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, ATMs, 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.

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. 2

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 by different authors. Some are as follows:

According to Crowther,
"Bank is a dealer in debtshis 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."

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) b) c) Pre-Nationalization Era Nationalization Era 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 on July 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 the improvement of overall position. The private sector also responded to these changes and some very positive changes were observed. Some of the steps taken by the government in this regard were as under: i. Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948. 4

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
Habib Bank Ltd. National bank of Pakistan Ltd. United Bank Ltd MCB Bank Ltd. Allied Bank Ltd.

NO.OF BRANCHES
667 579 497 506 145

DEPOSITS
Rs. 6,160 (million) Rs. 5,660 (million) Rs. 5,670 (million) Rs. 1,640 (million) Rs. 570 (million)

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: 6

Scheduled Banks Category

Nationalized Commercial Banks Private / Privatized Commerce Banks Public Sector Specialized Banks Foreign Banks Total Schedule Banks

No. of Banks
3 18 4 19 44

In addition to above mentioned scheduled banks there are 11 Development Financial Institutes (DFIs), 16 Investment Banks and 21 leasing and Modarbah Companies.

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. 8

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.

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 10

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 Ltd known 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 be privatized upon recommendations of World Bank and IMF. The reason for this choice was the better profitability condition of the organization and less risky credit portfolio which made'' it a good choice for investors. 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. 12

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 in order 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

MCBs 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 13

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 customers 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 its 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

14

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 1st Islamic banking branch at 1st floor shaheen complex, Karachi. This complex starts working from September 1, 2003.

15

VISION STATEMENT

Challenging and Changing

The Way You Bank.

16

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

17

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

Mian Mohammad Mansha Chairman

S.M. Muneer
Vice Chairman

Muhammad Aftab Manzoor

President & Chief Executive

Tariq Rafi
Director

Sheikh Mukhtar Ahmed

Director

Muhammad Arshad
Director

Shahzad Saleem
Director

Mian Umer Mansha Director

19
SArmed Ameen Director

AUDIT COMMITTEE
Mian Mohammad Mansha Chairman Shaikh Mukhtar Ahmed Shahzad Saleem Member 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

20

REGISTRAR AND SHARE REGISTRATION OFFICE

THK Associates (Pvt.) Ltd. Shares department, ground floor sheikh sultan trust building no 2, Beaumont road Karachi

ORGANIZATIONAL HIERARCHY OF MCB

PRESIDENT
SENIOR EXECUTIVE VICE PRESIDENT EXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

OFFICER Grade I

OFFICER Grade II

OFFICER Grade III

ACCOUNTANT

CASHIER 21

PEON / NAIB QASID

MANAGEMENT LEVEL
The organization chart within a department and in different offices is as follows: Divisional Heads .. Head Office

Regional Head (EVP) Zonal Head (VP) Branch Manager

.. Regional Office .. Zonal Office

..

Branch

(VP, AVP, GRADE 1, 2, 3)

ORGANIZATIONAL SETUP OF MCB

HEAD QUARTER KARACHI

PROVINCIAL HEAD QUARTERS

PUNJAB

LAHORE

SINDH

KARACHI

BALOCHISTAN

PESHAWAR

NWFP & AZAD KASHMIR

QUETTA

CIRCLE OFFICES

BRANCH OFFICES

22

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 10 directors 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) b) c) Corporate Banking Commercial Banking 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.

23

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
40 branches

Consumer
820 branches

Commercial
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 ps of marketing. These four marketing tools are viewed as 4cs by the consumers.

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4 Ps
Product/ Service Price Place Promotion

4 Cs
Customer Solution Customer Cost Convenience Communication

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 countrys 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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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 26

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 27

6.

Capital Growth Certificate Scheme

For long term depositors under which the amount deposited almost

doubles at the end of 5 years. For the scheme, the minimum amount of deposits is Rs. 10000 while there is no maximum limit. In case of premature encashment of the certificate, the depositor will profit at the same rates as that of PL Saving Account.

7.

Fund Management Scheme

This scheme is offered to corporate and customers and is aimed at

providing better rate of return up to 15% per annum. One of the objectives of the scheme is to develop secondary market for Government Securities.

8.

Consultancy Services
In the process of privatization of public sector units, prospective buyers

need professional assistance and MCB, with its expertise, offers to them specialized service for valuation of the market value of the industrial unit, preparing bid documents and arranging finance for the purchase of the unit.

9.

Self Supporting Scheme

For the benefits of genuine worker/borrowers who are poor and needy and

for small entrepreneur the bank as evolved a self supporting scheme: maximum amount of loan Rs.25000 and minimum Rs.5000 per individual. Loan will be totally free of mark-up.

10.

Fax Press

This product was first of its kind introduced by using modem technology of The Fax Machine. It facilitates speedy transfer of funds within Pakistan. The service guarantees transfer of from one city to another, within an hour.

11.

Night Banking Service

28

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 Collection

With 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

29

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 are

available 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. 30

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 Pakistans 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. Weve 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.

31

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 32

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.

33

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 34

leads you best in life. It is affordable with competitive markup, flexible conditioning and easy processing and above all no hidden cost.

35

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:

Punjab Sindh NWFP Blochistan Azad Kashmir Domestic Overseas TOTAL

723 222 211 24 10 110 100 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 customers 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 build more 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 38

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 is made 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. 39

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) 2) Time deposits / liabilities 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: 40

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)

Cheque with slip given Slip is asked & filled

Cheque along with slip checked, signed & received by officer

Entries in daybooks are made Entries checked & verified by another officer after banking hours by officer

Cheques collected at the day end by Main Branchs Officials

Cheques are sent to respective banks next day after posting in computer by Main Branch

The same day not honored cheques are returned to Main Branch

The day after tomorrow the banks are informed about dishonored cheques

Provisional entries for returned cheques are debited again in both computer & daybooks Party is informed about returned cheques through Phone or personal contact

Cheques are mailed through TCS in case of no personal contact 46 same day the (If there is any availability)

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 credit portfolio 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: 47

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 him loan. 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 48

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 Telegraphic Transfer Demand Drafts (MT) (TT) (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. 2. 3. 4. 5. Branch Mail transfer form Receiving Branch Register copy Issuing branch register Copy beneficiary advice 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. Customers advice 2. Customers 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 50

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. 51

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 Operational Manager Chief Cashier Billing Cashier Customer Services Officer Remitance Officer Cash Sortor Others Hamid Ali Faisal Shahzad Mian Muhammad Ali Kamran Shah Zainab Naseem Ahmad Tallat and Mubashir 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.

Deposits
25

20

Amount in Million

15

10

0 2003 2004 Years 2005

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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No. of vouchers
The vouchers which are transacted in this branch in 2010 are as follows:

CASH Month January February March April May June July August September October November December DEBIT 2521 2209 2753 3079 3433 2813 3555 3784 4134 4923 6427 2808 CREDIT 2303 2268 2508 2569 2726 2578 2229 2123 2114 1980 1968 2312

TRANFER DEBIT 2140 1835 2141 1982 1944 1962 2021 1928 2078 2337 2871 2992 CREDIT 1967 1725 2395 2040 2018 1972 2123 2030 2135 2350 2720 2925 Total 8911 8037 9797 9670 10121 9325 9928 9865 10461 11590 13986 14037

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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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. Banks 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 customers integrity, 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, has directed 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 customers account. In such situations the excess amount withdrawn by the customer can only be realized if the customer is a respectable person. 57

Inquiries about clients: Being a banker I think MCB has a business obligation to respond to inquiries from other banks etc. about his customers 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 customers 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 Banks prescribed application form, duly introduced 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 Current Term Deposit 500 500 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 59

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 Introducers 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 Proprietors 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 61

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 with cheque 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 clients 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 book inventory 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 Cash Manager 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 any time 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 and scrutinize 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

65

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 customers 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 employees 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 employees 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 employees 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 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. well furnished organization. During my internship I have gained not only good experience but also so many new things of daily life within

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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 investors 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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70

71

BALANCE SHEET

72

PROFIT & LOSS ACCOUNT

73

CASH FLOW STATEMENT

74

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

75

 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 76

 Break up value/Book value per share M/B ratio

77

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 16873175000 / 54821296000 = 0.308 Year 2009 15495297000 / 51616007000 = 0.300 = 0.384 Year 2008 15374600000 / 40043824000

Working

Mark-up / return / interest earned(sales) . Mark-up / return / interest expensed Net mark-up / interest income..

54,821,296 17,987,767 36,833,529 444,476

51,616,007 15,837,322 35,778,685 1,484,218 5,796,527 41,576 7,322,321

40,043,824 11,560,740 28,483,084 2,683,994 1,335,127 4,019,121

Provision for diminution in the value of investment-net Provision against loans & advances 79

3,100,594 52,047 3,597,117

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

33,236,412

28,456,364

24,463,963

4,129,540 543,906 632,346 411,834 547,680 6,265,306 39,501,718

3,455,948 459,741 341,402 773,768 612,026 5,642,885 34,099,249

2,953,394 617,554 727,564 740,429 (103,198) 855,697 5,791,440 30,255,403

12,173,942 88,261 986,440 13,248,643 26,253,075 8,027,433 1,352,467 9,379,900

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

7,546,878 23,135 817,824 8,387,837 21,867,566 7,341,257 (864,824) 16,533 6,492,966 15,374,600 5,130,750 21,319

Non- markup / interest expense Administrative expense Other provision 80

16,873,175 15,779,127 21,792

net.. Other charges. Total non-markup / interest expense.. Profit before taxation . Taxation Current Prior years.. Deferred ..

15,800,919 32,674,094

9,215,656 24,710,953

5,152,069 20,526,669

year..

Profit after taxation(Net Profit)

Un appropriated profit brought forward . Transfer from surplus on revaluation of fixed assets net of tax

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Graphical representation

Net Profit M argin

0.5 0.4 0.3 0.2 0.1 0 0.384 0.300

0.308

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 firms 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 16873175000 / 567552613000 = 0.030 * 100 = 3.00 %

Year 2009 15495297000 / 509223727000 = 0.030 *100 = 3.00 %

Year 2008 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 .. Calculation for net profit is the same as calculated before. 567,552,613 509,223,727 443,615,904 45,407,183 1,478,569 4,401,781 213,060,882 254,551,589 20,947,540 27,705,069 38,774,871 6,009,993 3,000,000 167,134,465 253,249,407 18,014,896 23,040,095 39,631,172 4,043,100 4,100,079 96,631,874 262,135,470 17,263,733 19,810,476

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Graphical representation

Return on Assets
4% 3% 3% 3% 3% 3%

3.50% 3% Year 2010 3% 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 owners point of view that what the 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 doesnt 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 85

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 16873175000/ 54821296000 * 54821296000 / 567552613000 = 0.030

Year 2009 15495297000 / 51616007000 * 51616007000 /509223727000 = 0.030

Year 2008 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

0.036 0.034 0.032 0.030 0.028 0.026

0.035 0.030 Year 2010 0.030 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 36833529000 / 54821296000 = 0.672

Year 2009 35778685000 / 51616007000 = 0.693

Year 2008 28483084000 / 40043824000 = 0.711

Working
OPERATING INCOME 2010 (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 17,987,767 36,833,529 2009 (Rs. 000) 51,616,007 15,837,322 35,778,685 2008 (Rs. 000) 40,043,824 11,560,740 28,483,084

Calculation of sale is same as calculated above

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Graphical representation

O eai gI c m Mr i p r tn n o e agn
Ya 20 er 08 Ya 20 er 09 Ya 21 er 00 0 4 .6 0 6 .6 0 7 .6 2 0 8 .6 0 .7 0 2 .7 0 9 .6 3 0 1 .7 1

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 16,873,175,000 / 325308093000 = 0.049 = 0.052 = 0.048 Year 2009 15495297000 / 313039174000 Year 2008 15374600000 / 323130454000

Working

2010 Cash & balances with treasury banks 39,631,172 Lending to financial institutions 4,100,079 Advances net 262,135,470 Operating fixed assets 17,263,733 = = = =

2009 45,407,183 4,401,781 254,551,589 20,947,540

2008 38,774,871 3,000,000 253,249,407 18,014,896

Operating assets 323130454000

= 325308093000

313039174000

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The value of net profit is the same as calculated before

Graphical representation

R eturn on operating assets

0.054 0.052 0.05 0.048 0.046 Year 2010 Year 2009 0.052 0.049 0.048 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. 91

Formula
Return on Equity = Net Income/Shareholder's Equity *100

Year 2010 16873175000 / 69180011000 = 0.244 * 100 = 24.4 %

Year 2009 15495297000 / 61075932000 = 0.254 *100 = 25.4 %

Year 2008 15374600000 / 52244865000 = 0.294 *100 = 29.4 %

Working
Amounts of net income and share holders equity are the same as calculated above.

Graphical representation
Return on total equity
30.00% 20.00% 10.00% 0.00% 24.40% 25.40% 29.40%

Year 2010

Year 2009

Year 2008

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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 doesnt 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 firms 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 36833529000 / 54821296000 = 0.672

Year 2009 35778685000 / 51616007000 = 0.693

Year 2008 28483084000 / 40043824000 = 0.711

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Working
Values of gross profit and sales are the same as calculated before.

Graphical representation

Gross Profit Margin

0.72 0.7 0.68 0.66 0.64 Year 2010 Year 2009 Year 2008 0.672 0.693 0.711

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 54821296000 / 567552613000 = 0.097 Year 2009 51616007000 / 509223727000 = 0.101 = 0.090 Year 2008 40043824000 / 443615904000

Working
The values of sale and assets are the same as calculated above.

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Graphicalrepresentation
Total asset turn over
Year 2008 Year 2009 Year 2010 0.08 0.085 0.090 0.101 0.097 0.09 0.095 0.1 0.105

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 54821296000 / 48652609000 = 1.127 Year 2009 51616007000 / 41054991000 = 1.257 = 1.080 Year 2008 40043824000 / 37074209000

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

Fixed Assets turnover

Year 2008 Year 2009 Year 2010 0.9 1 1.1 1.127 1.2 1.3 1.08 1.257

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 recently undertaken 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 98

dividing it by the total shares outstanding.

Formula
Dividend per share = Dividend / No of Shares

Calculation

Year 2010 6,461,839,000 / 760214979 = 8.5

Year 2009 5,183,327,000 / 760214979 = 6.82

Year 2008 5,654,493,000 / 760214979 = 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. assistance. Dividends Interim Cash Dividend March Interim Cash Dividend June Interim Cash Dividend Sep 6,461,839,000 99 5,183,327,000 YEAR 2010 1,900,549,000 2,280,645,000 2,280,645,000 YEAR 2009 1,727,781,000 1,727,773,000 1,727,773,000 5,654,493,000 YEAR 2008 1,884,831,000 1,884,831,000 1,884,831,000 A scanned copy of changes of equity is also attached for further

Graphical representation

Dividend Per Share

10.00 8.00 6.00 4.00 2.00 0.00 8.50 6.82

7.44

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 32674094000 / 760214979 = 42.98

Year 2009 24710953000 / 760214979 = 32.51

Year 2008 20526669000 / 760214979 = 27.00

Working
No of shares are taken from Pattern of share holding (As of December 31, 2010) Year 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 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 2008 40,043,824 11,560,740 28,483,084 2,683,994 1,335,127 4,019,121 24,463,963

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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 / interest income 8,027,433 1,352,467 Non- markup / interest expense Administrative expense Other provision net.. Other charges. Total non-markup / interest 102 21,792 15,800,919 32,674,094 22,324 9,215,656 24,710,953 15,779,127 9,193,332 9,379,900 16,873,175 7,703,305 (2,232,226) 2,188,569 7,659,648 15,495,297 7,341,257 (864,824) 16,533 6,492,966 15,374,600 5,130,750 21,319 5,152,069 20,526,669 12,173,942 88,261 986,440 13,248,643 26,253,075 10,111,330 142,824 690,150 10,944,304 23,154,945 7,546,878 23,135 817,824 8,387,837 21,867,566 547,680 6,265,306 39,501,718 612,026 5,642,885 34,099,249 (103,198) 855,697 5,791,440 30,255,403 4,129,540 543,906 632,346 411,834 3,455,948 459,741 341,402 773,768 2,953,394 617,554 727,564 740,429

expense.. Profit before taxation . Taxation Profit after taxation.. Current Prior years.. Deferred ..

year..

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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Earning Per Share

60.00 40.00 20.00 0.00 Year 2010 Year 2009 Year 2008

42.98 32.51 27

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 207.32 / 42.98 = 4.82 Year 2009 207.32 / 32.51 = 6.38 Year 2008 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 Balances with other bank Lending to financial institutions Investments -net Advances net = 45,407,183,000 = 1,478,569,000 = 4,401,781,000 = 213,060,882,000 = 254,551,589,000

Total current assets

= 518,900,004,000

Current liability
Bills payable Borrowings Deposits & other accounts = 10,265,537,000 = 25,684,593,000 = 431,371,937,000

Total current liabilities

= 467,322,067,000

YEAR 2009

Current assets
Cash & balances with treasury banks Balances with other bank = 38,774,871,000 = 6,009,993,000 106

Lending to financial institutions Investments -net Advances net

= 3,000,000,000 = 167,134,465,000 = 253,249,407,000

Total current assets

= 468,168,736,000

Current liability
Bills payable Borrowings Deposits & other accounts = 8,201,090,000 = 44,662,088,000 = 367,604,711,000

Total current liabilities

= 420,467,889,000

YEAR 2008

Current assets
Cash & balances with treasury banks Balances with other bank Lending to financial institutions Investments -net Advances net = 39,631,172,000 = 4,043,100,000 = 4,100,079,000 = 96,631,874,000 = 262,135,470,000

Total current assets

= 406,541,695,000

Current liability
Bills payable Borrowings = 10,551,468,000 = 22,663,840,000 107

Deposits & other accounts

= 330,181,624,000

Total current liabilities Year 2008 406541695000 / 363396932000 = 1.119 : 1 Year 2009 468168736000 / 420467889000 =1.113 : 1

= 363,396,932,000

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 108 Year 2009 Year 2008

518900004000 -254551589000 / 467322067000 = 264348415000 / 467322067000 = 0.566

468168736000 253249407000 / 420467889000 = 214919329000

406541695000 262135470000/ 363396932000 / =144406225000 363396932000 = 0.397

420467889000 = 0.511

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LEVERAGE/SOLVENCY ANALYSIS
Solvency analysis of a firm indicates the amount of the other peoples 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 Total Equity Total Assets Ratio 2010 (Rs. In Million) 79,204 5,67,553 0.14 2009 (Rs. In Million) 69740 509224 0.13 2008 (Rs. In Million) 58436 443616 0.13

Debt Ratio/ Solvency Ratio

Total Debts
Debt Ratio =

Total Assets

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Year Total Debts Total Assets Ratio

2010 (Rs. In Million) 488348 5,67,553 0.86

2009 (Rs. In Million) 439484 509224 0.85

2008 (Rs. In Million) 385180 443616 0.86

Debt to Equity Ratio

Total Debts
Debt to Equity =

Equity
Year Total Debts Equity Ratio 2010 (Rs. In Million) 488348 79,204 6.16 2009 (Rs. In Million) 439484 69740 6.30 2008 (Rs. In Million) 385180 58436 6.59

Debt to Tangible Net worth

Total Debts
Debt to Equity =

Equity
Year Total Debts Equity Ratio 2010 (Rs. In Million) 488348 79,204 6.16 2009 (Rs. In Million) 439484 69740 6.30 2008 (Rs. In Million) 385180 58436 6.59

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Debt to Funds Ratio

Long Term Debt
=

Long Term Funds

Year Long Term Debts Long Term Funds Ratio 2010 (Rs. In Million) 255452 431372 0.59 2009 (Rs. In Million) 253249 367605 0.68 2008 (Rs. In Million) 262135 330182 0.79

External Internal Equity Ratio

External Equity
=

Internal Equity
Year External Equity Internal Equity Ratio 2010 (In Million) 488348 79,204 6.16 2009 (Rs. In Million) 439484 69740 6.30 2008 (In Million) 385180 58436 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 ASSETS Cash Balance with other banks Lending to financial institutions Investments_ net Advances net Operating fixed assets Other assets_net Deferred tax assets_net LIABILITIES Deposits and other accounts Borrowings from financial inst. Bills payable Other liabilities Deferred tax liabilities Sub ordinated loans Liabilities against assets NET ASSETS REPRESENTED BY Share capital Reserve Unappropriated profit Surplus on revaluation of assets

2008 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

2009 133% 264% 32% 75% 174% 209% 69% 0% 110% 121% 35% 121% 72% 15% 99.9% 0% 109% 124% 126% 187% 26% 146% 99%

2010 132% 68% 30% 78% 228% 214% 72% 191967% 127% 126% 125% 136% 95% 0% 99.8% 0% 123% 199% 160% 443% 34% 283% 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 Mark-up/return/interest earned Mark-up/return/interest expensed Net mark-up/interest income Provision against non-performing loans and advances Provision for diminution in the value of investments Bad debts written off directly Provision for potential lease losses Net mark-up/interest income after provisions NON MARK-UP/INTEREST INCOME Fee commission and brokerage income Dividend income Income from dealing in foreign currencies Other income Gain on Investments Gain / Loss on trading in government securities Total non-mark-up/interest income NON MARK-UP/INTEREST EXPENSES Administrative expenses (Reversal) / Other provisions Other charges Total non-mark-up/interest expenses Compensation on delayed tax refund PROFIT BEFORE TAXATION Taxation current year Prior years Deferred PROFIT AFTER TAXATION 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 96% 149593% 3189% 92% 513852% 130% 102% 0% -42% 140% 87% -72740% 13468% 81% 340596% 420% 301% -149763% 216% 513% 100% 100% 100% 100% 100% 100% 100% 100% 220% 127% 193% 116% 209% -11440% 163% 92% 270% 161% 106% 217% 226% -851% 209% 172% 2008 100% 100% 100% 100% 100% 100% 100% 100% 100% 2009 59% 34% 75% 442575% -172876% 1.2% 234% 39% 79% 2010 115% 46% 161% 1242153% -98982% 0.16% 0% 159% 161%

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Unappropriated profit brought forward Transferred from surplus on revaluation of fixed Assets Profit available for appropriation APPROPRIATIONS Transfer to Statutory reserve General reserve Capital reserve Reserve for issue of bonus shares Interim cash dividend Rs 1.75 per share Interim cash dividend Rs 1.50 per share Unappropriated profit carried forward

100% 100% 100%

69% 42% 116%

58% 137% 402%

100% 100% 100% 100% 100% 100% 100% 100%

146% 800000% 0% 84% 51% 50577% 156% 26%

256% 5500000% 0% 213% 97% 639799% 541% 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 ASSETS Cash Balance with other banks Lending to financial institutions Investments_ net Advances net Operating fixed assets Other assets_net Deferred tax assets_net

2008 100% 9% 0.5% 3.8% 47% 36% 1.3% 2.4% 0% 100%

2009 100% 9% 2.2% 4% 26% 53% 2% 3.8% 0% 100% 100% 90% 3% 3% 2.6% 0.8% 0.6% 0% 100% 100%

2010 100% 8% 2.8% 3.3% 23% 60% 27% 0.4% 0% 100% 100% 83% 10% 3% 3.4% 0% 0.6% 0% 100% 100%

LIABILITIES Deposits and other accounts Borrowings from financial inst. Bills payable Other liabilities Deferred tax liabilities Sub ordinated loans Liabilities against assets

100% 81% 12.5% 3.2% 2.4% 0.3% 0.6% 0% 100%

NET ASSETS REPRESENTED BY Share capital Reserve Unappropriated profit

100%

28% 29% 3% 70%

23% 39% 1% 63% 37% 100%

18% 58% 1% 77% 23% 100%

Surplus on revaluation of assets

30% 100%

Assets
Cash and balances with treasury banks Deferred tax assets Operatig fixed assets Balances with other banks Lendings to financial institutions

Other assets

Investm ents Advances

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Liabilities against assets subject to finance lease

Other liabilities

Deferred tax liabilities Unappropriated profit Reserves Bills payable Borrowings from financial institutions

Share capital Sub-ordinated loans

Deposits and other accounts

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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 128

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 banks 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)

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