Internship Report Final
Internship Report Final
Submitted by
Syed Usman Nisar
L1F11BCOM0013
Session 2011 - 2015
FACULTY OF COMMERCE
UNIVERSITY OF CENTRAL PUNJAB
Submitted by
Syed Usman Nisar
L1F11BCOM0013
Session 2011 - 2015
Supervised by
Prof. Waqas Zaki
Faculty of Commerce
UNIVERSITY OF CENTRAL PUNJAB
Undertaking
I certify that the internship report titled Internship Report on MCB Bank is my own work.
The work has not been presented elsewhere for assessment.
Grade Awarded
Internship In-charge
___________________
Examiners Signature
_________________
(Prof. Waqas Zaki)
_________________
Prof. Muhammad Azhar Ikram Ahmad
Dean
Faculty of Commerce
University of Central Punjab
Lahore
Acknowledgements
All thanks to ALLAH Almighty who give me insight and devotion to perform such creative
work. I am thankful to all those who helped me completing my Internship report. I am thankful
to my parents without their support my report could not be possible to complete. My appreciation
also goes for my friends and those who willingly helped me in my final report.
I would also like to thank Prof. Muhammad Azhar Ikram Ahmad, Dean Faculty of Commerce
for the opportunities he has created for us. I would also like to thank Prof. Ather Azim Khan,
Associate Dean Faculty of Commerce for the guideline he has created for us. I also pay my
gratitude to the whole faculty, who were there to guide us at every step of process, specially
Prof. Waqas Zaki in charge of internship program who helped us in entire internship program.
I also thank Mr. Raheel Shah (Manager of MCB consumer branch) who helped me in
completing my report by providing relevant information regarding MCB Bank and its policies.
Abstract
MCB is one of the eminent banks in Pakistan which has made truly a tremendous progress in a
moderately shorter timeframe. It was found in 1947 by Adamjee group which was later
privatized in mid 1970s. Following the time when then, the bank has seen gigantic
accomplishment in each aspect, from its exclusive expectations of hard working attitudes to
getting known nationwide to have most astounding consumer loyalty. The Bank is
unquestionably rendering perfect administrations which are the reason it has a client base of 4
million and the system of ATM machines around 650. It was some time ago known as Muslim
business bank; however its name was changed later.
The report covers all the significant parts of entry level position and the involvement with MCB.
It unequivocally expresses the general voyage there and the definite SWOT examination
combined with brief diagram of association's chain of importance and branch profile, and detail
of the assignments depended and done by the person.
The MCB Bank's development is lucky and the investigation of its money related explanation is
a demonstration of it. The Bank trusts in setting exclusive expectations in all parts of saving
money to yield results and innovativeness. It likewise develops abilities and trust in his workers
because of which it succeeds in accomplishing abnormal state of gainfulness. Passing by the
examination, it doesn't have much dependence on obligation, indicating how all around dealt
with the bank is and how proficiently it has adapted to obligation to keep a mind influence. This
report edifies about my adventure as an assistant and reveals insight into distinctive parts of it.
Table of Contents
Chapter 1..........................................................................................................................................1
Vision Statement:.........................................................................................................................1
Mission Statement:......................................................................................................................1
History of Bank...........................................................................................................................2
MCB Bank Today........................................................................................................................3
The Business............................................................................................................................4
Providing New Asset and Liability Products...........................................................................4
Overview..................................................................................................................................5
Organizational Hierarchy of MCB..............................................................................................7
Organizational Setup of MCB.................................................................................................7
Ceo, s Message........................................................................................................................8
Management Level..................................................................................................................9
Organizational Structure of MCB..........................................................................................10
Human Resource Functions.......................................................................................................11
Structure of the Marketing Department.....................................................................................14
Functions of the Marketing Department................................................................................14
Chapter 2:.......................................................................................................................................16
Strategic Analysis of Company:................................................................................................16
Macro Analysis:.....................................................................................................................16
Pest Analysis Overview:........................................................................................................16
Pest Analysis of MCB............................................................................................................20
Micro Analysis:......................................................................................................................22
Porter Five Forces Model......................................................................................................22
SWOT Analysis.....................................................................................................................24
SWOT Analysis Quadrant Combination (SWOT Matrix).....................................................30
Industry Analysis...................................................................................................................33
External Factor Evaluation (EFE) Matrix..............................................................................33
Competitive Profile Matrix:...................................................................................................35
Internal Factor Evaluation Matrix..........................................................................................36
SPACE Matrix:......................................................................................................................38
Quantitative Strategic Planning Matrix (QSPM)...................................................................41
Possible Alternative Strategies...............................................................................................42
7
Strategy Selected:..................................................................................................................42
Financial Analysis of MCB Limited..........................................................................................43
Total Assets:...........................................................................................................................43
Advances:...............................................................................................................................43
Non-performing Loans:.........................................................................................................43
Investments:...........................................................................................................................44
Deposits:................................................................................................................................44
Equity and Dividends.............................................................................................................44
Net Interest Margin................................................................................................................45
Non-Markup Income..............................................................................................................45
Operating Expenses...............................................................................................................46
Ratios:........................................................................................................................................47
Comparitive Analysis:...............................................................................................................47
Horizontal Analysis Description:...........................................................................................49
Trend Analysis:..........................................................................................................................51
Chapter 3:.......................................................................................................................................55
Recommendations:....................................................................................................................55
Internship Activities...................................................................................................................57
Conclusion:................................................................................................................................61
List of Tables
Table 1 SWOT Matrix...................................................................................................................32
Table 2 EFE Matrix........................................................................................................................34
Table 3 CPM Matrix......................................................................................................................35
Table 4 IFE Matrix.........................................................................................................................37
Table 5 SPACE Matrix...................................................................................................................38
Table 6 QSPM................................................................................................................................41
Chapter 1
A Commercial bank is a type of Bank / Financial Institution that provides services such as
accepting deposits, making business loans, and offering basic investment products.
Organizational Profile
MCB Bank Limited
Vision Statement:
To the leading financial services provider, Partnering with our customers for a more
prosperous and secure future.
Mission Statement:
We are a team of committed professionals, providing innovative and efficient financial
solutions to create and nurture long-term relationships with our customers. In doing so, we
ensure that our shareholders can invest with confidence in us.
I do internship in the consumer branch of MCB the activities of this so much different from
general banking branch there are 8 main consumer branches in 8 major cities in pakistan i.e.
Gujranwala, Faisalabad, Multan, Lahore, Karachi, Islamabad, Rawalpindi, Hyderabad.
Consumer branch deals 4 types of loans i.e.
1. Car4U
2. Home loan(pyara ghar)
3.Credit card
4.Personal loan
11
Before division of Indo Pak, the requirement for more Muslim banks was felt. Furthermore,
Muslims having solid money related limit were speculation to put resources into this part also.
This was the real trick which made ready for setting up MCB Bank Ltd known as MCB. This
was the third Muslim bank in the subcontinent.
History of Bank
This bank was incorporated under companies act 1913 on ninth July, 1947 (just before partition)
at Calcutta. However, because of changing situation of the locale, the certificate of incorporation
was issued on seventeenth August, 1948 with a deferral of right around 1 year; the authentication
was issued at Chitagong. The main Head office of the organization was Set up at Dacca and Mr.
G.M. Adamjee was designated its first executive. It was incorporated with an approved capital of
Rs.15 million.
After some time the office of the organization was moved to Karachi on August 23rd, 1956
through an exceptional determination, now as of late the Head office of MCB has been moved to
Islamabad in July, 1999 and now Head office is termed as Principle Office.
This organization was nationalized with other on January first, 1974. Around then it had 506
branches and deposits amounting up to Rs.1640 million. Despite the fact that. MCB has a
notoriety of a traditionalist bank yet nationalization additionally left its impacts on this
establishment also and by end of year 1991 in which it was privatized the aggregate number of
branches were 1.287 and deposits amounting up to as high as Rs.35,029 million
12
Privatization
At the point when privatization policy was declared in 1990, MCB was the first to be privatized
upon recommendations of World Bank and IMF. The purpose behind this decision was the better
productivity state of the association and less risky credit portfolio which made'' it a decent
decision for financial specialists. On April eighth, 1991, the administration control was given
over to National Group (the highest bidders). At first just 26% of shares were sold to private part
at Rs.56 per offer.
After Privatization
Ten 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.
After privatization, the growth in every department of the bank has been observed. Following are
some key developments:
13
The Business
MCB is in its over 50 years of operation. It has a network of over 1,000 branches all over the
country with business establishments in Sri Lanka and Bahrain. The branch break-up province
wise is Punjab (57%), Sindh (21%), KPK (19%) and Baluchistan (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
multinational concerns. MCB is also catering to the growing middle class by.
Providing New Asset and Liability Products
The Bank provides 24 hour banking convenience with the largest ATM network in Pakistan
covering 27 cities with over 151 ATM locations. The Banks Rupee Traveller Cheques have been
market leaders for the past six years and have recently launched their Gift Cheque Scheme.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
14
Overview
Core Values
1. Integrity
We are the trustees of public funds and serve our community with integrity. We believe in being
the best at always doing the right thing. We deliver on our responsibilities and commitments to
our customers as well as our colleagues.
2. Innovation
We encourage and reward people who challenge the status quo and think beyond the boundaries
of the conventional. Our teams work together for the smooth and efficient implementation of
ideas and initiatives.
3. Excellence
We take personal responsibility for our role as leaders in the pursuit of excellence. We are a
performance driven, result oriented organization where merit is the only criterion for reward.
4. Customer Centricity
Our customers are at the heart of everything we do. We thrive on the challenge of understanding
their needs and aspirations, both realized and unrealized. We make every effort to exceed
customer expectations through superior services and solutions.
15
5. Respect
We respect our customers values, beliefs, culture and history. We value the equality of gender
and diversity of experience and education that our employees bring with them. We create an
environment where each individual is enabled to succeed.
16
PRESIDENT
VICE PRESIDENT
OFFICERS GRADE
I II III
ASSISTANTS
CASHIER
PEONS
17
Ceo, s Message
We at MCB Bank Limited believe that every employee is unique and possesses
distinctive talents that we value and nurture. MCB Bank is home to an exclusive group of
committed and dedicated individuals who jointly, with their dedication, honesty, innovation and
teamwork, contribute towards our collective success. Our organization has a long and healthy
tradition of providing exceptional service and preserving strong relationships with both our
internal and external customers. Therefore, at MCB Bank, we inspire every individual to play a
significant role in our continued success by creating maximum economic value for our clients
and shareholders, while maintaining the highest human values and principles.
MCB Bank is one of the leading financial services providers in Pakistan and as one of the largest
and oldest banking entities in the country; we not only embrace and cherish our heritage and
traditions, we strive for growth and change as well. Our goal is to create and promote long term
relationships with our customers by catering to all their financial needs, including traditional
banking services, insurance and investment advisory, coupled with an exceptional level of
customer service.
Our objective at MCB is to ensure that we have motivated, professional and customer-centric
employees on board who help us deliver the promise of being the 'most credible bank' across the
industry.
18
Management Level
The organization chart within a department and in different offices is as follows:
Divisional Heads
Head Office
Regional Offices
Zonal Office
Branch Manager
Branch
(VP, AVP, GRADE 1, 2, 3)
19
a)
Corporate Banking
b)
Commercial Banking
c)
Consumer Banking
20
Evolving abilities
Appearance organization
Employee happiness
Variety
Agreement
21
human resources outlet is to assurance the important services, progresses and policies are in
place to succeed employee to accomplish at their finest, be safe and satisfied with their work and
be properly developed .human resources is also vital to settle that employees energy in an
atmosphere which is in unity with the departments values, the related legislative requirements
and public service values and best training
Human resources area office is liable for the administration of the human resources role for the
department of human services .this entail of responsibility for human resources systems, policy
and training through the branch. The branch is planned to importance on planned human resource
work, the supervision of departmental mangers and human resources staff in areas and divisions
Human resources have a number of areas of focus including:
Employee relation
Employee security
Managerial facilities
Organizational capability
The human resources branch managers a number of organization-wide schemes through the
department in the above areas, in association with human resources staff in area and programs.
22
The branch everything closely through manufacturing relation branch (situated within financial
and commercial facilities division) in evolving and applying enterprise negotiating agreements
and issue resolution with mergers covering the departments employees.
23
24
5. New strategies are made increase the market share of consumer finance as well as commercial
finance.
6. New campaign on media, net and on branch are designed
7. New broachers are designed printed and circulated in the branches
8. As per the new situation due to the increasing interest rate, MCB has also increased interest
rate and its offerings on the saving accounts.
25
Chapter 2:
Strategic Analysis of Company:
Macro Analysis:
Pest Analysis Overview:
The PEST analysis is a useful tool for understanding market growth or decline, and as
such the position, potential and direction for a business. A PEST analysis is a business
measurement tool. PEST is an acronym for Political, Economic, Social and Technological
factors, which are used to assess the market for a business or organizational unit.
A PEST analysis is a business measurement tool. PEST is an acronym for Political, Economic,
Social and Technological factors, which are used to assess the market for a business or
organizational unit.
The PEST analysis headings are a framework for reviewing a situation, and can also, like SWOT
analysis, and Porter's Five Forces model, be used to review a strategy or position, direction of a
company, a marketing proposition, or idea. Completing a PEST analysis is very simple, and is a
good subject for workshop sessions. PEST analysis also works well in brainstorming meetings.
Use PEST analysis for business and strategic planning, marketing planning, business and product
development and research reports.
PEST analysis is one of the major tools that help in determining the external factor influence
upon the optimum performance of organization. PEST combines following external factors that
may have effects on business performance, whether externally or internally. PEST analysis
categorizes following these points
Political
Economical
Social
Technological
26
27
Political
Political factors are basically to what degree the government intervenes in the economy.
Specifically, political factors include areas such as tax policy, labor law, environmental law, trade
restrictions, tariffs, and political stability. Political factors may also include goods and services
which the government wants to provide or be provided (merit goods) and those that the
government does not want to be provided (demerit goods or merit bad). Furthermore,
governments have great influence on the health, education, and infrastructure of a nation.
Labor Laws
Consumer Protections Laws
Tax Regulations
Employment Laws
Environmental Laws
Economical
Economic factors include economic growth, interest rates, exchange rates and the
inflation rate. These factors have major impacts on how businesses operate and make decisions.
For example, interest rates affect a firm's cost of capital and therefore to what extent a business
grows and expands. Exchange rates affect the costs of exporting goods and the supply and price
of imported goods in an economy.
There are certain factors that sum up overall economic scenario for a firm to operate in.
Economic policies
Fluctuations in exchange rates
Effects of World Economies
International Businesses and Trade
Social
Social factors include the cultural aspects and include health consciousness, population
growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors
28
affect the demand for a company's products and how that company operates. For example, an
aging population may imply a smaller and less-willing workforce (thus increasing the cost of
labor). Furthermore, companies may change various management strategies to adapt to these
social trends (such as recruiting older workers).
Technological
Technological advancements are approaching to the highest frequencies now a day. An
organization lacking in technological advancement is highly vulnerable to threat of becoming an
obsolete amongst modern manufacturing and business concerns.
Technological advancements can be further classified in to following categories
Technological Advancements
Life cycle of Technology
Spending on technology
Training and Development
29
Saving rates
Consumption patrons
Rate of interest
Budget deficit
Exchange rates
Cost of living
Inflation
Social
Cultural issues can be there but still as there are a number of multinational companies
A society is shaped by beliefs, norms and values. Peoples in a society consciously and
unconsciously interact with.
Themselves
Others
Organization
Society
Technological
People are highly skilled and MCB can introduce new technology to increase
competencies.
Forces of technological advancement have played most dramatic role in shaping the lives of the
peoples. The rate of change of technology has greatly affected the rate of growth of economy.
New technology is creating deep rooted affects which could be observed in long run. The
improvement techniques involved in online banking. In brief PEST analysis affects overall
banking companies and provides us the information about the external macro condition.
31
Micro Analysis:
Porter Five Forces Model
1. Barriers to Entry:
The MCB is providing value added services to its customers. On the other hand market is getting
more saturated and other organizations are getting involved in the bank operations. For example,
Telenor is offering Easy Paisa, etc. At the beginning all the functions like money exchange,
currency converter, FOREX, money transfer, etc were relates to bank but now a day other
organizations are becoming more specialized in these and hence resulted in declining of profit
(commission income or service charges).
2. Bargaining Power of Supplier:
Because of concentrated competition and new entrance of foreign banks in the industry the
investors are becoming more conscious in providing the funds for deposits. The funds are
dispersed among the banks because every bank in the industry wants to capture these funds
(from potential investors) hence to increase its market share and to generate more and more
profit. It is the fact that suppliers funds are more critical to market success. Due to which the
bargaining power of supplier has been increased.
Financial statements of MCB reveal that deposits with the bank are decreased from 83% to 79%
during the last seven years.
3. Bargaining Power of Customers:
Customers can be powerful when the switching cost is very low and in the banking sector the
customers needs includes favorable profit on investment and getting banking services with low
cost. All the banks in Pakistan are competing for healthy market share so they are trying to
provide the better services from other banks by giving more incentives on their services as a
32
result of which the bargaining power of customers has been increased. Hence the MCB is facing
great difficulty in sustaining his competitive position in the market and this is done by providing
more are more value added services to its customers.
4. Availability of Substitute Product:
Substitute products are also available in the market like MobiCash services by Mobilink GSM,
Easy Paisa by Telenor Pakistan both are used for transfer of money between two customers.
There is also an example of PayPal, Alert Pay, etc are best alternatives for the transferring of
money all across the globe with minimum charges or service fee. All these substitute products
are creating a big hurdle in earning commission and generating revenue for the bank.
5. Rivalry among the Competitors:
The intensity of competition in an industry depends upon bulk of factors such as number of
competitors, the presence of exit barriers, degree of product differentiation and growth rate.
Taking only one factor in due consideration the degree of product differentiation it can be seen
that all the banks are providing same kind of services but with different names. It means that the
degree of differentiation for the products is near to zero and it is fact that when the degree of
product differentiation is less the competition is high because customers switching cost
eliminates. For example, NBP, UBL, Summit Bank, BOK etc are offering the services for
transfer of money with the help of Xpress Money. And some other banks like Bank Al-Habib,
Bank Alflah etc are using Money Gram for the same activity.
33
SWOT Analysis
SWOT analysis is a key measurement tool that helps in determining key factors, which
can make a difference between success and failure of a business concern.
Theoretically SWOT analysis may be defined in the following ways,
A SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) is a strategic
planning tool, useful for planning and decision-making at multiple levels within an
institution, organization or business.
SWOT analysis within an organization can be carried out on a single product, place or on the
whole industry. The main purpose of the SWOT analysis of an organization is to develop the
understanding regarding internal and external factors, whether these factors fits best with the
core competencies of the organization or not.
Figure 1 SWOT
34
Strengths (Internal)
The major distinguishing factors, that gives competitive edge over the others.
Political support
Funding available
Market experience
Strong leadership
Weakness (Internal)
The major factors that can lead towards diminishing performance of an organization,
With respect to other enterprises.
Likely to be costly
Opportunity (External)
All the possible events, which may go in the favors of organization.
35
Threats (External)
All such contributing factors, that ultimately leads to reduced performance.
Environmental constraints
Time delays
Opposition to change
36
Bank reputation
Technical management skills
Customer satisfaction
Promotion effectiveness
Team based approach
Quest for quality
Employee respect and dignity
Large network of branches
Weaknesses
MCB has some weakness within the organization which is discuss under as follows.
market positions. It can familiarize debt card system or may adapt the current ATM cards into a
whole debt card. House financing sector can be targeted to maximize the profit.
37
MCB bank enter into contract with other banks to use each other ,s ATMs which will result in an
increased accessibility to MCB customers and customers of other banks as well as all around the
world settlements money are strictly observed so as the money paid may not fall in hands of thus
termed extremists for that all predictable money filtering done HUNDIES have been still there is
an opportunity for MCB to spread its branch network to several countries highlighting mostly on
introducing electronic fund transfer services.
Different banking courses can be offered for improving of banking staff.
Management skills
Update courses
Foreign training
IT courses
Threats
Every organization has threats from internally and externally and MCB also have some
kind of threats.
38
39
Strengths S
Weaknesses W
Bank reputation
Technical
Less productivity
management skills
Customer
satisfaction
Promotion
from staff
Overburdened staff
Late sitting trend
Lack of organization
devotion
Attitude of seniors
effectiveness
Team based
towards juniors
Lack of leadership
approach
Quest for quality
Employee respect
and dignity
Large network of
qualities
branches
Opportunities O
Management skills
Update courses
Foreign training
IT courses
SO Strategies
management skills.
They should send
become effective
WO Strategies
staff.
Leadership qualities
foreign training
can be developed by
and demos.
MCB should start a
foreign trainings.
Overburdening and
program for IT
40
be changed by
employees.
management skills to
upper level
management.
Threats T
Competitions are
ST Strategies
Entrance of foreign
Weak economic
condition of Pakistan
Unregistered business
concern
satisfaction and
shifts, management
team based
approach can
satisfaction and to
of competitors.
Large network of
branches and
Customer
WT Strategies
of competitors.
By train the upper
skilled management
level management
economy and
changed towards
instability threat.
Bank reputation
and customer
satisfaction can
threats collectively.
MCB should raise the
attract more
customers which
lower level
threat of low
management to
customers due to
increase their
increasing interest
devotion towards
rate.
organization, which
can help MCB to
minimize threats of
market and
competitors.
42
Industry Analysis
External Factor Evaluation (EFE) Matrix
External Factor Evaluation (EFE) matrix method is a strategic-management tool often
used for assessment of current business conditions. The EFE matrix is a good tool to visualize
and prioritize the opportunities and threats that a business is facing.
External factors assessed in the EFE matrix are the ones that are subjected to the will of social,
economic, political, legal, and other external forces.
Opportunities
All events that may be go in favour of the organization.
Threats
All events which would be leave negative impact on organization.
EFE MCB
Key External Factors
Weight
Rating
Wtd
Score
Opportunities
1. Govts help to up lift economy
0.15
0.30
0.15
0.30
0.05
0.15
0.05
0.10
0.10
0.30
Weight
Rating
Wtd
Score
Threats
43
0.15
0.30
0.05
0.05
3. Inflation Rates
0.10
0.20
0.05
0.05
0.15
0.15
Total
1.0
badly
SBP
1.9
44
ABL
CSFs (contd) Wt
MCB
Financial
0.15 4
Score
0.60 4
Score
0.60
Position
Service
0.10 3
0.30
0.40
Quality
Customer
0.20 3
0.60
0.60
loyalty
Market Share
Work Force
0.10 3
0.15 3
0.30
0.45
3
4
0.30
0.60
Motivation
Online/ATM
0.15 4
0.60
0.60
Services
Advertisement 0.15 3
Total
1.00
0.45
3.3
0.60
3.7
45
IFE MCB
Key Internal Factors
Weight Rating
Wtd
Score
Strengths
1. Large online Branches Network
0.10
0.30
0.15
0.45
0.15
0.45
4. Market share
0.05
0.10
0.05
0.15
Weight
Rating
Wtd
Score
Weaknesses
1. Less Advertisement
0.10
0.20
46
0.15
0.30
0.05
0.10
0.15
0.30
0.10
0.20
Total
1.00
2.55
47
SPACE Matrix:
Market Share
-2
Growth Potential
Online networks/ATMs
-1
Resource Utilization
Technological Knowledge
-1
Financing Access/Stability
Customer Service
-2
Barriers to Entry
Customer Loyalty
-3
Profits Potential
Average:
-1.8
Average
Return on Asset
Competitive Pressure
-3
Leverage/Debt
SBP Policy
-3
Net Income
Inflation Rates
-2
EPS
Technological Change
-2
Barriers to entry
-2
Average:
4.4
Average:
-2.4
48
49
After listing all the factors and giving them rating accordingly the averages are mentioned above.
And after calculating directional vector points the line stretches in the first quadrant. Which
means the company needs aggressive strategies like:
50
As
Strategy 2
TAS
AS
TAS
Internal Factors
1.
Government
Intervention
in
Banks
0.12
0.48
0.36
0.14
0.56
0.42
0.09
0.27
0.36
0.11
0.22
0.33
0.10
0.40
0.20
0.08
0.24
0.16
0.06
0.18
0.24
0.10
0.40
0.30
0.07
0.21
0.14
0.08
0.32
0.16
0.05
0.15
0.20
Matter
External Factors:
5.High
discount
Rates
and
lending
restrictions
6.Less Savings of the People
1.00
3.43
2.87
Table 6 QSPM
51
Strategy Selected:
52
53
trajectory can be observed in NPL base. The coverage ratio of the Bank has improved from
67.47% in 2009 to 82.84% in 2014. Moreover, the NPLs classified in loss category constitute
more than 90% of the NPLs base as at December 31, 2014, which specifies the adequacy of
provision held in the books of the Bank.
Investments:
During the past few years, the lack of credit opportunities resulted in banking sector money
deployed in Government Papers. With an average annual growth rate of 32% over the last six
years, the investment base of the Bank has grown from Rs. 167 billion in 2009 to Rs. 511 billion
in 2014.
Deposits:
The deposit base of the Bank has steadily grown over the last six years, with absolute numbers
increasing from Rs. 368B in 2009 to Rs. 688B in 2014. MCB Bank carries the competitive edge
of holding the highest CASA base, supporting its lower cost of deposits. The Bank has been
strategically tapering off its high cost deposit. .The CASA base has more than doubled in last 6
years, increasing from Rs. 305 billion in 2009 to Rs. 626 billion in 2014; MCB Bank has been
able to maintain its share in the domestic industry deposit pie at approximately 8%. This is made
possible by service excellence, strategically placed touch points for the customer and
transactional convenience provided through a variety of products.
The paid-up capital of the Bank has grown from Rs. 6.9 billion in 2009 to Rs. 11.1
billion in 2014, meeting the statutory capital requirements set by the Central Bank.
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In 2008, most affluence strategic partnership occurred in Pakistan where the largest Bank
of Malaysia, Maybank Berhad, acquired 20% holding in MCB Bank Limited. This brought
synergies in technology, human resource and trade business.
The equity base of the Bank is reflective of the outstanding financial results achieved
through consistent performance over years. The capital base of the Bank is rated as strong which
is substantiated by the reported CAR of 20.41% as at December 31, 2014 against the statutory
requirement of 10%. The Shareholders equity has grown significantly from Rs. 61 billion in
2009 to Rs. 107 billion in 2014.
The Bank has the highest cash dividend per share in the industry with regular interim
dividends and remains one of the prime stocks preferred in the Pakistani equity markets.
Net Interest Margin
The composition of markup income has seen a shift in the last six years on the back of
concentration shift in the earning asset base of the Bank. The contribution from markup income
earned on advances has reduced from 70.55% in 2009 to 37.43% in 2014 while markup income
from investments has increased to 61.91% (2009: 26.9%).
The regulatory revisions covering minimum deposit rate during the commentary period
has adversely affected the Banks net interest margin. The said impact was diluted by improving
the CASA base over period taking it to an all time high of 91% as at December 31, 2014.
Non-Markup Income
During last six years, fee, commission income and capital gains have been the major
drivers behind non-fund income. Fee, commission income was supplemented on the back of new
products and services added to themenu coupled with remote banking and branchless initiatives
taken by the Bank. The product development teams of the Bank have been tapping the unbanked
segment of the population and offering them tailored products to meet their specific financial
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requirements. Different types of products have been offered in order to meet the needs of the
time like credit card, mobile banking, visa debit card, MCB Lite, prepaid cards, IBFT etc.
The fee, commission and brokerage block of the Bank has been constantly increasing
over the years with major contributions coming from commission earned on card business,
bancassurance business, remittances and intercity / intra-city cash transfers.
The equity investment base of the Bank has been providing outstanding dividend yields
with dividend income and capital gain proving to be the second highest contributor to
nonmarkup income. During the past 6 years, approximately Rs. 7 billion has been earned by way
of Capital Gains.
Operating Expenses
Owing to the strengthened risk management framework, the provision charge of the
Bank has been on a declining trend over years. The provision and write-off charge was reported
at Rs. 7.4billion for the year 2009 which was reduced substantially to Rs. 291M for the year
2012. For the year 2013 & 2014, the Bank reversed provisions to the tune of Rs. 2.9 billion and
Rs. 1.4 billion respectively based on the recoveries posted classified advances. It is pertinent to
add that the Bank carries an unencumbered general provision of around 0.1% of gross advances
and has not taken the benefit of FSV in provision calculation for the year 2014.
The growth in administrative block of the bank has been nominal considering the
inflationary patterns followed over the period of six years and falls within the budgetary limits
set. The management has been able to introduce cost effective techniques / methods to exercise
control over the administrative expenses. Centralization of various expense heads and imposition
of annual capping have been few of the key initiatives undertaken in this respect. This has
enabled the Bank to maintain one of the lowest cost to income ratios in the industry.
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Ratios:
Comparitive Analysis:
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Tax (PBT) and Profit After Tax (PAT) have increased by an average of 9% and 11%, respectively,
marking MCB as one of the most profitable bank in the industry.
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Trend Analysis:
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Chapter 3:
Recommendations:
Efficient cost-control procedures may limit the growth of operating expenses leading to
higher operating profit margin. Banks poorly managed their operating expenses. Further
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Internship Activities
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Conclusion:
The banking system and particularly MCB as a whole, remains healthy despite the economy
going through a period of economic difficulty. MCB absorbed the build-up of non-performing
loans in the system while maintaining profitability and robust balance sheets. Much of the credit
for this must go to the SBP for the policies it has pursued over the last decade to ensure that
banks are adequately capitalized and adhere to prudent risk management.
The objectives were targeted towards customers, improved management policies, strong policy
framework, improved governance structure, strategic investment initiatives and implementation
of cost effective measure across bank. The group structure of the bank individually worked hard
in achieving the milestones under continuous monitoring and supervision of the senior
management and Board.
The bank displayed extraordinary results in both financial and non-financial terms. With the
banking industry recovering at a steady pace since the 2007 crisis, MCB ensured availing all
possible positive opportunities and delivered substantial profits ensuring sound asset growth
Financial year 2009 MCB stood up to the challenges and produced significant increases in major
areas of its business while maintaining higher profitability, stronger asset base with
corresponding increase in equity. The sector also made positive recoveries while heading towards
its actual position prior to 2007 and 2008 financial market crisis.
I found out that this a good bank as its working, management is concerned. First of all
the reason is that there is no directive style in the management of MCB and which shows that
there is decentralization in the Bank and every branch manager can take decision according to
the situation.
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MCB is providing their customers with wide range of services including online banking, virtual
banking and some of their new products in the pipeline; include ATM network etc. shows that
MCB Bank is taking good care of their customers. MCB Bank made heavy investments, towards
enhancing its capabilities in the area of automation and technology. MCB is well positioned to
meet client needs, with improved competitive advantage.
From the financial statement analysis and its comparison with other banks I found that it is
somewhat better than others, and from the analysis of previous year I concluded that it is
improving and it is earning more profits as compare than the previous year. So I can say that
MCB Bank is performing very well.
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