Muslim Commercial Bank Limited, incorporated in 1947, has a solid foundation over 63 years in Pakistan, with a network of over 1,043 branches, over 850 of which are Automated Branches, and over 450 MCB ATMs in 41 cities nationwide and a network of over 12 banks on the Mnet ATM Switch.
MCB`s operations continued to be streamlined with focus on rationalization of expenses, re-alignment of back-end processing to increase productivity, enhancement of customer service standards, process efficiency and controls. The Bank has taken the lead in introducing the innovative concept of Centralizing Trade Service in the country by providing centralized foreign trade services to branches with a view to improve efficiency.
During my internship in MCB, I worked in different departments like Retail banking, Foreign Trade (LC Department) and Credit (Advances) department. I also learnt about different functions performed by Remittances, Clearings and Customer Service. I also leant about how bank correspondence with their customers, within branches, within different banks and the banks of other countries. Bank correspondences within branches through Internet, with other banks through NIFT (National Institution Facilitation Technology), and internationally via SWIFT (Society of World Wide Institution Facilitation Technology).
I also leant about documentation requirements and record keeping for different activities and processes, especially the documentation of LC and Credit facilities.
TABLE OF CONTENTS
Overview of the organization 09
History 09
Head office 10
Product lines 11
Deposit products 11
Investment products 17
Loans 18
Credit cards 20
Competitors 21
Organizational structure 23
Organizational hierarchy chart 23
Comments on structure 24
Internship Activity plan 24
Branch introduction 24
Employee's information 25
Training time 25
Departments 25
Training Programs 27
Tasks 28
Project 28
Management functions 31
Planning 31
Organization planning strategies 31
Decision Making Process 31
Organizing 32
Organizational design 32
Managing change and innovation 32
Managing IT and communication 33
Leading 34
Leadership style 34
Power and politics 34
Motivation 35
Controlling 35
Controlling approach 35
Controlling standards 35
controlling of operations 36
Controlling of performance 36
Controlling of information 36
Critical analysis 37
SWOT analysis 44
Conclusion 48
Recommendations 48
References 49
Annexes 49
1. Overview of the organization
1.1. History
MCB is one of the leading banks of Pakistan with a deposit base of Rs. 368 Billion and total assets over Rs.500 Billion. Incorporated in 1947, MCB soon earned the reputation of a solid and conservative financial institution managed by expatriate executives. In 1974, MCB was nationalized along with all other private sector banks.
The Bank has a customer base of approximately 4 million, a nationwide distribution network of over 1,000 branches and over 450 ATMs in the market.
During the last fifteen years, the Bank has concentrated on growth through improving service quality, investment in technology and people, utilizing its extensive branch network, developing a large and stable deposit base.
Vision Statement
To be the leading financial services provider, partnering with our customers for a more prosperous and secure future.
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 with confidence in us.
Our values
INTEGRITY
We are the trustees of public funds and serve our community with integrity. We believe in being the best at always doing the right thing.
RESPECT
We respect our customer's values, beliefs, culture and history.
EXCELLENCE
We take personal responsibility for our role as leaders in the pursuit of excellence.
CUSTOMER CENTRICITY
Our customers are at the heart of everything we do. We thrive on the challenge of understanding their needs and aspirations, both realized and unrealized.
INNOVATION
We encourage and reward people who challenge the status quo and think beyond the boundaries of the conventional. Our teams work together for the smooth and efficient implementation of ideas and initiatives.
1.2. Head office
In 2005, the management of the bank abbreviated its name from Muslim Commercial Bank Limited to MCB Bank Limited to explore international markets; they were facing resistance due to the word Muslim especially from Western Countries to avail license. In 2008 the head office of MCB was shifted from Karachi to Lahore in a newly constructed building, namely MCB House located at Sharea Ghous-ul-Azam, commonly known as Jail Road.
PRESIDENT ATIF ASLAM BAJWA
Lahore, 16 May: MCB Bank's Board of Directors is pleased to announce that Mr. Atif Aslam Bajwa would be taking over from Mr. Aftab Manzoor, as the President of the Bank.
1.3. Product lines
1.3.1. Deposit products
SAVINGS 365 GOLD
The higher you save, the higher you go.
MCB Savings 365 Gold Account offers you a wide range
of attractive profit rates.
KEY FEATURES
The higher your balance, the higher your rate.
Profit calculated on daily basis.
SAVINGS XTRA
Grow with MCB Extra by saving more and earning greater profit.
MCB Savings Extra Account offers you a wide range of attractive profit rates.
KEY FEATURES
The higher your balance, the higher your profit.
Now avail attractive rates up to 8.5%.
Profit calculated on monthly basis.
SMART DOLLAR ACCOUNT
Discover a sensible solution that helps make more of your dollar savings.
MCB Smart Dollar Account is a sensible way to maintain or grow your
US Dollar deposit across USD Current, Savings or Term Deposits.
KEY FEATURES
USD Current, Savings and Term Deposit accounts.
Competitive profit rates.
Attractive incentives being offered, if you maintain the minimum amount of USD 10,000/- or above.
SAVINGS ACCOUNT
Start saving and discover a habit that's worth getting into.
MCB Savings Account offers you one of the most suitable ways to manage
your hard-earned money. So start saving and earning profit today.
KEY FEATURES
Low monthly average balance requirements.
Profit paid into your account every six months.
CURRENT ACCOUNT
What are you waiting for? Race and be ahead.
Discover the quick, easy, and convenient way to manage and use your money with an MCB Current Account.
KEY FEATURES
Low minimum balance requirements.
Unlimited cash deposit and withdrawal facility at hundreds of branches nationwide.
CURRENT LIFE ACCOUNT
The coverage you need for the life you lead.
MCB Current Life gives you the peace of mind of comprehensive
life insurance in a current account and fits right into your lifestyle.
KEY FEATURES
Open a Current Life Account with just Rs.1, 000.
Free comprehensive life insurance coverage.
No joining fees on Debit/ATM Card.
BUSINESS ACCOUNT
An upwardly mobile way to bring down costs on your way up.
MCB Business Account lets you build your business through the
accrued savings from discounted transaction fees and more.
KEY FEATURES
Higher the balance, the higher the number of free transactions.
Open a Business Account with Rs.50, 000 only.
Unlimited free cash deposit and withdrawal facility at hundreds of branches nationwide.
FOREIGN CURRENCY ACCOUNT
Enjoy the confidence of operating an international account, locally.
MCB Foreign Currency Account offers you the option of earning
attractive returns on your Foreign Currency Investment.
KEY FEATURES
Open your account in US Dollar, UK Pound Sterling, or Euro.
Open for as little as US$ 500 or equivalent.
SPECIAL RUPEE TERM
Make the most of your time with lucrative term deposits.
With a wide range of choices and tenors, you can open one or more
term deposit accounts that best suit your current or long term needs.
KEY FEATURES
Highly attractive profit rates.
Multiple tenors from one month onwards.
1.3.2. Investment Products
DYNAMIC CASH FUND
KEY FEATURES
No Entry and Exit charges at the time of investment or withdrawal.
Minimum investment amount is as low as Rs. 50,000/- for Growth Units and Rs. 100,000/- for Income Units. Further re-investments can be made with as little as Rs.1, 000/- only.
DYNAMIC ALLOCATION FUND
MCB Dynamic Allocation Fund (MCB DAF) is an open-end asset allocation fund managed by MCB AMC which allows 0-100% exposures into debt or equity as per market conditions and discretion of the fund manager. The aim of the fund is to provide investors with a high absolute return.
FEATURES & BENEFITS:
Superior returns relative to stock market at a higher risk
No Exit charges are applied at the time of withdrawal. One time front end load of 3% is applied at the time of investment.
1.3.3. Loans
AUTO LOAN
DRIVE YOUR WORTH:
Life in the fast lane can be really slow without a car. MCB makes it a breeze to finance/lease your new/used car.
Features & Benefits:
Option for financing or leasing
Financing tenures from 1 to 7 years
Option for new as well as used cars
Mortgage
FEATURES & BENEFITS:
Lower mark up rates
Financing up to 80% of the value of your house/apartment
Personal Loan
Features & Benefits:
Speedy loan approval.
No guarantor / security / collateral required.
Borrow up to Rs.1, 000,000/-.
1.3.4. Cards
Smart card / DEBIT CARDS
MCB now brings you MCB Smartcard -a secure and convenient instrument of payment with unmatched functionalities. It provides 24-hour direct access to your bank account.
PURCHASING
BILL PAYMENT
FUNDS TRANSFER
24 HOURS CASH WITHDRAWALS
BALANCE INQUIRY
MINI STATEMENT
This service can be availed via any of the following:
At the largest nationwide network of MCB ATMs.
By using the MCB Mobile Banking facility.
1.4. Competitors
COMPETITORS
The era of nineties was the climax of privatization, deregulation and restructuring in the domestic banking industry and financial institutions. The Muslim Commercial Bank was the first bank to privatize. Followed by ABL, UBL and HBL.
Following is the list of those banks which are thought to be a Competitors of Muslim Commercial Bank Limited.
Public Sector Commercial Banks
National Bank of Pakistan
The Bank of Punjab
The Bank of Khyber
Local Banks
Allied Bank Limited
United Bank Limited
Bank Al-Falah Limited
MCB Bank
Habib Bank Limited
My Bank Limited
PICIC Commercial Bank Limited
Faysal Bank
Soneri Bank Limited
FORIGN BANKS
ABN Amro Bank
Al baraka Islamic Bank
American Express
The bank of Tokyo Mitsubishi
CITI Bank
Credit Agricole Indo Suez
Deutsche Bank
Doha Bank
Habib Bank A.G. Zurich
Corporation
Mashreq Bank PJSC
Oman Bank
Rupali Bank
Standard Chartered Bank
SPECIALIZED BANKS
Zari Tarqiati Bank Limited
Industrial Development Bank of Pakistan.
Organizational structure
Organizational hierarchy chart
Comments on structure
A hierarchical organization is an organizational structure where every entity in the organization, except one, is subordinates to a single other entity. This arrangement is a form of a hierarchy. In an organization, the hierarchy usually consists of a singular/group of power at the top with subsequent levels of power beneath them. This is the dominant mode of organization among large organizations; most corporations, governments, and organized religions are hierarchical organizations with different levels of management, power or authority. For example, the broad, top-level overview of the general organization of the Catholic Church consists of the Pope, then the Cardinals, then the Archbishops, and so on.
Members of hierarchical organizational structures chiefly communicate with their immediate superior and with their immediate subordinates. Structuring organizations in this way is useful partly because it can reduce the communication overhead by limiting information flow; this is also its major limitation.
3. Internship Activity plan
3.1 Branch introduction
Name of Branch: MCB Bank Limited Rahim Yar khan Br.
Branch Code: 1447
Branch Manager: Muhammad Tariq
Operation Manager: Mrs.Khurshida Rasheed
Clearing Officer: Miss Shazia
3.2 Employee's information
There are 25 employees of all level. Mr.Tariq (Branch Manager), Mr.Shakeel Sahib (Operation Manager), Mr. Salman Ashraf (In charge Credit), Mr. Tariq khan (In charge foreign Banking), Mr. Amir Sahib (account opening officer Deposit), Mr. Rana Naeem (In charge Leasing department) are the main people.
3.3 Training time
Starting and ending dates of internship
Starting Date Ending Date
Nov 01, 2010 Dec 31, 2010
3.4Departments
CLEARING DEPARTMENT
The Bank is the member of the Clearing House and receives Cheques, demand drafts and other negotiable instruments for presentation of its payment by the branch of a drawee bank located within the city other than MCB. The proceeds of the clearing instruments are credited into the account of the customer. The clearing facility is available on all working days.
Wherever the clearing facility is both available or the drawee institution is not the member of clearing house the Bank receives Cheques, demand draft or negotiable instruments for collection and upon receipt of payment from the drawee the same is credited into the account of the customer. Clearing may be outward or inward.
Foreign exchange department
import
This department provides the facility to their customer to import machinery or products form other countries. It is necessary for the importers to have the license, which is issued by the chief controller of imports and exports. Before obtaining an import license the importer must be registered with the chief controller of import and export. For having license, an individual or firm submits the application through his bank.
Required Documents
Filled application form for registration
Copy of CNIC of applicant
NTN number of applicant issued by Income Tax Department
In case of firm or company, the Memorandum and Article of Association should attached
EXPORT
The export means to ship the goods and services of home country to other country. The seller of such goods and services is referred to as an "Exporter" who is based in the country of export. Usually the exporter does not rely on the credit of banker in the country of importer, and insist on a confirmation form a banker carrying on business in his own country. Thus this department of a bank helps the exporters to settle down their financial affairs. For exporting it is necessary for exporter to get export license form the chief controller of import and export after registration.
4. Training Programs
Detailed description of my Work
retail/general banking
open different accounts of different people
During my internship in general banking, I opened many accounts of different people. Some of them are salaried person while some are business men. Some want to open Current Account, some Saving Account and some desired to open Basic Banking Account. There is a little difference in documentary requirements of salaried and business person accounts.
Account Opening;
Account opening is an agreement in which customer offers his funds and bank accepts these funds, therefore the nature of relation between a banker and customer is of a contractual, one and all the conditions applicable to this contract act are also applicable.
5. Management functions
The four management functions are
5.1Planning
5.1.1Organization planning strategies
Nearly every bank executive accepts the intrinsic value of strategic planning and tries to engage in planning to some extent. For such a common management exercise, however, it is widely misunderstood and often poorly executed.
Strategic planning is a continuous executive management activity that enfolds virtually every aspect of a bank's operation. "Planning requires thinking.
Information-gathering phase.
Good strategic planning starts with complete data, including financial information, market data and peer group comparison data. In-depth interviews with bank officers help develop an understanding of the bank's day-to-day operating environment.
Directors/Senior Management
Nothing about strategic planning is easy Data collection and analysis requires time, attention to details and a willingness to ask the hard questions. The planning phase takes commitment and a good measure of business sense, enhanced by imagination. Implementation does not happen without discipline, drive and determination. For effective follow-through, dedication and the ability to honestly evaluate results are necessary.
EVOLUTION OF STRATEGIC PLANNING
Nearly every bank executive accepts the intrinsic value of strategic planning and tries to engage in planning to some extent. For such a common management exercise, however, it is widely misunderstood and often poorly executed. It is no wonder, considering that strategic planning is a continuous executive management activity that enfolds virtually every aspect of a bank's operation. "Planning requires thinking. You have to step back and look forward," says Wiley.
Information-gathering phase.
Good strategic planning starts with complete data, including financial information, market data and peer group comparison data. In-depth interviews with bank officers help develop an understanding of the bank's day-to-day operating environment.
Strategic planning phase.
The next phase begins with the board of directors setting the strategic direction for the bank, based on the information collected and a common vision for the bank's future. The board and the CEO craft a mission statement and, with the input of senior managers, devise goals to support the mission.
Documentation phase.
The strategic plan is then committed to writing, copied and bound for frequent reference.
Implementation and follow-- up phase.
Measurement criteria should be devised for each of the four disciplines. Traditionally performance measures have been applied only to financial operations. However the practice of strategic planning has evolved to the point where it is possible to objectively measure performance in the other three disciplines as well, yielding a more reliable basis for judging the progress of a strategic plan.
Ultimately the success of the strategic plan rests on tireless attention to the implementation and follow-up components.
5.1.2Decision Making Process
Following are the decision making processes.
Risks and alternatives
The staff projection is an outlook for the economy's most likely path. There is, of course, much uncertainty around this outlook, and the economic model is used to assess the main "risks" to it.
Regional survey and forecast
Information on economic activity gathered from industry contacts across the country provides a very different lens through which to view the economy.
Four times a year, regional representatives visit about 100 companies. They ask a set of standard questions on past and expected future sales growth, investment intentions, inventories, employment plans, wage growth, and prices.
Review of indicators of inflation and capacity pressures
This review includes indicators of activity and capacity in the goods, labor, and real estate markets, as well as various measures of wage and price inflation, and measures of inflation expectations.
Money and credit
The economic model used in the staff projection focuses on the links from interest rates to spending by households and firms. Information on various holdings of money and credit provide another view of what consumers and firms are doing and planning to do.
The challenge for the staff is to separate the genuine signals about economic activity and inflation from volatility caused by other factors. Regular contact with financial institutions provides useful insight into developments that appear to be affecting the growth of money and credit. Information is also obtained on credit spreads in bond markets and on any changes in the conditions under which banks are lending to businesses and households.
Financial market expectations
The Financial Markets Department assesses market expectations for interest rates; in particular, what the markets expect the Bank to do with the key policy rate, and what the U.S. Federal Reserve is expected to do at their next few meetings.
5.2Organizing
5.2.1Organizational design
Branch Manager/ A.V.P
Branch operation Manager
Customers Services Department
Clearing Department
Bills/ Remittance Department
Agri. Credit Department
Accounts Department
Retail Banking Department
Account opening Department
Cash/Deposit Department
5.2.2Managing change and innovation
Banking wilt never be the same. We are in the midst of one to the most dynamic periods in modern banking. These are anything but ordinary times. Given the turmoil, how do you manage during this period? How do you make sure that you and your bank stay focused in these turbulent times?
Here are eight steps you can take to manage the change in a positive way:
Change your attitude
This is important, because so many bankers are mired in all that has gone wrong, and are having difficulty working through their negativity. Before you can truly build a new plan for your bank, you need to think positively about the industry and where it is going.
Start with a guiding principle
This is critical - you need a mantra, such as "only the most informed and profitable will survive and prosper." This means that those banks that work from quality and detailed data and information on profitability will be successful, and that a profitability focus should be the driving force for a successful bank, differentiating it from a bank that is not.
Collect lots of quality data
This is a time to make decisions that are data-based and not gut-based. During times of change, emotions are too high, and it is important to look at solid data. Set up a top-notch
Isolate the problems
Ask yourself whether most of management or tots of staff are focusing their jobs and time on the problem areas. If you find that most of the attention of management is on the problems, then that needs to be adjusted. Think about all of the things the bank does well, all of the reasons why customers chose it and all the good things the bank has to offer to become successful going forward.
Ask the right questions
That is management's job. Keep asking "why?" You are running a business. Think like a businessperson, and ask all the right business questions:
Start initiatives
Challenging times are the best times to start new initiatives. Do not wait for things to get better. Start now. From your database, find those areas which have the greatest potential for positive success and which align with your guiding principle.
Get help
Often it is hard to see things clearly when you do not look outside of your bank. So get help. Work with providers that have a broader perspective on the industry and may be able to show you new concepts that might not have come internally. Ask for help and be open to outsiders giving you new ideas.
Do the "right" thing
This is certainly the optimal time to be thinking about what is the right thing to do. This past era of "whatever" needs to be replaced with a new era of rational analysis coupled with an understanding of the implications relative to doing the "right" thing. Managing change means combining analytics with decency, so ask yourself what the right thing is, and when it makes sense from a business perspective, then do it.
Managing IT and communication
Communications management is the systematic planning, implementing, monitoring, and revision of all the channels of communication within an organization, and between organizations; it also includes the organization and dissemination of new communication
directives connected with an organization, network, or communications technology. Aspects of communications management include developing corporate
5.3Leading
5.3.1Leadership style
The inspirational leader feels passionately about the vision and mission of the organization. He or she is also able to share that passion in a way that enables others to feel passionate, too. The nature of the vision and mission is critical for enabling others to feel as if their work has purpose and meaning beyond the tasks they perform each day. Sometimes leaders have to help their staff connect the dots by explaining this big picture to all. Communicating the big picture regularly will help reinforce the reason your organization exists.
5.3.2Power and politics
One of the most desired human wants is power. In the business world, power and politics, to a large extent, determine the growth, stability and continual success of companies. Before comparing and contrasting power and politics in organizations it would be beneficial to define each term. For the purpose of this paper, power is defined as the exercise of influence or control over another's behavior, while politics is defined as the tactics used to obtain a desired goal, position or status in a company. Two examples of the abuse of power and politics, as it relates to management and leadership in an organization, is the failure of the management of some companies to give credit where it is due and the underhanded practices used by others for career advancement. Power and politics are the top two elements used in a company that either can cause the downfall or success of that company. Knowing the positions of power and politics and the role they
5.3.3Motivation
The motivation is what got that organization together in the first place and so it's important to keep that motivation up throughout all your endeavors. Motivation in organizations can be accomplished by finding whatever gets everyone going. It won't be the same for every organization but by finding out what that thing is, you can be sure the organization will be successful at whatever they attempt.
Common Goals
The organization got together for a reason. That reason may be to raise money for sick children, or it may be to raise awareness for some other type of cause. If the organization has lagged in attendance and people seem to be dragging their feet, it could be because everyone forgot what they're working towards. It's important, then, for the leaders to remind everyone what the organization's goal is. That's how motivation in organizations
5.4Controlling
5.4.1Controlling approach
The organization hierarchy controls the organization and all its operations.
5.4.2Controlling standards
Internal control is the responsibility of all officials. Euro found aims to ensure that internal control systems are integrated with operating activities so that prompt reaction to changing situations is possible and the quality of decision-making and delegation can be improved. Management supervision is performed to ensure that the implementation of activities is running efficiently and effectively while complying with applicable provisions.
5.4.3controlling of operations
Data are stored primarily in a SQL server data bank that has been optimized for the longitudinal data collection in rheumatology. Physically the dual-processor server has 1 GB of memory, and over 140 gigabytes of storage. Backup of the data bank to tape is performed nightly, and off site storage of the backup tapes occurs routinely. There are three other servers that make up the entire NDB network system. These include a Web Server, Email Server, and File Sever. Currently there are 27 workstations attached to the NDB network, and Internet access is via dedicated full T1 line.
X-ray Data Bank
Fax server
5.4.4Controlling of performance
Control is a foreseeing action whereas earlier concept of control was used only when errors were detected. Control in management means setting standards, measuring actual performance and taking corrective action.
Control is a continuous process
Control is a management process
Control is embedded in each level of organizational hierarchy
Control is forward looking
Control is closely linked with planning
Control is a tool for achieving organizational activities
5.4.5Controlling of information
Initially in businesses and other organizations, internal reporting was made manually and only periodically, as a by-product of the accounting system and with some additional statistic(s), and gave limited and delayed information on management performance. Previously, data had to be separated individually by the people as per the requirement and necessity of the organization. Later, data was distinguished from
information, and so instead of the collection of mass of data, important and to the point data that is needed by the organization was stored.
6. Critical analysis
Ratio Analysis
Liquidity Ratios
Liquidity ratios measure a firm's ability to meet its current obligations. These include:
Current Ratio = Current Assets / Current Liabilities
2009 = 468168736 / 420467889 = 1.11: 1
2008 = 406541695 / 363396932 = 1.12: 1
2007 = 376592633 / 342463187 = 1.10: 1
Quick Ratio = Current Assets - Investment / Current Liabilities
2009 = 468160736 - 167134465 / 420467889 = 0.72: 1
2008 = 406541695 - 96631874 / 363396932 = 0.85: 1
2007 = 376592633 - 113089261 / 342463187 = 0.77: 1
Sales to Working Capital = Revenue earned / Working Capital
2009 = 51616007 / 47700847 = 1.08
2008 = 40043824 / 43144763 = 0.93
2007 = 31786595 / 34129446 = 0.93
Working Capital = Current Assets - Current Liabilities
2009 = 47700847
2008 = 43144763
2007 = 34129446
Leverage Ratio
Time Interest Earned Ratio = EBIT / FIXED INTERST CHARGES
2009 = 38519581 / 15364636 = 2.51
2008 = 32764741 / 10843175 = 3.01
2007 = 28769732 / 7461697 = 3.86
Debt Ratio = Long Term Debts / Share holders' equity * 100
2009 = 19015825 / 61075932 * 100 = 31.13 %
2008 = 21782918 / 52244865 * 100 = 41.70 %
2007 = 12902655 / 45414156 * 100 = 28.41 %
Debt to Equity Ratio = Long term debts / Capital employed (capital employed = shareholder's equity + long term debts)
2009 = 19015825 / 80091757 = 0.24
2008 = 21782918 / 74027783 = 0.29
2007 = 12902655 / 46704422 = 0.28
Debt to tangible net worth = total liabilities / net worth - net intangible assets
2009 = 439483714 / 69740013 = 6.30
2008 = 385179850 / 58436054 = 6.59
2007 = 355365842 / 55119675 = 6.45
Total Capitalization Ratio = Long term debts / capital employed
2009 = 19015825 / 80091757 = 0.24
2008 = 21782918 / 74027783 = 0.29
2007 = 12902655 / 46704422 = 0.28
Fixed Asset Ratio / Equity Ratio = (markup earned / fixed assets) / (shareholder's equity / total assts)
2009 = (51616007 / 41054991) / (61075932 / 509223727) = 1.26 / .12 = 10.5
2008 = (40043824 / 37074209) / (52244865 / 443615904) = 1.08 / 0.12 = 9
2007 = (31786595 / 33892884) / (454141456 / 410485517) = 0.94 / 0.11 = 8.55
Long term assets versus long term debts = Long term assets / long term debts
2009 = 41054991 / 19015825 = 2.16
2008 = 37074209 / 21782918 = 1.70
2007 = 33892884 / 12902655 = 2.63
Profitability Ratios
Net Profit Margin = Net Profit / Mark up Interest Earned * 100
2009 = 15495297 /51616007 * 100 = 30.02 %
2008 = 15374600 / 40043824 * 100 = 38.39 %
2007 = 15265562 / 31786595 * 100 = 48.03 %
Return on Assets = EBIT / Capital Employed
2009 = 38519581 / 80091757 = 0.48
2008 = 32764741 / 74027783 = 0.44
2007 = 28769732 /46704422 = 0.62
Horizontal Analysis
2009 09 Vs 08
2008 08 Vs 07
2007 07Vs 06
Rs M
%
Rs M
%
Rs M
%
Balance Sheet
Assets
Cash and balances with treasury banks
38,775
-2%
39,631
0%
39,684
22%
Balances with other banks
6,010
49%
4,043
6%
3,808
-42%
Landings to financial institutions
3,000
-27%
4,100
290%
1,051
-95%
Investments - net
167,134
73%
96,632
-15%
113,089
78%
Advances - net
253,249
-3%
262,135
20%
218,961
10%
Operating fixed assets
18,015
4%
17,264
8%
16,024
77%
Deferred tax assets - net
-
-
-
-
-
-100%
Other assets - net
23,040
16%
19,810
11%
17,869
62%
509,224
15%
443,616
8%
410,486
20%
Liabilities
Bills payable
8,201
-22%
10,551
1%
10,479
48%
Borrowings
44,662
97%
22,664
-42%
39,407
65%
Deposits and other accounts
367,605
11%
330,182
13%
292,098
13%
Sub-ordinate loan
-
-
-
-100%
479
-70%
Deferred tax liabilities - net
3,198
632%
437
-63%
1,180
100%
Other liabilities
15,818
-26%
21,346
82%
11,722
5%
439,484
14%
385,180
8%
355,366
18%
Net assets
69,740
19%
58,436
6%
55,120
35%
Represented by
Share capital
6,911
10%
6,283
0%
6,283
15%
Reserves
38,386
4%
36,769
8%
34,001
38%
In appropriated profit
15,779
72%
9,193
79%
5,131
-7%
Surplus on revaluation of assets - net of tax
8,664
40%
6,191
-36%
9,706
87%
69,740
19%
58,436
6%
55,120
35%
Profit & Loss Account
Mark-up / return / interest earned
51,616
29%
40,044
26%
31,787
23%
Mark-up / return / interest expensed
(15,841)
37%
(11,561)
47%
(7,866)
74%
Net mark-up / interest income
35,775
26%
28,483
19%
23,921
13%
Provisions & write off
(7,465)
85%
(4,042)
32%
(3,061)
156%
Net mark-up / interest income after provisions
28,309
16%
24,441
17%
20,860
4%
Non-mark-up / interest income
5,643
-3%
5,791
-10%
6,448
29%
Non-mark-up / interest expenses
10,797
29%
(8,365)
39%
(6,000)
-8%
Profit before taxation
23,155
6%
21,868
3%
21,308
15%
Taxation
(7,660)
18%
(6,493)
7%
(6,042)
-5%
Profit after taxation
15,495
1%
15,375
1%
15,266
26%
Note: Data is obtained from Annual Statements of MCB Bank Limited
VERTICAL ANALYSIS
2009
2008
2007
Rs M %
Rs M %
Rs M %
Balance sheet
Assets
Cash and balance with treasury banks
38,775
8%
39631
9%
39,684
10%
Balance with other banks
6,010
1%
4,043
1%
3,808
1%
Lending to financial institutions
3,000
1%
4,100
1%
1,051
0%
Investment
167,134
33%
96,632
22%
113,089
28%
Advances
253,294
50%
262,135
59%
218,961
53%
Operating fixed assets
18,015
4%
17,264
4%
16,024
4%
Deferred tax assets
-
-
-
-
-
-
Other assets
23,040
5%
19,810
4%
17,869
4%
Total
509,224
100%
443,616
100%
410,486
100%
Liabilities
Bills payable
8,201
2%
10,551
2%
10,479
3%
Borrowings
44,662
9%
22,664
5%
39,407
10%
Deposits and other accounts
367,605
72%
330,182
74%
292,098
71%
Deferred tax liabilities
-
-
-
-
479
0%
Other liabilities
15,819
3%
21,346
5%
11,722
3%
Total
439,484
86%
385,180
87%
355,366
87%
Net assets
69,740
14%
58,436
13%
55,120
13%
Represented by
Share capita
6,911
1%
6,283
1%
6,283
2%
Reserves
38,386
8%
36,769
8%
34,001
8%
Inappropriate profit
15,779
3%
9,193
2%
5,131
1%
Surplus on revaluation of assets
8,664
2%
6,191
1%
9,706
2%
Total
69,740
14%
58,436
13%
55,120
13%
Profit & Loss Account
Mark-up / return / interest earned
51,616
90%
40,044
87%
31,787
84%
Mark-up / return / interest expensed
(15,841)
-28%
(11,561)
-25%
(7,866)
-21%
Net mark-up interest income
35,775
62%
28,483
62%
23,921
63%
Provision % Write off
(7,465)
-13%
(4,042)
-9%
(3,061)
-8%
Net mark-up / interest income after provisions
28,309
49%
24,441
53%
20,860
55%
Non-mark-up interest income
5,643
10%
5,719
13%
6,448
17%
Not-mark-up interest expense
(10,797)
-19%
(8,365)
-18%
(6,000)
-16%
Profit before taxation
23,156
40%
21,868
48%
21,308
56%
taxation
(7,660)
-13%
(6,493)
-14%
(6,042)
-16%
Profit after Taxation
15,495
27%
15,375
34%
15,266
40%
Note: Data is obtained from Annual Statements of MCB Bank Limited
7. SWOT analysis
STRENGTHS
LEADING PRIVATE SECTOR BANK:
MCB bank is the leading private sector bank in the banking network in Pakistan with many of them online branches in major cities of the country
AUTOMATIC OPERATIONS:
The operations performed by the bank are highly automated that result in assurance for the customers that their transactions are completed reliably, efficiently and securely.
FULL DAY BANKING
One can avail the benefit of the services provided at the bank till 5:00 P.m. which is highly useful for those customers who find it difficult to leave their officers in the morning...
ATM NETWORK
The bank has the largest ATM Network cross the country. The customers of MCB withdraw access their funds any time at all the ATM Sites.
ELECTRONIC BANKING
The revolution in the banking in the form of electronic banking operations have opened avenues of excellent, efficient and quick services saving the time and costs of the customers and fortunately MCB is among those few banks who are already reaping the benefits of electronic transactions.
ELECTRONIC FUNDS TRANSFER
MCB management is quite prepared to adopt the latest advancements in technology resulting in revolution in the banking operations such as check clearing process, computer based teller equipment, automatic teller machines, and electronic funds transfers among the others.
PHONE BANKING
Phone banking service is very attractive for those classes of customers who don't have time to personally come to the bank i.e. banking on the phone line thus saving the precious time of the customers.
WEAKNESSES
In my opinions these are the points that might be detrimental to the efficiency and profitability of the bank.
NOT HIGHLY AUTOMATED
The bank has still some of the traditional ways of operations in this advanced technological environment.
LOW JOB SATISFACTION
Understanding and the effective management of the human resources is the most difficult challenge faced not only by the bank but by all the organizations. Even though the people have been sacrificed in the new organizational developments, it is becoming clear that the true lasting competitive advantage comes through human resources and how they are managed. MCB seems to not focusing on this highly critical issue as the job satisfaction level of the employees working at MCB, was quite low.
LACK OF FACEULTY
MCB has lesser number of branches as compared to many other branches. Due to this problem, army officers can not avail the benefits of their own bank.
HR DEPARTMENT PERFORMANCE
The human resource department is not performing the function of selection and recruitment very effectively. Selection process is not on merit due to which competent persons cannot be selected.
NOT INTRODUCE NEW PRODUCT
Bank is not introducing new products and new saying schemes. Bank should boost the product development and increase the range of facilities offered for customers.
LACK OF TRAINING FACILITIES
Presently there is no specific training program arranged for the new recruiters. They have to learn based on their observations and also their mistakes. It takes a bit time for the fresh one to learn the banking the result is huge amount of blunders, mistakes etc. resulting in monetary and non-monetary losses for the bank. There is pressure not only on the new learner but also on the person placed upon with this responsibility.
OPPORTUNITIES
Apart from the ones discussed in External Factors Evaluation Matrix, the bank is facing the following threats and opportunities currently:
These are positive external environmental factors effecting the organization.
It deals in bulk business.
A large amount of foreign investment is attracted.
Strong potential for growth
Steady increase in Customer Deposits
Overseas Operations
Branches In Remote Areas
Islamic Banking
Sharp increase in imports and exports
THREATS
High Employees Turnover
As discussed above, the job satisfaction level of the employee is very low resulting in high turnover, which is bad for any organization as there are huge monetary and non-monetary costs involved in the fresh recruitments.
High charges
The schedules of charges indicate that the fees charged by the bank on the various services it provides are extremely high. It may result in decrease in the number of its exiting customers. Further more, this could be very alarming situation for the bank in case some of the competitors grasped the opportunity and lowered its rates. The result
Would be either the lost of market share or decrease in the charges resulting in lowering the bank's income.
Less attractive rate of return
Commercial banks face considerable competition in attracting deposits from individuals or small investors. In contrast, the Govt. of Pakistan national saving scheme offers attractive rates of return (approx. 16 to 18 percent annually) on 10-15 year fixed accounts, which banks find difficult to match.
Some other banks have competent taskforce, which is also a threat for MCB. Because human resource is the most valuable resource.
MCB has many competitors, which are continuously increasing its products and marketing aggressively. It may cause its customers to shift to competitors.
8. Conclusion
It is evident from this report and the financial statements of MCB Bank that it is making progress by leaps and bounds. The profits of MCB have grown considerably during the last few years and this trend is expected to continue into the future. Therefore, I conclude that MCB has a very prosperous present and future, which assures the shareholder's wealth maximization. Side by side of it, I think that if MCB would be able to cover and control above mentioned weaknesses and threats, then it would be in such a situation that will really lead it towards the road of prosperity, development and integrity. With above sentences I think there is some faults also form customers, and in order to make the proper working of the bank the customers
should also cooperate with the bank's officials which will be very good, ambitious and diligent for the bank and customers too.
If bank get control over its weaknesses then it will be in a position to compete its competitors very effectively and hence can get competitive edge over its competitors.
9. Recommendations
After spending six weeks at different departments of the bank, interacting with the employees, getting their views, observing the organizational structure and design, I have come up with the following suggestions that in my view, will definitely improve a few weaknesses observed in the bank by me.
Flexible Policies
The bank should be adopt flexible policies, specially in the areas of the recruitment, promotions, evaluation of the employees otherwise the high.
Turnover observed in the bank will continue to create problems for the bank now and in the future.
Job security
The employees in the organization should be insured job security so that there is no pressure on the employees while performing their tasks.
Permanent Hiring
The fresh hiring should be made permanent so that they a*re secured of their future. Further the allowances and perquisites attached with the permanent jobs will also increase the motivation level of the employees.
Job Training Programs
The bank should place emphasis on the organization of effective training and development programs for its new as well as existing employees so that these are gradually updated regarding the recent developments in the field of banking.
