Final Internship Report

DECLARATION
I, Subhan Basit, Roll No. 1267-BH-BAF-2013, student of Bachelor (Hons.) in Business

Accounting & Finance, Session 2013-2017 hereby declare that the matter contained in this
internship report titled, “Internship at MCB Bank Limited (Main Boulevard 1711, Lahore)”
is my own work and has not been printed, published and submitted as a report/research work,
thesis or publication in any form in any University, Research institution etc. within or outside of
Pakistan.
Date: ______________________ _______________________

Subhan Basit
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INTERNSHIP COMPLETION CERTIFICATE
It is to certify that the internship work contained in this internship report titled, “Internship at
MCB Bank Limited” is carried out and completed by Mr. Subhan Basit, Roll No.1267-BH-
BAF-2013, under my supervision during his Bachelor (Hons.) studies in the subject of Business
Accounting & Finance.
Dated: _______________________
Alvina Sabah Idrees
Lecturer
Department of Economics
GC University, Lahore
Submitted through
ky
_______________________
_______________________ ________________________
Dr. Saima Sarwar
In-charge Controller of Examination
Department of Economics GC University, Lahore
GC University, Lahore
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Acknowledgements
In the name of ALLAH, the most kind and most merciful.
First of all I’m grateful to ALLAH ALMIGHTY, who bestowed upon me health, abilities and
guidance to complete the project in a successful manner, made me able to study in GC university
and without HIS help I would’ve been unable to perform this arduous task.
More than anybody else, I would like to acknowledge my parents contribution towards helping
me achieve my goals and objectives, whose undying affection and expectations continue to
provide me strength in order to complete all my tasks. I also am in huge gratitude to my teachers
who played an important role in my life in teaching me valuable lessons without which I would
not be the person I am today.
Namely,
Ms Alvina Sabah (My Supervisor)
Ms. Saima Sarwar (Head of Department of Economics)
Also, I acknowledge the People who have been helpful and the people who immensely made my
internship very educative and enormously interesting. They were very supportive throughout my
Internship and these great people are Mr.Asim (Branch Operations Manager), Ms Anum Sabir
(GBO Operations), Ms Shahista (GBO Information), Ms Wajeeha Usman (Branch Manager) and
Mr. Ali (Head Cashier).
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Executive Summary
I consider myself fortunate to have been part of an organization such as Muslim Commercial
Bank Limited and have been able to complete my internship report. This great banking
institution was founded in 1947 and soon managed to earn itself the reputation of a solid and
conservative financial institution also undergoing a process of nationalization in 1974. This
institution has truly stood the test of times.
This report showcases my journey as an internee in this institution and what I was able to learn
about the operational aspects of an organization of this stature. It gave me an insight as to how
the banking sector operates in Pakistan. This bank is intertwined and well acquainted with the
evolutionary aspect of banking over the years.
The main goal of my internship was to enhance my practical understanding of the banking
organization as I had studied banking through the course of my degree. This report provides an
analysis of MCB’s financial, strategic, technical and managerial aspects which have been
reviewed and analyzed by me. Also included are SWOT Analysis and financial analysis. I have
also made room for my assessment to analysis wherever required and ascertained what I think
are the likely causes of such figures.
During the course of my internship. It became part of practical knowledge the presence of
various departments inside every banking organization such as Remittance, Account Opening,
Clearing and Customer Service Office Departments. Also the overall understanding of the
organization which is MCB and how they conduct their day to day activities. I learnt about
documentation requirements and record keeping for different activities and processes especially
the documentation requirement of different kinds of financing facilities. Lastly, I would like to
add that MCB have a very dedicated core team working tirelessly to ensure that MCB keeps
meeting the ever increasing requirements of the modern banking consumer base.
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Table of Contents
Executive Summary ......................................................................................................................... v
CHAPTER 1
INTRODUCTION TO ORGANISATION
1.1 History and Background of MCB ..............................................................................................1
1.2 Incorporation of MCB ...............................................................................................................1
1.3 Nationalization of MCB ............................................................................................................1
1.4 Privatization of MCB.................................................................................................................2
1.5 Mansha Group Acquisition of MCB..........................................................................................3
1.6 Vision Statement........................................................................................................................4
1.7 Mission statement ......................................................................................................................4
1.8 MCB’s Values ...........................................................................................................................4
1.9 Corporate Profile .......................................................................................................................8
1.10 Nature of MCB ......................................................................................................................10
1.11 MCB’s Core types as an organization ...................................................................................10
1.12 Products and Services…………………………………………………………………........11
1.13 Loan Products ........................................................................................................................14
CHAPTER 2
FINANCE/ACCOUNTS DEPARTMENT
2.1 Overview……………………………………………………………………………………..20
2.2 Functions of the Finance Department ..................................................................................... 20
2.3 Accounts Department.............................................................................................................. 21
2.4 Role of CFO’s ......................................................................................................................... 21
2.5 Salman Zafar Siddique (CFO) ................................................................................................ 21
CHAPTER 3
ANALYSIS OF BANK'S POSITION
3.1 Software Employed by MCB .................................................................................................. 23
3.2 Sources of funds...................................................................................................................... 23
3.3 Generation of funds................................................................................................................. 26
3.4 Allocation of funds.................................................................................................................. 29
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CHAPTER 4
FINANCIAL ANALYSIS
4.1 Five Years’ Balance Sheet (2012-2016) ................................................................................. 32
4.2 Five Years’ Income Statements (2012-2016) ......................................................................... 33
4.3 Horizontal Analysis- Income Statement (2012 as the Base Year).......................................... 34
4.3.1 Five Year Percentage Trend in Total Income for MCB....................................................... 35
4.3.2 Five Year Trend in Total Expenses.......................................................................................35
4.3.3 Five year trend in Profit before Tax……………………………………………………….36
4.3.4 Five Year Trend in Profit after Tax ..................................................................................... 37
4.3.5 Five Years Profit Attributable To the Equity Holders of Bank ............................................ 37
4.3.6 Five Year Trend in the Earnings per Share ......................................................................... 38
4.4 Horizontal Analysis - Balance Sheet ...................................................................................... 38
4.4.1 Five Year Trend in Total Assets ........................................................................................... 39
4.4.2 Five Year Trend in Net Assets.............................................................................................. 39
4.4.3 Five Year Trend in Total Equity .......................................................................................... 40
4.4.4 Five Year Trend in Total Liabilities..................................................................................... 41
4.5 Vertical Analysis- Balance Sheet............................................................................................ 42
4.5.1 Five Year Trend for Total Assets ......................................................................................... 42
4.5.2 Five Year Trend for Total Liabilities ................................................................................... 43
4.5.3 Vertical Trend for Total Equity............................................................................................ 44
4.6 Vertical Analysis of Income Statements %cent of Total Markup and Non-Markup Income. 45
4.7 Ratio Analysis ........................................................................................................................ 46
4 .7.1 Current Ratio......................................................................................................................46
4.7.2 Total Asset Turnover….......................................................................................................47
4.7.3 Return on Total Assets….................................................................................................... 47
4.7.4 Return on Shareholder’s Equity…......................................................................................48
4.7.5 Fixed Assets Turnover.........................................................................................................49
4.7.6 Profit after Tax Margin = Profit after Tax/ Total Income ................................................. 49
4.7.7 Net Advances to Deposits Ratio..........................................................................................51
4.7.8 Deposits to Shareholder Equity Ratio…............................................................................ 51
4.7.9 Investments to Deposits Ratio….........................................................................................52
4.7.10 Earning Assets to Total Assets Ratio…...............................................................................53
4.7.11 Profit before Tax Ratio.......................................................................................................53
4.7.12 Return On Capital Employed…..........................................................................................54
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4.7.13 Dividend Payout Ratio…...................................................................................................55
4.7.14 Dividend Cover Ratio.........................................................................................................55
4.7.15 Price Earnings Ratio..........................................................................................................56
4.7.16 Equity Multiplier….............................................................................................................57
4.7.17 Debt Equity Ratio…...........................................................................................................58
4.7.18 Administrative Expenses to Profit before Tax Ratio…..................................................... 59
4.7.19 Non-Interest Income to Total Income Ratio…...................................................................60
4.7.20 Cash to Current Liabilities Ratio…...................................................................................61
CHAPTER 5 ................................................................................................................................. 62
SWOT ANALYSIS ...................................................................................................................... 62
5.1 Strengths.................................................................................................................................. 62
5.2 Weaknesses ............................................................................................................................. 62
5.3 Opportunities........................................................................................................................... 63
5.4 Threats..................................................................................................................................... 63
5.5 Analysis of Organization with Other Banks ........................................................................... 63
CHAPTER 6
INTERNSHIP ACTIVITIES
6.2 Account Opening Procedure ................................................................................................... 66
6.3.1 Current Accounts ................................................................................................................. 67
6.3.2 Saving Accounts ................................................................................................................... 67
6.3.3 My Experience in Account Opening..................................................................................... 68
In My Second, Third and Fourth Week ........................................................................................ 68
6.4 Mcb Clearing Department ....................................................................................................... 68
6.4.1 Types of Clearing ................................................................................................................. 69
6.4.2 Clearing Function ................................................................................................................ 69
6.5 My Experience in Clearing Department ................................................................................. 71
6.6 Remittance Department........................................................................................................... 71
6.6.2 Types of Remittance ............................................................................................................. 72
6.6.3 Local Currency Remittance Instruments ............................................................................. 72
6.6.4 Payment................................................................................................................................ 73
6.6.5 My Experience in Remittances Department......................................................................... 73
6.7 Cash Department..................................................................................................................... 73
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6.7.1 My Experience in Cash Department .................................................................................... 73
CHAPTER 7
CONCLUSION
7.1 Conclusion…............................................................................................................................75
7.2 Recommendations ................................................................................................................... 76
7.3 My Overall learning ................................................................................................................ 77
7.4 Concluding Remarks…............................................................................................................79
7.5 References…............................................................................................................................79
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CHAPTER 1
ORGANISATION
1.1 History and Background of MCB
A little earlier before the creation of Pakistan, the role of the Muslims of the areas, which were
later included in Pakistan was of no significance due to their restricted participation in the
banking sector. There was only a small bank namely Australasia Bank having a few branches in
Lahore and its suburbs. In 1942, the Australasia Bank was housed in a garage of a trader of
Lahore who used to trade at a small scale with Australia during that period. However, the only
fully fledged bank, run by the Muslims of the sub-continent, was the Habib Bank which was
established in 1941. At that time Quaid-e-Azam Muhammad Ali Jinnah expressed his desire that
another Muslim bank also be established in Calcutta which came into reality when Adamjee with
the assistance of Isphanis established Muslim Commercial Bank on July 9, 1947 in Calcutta.
When Pakistan came into being the Muslim Commercial Bank shifted its headquarters from
Calcutta to Dhaka on August 17, 1948 and later on to Karachi on August 23, 195
1.2 Incorporation of MCB

MCB (Formerly Muslim Commercial Bank) with more than 60 years of experience as one of the
leading banks in Pakistan was incorporated by the Adamjee Group on July 9, 1947, under the
Indian Companies Act, VII of 1913 as a limited company. The bank was built with an ideology
to provide banking facilities to the business community for South Asia. The bank has journeyed
through a remarkable tenure of more than 50 years. It is competitively edged and its well
positioned heights of success are due to its employment of quality banking, keeping up with
technological advancements and enjoying a professionally leading management and a prudent,
ethical approach towards work methodologies
1.3 Nationalization of MCB

The era of General Ayub Khan which came to be known as the decade of development in the
60’s was a huge leap forward for the Pakistani banking sector as whole. The banking sector
registered witness able growth during that period and also lent its support to the government of
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the time to supplement the aims of rapid economic growth of Pakistan. But with the onset of
1970s this scenario was to be a victim of gross change. The separation of East Pakistan (now
Bangladesh) and induction of the government led by Zulfiqar Ali Bhutto were one of the most
significant events of early 70’s having far reaching effects on the banking system. In light of
such rapidly evolving conditions of the nation, the government took the decision to nationalize
all the commercial banks so that the nation as a whole could take advantage from a better use of
resources as per the government’s thinking. Consequently, MCB was nationalized under the
Banks (Nationalization) Act in 1974 being realized a public entity on January 1, 1974. In the
banking sector scenario of the time, the then government decided to retain only five major banks
by merging all the smaller banks with the large ones. As a result of this policy, the Premier Bank
became a part of Muslim Commercial Bank in 1974.
The bank was nationalized in 1974 during the tenure of Zulfiqar Ali Bhutto. At that time it
consisted of 506 branches with its total deposit base amounting to RS.1, 640 million.
Although Even though MCB has a reputation of being a conservative bank, it was also to bear
the negative ramifications brought about by nationalization.
1.4 Privatization of MCB
As the effects of nationalization began taking shape, Banks had come under political and
bureaucratic control and had shown a tendency to deviate from standard banking practices. Some
of their senior executives were tempted or forced to nurture a culture of obliging big
businessmen, feudal and political influential people of the country. As the general lessons in
History teach us, things can never be positive as long as the decisions are not made on merit and
standard of procedures followed. They sacrificed their personal integrity and the interest of the
banking sector for gaining promotions and amassing personal wealth. That is how the banking
sector started losing its weight and its professional institutional image was at an all-time low. Its
slide towards the down side started during the 1990s. The then PML also got aware of the
declining standard of the banking sector and decided to privatize all the commercial banks.
Banks (Nationalization) (Second Amendment) Ordinance 1991 was also promulgated to pave the
way for privatization of banks in Pakistan.
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When privatization policy was announced in 1990, MCB was the first to be privatized upon
recommendations of the World Bank and the IMF. Better profitability conditions of the
organization and less risky credit portfolio was cited as one of the main reasons for
recommendation by these international organizations with them quoting, “It is a good choice for
investors”. 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 a rate of. Pkr 2.3 after
privatization.
So, in the wake of above amendments, 26% of shares valued at Pkr. 149.8 million of MCB,
under the prerogative of the State Bank of Pakistan, were sold and the Bank’s management was
transferred to the purchasers of these 26% shares. The year 1991, in which this institution was
privatized, the total number of branches totaled 1,287 and deposits had amounted to a high of
RS.35, 029 million.
1.5 Mansha Group Acquisition of MCB
When MCB Bank was privatized in 1991, it was purchased by a consortium of Pakistani
corporate groups led by the Nishat Group.
Nishat Group has the distinction of being in the top brass of the most expanded and diversified
business groups in Pakistan. The group has a strong interest and stake in the most important
business sectors of Pakistan such as banking, textile, cement and insurance. As of June 2008, the
Nishat Group owns a majority stake in the bank. The president of the bank is Mr. Imran Maqbool
who is also its CEO.
Mian Mohammad Mansha is the Chairman of the group as well as of MCB.
Mian. Muhammad Mansha being the chairman of the group including MCB has played a key
role in its success. Also being awarded the “sitar-e-imtiaz”, which is one of the most prestigious
civil awards of the country. After some time the registered office of the company was shifted to
Karachi on august 23rd, 1956 through a special resolution.
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After almost 2 and a half decades after privatization, MCB now finds itself in a consolidation
stage designed to lock in the gains made in recent years and prepare its groundwork for future
success of the organization as a whole.
The bank has restructured its asset portfolio and rationalized the cost structure in order to remain
a low cost producer.
1.6 Vision Statement
To be the leading financial services provider, partnering with our customers for a more
prosperous and secure future.
1.7 Mission statement
We are a team of committed professionals, providing innovative and efficient financial solutions
to create and nurture long-term relationships with our customers. In doing so, we ensure that our
shareholders can invest in us with confidence.
1.8 MCB’s Values
These are the standards and principles which determine our behavior and how we interact
with our customers and each other:
1.8.1 Integrity
Dedication towards the highest standards of business ethics and their alertness in the
protection of the necessary trust required of a financial institution are paramount values
to MCB for its integrity.
1.8.2 Customer care
MCB ensures that highest standards of customer care and follow up are provided by the
MCB with customer’s understanding and prudence.
1.8.3 Team work
MCB’s approach ensures consistency and joint development of the synergistic potential
among its stakeholders & between the companies of the Group alongside leveraging its
individual skills & competencies and also enhancing them.
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1.8.4 Innovation
a long-standing in-house tradition of proactively seeking opportunities at the
technological, operational & managerial levels - a long string of market firsts testifies to
this.
1.8.5 Knowledge
A strong commitment to nurture our human capital through lifelong development &
learning towards achieving our vision.
1.8.6 Excellence
our ability to constantly rethink ourselves & reflecting our effort to instill, collectively &
individually, behaviors tuned to outstanding performance.
1.9 Corporate Profile
1.9.1 Board Of Directors
Mian Muhammad Mansha Chairman

Imran Maqbool President and CEO
S.M Munir Vice President
Tariq Rafi Director

Mohd Suhail Amar Suresh Director
Shahzad Saleem Director

Samir Akbar Saigol Director
Mian Umer Mansha Director

Iqra Hassan Mansha Director
Ahmad Alman Aslam Director

Irfan Ahmed Hashmi Director
Noor Hizam Bin Hashim Director

Muhammad Ali Zeb Director
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1.9.2 Organizational Structure
Source: Annual Report MCB (2016)
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1.9.3 Management Hierarchy
MIDDLE MANAGEMENT
Divisional Heads Head Office
Regional Head (EVP) Regional Office
Zonal Head (VP) Zonal Office
Branch Manager Branch
1.9.4 Addresses
Registered Office
MCB Building, F-6/G-6, Jinnah Avenue, Islamabad
Principal Office
MCB 15 Main Gulberg, Lahore
Corporate Office
MCB House, Jail Road, Lahore
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1.9.5 Organization Structure of 1711 Branch
Branch Manager
Branch General Banking General Banking

Operations Officer Officer Cashier
Manager (Operations) (Services)
Source: Author’s own observation
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1.9.6 Branch Network
The Following shows the Branch Network of 1711 branch where I interned.
Source: Annual Report MCB (2016)
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1.10 Nature of MCB
MCB bank ltd being a commercial banking organization has recently in its stride undertaken
activities in the corporate and financial sectors of Pakistan. The branch I was in also housed a
separate corporate branch on the upper floor of the edifice and there are many other diverse
branches of MCB scattered all across Pakistan at points of strategic importance to them.
1.11 MCB’s Core types as an organization
These are five types of banking offered by MCB
a) Commercial Banking
b) Consumer Banking
c) Corporate Banking
d) Virtual Banking
e) Islamic Banking
a) Commercial Banking
Commercial Banking performs the routine duties of a banking setup. It collects surplus money
from people; offers loans along with advances in the form of overdrafts, cash credits and
discounting bills of exchange. It also provides agency services and general utility services.
b) Consumer Banking
MCB Consumer Banking in its various functions also offers different types of savings accounts
with attractive returns and investment products for their diverse customer base. This enables
healthy monthly profits as well as enhancement of ease of the payment instruments that serve the
purpose of safety in highly valuable transaction, having acceptance around the world in digital as
well as non-digital markets.
c) Corporate Banking
MCB’s Corporate Banking is a platform provided to its ever increasing customer base having
under their employment, shrewd financial advisors that give personalized attention to different
customers’ banking needs. These people are specialists in connection with the services like
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under-taking, corporate advisory, project finance, equity placements etc. ensuring their best for
clients.
d) Virtual Banking
MCB virtual internet banking offers its customers the convenience to manage the bank account d
+ their finances , when and where they want .MCB’s virtual Banking facility has 3 benefits due to
which it is thriving in the market. These are,
1. Simple
2. Secure
3. Free of cost
e) Islamic Banking
Islamic Banking Division was formed on 1st January 2003 and in a very summarized period
managed to build sufficient expertise, grand infrastructure required, advances in information
technology, and the manpower required to run Islamic Banking Operations and offer Islamic
Banking Products as efficiently as possible.
1.12 Products and Services
1.12.1 Consumer Banking
 Deposit Accounts
 Loan Products
 MCB Master Card
 MCB Rupee Traveler's Cheques
1.12.2 Deposit Accounts
a) Khushali Bachat Account
Khushali Bachat Account, a Rupee savings account is one of MCB Bank’s most popular
products. Due to the low initial deposit, the account can be opened by people from all walks of
life and still avail the facility of daily product profit calculation.
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b) Mahana Khushali Bachat
MCB Monthly Khushali Scheme provides its customers with the consistent stream of income
every month with one of the most competitive rates offered on their deposits.
c) Pak Rupee Savings Account
MCB’s Pak Rupee Savings Account is another form of account on offer by MCB which also
uses offers smart returns on customer’s investment. This also enables ATM card usage all across
the country with MCB having the most number of ATM’s inside Pakistan for a single banking
organization. This service is available 24/7. The withdrawals from this service are limitless with
the only restriction being the ATM transaction limit.
d) Pak Rupee Current Account
MCB’s Pak Rupee Current Account gives the accessibility of unlimited drawings to the
customers whenever they so choose from their deposits. The number of transactions are limitless
in a day and on top of that, customers can benefit from the finance facility offered by MCB
which can go as high as 75% of the total deposit.
The ATM services for this can also be benefitted from 24/7 with no restriction on the number of
transactions made through the ATM facilities.
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e) Pak Rupee Term Deposit
MCB Pak Rupee Term Deposit’s attractiveness lies in its higher rates of return compared to
other forms of accounts. . Be it any sort of deposit ranging from time of 1, 3, 6 months, as well as
1, 2, 3, 4 and 5 year term deposits.
f) Saving 365
The MCB Saving 365 offers the service of daily profit calculations on top of limitless use of the
ATM.
g) Foreign Currency Savings Account
This type of account offers very favorable rates of returns on the foreign currency that lies in the
account. Currencies ranging from US Dollar, UK Pound, Japanese Yen or Euros. This also offers
exemption from the automatic zakat deductions and protection from Withholding Tax.
h) Foreign Currency Current Account
Along with limitless transactions made from the ATM and unlimited access to customer to his
funds, this service is one of the most convenient for foreign currency holders.
i) MCB Foreign Currency Term Deposit
MCB Foreign Currency Term Deposit gives a higher rate of return. It gives the choice of 1, 3, 6
months as well as 1, 2, 3, 4 and 5 year term deposits.
j) Dollar Khushali Account
The Dollar Khushali Account, a Dollar based account which was offered as service in 1993 is
now available everywhere with the chance to open this type of account in over 200 of MCB
branches.
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1.13 Loan Products
1.13.1 MCB Business Sarmaya
“MCB Business Sarmaya” is the best Running Finance facility against the residential property
which empowers its customers to manage their business dealings more effectively and
efficiently. This facility improves client’s business’s, helps in acquiring advantageous
opportunities and helps expand a business, with absolute guarantee of cash flows..
1.13.2 MCB Car 4 u
MCB CAR 4 U is an Auto Finance facility provided by MCB to its customers. It was designed to
be very convenient for the use of the average customer and to spur the rate Auto Financing done
by the MCB. Its benefits are that it is an affordable way, with one of the lowest mark up in the
market competitively, the conditions are versatile and this facility has paved the way for easy
processing. It is also a testament to MCB’s integrity that they not inserted any hidden costs.
1.13.3 MCB Pyara Ghar
MCB Pyara Ghar is an ideal Home Finance from MCB to its customers that lets them Purchase,
Renovate and get construction done on their house the way they desire. At a time when having a
house is so difficult, MCB Pyara Ghar is a big facility for its customers in realizing their dreams
1.13.4 Easy Personal Loan
MCB Easy Personal Loan provides its customers with the financial force to accomplish aims
they always dreamed of but lacked the financial capital and appetite to realize them. Be it
holidays, acquiring a car. Refurnishing their house, purchasing home appliances equipment and.
financing education which is of the utmost quality.
1.13.5 MCB Master Card
Since the beginning of time, people have tried to find more convenient ways to pay, from gold to
paper money and cheques. Today, currency is distancing itself from tangible currencies and
moving towards universal payment products that transcend national borders, time zones, and
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now with the easy access of Internet, even physical space. Plastic or "virtual" money are soon to
overtake cash and cheques as the medium of currency of the future
1.13.6 MCB Rupee traveler’s Cheques
MCB’s Rupee Traveler's Cheques which came into the market in 1993 is hailed as a safe cash for
traveling and travel related ventures. The product has been extremely popular and is preferred
over cash by majority of customers while they’re traveling abroad and where ever its
convenience can come into use. They are considered one of the safest ways to carry cash.
1.14 Corporate Banking
a) Cash Management Services
b) Working Capital Loans
c) Term Loans
d) Trade Finance Services
a) Cash Management Services
MCB’s network of over 1,189 branches in Pakistan enables it to collect and disburse payments
efficiently with its cash management services. This also enables it to offer its customers either
paper based or electronic fund transfer solutions including collection amounts, cross branch on-
line transactions etc.
b) Working Capital Loans
Based on the customer’s specific requirements, the Corporate Bank offers a number of different
working capital financing facilities including Running Finance, Cash Finance, Export Refinance,
Pre-shipment and Post- shipment etc. These are Tailor- made solutions assembled with a view to
cater to the personalized demands of your business.
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c) Term Loans
MCB offers Short to Medium Term Finance to meet capital expenditure and short term working
capital requirements of their customers. The loans are structured on the basis of underlying
project characteristics and cash flows of the business.
d) Trade Finance Services
Under Corporate Banking, MCB brings to its customers trade finance services that include an
entire series of import and export activities among whom are issuance of Letters of Credit
(L/Cs), purchasing export documents, providing guarantees and other support services.
1.15 Online Services
a) MCB ATM Services
b) MCB Mobile Banking
c) MCB Call Center
d) MCB Smart Card
e) MCB Debit Card
a) MCB ATM Services
With a solid mileage of more than 5 decades in Pakistan, to having more than 750 automated
branches, 269 online branches, over 222 MCB ATMs in 41 cities nationwide and a network of
over 12 banks on the MNET ATM switch, MCB is well positioned at the forefront of the
banking industry in Pakistan. Its success has been possible because of a never-ending drive to
achieve higher levels of excellence, constantly striving to raise the level of its organizational
performance.
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b) MCB Mobile Banking
At the forefront of technological excellence, MCB has also introduced ‘MCB MOBILE
BANKING’. They have provided the convenience to customers for the easy access to their
account information and mini bank statements whenever they require for themselves with the
easiest of ways.
c) MCB Call Center
MCB Call Center service has made it so simple to answer any queries without leaving the
comfort of their own homes. MCB phone service is just fingertips away. It offers basic banking
services for customer’s convenience thereby eliminating the need for them to make unwanted
trips to their branch.
d) MCB Smart Card
MCB has also brought forth a service in the form of smart card which is a secure and convenient
instrument of payment with great functionalities. It provides a 24-hour direct access to
customer’s bank account.
e) MCB Debit card
MCB Debit Card is another secure, convenient and quick payment facility that enables its
customers to do all the purchasing by using their existing MCB ATM / MCB Smart Card as a
Debit Card.
1.6 Islamic Banking
MCB with the assistance of religious scholars, lawyers and people with extensive knowledge of
the western and Islamic banking system, MCB has come up with the form of Islamic Banking
which provides Riba Free and Sharia Accommodating solutions to various sections of their
diverse consumer base in several cities and that list of cities is fast expanding.
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1.6.1 Deposit Schemes
For customers who seek to rest their deposits without fear of their funds being non halal, MCB
has come up with the following solutions::
 Al-Makhraj Saving Account

 Al-Makhraj Ianat Account
 Al-Makhraj Term Deposit

1.6.2 Fund Based Facilities
MCB offers 3 broad Islamic fund based facilities:
 Ijarah
 Murabahah
 Diminishing Musharikah Equipment
a) Ijarah Products
MCB’s Islamic Ijarah, analogous to the English term 'leasing’, is based on the ‘Ijarah wa Iqtina’
concept which means the sale of the asset to the lessee after the Ijarah has matured. Under this
scheme, MCB will be the owner of the asset, and the customer (lessee) will be given the asset to
use for a certain period of time in return for monthly rental payments. MCB will give a separate
unilateral undertaking that it will offer to sell the asset to the customer (lessee) at the maturity of
the Ijarah agreement at a price that may be equal to the security deposit amount, hence the term
‘WA Iqtina’
1.6.3 Types of Ijarah
a) Car Ijarah
b) Equipment Ijarah
18
1.6.4 Murabahah
It is a contract between a buyer and a seller under which the latter first purchases the goods at the
request of the customer and then sells it to same customer after adding its profit.
Murabahah Sale Price = Cost + Expenses incurred + The Agreed Profit
1.6.5 Musharikah Equipment
It is a contract through which the bank and its client participate in the joint ownership of a
property. The share of the Bank is further divided into a number of units and it is agreed that the
client will purchase the bank’s share periodically, thus increasing his own share until all the units
of the bank are purchased by him so as to make the client the sole owner of the property.
19
CHAPTER 2
FINANCE/ACCOUNTS DEPARTMENT
2.1 Overview
The MCB Headquarters is home to fifteen departments which are designated as groups by
the bank.
The corporate finance department is charged with the responsibility of dealing with all the
accounting related tasks for the enterprise. These include
a) Capital Investing and Capital Financing

b) Short term liquidity and preparation of commercial accounts
c) Setting markup rates for the ban and offering financial services to their foreign clients.
d) Maintaining accounts with the State Bank of Pakistan and among other financial
accounts.
e) Reviewing and supervising the accounting policies in all of MCB’s branches
f) Offering financial services to their foreign clients.
2.2 Functions of the Finance Department
Functions designated to the Finance Department are several. I have explained some of these
below.
The attainment of funds, their expectation, their effective allocation and assessment in the most
efficient manner.
Preparation of budgets and financial reports and the management of various ledgers also comes
in their scope of activities.
They are also tasked with creation of strategies for the purposes of capital budgeting, structuring
and debt financing.
Cooperation with external auditors and Credit Risk Management (CRC).
Managing the cost of capital as well as ascertaining the allocation of capital investment and how
much dividends can go towards the shareholders.
20
2.3 Accounts Department
The accounts department is charged with the responsibility of overseeing transactional data that
takes place during banking hours. This includes the structuring, briefing and the recording of
accounting information till day end in the shape of revenues, expenses, assets and liabilities.
Before sending the bank’s position to the State Bank of Pakistan, the statement of affairs are
consolidated by the finance department inside the head office with respect different banks.
Finance Department ensures smooth liquidity of the bank by arranging funds from SBP and other
banks when requirement arises. Making physical investment on behalf of the bank into
government and other forms of securities is also their responsibility. Following are the ledgers
and registers maintained by this department
a) Cheque Book Issue Register along with Cash Remittances Inward and Outward.
b) General Ledger and the bank transfer scroll.
c) Monthly cheque Return Register and related books
d) Making entries for closing and maintaining Profit and Loss
2.4 Role of CFO’s

The chief financial officer of an organization is one of the most important posts in any
organization. He/she is in charge of the finances and the allocation of those finances in a way
which best benefits the organization.
The roles of the CFO include the following:

a) Formulation of strategic financial planning along with the creation of financial analysis.
b) Handling the long term investments of MCB and keeping up with the increasing finance
structure with the best standards of application.
c) Shielding the financial assets of the company and ensuring amenability with financial
procedures.
2.5 Salman Zafar Siddique (CFO)
Salman Zafar Siddique is the current CFO of MCB with a working experience of over 25 years
in different institutions. He began his career in 1988 with Maurice Apple & Co Chartered
Accountants, also having experience working with Coca Cola Co, Haleeb Foods ltd and AL
21
Ghurair Group. He later joined MCB Bank Limited as Group Head Audit where he served for
three years before being tasked with the responsibility of CFO in 2009.
2.6 Role of the CFO as an overall Financial Manager

The CFO is also the main financial manager for the company. His duties and responsibilities
include:
a) Being a Controller as well as treasurer.

b) Managing the cash and Credit for the company as well as managing the overall risk.
c) International banking management and the budgeting of capital also falls in his domain.
22
CHAPTER 3
ANALYSIS OF BANK’S POSITION
3.1 Software Employed by MCB
MCB keeping in line with its policy of being up to date with the latest technological
advancements in the banking industry has also begun employing the new software specially
made to efficiently manage its daily base transactions The software is known as the CDS 8.5.
CDS 8.5 has many advantages over its predecessor and has made the workflow of the
organization faster than the previous software employed by MCB allowing for better
organization of its operational procedures. The system is so easy to use that it has cut the training
periods of employees and the chances of error almost nonexistent accounting reports can be
generated with the click of a button according to the exact requirements of this organization.
3.2 Sources of funds
Below is the table that constitutes the main sources of revenue which the bank generates in order
to be profitable. The sources of funds for MCB are:
(Pkr in “000)
Years 2012 2013 2014 2015 2016

Deposits and 544,988,091 632,309,094 688,270,091 706,239,715 795,689,546
other
accounts
Borrowings 79,064,351 38,660,405 59,776,578 118,615,031 77,438,993
Share 9,198,601 10,118,461 11,130,307 11,130,307 11,130,307

Capital
Reserves 44,620,928 47,008,936 49,200,045 51,491,384 53,512,633
23
Below are graphs for the above items shown in the above table
3.2.1 Deposits and Other Accounts
Deposits and other accounts

1E+09
795689546
800000000 688270091 706239715
632309094
600000000544988091
400000000
200000000
0
2012 2013 2014 2015 2016
Source: Authors own calculations
Analysis:
As we can see from the chart, Deposits have gradually been rising yearly. 2014-15 saw the
lowest increase figures whereas 2016 marked the biggest increase in deposits in a working year
in the period of 2012-16. The total in 2016 amounted to deposits of Pkr 795689546. Judging
from the general trend of the chart, I can deduce that the future looks promising and the bank’s
deposit base is likely to thrive as more people become a part of MCB.
3.2.2 Borrowings
Borrowings
140000000
118615031
120000000
100000000
79064351 77438993
80000000
59776578
60000000
38660405
40000000
20000000
0
2012 2013 2014 2015 2016
24
Analysis:
Borrowings are a source of fund for every major organization and MCB avails from this facility
as well. The trend has seen many ups and downs as MCB’s inclination towards borrowing has
been varying very much yearly from 2012 to 2016. MCB reduced its reliance on borrowings in
the financial year of 2013. It increased the following year in 2014 to Pkr 59776578 until it takes
the biggest jump to Pkr 118615031 in 2015. They were relying heavily on borrowings but MCB
again dropped its borrowings in 2016 as it sought to possibly shift from increasing liabilities and
focus more on other sources of finance.
3.2.3 Share Capital
Share Capital
12000000 11130307 11130307 11130307
10118461
10000000 9198601
8000000
6000000
4000000
2000000
0
2012 2013 2014 2015 2016
Analysis:
Share capital in the period of 2012-16 had been increasing till the year 2014. Then we see it
being consistent for the next 2 years till 2016 at 11130307. It’s not the most cost effective way
raise finance and hence it could be a reason for it being stagnant for 3 straight years
25
3.2.4 Reserves
Reserves
56000000
53512633
54000000
51491384
52000000
50000000 49200045
48000000 47008936
46000000 44620928
44000000
42000000
40000000
2012 2013 2014 2015 2016
Analysis:
As can be seen from the graph, the trend for its reserves has been registering a year by year
increase. The reserves show how much stability the bank has in terms of meeting its sudden
requirements and the increase in reserves means the shareholder’s confidence in MCB is only
likely to go higher.
3.3 Generation of funds
The following table tells us about the generation of funds deduced from various sources during
the time period of 2012-16
Years 2012 2013 2014 2015 2016

Profit 32,064,650 32,932,070 37,354,022 42,788,640 36,720,857
earned
Interest 68,443,744 65,186,388 77,411,189 80,840,506 69,035,820
Income
Net interest 40,462,183 40,802,572 45,090,579 49,123,182 44,242,005
income after
provisions
Profit after 20,967,541 21,950,141 24,774,446 25,035,112 22,174,145
tax
26
3.3.1 Profit Earned Analysis
Profit Earned
45000000 42788640
40000000 37354022 36720857
35000000 32064650 32932070
30000000
25000000
20000000
15000000
10000000
5000000
0
2012 2013 2014 2015 2016
Analysis:
The profit earned chart shows us that profits were pretty even till 2013 but saw an increase in the
year 2015 to Pkr 42788640 which was the highest in period noted. It faced a decline in the
following year but it kept in line with the previous trend that preceded 2015 which can be
explained by other rising costs of the organization.
3.3.2 Interest Income
Interest Income
100000000
77411189 80840506
80000000 68443744 69035820
65186388
60000000
40000000
20000000
0
2012 2013 2014 2015 2016
Analysis:
The income earned through interest touched the lowest in 2013 but it can be still called very
stable. The highest point in the period was in 2015 with interest touching Pkr 80840506. Over all
we can say that the interest income has been very similar yearly with minor expected increases
27
and decreases expected due to various factors such as decline in the rate of interest among other
things.
3.3.3 Net Interest Income after Provisions
Net Interest Income After

Provisions
60000000
49123182
50000000 45090579 44242005
40462183 40802572
40000000
30000000
20000000
10000000
0
2012 2013 2014 2015 2016
Analysis:
The amounts in the period between 2012-16 have been very even with the biggest difference
being witnessed in the year 2015.The amount possibly saw a decrease in 2016 as the interest
income itself was lower in 2016.
3.3.4 Profit after Tax
Profit After Tax
26000000 24774446 25035112

24000000
21950141 22174145
22000000 20967541
20000000
18000000
2012 2013 2014 2015 2016
28
Analysis:
The Profit after Tax was growing yearly till the year 2015. It can be seen that there was a minor
increase in 2014 to 2015 until it falls to Pkr 22174145 which is the lowest in the period 2012-16.
2016 was a year in which MCB saw rising costs and a higher tax payments or increase in
operational costs could explain this fall.
3.4 Allocation of funds
Below table shows the funds generated that have to be apportioned accordingly to get the
maximum returns. The allocation for these funds for MCB is as follows:
(Rupees in ‘000)
Years 2012 2013 2014 2015 2016

Net 405,601,313 453,808,345 516,898,299 566,564,304 556,770,384
Investments
Operating 24,144,242 29,005,931 31,583,646 31,536,887 35,225,865
Fixed Assets
Other Assets 41,715,761 27,176,720 37,888,155 31,915,210 34,617,075
3.4.1 Net Investments
NET INVESTMENTS
600000000 566564304 556770384
516898299
500000000 453808345
405601313
400000000
300000000
200000000
100000000
0
2012 2013 2014 2015 2016
29
Analysis:
Net investments had been seeing a good growth pattern yearly till the year 2015 until for the first
time in the period 2012-16, it fell albeit a very small decline. The amounts reduce in the year
2016; however the decrease is not substantial. Maybe the pattern of shrewd investments by MCB
showed a bit of complacency in the year 2016 which could explain them missing the mark in
2016.
3.4.2 Operating Fixed Assets
40000000
Operating Fixed Assets
35225865
35000000 31583646 31536887
29005931
30000000
24144242
25000000
20000000
15000000
10000000
5000000
0
2012 2013 2014 2015 2016
Analysis:
The operating fixed assets saw an upturn from the 2012 till 2014. The assets decreased
marginally in 2015 but it was minute fall. Overall the operating fixed assets increased till 2016
which can only point to MCB increasing its stature. So it was strong showing. Revaluation might
have played a part in the trend.
30
3.4.3 Other Assets
Other Assets
4500000041715761
40000000 37888155
34617075
35000000 31915210
30000000 27176720
25000000
20000000
15000000
10000000
5000000
0
2012 2013 2014 2015 2016
Analysis:
A lot of Fluctuation can be seen from this chart, with other assets being the highest in the base
year of 2012. 2013 saw the biggest decrease in a financial year in the period 2012-16. It
increased substantially again in 2014 only to fall again in 2015. The year 2016 saw MCB again
on the path of strengthening its asset base. This variation may be owing to usage of funds to
other areas in the organization such as interest bearing instruments.
31
CHAPTER 4
FINANCIAL ANALYSIS
4.1 Five Years’ Balance Sheet (2012-2016)
The following table shows the balance sheet of MCB for the period 2012-16 for the purpose of
Financial Analysis
Balance Sheet
Assets 2016 2015 2014 2013 2012

Cash and balances 75,732,185 61,265,859 46,753,868 59,946,218 57,420,211
with treasury banks
Balances with other 7,201,459 10,058,662 3,063,774 1,594,660 1,236,736
banks
Lending to financial 2,809,752 2,867,744 1,418,181 1,224,638 1,551,472
institutions
Investments - net 556,770,384 566,564,304 516,898,299 453,808,345 405,601,313
Advances – net 364,333,516 316,771,355 304,000,563 248,521,792 239,788,511
Operating fixed 35,225,865 31,536,887 31,583,646 29,005,931 24,144,242
assets
Other assets - net 34,617,075 31,915,210 37,888,155 27,176,720 41,715,761
Total Assets 1,076,690,236 1,020,980,021 941,606,486 821,278,304 771,458,246
Liabilities
Bills payable 13,291,328 11,975,237 16,627,700 10,138,726 9,896,284
Borrowings 77,438,993 118,615,031 59,776,578 38,660,405 79,064,351
Deposits and other 795,689,546 706,239,715 688,270,091 632,309,094 544,988,091
accounts
Deferred tax 12,889,649 12,482,287 10,735,841 4,500,293 9,768,871
liabilities – net
Other liabilities 31,420,650 29,491,131 29,927,070 20,206,991 21,265,639
Total Liabilities 930,730,166 878,803,401 805,337,280 705,815,509 664,983,236
Net Assets 145,960,070 142,176,620 136,269,206 115,462,795 106,475,010
Represented By
Share Capital 11,130,307 11,130,307 11,130,307 10,118,461 9,198,601
32
Reserves 53,512,633 51,491,384 49,200,045 47,008,936 44,620,928
Unappropriated 55,509,013 52,631,368 49,765,031 43,038,094 37,530,955
profit
Non-controlling 509,331 512,076 511,960 489,671 501,256
interest
120,661,284 115,765,135 110,607,343 100,655,162 91,851,740
Surplus on 25,298,786 26,411,485 25,661,863 14,807,633 14,623,270
revaluation of assets
- net of tax
145,960,070 142,176,620 136,269,206 115,462,795 106,475,010
Source: Annual Report (2016)
4.2 Five Years’ Income Statements (2012-2016)

The following table shows the Income statement of MCB for the period 2012-16 for the purpose
of Financial Analysis
Income Statements 2016 2015 2014 2013 2012
Mark-up / return / interest 69,035,820 80,840,506 77,411,189 65,186,388 68,443,744

earned
Mark-up / return / interest 24,236,261 31,171,853 33,770,144 27,219,433 27,503,496
expensed
Net mark-up / interest income 44,799,559 49,668,653 43,641,045 37,966,955 40,940,248
Provision / (reversal) for -647,356 831,369 -355,809 -6,834 -3,044
diminution in the value of
investments - net
Provision / (reversal) against 1,204,892 -285,965 -1,093,745 -2,828,783 480,903
loans and advances - net
Bad debts written off directly 18 67 20 - 206
557,554 545,471 -1,449,534 -2,835,617 478,065
Net mark-up / interest income 44,242,005 49,123,182 45,090,579 40,802,572 40,462,183
after provisions
Non mark-up / interest income

Fee, commission and brokerage 8,244,999 8,463,171 7,775,318 7,204,266 6,384,757
income
Dividend income 1,123,108 861,381 729,708 714,207 1,060,411
Income from dealing in foreign 942,613 771,686 1,443,458 920,008 823,838
currencies
Gain on sale of securities - net 5,498,958 4,343,994 2,206,577 2,165,381 857,405
Unrealized gain on revaluation 5,614 577 27,324 21,787 30,285
of investments classified as held
for trading
33
Other income 540,644 2,088,120 1,570,088 450,879 384,459
Total non-mark-up / interest 16,355,936 16,528,929 13,752,473 11,476,528 9,541,155
income
60,597,941 65,652,111 58,843,052 52,279,100 50,003,338
Non mark-up / interest expenses
Administrative expenses 23,628,212 22,566,685 21,014,641 19,099,222 17,822,584
Other provision - net 271,151 155,240 76,935 -52,285 -187,305
Other charges 924,495 937,153 979,225 928,954 600,054
Total non-mark-up / interest 24,823,858 23,659,078 22,070,801 19,975,891 18,235,333
expenses
Share of profit of associates 946,774 795,607 581,771 628,861 296,645
Extra ordinary / unusual item
Profit before taxation 36,720,857 42,788,640 37,354,022 32,932,070 32,064,650

Taxation - Current year 12,503,868 14,569,863 12,003,454 15,220,551 9,646,189
Prior year 1,682,063 1,894,674 -1,074 -2,137 126,396
Deferred year 177,995 1,209,820 529,658 -4,318,658 1,288,353
Share of tax of associates 182,786 79,171 47,538 82,173 36,171
14,546,712 17,753,528 12,579,576 10,981,929 11,097,109
Profit after taxation 22,174,145 25,035,112 24,774,446 21,950,141 20,967,541
Profit attributable to non- -111,157 -125,111 -118,859 -75,043 -82,050
controlling interest
Profit attributable to equity 22,062,988 24,910,001 24,655,587 21,875,098 20,885,491
shareholders of the Bank
Unappropriated profit brought 43,038,094 37,530,955 30,617,206
forward
Transfer from surplus on 47,941 36,045 36,056
revaluation of fixed assets - net
of tax
43,086,035 37,567,000 30,653,262
Profit available for appropriation 67,741,622 59,442,098 51,538,753
Basic & diluted earnings after 19.82 22.38 22.15 19.65 20.64
tax
Source: Annual Report (2016)
4.3 Horizontal Analysis- Income Statement (2012 as the Base Year)
The horizontal analysis for MCB shows the percentage change in specific items in the income
statement keeping the base year of 2012. All the other years are measured with respect to its base
year and overall significance till the final year of 2016. The trends for these specific items is
displayed as follows:
34
4.3.1 Five Year Percentage Trend in Total Income for MCB
FIVE YEAR TREND IN TOTAL INCOME

140% 131.30%
117.68% 121.19%
120% 104.55%
100%
100%
80%
60%
40%
20%
0%
2012 2013 2014 2015 2016
.
Interpretation:
Taking 2012 as the base year, we can witness an increasing trend in total income till 2015 being
the peak in this period at 131.30%, in 2016, the increase is at a slower rate than the previous
years however but not a cause for concern
4.3.2 Five Year Trend in Total Expenses
150%
FIVE YEAR TREND IN TOTAL
136.13%
EXPENSES
121.03%
129.74%
100% 109.54%
100%
50%
0%
2012 2013 2014 2015 2016
35
Interpretation:
An incremental increase in the total expenses of the past 5 years can be observed from the graph
of Total expenses starting from 2012. The highest increase in the costs in a single year took place
in between the year 2013-14. The total increase from 2012 till 2016 was +36.13% if we take
2012 costs at a base of 100%. This could be due to many factors, such as an increase in operating
activity, which leads to a rise in administrative expenses.
4.3.3 Five Year Trend in Profit before Tax for Mcb
FIVE YEAR TREND IN THE PROFIT

BEFORE TAX
150%
133.44%
100% 116.50% 114.52%
100% 102.71%
50%
0%
2012 2013 2014 2015 2106
Interpretation:
Profit before tax shows an increasing trend from 2012. The maximum increase took place in
between 2014-15. As we noted, the rate then fell for the first time since 2012 in year 2016 to
114.52%. Potential causes could be inflation and the rising operational costs.
36
4.3.4 Five Year Trend in Profit after Tax
FIVE YEAR TREND IN PROFIT AFTER

TAX
125%
118.16% 119.40%
120%
115%
110% 105.75%
104.69%
105%
100%
100%
95%
90%
2012 2013 2014 2015 2016
Interpretation:
The trend in the profit after tax shows the year 2015 touching the peak in the period 2012-16 at
119.4% from the base of 100%. However, this trend of increasing profits was not to continue as
we witness a decline in 2016 to 105.75%. Likely causes could be deferred tax payments outlay
and operational costs.
4.3.5 Five Years Profit Attributable To the Equity Holders of Bank
FIVE YEAR TREND IN THE PROFIT

ATTRIBUTABLE TO THE EQUITY
HOLDERS OF THE BANK
130%
120%
118.05% 119.27%
110%
100% 104.74% 105.64%

100%
90%
2012 2013 2014 2015 2016
37
Interpretation:
The trend in unappropriated profit shows a decreasing trend touching the highest in 2015 in the 5
year period of 2012-16. The unappropriated profit was 119.27% in 2015 but was to break the
trend in the following year by declining sharply to105.64%.A decrease of 13.63% which is
substantial considering it took 4years to reach the high of 2015. This decline may be due to
payments of dividends to shareholders and an increase in the amounts of total provisions.
4.3.6 Five Year Trend in the Earnings per Share
FIVE YEAR TREND IN EARNINGS PER

SHARE
110%
105% 107.32% 108.43%
100%
100%
95%
95.20% 96.03%
90%
85%
2012 2013 2014 2015 2016
Interpretation:
The EPS trend has been in the negative in 2 of the 5 years namely: 2013 & 2016. The lowest
point of the EPS was in 2013 at 95.20%. The pinnacle point in EPS trend was 2015, in which it
touched 108.43%. However a decrease in EPS was to follow in 2016 to 96.03%. The two years
of 2013 & 2016 can be explained due to rising profits which may be due to an offering of capital
to the public.
4.4 Horizontal Analysis - Balance Sheet
The horizontal analysis of the balance sheet analyzes specific line items in the balance sheet as
compared to the base year which is 2012. The graphs depicting the trends for these specific items
are displayed as follows:
38
4.4.1 Five Year Trend in Total Assets
FIVE YEAR TREND IN TOTAL ASSETS

160%
139.57%
140% 132.34%
122.06%
120% 100% 106.46%
100%
80%
60%
40%
20%
0%
2012 2013 2014 2015 2016
Interpretation:
The five year trend in total assets has in all actuality been very encouraging for MCB. There was
a whopping 39.57% increase in overall assets in 2016 compared to the base of 2012. The biggest
increase came in the year of 2015 with a 10.28% increase from 2014. This displays the ambitious
nature of the bank to work towards increasing its overall assets over time.
4.4.2 Five Year Trend in Net Assets
FIVE YEAR TREND IN NET ASSETS

160%
140%
120% 133.53% 137.08%
127.98%
100% 108.44%
100%
80%
60%
40%
20%
0%
2012 2013 2014 2015 2016
39
Interpretation:
The net assets of a bank show the total assets after the liabilities have been deducted. The trend is
an ever increasing one. The total net assets increased by 37.08% from the base of 2012. The
biggest increment came in the year 2014, as the bank had a 127% increase in its net assets as
compared to 2012. The increase displays the dedication of the bank to increase its net assets to
become financially stronger.
4.4.3 Five Year Trend in Total Equity
FIVE YEAR TREND IN TOTAL EQUITY

160%
140%
120% 131.53%
120.52% 126.17%
100% 109.65%
100%
80%
60%
40%
20%
0%
2012 2013 2014 2015 2016
Interpretation:
A gradual year by year increase in total equity can be seen here from the above graphical data.
Biggest increase in a year was witnessed in between 2013-14 with a percentage increase of
10.87%. This points to a good performance of the bank yearly with a workforce dedicated to
ensure increases which likely correlate with increasing investor confidence in the financial side
of MCB.
40
4.4.4 Five Year Trend in Total Liabilities
FIVE YEAR TREND IN TOTAL LIABILITIES

160%
140%
139.96%
120% 132.15%
121.11%
100%
106.14%
100%
80%
60%
40%
20%
0%
2012 2013 2104 2015 2016
Interpretation:
The total liabilities of MCB also show us an increase over the period specified with the biggest
attached with 2015. We should also note that the deposits in the banking organization have been
increasing yearly. This is a reminder of the bank’s growing deposit power as deposits have a
lion’s share in the liabilities of a bank.
41
4.5 Vertical Analysis- Balance Sheet
The common sized balance sheet is presented below for analysis; the values for total assets, total
liabilities and total equity are equated to 100% and the items included in their totals have been
presented as proportions of 100%.
4.5.1 Five Year Trend for Total Assets
F I VE YEA R TR EN D F OR TOTA L A SSETS

Cash and balances with treasury banks Balances with other banks
Lendings to financial institutions Investments - net
Adva nces – net
31.08% 30.26% 32.29% 31.03% 33.84%
52.58% 55.26% 54.90% 55.49% 51.71%
0.20%
0.16% 0.15%
0.19% 0.15% 0.28%
0.99% 0.26%
0.67%
7.44% 7.30% 0.33% 6.00% 7.03%
4.97%
2012 2013 2014 2015 2016
Interpretation:
As is visible from the Vertical trend for total assets, we can see that the net assets are 54%of the
total assets in the time spanning from 2012 to 2016. They seem to be the biggest part of total
assets. Secondly, the net advances formed a big part as well of total assets at 30% over the years.
Cash and balances with treasury banks are at 6.5% of the total assets. They are in a decent
liquidity position.
42
4.5.2 Five Year Trend for Total Liabilities
FIVE YEAR TREND FOR TOTAL LIABILITITES

100% 3.20% 2.86% 3.72% 3.36% 3.38%
1.47% 0.64% 1.33% 1.42% 1.38%
90%
80%
70%
60%
81.96% 80.36%
50% 89.59% 85.46% 85.49%
40%
30%
20%
10% 13.50%
11.89% 7.42% 8.32%
5.48%
0% 1.49% 1.44% 2.06% 1.36% 1.43%
2012 2013 2014 2015 2016
Bills payable Borrowings Deposits and other accounts Deferred tax l iabilities – net Other liabilities
Interpretation:
The graphical representation shows that 85% portion of the total liabilities are deposits that are
with MCB. The branch managers have been doing a good job so far as the increase in deposits
correlates to their efforts in their job. If we have a look at the borrowings of MCB, we can state
that the trend has been up and down with the highest level at 13.5% in 2015 and lowest at 5.48%
in 2013.
43
4.5.3 Vertical Trend for Total Equity
FIVE YEAR TREND IN TOTAL EQUITY

13.73% 12.82% 17.33%
18.83% 18.58%
0.47% 0.0042
0.0037 0.0036 0.0036
35.25% 37.27%
36.52% 37.02% 38.02%
41.91% 40.71%
36.10% 36.22% 36.66%
8.64% 8.76% 8.16% 7.83% 7.62%

2012 2013 2014 2015 2016
Share Capital Reserves Unappropriated profit Surplus on revaluation of assets - net of tax
Interpretation:
As can be seen, the reserves are the major part of the bank’s equity. The unappropriated profit
comes rests at being the second largest share of total equity. Share capital is around the 8% mark
in terms of total equity. The revaluation has increased over each of the past five years. The
largest gain was made in 2014 and the lowest made in 2013.
44
4.6 Vertical Analysis of Income Statements - Percent of Total Markup and Non-Markup
Income
COMMON SIZE INCOME STATEMENT ANALYSIS

160.00%
140.00%
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
Mark up Markup Net mark Net Non mark Non mark Profit Taxation Profit
earned expensed up markup up up before after tax
income income income expenses tax
after
provisions
2012 2013 2014 2015 2016

Linear (2012) Linear (2013) Linear (2014) Linear (2015) Linear (2016)
Interpretation:
This is based on every item being shown as a percentage of total mark up along with non-mark
up income. The graph portrays mark up being of the highest proportion in every year. The
profitability seems to be on the rise due to the declining trend of markup expenses. Since 2012,
Net markup income has seemingly been very steady with minor fluctuations of which biggest
took place in between 2012-13. The net markup income after provisions has also been on a
decline possibly due to increase in provisioning by the bank. The non-markup income has
increased at a gradual rate since 2012 contributing towards the bank’s better profitability. In
addition, non-markup expenses have also increased over the years. The profit before taxes have
also been following a decreasing trend, owing to rising operational costs of the bank and policies
of the government as can be learnt by the taxes which have been increasing. The profit after
taxes also follows a falling trend. In 2016, lowest proportion of profit after tax was recorded by
MCB.
45
4.7 Ratio Analysis
4 .7.1 Current Ratio = Current Assets/ Current Liabilities
Year 2012 2013 2014 2015 2016

Current 1.113021 1.12331 1.140531 1.144232 1.135858
ratio
CURRENT RATIO
1.15
1.14
1.13
1.12
1.11
1.1
1.09
2012 2013 2014 2015 2016
Interpretation:
The current ratio is a measure of the liquidity for a company. Liquidity is the ability of a firm to
pay its debt obligations in a short term. The position of MCB in terms of this measure has been
very good in recent years with 2015 being the year in which they exhibited the highest liquidity
ratio, almost touching 1.13. It fell a little in 2016, but is still greater than 1 which means the bank
is positioned strongly.
4.7.2 Total Asset Turnover: Total Income/ Average Total Assets*100
Years 2012 2013 2014 2015 2016

Total Asset 6.48% 6.56% 5.11% 5% 4.22%
Turnover
46
TOTAL ASSET TURNOVER
8.00%
6.00%
4.00%
2.00%
0.00%
2012 2013 2014 2015 2016
Interpretation:
The total asset turnover measures the revenue which has been generated from the company’s
total assets. The asset turnover has been falling this may be due to the rate of investments and
borrowings made by the bank. This can have a negative effect on the credit lending by the bank
and ultimately negatively effects the interest income earned on those lending’s by the bank.
4.7.3 Return on Total Assets = Net Profit before Tax/ Average Assets*100
Years 2012 2013 2014 2015 2016

ROA 4.15% 4.13% 4.24% 4.36% 3.5%
RETURN ON TOTAL ASSETS
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2012 2013 2014 2015 2016
47
Interpretation:
The return on total assets measures the percentage of profit the assets of the company have been
able to generate. The ROA is an important measure of a firms’ profitability since investors use
this ratio to see if a company is worth investing in. MCB’s return on assets has followed a steady
trend since 2012, with the trend being consistent till 2015. The ratio falls in 2016, which is
because of declining profits for the bank.
4.7.4 Return on Shareholder’s Equity= Net Profit Before Tax/ Average Shareholders
Equity*100
Years 2012 2013 2014 2015 2016

ROE 35% 34.39% 35.53% 38% 31.2%
RETURN ON EQUITY
40%
30%
20%
10%
0%
2012 2013 2014 2015 2016
Interpretation:
The ROE measures the return generated by the shareholders’ investment. Needless to say, this
ratio is used by shareholders to learn about and evaluate the effectiveness of their investment in
the organization they are interested in. We can sense the ROE being almost constant which bodes
well for the shareholders. Zero volatility in the ratio means safer returns in the future as well for
the concerned shareholders.
48
4.7.5 Fixed Assets Turnover = Total Income/ Total Fixed Assets
Years 2012 2013 2014 2015 2016

Fixed assets 75.92% 93.05% 84.7% 103.47% 86.76%
turnover
FIXED ASSET TURNOVER
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
2012 2013 2014 2015 2016
Interpretation:
This ratio is an indicator for how well the organization manages its fixed assets in order to
generate income from them. In this case, the fixed asset turnover ratio for MCB has remained at
high levels in the past five years, which is a positive aspect for the bank. 2015 was a year which
saw the peak level in 5 years at 105% of the total income. It is still strong even at the rate of 86%
in 2016.
4.7.6 Profit after Tax Margin = Profit after Tax/ Total Income
Years 2012 2013 2014 2015 2016

Profit after 41.93% 41.98% 42.10% 38.13% 36.59%
tax margin
49
PROFIT AFTER TAX MARGIN
44.00%
42.00%
40.00%
38.00%
36.00%
34.00%
32.00%
2012 2013 2014 2015 2016
Interpretation:
The profit after tax margin is a profitability ratio which is used to determine the profitability of a
company. It gives us an idea of the overall profit levels which in turn depict the overall success
of the company. The ratio for MCB has declined over the period of 5 years, which could be
worrisome for the various stakeholders of the bank. Possibly due to the economy being under
strain as well as increased expenses.
4.7.7 Net Advances to Deposits Ratio = Net Advances/ Total Deposits
Years 2012 2013 2014 2015 2016

Net 44% 39.30% 44.17% 44.85% 45.79%
advances to
deposits
ratio
50
NET ADVANCES TO DEPOSITS RATIO
46%
44%
42%
40%
38%
36%
2012 2013 2014 2015 2016
Interpretation:
This is an important ratio is for the bank since it measures the organization’s spread and its
profitability. The spread is the difference between the interest received on advances and the
interest paid on deposits. The advances to deposits ratio is increasing since 2013, being the
highest ever in the 5 five year period which means the bank has enjoyed a greater spread over the
past five years. If this trend continues in the future, then the bank will continue to enjoy greater
profits.
4.7.8 Deposits to Shareholder Equity Ratio = Deposits/ Total Equity (Times)
Years 2012 2013 2014 2015 2016
Deposits to 5.96 6.31 6.25 6.13 6.62
equity ratio
DEPOSITS TO EQUITY
6.8
6.6
6.4
6.2
6
5.8
5.6
2012 2013 2014 2015 2016
51
Interpretation:
The deposits are the bedrock of every bank. It is the foundation upon which the bank bases its
capacity to lend. The deposits to equity ratio measures how many times the deposits equal the
amount of equity. The trend for this ratio has been one of decline since 2013 but greatly picked
up in 2016 posting the highest ratio in period of 2012-16. A very positive indicator of the
financial health of the bank.
4.7.9 Investments To Deposits Ratio = Total Investments/ Total Deposits*100
Years 2012 2013 2014 2015 2016

Investments 73.77% 71.01% 74.26% 81.18% 71.14%
to deposits
ratio
TOTAL INVESTMENTS TO DEPOSITS

RATIO
85.00%
80.00%
75.00%
70.00%
65.00%
2012 2013 2014 2015 2016
Interpretation:
The investments to deposits ratio measures the effectiveness of the bank in efficiently managing
its deposit base. The profitability of the bank depends on how smartly it can invest its earnings.
As the ratio points out, MCB has managed to maintain a steady investment to deposit ratio, with
the highest at 81% in 2015. This drops down to 71% in 2016 possibly due to a change in its
approach towards investments.
52
4.7.10 Earning Assets To Total Assets Ratio = Total Earning Assets/ Total Assets*100
Years 2012 2013 2014 2015 2016

Total 83.65% 85.82% 87.18% 86.52% 85.55%
earning
assets to
total assets
EARNING ASSETS TO TOTAL

ASSETS RATIO
88.00%
86.00%
84.00%
82.00%
80.00%
2012 2013 2014 2015 2016
Interpretation:
Earning assets are defined as assets which earn interest and other types of incomes for the
company. Companies mostly invest their excess funds into earning assets in order to boost
income. The earning assets to total assets define how much of the total assets contribute to the
total income of the bank. For MCB, Around 80% of the total assets earn interest and other
income which is very positive.
4.7.11 Profit Before Tax Ratio = Profit Before Tax / Total Income*100
Years 2012 2013 2014 2015 2016

Profit before 64.125% 62.99% 63.48% 65.17% 60.60%
tax margin
53
PROFIT BEFORE TAX MARGIN
66.00%
64.00%
62.00%
60.00%
58.00%
2012 2013 2014 2015 2016
Interpretation:
The profit before tax margin is the lowest in 2016, at 60%.As 2015 was the best year for the
bank, there were increases in the profit before tax margins in that year, but other than that, it has
been following a declining trend in which 2016 witnessed the sharpest decrease. The declining
trend could be due to lower deposits ratio and rising expenses, which reduce total income and
therefore lower profits.
4.7.12 Return On Capital Employed = Profit After Tax / Capital Employed*100
Years 2012 2013 2014 2015 2016

ROCE 15.24% 15.65% 14% 13.59% 11.65%
ROCE
20.00%
15.00%
10.00%
5.00%
0.00%
2012 2013 2014 2015 2016
54
Interpretation:
The ROCE ratio measures return earned from the capital employed by the firm. Capital
employed is total assets minus the current liabilities. The ROCE for MCB follows a declining
trend, dropping to 11% in 2016. Might be due to increased deposits, which in turn increases
current liabilities there by reducing the ratio.
4.7.13 Dividend Payout Ratio = Cash Dividends/ Net Income After Tax*100
Years 2012 2013 2014 2015 2016

Dividend 56.5% 64.54% 62.90% 71.13% 80.31%
payout ratio
DIVIDEND PAYOUT RATIO
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
2012 2013 2014 2015 2016
Interpretation:
The dividend payout ratio measures the amount of dividends paid to stockholders relative to the
amount of total net income of a company. The payout ratio for trend was around 80% in 2016.
Possibly to increase the demand of shares in MCB
4.7.14 Dividend Cover Ratio = Net Income After Tax/ Cash Dividend (Times)
Years 2012 2013 2014 2015 2016

Dividend 1.77 1.55 1.59 1.40 1.24
cover ratio
55
DIVIDEND COVER R ATIO
1.5
0.5
0
2012 2013 2014 2015 2016
Interpretation:
This ratio measures the times a company can pay dividends out of its current income. It is the
inverse of the dividend payout ratio. For MCB, The dividend cover has been declining recently.
It was at its lowest point in 2016 at 1.2, which means the firm can pay dividends 1.2 times.
4.7.15 Price Earnings Ratio = Price Per Share/ Earning Per Share
Years 2012 2013 2014 2015 2016

P/E Ratio 11.29 14.56 13.99 9.45 12.09
PR ICE EA R NINGS R ATIO
16
14
12
10
8
6
4
2
0
2012 2013 2014 2015 2016
56
Interpretation:
The price earnings ratio is the current market price of a company share divided by the earnings
per share of the company. This ratio measures the inclination of investors to buy the stock of the
company, given the current earnings. The P/E ratio for MCB saw an increase over the five years,
ending on a high in 2016 from the base of 2012. It did take a negative in 2015 compared to 2014
but managed to recover in 2016 possibly due to enhanced investor confidence looking at the
success of 2015 as a good year overall for the organization.
4.7.16 Equity Multiplier = Total Assets/ Total Equity (Times)
Years 2012 2013 2014 2015 2016

Equity 8.44 8.20 8.55 8.86 8.96
multiplier
EQUITY MULTIPLIER
9
8.8
8.6
8.4
8.2
8
7.8
2012 2013 2014 2015 2016
Interpretation:
The equity multiplier is a financial leverage ratio that measures the amount of a company’s
assets that are financed by its shareholders by comparing total assets with total shareholder's
equity. We can witness a rising trend from MCB reaching an all-time high of 8.8 in 2016. This
can only be good because the higher the ratio will correlate with higher company’s assets.
57
4.7.17 Debt Equity Ratio = Total Debt/ Total Equity
Years 2012 2013 2014 2015 2016

Debt equity 7.28 7.05 7.31 7.62 7.75
ratio
DEBT EQUITY RATIO
7.8
7.6
7.4
7.2
7
6.8
6.6
2012 2013 2014 2015 2016
Interpretation:
The debt equity ratio is a measure of the gearing power of the company. MCB is a highly geared
company which makes it riskier due to the piling liabilities. The debt to Equity ratio follows an
increasing trend from 2013 to 2016 being at its highest in the 2016 at 7.4. This means that MCB
could be possibly expanding its operations and a marked increase in its investments could be
reason which would impact the long term profits for the shareholders.
4.7.18 Administrative Expenses To Profit Before Tax Ratio = Admin Expenses/ Profit Before
Tax*100
Years 2012 2013 2014 2015 2016

Admin 55.58% 57.99% 56.26% 52.74% 64.34%
expenses to
profit ratio
58
ADMININSTRATIVE EXPENSES TO PROFIT
RATIO
80.00%
60.00%
40.00%
20.00%
0.00%
2012 2013 2014 2015 2016
Interpretation:
The administrative expenses to profit ratio measures how much percentage of total profit will
contribute towards paying the company’s expenses. The trend remains almost constant from
2012 -15 period but increases to 64% in 2016 could be due to increased labor force or a greater
volume of operations which requires more administration tasks which in turn increase
administrative costs.
4.7.19 Non-Interest Income To Total Income Ratio = Non Interest Income/ Total Income*100
Years 2012 2013 2014 2015 2016

Non-interest 19.08% 21.95% 23.37% 25.18% 26.99%
income to
total income
ratio
59
NON INTEREST INCOME TOTAL
INCOME
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
2012 2013 2014 2015 2016
Interpretation:
The non-interest income to total income ratio measures the percentage this income occupies from
the total mark up and non-markup income. The trend tells us a gradual rise till 2016, which
means it is investing in higher interest earning securities. This is a good sign in helping to
increase the earning capacity for the bank.
4.7.20 Cash To Current Liabilities Ratio = Total Cash/ Current Liabilities*100
Years 2012 2013 2014 2015 2016

Cash to 9.05% 8.80% 6.11% 7.32% 8.54%
current
liabilities
CASH TO CURRENT LIABILITIES
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2012 2013 2014 2015 2016
60
Interpretation:
The cash to current liabilities is a liquidity ratio measuring the amount of cash there is in terms of
its current liabilities. Cash, being the most liquid asset, is important in order to pay off liabilities
as they become due. The trend for MCB has seen an overall decline compared to its base 2012
year. One from 2012 till 2014, where it drops to 6.11%. However, the ratio rises again 2014 and
2015, with cash being at 8.54% liabilities. This points to a strong liquidity position.
61
CHAPTER 5
SWOT ANALYSIS
For a better strategic management, organizations need to go for scanning the internal as well as
the external sources on which the overall business lies. The first and the foremost concern of the
organization are to see its internal capabilities and the things which can be the problem in
achieving their targets, goals and aims. I conduct the SWOT analysis of the MCB Bank and my
findings are here under explained.
5.1 Strengths
a) MCB is the first Pakistani privatized bank and because of its quality management,
marketing, innovation in products and services is performing well in financial market
b) It has established a good reputation in the banking market
c) Strict adherence with the banking procedures requirements, SBP’s prudential regulation
requirements and its SROs and international banking requirement as well as to its own set
policies
d) Strong and very well managed attractive products and services.
e) Better focus on customer services and customization
f) Flexibility with the changing environment
g) Induction of the highly qualified professionals to change overall set up
5.2 Weaknesses
a) Weak organizational culture (need a paradigm shift to improve organizational structure)

b) HR Policies (appraisal, compensation, career planning)
c) Networking problems regarding ATMs
d) Weak MIS interconnectivity among the Division
e) No mobile ATM services in rural areas
f) Most of the time ATM Machines remain out of order
g) No. of employees are not according to the branch needs
62
5.3 Opportunities
a) Information Technology (MIS)

b) Establishing more Foreign Branches
c) Local Setup should be expanded.
d) Internet Banking
e) Some more innovative products and services should be introduced.
f) Centralization
5.4 Threats
a) Downsizing is potential threat for MCB employees and they are losing their confidence
towards bank performance.
b) Fierce competition
c) Changing environment of banking
d) Unstable Govt., Economic and political conditions are a serious threat.
e) Entrance of international banks
f) Latest MIS is available in market whereas MCB is capitalizing in symbols.
5.5 Analysis of Organization with Other Banks

The following table compares the essential items of MCB against other banks
Particulars MCB HBL UBL NBP Allied bank

(2016)
Deposits 795,689,546 1,885,959,026 1,245,791,616 165,7132,405 805,090,074
Advances 364,333,516 748,466,297 537,782,146 668,883,928 330,271,881
Profit after 22,174,145 34,206,254 28,002,302 23,087,260 14,700,136

tax
Total 930,730,166 2,310,913,461 1,498,013,036 1,801,277,896 969,228,931
Liabilities
63
5.5.1 Graphical Representation of Deposits, Advances, Profits & Liabilities with Competitors
a) Deposits
DEPOSITS
1885959026
1657132405
1245791616
805090074
795689546
MCB HBL UBL NBP ALLIEB BANK
b) Advances
ADVANCES
748466297
668883928
537782146
364333516
330271881
MCB HBL UBL NBP ALLIED BANK
64
c) Profit after Tax
PROFIT AFTER TAX
34206254
28002302
23087260
22174145
14700136
d) Total Liabilities
TOTAL LIABILITIES
2310913461
1801277896
1498013036
969228931
930730166

65
CHAPTER 6
INTERNSHIP ACTIVITIES
First week: Account Opening Procedures and my Experience
6.1 A Brie f Introduction
The opening of an Account is the first instance of the establishment of a banker -

customer relationship. The scope of duties carried out by this department include
opening accounts for customer. Issuing cheque books to the customers while also
dealing with customers that make their way to take remittances. In the first instance, the
person who wishes to open an account with the bank has to fill an account opening form
obtained from any branch of MCB at the time of opening an account. The bank officer
tactfully obtains information about character, integrity, responsibility, occupation, and
the nature of the business of the respective customer (KYC).
6.2 Account Opening Procedure

a) Application Form
When opening an account, the customer is asked to fill an account opening form. This
form is provided by the general banking officer or the manager to the customer. The
customer then provides all the relevant personal information in order for the bank to
open the customer’s account.
b) KYC (know your customer)
The KYC is a regulation set by the State Bank of Pakistan, in order to counter the risk
of terrorism and money laundering. The KYC form rates the customer based on his/ her
risk profile and then assigns an appropriate risk rate to the customer.
c) Specimen Card
The SS card is required at the time of account opening and this is used to compare the
signature of the customers with their signatures on their CNIC.
66
This card is an important requirement, since this filters the authentic persons from the
non- authentic persons. The banking officer is required to properly check the signatures
of the customer on the SS card as well the on the CNIC.
d) Account Opening Register
At the time of account opening, the banking officer is required to fill out all the
necessary details onto the account opening register. The register is maintained by the
bank, and is filled with all of the customer’s personal details as provided by him/her.
This is done so that the bank has ready information about each customer and can be
accessed at any time.
6.3 Type s of accounts that are ope ne d
6.3.1 Current Accounts

a) Basic Banking Account
b) Business Account
c) New Foreign Currency Account
d) Call Deposit Receipts
6.3.2 Saving Accounts

a) (PLS) savings Account
b) Smart Savings Account
c) 365 Savings Gold Account
d) Khushali Bachat Account
e) Saving Extra Account
f) Savings Maximizer Account
g) Salary Maximizer Account
h) 365 Savings Accounts
i) Smart Saving Foreign Currencies
j) New foreign Currency savings Account
N o t e: Al l o f t h ese a ccoun ts a re men ti oned o n t he a ccoun t o p en ing fo rm o f MC B .
67
6.3.3 My Experience in Account Opening
The account opening department is essential to the operations of the bank as it is

responsible for garnering customers to the bank. This department fell under the domain
of Miss Shahista who was the GBO (Services) in my 1711 branch. The branch
operations manager also encouraged me to spend my first week here. Here, I learned the
basic requirements for account opening. The different types of account which were
opened in my branch were:
a) Current Account
b) Basic Banking Account
c) PLS Savings Account
The basic requirements for the aforementioned accounts are the same. The complete
information of the customer as per CNIC is provided, along with a copy of CNIC, and
the details about the customer’s next of kin. Other than these basic requirements,
employed persons are required to provide their employers contract and other relevant
proof of employment. In case, of illiterate persons two passport sized pictures are
provided for proper identification. Such an account is then called a Photo account.
6.3.4 Names of Accounts:
a) Individual
b) Joint stock Companies
c) Trust Accounts
d) Account opened in Name of Minor
e) Sole Proprietorship
f) Partnership
g) Clubs, Societies and Associations
In My Second, Third and Fourth Week
6.4 Mcb Clearing Department
MCB along with their daily business activity also provides the facility of collecting
credit claims for customers i.e. when a customer deposits a cheque or draft for
68
collection, by another bank, the bank collects this instrument on the behalf of its
customer through clearing. Similarly in case of payments, the bank makes the payment
through clearing for the instruments (cheque or draft), which are given by its customers
for his obligation fulfillment customer of some other bank. The clearing process is
supervised by the SBP (State Bank of Pakistan)
6.4.1 Types of Clearing

There are two types of clearing.
a) Inward clearing
b) Outward clearing
a) Inward Clearing
This refers to the process whereby cheques drawn on MCB branch deposited by account
holders of other banks into their own bank accounts. After wards these cheques are
presented by other banks to MCB bank ltd for clearing and involve the outflow of funds
from the bank. Any cheques that faces dishonor is called “inward clearing returns”
b) Outward Clearing
A process whereby cheques are drawn on the branches of other banks and come to be
deposited by the account holders of the branch into their accounts. Such cheques are
forwarded to other banks for clearing and include the influx of money to the bank.
Cheques subjected to dishonor are known as “outward clearing returns”.
6.4.2 Clearing Function
The process includes the involvement of the National institutional Facilitation

Technologies (Pvt) ltd. (NIFT) body corporate whose purposes is to collect such
cheques, have them sorted and ensures that the same are
received by the relevant bank on the next day.
69
In performing its clearing function, NIFT acts as an intermediary between the branches
of different banks. NIFT collects the outward clearing bundles from the branches, sorts
them and delivers to the branches on which the cheque are drawn.
6.4.3 Inward Clearing Returns
An instrument will be considered dishonored if any irregularity is found during the

scrutiny process. Any instrument that is found to be forged or otherwise fraudulent or
due to which instrument cannot be honored shall be returned.
6.4.4 Outward Clearing Returns
On receipt of cheque, the customer accounts shall be given temporarily credit (against
Clearing). At the day end the counter staff shall prepa re a schedule which includes all
instruments received during the day. The bundles for the day will be placed in a sealed
envelope in time for its collection by the NIFT courier.
The cheques returned from NIFT are received by courier next day. The concerned
officer shall ensure that the NIFT seal is intact and agree totals of the schedule with
those of the instruments. Once amounts are agreed, the returned cheques shall be
marked in the system whereby automatic debit shall be given to the customers’ account s
which were previously credited, when instruments was deposited. Permanent credit
shall be given to the customer’s account. If instruments are not returned drawer
From NIFT the following return memo attach with the cheque in case of not clearing
under such reasons.
The format of return memo is given below:
a) Not arranged for

b) Amount in words and figures differs
c) Bank discharge irregular
d) Cheque is mutilated
e) Cheque postdated/out of date
f) Clearing stamp required
g) Account closed
70
h) Effects not cleared please present again
i) Insufficie nt funds
j) Title of account required
k) Second/third signature required
l) Drawer’s signature incomplete/differs/required
m) Non –resident A/c form A- 7 required
n) Payee’s endorsement irregular/ille gib le/required
o) Payee’s endorsement irregular, require Bank’s conformation
p) Alteration in date /figures/words require drawer’s full signature
q) Funds drawn against not yet received; present again
r) Drawer deceased
s) Cheque incomplete
t) And many others reasons
6.5 My Experience in Clearing Department
Clearing is done by Miss Anum Sabir whose work was overseen by the branch operations
manager. She performed various tasks such as collecting the cheques, issuing checkbooks to the
customers as well. In my first week with Miss Anum, I was asked to observe and learn the tasks
she performed. I was never allowed to sit the system. After 5 days, I was making entries in the
intercity Clearing Register. I used to help her calculate the withholding tax of a customer along
with helping her in calculation of the daily balancing of the bank and paste that in the daily
balancing file.
6.6 Remittance Department
6.6.1 Introduction
Funds transfer facility or remittances of funds are one of the functions of the banks all
over the world. Remittances through banking channels save time, costs less and
eliminate the risks involved in physical transportation of money from one place to
another.
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It can be defined as transfer of funds from one bank to ano ther either locally or
internationally, in local or foreign currencies are generally referred to transfers of
money by foreign workers to their home countries. Remittance is playing an increasing
larger role in the economics of many countries. Globally remittances contribute to
economic growth and to the livelihood of needy people. Moreover remittance can also
promote access to financial services for the sender and recipient.
6.6.2 Types of Remittance

There are two types of remittance
a) Inward remittance
b) Outward remittance
a) Inward Remittance
In which, branch receives message or instruments of funds, transferred from some other
bank or branch of the same bank is called inward remittance.
b) Outward Remittance
In which branch sends messages or instruments of funds transferred to some other bank
or branch are called outward remittance.
6.6.3 Local Currency Remittance Instruments
a) Demand Draft
b) Pay Order
Demand draft and pay order are not very different instruments these are written orders,
drawn by one branch of a bank up on another branch of the same bank, or upon other
bank under special arrangements to pay a certain sum of money to or to the order of a
specified person. These are negotiable instruments. Legal provisions at endorsement,
collection and payments in due course are similar to those as for cheque and other
negotiable. Difference in both these is minor as Demand Draft (DD) is neither issued
payable to bearer nor drawn on branches situated within the same city while Pay order
is prepared for branches outside the city means with in the country.
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6.6.4 Payment
The draft/ order should be presented by the payee to the collecting banker for payment,
Following is the process of analysis which must be followed,
Must be drawn against the branch to which it was first presented and it cannot be more
than six months old It must not be maimed and no kind of overcutting/writing should
form part of the instrument. Identification of the payee is a priority. GBO must afyt er
confirmation enter details in the system, fulfill the transaction and put the posted stamp
on it. They must then put their sign on it and also get it signed from Branch Operations
Manager and recorded for record keeping.
6.6.5 My Experience in Remittances Department
Remittances were also handled by Mrs. Anum Sabir but she never let me have any practical
experience with regards to remittances.
6.7 Cash Department
Cash department owes its’ importance to the fact that it is a major point of contract between the
bank and the customer, the bank’s most valued relationships. This department is the showcase of
the bank and conveys the first impressions about the bank’s commitment to professionalism in its
system and procedures and to courteous and efficient customer service. This department
performs the function of receipts and payments.
6.7.1 My Experience in Cash Department
Cash department is a very sensitive department and no one is allowed to enter in this department
except the Branch Operations Manager. The room was locked with a keypad installed on the
door to ensure no one can get in. So here I will mention only my observation regarding this
department and information which I have collected from the BM. This department requires full
activeness and concentration. In this department there was only one cashier named Mr. Ali who
is responsible almost for all affairs of cash departments. I observed how he from time to time
with the Branch operations Manager maintained the ATM machine update; tried to complete the
customer’s requirements on time. The job of cashier is very thorough according to my
73
experience in this department. He has to sort out the case before leaving the branch at the end of
the day. In cash department many registers are maintained for updating the daily transactions.
74
CHAPTER 7
CONCLUSION
7.1 Conclusion
On the basis of my experience during my internship, detailed study of the organization and
complete financial analysis, I am able to write down the conclusion of this report. It can be said
that MCB Bank Limited is an organization well managed with organizational structure and
efficient employee base; due to its growth, it is well on the path of a bright future. I have found
that MCB Bank is fully devoted to attain what it has said in its mission statement.
MCB Bank has the capability to face the challenges of the internal and external environment as
can be witnessed that in spite of external crises, the bank has maintained its growth rate. The
bank displays extraordinary results in both financial and non-financial terms. With the banking
industry recovering at a steady pace since the 2010 crisis, MCB ensured itself availing all
possible positive opportunities and delivered substantial profits ensuring sound asset growth as
2015, its best year in the period from 2012-16. The things I have observed during my training in
the branch which badly affect the efficient working of the bank are: No. of employees in the
branch are according to the needs of the branch. As the business of the bank is growing there will
arise a need to hire more professionals as the nearby branch of previously NIB is now merged
with MCB and the branches are going to merge as well. There is some rotation of the officers in
the different departments in case of absence of an officer. Sometimes customers have to face
difficulties in terms of photocopying as the lower staff is irregular and non-serious. No training
programs are conducted for the efficient working of the employees. Work load on an employee is
very much which affects his/her efficiency e.g. Miss Anum Sabir, who had most of the
responsibilities including locker operating responsibility. No attractive incentives are given to
motivate the employees in the operations however those in sales are relatively much better off
and motivated. Salaries of employees are a bit less attractive compared to the growth in the
profits of the bank.
Overall Bank's outstanding performance resulted in improved efficiency and profitability. Finally
I conclude that, by keeping entire picture in the mind that MCB Bank Limited is doing decent
business overall, with a powerful financial base but need to make the policies of the organization
more effective which will ultimately make the organization more reliable and strong.
75
7.2 Recommendations
Following are some of the suggestions and recommendations that I want to give on the basis of
shortfalls / weaknesses found in the bank.
a) Increase in Salaries
MCB Bank is making good profits but pay comparatively lesser salaries to its employees as
compared to its competitors. I noticed many employees complaining about the salary packages
offered and how there was a lack of growth on merit. Many people felt they deserved to be
higher based on their dedication and experience.
b) Rotation in the Nature of the Work
Most of the bank employees have mastered the art of one particular job. My GBO Operations
had been doing the same job since the last 7 years. I feel that by switching roles and seats for
some time will make the work force diverse and multi-faceted rather than one dimensional. The
same tasks become monotonous and it can lead to a chance of increased risk of error hence
rotation should take place.
c) Promotions
I feel the bank’s internal system for judging employee’s productivity is relatively weak. This
caused the employee’s being unsatisfied with their job and organization. Merit should be the
number one criteria for officers emerging at the top level of a bank.
d) Training
Every year some of the employees should be sent for training abroad and people should come
and work here as well. This will increase the confidence levels of employees and give them
exposure in life. It is the job of the organization to make its employees better as they reflect the
level of organization. There should be online courses that should be accessible from the system
so that the employees can specialize and give online tests. They should be allotted at least one
hour of study if they are interested in a particular subject related to banking. The purpose should
be to educate the employees and make them look forward to embracing the technological
challenges of the future.
e) Incentive for the Employees
Bank should give some incentives to its employees in order to remove the resentment between
lower and higher grade officers. Such system should be designed that every employee who has
76
some problems with his officer can communicate to the higher management and some steps must
be taken to improve that.
f) Performance and Reward
Smart, educated, skilled, well-spoken staff personnel should be rewarded and appreciated, while
on the other hand lazy, lethargic, ill-mannered employees must be warned and penalized. It is
therefore suggested certain checks may be introduced in MCB to increase efficiency through
reward and punishment system.
g) Investment Strategy
MCB’s will lead over its rivals if they emphasizes more on its aggressive investment strategy
and capital strength.
h) Efficient Cost Cutting Policy
Efficient cost-control procedures may limit the growth of operating expenses leading to higher
operating profit margin. Banks poorly manage their operating expenses. Further improvement
may be necessary to enhance ROA development.
i) Borrowing from Other Banks
The reliance on borrowing has to be reduced and the increase in deposits should be the main aim.
j) Period of Internship
Lastly, period of internship should be divided into the number of the departments of the MCB
Bank Limited. The internee should be given timetable mentioning the number of the days he has
to work at different places in the bank. On the very 1st day in each department, officer should
deliver lecture to the internee about the functioning of the concerned department.
7.3 My Overall learning
During my internship period, I learned about all banking activities related to above mentioned
departments. I performed all the duties very well which are assigned to me. I worked and
observed the working of the five departments Account department, clearing department,
Remittance department, Advances Department, Cash Department in the bank and it turned out to
be a great learning experience. I also managed to get along well with the employees and in no to
time, I felt like I belonged there. I got to sit with Miss Wajeeha Usman quite often and learnt a
lot about the sales department in the bank. I was also given the opportunity to visit two places for
the purposes of deposit base building namely Bonera Enterprises in the Siddiq Trade Center and
77
the Punjab Social security Office who wanted to keep its vast pension scheme deposits in banks
that offered the best rate of return. I got to interact with wonderful people, made important
contacts and portrayed a very good image of my institution through my demeanor. Whatever I
have managed to learn, I feel will greatly aid in the path of grooming myself and prepare myself
for the competitive world that awaits us. I would once again like to thank each and every person
right down to the teaboy named Azam. Miss Anum, Sir Asim, Miss Shahista, Mr. Ali and most
of all Miss Wajeeha who made my internship memorable and it is with a heavy heart I bid
farewell to these people. Overall the branch environment was very well maintained. There was
no friction between the upper management with the lower management.
I will conclude this report on the remarks that, notwithstanding the difficult economic conditions
of the country. MCB Bank Limited has journeyed to make progress in its operations and achieve
sound financial results. On the base of the financial analysis presented in this report, it is
revealed that Bank has coped well with the challenges in the financial years 2012-16 and met
stakeholder’s expectations while ensuring the positive returns on their investment in the Bank,
both in terms of wealth and trust.
78
References
MCB Annual Report (2016). Retrieved from https://www.mcb-bank.com/annual_report_2016
79

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DECLARATION

I, Subhan Basit, Roll No. 1267-BH-BAF-2013, student of Bachelor (Hons.) in Business

Date: ______________________ _______________________

In the name of ALLAH, the most kind and most merciful.

1.1 History and Background of MCB

1.2 Incorporation of MCB

1.3 Nationalization of MCB

1.4 Privatization of MCB

1.5 Mansha Group Acquisition of MCB

Mian Mohammad Mansha is the Chairman of the group as well as of MCB.

1.6 Vision Statement

1.7 Mission statement

1.8 MCB’s Values

1.9 Corporate Profile

1.9.1 Board Of Directors

Mian Muhammad Mansha Chairman

Tariq Rafi Director

Shahzad Saleem Director

Mian Umer Mansha Director

Ahmad Alman Aslam Director

Noor Hizam Bin Hashim Director

Source: Annual Report MCB (2016)

Branch General Banking General Banking

Source: Author’s own observation

Source: Annual Report MCB (2016)

1.11 MCB’s Core types as an organization

These are five types of banking offered by MCB

1.12 Products and Services

1.12.1 Consumer Banking

1.12.2 Deposit Accounts

a) Khushali Bachat Account

c) Pak Rupee Savings Account

d) Pak Rupee Current Account

g) Foreign Currency Savings Account

h) Foreign Currency Current Account

i) MCB Foreign Currency Term Deposit

j) Dollar Khushali Account

1.13.1 MCB Business Sarmaya

1.13.2 MCB Car 4 u

1.13.3 MCB Pyara Ghar

1.13.4 Easy Personal Loan

1.13.5 MCB Master Card

1.13.6 MCB Rupee traveler’s Cheques

1.14 Corporate Banking

a) Cash Management Services

b) Working Capital Loans

d) Trade Finance Services

a) Cash Management Services

b) Working Capital Loans

d) Trade Finance Services

1.15 Online Services

a) MCB ATM Services

b) MCB Mobile Banking

c) MCB Call Center

d) MCB Smart Card

e) MCB Debit Card

a) MCB ATM Services

c) MCB Call Center

d) MCB Smart Card

e) MCB Debit card

1.6 Islamic Banking

 Al-Makhraj Saving Account

Date: _