INTERNSHIP REPORT MCB BANK LTD

Submitted By: Ahsan Ali (F-18-BBA-1063)

Program: BBA (Hons.)

Session: 2018-22(Morning)

Supervisor Name: Dr. Umar Iqbal Siddiqi

DEPARTMENT OF MANAGEMENT SCIENCES

UNIVERSITY OF OKARA
 DEDICATION

I would like to dedicate this accomplishment offline to my beloved andcaring parents and
to my teachers with the support of whom I am standing at this step of my life stairs.
 ACKNOWLEDGEMENT

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

First of all I’m grateful to ALLAH ALMIGHTY, who bestowed me with health, abilities
and guidance to complete the project in a successful manner, and without HIS help I was
unable to perform this task.

I would also like to thank Mr. Faraz (Operations Manager of MCB) for providing me the
opportunity to have an excellent learning experience during my internship. His critical
comments on my work have certainly made me think of new ideas and techniques.
 UNIVERSITYOF OKARA
Department of Management Sciences
LETTER OF UNDERTAKING:

This internship report was submitted by Ahsan Ali S/O Muhammad Tufail Roll Number F18-
BBA-1063 for the partial fulfillment of the requirements for the degree of:

BBA (Hons.) Session:2018-2022

Specialization Finance

And is hereby accepted by the evaluation committee.

InternshipSupervisor

HOD/Coordinator

External Examiner

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Table of Contents

EXECUTIVE SUMMARY.................................................................................................................................................................. 2
OBJECTIVES................................................................................................................................................................................... 3
1.OVER VIEW OF THE ORGANIZATION.......................................................................................................................................... 4
1.1.BRIEF HISTORY OF THE ORGANIZATION............................................................................................................................... 5
1.1.1 DEVLOPMENT PHASE.................................................................................................................................................... 5
1.1.2 NATIONALIZATION PHASE............................................................................................................................................. 6
1.1.3 PRIVITIZATION PHASE................................................................................................................................................... 6
1.2.NATURE OF THE ORGANIZATION......................................................................................................................................... 7
1.2.1.CORPORATE FINANCE................................................................................................................................................... 8
1.2.2TRADING & SALES.......................................................................................................................................................... 8
1.2.3RETAIL & CONSUMER BANKING..................................................................................................................................... 8
1.2.4.COMMERCIAL BANKING................................................................................................................................................ 8
1.3 NUMBER OF EMPLOYEES..................................................................................................................................................... 9
1.3.1 BOARD OF DIRECTORS................................................................................................................................................... 9
1.3.2 KEY MANAGEMENT..................................................................................................................................................... 10
1.3.3. HIERARCHY OF MANAGEMENT.................................................................................................................................. 12
1.4 PRODUCT & SERVICES........................................................................................................................................................... 13
1.4.1MCB CORPORATE FINANCING.......................................................................................................................................... 13
1.4.2 MCB RETAIL BANKING..................................................................................................................................................... 14
1.4.2.1 DEPOSITACCOUNTS.................................................................................................................................................. 14
1.4.2.2 BANCA INSURANCE.................................................................................................................................................. 17
1.4.2.3 MCB’S REMITTANCE................................................................................................................................................. 17
1.4.2.4 MCB LOAN PRODUCTS............................................................................................................................................. 18
1.4.2.5 MCB RUPEE TRAVELERS CHEQUE............................................................................................................................. 19
1.4.2.6 MCB ONLINE SERVICES............................................................................................................................................. 19
1.4.2.7 MCB CARDS............................................................................................................................................................. 20
1.4.3 MCB INVESTMENT BANKING........................................................................................................................................... 21
1.4.4 MCB AGRICULTURE PRODUCTS....................................................................................................................................... 23
1.4.5 ISLAMIC BANKING........................................................................................................................................................... 26
2.ORGANIZATIONALSTRUCTURE................................................................................................................................................. 28
2.1 ORGANIZATIONAL CHART.................................................................................................................................................. 28
2.3 ORGANIZATIONAL STRUCTURE OF THE BRANCH................................................................................................................ 30
3.SIX YEAR'S FINANCIAL PERFORMANCE/FINANCIAL RATIO 2016 TO 2021...............................................................................31
3.1SIX YEAR'S FINANCIAL PERFORMANCE/FINANCIAL RATIO 2016 TO 2021............................................................................33
3.2.SIX YEAR'S- PERFORMANCE COMMENTARY....................................................................................................................... 34
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 3.2.1.TOTAL ASSETS............................................................................................................................................................. 34
3.2.2.ADVANCES.................................................................................................................................................................. 34
3.2.3.NON-PERFORMING LOANS.......................................................................................................................................... 35
3.2.4.INVESTMENTS............................................................................................................................................................. 35
3.2.5.DEPOSIT ..................................................................................................................................................................... 36
3.2.6.PROFIT AND LOSS ACCOUNT....................................................................................................................................... 36
4.SWOT ANALYSIS....................................................................................................................................................................... 45
4.1.STRENTHS.......................................................................................................................................................................... 45
4.2.WEAKNESSES..................................................................................................................................................................... 45
4.3.OPPORTUNITY.................................................................................................................................................................... 45
4.4.THREATS............................................................................................................................................................................ 46
5.RECOMMENDATIONS............................................................................................................................................................... 46
6.ANNEXES.................................................................................................................................................................................. 48
7.REFERENCES............................................................................................................................................................................. 51

EXECUTIVE SUMMARY

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 This report is the essential part of my BBA (Hons) program of studies as per for the
academic requirements. The sole intention is to disseminate with the realistics
manipulation of the organization. This report has been written to know how big
organizations like MCB manage their Finance and Management operation.

MCB is one of the leading banks of Pakistan incorporated in 1947 MCB Bank has made
significant contributions in building and strengthening both corporate and retail banking
sector in Pakistan.

This report is an upshot of my eight weeks internship in Muslim Commercial Bank of

Pakistan. MCBofPakistan possesses an imperativeand historical importancein thebanking
sector of Pakistan. It always remains the center of hustles in business activities. It always
endows with great covenant of rally round in terms of funds and services at all epochs of
its dynamism.

Themain purpose of internship is to learn, byworkingin practical environment and to

apply the knowledge acquired, during the studies, in a real world scenario in order to
tackle the problems. In this report the detailed analysis of the organization has been done
and all the financial, technical, managerial and strategic aspects have been evaluated to
analyze the current position of the organization. Along with it, the background analysis,
the prevailing competition analysis, the business process analysis, and the internal
environment and external environment of the organization have been discussed and the
recommendations & suggestions for the improvement have been made wherever required.
This report will provide a complete and clear image about Muslim Commercial Bank

OBJECTIVES

This internship offers me an incredible opportunity to gain real-world experience in the high-stakes
finance industry. The primary objective of the project is to forecast or determine the actual financial
status and performance of an organization

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 Following are important objectives of studying the organization:

 To learn about Capital Adequacy, Asset and Liability Management,

Interest Rate Risk , Liquidity, Asset Quality & Profitability of bank.

 To monitor the adequacy and effectiveness of the internal control

system and Financial Reporting Framework.

 Assessment of the company’s financial condition through the financial

statements.

 Analyzing savings and investment trends in banking sector.

 To describe the impact of financial decisions on the health and

functioning of the overall organization.

 To examine the Innovations in customer service in banking.

1.OVER VIEW OF THE ORGANIZATION

1.1.BRIEF HISTORY OF THE ORGANIZATION

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The history of MCB can be divided into Phases:

 Development Phase

 Nationalization Phase

 Privatization Phase

1.1.1 DEVLOPMENT PHASE

MCB Bank Limited was incorporated by the Adamjee Group on July 9, 1947, under the
Indian Companies Act, VII of 1913 as a limited company. The bank was established with
a view to provide banking facilities to the business community of the South Asia. After
the partition of the Indo-Pak subcontinent, the bank moved to Dhaka (then the capital of
former East Pakistan) from where it commenced business in August 1948. In 1956, the
bank transferred its registered office to Karachi, Where the head office is presently
located. Thus, the bank inherits a 64 years legacy of trust of its customers and the citizens
of Pakistan. MCB Bank is not an overnight success story. It started with a share capital of
Rs 30 million which is divided into 3 million ordinary shares of Rs 10 each.

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1.1.2 NATIONALIZATION PHASE

The 1960s decade is stated as the golden era in Pakistan’s economic and financial
development. The banking sector also registered noticeable growth during that period and
lent a strong helping hand to the government to achieve rapid economic growth of the
country. But in early 1970s this scenario changed altogether.The separation of East
Pakistan (now Bangladesh) and induction of the government led by Zulfiqar Ali Bhutto
were themost significant events of early 70s having far reaching effects on the banking
system.

In the wake of rapidly changing conditions of the country, the government decided to
nationalize all the commercial banks so that the nation as a whole can benefit from a
better use of resources. Consequently, the Muslim Commercial Bank was nationalized
under the Banks (Nationalization) Act, 1974 promulgated on January 1, 1974.

In the banking sector, the then government decided to retain only five major banks by
merging all the smaller banks with the large ones. As a result of this policy, the Premier
Bank was merged into Muslim Commercial Bank in 1974.

1.1.3 PRIVITIZATION PHASE

This was the first bank to be privatized in 1991 and the bank was purchased by a
consortium of Pakistani corporate groups led by Nishat Group.

The banks after nationalization came under political and bureaucratic control and deviated
from normal banking practices. Some of their senior executives were tempted to nurture a
culture of obliging big businessmen, feudal and political influential. They sacrificed their
personal integrity and interest of banking sector for gaining promotion and accumulating
personal wealth. That is how banking sector started losing its upright and professional
institutional image from mid-80s and its downward slide started which touched new low
during 1990s.

The then PML government also became conscious of the falling standard of the banking
sector and decided to privatize all the commercial banks. Banks (Nationalization) (Second
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Amendment) Ordinance 1991 was also promulgated to pave the way for privatization of
banks in Pakistan.
In the wake of above amendments, 26% shares valuing Rs. 149.8 millions of the Muslim
Commercial Bank, held by the State Bank of Pakistan were sold and the
Bank’smanagement was transferred to the purchasers of these 26% shares.

Mian Mohammad Mansha is the Chairman of the MCB and has played instrumental role
in its success.

1.2.NATURE OF THE ORGANIZATION

MCB Bank Limited is a banking company incorporated in Pakistan and is engaged in

commercial banking and related services.The Bank’s ordinary shares are listed on allthe
stock exchanges in Pakistan whereas it’s Global Depository Receipts (GDRs)
representing two ordinary shares are traded on the International Order Book (IOB)
system of the London Stock Exchange.

MCBBankLimitedisaPakistan-basedcompany.TheBankoperatesinfourbusiness segments:

 Corporate finance

 Trading and sales

 Retail and consumer banking

 Commercial banking

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1.2.1.CORPORATE FINANCE
Corporate finance includes underwriting, securitization, investment banking,
syndications; initial public offerings (IPO) related activities (excluding investments) and
secondaryprivate placements

1.2.2TRADING & SALES

Trading&salessegmentincludesfixedincome,equity,foreignexchangecommodities,
lending’s to financial institutions and brokerage debt.

1.2.3RETAIL & CONSUMER BANKING

Retail & consumer banking includes retail lending and deposits, banking services, private
lending and deposits, banking services and retail offered toitsretailcustomersandsmalland
medium enterprises.

1.2.4.COMMERCIAL BANKING
Commercial banking segment includes project finance, export finance, trade
finance,leasing, lending, guarantees and bills of exchange relating to its corporate
customers.

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1.3 NUMBER OF EMPLOYEES

1.3.1 BOARD OF DIRECTORS

Mian Mohammad Mansha Chairman

S. M. Muneer Vice Chairman

Mr.Tariq Rafi Director

MR. Shahzad Saleem Director

Mr. Sarmad Amin Director

Dr. Muhammad Yaqub Director

Dato’ Mohammed Hussein Director

Mian Raza Mansha Director

Aftab Ahmad Khan Director

Mian Umer Mansha Director

Mr. M. Ali Zeb Director

Dato’ Seri Ismail Shahudin Director

Mr.M.U.A. Usmani (President / CEO)

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1.3.2 KEY MANAGEMENT
Audit Committee

Members

Tariq Rafi – Chairman

Dr. Muhammad Yaqub

Dato’ Mohammed Hussein

Aftab Ahmad Khan

Muhammad Ali Zeb

Malik Abdul Waheed

Human Resource Committee

Members

Mian Mohammad Mansha Chairman

Dr. Muhammad Yaqub

Mian Raza Mansha

MR. Shahzad Saleem

Mr. M.U.A. Usmani

Risk Management and Portfolio Review Committee

Members

Mian Umer Mansha Chairman

Mr. Tariq Rafi

Mr. Sarmad Amin

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Mian Raza Mansha

Mr. Shahzad Saleem

Business Strategy and Development Committee

Members

Mian Mohammad Mansha Chairman

Mian Raza Mansha

S. M. Muneer

Mian Umer Mansha

Dr. Muhammad Yaqub

Mr. M.U.A. Umani

Dato' Mohammed Hussein

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1.3.3. HIERARCHY OF MANAGEMENT

Grades of Bank

SEVP

ESEVP

SVP

VP

AVP

Grade- 1

Grade- 2

Grade- 3

Assistant

Clerical Staff Non-ClericalStaff

Cashier Messenger

TechnicalStaff DispatchRider

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1.4 PRODUCT & SERVICES

1.4.1MCB CORPORATE FINANCING

MCB Corporate Financing provides access to diversified financing options, including
working capital loans, term loans, trade finance services and investment banking.

 Working Capital Loans

Based on the customer’s specific needs, the Corporate Bank offers a number of
different working capital financing facilities including Running Finance, Cash
Finance, Export Refinance, Pre-shipment and Post- shipment etc. Tailor- made
solutions are developed keeping in view the unique requirements of your business.

 Term Loans

MCB offers Short to Medium Term Finance to meet capital expenditure and short
term working capital requirements of our customers. The loans are structured on the
basis of underlying project characteristics and cash flows of the business.

 Trade Finance Services

Under Corporate Banking MCB offers trade finance services that include an entire
range of import and export activities including issuing Letters of Credit (L/Cs),
purchasing export documents, providing guarantees and other support services.

 Cash Management

Cash Management provides a wide range of value added services to large corporations
through its vast network of online branches. Our structured and customized products
enable our customers to realize their sales proceeds swiftly from all over the country,
supported by real-time MIS.

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 TransactionBankingDivision

Transaction Banking provides wide range of value added services to large corporations
through its vast network of real-time online branches network. Our structured and
customized products enable our customers to realize their sales proceeds swiftly from all
over the country, supported by real-time MIS.
The basic products offered by Transaction Banking Division areas under:

 Collections
 Payments
 Channel Financing
 Local Rupee Drawing Arrangement
 Home Remittances

1.4.2 MCB RETAIL BANKING

1.4.2.1 DEPOSITACCOUNTS

 Current Account

MCB Bank offers a variety of current accounts to cater to the everyday transactional needs
of various customers. These accounts ensure ease and freedom to bank from any of
the1,100branches across thecountry. The different accountsinclude:the basicaccount thathas
no minimum balance; Business Account offering free online transactions, Demand Drafts,
Pay Orders and lots more to meet the day to day business requirements; Current Life
Account which offers the security of life insurance free of cost; and for all the others the
conventional Current Account.

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It offers a wide array of savings products that suit short term growth & transactional needs.
Our savings accounts offer attractive profit rates as well as flexibility to transact. Savings
Xtra is targeted for customers having Rs. 5 million deposit, 365 Gold offers profit rate on
daily balance while PLS savings has a lower minimum balance requirement. In addition, a
unique product: Smart Savings is an account run solely via a debit cart, offering a very
competitive rate to small savers.

 Foreign Currency Account

Enjoy the confidence of operating an international account, locally. MCB Foreign Currency
Account offers the option of earning attractive returns on your Foreign Currency Investment.

 Saving365 Gold

MCB Savings 365Gold Accountoffers youawiderangeofattractiveprofitrates.TheMCB

Saving 365 calculates profits on a dailyproduct basis and gives you the facilityof unlimited
withdrawals.

 Smart Dollar Account

MCB Smart Dollar Account is a sensible way to maintain or grow your US Dollar deposit
across USD Current, Savings or Term Deposits.

 Special Term Deposits

With a wide range of choices and tenors, you can open one or more term deposit accounts
that best suit your current or long term needs MCB Term Deposits offer attractive short to
mid-term investment options with flexibility, convenience and security .With various tenor
options available customers can choose one that suits their needs. This is combined with
different profit payout options and the added facility of being able to avail credit facility

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against their deposits.

 Business Accounts

MCB Business Account lets you build your business through the accrued savings from
discounted transaction fees, and more

 Saving Xtra Account

MCB Savings Xtra Account offers you a wide range of attractive profit rates.Grow with
MCB Xtra by saving more and earning greater profit.

 Current Life Account

The coverage you need for the life you lead. MCB Current Life gives you the peace of mind
of comprehensive life insurance in a current account and fits right into your lifestyle

 Mahana Khushali Bachat

MCB Monthly Khushali Scheme provides you with a steady income every month. Just
purchase a Monthly Khushali Certificate and you will enjoy a steady income of your total
deposit every month. Terms deposit.

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1.4.2.2 BANCA INSURANCE

Combining the best of banking and insurance solutions, MCB Bancassurance has created a
one-stop shop for all your financial and insurance needs. Whether you want to save for your
child’s education or marriage, for the security of dignity after retirement or gaining
maximum return on savings, MCB Bancassurance has a plan just for you.
 Flexi Life
 Life Partner
 Edu Care
 Dream Wedding
 Capital Sure
 Retire Easy
 Income Max
 Future Assure
 Protection Plan

1.4.2.3 MCB’S REMITTANCE

Fast, secure and easy-to-use, MCB's Remittance Services is an efficient way to transfer
money overseas. You can remit funds from any country to Pakistan through Swift System.

MCB Home Remittance provides a seamless inflow of foreign remittances credited in the
beneficiary’s account within minutes. Cash payments can also be made at our designated
branches onbehalfofXpressmoney, Samba(Speedcashnow) and MoneyGram,alongwith cash
payments from other correspondents all over the world.

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1.4.2.4 MCB LOAN PRODUCTS

 Car 4U

MCB Car4U not only gets a car of your own choice but is also affordable with competitive
mark-up, flexible conditions, easy processing and above all, no hidden costs.

 Business Sarmaya

Good cash flow is the key to any successful business. MCB Business Sarmaya offersrunning
finance facility against your house/ flat, insuring a steady cash flow for your business.

 Pyara Ghar

MCB Pyara Ghar is an ideal Home Finance from your own bank that lets you Purchase,
Renovate or Construct your home the way you have always wanted. Having your own home
was never so easy

 Easy Personal Loan

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.

 Instant Finance

With MCB instant Finance get a loan instantly at any MCB branch against liquid collateralat
competitive pricing.

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1.4.2.5 MCB RUPEE TRAVELERS CHEQUE

It is a safe and secure way to make payments nationwide. MCB Rupee Travelers Cheque,
being the market leader, is the most widely accepted way to pay cash for travel-related
purposes MCB Rupee Traveler's Cheques were first introduced in 1993 as safe cash for
traveling and travel related purposes.

1.4.2.6 MCB ONLINE SERVICES

 ATMs

MCB has one of the nation's largest ATM networks with over 450 ATMs and still growing.
MCB ATMs give you 24-hours convenience of cash withdrawal, mini-statement, utility bill
payment, funds transfer services and much more. With MCB Mobile ATM not only do we
provide you with world class banking service but we also provide convenience. Our
innovative mobile ATMs ensure that you are given service close to you.

 CallCenter

The state of the art MCB call center is the right choice to keep you in step with your ever
hectic schedule by providing you services relating to your account and Smart card at any
point in time.
There’s no easier way to bank than the new enhanced 24/7 MCB Call Center, which blends
innovation and convenience to provide Banking Services that go beyond expectations. With
MCB Call Centre you can maintain your VISA credit & ATM/Debit cards, check your
account balances, confirm last 5 transactions, pay utility & mobile phone bills, top-up your
mobile, pay MCB Visa Credit Card bill from your MCB toaccount, transfer money
withinyour own accounts in MCB and register complaint.

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  MobileBanking

At the forefront of technological excellence, MCB proudly introduces MCB MOBILE

BANKING. MCB Mobile is a quick easy and secure way to recharge mobile phones,transfer
money, pay bills and do much more.
No need to visit a branch or an ATM anymore, login to www.mcbmobile.comusing your
mobile phone and start transacting.

 Bill Payments

MCB easybill pay offers unmatched convenience to pay your utility and mobile phone bills
orre-charge yourprepaidmobilephoneaccountsanywhere,anytimewithsecurityandpeace of
mind.MCB is the only bank that offers you 3 convenient options of making bill payments to
PTCL, SSGC, SNGPL, KESC, Mobilink, Supernet, IESCO,HESCO, and Ufone. So, save
your precious time by avoiding long queues and pay your bills through MCB Easy Bill Pay.

 Online Banking

MCB has a fast growing network of over 1,100 online branches in the country providing
customers real time online transaction facilities.

1.4.2.7 MCB CARDS

 Smart Card

MCB Smart Card is the key that enables access to convenient banking services.Smart Card
allows you to manage your account, withdraw cash, transfer funds, pay utility and mobile
bills, recharge prepaid connections, register for mobile and internet banking services and
muchmore.smarter life. It not only helps you manage your expenses, but also eliminates
undue interest on your day to day credit card transactions. Your balance is always within
your reach and you spend accordingly.
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MCB now brings MCB Smart Card -a secure and convenient instrument of payment with
unmatched functionalities. It provides 24-hour direct access to your bank account.

 Debit Card

Now MCB brings a secure convenient and quick payment facility that enables you to do
purchasing by using your existing MCB ATM / MCB Smart Card as a DEBIT CARD.

 Visa Credit Card

MCB offers a complete suite of Classic, Gold and Platinum Visa Credit Cards focusing on
providing, superior service, travel privileges & shopping pleasure. It also offers
comprehensive insurance & installment plans, reward points and SMS alerts that give a
different feel to the world of Credit Cards. These unique features include i-revolve, which
makes variable mark-up rate available to customers allowing them to repay at affordable
rates.

1.4.3 MCB INVESTMENT BANKING

Make the most of your wealth with investment opportunities that match your unique
financial aspirations. MCB Investment Services offer distribution of mutual funds managed
by the leading fund managers of Pakistan. We can suggest the products most suited for your
needs, or work with you to create a personalized solution completely focused on your
expectations of the capital markets
MCB goal is to provide best financial solutions to client helping them achieving their
objectives and support economic growth of the Country.
The basic services offered by investment banking areas under:

 Project & Structured Finance

Involves financing complex projects, usually in an SPV structure, where the loan is tightly
structured around the cash flows, risks are allocated amongst various stakeholders, and there
is limited or no recourse to the sponsors.

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  Syndicated Loans and Debt Capital Markets

It involves structuring/advisory arrangement, underwriting and placement services for

significant financing requirements by large corporate and institutional clients to other
financial institutions or through the debt capital markets.

 Quasi Equity/Hybrid Instruments

It structures and places a category of debt that has some characteristics of equity such as
being unsecured, subordinated or with a potential equity upside.

 Equity Capital Raising

Equity Services relate to raising capital for clients by offering common or preferred equityto
public or private investors, through initial public offers, offers for sale, rights issues and
private equity placements.

 Advisory Services

Financial and Capital Raising Advisory provides clients with financial advisory services,
commercial structuring support and access to capital resources to help companies
successfully finance their business/project.

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  Facility Administration

Management of creditor interests in syndicated transactions in capacities such as facility

agent, security trustee, project monitoring bank, book-runner etc.

 Commercial Banking
Complementary products and services such as revolving lines of credit, trade services and
cash management that may be bundled with our Investment Banking Products.

1.4.4 MCB AGRICULTURE PRODUCTS

MCB has been providing finance to the agriculture sector since 1973. With the help of our
vast branch network, specialized staff posted in the branches, multiple and diversified
product range, we cater to the financing requirements of the farming community spread
throughout the country and facilitate in achieving increased productivity.

 Shadabi Plan

Shadabi Plan caters the financing needs for production activities on the farm which mainly
include seed, pesticides and fertilizers along with provisions for miscellaneous expenses like
payment of electricity & diesel bills of tube wells, maintenance expenses for tractors and the
like items as per list of Eligible items.

 Khushali Scheme

Under Khushali Scheme loans/finances are allowed for farm/ non-farm credits whichinclude
fixed investments/working capital requirements. Amount of finances sanctioned depend
upon the credit requirement and collateral.

Financingforlandleveling/development,heavyequipments,agriculturemachinery,
vehicles/transport for agri purpose are covered under this scheme. There may be other
development projects proposed by the farmers falling with in the ambit of agri financing,
which can be considered under this scheme.

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  Tractor Finance Scheme

To boost up the mechanized farming in the country, Tractor Finance Scheme is introducedto
offer specialized services to farmers. Under this scheme, there is no requirement of
minimum land holding because of multipurpose use of tractor for agriculture cum
commercial. However, the repayment capacity and potential use of tractor will be evaluated
at the time of loan processing

 Aabiari Scheme

Under the Aabiari scheme, financing facilities for tube well, other wells, irrigation systems
of all types including sprinklers are covered. The purpose is to facilitate the farmers in
overcoming the shortage of water for cultivation/plantation since water is essential
requirement for crops.

 Grower Finance

Grower Finance is a unique way of financing registered/(bonafide) growers/farmers of

sugarcane,cottonandrice(mills).Thespecialcharacteristicisthatthefinancingfacilitiesare
extended to farmers against the Mill/Factory guarantee. Fixed/floating charge may becreated
on the Mill's assets and the loan is disbursed directly to the growers. This finance is short
term in nature but the tenure may extend to eighteen months in case of growers of sugarcane.

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  Dairy &Meat Plan

The plan is aimed at promoting the Dairy sector & meat production in the country. The
farmers are extended financing facilities to purchase dairy animals for milk and for the
establishment of animal fattening stations to increase meat production on commercial line,
thus enabling the farmer to create more income.

 Murghbani Scheme

Murghbani Scheme covers extensively all requirements of the poultry industry with focus on
facilitating the farmers. We offer financing facilities of all types of activities in the value
chain starting from establishment of poultry farms infrastructure to all requirements in the
process till the final out put including marketing of the same by the farmers. Value addition
process by the farmers for poultry processing is also covered under the scheme.

 Baghbani

The scheme aims at facilitating the farmers engaged in horticulture by extending credit
facilities covering the entire range of related activities. The proposals are assessed keepingin
view the market potential and repayment capacitybased on the cash flows of the activity.
The farmers are extended all type of credit facilities required to produce fruits & vegetables
of better quality. The repayment of the loan is as per farmer convenience or linked to crop
cycle and timings of cash flows. Facilities like running finance, working capital
requirements, infrastructure development, machinery & equipment, irrigation etc are all
covered under this scheme.Progressive farmers are specially encouraged

 Mahigeri Scheme

Mahigeri Scheme caters to the credit needs of fish farmers covering entire range of activities
including marketing of their produce. The loans are of short medium and long term
depending upon the purpose. Financing for value addition process by the fish farmers is also

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covered under the scheme.
 Personal Alerts for reminding of pre-specificed events and occasions.

1.4.5 ISLAMIC BANKING

With the help of Shariah specialists, lawyers and professional commercial bankers, MCB
Islamic Banking provides Riba Free and Shariah Compliant solutions to various customer
segments in a growing number of cities.

 Deposit Schemes
For customers who are looking for a deposit opportunity where they can purse their
funds and reap halal returns on it, MCB offer the following products:

Al-MakhrajSavingAccount Al-Makhraj

Ianat Account Al-Makhraj Term

Deposit

 Fund Based Facilities

MCBoffers3broadIslamicfundbasedfacilities:

Ijarah Murabahah

Diminishing Musharika Equipment

 Ijarah Products

MCB’s Islamic Ijarah, analogous to the English term 'leasing’, is based on the ‘Ijarah wa
Iqtina’ concept which means the sale of the asset to the lessee after the Ijarah has matured.
Under this scheme, MCB will be the owner of the asset, and the customer (lessee) will be
given the asset to use fora certain period of time in return for monthly rental payments.MCB
will give a separate unilateral undertaking that it will offer to sell the asset to the customer
(lessee) at the maturity of the Ijarah agreement at a price that may be equal to the security

27
deposit amount, hence the term ‘Wa Iqtina’

Types of Ijarah

Car Ijarah

Equipment Ijarah

 Murabahah

It is a contract between a buyer and a seller under which the later first purchases the
goods at the request of the former i.e., customer and then sells it to same customer
after adding profit.

Murabah Sale Price=Cost+Expenses incurred +AgreedProfit

 Musharika Equipment

It is a contract through which the bank and its client participate in the jointownership
of a property. The share of the Bank is further divided into a number of units and it is
agreed that the client will purchase the bank’s share periodically, thus increasing his
own share until all the units of the bank are purchased by him so as to make the
client the sole owner of the property.

2.ORGANIZATIONALSTRUCTURE

2.1 ORGANIZATIONAL CHART

28
Board of Directors
 Chairman

President

2.3 ORGANIZATIONAL STRUCTURE OF THE BRANCH

Audit &RAR Wholesale Banking Consumer Banking Islamic Banking Commercial Treasury& Forex
A well-developed and properly coordinate structure is an important requirement for the
success of any organization. It provides the basic framework within which functions and
Special AssetsManagement
procedures are performed. AnyRisk
Public Relations Management
organization needsCompliance&Control
a structure, whichStrategic
providesPlanning&Investment
Financial Control
a framework
for successful operations. The operation of an organization involves a number of activities,
which are related to decision making, and communication of these decisions. Theseactivities
Information Technology Project Management Human Resource Management
Operations Business Development andNewInitiatives
must be well coordinated so that the goals of the organization are achieved successfully

General Manager Commercial

Regional Operational Manager / VP Regional Head/VP

Branch Operational Manager / OG III Branch Manager/ VP

Internal Control Officer / OG I

GEN.BANKINGDEPTT CASHDEPTT CREDITDEPTT

Incharge ForexOGIII

BRANCH
Branch Supervisor/OGIII Chief Teller/Assistant Credit Officer/OGIIII

GBO- Transfer/OG-III Teller Outsource

Personal Banking Advisor

GBO-Remittance/OG-I Teller Outsource

GBO-Clearing/OG-II Personal Banking Persona lBanking

Advisor-OGIII Advisor-OGII

Customer Service Officer Customer Services Officer

29
3.SIX YEAR'S FINANCIAL PERFORMANCE/FINANCIAL RATIO 2016
TO 2021
2021 2020 2019 2018 2017 2016
Profit and loss account
Mark-up/return earned Rs.Mln 123,334 136,076 138,2 83,319 74,091 67,400
92
Mark-up/return expensed "" 59,347 64,741 78,676 37,305 31,429 23,586
Fund based income "" 63,987 71,334 59,616 46,014 42,662 43,814
Fee, Commission, brokerage & FX income "" 17,011 13,594 14,469 14,625 11,435 9,040
Dividend and capital gains "" 3,062 4,542 2,210 2,573 6,682 7,135
Total income "" 84,061 89,470 76,295 63,212 60,780 59,989
Operating expenses "" 36,894 33,908 33,709 32,902 28,721 22,989
Operating profit before tax and provision "" 47,167 55,562 42,586 30,310 32,059 36,999
Provisions/(Reversals) "" (4,823) 7,313 2,484 (1,753) 1,045 925
Profit before tax "" 51,989 48,249 40,102 32,064 31,014 36,075
Profit after tax "" 30,811 29,037 23,977 21,360 22,459 21,891
Cash Dividends "" 22,516 23,701 20,146 18,961 18,673 17,808

Statement of financial position

Authorised capital "" 15,000 15,000 15,000 15,000 15,000 15,000
Paid up capital "" 11,851 11,851 11,851 11,851 11,851 11,130
Reserves "" 84,602 80,696 77,591 74,148 70,866 53,347
Un appropriated Profit "" 63,683 69,835 55,777 53,532 53,776 53,469
Shareholder's equity "" 160,136 162,382 145,219 139,531 136,493 117,946
Surplus on revaluation of assets-net of tax "" 14,272 27,720 23,695 9,747 17,073 23,680
Net Assets "" 174,407 190,102 168,915 149,278 153,566 141,627
Total Assets "" 1,970,46 1,757,462 1,515,15 1,498,13 1,343,23 1,072,36
8 2 0 8 5
Earning Assets "" 1,732,05 1,544,536 1,294,09 1,343,37 1,175,35 911,163
5 6 8 2
Gross Advances "" 635,574 513,550 540,037 546,792 515,058 367,678
Advances-net of provisions "" 589,711 462,942 496,679 503,581 469,356 348,117
Non-Performing Loans(NPLs) "" 50,491 51,189 49,424 48,956 48,753 21,688
Investments "" 1,035,58 1,015,869 748,765 749,369 656,964 555,929
5
Total Liabilities "" 1,796,06 1,567,361 1,346,23 1,348,85 1,189,67 930,739
1 7 2 2
Deposits & other accounts "" 1,411,85 1,289,502 1,144,76 1,049,03 968,483 781,430
2 3 8
Current& Saving Deposits(CASA) "" 1,312,05 1,198,785 1,035,06 954,813 899,364 735,550
9 3
Borrowings "" 269,526 164,002 89,506 216,019 133,070 74,515
Interest bearing Liabilities "" 1,118,18 964,119 809,717 867,048 728,361 557,913
2
Contingencies and Commitments "" 619,187 714,038 851,147 584,434 448,135 307,566

30
Profitability ratios:
Profit before tax ratio % 42.15% 35.46% 29.00% 38.48% 41.86% 53.52%
Gross Yield on Average Earning Assets "" 7.53% 9.59% 10.49% 6.41% 7.10% 7.56%
Gross Yield on Avg. Earning Assets (incl .dividend "" 7.72% 9.91% 10.65% 6.61% 7.74% 8.36%
&capital gains)
Gross Spread "" 51.88% 52.42% 43.11% 55.23% 57.58% 65.01%
Cost to income ratio "" 42.09% 36.49% 42.82% 50.77% 46.00% 36.80%
Return on average equity(ROE) "" 19.11% 18.88% 16.84% 15.48% 17.65% 18.94%
Return on average assets(ROA) "" 1.65% 1.77% 1.59% 1.50% 1.86% 2.16%
Return on Capital Employed(ROCE) "" 19.11% 18.88% 16.84% 15.48% 17.65% 18.94%
Shareholder Funds "" 8.85% 10.82% 11.15% 9.96% 11.43% 13.21%
Return on Shareholder Funds "" 16.91% 16.18% 15.07% 14.11% 15.22% 15.67%
Noninterest income total income "" 23.88% 20.27% 21.86% 27.21% 29.81% 26.96%
Admin Exp to Profit before Tax "" 68.05% 67.66% 81.47% 100.08 90.15% 61.19%
%

Investment ratios\Market Ratios:

Earnings per share(aftertax) Rs. 26.00 24.50 20.23 18.02 19.56 19.67
Earnings per share(beforetax) "" 43.87 40.71 33.84 27.06 27.02 32.41
Break up value per share
-without surplus on revaluation of fixed assets & "" 135.13 137.02 122.54 117.74 115.18 105.97
investments
-without surplus on revaluation of fixed assets "" 131.49 144.45 126.47 115.68 119.17 116.10
-with surplus on revaluation of fixed assets & "" 147.17 160.42 142.54 125.97 129.59 127.24
investments
-with surplus on revaluation of fixed assets &investments&
Investment in related party at fair /market value "" 149.82 162.80 144.89 128.41 132.90 132.90
Cash Dividend % 190% 200% 170% 160% 160% 160%
Dividend Yield ratio(based on cash dividend) "" 12.39% 10.79% 8.30% 8.27% 7.54% 6.73%
Dividend Payout ratio "" 73.08% 81.62% 84.02% 88.77 81.86% 81.35%
%
Price to book value ratio Tim 1.13 1.35 1.67 1.64 1.84 2.24
es
Price to earning ratio "" 5.90 7.56 10.13 10.74 10.85 12.09
Dividend cover ratio "" 1.37 1.23 1.19 1.13 1.18 1.23

31
3.1SIX YEAR'S FINANCIAL PERFORMANCE/FINANCIAL RATIO 2016 TO
2021

32
 2021 2020 2019 2018 2017 2016
Share Information:
Market value per share - Dec 31 Rs. 153.35 185.28 204.94 193.57 212.32 237.82
High - during the year "" 202.40 224.53 216.20 236.56 262.10 244.82
Low - during the year "" 146.00 132.89 154.04 177.16 190.43 190.20
Market Capitalisation Rs. 181,729 219,568 242,866 229,392 251,612 264,701
Mln
Asset Quality and Liquidity ratios:

Gross Advances to deposits ratio % 45.02% 39.83% 47.17% 52.12% 53.18% 47.07%
Net Advances to deposits ratio "" 41.77% 35.90% 43.39% 48.00% 48.46% 44.55%
Investments to deposits ratio "" 73.35% 78.78% 65.41% 71.43% 67.83% 71.14%
Consolidated:
Weighted Average Cost of Deposits "" 3.49% 4.53% 5.70% 3.18% 2.53% 2.48%
Total Assets Rs. Mln
CASA to total deposits "" 92.93%2,122,12192.96%
1,891,276 1,612,215
90.42% 1,585,210
91.02% 1,389,492
92.86% 1,097,281
94.13%
Shareholders' Equity "" 161,592 163,409 145,854 140,196 138,100 120,152
NPLs to Gross advances ratio "" 7.94% 9.97% 9.15% 8.95% 9.47% 5.90%
Net Assets "" 177,569 192,991 171,347 151,323 156,543 145,960
NPLs to Shareholders Equity "" 31.53% 31.52% 34.03% 35.09% 35.72% 18.39%
Profit before tax "" 53,275 49,318 40,154 30,806 30,614 36,721
Coverage
Profit afterRatio
tax (specific provision/ NPLs) " "" " 87.45% 31,32888.19%29,562 84.85%
23,947 85.68%
20,415 91.46%
22,048 87.32%
22,174
Coverage
Return on Ratio (total
Average provision/ NPLs)
Assets " "% 90.83% 1.56%98.87% 1.69% 87.73%
1.50% 88.26%
1.37% 93.74%
1.77% 90.82%
2.14%
Earning
Return onassets to total
Average assets ratio
Equity " "" " 87.90% 19.19%87.88%
19.02% 85.41%
16.66% 89.67%
14.60% 87.50%
16.98% 84.98%
19.18%
Investments
Earnings pertoshare
total assets ratio " "Rs. 52.56% 26.3157.80% 24.82 49.42%
20.14 50.02%
17.17 48.91%
19.13 51.84%
19.82
Breakup
Cash valueEquvilants
& Cash per share to Total Assets "" " 9.23% 149.84 8.30%162.85 144.59
9.50% 127.69
7.55% 132.10
8.16% 131.14
7.31%
Capital
Cash to Adequacy Ratio
Current Liabilities " "% 4.49% 15.98% 6.34%
19.69% 17.84%
5.39% 17.02%
3.44% 16.34%
5.07% 19.68%
7.78%
Per Branch:
Efficiency Ratio "" 70.96% 70.28% 84.06% 102.61% 92.61% 63.73%
Cash Reserve Ratio "" 5.09% 5.02% 5.02% 5.02% 5.03% 5.02%
Gross Advances
Liquid Assets to Total Assets Ratio
Rs. Mln
"" 54.10% 442.2950.99%
359.38 383.01
43.74% 394.23
43.18% 356.69
38.18% 297.10
40.07%
Deposits "" 982.50 902.38 811.89 756.34 670.69 631.20
Gross Non Performing Assets to Gross Advances & Investments "" 3.05% 3.38% 3.88% 3.82% 4.20% 2.36%
CASA "" 913.05 838.90 734.09 688.40 622.83 594.14
PBT
Earning assets to interest bearing Liabilities ""
Times 1.55 36.18 33.76
1.60 28.44
1.60 23.12
1.55 21.48
1.61 29.14
1.63
Deposits to shareholder equity "" 8.82 7.94 7.88 7.52 7.10 6.63
Assets to Equity "" 12.30 10.82 10.43 10.74 9.84 9.09
Current / Quick Ratio "" 1.53 2.38 2.29 1.91 2.01 3.05
Risk Adequacy:

Tier I Capital Rs. 150,354 152,901 136,257 128,999 129,130 111,999

Mln
Total Eligible Capital "" 169,604 188,409 163,611 145,987 147,227 128,968
Risk Weighted Assets (RWA) "" 997,279 897,938 867,478 805,177 895,415 667,195
Tier I to RWA % 15.08% 17.03% 15.71% 16.02% 14.42% 16.79%
RWA to total assets "" 50.61% 51.09% 57.25% 53.75% 66.66% 62.22%
Capital Adequacy Ratio "" 17.01% 20.98% 18.86% 18.13% 16.44% 19.33%
Net Return on Average RWA "" 3.25% 3.29% 2.87% 2.51% 2.87% 3.40%
Duo Pont Analysis:

Net Operating Margin % 36.65% 32.45% 31.43% 33.79% 36.95% 36.49%

Asset Utilization % 4.51% 5.47% 5.06% 4.45% 5.03% 5.78%
Leverage Ratio / Equity Multiplier Times 11.56 10.64 10.58 10.29 9.49 8.99
Industry Share:

Deposits* % 6.41% 6.91% 7.45% 7.57% 7.59% 6.79%

Advances* "" 5.98% 5.69% 6.21% 6.57% 7.46% 6.24%
Market Capitalisation "" 13.03% 16.08% 16.87% 17.17% 17.85% 14.86%
*based on economic data released by State Bank of Pakistan

3.2.SIX YEAR'S- PERFORMANCE COMMENTARY

2016 - 2021
33
In this section, commentary on the six years’ performance of the Bank is being provided, covering key highlights;

Statement of Financial Position

3.2.1.TOTAL ASSETS

The asset base of the Bank has registered a remarkable compounded annual growth rate (CAGR) of 12.94% over
the last 6 years; growing to Rs. 1,970 billion as at December 31, 2021. Prime contributors to the said increase have
been advances and investments; with investments growing annually by approximately 13.25% while gross
advances growing by 11.57%. The earning asset mix of the Bank has been prudently managed to ensure
maximization of returns to the stakeholders.

In 2017, based on the strategic move, NIB Bank was merged with MCB Bank Limited resulting in a significant
increase in assets of 25%. Furthermore in 2018, 90 branches of the Bank were transferred to a wholly owned
subsidiary of the Bank i.e. MCB Islamic Bank Limited. In 2021, the Bank recorded a net growth of Rs. 213 billion
in total assets (12.12%) over 2020.

3.2.2.ADVANCES

During the year under review, the economy witnessed a V shaped recovery. Improving operating scenario amidst
uplifting of COVID-19 enforced lock downs, pickup in domestic activity and
resurgence of key economic sectors laid the foundation for a broad based growth in advances across the entire
banking industry. MCB capitalized on the emerging credit extension opportunities, within its
defined risk appetite, and posted a remarkable growth of 24% in its credit book (on a gross basis) in 2021 on year
on year basis. Over the cumulative period of 6 years, the expansionary economic cycle witnessed at the end of the
time analysis improved MCB’s CAGR to 11.57 % over the last 6 years as compared to previously reported six year
34
CAGR of 9.75%.

3.2.3.NON-PERFORMING LOANS

Strengthened risk management policies coupled with refined credit appetite has enabled the Bank to keep a check
on the quality of its assets. During 2021, the Bank continued with its trend of registering significant recoveries to
post another year of historic performance; the total recoveries for the year amounted to Rs. 2.67 billion. The
infection ratio of the Bank was 5.90% as at December 31, 2016, however, the transfer of NPL stock from NIB
Bank i.e. Rs. 29.650 billion had increased the infection ratio to 9.47% as at December 31, 2017. In 2021, effective
management of Bank’s credit risk by leveraging a robust risk management
framework has enabled MCB to decrease its Non-performing loan (NPLs) base to the tune of Rs. 698 million. The
lowering NPL base together with a growing credit book improved Bank’s infection ratio from 9.97% in 2020 to
7.74% in 2021. The coverage ratio of the Bank has improved slightly from 90.19% as at December 31, 2016 to
90.83% as at December 31, 2021. NPLs classified in “loss” category constitute more than 98.83% of the NPLs
base as at December 31, 2021. This specifies the adequacy of provision held in the books of the Bank.

3.2.4.INVESTMENTS

Over the past few years, a dearth of quality credit extension opportunities resulted in the banking sector
liquidity being deployed in Government Papers as Government’s borrowing appetite continued
to grow. The year 2021 witnessed a trend reversal as advances made a notable contribution to expansion in Bank’s
asset base on the back of economic recovery driven by improvement in LSM growth and a rise in business
confidence index. However, with an average annual growth

rate of 13.25% over the last six years, the investment base of the Bank has grown from Rs. 556 billion as at

35
December 31, 2016 to Rs. 1,036 billion as at December 31, 2021 and still constitutes 52.56% of the total asset base
(declining from 57.80% in 2020). The duration of the investment portfolio has been proactively monitored amidst
the evolving yield curve scenario to maximize shareholder returns and optimize liquidity management. The equity
book of the Bank consists of investments in diverse companies with strong fundamentals with a view to earn stable
dividends.

3.2.5.DEPOSIT
The deposit base of the Bank has nearly doubled over the last six years, surpassing the landmark of PKR 1 trillion
in 2018, with the absolute number increasing from Rs. 781 billion as

at December 31, 2016 to Rs. 1,412 billion as at December 31, 2021. CAGR of 12.56% has been maintained over
the past 6 years. CASA base has registered a remarkable increase in the last 6 years, increasing from Rs. 736
billion as at December 31, 2016 to Rs. 1,312 billion as at December 31, 2021. This has been strategically achieved
through service excellence, strategically placed touch points for the customers and transactional convenience
provided through a vast range of diversified produc

3.2.6.PROFIT AND LOSS ACCOUNT

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 in the total markup
income mix had increased from 34.06% in 2016 to 41.46% in 2019 while the contribution from markup income on
36
investments declined from 65.62% to 54.58% over the same period. However, diversion of excess liquidity
towards the investment
book due to lack of good credit opportunities in the subsequent years diluted concentration of advances related
markup income in the income mix and led to
a fall in their contribution to 26.86% in 2021.

The investment to total asset ratio has

increased slightly from 51.84% in 2016 to
52.56% in 2021;whereas, the advances to
total asset ratio has decreased by 2% from the
base year. Gross yield on average assets has
also improved over the years and closed at
8.15% in 2021.

Achieving growth in no-cost current accounts to improve their contribution in the total deposit and align it with a
balanced mix of earning assets base has remained at the forefront of MCB’s key strategic focus; in turn lending
support to the Bank’s net interest margins. CASA base of the Bank has thereby remained above 90% throughout
the period covered by the time analysis despite a CAGR of 12.56% achieved in the total deposit base.

Non-Markup Income

During the last six years, fee & commission income and capital gains have been the major drivers behind non-fund
income growth. Apart from the exception of 2020 wherein the

realization of various systematic and idiosyncratic factors, emanating from the COVID-19 outbreak, impacted
37
Banks income streams, the fee & commission income has witnessed a broad based growth over the years on the
back of new products and services added to the menu coupled with remote banking and branchless initiatives taken
by the Bank. The product development teams of the Bank have been tapping the unbanked segments of the
population and offering them tailored products to meet their specific financial 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
etc.

The fee, commission and brokerage block of the Bank have been constant contributors to its bottom line growth;
major thrust to the income has been provided by commission earned on card business,bancassurance business, and
remittances and intercity / intra-city cash transfers.

The equity book of the Bank consists of investments in diverse companies with strong fundamentals and has been
a stable contributor to the non-markup income by providing outstanding dividend yields. During the past 6 years,
above Rs. 26 billion have been realized by way of capital gains and dividend

Provisions and write offs

The Bank’s risk management platform is being driven by an augmented framework of sound risk principles,
optimum organizational structure, robust risk assessment models and effective
monitoring systems in an IT enabled environment to effectively identify, evaluate and mitigate all risks undertaken
in the achievement of its long-term strategic objectives. The captioned

platform has formed the basis for a declining trend in provision charge booked against
advances over the years; in fact, the Bank’s has been able to post significant provision reversals up till year 2019
on the back of extensive recovery efforts undertaken.
38
During 2020, however, the Bank has witnessed a trend reversal in recognition of provision
against advances. The subjective classification of obligor accounts on a prudent basis coupled with an additional
recognition of general provision charge,amounting to Rs. 4 billion, in anticipation of the impact
realization of COVID-19 pandemic post expiration of SBP’s relaxations and waivers in 2021 were the prime
contributors to the captioned increase. During 2021, as part of the continuous credit

assessment process, the Bank, while creating specific provisions against exposures that reflected signs of financial
distress, have reversed the general provision charge created in the preceding year as the systematic risks
surrounding the economic recovery receded. The Bank has not taken any benefit of FSV in its provision
calculation.

Operating expense:

Considering expansion in Bank’s branch outreach, continued investment in technological infrastructure, regular
performance merit adjustments for the Human Capital, rising regulatory compliance costs and sustained
inflationary patterns witnessed over the period of six years, the posted growth in the

administrative block of the Bank has been kept in strict check through introduction of cost effective
techniques/methods; automation led saving initiatives, centralization of operations and imposition of annual
capping’s have been the key pillars of cost management drive undertaken by the Bank and have laid the basis for
the Bank to boast one of the lowest cost to income ratios in the industry.

Profit before tax and Profit after tax:

MCB Bank has been able to post outstanding profitability numbers over the period of last six years as substantiated
by one of the highest industry EPS and a remarkable return on assets
ratio.

39
The aggregate profit after tax for the last six years has approximated Rs. 150 billion.
Profitability ratios have been one of the best in the banking industry which are reflective of effective management
of the affairs and adoption of prudent strategies.

40
FIVE YEARS HORIZONTAL ANALYSIS OF FINANCIAL RATIO 2017 TO 2021

41
STATEMENT OF FINANCIAL POSITION
Asset 2021 21vs20 2020 20vs19 2019 19vs18 2018 18vs17 2017
RS.MLN % RS.MLN % RS.MLN % RS.MLN % RS.MLN
Cash and balances 164,613 36% 122,181 -8% 132,705 29% 103,175 -3% 106,072
with treasure banks
Balance with other 18,830 -22% 24,030 92% 12,542 6% 11,879 159 4,579
banks %
Landing to financial 42,467 148 17,139 1472 1000 -97% 36,106 608 4,398
institutes % % %
Investment 1,035,58 2% 1,015,86 36% 748,765 0% 749,369 14% 656,964
5 9
Adnances 589,711 27% 462,942 -7% 496,679 -1% 503,581 7% 469,356

Operating fixed 57,328 -1% 58,028 0% 58,271 43% 40,812 4% 39,170

assets
Intangible assets 979 4% 938 -2% 958 52% 630 56% 404
Other assets 60,955 8% 56,334 - 64,143 20% 53,578 - 62,295
12% 14%
1,970,46 12.12 1,757,46 15.99 1,515,15 1.14 1,498,13 11.53 1,343,23
8 % 2 % 2 % 0 % 8

LIABILLITIES
Bills payable 24,590 3% 23,981 103% 11,822 -25% 15,699 -31% 22,681
Borrowing 269,52 64% 164,002 83% 89,509 -59% 216,019 62% 133,070
6
Sub-ordinated - - - - - -100% 3,891 0% 3,893
loans

42
Deffered tax 729 -90% 6,975 19% 5,851 28% 1,532 -67% 4,625
liabilities
Deposits 1,411,8 9% 11,289,502 13% 1,144,763 9% 1,049,038 8% 968,483
52
Other liabilities 89,365 8% 82,901 -12% 94,296 50% 62,673 10% 56,921
1,796,0 15% 1,567,361 16% 1,346,237 0% 1,348,852 13% 1,189,672
61

NET ASSETS 174,40 -8% 190,102 13% 168,915 13% 149,278 -3% 153,566
7

Share capital 11,851 0% 11,851 0% 11,851 0% 11,851 0% 11,851

Resarves 84,602 5% 80,696 4% 77,581 5% 74,148 5% 70,776
Surplus on 14.272 -49% 27,720 17% 23,695 143% 9,947 -43% 17,073
revaluation of
assets-net of
tax
Unappropiate 63,683 -9% 69,835 25% 56,777 4% 53,532 0% 53,776
174,40 -8% 190,102 13% 168,915 13% 149,278 -3% 153,566
7

PROFIT & LOSS ACCOUNT

2021 21VS20 2020 20VS19 2019 19VS18 2018 18VS17 2017
Rs.Mln % Rs.Mln % Rs.Mln % Rs.Mln % Rs.Mln

Mark up earned 123,334 -9% 136,076 -2% 138,292 66% 83,319 12% 74,091
Mark up 59,347 -8% 64,741 -18% 78,676 111% 37,305 19% 31,429
expensed
Net mark up 63,987 -10% 71,334 20% 59,616 30% 46,014 8% 42,662
income
Total income 84,061 -6% 89,470 17% 76,295 21% 63,212 4% 60,780
Non markup 36,894 9% 33,908 1% 33,709 2% 32,902 15% 28,721
expenses
Profit before 47,167 -15% 55,562 30% 42,586 40% 30,310 -5% 32,059
provision
Provision & 4,823 -166% 7,313 194% 2,484 -242% 1,753 -268% 1,045
write off
Profit before 51,989 8% 48,249 20% 40,102 25% 32,064 3% 31,014
taxation
Taxation 21,2178 10% 19,212 19% 16,125 51% 10,704 25% 8,565
Profit after 30,811 6% 29,037 21% 23,977 12% 21,360 -5% 22,459
taxation

43
44
 4.SWOT ANALYSIS

4.1.STRENTHS

 Strong Financial Position and Profitablity.

 Strong Capital Base Highest CASA ratio (>90%) in the Industry.
 2nd Lowest Infection Ratio among Peer Banks
 Offering of Comprehensive Solutions to Clients across Products (Debt, equity issuance, advisory and
facility arrangement)
 Diversified Portfolio of Loans and Advances; and Diversified Income Streams .
 Established Brand Name / Customer Loyalty .
 Competent and Committed Human Capital .
 High Levels of Visibility through Wide Customer Outreach across Multiple Channels Conservative and
Sustainable Business Policy.

4.2.WEAKNESSES

 Need to further strenghthen market share in deposits

 InvestmentsConcentration in Government Securities.
 Lower International Presence / Global Footprint Compared to Peer Banks.

4.3.OPPORTUNITY

 Undifferentiated Products Lines across the Banking Sector Emerging Trends in Consumer Behavior High
Traditional and Digital Financial Exclusion Base
 Enhanced Market Scope for Service Offerings through Digital Products and Channels
 Forging Strategic Partnerships with Leading Technological Platforms Leveraging Retail and Corporate
Relationships for Cross Sell Initiatives
 Deploying Intelligent Data Analytics' Tools to identify Underlying Patterns and Drive Business

Growth Exploiting Low Credit Penetration Ratio

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  Exploiting Growth and Expansion Opportunities in Emerging Economies
 Expanding the Advisory and Other Services offered to Clients and Investors

4.4.THREATS

 Dynamic competitive landscape including Growing Competition from Fintechs and other Emerging
Entrants .
 Unexpected Fluctuations in Discount Rates Rising Operating Technology Costs Risks Arising from
PESTEL Factor's.

5.RECOMMENDATIONS
Following are some of the suggestions and recommendations that Iwant to give on the basis
of shortfalls / weaknesses found in the bank.

 The target rate of return on assets (ROA) of commercial banks reflects the effectiveness and
efficiency of the use of resources is the embodiment of its operating efficiency and
management level of the important comprehensive index. Emphasis on return on assets, and
continuously improve the return on assets and achieve an operating profit maximization
should be the primary objective of Muslim commercial bank.

 A strong ROE is a solid signal that management is doing a good job of generating returns for
shareholders' investments. Active capital management activities will provide better ROEs.
Bank that manages larger reserves due to recent or future investment projects will stymie their
ROEs. Another determinant of the ROE is the operating profit margin of banks. Recently, this
tends to converge towards non- interest income as net interest margins tend to cause net
interest income to be
squeezedovertimeduetorisingcompetition.MuslimCommercialBankshould

 The Bank's controlled budgeting and diligent monitoring on operating expenditure block.
Effective monitoring at management level ensured managed increase in administrative charge
46
 within the approved budgetary limits.

 MCB’s lead over rivals if they more emphasis on its aggressive investment strategy and
capital strength, the investments may bolster MCB’s.

 MCB Bank Ltd Pakistan’s largest lender by market value should plans to expand overseas
and add branches and employees at home even as economic growth slows after the worst
floods in the nation’s history. Increase staff as it expands trade financing, remittances
management and mobile-banking operations.

6.ANNEXES
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 ORGANIZATIONAL STRUCTURE

Board ofDirectors

Chairman

President

Audit &RAR WholesaleBanking ConsumerBanking IslamicBanking CommercialBanking Treasury&Forex

SpecialAssetsManagement PublicRelations RiskManagement Compliance&Control StrategicPlanning&InvestmentFinancialControl

InformationTechnology ProjectManagement HumanResourceManagement Operations BusinessDevelopmentandNewInitiatives

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 MANAGEMENT OF BRANCH
GeneralManagerCommercial

RegionalOperational Manager / VP RegionalHead/VP

BranchOperational Manager / OG III BranchManager/ VP

InternalControl Officer / OG I

GEN.BANKINGDEPTT CASHDEPTT CREDITDEPTT

InchargeForexOGIII

BranchSupervisor/OGIII ChiefTeller/Assistant CreditOfficer/OGIIII

GBO- Transfer/OG-III TellerOutsource

BRANCH

PersonalBankingAdvisor
GBO-Remittance/OG-I TellerOutsource

GBO-Clearing/OG-II PersonalBanking PersonalBanking

Advisor-OGIII Advisor-OGII

CustomerService Officer CustomerServices Officer

SupportStaff SecurityStaff

TeaBoyOutsource GuardMCBFoundation

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7.REFERENCES

All of there references and sources from where the data gathered for this report
are mentioned herewith for your kind concern.

ORGANIZATION

Annual Reports 2021 of MCB Bank Limited of Pakistan.

MCB Credit Policy

http://www.mcb.com .pk.

WEBPORTALS
http://www.sbp.com.pk

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