has been in increased by 0.4 % than year 2017. Bills payable
increased 0.4% which is a good sign for the bank. Deposits & other accounts
increased 0.2% the deferred tax liabilities increased 3.2% & other liabilities
increased 6.5%The increased or decrease in the value of every item in the
balance sheet shown above is because of the increase or decrease in the
amount of that item the difference mentioned with the minus sign shows the
decrease in the current year i.e. 2017

52
Horizontal Analysis of income Statement

2017 2016 2016 vs

2017
Profit after taxation 22047764 22174145 (0.5)
Items not to be reclassified (1574754) 780529 0.5
Equity share holder of bank 332,722 (171,117) 15
Non-controlling asset 442 (11) 80
Effect of translation 333,164 (171,128) 14
Share of exchange (20,236) (13650) 15
Comprehensive income transferred 20785938 22769896 (0.09)
to equity
Net change in fair value (10,792,359) (3,889,715) (12)
Deffered 3,744,839 1,408,237 14
Share of other C.Income (344,715) (521,175) (4)
Items to not reflected to equity (7392235) (3002653) 0.4
Total Comprehensive income 13393703 19767243 (0.4)

Interpretation
Horizontal analysis of the income statement is usually in a two-year
format, such as the one shown below, with a variance also shown that
states the difference between the two years for each line item. An
alternative format is to simply add as many years as will fit on the page,
without showing a variance, so that you can see general changes by
account over multiple years. A third format is to include a vertical analysis
of each year in the report, so that each year shows expenses as a
percentage of the total revenue in that year.

Profit after taxation For the year 2017 is -114.0% than 2016. which is not a
good sign for the organization.

Comprehensive income transferred to equity for the year 2017 decreased

-1.16% than 2016 according to Horizontal analysis it increased -1.16%.Items
to be reclassified are increased 197% which increased is good sign .Total
Comprehensive income is has decreased -17.7%

53
Vertical Analysis of income Statement

2017 2017% 2016 2016%

Profit after taxation 22047764 5 22174145 10
Items not to be reclassified (1574754) 5 780529 5
Equity share holder of 332,722 10 (171,117) 12
bank
Non-controlling asset 442 2 (11) 3
Effect of translation 333,164 8 (171,128) 5
Share of exchange (20,236) 10 (13650) 6
Comprehensive income 20785938 7 22769896 3
transferred to equity
Net change in fair value (10,792,359) 3 (3,889,715) 6
Deffered 3,744,839 30 1,408,237 20
Share of other C.Income (344,715) 10 (521,175) 5
Items to not reflected to (7392235) 10 (3002653) 15
equity
Total Comprehensive 13393703 100 19767243 100
income

Interpretation
The most common use of vertical analysis in an income statement is to
show the various expense line items as a percentage of sales, though it can
also be used to show the percentage of different revenue line items that
make up total sales.  An example of vertical analysis for an income
statement is shown in the far right column of the following condensed
income statement:

Profit after taxation For the year 2017 is 30% and 2016 is 20%. which is not a
good sign for the organization.

Items not to be reclassified In 2017 is 10% in 2016 it is 20% Comprehensive

income transferred to equity is 40% in 2016 it is 50% Items to not reflected to
equity in 2017 is 20% in 2016 it is 10%

54
6.4 Ratio Analysis
Ratio analysis is the most commonly used analysis to judge the financial
strength of a company. It is a quantitative relation between two magnitudes of
the same kind. This comparison allows the firm to detect major operating
differences. the main categories of ratios are.
Acid-test ratio 

The acid-test ratio is a strong indicator of whether a firm has

sufficient short-term assets to cover its immediate liabilities.
Commonly known as the quick ratio, this metric is more robust than
the current ratio, also known as the working capital ratio, since it
ignores illiquid assets such as inventory.

The basic formula for the acid-test ratio is: ATR = (Cash +

Accounts Receivable + Short-term Investments) / Current Liabilities.
Short-term investments include marketable securities that can be
liquidated quickly.

Cash + Accounts Receivable + RESULT

YEARS Short-term Investments) /
Current Liabilities.

2016 639706837/886419867 72.1%

2017 782155554/1168495755 66.9%

Interpretation
Acid test ratio in 2016 it is 72.1% and 2017 66.9% which can be decrease then
previous year.

55
6.4.1 Liquidity

The most common liquidity ratio is the current ratio, which is the ratio of
current assets to current liabilities. This ratio indicates a company's ability to
pay its short-term bills. A ratio of greater than one is usually a minimum
because anything less than one means the company has more liabilities than
assets. A high ratio indicates more of a safety cushion, which increases
flexibility because some of the inventory items and receivable balances may
not be easily convertible to cash. Companies can improve the current ratio by
paying down debt, converting short-term debt into long-term debt, collecting
its receivables faster and buying inventory only when necessary.

Current ratio
The current ratio is a liquidity and efficiency ratio that measures a firm's
ability to pay off its short-term liabilities with its current assets. The current
ratio is an important measure of liquidity because short-term liabilities are due
within the next year.
This means that a company has a limited amount of time in order to raise the
funds to pay for these liabilities. Current assets like cash, cash equivalents, and
marketable securities can easily be converted into cash in the short term. This
means that companies with larger amounts of current assets will more easily
be able to pay off current liabilities when they become due without having to
sell off long-term, revenue generating assets.

Formula

The current ratio is calculated by dividing current assets by current liabilities.

This ratio is stated in numeric format rather than in decimal format. Here is the
calculation:

Current Ratio
Current Assets 2016=
75732185+7201459+2809752+556770288=639706837

56
Current Liabilities 2016=13291328+77438993+735689546=886419867
Current Assets 2017=
109452902+7348882+5273524+660070246=782155554
Current Liabilities 2017=
22994877+140462138+1001146162+3892578=1168495755

CURRENT ASSET/CURRENT RESULT

YEARS LIABILITIES
2016 639706837/886419867 72.1%
2017 782155554/1168495755 66.9%

Interpretation
Current ratio showed a decrease in the year 2017 to 66.9% from the last year’s
72.1% which is not good sign for the organization

Net Working Capital

Net working capital is a liquidity calculation that measures a company’s

ability to pay off its current liabilities with current assets. This measurement is
important to management, vendors, and general creditors because it shows the
firm’s short-term liquidity as well as management’s ability to use its assets
efficiently.

Much like the working capital ratio, the net working capital formula focuses
on current liabilities like trade debts, accounts payable, and vendor notes that
must be repaid in the current year. It only makes sense the vendors and
creditors would like to see how much current assets, assets that are expected to
be converted into cash in the current year, are available to pay for the
liabilities that will become due in the coming 12 months.
If a company can’t meet its current obligations with current assets, it will be
forced to use it’s long-term assets, or income producing assets, to pay off its

57
current obligations. This can lead decreased operations, sales, and may even
be an indicator of more severe organizational and financial problems.

Formula

The net working capital formula is calculated by subtracting the current

liabilities from the current assets. Here is what the basic equation looks like.

Current Assets 2016=

75732185+7201459+2809752+556770288=639706837
Current Liabilities 2016=13291328+77438993+735689546=886419867
Current Assets 2017=
109452902+7348882+5273524+660070246=782155554
Current Liabilities 2017=
22994877+140462138+1001146162+3892578=1168495755

YEARS CURRENT ASSETS – RESULT

CURRENT LIABILITIES
2016 639706837-886419867 -246713030
2017 782155554-1168495755 -386340201

Interpretation
The calculation of this ratio show that net working capital in 2016 was Rs.
-246713030 while in 2017 it is Rs. -386340201 which increased

Debt to Equity Ratio

The debt to equity ratio is a financial, liquidity ratio that compares a

company's total debt to total equity. The debt to equity ratio shows the
percentage of company financing that comes from creditors and investors. A
higher debt to equity ratio indicates that more creditor financing (bank loans)
is used than investor financing (shareholders).

58
Formula

The debt to equity ratio is calculated by dividing total liabilities by total

equity. The debt to equity ratio is considered a balance sheet ratio because all
of the elements are reported on the balance sheet.

YEARS TOTAL LIABITIES/TOTAL RESULT

EQUITY
2016 930730166/145960010 63.7%
2017 121887369/150543081 77.7%
Interpretation
Debt to equity ratio for the year 2016 is 63.7% while it increased in the current
year 2017 to 77.7%, due to constant increase in the liabilities

6.4.2 Solvency Ratios

Solvency ratios indicate financial stability because they measure a company's

debt relative to its assets and equity. A company with too much debt may not
have the flexibility to manage its cash flow if interest rates rise or if business
conditions deteriorate. The common solvency ratios are debt-to-asset and debt-
to-equity. The debt-to-asset ratio is the ratio of total debt to total assets. The
debt-to-equity ratio is the ratio of total debt to shareholders' equity, which is
the difference between total assets and total liabilities.

Debt Ratio

Debt ratio is a solvency ratio that measures a firm's total liabilities as a

percentage of its total assets. In a sense, the debt ratio shows a company's
ability to pay off its liabilities with its assets. In other words, this shows how
many assets the company must sell in order to pay off all of its liabilities.
This ratio measures the financial leverage of a company. Companies with
higher levels of liabilities compared with assets are considered highly
leveraged and more risky for lenders.

59
This helps investors and creditors analysis the overall debt burden on the
company as well as the firm's ability to pay off the debt in future, uncertain
economic times.

Formula

The debt ratio is calculated by dividing total liabilities by total assets. Both of
these numbers can easily be found the balance sheet. Here is the calculation:

YEARS TOTAL LIABILITIES/ TOTAL RESULT

ASSETS
2016 930730166/1076690236 86.4%
2017 1216887369/1373430450 88.6%

Interpretation
Debt ratio is in 2016 i.e 86.4% and 2017 i.e 88.6% which increase in 2017

Equity Ratio

The equity ratio is an investment leverage or solvency ratio that measures the

amount of assets that are financed by owners' investments by comparing the
total equity in the company to the total assets.
The equity ratio highlights two important financial concepts of a solvent and
sustainable business. The first component shows how much of the total
company assets are owned outright by the investors. In other words, after all
of the liabilities are paid off, the investors will end up with the remaining
assets.

The second component inversely shows how leveraged the company is with
debt. The equity ratio measures how much of a firm's assets were financed by
investors. In other words, this is the investors' stake in the company. This is
what they are on the hook for. The inverse of this calculation shows the

60
amount of assets that were financed by debt. Companies with higher equity
ratios show new investors and creditors that investors believe in the company
and are willing to finance it with their investments.

Formula

The equity ratio is calculated by dividing total equity by total assets. Both of
these numbers truly include all of the accounts in that category. In other
words, all of the assets and equity reported on the balance sheet are included
in the equity ratio calculation.

YEARS TOTAL EQUITY/TOTAL RESULT

ASSETS
2016 145960070/1076690236 13.9%
2017 150543081/1373430450 10.9%

Interpretation
Equity ratio for the year 2016 is 13.9% and in 2017 it is10.9% which means it
decrease in current year

6.4.3 Profitability Ratios

Profitability ratios indicate management's ability to convert sales dollars into

profits and cash flow. The common ratios are gross margin, operating margin
and net income margin. The gross margin is the ratio of gross profits to sales.
The gross profit is equal to sales minus cost of goods sold. The operating
margin is the ratio of operating profits to sales and net income margin is the
ratio of net income to sales. The operating profit is equal to the gross profit
minus operating expenses, while the net income is equal to the operating profit
minus interest and taxes. The return-on-asset ratio, which is the ratio of net
income to total assets, measures a company's effectiveness in deploying its
assets to generate profits. The return-on-investment ratio, which is the ratio of

61
net income to shareholders' equity, indicates a company's ability to generate a
return for its owners.

Gross spread Ratio

The difference between the underwriting price received by the issuing

company and the actual price offered to the investing public. The gross spread
is thempensation that the underwriters of an initial public offering (IPO) make
to cover expenses, management fees, commission (or takedown) and risk.
The majority of profits that the underwriting firm earns through the deal are
often achieved through the gross spread. In addition to the gross spread,
an initial public offering typically involves "fixed costs," such as legal and
accounting consultants, and registration fees.

Net Interest Margin:

Net interest margin (NIM) is a measure of the difference between the interest
income generated by banks or other financial institutions and the amount of
interest paid out to their lenders, relative to the amount of their assets. It is
similar to the gross margin of non-financial companies

Interest Expenses / Interest

Years Income
2016 241673040/44846950 53.8%
2017 32649614/43540186 74.9%

Interpretation.
This ratio examines how successful a firm's investment decisions are
compared to its debt situations. The interest margin ratio in 2017 is increased
as compared to 2016 is favorable for the bank.

62
Earning Asset to total assets
An asset that produces money for a company without any work needing to be
Done. Earning assets include such things as loan, Lease, stocks, bonds,
certificates of deposit, and generally anything that earns interest or dividends.
Earning assets include loan, Lease, investment securities and money market
assets. This ratio show that the contribution of these assets to total assets.
Interest Earned/Total
Years Assets
2016 69014090/1076690236 6.4%
2017 79189800/1373430450 5.7%

Interpretation
The ratio of earning to total assets in 2017 is 6.4% and in 2016 it is 5.7%
which decrease , but the decrease could be unfavorable.

Return on Earning Assets.

An indicator of how profitable a company is relative to its earning
assets. ROEA gives an idea as to how efficient management is at using its
assets to generate earnings.

Years Net income/interest

income
2016 19767243/44846750 44.0%
2017 13393703/43540186 30.7%

Interpretation
Return on earning assets is decreases in 2017 as compared to previous year,
due to inefficient management of MCB, showing unfavorable trend.

63
6.4.4 Efficiency

Two common efficiency ratios are inventory turnover and receivables

turnover. Inventory turnover is the ratio of cost of goods sold to inventory. A
high inventory turnover ratio means that the company is successful in
converting its inventory into sales. The receivables turnover ratio is the ratio
of credit sales to accounts receivable, which tracks outstanding credit sales. A
high accounts receivable turnover means that the company is successful in
collecting its outstanding credit balances.

Equity to Total Assets.

The equity to debt ratio show how much MCB have equity out of total assets.
YEARS EQUITY/TOTAL ASSETS
2016 145960010/1076690236 13.5%
2017 150543081/1373430450 10.9%

Interpretation.
This ratio shows the ownership of the bank. In both 2016 i.e 13.5% and 2017
it is i.e 10.9% which are decrease.

Non Performing Loan to Total Loan

NPL, are loans that are no longer producing income for the bank that owns
them. Loans become nonperforming when borrowers stop making payments
and the loans enter default. The exact classification can vary from institution
to institution, but a loan is usually considered to be nonperforming after it has
been in default for three consecutive months.

Credit to Deposit ratio(CD ratio)

YEARS ADVANCES/ DEPOSITS

2016 364470188/795689543 4.5%
2017 500965801/1001146162 50.0%

Interpretation.

64
Credit to deposit ratio shows how much bank uses deposit to advances. In
2016 bank use 4.5 % deposit for advances but in 2017 bank use % deposit for
advances.

65
.
6.7 SWOT ANALYSIS

“The overall evaluation of a company’s strengths, weaknesses, opportunities

and threats” Strengths (S) include internal capabilities, resources and positive
situational factors that may help the company to serve its customers and
achieve its objectives Weaknesses include internal limitations and negative
situational factors that may interfere with the company’s performance.
Opportunities are favorable factors or trends in the external environment that
the company may be able to exploit to its advantage. And Threats are
unfavorable external factors or trends that may present challenges to
performance. A scan of the internal and external environment is an important
part of the strategic planning process.
STRENGTH

MCB is the first Pakistani privatized bank and because of its quality
management, marketing, innovation in products and services. Owing to all
such factors they have established a good reputation in the banking market.
The name of MCB makes you recall the highly cooperative and professional
individuals ready to serve you with maximum zeal and zest.
The joining of experienced people, advanced management, advance setup and
facilities gave MCB an edge over its competitors.
MCB BANK’S IMAGE:

MCB is a reputable financial organization and is well known all over the
Pakistan. Perception is of producing a high quality services.
CUSTOMER CARE:

The Bank not only provides high quality services but it also look for the
comfort and convenience of the clients, MCB always preferred their
customers.

66
MARKET SHARE:

MCB has covered much of the potential market and the net profit is increasing
years after years. Deposits and advances have sufficiently increased.
LARGE NUMBER OF DIVERSIFY PRODUCTS:

This is also its main strength as it has diversified in many products such as:

Debit Card

Visa Card

Car Financing

Agriculture Financing

BRANCH NETWORK

It is the greatest strength of the Bank is large network of branches nationwide.

SOUND MARKETING:

Skillful marketing of the products is being achieving countrywide goals of

MCB Bank Limited.

PHONE BANKING:

Every account holder can conform its balance on Phone and may ask for any
query. There are also 24 hours help lines for customers.

MOBILE BANKING:

It has been launched recently. It helps in getting accounts details and making
transactions using mobiles.

HIGHLY AUTOMATED BANK:

MCB in Pakistan is the also in the list of highly automated banks, about 750,
like Emirates because of its modern style of banking through fully
computerized control and twenty four hour banking.

67
FASTER BANKING SERVICE:

MCB have faster banking services that are making it more prominent in the
banking industry especially in operations and Foreign exchange. The customer
prefers this bank not only because of its faster speedy service rather due to
reasonable service charges.

INTERNATIONALLY DESIGNED PRODUCTS:

MCB’s products are internationally designed products. These are valuable and
operational in all over the world.

CONTRACT WITH CIRRUS:

Now MCB has also entered into a contract with Cirrus which is a subsidiary of
MasterCard. This contract will enable an ATM card holder to use his account
even when he is out of country at all the ATMs where Cirrus logo is displayed.

WEAKNESSES

ADVERTISEMENT:

The majority of people are not well aware about the products of MCB.
Therefore it should advertise extensively especially RTC and Master Cards.

ACCOMMODATE BEHAVIORALLY:

A behavior has been noted that bank tries to feel at ease with good looking,
rich and educated people and the poor looking customers feel some bit strange
in the environment of the bank. The bank employees should try to
accommodate behaviorally all type of customers.

MISMANAGEMENT OF TIME:

Mismanagement of time is another big mistake in MCB branches, the bank

official time of closing is 5:30pm but due mismanagement of time allocation
and work the staff is normally on their seats till 7:00 or 8:00 clock.

68
AND ALSO,

Costly documents are required for loan sanctioning.

Some times bank also never meets stated rate of profit

OPPORTUNITIES

PRIVATIZATION:

As on December 31, 1998, sixty-eight scheduled banks with 9,106 branches

are operating in Pakistan. As on this date, total population of Pakistan is
140.03 million. Total number of personal accounts with all scheduled banks as
on December 31,1997, are 28.98 million. If we consider the population
statistics of working age group as on December 31,1997, it stands to the figure
of 96.64 million. Thus we can say those 28% of working age people of
Pakistan are having accounts with banks while 72% are unbanked.

The need of privatization has made people to switch to banks to satisfy their
needs of lending and borrowing. This not only increases the deposits but also
the credit business.

DIVERSIFICATION:

They may enter in New business or any other consumer-durable product in

order to promote their name, by introducing Loan for the students, small
businesses, and handicraft industry.

SOME MORE OPPERTUNITIES:

Information Technology.

Credit cards can give more earning.

Establishing more foreign Branches.

They should introduce Student Finance Facility.

They should also introduce mobile ATM

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THREATS

CHANGE IN GOVERNMENT POLICIES:

Change in government policies has affected the banking business. Still banks
have to wait to get permission of state bank. The freezing of foreign currency
accounts is a vital example of letting people not to trust on banks.

COMPETITION:

The Competition has become severe by the entrants of so many banks, So to

exist one will have to prove himself in its services through excellent
management and will have to satisfy its shareholders. Otherwise he will be out
the market.

LOW INVESTMENT:

and the relative rate of interest thus creating a threat for MCB.

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 CHAPTER 7
FINDINGS AND RECOMMENDATIONS

7.1 Conclusions

During the eight weeks of internship in MCB HAVELLIAN BRANCH

ABBOTTABAD (0588) I observed and made discussions with customer and
staff of the bank, I have noted all Information and I have, found out some
problems and weaknesses in the bank, which can be solved with little efforts
which will improve the efficiency of the bank and will enable it to achieve its
targets.

If I have to express my experience of internship in MCB Bank HAVELLIAN

BRANCH ABBOTTABAD I would briefly say that MCB Bank is a good
Organization in the way that anybody can join it for his/ her long-term career.
Overall working environment is comfortable. Management of branch cares a
lot of its employees and considers them as the Asset of bank. Behavior of
senior executive of bank is very polite and they are caring about the
individual’s career and their growth.

I experienced that the management is hesitate to give internee chance of

working in the cash department because they are not take any risk. Also some
branches have not full decorated and in some branches there is no installation
of rotation camera which is not good for the security.

I conclude through the study and perpetration of the ratio analysis I

conclude that the Net profit margin of the company decrease and it is need to
be improved and Gross spread ratio also decrease need to be improved, non
interest income to total income is relatively increase which is good sign for
organization . Debt ratio of the company decreased over the years. Re turn on
asset (ROA) increasing on the year base its good because the organization use

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its asset effectively and efficiently and there is also need to improve the return
on equity. Price earn ratio is stabilizing over the period of time and the return
of equity has been decreased.

Finally I conclude that by keep the entire thing in mind that

organization doing good business overall but the need to make the policies of
the organization is more effective and stabilized which makes the organization
more sound reliable and strong. During my internship in MCB it has a good
experience of 8 weeks and I learn so much about the banking and the working
and I also observe many thing in which some thing are good for the banking
business and I observe some weakness in the MCB branches. the good thing
is that most of the branches are online and connected with the main Bank and
the online system which I like and observe is secure and time saving and there
is less chances of the mistake as compare to non-online bank branches there is
also facility of ATM machine almost all the branches of MCB bank which is
good for bank and the customer too and the working and the functioning of the
MCB bank is smooth and customer oriented and the management is good but
there is also the drawback is that some employees has not professional degree
which makes the difference as compare to the work of the professional degree
holder some employee not paid full attention to the customer and not use the
proper business language with the customer but the professional have the very
good manner and they give proper attention to there customer.
However management is very demanding about the targets but good reward at
the achievement of assigned targets is awarded. Employees at Bank are quite
efficient. The employees work more than their working hours and it is all
according to their will. It also shows their loyalty, commitment to
organization. Employees are given the benefits like bonus, gratuity funds,
loans, increments, and medical. All the customers are entertained individually.
Same kind of behavior and attention is given to all the customers. Getting
ideas for improvement from customer side is a new idea and that is working
very well in MCB Bank.

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Prioritizing its product portfolio in line with its corporate and consumer needs
and wants the bank is committed to develop products that give more value to
its customers in both the sectors. In bank, the work is done on computers as
well as manually. All the entries are made in computer. Balance is fed into the
computer. This increases efficiency of the bank.

During my internship training I gathered information regarding how a

successful bank operational aspect decorticated with the practical. I found my
internship training at MCB Bank HAVELLIAN BRANCH ABBOTTABAD
to be a very rewarding experience. The training was beneficial because it
helpful me to aware a real life working environment.

So far my learning is concerned; all the employees at branch were quite

cooperative. They helped me to understand the activities of a bank to possible
extent. Their good attitude gave me more confidence to learn more and to ask
if I have any query in my mind. Besides their ever going activities they never
get irritant by my questioning. I had made an honest efferent to present the
working & operation at Branch in simplest way. I feel pleasure that I have
really gained a lot during 8 weeks & enjoyed working with experienced
cooperative & intelligent staff.

7.2 Problems and Recommendations

Nothing in this world is permanent but change. And response to change still
needs greater change. All it means that nothing is perfect but there is always
some room for improvement. It is always a hard working and some taking
activity to make on institution on sound basis and to maintain its performance
as steps to improve the performance.

7.2.1 Providing Customer Services

In the market economy and age of competition the customer is the king;
customer satisfaction is the road to success. The bank should implement such

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strategies and facilities which attracts and satisfy more customers. As most of
remittances are sent through informal means of hawala/hundi. MCB has to
play a vital role in mobilizing such remittances.

7.2.2 Training and education of the staff

Development and change are the two inevitable characteristics of progress.
And change has to be there in this process of progress of progress if not then
every thing will come to a stand still situation. In such situation only those will
survive who accept the change and take measures for adapting to these
changes.
For imparting various skills and behavior a sound training policy has be
formulated by MCB. The training in under to be more effective should be
given by highly qualified and experienced trainer. In the year 1998 the banks
has given training to its upper and middle management officer, but still a lot of
work is required to be done in this connection.

7.2.3 Full Control and Authority

For every organization to run on sound footing it should be given the decision
making authority and unnecessary intervention from outside is avoided. For
this the management should be given more authority. The management should
be given more authority in decision making in areas of finance, recruitment of
staff, posting/promotion. And the upper management should take such steps.

7.2.4 Discipline in financial performance

It is an important responsibility of every organization to decrease expenses
and checks are required for the management. All the loopholes must be
checked that are incurring expenses in report of vehicles, fuel charges,
entertainment, traveling, telephones, medical allowances, foreign benefits etc.
The bank will get more if it analyze every activity or cost benefit basis.

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7.2.5 Recovery Form Defaulters
One of the biggest problems of MCB’s is the recovery of the stuck up loans or
finances. For this purpose the bank has taken some major steps so that the
process of recoveries is accelerated. Total recoveries and restructuring of non-
performing loans during the year amounted to Rs. 9.4 Billion. This amount
also includes Rs.3.2 billion in cash recoveries. Provisions for non-performing
loans decreased from 57% of total advance 18 months ago to 29% as of
December 1998. Further achievements this connection will depend upon the
following factors.
 More bold and impartial policies have to be implemented.
 More authority should be given to the recovery division.

7.2.6 Delegation of Power

The business environment has changed considerably and so is the business
mood people / customer wants the satisfaction of their needs at the earliest.
For making prompt decision to the middle management. This will facilitate the
process of handling transaction with great pace, and resulting in increasing the
good image of the bank.

7.2.7 Profit Haunt

Like every business entity, the bank too is always profit conscious. Profit can
be increased either by increasing deposits or by decreasing expenses. As the
performance of each branch and department is evaluated, mostly on the basis
of profitability. And those branches and department which are incurring
consistent losses, and it is impossible to turn into profit producing units, may
be closed.

7.2.8 Introduction of improved technologies

Technology plays an important role in this regard. No body can stop the
process of innovations. This process is not limited to any particular branch or
area. This is also happening in the field of science and technology. Computer

75
is the out put of such activities. Application of computer in the field of
banking is not a novelty any more. For this purpose if a separate research wing
is established, it will greatly benefit the bank. Because this wing will asses
new technologies that can be adopted by the bank.

7.2.9 Allocation of targets

Allocation of targets to the staff is a very important area. It is through this
allocation and achievements of targets that the performance of staff is
evaluated. So to allocate such targets which are achievable will definitely
bring good and positive response from the staff. This measure will help the
employees and the employer alike.

7.2.10 Communication
Swift communication in any organization is the inevitable need. But reliable,
swift and workable communication is of utmost importance to the bank. All
the operation of the bank are very much depend on inward an outward
communication. And any disturbance in the free flow of information will
being drastic consequences. So to avoid such situation a more swift flow of
information is to be maintained. So for the written or oral communications are
concerned that 7c’s are desired to be considered in bank.

7.2.11 Monitoring of bank operation

Monitoring of the on going activities is very important because without
monitoring you may not be able to take remedial measures in due time. For
this purpose of reporting information is placing unnecessary burden on the
branches. This burden can be minimized through the application information
technology (I.T).

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 7.3 SUGGESTIONS

7.3.1 Lack of proper training

There is not proper training system among the staff. Training is necessary to
show good performance and efficiency.I suggest that an arrangement of
refresher courses and in service training must be made to increase the
knowledge and skills of the employees. This will help enabling them to meet
modern banking requirement and to fill the efficient staff qualities.

7.3.2 Branch environment

It is recommended that the emoloyees should be trained to be polite and
maintain silence as much as possible and not to discuss politics or personal
problems with each other during work hours. This distirbes the working
environment of the bank and other employees can not perform their work
properly.
.
7.3.3 Delegation of authority
There is no proper delegation of authority
Executive at all level should be given sufficient power and authority to make
quick decisions. This will increase the effectiveness and efficiency of the
organization.

7.3.4 Distribution of work

There is no proper distribution of work.
All work must be distributed properly among the employees.

7.3.5 In adequacy of staff

In my observation, I felt that the strength of the present staff is insufficient.
The staff is affecting badly due to burden of over work.
The shortage of staff must be fulfilled immediately, in this way, the staff will
be able to perform its duties appropriately.

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 References

 http://www.mcb.com.pk/ir/fin_data_rep.asp

 https://www.mcb.com.pk/about-mcb/board-of-directors

 https://www.mcb.com.pk/about-mcb/management-profiles

 https://www.mcb.com.pk/about-mcb/management-profiles

 MCB Annual Report, 2016

 Annual Report, 2017

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