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EXECUTIVE SUMMARY
This document provided details of my achievements in terms of practical
implementation and understanding of working environment in banks. During the
course of my internship at Muslim commercial Bank (JR) Branch Chiniot (0333), i
worked in the remittance deprtment, account opening and clearing department.
A bank is now a financial institution which offers savings and cheque
accounts, makes loans and provides other financial services, making profits
mainly from difference between interest paid on deposits and charged for loans,
plus fees for accepting bills and other services.
The major operations of MCB include: Accepting various types of
Deposits, phone Banking, ATM’s, Guarantees etc.The various departments at MCB operate independently. They generate
their revenues and after deducting the expenses the net income is transferred to
bank by these departments.
MCB offers a wide range of products from account opening to
specialized products under the main categories like; Personal Accounts, SME
Products and Personal Finance etc.
On the whole, MCB has given me an intern experience and an insight to
practical work environment and therefore, worthwhile learning experience. I
believe, there is nothing like getting hands-on experience because it can only
prepare you for what the workforce is looking for.
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INTRODUCTION
The word 'Bank' is said to have been derived from the words Bancus or
Banque or Bank. This history of banking is traced to as early as 2000 B.C. The
priests in Greece used to keep money and valuables of the people in temples.
These priests thus acted as financial agents. The origin of banking is also traced
to early goldsmiths. They used to keep strong safes for storing the money and
valuables of the people. The persons who had surplus money found it safe and
convenient of deposit their valuables with them. The first stage in the
development of modern banking, thus, was the accepting of deposits of cash
from those persons who had surplus money with them.
The goldsmiths used to issue receipts for the money deposited with them.
These receipts began to pass from hand to hand in settlement of transactions
because people had confidence in the integrity and solvency of goldsmiths.
When it was found that these receipts were fully accepted in payment of debts;
then the receipts were drawn in such a way that it entitled any holder to claim the
specified amount of money from goldsmiths. A depositor who is to make the
payments may now get the money in cash from goldsmiths or pay over the
receipt to the creditor. These receipts were the earlier bank notes. The second
stage in the development of banking thus was the issue of bank notes.
The goldsmiths soon discovered that all the people who had deposited
money with them do not come to withdraw their funds in cash. They found that
only a few persons presented the receipts for encashment during a given period
of time. They also found that most of the money deposited with them was lying
idle. At the same time; they found that they were being constantly requested for
loan on good security. They thought it profitable to lend at least some of the
money deposited with them to the needy persons. This proved quite a profitable
business for the_ goldsmiths. They instead of charging safe keeping charges
from the depositors began to give them interest on the money deposited with
them. This was the third stage in the development of banking.
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DEFINITION OF BANK
The term 'bank' is being used for a long time, yet it has no precise
definition. The basic reason is that the commercial banks perform not just one
but many types of functions. The term bank has been defined differently bydifferent authors. Some are as follows:
According to Crowther,
"Bank is a dealer in debts—his own and of other people."
According to G.W. Gilbert,
"A banker is a dealer in capital or more properly a dealer
in money. He is an intermediate party between the
borrower and the lender. He borrows from one party and
lends to another."
According To Bamkinh Companies Ordinance
U/s3 (B) of Banking Companies Ordinance 1962 "Banker
means person transacting the business of accepting for
the purpose of lending or investment, of deposits of
money from the public, repayable on demand or
otherwise and withdraw able by cheque, draft, order or
otherwise and includes any Post Office Savings Bank."
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HISTORY OF BANKING IN PAKISTAN
The interesting point which I observed during the span of mine internship
was the historical background of Banking & Financial sector which is the one in
which great improvement and growth is observed since the formation of
Pakistan. For studying the growth of this sector we can divide it into three stages,
which are as follows
a) Pre-Nationalization Era
b) Nationalization Era
c) Post Nationalization Era
A) Pre Nationalization Era
There were only two Muslim banks in Indo Pak before partition, they were;
Habib Bank Ltd. (estd. in 1941 at Bombay) & Australia Bank Ltd. (estd. In 1944 at
Lahore). Hindus or Foreigners either owned all other banks, at that time. At the
time of partition there were 631 bank branches in area, which came under
Pakistani control. But due to blood shed and violence at large scale, mostly
branches were closed and the disparity can be assessed from the fact that onJuly 1948 there were 195 branches with deposits of Rs.88 crore (880 million)
only. Also a factor lagging in Pakistani industry was a central bank of its own, by
that time Reserve Bank of India was acting as central bank for both countries and
same currency notes were used in both territories. But Reserve Bank of India
was biased and Set down Pakistan on many occasions such as the issue of
funds transfer etc.
In this period drastic steps were taken in government sector for theimprovement of overall position. The private sector also responded to these
changes and some very positive changes were observed. Some of the steps
taken by the government in this regard were as under:
i. Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948.
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ii. Setting up of National Bank of Pakistan in November, 1949 to control the
'jute' export in East Pakistan and to act as agent of SBP.
iii. Larger powers were given to SBP through SBP Act (1956) for controlling
purposes.
iv. Banking Companies Ordinance 1962 for protection and guidance to
banks.
v. Establishment of specialized banks, such as ADBP (1952);
a) HBFC (Nov, 1952);
b) P1CIC (Oct, 1957)
c) IDBP (Aug. 1961);
d) NDFC (Jan, 1973).
These were the steps, which built a strong banking sector in Pakistan.
This is also obvious from the facts that by 1973 there were almost 10 foreign
banks were working in Pakistan and all over deposit position was around
Rs.2300 crore (23,000 million). A bird eye view of 5 top banks was as given
below:
BANKING SECTOR IN PAKISTAN IN 1973
BANK NO.OF BRANCHES DEPOSITS
Habib Bank Ltd. 667 Rs. 6,160 (million)
National bank of Pakistan Ltd. 579 Rs. 5,660 (million)
United Bank Ltd 497 Rs. 5,670 (million)
MCB Bank Ltd. 506 Rs. 1,640 (million)
Allied Bank Ltd. 145 Rs. 570 (million)
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B) Nationalization Era:
On January 01, 1974 all Pakistani banks were nationalized through
Nationalization Act 1974. Under this law all Pakistani banks became a public
property. All small banks were merged in bigger banks to create 5 major
Pakistani banks Pakistani banks. These banks were to control by Pakistan
Banking Council. There are still controversies about this act of government as
whether it contributed in success of failure of banks. However the major changes
after nationalization were as follows:
• Working of banks was extended to under developed areas.
• Market expansion for credit and deposits.
• Bank were encouraged to extend cooperation to neglected areas
• Decrease in service level of bank officers.
• Decrease in profitability as well.
C) POST NATIONALIZATION ERA
In 1990 the government decided to denationalize all the nationalized
institutes. Some was also suggested in banking sector. For this purpose,
amendments were made to Nationalization Act 1974 and two nationalized banks
were privatized. Along with this a permission to open banks in private sector was
also granted. The rules regarding establishment of new banks and for incoming
foreign banks were also relaxed.
The-three privatized banks are;
a) MCB taken up by a private group in April, 1991
b) ABL taken up by its own employees in September 1991.
c) UBL taken up by UAE party in 2002.
After these changes a large number of private and foreign banks started
their operations in Pakistan and the present status can be seen from the
following figures:
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Scheduled Banks
Category No. of Banks
Nationalized Commercial Banks 3
Private / Privatized Commerce Banks 18
Public Sector Specialized Banks 4
Foreign Banks 19
Total Schedule Banks 44
In addition to above mentioned scheduled banks there are 11
Development Financial Institutes (DFI’s), 16 Investment Banks and 21 leasing
and Modarbah Companies.
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PAKISTAN BANKING SECTOR
• Nationalized Commercial Banks
• Privatized Banks
• Specialized banks
• Private banks
• Foreign banks
• Other financial Institutions
Nationalized Schedule Banks
• First Women Bank Ltd.
• National Bank of Pakistan
• Habib Bank Ltd.
De-Nationalized Schedule Banks
• Allied Bank of Pakistan Limited
• MCB Bank Limited
• United Bank Ltd.
Specialized Banks
• Zarai Taraqiti Bank of Pakistan (ADBP)
• Industrial Development Bank of Pakistan(IDBP)
• Punjab Provincial Cooperative Bank
• Federal bank for Cooperatives
Private Schedule Banks
• Askari Commercial Bank Ltd.
• Bank Alfalah Ltd.
• Bank Al-Habib Ltd.
• Bolan Bank Ltd.
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• Faysal Bank Ltd.
• Habib Credit & Exchange Bank
• Indus Bank Ltd.
• Metropolitan Bank Ltd.
• Platinum Bank Ltd.
• Prime Commercial Bank Ltd.
• Prudential Bank Ltd.
• Soneri Bank Ltd.
• The Bank of Khyber
• The Bank of Punjab
• Union Bank Ltd.
Foreign Banks
• ABN AMRO Bank N.V.
• Albaraka Islamic Bank BSC (EC)
• American Express Bank Ltd.
• ANZ Grindlays Bank Ltd.
• Bank of America (NT & SA)
• Bank of Tokyo Mitsubishi Ltd.
• Bank of Ceylon
• Banque Indosuez
• Citibank N.A.
• Credit Agricole A.G.
• Deutche Bank A.G.
• Doha Bank Ltd.
• Emirates bank International Ltd. P.J.S.C.
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• Habib Bank A.G. Zurich
• Hong Kong and Shangai Banking Crop. Ltd.
• International Finance Investment and Commerce Bank Ltd.
• Mashreq Bank PSC
• Oman International Bank SOAG
• Rupali Bank Ltd.
• Societe Generale, the French Int. Bank Ltd.
• Standard Chartered Bank
• Trust Bank Ltd.
Development Financial Institutions (DFIs)
• Investment Corp of Pakistan
• National Development Finance Corp.
• Pakistan Industrial Credit and Investment Corp.
• Pak Kuwait Investment Company
• Pak Libya Holding Company
• Regional Development Finance Corp.
• Saudi Pak Industrial & Agricultural Investment Corporation
• Small Business Finance Corporation
• House Building Finance Corporation
• National Investment Trust
Investment Banks
• Crescent Investment Bank
• First International Investment Bank
• Atlas BOT Investment Bank
• Security Investment Bank
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• Fidelity Investment Bank
• Prudential Investment bank
• Islamic Investment Bank
• Asset Investment Bank
• Al-Towfeek Investment Bank
• Al-Faysal Investment Bank
• City Corporation Investment Bank (Pak) Ltd.
• Franklin Investment Bank Ltd.
• Orix Investment Bank (Pak) Ltd.
• Trust Investment Bank Ltd.
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HISTORY OF THE MCB BANK LIMITED
Before separation of Indo Pak, the need for more Muslim banks was felt.
And Muslims having strong financial capacity were thinking to invest in this sector
as well. This was the idea which paved the way for setting up MCB Bank Ltdknown as MCB. This was the third Muslim bank in the subcontinent.
History
This bank was incorporated under companies’ act 1913 on 9th July, 1947
(just before partition) at Calcutta. But due to changing scenario of the region, the
certificate of incorporation was issued on 17th August, 1948 with a delay of almost
1 year; the certificate was issued at Chitagong. The first Head office of the
company was established at Dacca and Mr. G.M. Adamjee was appointed its first
chairman. It was incorporated with an authorized capital of Rs. 15 million.
After some time the registered office of the company was shifted to
Karachi on August 23rd, 1956 through a special resolution, now recently the
Head office of MCB has been transferred to Islamabad in July, 1999 and now
Head office is termed as Principle Office.
This institute was nationalized with other on January 1st, 1974. At that
time it had 506 branches and deposits amounting to Rs. 1,640 million. Although.
MCB has a reputation of a conservative bank but nationalization also left its
effects on this institute as well and by end of year 1991 in which it was privatized
the total number of branches were 1.287 and deposits amounting to as high as
Rs. 35,029 million.
Privatization
When privatization policy was announced in 1990, MCB was the first to beprivatized upon recommendations of World Bank and IMF. The reason for this
choice was the better profitability condition of the organization and less risky
credit portfolio which made'' it a good choice for investors. On April 8th, 1991, the
management control was handed over to National Group (the highest bidders).
Initially only 26% of shares were sold to private sector at Rs. 56 per share.
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After Privatization
After privatization, MCB is now in a consolidation stage designed to lock in
the gains made in recent years and prepare the groundwork for future growth.
The bank has restructured its asset portfolio and rationalized the cost structure inorder to remain a low cost producer.
After privatization, the growth in every department of the bank has been
observed. Following are some key developments:
• Launching of different deposit schemes to increase saving level.
• Increased participation on foreign trade.
• Betterment of branches and staff service level.
• Introduction of Rupee Traveler Cheques & Photo Credit Card for the first
time in Pakistan.
MCB today, represents a bank that has grown with time, experience and
Pakistan. A major financial institution, in scope and size, it symbolizes a fully
growing tree evergreen, strong, and firmly rooted.
Foreign Trade
The bank conducted import business during the year amounting to RS.
54.0 billion as compare to RS. 56.4 Billion In 2009. The export business slightly
improves to RS. 36.9 Billion From RS. 35.1 Billion. In 2010. Home remittances
decline to RS. 16.7 Billion From 30.7 Billion the decline in home remittances
business was due to freezing of Foreign Currency Accounts, which has affected
the confidence of Pakistanis working overseas.
Year 2010 Compliance
MCB’s strength lies in providing a technological base at the gross root
level of the society with a challenge to educate and assimilate such systems
across vast cultural and economic backgrounds. With over 1400 automated
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branches, 1300 online branches, over 151 MCB ATMs in 27 cities nationwide
and a network of over 16 banks on the MNET ATM switch, MCB continuously
innovates new products and services that harness technology for the customer’s
benefits.
Social Sector
The bank activity participating in the Prime Minister self-employment
Scheme. The application received from various applicants is being processed on
merit and disposed off as quickly as possible.
The Business
MCB is in it’s over 50 years of operation. It has a network of over 1400
branches all over the country with business establishments in Sri Lanka and
Bahrain. The branch break-up province wise is Punjab (57%), Sindh (21%),
NWFP (19%) and Blochistan (3%) respectively.
MCB has an edge over other local banks, as it was the first privatized
bank. The State Bank of Pakistan has restricted the number of branches that can
be opened by foreign banks, an advantage that MCB capitalizes because of its
extensive branch network.
Fourteen years after privatization, MCB is now in a consolidation stage
designed to lock in the gains made in recent years and prepare the groundwork
for future growth. The bank has restructured its asset portfolio and rationalized
the cost structure in order to remain a low cost producer.
MCB now focuses on three core businesses namely Corporate,
Commercial and Consumer Banking. Corporate clientele includes public sector
companies as well as large local and multi national concerns. MCB is also
catering to the growing middle class by
MCB looks with confidence at year 2007 and beyond, making strides
towards fulfillment of its mission, "to become the preferred provider of quality
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financial services in the country with profitability and responsibility and to be the
best place to work".
A major achievement of MCB is that the state bank of Pakistan has issued
a license to MCB to start Islamic banking. Now MCB is setting up a 1
st
Islamicbanking branch at 1st floor shaheen complex, Karachi. This complex starts
working from September 1, 2003.
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VISION STATEMENT
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Challenging and
Changing
The Way You Bank.
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MISSION STATEMENT
To become the preferred provider of quality
financial
services in our country with the profitability
and responsibility and to be best
place to work
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OUR CORE VALUES
Customer Focus
We treat each of our customer equality & as the most important person
while we interact with him/her. We must ensure that we do everything to meet
and exceed the customers expectations with perfect to times, accuracy & quality
services.
Employee Respect & Dignity
We treat each of our employees with fairness, which includes giving
constructive feedback for their development. We celebrate diversity and seek
suggestions from all employees for improvement. We ensure that responsibility &
fairness in all our decision-making.
Team Based Approach
We work towards achievement of our vision & mission as a combines
group. We encourage inter & intra-departmental communications. We treat our
colleagues as our internal customers & ensure that the requirements of internal
customer focus are always met.
Quest for Quality
We ensure that each moment of our time is spent on value adding activity.
We always seek ways for exceeding expectations of customers & colleagues.
We also ensure that we do things right, first time every time.
Good Corporate Citizenship
We ensure that we contribute our due share to the Govt. we realize that
we have a responsibility to the society in which we operate & we seek ways of
playing a positive role for the betterment of the community at large.
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BOARD OF DIRECTORS
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Mian Mohammad Mansha
Chairman
S.M. MuneerVice Chairman
Muhammad Aftab ManzoorPresident & Chief Executive
Tariq Rafi
Director
Sheikh Mukhtar AhmedDirector
Muhammad Arshad
Director
Shahzad Saleem
Director
Mian Umer Mansha
Director
SArmed Ameen
Director
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AUDIT COMMITTEE
Mian Mohammad Mansha Chairman
Shaikh Mukhtar Ahmed Member
Shahzad Saleem Member
CHIEF FINANCIAL OFFICER
Ali Amin
COMPANY SECRETARY
Tameez-ul-haque
AUDITOR
A. F. Ferguson & Co
Chartered accountants
M. Youasuf Adil Saleem & co
Chartered accountants
LEGAL ADVISOR
Chartered accountants mandiwalla & zafar
Advocates & legal consultants
SHARIAH ADVISOR
Dr. Muhammad Zubair Usmani
REGISTERED OFFICE
MCB building, F-6/G-6
Jinnah Avenue, Islamabad
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MANAGEMENT LEVEL
The organization chart within a department and in different offices is as
follows:
Divisional Heads ………..…………………… Head Office
Regional Head (EVP) ………..…………………… Regional Office
Zonal Head (VP) ………..…………………… Zonal Office
Branch Manager ………..…………………… Branch
(VP, AVP, GRADE 1, 2, 3)
ORGANIZATIONAL SETUP OF MCB
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PUNJAB
NWFP & AZADKASHMIR
SINDH
BALOCHISTAN
KARACHI
LAHORE
PESHAWAR
PROVINCIAL HEADQUARTERS
QUETTA
HEAD QUARTER
CIRCLE OFFICES
BRANCH OFFICES
KARACHI
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ORGANIZATIONAL STRUCTURE OF MCB
As MCB is a banking company listed in stock exchange therefore it follows
all the legalities which are imposed by concerned statutes Mr. Muhammad
Mansha is chairman & chief executive of the company with a team of 10directors and 1 vice chairman to help in the business control and strategy making
for the company.
Operational Management of the bank is being handled by a team of 10
professionals. This team is also headed by Mr. Muhammad Mansha. The
different operational departments are Consumer Banking & IT div; Financial &
Inter branch div; Banking operations div; HR & Legal div; financial control & Audit
div; Credit management div; Commercial Banking div; Corporate Banking div;Treasury management & FX Group and lastly Special Assets Management
(SAM) Group.
For effective handling of branches, it has been categorized into three
segments with different people handling each category. These categories are:
a) Corporate Banking
b) Commercial Banking
c) Consumer Banking
Corporate Banking
These are branches which have an exposure of over Rs. 100 million.
Usually includes multinational & public sector companies.
Commercial Banking
The branches which has a credit exposure of less than Rs. 100 million but
having a credit portfolio of more than Rs. 20 million (excluding staff loans)
Usually branches in large markets and commercial areas come under this
category.
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Consumer Banking
These are the branches which have exposure up to Rs. 20 million and
these include all the branches which are neither corporate nor commercial
branches.
Recently the organizational structure was re-designed as follows:
Province wise branches
Corporate Consumer Commercial
40 branches 820 branches 540 branches
MARKETING MIX OF MCB BANK LIMITED
Marketing is the task of creating, promoting and delivering goods and
services to consumers and businesses. Organizations identify and profile distinct
group of buyers who might prefer or require varying products and marketing
mixes. The customer seeks for value and satisfaction. The organizations can
increase the value of the customer offering in several ways e.g. raising benefits,
reducing costs etc. marketing mix is a set of marketing tools that the firm uses to
pursue its marketing objectives in the target market. These marketing tools are
known as 4 p’s of marketing. These four marketing tools are viewed as 4c’s by
the consumers.
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To identify the customer needs and fulfilling hem is the basic objective of
an organization. Marketing is not just satisfying your customers, you have to
delight them and this can be done by acting upon this phrase.
“Under Promise and Over Deliver”
MCB Bank provides a winning combination of products and services to its
prime customers. It is one of the country’s leading commercial banks, which
ensures complete security, and reliability in all-financial transactions.
PRODUCT MIX & PRICES OF MCB BANK
1. MCB Rupee Traveler Cheque
MCB Rupee Travelers Cheques are as good as cash, infact better. Better because with Rupee Travelers Cheques you have the power to purchase and a
feeling of security that should you lose them, you will get a refund.
MCB Rupee Travelers Cheques are accepted at major shops, travel
agents, hotels, business establishments and MCB branches all over Pakistan.
You don't have to be an MCB account holder to buy the Rupee Traveler
Cheques. Anybody can purchase them. It's a safe and convenient way to
conduct everyday business. At a time when thefts and robberies are on the
increase, you are better off carrying Travelers Cheques rather than money.
2. Mahnama Khushali Scheme
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4 P’s 4 C’s
Product/ Service Customer Solution
Price Customer Cost
Place Convenience
Promotion Communication
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A 5- year fixed Deposit Scheme, targeted to persons with small savings
who would desire a regular monthly return on their investment.
Salient Features
• Minimum amount of investment shall be Rs.0.010m and the maximum
amount of investment would be Rs. 1.000m.
• Khushali Certificates can be purchased by individuals (singly or jointly) or
by the Proprietorship/Partnership concerns or Companies, etc. in their
name
• The Khushali Certificate will be of five years maturity.
• The interim rate of profit offered will be minimum 1% per month. If the
profit declared by the bank is higher, additional profit will be paid.
• Zakat will be deducted wherever applicable on yearly basis whether you
will be receiving your profit or encashing your certificates.
• As per Government Directions, tax on the profit / return is to be deducted
by MCB branches at the time of payment.
3. MCB Khushali Bachat Account
Salient Features
• 8% rate of return per annum.
• Returns calculated on daily.
• Average balance and paid half yearly.
• Introduced first time in Pakistan.
• The facility of helping account holders pays utility bills (electricity,
telephone and gas) through their account. No queues. No delays.
4. Prime Currency Account Scheme
Launched to attract deposits in foreign currencies. US Dollars, Pound Sterling,
Euro and Japanese Yen.
Salient Features
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• Owing foreign currency account under the Prime Currency Scheme allows
you to earn attractive rates of interest in foreign currency.
• You have a choice between opening this account in your personal name
and opening it under joint names.• Whether you are a resident or a non-resident Pakistan, MCB Prime
Currency Scheme invites all to operate a foreign currency account.
• Foreign nationals and foreign companies can also open a foreign currency
account under the Prime Currency Scheme.
• Your foreign currency account can be opened in four global currencies:
The United States Dollar, the Pound Sterling, the Japanese Yen and the
Euro.
• Travellers Cheques and Foreign Currency Notes can also be issued to
holders of persona! and Joint accounts.
• Rupee Loan facility will also available against this account.
• You can draw any amount of foreign exchange from your foreign currency
account and transfer or remit the amount freely to any part of the world
without any restrictions.
• The restrictions imposed by the State of Pakistan for the opening of
foreign currency accounts in case of passport; Work-permit and resident
Visa have been withdrawn. Your account will be restriction free.
• The Prime Currency Scheme is exempt from al! forms of taxes including
Income Tax, Wealth Tax and Zakat deductions.
• MCB Prime Currency Scheme is a world in itself.
5. Hajj Mubarak Scheme
A saving scheme, of 2/3 years duration, for the convenience of persons,
with a limited income, who desire to perform Hajj was introduced.
Under the 2 years scheme, a monthly deposit of Rs.1800 is required, whereas
under the 3 years scheme, the required monthly deposit is only Rs.1200
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For the convenience of the account holder, service has, especially, been
introduced at busy commercial centers. Traders and other clients can now make
deposit, with case, at such centers up to 8.00PM.
12. Utility Bill CollectionWith the aim of extending this service to wider range of customers, the number of
MCB branches collecting Utility Bills more than 900.
13. MCB Mobile Banking
At the forefront of technological excellence, MCB proudly introduces MCB
MOBILE BANKING*. The convenience of accessing account balance information
and mini statements whenever want or wherever may need them, with comfort
and peace of mind.
MCB Mobile Banking service is available to all MCB ATM cardholders, 24 hours -
365 days.
MOBILE BANKING AT A GLANCE
MCB Mobile Banking gives easy and quick access to account(s) at a time
find convenient, including all holidays.
• With MCB Mobile Banking
· Check balance
· View the last 4 transactions of your MCB account(s).
• A FREE SERVICE
MCB Mobile Banking is a free service for MCB account holders who have
an ATM card of an SMS message if charged by the service provider.
• Banking at fingertips
Dial in anytime to get information regarding balance and mini statements.
1. MCB Islamic Banking Services
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Islamic banking services through exclusive units/branches offering a range
of liability and asset based Sharia compliant products like Musharika, Murabaha,
Ijara and Istasana.
2. MCB Car Cash
Car financing and leasing at competitive rates with flexible options Car
cash finances both semi-commercial and non-commercial vehicles for personal
and business use.
3. MCB Locker
The best protection for your valuables. Lockers of different capacities areavailable nationwide
4. MCB Master Card
THE FUTURE OF MONEY
Since the beginning of time, people have
tried to find more convenient ways to pay,
from gold to paper money and checks.
Today, money is moving away from distinct
hard currencies and towards universal
payment products that transcend national borders, time zones, and, with the
Internet, even physical space.
Plastic or "virtual" money, credit, debit, and electronic cash products,
inevitably will displace cash and checks as the money of the future.
MasterCard International has expanded globally in more locations in the world
than any other card. The card was introduced by MCB Bank Limited in 1995 and
now offers card members over 15 million outlets in 232 countries.
• Photo security- The first bank in Pakistan to introduce the enhanced
feature of photograph on the card limiting fraud in case of card loss.
• Welcomed at over 3, 000 outlets in Pakistan.
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• Provides up-to 45 days Free Credit.
• Joining and Annual Fees to suit you.
• 24 Hour Customer Services- Call 111-700-700 and you can get
information from our customer services representatives on new card
application or have your queries resolved anytime of the day.
• Cash Advance Facilities
Available in Pakistan and worldwide with a network of over 1,000
branches and a team of dedicated professionals, MCB is Pakistan’s largest
private sector commercial bank.
Our Consumer Banking provides customers with innovative saving
schemes, products and services. Our ATM network is the largest in Pakistan and
our Pak Rupee Travelers Cheques are market leaders. We were the first to
introduce the photo card with the introduction of the MasterCard.
Our Corporate Banking ensures assistance from a dedicated team of
professional financial advisors for underwriting, project finance or corporate
advisory services.
When it comes to banking practices, you can depend on us. We’ve been around
for over fifty years.
5. MCB Smart Card
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
The convenience and flexibility of MCB SmartCard will help live a smarter life. It not only helps you manage your expenses, but also avoids undue interest
on your day to day credit card transactions.
Your balance is always within your reach and you spend accordingly.
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MCB is the only bank to introduce a debit card that gives the option to choose
from domestic and international card for local and global usage respectively
6. Remit Express
Fastest to Pakistan. Anywhere in Pakistan.
The fastest way of getting your money across to
Pakistan. Remit Express offers low cost remittance
from U.A.E. and Saudi Arabia. Your relatives, friends
or business associates receive drafts within 72
hours.MCB Remit Express has been specifically
designed to meet the needs of the expatriate Pakistani community residing in the
Gulf countries.
7. Easy Personal Loan
Helping You Do More
MCB Easy Personal Loan provides you with the financial advantage to do
things you've always wanted to but never had the sufficient funds for. Take that
much-needed holiday. Buy a car. Refurnish your house. Purchase a new TV.
Finance a better education for your children.
Salient Features
• MCB will lend you any amount, from Rs 30,000 to Rs 490,000, depending
upon your net monthly income
• You can choose tenure of 1 to 3 years for the repayment of the loan
• Bank to Bank Balance transfer
• Credit Card balance transfer
• Loan Protector Shield- insurance coverage of balance loan amount in
case of death or permanent and total disability
• Availability of early repayment option
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• Repayment Arrangements
• Repayment of principal and mark-up is monthly and can repaid using
either one of the following modes:
• Direct Salary Transfers
• Payroll Deduction
Eligibility Criteria
• Minimum net monthly income Rs 10,000
• 25 to 55 years of age
• Pakistani national
• At least 2 years of employment with current employer.
• Processing fee of 1% of the principal loan amount to be charged at the
time of loan disbursement.
8. MCB Pyara Ghar
MCB gives dream home at the lowest
and best possible mark-up rates. You can
choose either one of our two mark-up rate
options- fixed or variable.
Early repayment option tailor-made to allow making partial prepayments at dates
that suit.
Who Can Apply
Anyone who fulfills the following criteria is eligible to apply:
• Pakistani national residing in the city and area where the product is
launched.
• 25 years old or above when you apply and under 60 at the time of maturity
of the applied financing period.
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• Salaried person, self-employed professional or a businessman with a
verifiable monthly income stream.
• Net take -Home income not less than Rs. 25,000 per month.
• Have 5 years or more of business or professional experience.
• Employed with the present employer for 2 years with a total employment
history of 5 years.
• Home Purchase Home Renovation Home Construction
• Tenure 3 years to 15 years 2 years to 5 years 3 years to 15 years
9. MCB Virtual
MCB Virtual provides the continence of
banking on internet. Whether at office or home
or traveling. Log on at www.mcb.com.pk and
enjoy 24 hours access of all your accounts for
the largest array of service.
10. MCB Business Sarmaya
MCB Business Sarmaya is a running finance
against your residential property. It offers running
finance up to 20 millions with low markup.
11. MCB Car 4 U
MCB car 4 u auto finance is a power move that
gets you not only a car of your own choice but
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leads you best in life. It is affordable with competitive markup, flexible
conditioning and easy processing and above all no hidden cost.
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PLACING STRATEGIES OF MCB BANK
The location of the bank plays a vital role in making its operations profitable. If
the bank is located in some business center then it will be very easy for it to
attract business people as its customers. Therefore MCB has most of its
branches at places where it can reach its targets customer easily. The branch
network of MCB is given as follows:
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Punjab 723
Sindh 222
NWFP 211
Blochistan 24
Azad Kashmir 10
Domestic 110
Overseas 100
TOTAL 1400
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PROMOTION STRATEGIES OF MCB BANK
MCB Bank is actively participating in promotion of its products and
services through advertisement and other promotional schemes.
Initially, the bank focused on the upper class customer’s only and offered
products for a limited class of people. But now the strategy has been changed
and the bank is now targeting the middle market also. The products offered are
of diverse nature to cater the needs of maximum number of people.
Customer Oriented Attitude
MCB Bank values its customers. Customers’ complaints are encouraged
because it gives an opportunity to know the needs of the customer and buildmore confidence in them.
Most of the promotional efforts are done through
Direct marketing
Public relations
MCB bank sometimes gets suggestions and recommendations from its
good customers.
Branch layout is being designed in such a way that more and more
customers are attracted. Some of the branches of MCB Bank have a very good
entrance and outlook but many still need to be improved.
FIELDS OF ACTIVITIES
The purpose of banks is to provide some services to the general public.
And for this purpose different banks provide different services to the people in
different forms. The MCB Bank is a commercial bank, in modern time commercial
banks play a very important role and their functions are manifold. The main
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functions and services which MCB Bank Limited provides to different peoples are
as follows.
1) Open Different accounts for different peoples
2) Accepting various types of deposits
3) Accepting various types of deposits
4) Granting loans & advances
5) Undertaking of agency services and also general utility functions, few of
those are as under
• Collecting cheques and bill of exchange for the customers.
• Collecting interest due, dividend, pensions and other sum due to
customers.
• Transfer of money from place to place.
• Acting an executor, trustee or attorney for the customers. ‘Providing
safe custody and facilities to keep jewellery, documents or securities.
• Issuing of travelers cheques and letters of credit to give credit facilities
to travel.
•
Accepting bills of exchange on behalf of customers.
• Purchasing shares for the customers.
• Undertaking foreign exchange business.
• Furnishing trade information and tendering advice to customers.
For proper functioning of branches and the over all bank has been divided in
different departments. These departments handle different jobs so that division of
work is there for improvement of functions and also it is easy to control the
situation. The general division in a branch is as follows:
1. Cash department
2. Deposit department
3. Advances & credit department
4. Remittance department
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5. Foreign exchange department
6. Technology department (new addition in order to cop with the growing
needs of day to day technology requirements)
Cash Department
The following books are maintained in the Cash Department:
• Receiving Cash Book
• Paying Cash Book
• Token Book
•
Scroll Book• Cash Balance Book
When cash is received in counter, it is entered in the Scroll Book and
Receiving Cashier Book. At the close of the day, these are balanced with each
other.
When the cheque or any negotiable instrument is presented at counter for
payment, it is entered in the token book and token is issued to the customer. The
token clerk and the Cashier make entries in the paying book and payment ismade to payee. At the close of day, the Token Book and Paying Cashier Book
are balanced.
The consolidated figure of receipt and payment of cash is entered in the
cash balance book and drawn closing balance of cash.
Opening Balance + Receipts - Payments = closing Balance.
This is very important department because cash is the most liquid asset
and mostly frauds are made in this department, therefore, extra care is taken in
this department and nobody is allowed to enter or leave the area freely. Mostly,
cash area is grilled and its door is under supervision of the head of that
department. All the books maintained in this department are checked by an
officer.
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Deposit Department
Bank deals in money and they are merely mobilizing funds within the
economy. They borrow from one person and lend to another, the difference
between the rate of borrowing lending forms their spread or gross profit.Therefore we can rightly state that deposits are the blood of the bank which
causes the body of an institution to get to work. These deposits are liability of the
bank so from point of view of bank we can refer to them as liabilities.
The total deposits of MCB are growing since its inauguration but after
privatization there is a sharp incline in over all deposits of the bank. The increase
in deposits is also a cause of increase on total number of accounts; bank has
progressed in both aspects.
TYPES OF DEPOSITS
Deposits can be segregated on two bases, one is the duration in which
there funds are expected to be with the bank and second is the cost of getting
these funds. So divide deposits in two classes according to duration of deposits
i.e.
1) Time deposits / liabilities
2) Demand deposits / liabilities
And on the basis of the cost to acquire these funds, a deposit can be
classified as any one of following four, High Cost Medium Cost, Low Cost No
Cost.
Banks has different kinds of deposit schemes in order to induce deposits.
These schemes are a mixture of the above mentioned two types of deposits with
an addition of different services & requirements such as minimum balance'requirement, mode of transaction, basis for calculation of profit, deductions,
additional benefits, eligibility for different groups.
In the similar fashion, MCB has a large variety of deposit schemes and some of
them are as follows:
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CURRENT ACCOUNT
In this type of accounts the client is allowed to deposit or withdraw money
as and when he likes. He may, thus, deposits or withdraws money several times
in a day if he likes. There is also no restriction of amount to be deposited or withdrawn. However, there is requirement of minimum balance maintenance of
Rs. 1000/-. Usually this type of account is opened by the businessmen. No profit
is paid by the bank and no service charges are deducted by the bank on current
deposits account. These types of deposits are also exempt from compulsory
deduction of Zakat.
PLS ACCOUNT
This type of account is for those persons who want to make small
savings'. This type of account is opened with a minimum deposit of Rs. 1000/-.
Under this scheme deposits can be made only up to a-costing amount and
withdrawals are allowed twice a week or 8 times a month. If a big amount is
required a seven days notice is required before the withdrawal. The profit is paid
on these accounts on the minimum balance during a month for the whole of that
month. Zakat & other withholding taxes are deducted as per rules of the
government.
KHUSHALI BACHAT ACCOUNT
This is an advance form of PLS saving a/c, in this type of account. The
minimum balance requirement for this type is Rs. 2500/-. There is also restriction
on the number of withdrawals as well, i.e. up to 4 times in a calendar month. For
maintaining this extra balance the customer gets the benefits of profit calculation
on daily product basis and also free service of standing instructions of paying
utility bills and HBFC installments. All other rules of saving account are
applicable.
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PLS 365 GOLD
This is a special type of saving account in which customer maintains a
minimum balance of Rs. 300,000- and in turn he gets the benefits of daily profit
calculations and also there is no restriction on the maximum number of withdrawals as was there in the case of KBA. There is also another advantage of
this scheme that if balance on a particular day falls below the minimum balance
then only the product of that day is ignored whereas in KBA, if balance falls
below the minimum limit then all the products for that month are ignored on in
other words no profit is paid for that month.
Khaunm Bachat Scheme
This is a type of term deposit, in this type of deposit an account is
deposited and monthly payments of Rs. 1000/- are made by the account holder
in this account for a minimum of 10 years. After the expiry of term, he receives
his funds along with profit for the tenor. The distinctive feature of this product is
that profit is calculated on monthly basis and charged to account on end of each
half /ear. Then profit is also calculated on that amount of profit which is credited
to the customer's account. So we can say that in this type of account there is a
concept of accumulated profits on profit. This ends in getting a heavy return for the depositor at the end of tenor for his small savings. This product was actually
introduced to promote saving habits in the people. Zakat and withholding taxes
are deducted as per rules only at the time of maturity while making payment to
the customer.
Term Deposits Receipts
This is a type of term deposit in which a receipt is issued for varying tenors
ranging from 1 month to 5 years or more. These are in the form of receipts and
profit on these receipts is paid biannually. These receipts are encashable after
expiry of the period for which they were issued. Different profit rates are applied
to different type of TDRs.
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Under this deposit scheme, a deposit is received from the depositor under
the condition that he will intimate the bank before a certain period in case of
withdrawals.
Functions of DEPOSIT department
This was a brief review of different types of deposit schemes. The Deposit
Department handles the account opening, profit payment and accounting of all
types of deposit schemes.
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.
Profit payment & calculation
Profit payment & calculation is done in accordance with the rules of each
type of deposit scheme-by the deposit department. The products for each deposit
scheme are calculated separately and added till the end of 6 month period. Then
the sum total of these products is multiplied with the respective profit rates which
are issued by the Head Office at the end of each half yearly closing. The profit
provisions for each type of deposits are also calculated on monthly basis by the
same department in order to calculate the net profit or loss position of the branch.
Accounting Entries
Accounting entries are also made in the respective books of account by
this department. However, in small and medium size branches, the accountant
performs the book keeping duties for all kinds of ledgers.
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Clearing Department
Every banker acts both as a paying as well as a collecting banker, It is
however an important function of crossed cheques. A large part of this work is
carried out through the bankers clearing house.
A clearing house is a place where representative of all banks of the city
get together and settle the receipts and payment of cheques drawn on each
other. As the collecting banker runs certain risks in receipt of their ownership the
law has provided certain protections to the banks.
The Negotiable Instrument Act, 1881, lays down hat drawer or holder of a
cheque or draft may cross the instrument generally or specially. It further lies
down that a crossed cheque can only be paid to a banker, who collects it for a
customer in good faith and without negligence.
Types of Cheques
• Transfer cheques: are those cheques, which are collected and
paid by the same branch of bank.
• Transfer delivery cheques: are those cheques, which are
collected and paid by two different branches of the same bank
situated in the same city.
• Clearing cheques: are those cheques, which are drawn on the
branches of some other bank of the same city or of the same area,
which is covered by a particular clearing house.
• Collection cheques: are those cheques, which are drawn on the
branches of either the same bank or of another bank, but those
branches, are not in the same city or they are not the members of
clearing house.
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Functions of Clearing Department
• To accept Transfer, Transfer delivery, clearing and collection cheques
from the customers of the branch and to arrange for their collection.
• To arrange the payment of cheques drawn on the branch and given for
collection to any other branch on MCB or any other members or sub
member of the local clearing house.
• To collect amount of cheques drawn on members, sub-member of local
clearing house, sent for collection by MCB Branches, not represented at
the local clearing house
• Receiving and scrutinizing the cheques and other deposit instruments,
and the pay-in-slip at the counter.
• Fixing the stamps.
• Scrutiny and receipt by the authorized officer.
• Returning the counter file to the depositor.
• Certificate and confirmation by the officer in charge of the department. ,
• Separating the cheque into transfer, transfer delivery, and clearing
cheques.
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CLEARING PROCESS (FLOW CHART)
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Cheque with slip given
Cheque along with slip checked, signed &
received by officer
The same day not honored cheques are returned
The day after tomorrow the banks are informed
Provisional entries for returned cheques aredebited a ain in both com uter da books
Party is informed about returned cheques
throu h hone or ersonal contact
Cheques are mailed through TCS in case of no
personal contact the same day
(If there is any availability)
Slip is asked & filled
Entries in daybooks are made
Entries checked & verified by another officer
after bankin hours b officer
Cheques collected at the day end by Main
ranch’s fficials
Cheques are sent to respective banks next day
after posting in computer by Main Branch
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Advances Department
Advances are the most important source of earning for the banks. MCB is
also giving full attention towards this aspect and it is also obvious from the
growing portfolio of advances and from very low delinquency rate. The creditportfolio of this institution is in a very much better shape than other financial
institutions of Pakistan and the credit goes to the management and the staff who
are concerned about the quantity and quality as well.
• Loans
• Cash Credits
• Overdraft
Loans
Loans are monetary assistance by a financial institution to a business,
individual etc. The loans are granted by the bank in lump sum, so these types
called fixed or demand loans. Interest is charged on the whole amount of a fixed
loan.
The borrower withdraws whole the amount of loan. This type of loan is
normally granted against security of gold documents.
In case of demand loans against gold or documents, a demand promissory note
for the amount of loan is taken from the borrower loans are granted under;
• Loan Against Gold
• Loan Against Pledge Of Stocks
• Stock pledged must be readily saleable
•
Products should be readily saleable
• Advance should be within the borrows means
• Requirements of Loan
For granting loan to any party or individual, the bank checks following
particulars of the client:
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Credibility
Feasibility Report
By Credibility, bank Judges the credibility of the client by his past bank
record, CBI report etc. it is very important in making decision about giving himloan.
Feasibility report is on the running or proposed business of the client.
The report enables the bank to judge the likely return of the business.
Cash Credit
Such cash account is opened in the name of the customer who borrows
from the bank. Customer is granted a loan up to a certain limit, sanctioned by the
head office, from which he can draw when he requires and interest is charged on
the amount actually utilized by the customer. In order to avoid the danger of idle
fund, the bank charges a certain rate of interest, even if the customer does not
withdraw any amount. The rate charged by the bank on cash credit in 46 paisa
per thousand on daily basis.
The credit is usually given against the securities of goods or merchandize
as follows:
Advance against Pledge of Stocks
When cash is granted against the pledge of stock or product, cash credit
form is taken, from the certain products or stock, but the actual pledge is created
when the stock or finished products are placed under the bank's lock or the
document of title is duly endorsed to the bank by the borrower.
Hypothecation of Stocks
The difference between pledge and hypothecation is that under a pledge
the borrower's goods are placed in the bank's possession under own lock,
whereas, under a hypothecation, they remain in the possession of the borrower
or guarantor and are merely charged to the bank under documents signed by
them. Even though the documents empower the bank to take possession of the
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goods hypothecated, but it is possible that the borrower may actually resist any
attempt.
Mortgage of Property
Title deeds of immovable property are accepted by the bank only as
collateral security or alternatively as unauthorized security.
Remittance Department
Remittance department performs following functions:
• Mail Transfer (MT)
• Telegraphic Transfer (TT)
• Demand Drafts (DD)
Mail Transfer (MT)
When a customer requests the bank to transfer his money from one
branch of bank to another branch of the same bank or from one city to another
city to the same bank or any other bank. Customer fills the form given by bank. If
the customer has an account with that amount as mentioned in the application
form then concerned officer will undertake the following procedure to make the
mail transfer complete.
1. Branch Mail transfer form
2. Receiving Branch Register copy
3. Issuing branch register Copy
4. beneficiary advice
5. advice to customer
In case where the customer is not account holder of the bank then the
customer will have to deposit the amount which he wants to transfer under Mail.
Then the above said procedure will be done.
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Telegraphic Transfer (TT)
This type of transfer is simple. After filling the application form the
concerning officer shall fill the telegraphic transfer form. Then it is sent to the
required bank which on receiving it immediately makes the payment to the
customer and afterwards the voucher are sent to that bank by ordinary mail.
Demand Draft (DD)
Demand draft is just like cheques and issued when the customer wants to
take cash with him personally. The idea behind is to avoid the risk and burden of
currency notes in huge quantity. Demand draft can easily be handled whatever
amount it has and the money can easily be taken from the bank when it is
presented. In fact, the bank persuades the customer to transfer money by drafts
and avoid the risk of frauds involves in MT and T.T. Draft is only issued when the
bank knows customer and bank has the confidence in him
In case of transfer of money by drafts, the customer has to fill an
application form. Then the concerned officer fills the following forms:
1. Customer’s advice
2. Customer’s debit form
3. Register copy
4. Cover Advice
Technology Department
Technological advancements are also affecting the banking industry. The
foreign banks have a competitive edge over all local banks in their technologies'
advancements and automated systems. Local banks have also realized the
gravity oil this situation and are striving to add computerized systems to their
branches
MCB is ahead of all other local banks in this field and now it is in a position
to even compete with foreign banks. There are more than 1045 branches of MCB
all over Pakistan and out of these more than 300 branches are fully
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computerized Almost all .the branches of big cities are computerized; therefore,
the need for a technology department at each branch is growing. Now a day, a
computer division is working in each city to provide service to ad the branches of
that area.
MCB has also introduced the now concept of online banking. There are
now more than 250 branches linked through this system and they can transact
with each other directly using computer systems at their own branches. Now
customers do not have to wait long for their transactions and can operate their
account through all the online branches.
ATM Network
ATM stands for Automatic Teller Machine. This machine is used to
transact in one's account without intervention of humans. These machines are
basically used for taking cash, confirming balances and requesting statements /
cheque books.
MCB has the largest ATM network in the country at the moment with
almost one ATM at each online branch and also ATM terminals at International
Airports. This network covers more than the 27 cities of Pakistan including the
provincial capitals and large commercial cities of the country.
ATMs are operated through a card issued to the valued customers and by
application of Personal Identification Number (PIN number). A person can
withdraw from any machine across Pakistan with having an account in only one
branch of MCB. This was only possible with the help of online system. In this
system all the machines are linked to central banking host at IRM division
Karachi through either satellite or telephone controller. This system identifies the
card holder and his PIN Number.
Now MCB has also entered into a contract with Cirrus which is a
subsidiary of MasterCard. This contract will enable an ATM card holder to use
his account even when he is out of country at all the ATMs where Cirrus logo is
displayed.
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Green Cards are ordinary cards with a maximum withdrawal facility of Rs.
15,000/- in a day. The annual fee for this card is Rs. 350/- only.
Gold Cards are special cars with maximum withdrawal limit of Rs. 25000/-
in a day. These cards are issued to the persons having more than Rs. 500000/-as their average balance. The annal fee for this card is Rs. 650/-only.
International Cards are issued in collaboration with Cirrus and are
useable all over the world with maximum withdrawal facility according to the
standards of Cirrus.
INFORMATION ABOUT MY BRANCH
I did my internship in MCB Bank Limited Jhang Road Chiniot
(0333) Branch. Some important information about my branch which I observed is
as follows:
MANAGEMENT OF THE BRANCH
Branch Manager Hamid Ali
Operational Manager Faisal Shahzad
Chief Cashier Mian Muhammad Ali
Billing Cashier Kamran Shah
Customer Services Officer Zainab
Remitance Officer Naseem Ahmad
Cash Sortor Tallat and Mubashir
Others Tee boy, washer man,& security
Gaurds.
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Other General Information of the Branch
Deposits
The total deposits of this about to 322.734 million. In deposit there is
increasing trend.
Profit
Total remittance of this branch is 2157.319 million in 2009.there is also
incrasing trend in profit from 2008 to 2010 because of higher mark up rate
charged on the finances.
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Deposits
0
5
10
15
20
25
2003 2004 2005
Years
A m o u n t i n M i l l i o
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No. of vouchers
The vouchers which are transacted in this branch in 2010 are as follows:
Financing & Advances
Mainly, the short term financing such as cash finance, running finance,
Demand finance, ERF II, FAFB, FBP are being dealt here.
Number of accounts
Accounts in this branch of MCB are as follows:
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CASH TRANFER
Month DEBIT CREDIT DEBIT CREDIT Total
January 2521 2303 2140 1967 8911
February 2209 2268 1835 1725 8037
March 2753 2508 2141 2395 9797
April 3079 2569 1982 2040 9670
May 3433 2726 1944 2018 10121
June 2813 2578 1962 1972 9325July 3555 2229 2021 2123 9928
August 3784 2123 1928 2030 9865
September 4134 2114 2078 2135 10461
October 4923 1980 2337 2350 11590
November 6427 1968 2871 2720 13986
December 2808 2312 2992 2925 14037
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Current account
Total numbers of current accounts are 1236.
PLS account
Total numbers of profit and loss accounts are 3950.
Khushali bachat account:
These are about to 301 accounts
Basic Banking Account (Introduced by SBP for salaried person)
There are about to 19 accounts.
Foreign Currency Accounts:
There are about to 60 accounts.
MCB 365 Gold Account
There are about to 101 accounts.
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WORK DONE BY ME
During my internship in the Bank Limited Jhang Road Chiniot
(0333) Branch, I really enjoyed to work with the staff of Branch, from 04/07/2011
to 04/09/2011 and have a wish to be employee of MCB. It was almost impossible
to work in all the departments within that limited time. But on my request, the staff
of the branch provided me the opportunity to work in the different departments for
the sake of practical knowledge. I am really very thankful to branch manager
M.Hamid that provides me a learning environment in the branch.
During my internship training in the MCB as I early mentioned that I have
worked in different departments & seats and learnt the followings.
ACCOUNT OPENING DEPARTMENT
Account opening and closing is the function of accounts departments.
Bank’s customers may be individuals (Single or Joint), firms
(partnership/proprietorship), Autonomous corporations, Limited Companies,
Charitable Institutions, Associations Educational Institutions or Local Bodies.
Basics to Open an Account
During the span of mine internship in MCB, I learned and observed a lot of
about the opening of an account. Basically I think that the opening of an account
is the establishment of a contractual relationship between the banker and the
customer. By opening an account at a bank a person becomes a ‘customer’ of a
bank. Further I am going to express the basic requirements and steps involved in
the opening of an account.
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Introduction and Preliminary Investigation
Before opening an account MCB as like the other banks in Pakistan
ascertain whether or not the person who is going to open the account is a
desirable customer or not. Then MCB determine the prospective customer’sintegrity, respectability, occupation and the nature of business by the introductory
references given at the time of account opening. Negligence in this informal
preliminary investigation may result in serious consequences not only for the
banker concerned directly but also for other bankers and the general public who
may be affected indirectly.
In order to further strengthen and streamline this process, the Federal
Ombudsman of Pakistan, vide his ruling on complaint No. II/31/5186, hasdirected the banks to retain with the account opening form a Photostat copy each
of the National Identity Cards of the person desiring to open an account as well
as that of the introducer. As per these directions, the concerned Branch
Managers are required to obtain the original National Identity Cards along with
their Photostat copies and then return the original after attesting the authenticity
of the retained copy.
Preliminary investigation is necessary because of the following reasons:
Avoid Frauds: In this regard I learned that if a banker does not make the
necessary inquiries mentioned above he may enable dishonest persons to
possess cheque books for fraudulent purposes. If any such person happens to
be an undercharged bankrupt, the banker might be placed in an awkward
position for having allowed such a person to open and open a bank account.
Safeguard against unintended overdrafts: Sometimes due to a mistake
an account may be given an overdraft, For instance, the ledger keeper,
misreading the balance of an account honors a cheque for an amount larger than
the balance. Similarly a credit entry belonging to a customer may be made by
mistake in another customer’s account. In such situations the excess amount
withdrawn by the customer can only be realized if the customer is a respectable
person.
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Inquiries about clients: Being a banker I think MCB has a business
obligation to respond to inquiries from other banks etc. about his customer’s
financial position. Though the banker gives only a general ideal about the
financial standing of his customer, it should nevertheless have the necessary
information available with him.
Specimen Signature
When an account is opened with MCB customer provides to the bank a
specimen of the form of signature which would appear on all his cheques to
express his authority for the payment of cheques drawn on his banker. This
specimen is taken generally on a card specially designed for this purpose, and
rule for the customers, full name, and account number are entered on it.
If the bank has reasons to doubt the genuineness of a signature, he should either
get it confirmed for his satisfaction or return the cheque with the remark
‘Signature differs’. If the signature of the customer is forged the banker cannot
escape his liability because he has actually acted on his customer’s mandate.
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How to Open an Account (General)
Before opening an account in MCB I observed that the following points
must be considered in this regard.
• Another account holder of the bank should properly introduce the new
customer.
• The account holder should sign the account opening form in the presence
of bank officer and the signature is duly verified.
• A copy of identity Card is required by Bank.
•
Against submission of the Bank’s prescribed application form, dulyintroduced in the manner provided and on supplying such document, as
may be required and account may be opened. The Bank reserves to itself
the right to refuse to open and account without assigning any reason.
• Each account shall be allotted a distinct number that is to be quoted in all
correspondence with the bank relation to the account.
• Minimum amount for opening and continued maintenance of various types
of accounts is as follows:
Rs.
Saving 500
Current 500
Term Deposit 1000
The bank reserves the right to change the above mentioned minimum
balance requirement at any time without any notice.
Procedure to Open an Account
According to my practice in MCB, when a customer wants to open an
account, the bank officer gives him an application form. All information, which is
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necessary to be known by the bank, are requirements of the application form.
Form also requires the essential documents to be attached by the customer.
Basically following information is required to open an account with MCB.
• Title of Account
• Full Name of Applicant
• Occupation
• Address
• Telephone No.
• Currency of account
• Nature of Business
• Introducer’s Name, Address & Signatures
• Special instruction regarding the account
• Initial Amount of the Deposit
• Signature of the applicant
Documents to be Attached
Further I learned that if you wanted to open an account with MCB then you
should attach the following documents with your application form which are
different for different categories.
Sole Proprietor’s Account
In order to open an account with MCB Sole Proprietors have to submit
their business registration certificate number.
Private / Joint Accounts
For individual or private or joint accounts National Identity Card is
required.
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Joint Stock Company
Before an account of a Public Limited Company is opened MCB must ask
the person authorized to do so to submit the certified copies or the following
documents
• Certified true copy of the Memorandum and Articles of Association of the
company.
• Certified true copy of the resolution of the board of directors / managing
committee / governing body regarding conduct of the account.
• Certified list containing names and signatures of the directors / office
bearers.
• Certified true copy of the certificate of incorporation or registration.
• Certified true copy of the certificate of commencement of business (in
case of public limited companies).
• Balance Sheet
• I.D. Card copy of each director
• Original is also enclosed for inspection and return
• List of persons authorized to operate the account.
• Power of Attorney in favor of the person opening account.
Partnership Firm Account
Information which is required to be submitted to MCB by a partnership firm in this
case is as follows:
• Full Names
• Address
• Specimen of signatures of the partners
• Certified true copy of partnership deed
• Registration No. if the Partnership is registered
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Societies / Clubs and Associations Account
MCB is authorized to open the accounts of the societies/clubs and associations,
These are non-trading organizations, formed for the promotion of culture,
science, education, recreational activities and charitable purposes etc. some of
these institution are registered under the Societies Registration Act, 1866, and
are issued a certificate of registration after they have been found fit for
registration.
Issuance of Cheque Book
When a customer opens an account with the bank, he is provided withcheque book for withdrawals from account. However, the first cheque book is
given to the customer only when all the required documents are checked. A
cheque book contains ten, twenty five, fifty or hundred leaves. The cheque book
also carries a requisition slip for the issuance of the new cheque book. This slip
is duly filled and singed by the customer. The signature of the customer is
verified by the bank and new cheque book is issued to the customer and serial
numbers of the cheque are duly entered in the book of the bank. Along with the
signature, person should also write his full name & address.
Usually only one cheque book is issued at a time, however big concerns who
need a number of cheque books at a time, may ask the bank to stock as number
of cheque books in their name and to point their name on these cheque books.
Bank debits the client’s account for excise duty of Rs.2.50/- per cheque
and keeps the cheque book ready for the customer, as on his advice.
The officer keeps and maintains the cheque book register Cheque bookinventory and cheque books issued are recorded in this register. The account
number for which the cheque book is issued and the number of leaves are also
recorded in this register when the cheque book issued an entry is passed in the
cheque book issue register.
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In case of loss of cheque book or requisition slip on cheque book the
customer has to fill the Form No. 216-B to obtain a new cheque book.
Utility Bills Collection
I worked in the utility bills collection department as the MCB collects utility
bills on behalf of WAPDA, Sui Gas Companies, and Pakistan Telecommunication
Corporation Limited by putting the stamp on the utility bills “Paid”, Date of
payment, Signature of the officer receiving the utility bills. After receiving utility
bills a list is made on the form which is called Bills scroll form. One copy of the
scroll is with the bank for evidence whereas the original copy with the receipt of
the bills is sent to the billing department of the respective corporation. The bank
charge commission on the bills.
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Cash Management
The most important department of MCB which deals in money (receiving
deposits at lower rates and lend them out at higher rates of interest). This
department also called as Chest Department and manager of it is called CashManager or Chest Manager. In those branches where this department is not
separately existed, the branch manager performs the duties of the Chest
Manager.
The excess cash (More than its insured limit by the insurance company) of
the branches of the region is collected by the main branch. The main branch is
also bound to send its excess cash (more than its insured limit) to the State Bank
of Pakistan. No branch can have cash its safe more than its insurance at anytime at the time of closing cash, if it is so the manager will be responsible (not the
insurance company) whether or not he informed to the regional office (exception
to the limit which is insured for the day).
New Notes and Prize Bonds are also part and parcel of the Cash
Management. Keys of the Safe lockers are with the three authorized persons
each one of them is responsible for cash as at the time of closing the cash the
officers including Cash officer presented and lock the safe after counting andscrutinize the cash. The cash officer maintain its daily cash book with
specification of notes (Bonds are also recorded in the books in relation with cash)
and other vouchers, after being satisfied the manager authenticates the books
and vouchers regarding cash with stamp and signature. at the end I would like to
conclude that the cash management is being done in the MCB very effectively.
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SWOT Analysis
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The SWOT shows the Strength, Weaknesses, Opportunities, and Threats
of any organization. The SWOT analysis of MCB is as follows.
Strengths
MCB is first private bank of Pakistan which have created well quality
management,
Good innovation of products and services, and well marketing in the
financial market of banks.
MCB got a very well reputation in the banking sector of Pakistan.
MCB have stronger and durable products for the customer’s satisfaction.
The services and customer satisfaction is of great importance for the
MCB, so the bank cares for them.
The new changes which are introducing within banking sector, the MCB
adopts them quickly and efficiently.
MCB introduced a high qualified and educated staff to control the overall
activities of bank.
Weaknesses
The majority of peoples are not well awarded about the new products and
services of MCB.
The poor people hesitate to use the specialized system and environment
of bank.
The focus of MCB is on employee’s individual role in the bank, this creates
differences within employees thinking style.
A weakness of MCB is that, there exists mismanagement within a branch
working routine. The closing time of bank is 5pm, but the employee’s
works till 7pm or 8 pm for completing their work.
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The management of MCB does not prefer to be a leader and prefer to be
a follower of others.
Slow acceptance and improvement of technological thing.
Opportunities
In the matter of credit division and remittances, the MCB have greater
opportunities in the market if the liberal policies are adopted by bank.
The well educated employees are of huge worth for the organization if
they perform their duty well. They can create changes in working style of
bank.
If the MCB adopt the information technology, the customer services can
be improved by doing so.
The accumulated deposit can be created by investing in big financial
organization like Agro based sector, leasing departments, personalizing
finance.
Threats
The effect of Government policies can create danger for the banking
sector.
The banking sector is well now days, but still they first get permission from
the stat bank regarding the daily life activities.
The competition in the banking sector has also created some threats. Any
bank who wants to prevail in the market must prove him by providing
services and giving advantages to the customers. Other wise, he will be
out of market.
Due to mismanagement, the customers got angered from the banking
services.
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Introduction of credit marketing by the local and foreign banks badly effect
the environment of MCB.
The creation and adoption of information technology and promotion of the
computer by the local as well as foreign banks will affect the services and
business of the MCB.
Conclusion
According to the experience which I have gained during my internship and
some of my observation at the time of preparing this report is as follows:
I have done well during my internship; I have learned about the bank and
banking system. How the banks satisfies their customer and how the bank fulfill
the requirements of his customers.
According to my own observation, the MCB is really a great bank which provides
maximum facilities to the customers. But I have also observed that, some rigid
thinking peoples do not like the system of MCB. They think that, MCB is a lower
category bank. I just want to say that, this type of customer dishearten the
employee’s efficiency within bank and try to confuse other good customer. This
type of customers say secret thing on spot and before other customers who are
available in the bank at same time. So this act would lead to a lowering down the
goodwill of MCB.
Overall MCB is a well furnished organization. During my internship I have
gained not only good experience but also so many new things of daily life within
an organization.
The conclusion of MCB in the light of SWOT analysis is that, The MCB is almost
covering the whole Pakistan and becoming the popular and super bank of
Pakistan.
The strength of MCB is that, the bank is now implementing new technology, new
techniques, innovation, aggressiveness, creativity, and reengineering process to
fulfill all the necessary instruments for banking system.
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The new investors and other powerful existing investor in the Pakistan also like
MCB. These are one of the great opportunities for MCB, because the huge
amount of cash which is deposited to MCB from investor’s would be very
beneficial for MCB. The bank can maintain his loans, funds, and other
investments through this cash.
The implementation of new technology and new communication system removes
the weaknesses of MCB to so much extent.
The threat for MCB is that, if there will be any uncertainty exist in the banking
system of MCB, the due to this error and inconveniences the big investor wants
to migrate from MCB to any other bank, then MCB must suffer a loss.
So for making himself extra strong, the MCB must note all the big and small
changes in the environment and if any changing in providing the services are
introduces by the other banks, the MCB must implement the same facility in his
branches. In this way, The MCB will not loss his goodwill and can achieve his
desired goals and can gain more and more goodwill and success in the banking
environment. MCB can also attain top position in the market and can hold
maximum shares and can become the leader in future.
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BALANCE SHEET
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PROFIT & LOSS ACCOUNT
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CASH FLOW STATEMENT
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FINANCIAL ANALYSIS
"Financial statement analysis is the process of identifying of financial
strengths and weaknesses of the firm by properly establishing relationship
between the items of the balance sheet and the profit &loss account," and it is
done through ratio analysis.
Ratio Analysis
Ratio means “one number expressed in term of another a ratio is
statistical yardstick by mean of which relationship between two or various figures
can be compared or measured. Here we are going to explain the ratio analysis
of MCB.
CATEGORIES OF FINANCIAL RATIOS
Financial ratios can be divided into the following six parts.
A. Liquidity ratios
B. Activity ratios
C. Leverage ratios
D. Profitability ratios
E. Investor ratios
F. Bank special ratios
A. Liquidity ratios
Current ratios
Quick ratios
Absolute Liquid ratio
B. Activity ratios
Inventory turnover ratio
Average collection period
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Average payment period
Total assets turnover ratio
C. Leverage ratios
Proprietary ratio
Debt ratio
Debt to Equity ratio
Debt to Tangible net worth ratio
Debt to Funds ratio
External-Internal Equity ratio
D. Profitability ratio
Return on total assets
Return on-equity
Return on investment
Return on fixed assets
Average profit per branch
Net profit Margin
Interest income to total income
Interest expense to total expense
Return on advances
E. Investor Ratios
Earning per share
P/E ratio
Dividend per share
Dividend yield ratio
Dividend payout ratio
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Break up value/Book value per share
M/B ratio
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F. Bank special Ratios
Earning assets to total assets
Return on earning assets
Net margin to earning assets
Loan loss coverage ratio
Equity to total assets
Deposit time equity
Loan to deposit ratio
Profitability Ratios
Profitability ratios are used to assess a business's ability to
generate earnings as compared to its expenses and other relevant costs incurred
during a specific period of time. It include following ratios:
• Net Profit Margin
• Return on Assets• DuPont Return on Assets
• Operating Income Margin
• Return on Operating Assets
• Return on Total Equity
• Gross Profit Margin
We will now discuss it one by one.
Net Profit Margin
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Profit margin is very useful when comparing companies in similar industries.
A higher profit margin indicates a more profitable company that has better control
over its costs compared to its competitors.
Formula
Net profit Margin = Net Profit / Net sales
Calculation
Year 2010 Year 2009 Year 2008
16873175000 / 54821296000
= 0.308
15495297000 / 51616007000
= 0.300
15374600000 /
40043824000
= 0.384
Working
Mark-up / return / interest earned……(sales)
………….
Mark-up / return / interest expensed ……………
Net mark-up / interest income…….…………….
Provision for diminution in the value of
investment-net
Provision against loans & advances –
54,821,296
17,987,767
36,833,529
444,476
3,100,594
52,047
3,597,117
51,616,007
15,837,322
35,778,685
1,484,218
5,796,527
41,576
7,322,321
40,043,82
11,560,74
28,483,08
2,683,99
1,335,12
-
4,019,12
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net……………
Bad debts written off
directly…………………………
Net markup / interest income after
provision…………
Non –markup / interest income
Fee, commission & brokerage
income…………………
Dividend income……………………...
………………..
Income from dealing in foreign
currencies……………
Gain on sale of
securities………………………………
Unrealized loss on revaluation of investments
classified as held for trading………………………………………
Other incomes
…………………………………………
Total non-markup / interest
income……………………
Non- markup / interest expense
Administrative expense
………………………………
Other provision –
33,236,412
4,129,540
543,906
632,346
411,834
-
547,680
6,265,306
39,501,718
12,173,942
88,261
986,44013,248,643
26,253,075
8,027,433
-
1,352,467
9,379,900
16,873,175
15,779,127
21,792
28,456,364
3,455,948
459,741
341,402
773,768
-
612,026
5,642,885
34,099,249
10,111,330
142,824
690,15010,944,304
23,154,945
7,703,305
(2,232,226)
2,188,569
7,659,648
15,495,297
9,193,332
22,324
24,463,96
2,953,39
617,554
727,564
740,429
(103,198
855,697
5,791,44
30,255,40
7,546,87
23,135
817,8248,387,83
21,867,56
7,341,25
(864,824
16,533
6,492,96
15,374,60
5,130,75
21,319
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net…………………………………..
Other
charges………………………………………….
Total non-markup / interest
expense…………………..
Profit before taxation
………………………………….
Taxation - Current
year……………………………..
- Prior years……………………………..
- Deferred ………………………………..
Profit after taxation……………………(Net Profit)
…
Un appropriated profit brought forward
……………….Transfer from surplus on revaluation of fixed
assets –net of tax
………………………………………………
15,800,919
32,674,094
9,215,656
24,710,953
5,152,06
20,526,66
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Graphical representation
Net Profit Margin
0.308 0.3000.384
00.1
0.2
0.3
0.4
0.5
Year 2010 Year 2009 Year 2008
Interpretation
Net profit margin measures how much of each dollar earned by the
company is translated into profits. A low profit margin indicates a low margin of
safety: higher risk that a decline in sales will erase profits and result in a net loss.
Net profit margin provides clues to the company's pricing policies, cost structure
and production efficiency. Different strategies and product mix cause the net
profit margin to vary among different companies. Net profit margin is bit better in
year 2008 as compare to other two years.
Return on assets
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Return on assets is a measure of how effectively the firm’s assets are
being used to generate profits ROA gives an idea as to how
efficient management is at using its assets to generate earnings. Calculated by
dividing a company's annual earnings by its total assets, ROA is displayed as a
percentage. Sometimes this is referred to as "return on investment".
Formula
Return on Assets = Net profit / Total Assets * 100
Calculation
Year 2010 Year 2009 Year 2008
16873175000 / 567552613000
= 0.030 * 100
= 3.00 %
15495297000 / 509223727000
= 0.030 *100
= 3.00 %
15374600000 /
443615904000
= 0.035 * 100
= 3.50 %
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Working
ASSETS:
Cash & balances with treasury banks
……….
Balances with other
bank……………………
Lending to financial institutions
……………..
Investments -net …………………………….
Advances –net
………………………………..
Operating fixed assets
………………………...
Deferred tax
assets…………………………..
Other assets –net
……………………………..
Total Assets
…………………………………..
45,407,183
1,478,569
4,401,781
213,060,882
254,551,589
20,947,540
-
27,705,069
567,552,613
38,774,871
6,009,993
3,000,000
167,134,465
253,249,407
18,014,896
-
23,040,095
509,223,727
39,631,1
4,043,10
4,100,07
96,631,8
262,135,4
17,263,7
-
19,810,4
443,615,9
Calculation for net profit is the same as calculated before.
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Graphical representation
Return on Assets
3% 3%
3.50%
3%
3%
3%
3%
3%
4%
Year 2010 Year 2009 Year 2008
Interpretation
The purpose of this ratio is to calculate the return that the business is
providing on total assets. This is important from owner’s point of view that whatthe business is earning on its assets, how their funds are being utilized. This ratio
also provides an indicator of overall effectiveness of management in generating
profit with the available assets the higher the percentage the better for the
organization. If we analyze the above situation we can find that in 2008 the ratio
is pretty good but it drops in year 2009 and good thing is that it doesn’t drop
further are remain constant at 3% in year 2010 also.
DuPont Return on Assets
Return on assets (ROA) is a percentage of the after-tax income as
compared to the total assets of the company. Management at Du Pont came up
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with Return on Assets (Du Pont), an approach that determines the impact of
asset turnover and profit margin on profits. This interactive tutorial explains the
concept by walking you through the calculations, including where to find the
numbers on the financial statements.
Formula
DuPont Return on Assets = (Net Income / Sales) X (Sales / Total Assets)
Calculation
Year 2010 Year 2009 Year 2008
16873175000/ 54821296000
*
54821296000 / 567552613000
= 0.030
15495297000 / 51616007000
*
51616007000 /509223727000
= 0.030
15374600000 /
40043824000
*
40043824000 /
443615904000
= 0.035
Working
The values of net income, sales and total assets are the same as calculated
above.
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Graphical representation
DuPont Return on Assets
0.030 0.030
0.035
0.026
0.028
0.030
0.032
0.034
0.036
Year 2010 Year 2009 Year 2008
Interpretation
DuPont Return on Assets actually shows the relation of the net income,
sales and total asset during the period. According to the result of the analysis it is
clearly indicated that this ratio is same in year 2010 & 2009 but its high in 2008.
Operating Income Margin
A ratio used to measure a company's pricing strategy and operating
efficiency.
Formula
Operating income margin = operating income / net sale
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Calculation
Year 2010 Year 2009 Year 2008
36833529000 / 54821296000
= 0.672
35778685000 / 51616007000
= 0.693
28483084000 /
40043824000
= 0.711
Working
OPERATING INCOME 2010
(Rs. ‘000’)
2009
(Rs. ‘000’)
2008
(Rs. ‘000
Mark-up / return / interest earned……
Mark-up / return / interest expensed ……………Net mark-up / interest income (Operating
income) Or Gross Profit
54,821,296
17,987,76736,833,529
51,616,007
15,837,32235,778,685
40,043,82
11,560,7428,483,08
Calculation of sale is same as calculated above
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Graphical representation
Operating Income Margin
0.672
0.693
0.711
0.64 0.66 0.68 0.7 0.72
Year 2010
Year 2009
Year 2008
Interpretation
This ratio measures the percentage of profit earned on sale after
deducting operating expenses from the Gross Profit. This ratio indicates that how
efficiently the expenses are being controlled by management. The higher the
margin the lower would be the operating expenses and better would be
management ability to control expense. As we look at the graph the figures are
little disappointed as for as organization is concern as you can clearly see in year
2008 company is in a better position to manage the expanses but unfortunately it
drops year by year which is not a good sign because it shows company has no or
less control on there expanses.
Return on operating assets
The return on operating assets measure only includes in the
denominator those assets actively used to create revenue. This focuses
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management attention on the amount of assets actually required to run the
business, so that it has a theoretical targeted asset level to achieve.
Formula
Return on operating assets = Net Profit / Operating Assets
Calculation
Year 2010 Year 2009 Year 2008
16,873,175,000 /
325308093000
= 0.052
15495297000 / 313039174000
= 0.049
15374600000 /
323130454000
= 0.048
Working
2010 2009 2008
Cash & balances with treasury banks = 45,407,183 38,774,871
39,631,172
Lending to financial institutions = 4,401,781 3,000,000
4,100,079
Advances –net = 254,551,589 253,249,407
262,135,470
Operating fixed assets = 20,947,540 18,014,896
17,263,733
Operating assets = 325308093000 313039174000
323130454000
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The value of net profit is the same as calculated before
Graphical representation
Return on operating assets
0.052
0.0490.048
0.046
0.048
0.05
0.052
0.054
Year 2010 Year 2009 Year 2008
Interpretation
This ratio gives the operating efficiency of management. This ratio
indicated how Operating assets are utilized. In other words how much assets are
used in operating activities. High Return on Operating Asset ratio shows the
efficient use of operating assets. The ratio is high in 2010 as compare to 2009
and 2008
Return on total equity
Return on equity (ROE) measures the rate of return on the ownership
interest (shareholders' equity) of the common stock owners. It measures a firm's
efficiency at generating profits from every unit of shareholders' equity (also
known as net assets or assets minus liabilities). ROE shows how well a company
uses investment funds to generate earnings growth.
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Formula
Return on Equity = Net Income/Shareholder's Equity *100
Year 2010 Year 2009 Year 2008
16873175000 / 69180011000
= 0.244 * 100
= 24.4 %
15495297000 / 61075932000
= 0.254 *100
= 25.4 %
15374600000 /
52244865000
= 0.294 *100
= 29.4 %
Working
Amounts of net income and share holders equity are the same as calculated
above.
Graphical representation
24.40% 25.40%29.40%
0.00%
10.00%
20.00%
30.00%
Year 2010 Year 2009 Year 2008
Return on total equity
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Interpretation
Return on Equity (ROE) is an indicator of company's profitability by
measuring how much profit the company generates with the money invested by
common stock owners. It is also known as Return on Net worth this ratio
doesn’t seem to be fluctuate too much just a little drop in percentage in
year 2009 & 2010 as compare to year 2008 .
Gross Profit Margin:
Gross profit margin is a measure of the gross profit earned on sales. The
gross profit margin considers the firm’s cost of goods sold, but does not include
other costs. It also used to assess a firm's financial health by revealing
the proportion of money left over from revenues after accounting for the cost of
goods sold. Gross profit margin serves as the source for paying additional
expenses and future savings.
Formula
Gross Profit Margin = Gross Profit / Net Sales
Calculation
Year 2010 Year 2009 Year 2008
36833529000 / 54821296000
= 0.672
35778685000 / 51616007000
= 0.693
28483084000 /
40043824000
= 0.711
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Working
Values of gross profit and sales are the same as calculated before.
Graphical representation
0.672
0.693
0.711
0.64
0.66
0.68
0.7
0.72
Year 2010 Year 2009 Year 2008
Gross Profit Margin
Interpretation
Gross profit margin is an indicator of how efficient a company is and how well
it controls its costs. The higher the margin is, the more effective the company is
in converting revenue into actual profit. By analyzing this graph we can easily say
that the organization is performing good in year 2008 but unfortunately the gross
profit margin come down year by year.
Activity Ratios
Indicates quality of receivables and how successful the firm is in its
collections.
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Total asset turn over
The total asset turnover represents the amount of revenue generated by a
company as a result of its assets on hand. This equation is a basic formula for
measuring how efficiently a company is operating. The sales represent all the
revenue generated by the company and is disclosed on a company's income
statement. The total assets represent the assets listed on the company's
balance sheet.
Formula
Total Assets Turnover = Total Net Sales / Total Assets
Calculation
Year 2010 Year 2009 Year 2008
54821296000 / 567552613000
= 0.097
51616007000 / 509223727000
= 0.101
40043824000 /
443615904000
= 0.090
Working
The values of sale and assets are the same as calculated above.
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Graphicalrepresentation
Total asset turn over
0.097
0.101
0.090
0.08 0.085 0.09 0.095 0.1 0.105
Year 2010
Year 2009
Year 2008
Interpretation
Total asset turnover measures the activity of the assets and the ability of
the firm to generate sales through the use of sales there is a decreasing trend
from year 2008 but in 2009 it increases not only increases but at the hightest
place as compare to 2010 & 2008 and again falls in 2010.
The lower the total asset turnover ratio, as compared to historical data for the
firm and industry data, the more sluggish the firm's sales. This may indicate a
problem with one or more of the asset categories composing total assets -
inventory, receivables, or fixed assets. The small business owner should analyze
the various asset classes to determine where the problem lies.
There could be a problem with inventory. The firm could be holding obsolete
inventory and not selling inventory fast enough. With regard to accounts
receivable, the firm's collection period could be too long and credit accounts may
be on the books too long.
Fixed Assets turnover
Fixed assets turnover ratio is also known as sales to fixed assets ratio.
This ratio measures the efficiency and profit earning capacity of the concern.
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Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio
means under-utilization of fixed assets.
Formula
Fixed Assets Turnover = Net Sales / Total Fixed Asset
Calculation
Year 2010 Year 2009 Year 2008
54821296000 / 48652609000
= 1.127
51616007000 / 41054991000
= 1.257
40043824000 /
37074209000
= 1.080
Working
Total fixed assets = Total assets – Current Assets
The value of total assets & current assets are calculated above we just
subtract the current assets from total assets in order to determine the value of
fixed assets. And also the value of sale is the same as calculated above.
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Graphical representation
1.127
1.257
1.08
0.9 1 1.1 1.2 1.3
Year 2010
Year 2009
Year 2008
Fixed Assets turnover
Interpretation
The formula is useful in analyzing growth companies to see if they are
growing sales in proportion to their asset bases. The fixed assets turnover ratio
really has little meaning except when it is put in the context of industrial
averages, and consideration is made whether new capital expenditures recentlyundertaken were such that they could skew the ratio. For example, the turnover
ratio will be lower just after a significant amount of fixed asset is acquired to
upgrade or expand the plant facilities. In the middle mean to say in the year 2009
the turnover is higher as compare to other two years.
Market Ratios
Dividend per share
The amount of dividend that a stockholder will receive for each share of
stock held. It can be calculated by taking the total amount of dividends paid and
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dividing it by the total shares outstanding.
Formula
Dividend per share = Dividend / No of Shares
Calculation
Year 2010 Year 2009 Year 2008
6,461,839,000 / 760214979
= 8.5
5,183,327,000 / 760214979
= 6.82
5,654,493,000 / 760214
= 7.44
Working
No of shares are taken from Pattern of share holding (As of December 31,
2010). And the amounts of these dividends are taken from statement of changes
of equity. A scanned copy of changes of equity is also attached for further
assistance.
Dividends YEAR 2010 YEAR 2009 YEARInterim Cash Dividend –
March
Interim Cash Dividend –
June
Interim Cash Dividend –
Sep
1,900,549,000
2,280,645,000
2,280,645,000
6,461,839,000
1,727,781,000
1,727,773,000
1,727,773,000
5,183,327,000
1,884,8
1,884,8
1,884,8
5,654,4
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Graphical representation
Dividend Per Share
8.50
6.82 7.44
0.00
2.00
4.00
6.00
8.00
10.00
Year 2010 Year 2009 Year 2008
Interpretation
Graph tells that the dividend per share is little bit fluctuate from year to
year in 2010 it is high it Is about 8.5 which drops to 6.82 in year 2009 and again
increase to 7.44 in 2008.
Earning Per Share
Total earnings divided by the number of shares outstanding. Earning per share ratio indicates the proportion of net profit; a company is getting per share.
Share holders are always interested to know the proportionate rate; a company is
getting per share. As price is numerator and earning in denominator, therefore
lower value means better return.
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Formula
Earning Per share =Profit Available to shareholders / No of shares outstanding
Calculation
Year 2010 Year 2009 Year 2008
32674094000 / 760214979
= 42.98
24710953000 / 760214979
= 32.51
20526669000 / 760214
= 27.00
Working
No of shares are taken from Pattern of share holding (As of December 31, 2010)
Mark-up / return / interest earned………………
Mark-up / return / interest expensed ……………
Net mark-up / interest income…….…………….
Provision for diminution in the value of
investment-net
Provision against loans & advances –
net……………
Bad debts written off
directly…………………………
Year 2010
54,821,296
17,987,767
36,833,529
444,476
3,100,594
52,047
3,597,117
33,236,412
Year 2009
51,616,007
15,837,322
35,778,685
1,484,218
5,796,527
41,576
7,322,321
28,456,364
Year 200
40,043,82
11,560,74
28,483,08
2,683,99
1,335,12
-
4,019,12
24,463,96
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Net markup / interest income after
provision…………
Non –markup / interest income
Fee, commission & brokerage
income…………………
Dividend income……………………...
………………..
Income from dealing in foreign
currencies……………
Gain on sale of
securities………………………………
Unrealized loss on revaluation of investments
classified as held for
trading………………………………………
Other incomes
…………………………………………
Total non-markup / interestincome……………………
Non- markup / interest expense
Administrative expense
………………………………
Other provision –
net…………………………………..
Other
charges………………………………………….
Total non-markup / interest
4,129,540
543,906
632,346
411,834
-
547,680
6,265,306
39,501,718
12,173,942
88,261
986,440
13,248,643
26,253,075
8,027,433
-
1,352,467
9,379,900
16,873,175
15,779,127
21,792
15,800,919
32,674,094
3,455,948
459,741
341,402
773,768
-
612,026
5,642,885
34,099,249
10,111,330
142,824
690,150
10,944,304
23,154,945
7,703,305
(2,232,226)
2,188,569
7,659,648
15,495,297
9,193,332
22,324
9,215,656
24,710,953
2,953,39
617,554
727,564
740,429
(103,198
855,697
5,791,44
30,255,40
7,546,87
23,135
817,824
8,387,83
21,867,56
7,341,25
(864,824
16,533
6,492,96
15,374,60
5,130,75
21,319
5,152,06
20,526,66
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expense…………………..
Profit before taxation
………………………………….
Taxation - Current
year……………………………..
- Prior years……………………………..
- Deferred ………………………………..
Profit after
taxation……………………………………..
Un appropriated profit brought forward
……………….
Transfer from surplus on revaluation of fixed
assets –net of tax
………………………………………………
Profit available for appropriation…………………
Graphical representation
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42.98
32.51
27
0.00
20.00
40.00
60.00
Year 2010 Year 2009 Year 2008
Earning Per Share
Interpretation
The earnings per share calculation is the company's net earnings for the
period divided by the average number of shares outstanding during the period.
Corporate earnings are released quarterly and totaled for the fiscal year. The net
earnings are the total revenues for the period minus all of the expenses incurred
during the reporting period. A corporation will report the number of shares
outstanding in the earnings report. The numbers required to calculate the
earnings per share will be found in the income statement portion of a company's
earnings report. This ratio shows the increasing trend in 2008, 2009 and 2010.
Because net profit increase but outstanding share are constant in all of these
three years.
Price / Earning Ratio
This ratio is calculated for those shares which have market value. This
ratio compares earning per share with market value of that share. The formula for
calculating this ratio is as follows:
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Formula
Price Earning Ratio = Current market Share price/ Earning per Share
OR
Price/Earning Ratio = market Price / Earning Ratio
Calculation
Year 2010 Year 2009 Year 2008
207.32 / 42.98
= 4.82
207.32 / 32.51
= 6.38
207.32 / 27.00
= 7.68
Current Ratio
It shows the relationship between current assets and current liabilities. And
also it indicates the short term financial position or liquidity of a firm.
Formula
Current ratio = current assets / current liabilities
Working
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YEAR 2010
Current assets
Cash & balances with treasury banks = 45,407,183,000
Balances with other bank = 1,478,569,000
Lending to financial institutions = 4,401,781,000
Investments -net = 213,060,882,000
Advances –net = 254,551,589,000
Total current assets = 518,900,004,000
Current liability
Bills payable = 10,265,537,000
Borrowings = 25,684,593,000
Deposits & other accounts = 431,371,937,000
Total current liabilities = 467,322,067,000
YEAR 2009
Current assets
Cash & balances with treasury banks = 38,774,871,000
Balances with other bank = 6,009,993,000
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Lending to financial institutions = 3,000,000,000
Investments -net = 167,134,465,000
Advances –net = 253,249,407,000
Total current assets = 468,168,736,000
Current liability
Bills payable = 8,201,090,000
Borrowings = 44,662,088,000
Deposits & other accounts = 367,604,711,000
Total current liabilities = 420,467,889,000
YEAR 2008
Current assets
Cash & balances with treasury banks = 39,631,172,000
Balances with other bank = 4,043,100,000
Lending to financial institutions = 4,100,079,000
Investments -net = 96,631,874,000
Advances –net = 262,135,470,000
Total current assets = 406,541,695,000
Current liability
Bills payable = 10,551,468,000
Borrowings = 22,663,840,000
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Deposits & other accounts = 330,181,624,000
Total current liabilities = 363,396,932,000
Year 2008
406541695000 / 363396932000
= 1.119 : 1
Year 2009
468168736000 / 420467889000
=1.113 : 1
Year 2010
518900004000 /467322067000
= 1.110 : 1
ACID TEST RATIO
Formula
Acid test ratio OR Quick ratio = Current assets – Advances / Current Liability
Calculation
Year 2010 Year 2009 Year 2008
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518900004000
-254551589000 /
467322067000
= 264348415000 /
467322067000
= 0.566
468168736000 –
253249407000 /
420467889000
= 214919329000 /
420467889000
= 0.511
406541695000
262135470000/
363396932000
=144406225000
363396932000
= 0.397
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LEVERAGE/SOLVENCY ANALYSIS
Solvency analysis of a firm indicates the amount of the other people’s
money being used to generate profit. In general, these analyses are more
concerned with long term debts, because these commit the firm to a stream of
payments over the long run. Solvency analysis includes:
Proprietary ratio
Debt ratio
Debt to Equity ratio
Debt to Tangible net worth ratio
Debt to Funds ratio
External-Internal Equity ratio
Proprietary Ratio
Total Equity
Proprietary Ratio=
Total Assets
Year 2010 (Rs. In Million) 2009 (Rs. In Million) 2008 (Rs. In Million)
Total Equity 79,204 69740 58436
Total Assets 5,67,553 509224 443616
Ratio 0.14 0.13 0.13
Debt Ratio/ Solvency Ratio
Total Debts
Debt Ratio =
Total Assets
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Year 2010 (Rs. In Million) 2009 (Rs. In Million) 2008 (Rs. In Million)
Total Debts 488348 439484 385180
Total Assets 5,67,553 509224 443616
Ratio 0.86 0.85 0.86
Debt to Equity Ratio
Total Debts
Debt to Equity =
Equity
Year 2010 (Rs. In Million) 2009 (Rs. In Million) 2008 (Rs. In Million)
Total Debts 488348 439484 385180
Equity 79,204 69740 58436
Ratio 6.16 6.30 6.59
Debt to Tangible Net worth
Total Debts
Debt to Equity =
Equity
Year 2010 (Rs. In Million) 2009 (Rs. In Million) 2008 (Rs. In Million)
Total Debts 488348 439484 385180
Equity 79,204 69740 58436
Ratio 6.16 6.30 6.59
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Debt to Funds Ratio
Long Term Debt
=
Long Term Funds
Year 2010 (Rs. In Million) 2009 (Rs. In Million) 2008 (Rs. In Million)
Long Term Debts 255452 253249 262135
Long Term Funds 431372 367605 330182
Ratio 0.59 0.68 0.79
External Internal Equity Ratio
External Equity=
Internal Equity
Year 2010 (In Million) 2009 (Rs. In Million) 2008 (In Million)
External Equity 488348 439484 385180
Internal Equity 79,204 69740 58436
Ratio 6.16 6.30 6.59
INTERPRETATION
The overall leverage position is showing better trend as compare to
previous year. The contribution of equity in total assets is increasing, while the
debt contribution is decreasing which is better for business. Equity ratio is
increased which shows the better condition of the bank. Solvency Ratio is in
good condition. So we can say that overall Solvency condition of the MCB is
better with the comparison to the previous year.
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TREND ANALYSIS
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In trend analysis we done two types of analysis, these are
1. Horizontal Analysis
It is conducted by setting consecutive balance sheet, income statement or
statement of cash flow side-by-side and reviewing changes in individual
categories on a year-to-year or multiyear basis.
A comparison of statements over several years reveals direction, speed
and extent of a trend(s). The horizontal financial statements analysis is done by
restating amount of each item or group of items as a percentage.
2. Vertical Analysis
Like horizontal analysis this can also done for balance sheet and income
statement. Here we assign 100% value to any key item of balance sheet or
income statement and then see portion of other items in this percentage.
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Particulars 2008 2009 2010
ASSETS
Cash 100% 133% 132%
Balance with other banks 100% 264% 68%
Lending to financial institutions 100% 32% 30%
Investments_ net 100% 75% 78%
Advances – net 100% 174% 228%
Operating fixed assets 100% 209% 214%
Other assets_net 100% 69% 72%
Deferred tax assets_net 100% 0% 191967%
100% 110% 127%
LIABILITIES
Deposits and other accounts 100% 121% 126%
Borrowings from financial inst. 100% 35% 125%
Bills payable 100% 121% 136%
Other liabilities 100% 72% 95%
Deferred tax liabilities 100% 15% 0%
Sub ordinated loans 100% 99.9% 99.8%
Liabilities against assets 100% 0% 0%
100% 109% 123%
NET ASSETS 100% 124% 199%
REPRESENTED BY
Share capital 100% 126% 160%
Reserve 100% 187% 443%
Unappropriated profit 100% 26% 34%
100% 146% 283%
Surplus on revaluation of assets 100% 99% 101%
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The horizontal analysis of the balance sheet of the bank over all give the
positive trend .The result of the balance sheet depict that there is a constant
increasing trend in cash, total assets, total liability and equity. There is
extraordinary high trend in 2010 in all factors of balance sheet as compare to
2007.
The trend of cash is increasing to upward with 32%. The trend of Total
asset is also increasing to upward with 27%, and the trend of total liabilities is
also increasing with 23% to upward. Equity is increased by 99%.
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PROFIT & LOSS A/C
Particulars 2008 2009 2010
Mark-up/return/interest earned 100% 59% 115%
Mark-up/return/interest expensed 100% 34% 46%
Net mark-up/interest income 100% 75% 161%
Provision against non-performing loans and advances 100% 442575% 1242153%
Provision for diminution in the value of investments 100% -172876% -98982%
Bad debts written off directly 100% 1.2% 0.16%
Provision for potential lease losses 100% 234% 0%
100% 39% 159%Net mark-up/interest income after provisions 100% 79% 161%
NON MARK-UP/INTEREST INCOME
Fee commission and brokerage income 100% 220% 270%
Dividend income 100% 127% 161%
Income from dealing in foreign currencies 100% 193% 106%
Other income 100% 116% 217%
Gain on Investments 100% 209% 226%
Gain / Loss on trading in government securities 100% -11440% -851%
Total non-mark-up/interest income 100% 163% 209%
100% 92% 172%
NON MARK-UP/INTEREST EXPENSES
Administrative expenses 100% 96% 87%
(Reversal) / Other provisions 100% 149593% -72740%
Other charges 100% 3189% 13468%
Total non-mark-up/interest expenses 100% 92% 81%
Compensation on delayed tax refund 100% 513852% 340596%
PROFIT BEFORE TAXATION 100% 130% 420%
Taxation – current year 100% 102% 301%
Prior years 100% 0% -149763%
Deferred 100% -42% 216%
PROFIT AFTER TAXATION 100% 140% 513%
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Unappropriated profit brought forward 100% 69% 58%
Transferred from surplus on revaluation of fixed
Assets
100% 42% 137%
Profit available for appropriation 100% 116% 402%
APPROPRIATIONS
Transfer to
Statutory reserve 100% 146% 256%
General reserve 100% 800000% 5500000%
Capital reserve 100% 0% 0%
Reserve for issue of bonus shares 100% 84% 213%
Interim cash dividend Rs 1.75 per share 100% 51% 97%
Interim cash dividend Rs 1.50 per share 100% 50577% 639799%
100% 156% 541%
Unappropriated profit carried forward 100% 26% 34%
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According to horizontal analysis of profit and loss account there is
increasing trend. In 2010 there is increase in all factors such as interest income
interest income interest income after provision and profit before and after tax
because the trust of people on banks is increasing day by day. The increase in
profit in 2010 is almost 5 times as compare to 2007
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Particulars 2008 2009 2010
ASSETS 100% 100% 100%
Cash 9% 9% 8%
Balance with other banks 0.5% 2.2% 2.8%
Lending to financial institutions 3.8% 4% 3.3%
Investments_ net 47% 26% 23%
Advances – net 36% 53% 60%
Operating fixed assets 1.3% 2% 27%
Other assets_net 2.4% 3.8% 0.4%
Deferred tax assets_net 0% 0% 0%
100% 100% 100%
LIABILITIES 100% 100% 100%
Deposits and other accounts 81% 90% 83%
Borrowings from financial inst. 12.5% 3% 10%Bills payable 3.2% 3% 3%
Other liabilities 2.4% 2.6% 3.4%
Deferred tax liabilities 0.3% 0.8% 0%
Sub ordinated loans 0.6% 0.6% 0.6%
Liabilities against assets 0% 0% 0%
100% 100% 100%
NET ASSETS 100% 100% 100%
REPRESENTED BY
Share capital 28% 23% 18%
Reserve 29% 39% 58%
Unappropriated profit 3% 1% 1%
70% 63% 77%
Surplus on revaluation of assets 30% 37% 23%
100% 100% 100%
Assets
Investments
Cash and balances
with treasury banks
Operatig fixed
assets
Deferred tax assets
Other assets
Balances with other
banks
Lendings to financial
institutions
Advances
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Share capital
Reserves
Bills payable
UnappropriatedprofitOther liabilities
Deferred tax
liabilitiesLiabilities against
assets subject to
finance lease
Sub-ordinated loans
Deposits and other
accounts
Borrowings from
financial institutions
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INTERPRETATION
In balance sheet of bank the most important item is earning assets. There
are four earning assets. Bank has strong earning assets like advances
investments and lending to financial institutions has major percentage in of
assets of bank. In liability and equity analysis the Borrowings from financial
institutions and deposits have major portion and reserve and share capital has
major portion in equity
SUGGESTIONS & RECOMMENDATIONS
From the Quantum of the profit and its financial data it can be easily
judged that after privatization, MCB is performing well. Its deposits are growing
day by day and so its profitability. The controlling body is responsible for the
productive performance of the Bank.
Following are my observation and suggestion to improve the efficiency for the
development of the bank.
• There is a criticism on the banking management that the salaries of the
employees are decreasing in every succeeding year. And I think this will
shake the confidence and working habit of the employees.
• There is another recommendation about the bank that there is no proper
timing of the bank and there is made an unnecessary delay in the banking
transactions, which might not be a good sign for the bank from future
prosperity point of view.
• Staff turnover particularly of trained staff result in financial and other
losses. The amount spent by the bank on employment, induction and
training of outgoing officers constitutes to beat till another officer should
ready prove this work. The exodus of bank officer in the past has
worsened the situation.
• Most of the bank employees, are sticking to one seat only with the result
that they become master of one particular job and loose their grip on other
banking operation. In my opinion all the employees should have regular
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job experience all out-look towards banking. The promotion policy should
be adjusted.
• Refresher Courses for the staff are most important in any international
organization. Alt the employees should have these courses according to
their requirement. Foreign experts can also be called for this purpose.
• Every year some of the employees should be sent for training to other
countries and employees from other branches should be brought here.
Some more reading material should be provided. The purpose should be
to Educate the employees with the advance studies in their field. The
employee should be provided the opportunities to attend and participate in
seminars and lectures on banking.
• Bank should give some more incentive to its employees in order to
remove the conflict between lower and higher officers and should try to
improve the working condition of the bank.
• As such system should be designed that every employee who has some
problems with his officers can communicate it to the higher management
and some steps must be taken to improve that.
• Recruitments should be strictly on merit basis and induction should be
after proper and extensive training.
• Old and lazy staff should be replaced by young, qualified and energetic
staff.
• Foreign branches should be opened in order to capture the international
market and to earn international repute for the bank.
• Working environment, equipment, furniture and staff dressing should be
according to the modern banking style.
• Proper attention should be paid to upgrade customer services.
• Bank should adopt the global organizational banking structure to meet the
international standards of banking sector.
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Annexes and Some Extra Information
Here I want to describe briefly all the necessary documents which are
used within bank. There are so many types of slips and other documents for
fulfilling different types of activities regarding account opening, depositing cash,
withdrawal of cash, and other cheque related documents.
First of all, I want to discuss the Deposit Slip
Deposit Slip
The deposit slip is used when any customers want to deposit his cash at
bank. In this slip, the name of account holder is shown as “Title name” is written,
and account numbers is also written. The Date and name of branch is also
mentioned in this slip. The total amount of rupees which is being deposit is
shown both in words and in figures. At the end the signature of the customer are
taken as proof.
If the customers want to transfer his cash by cheque, this slip would be
attached with cheque and the cheque number is also mentioned in this slip. If
that cheque is of any other bank like UBL, NBP, ABL then the name of the bank
would also be mentioned in this slip. In this way, this slip is filled either by the
customer or from the bank’s employees or either form the internee for providing
services to customers. This splip is shown below
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Online Slip
Online slip is used when any customer wants to transfer his money from
one place to another. The bank provides this facility of transfer cash. By this
facility, the customer can send the money to their loved one or relatives who are
in need. This is also used for the business purpose in the matters of give and
take cash for sale or purchase of any commodity.
In this slip, the name of account holder, number of account is used. In this
slip, the Beneficiary account name, account number and place or branch code is
also used where the cash is being transferred. The bank take some charges for
the sake of providing this facility to the customers.
Both sides of this online slip is being attached by me. But only the first
side is useful for filling purpose. Second side just shows the terms and conditions
for online.
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Cheque Book Requisition Slip
The cheque book requisition slip is used when a new customer opens his
account and applies for to get his cheque book. The banks send him a “Letter of
Thanks”. When customer received this letter and shows this letter to the banks
employees, the bank issues his cheque book.
In this, the title of account, account number and date of issuance are
shown. The account holder signs this slip at three times. When cheque book is
hand over to the account holder, the opening cheqe and last cheque numbers
are also mentioned on this slip.
After this process, the account holder will sign at cheque book register as
a proof of receiving the cheque book. In this slip, the numbers of cheque are also
mentioned because there are three types of cheque books regarding amount of
cheques. First contains 25 cheques, second contain 50 cheques and third
contain 100 cheques.
The bank charges Rs.6 for each leaf in this way cheque book containing
25 cheques is worth Rs.150, Rs.300 for 50 and Rs.600 for 100 leaves cheque
book. These charges are either deducted by account or took in cash.
It also contains two sides process. I have attached both sides of Requisition slip as shown below.
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Cheque Return Memo
The cheque return memo is used when any cheque which is provided by
the customer can not be cashed or transferred due to any certain reason. In
some certain conditions, the customer gives cheque to any other person for the
sake of payment in business use. When the person reaches to the bank and
shows the cheque before bank employees, it is found that, there is no any
balance in this account. So in these types of typical situation if the person leaves
the cheque at the bank, the bank must return the same cheque to the owner.
When cheque return memo is attached with cheque, there are so many reasons
which are mentioned on cheque return memo. The banker must fill the account
holder name, number of account, and he must mention the reason of rejection of
cheque.
The cheque return memo is also used in the clearing matters. When two
different banks matches their balances and notice the whole transaction between
them, if there will be any missing cheque is available which is not transferred, this
would be attached to the cheque return memo and return to the owner of the
cheque.
There are total 30 reasons for retuning the cheque and bank must mention
the most related situation for cheque returning. This slip is show below.
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CONCLUSIONS
It is evident from this report and the financial statements of MCB 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 nto
the future. Therefore, we conclude that MCB has a very prosperous present and
future, which assures the shareholders of wealth maximization. Side by side of it i
think that if bank would be able to cover and control on the above mentioned
recommendations then it would be in such a situation that will really lead it
towards the road of prosperity, development and integrity. And with the above
mentioned sentences i think there is too fault of the customers and in order to
make the proper working of the bank the customers should also cooperate with
the bank which will be really a good, ambitious and diligent condition for the
bank. And then bank will be really in such a situation and position to compete its
competitors in the country as well as on international level.
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BIBLIOGRAPHY
• http://www.mcb.com.pk/default.asp
• MCB Annual Report 2010
• MCB Economic Bulletin
• Financial Management by C.Van Horne
• Financial Management by Gitman
• Sir Faisal Manager Operations
• Sir Hafiz Muhammad Amjad (M.Com)
• Sir Waseem (M.com Finance)
• Sir Khalid Mehmood (M A English)