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Muslim Commercial Bank Limited Internship Report On Muslim Commercial Bank Limited MCB

Introduction to MCB A bank is a financial institution which deals with money and credit. It is an intermediate between two parties. A bank is a firm that takes deposits from household, firms and makes loans to household and firms.

History Muslim Commercial Bank Ltd. Unfold 57-years’ growth. MCB is not an overnight success story. The bank started corporate life in Calcutta on July 9, 1947. After the partition of the Indo-Pak Subcontinent, the bank moved to Dhaka from where it commenced business in August 1948. In 1956, the Bank transferred it Registered office to Karachi, where the Head Office is presently located. Main Muhammad Mansha Chairman and chief executive of MCB

P S MCB Product & Services Auto Loan Business Sarmaya Tractor finance scheme MORTGAGE S MCB ATM Services MCB Mobile Banking MCB Call Center Basic Banking Account (BBA) Current Account Saving Account Business Account D

Competitors Add Your Title Allied Bank Limited United Bank Limited Askari Bank Limited

Business volume Authorize capital Deposits Advances Investment Description 2007 2008 2009 Authorize capital Deposits Advances Investment Borrowing Reserve Profit after tax 6500 292,098 330,274 367,604 218,960 262,510 253,149 113,089 96,256 167,134 394,068 22,663 44,662 5,130 9,193 15,779 15,265 15,374 15,495

Organizational Hierarchy Chart President Chairman Vice president Senior Vice President Chief Financial Advisor Audit Committee Regional Manager Branch Manager

Traning Program Joining Adjoining 15-10-2010 30-11-2010

Collect External information Working Departments 1st week Customer service 2nd week Account 3rd week Remittance Department Clearing 4th week Cash 5th week Collect External information 6th week

Activity Leverage Liquidity Ratios Market Profitability

Liquidity Ratios

Current Ratio Muslim Commercial Bank Limited 2007 2008 2009 Ratio Analysis Muslim Commercial Bank Limited Current Ratio = Current assets Current Liability 2007 2008 2009 Current Ratio 62411535/22201551 2.81 67584827/31897249 2.11 70824959/24020172 2.94

Quick Ratio (Acid Test) Ratio Analysis Muslim Commercial Bank Limited Current Ratio = Current assets- prepaid Expenses Current Liability 2007 2008 2009 Quick Ratio 62411535/22201551 2.81 67584827/31897249 2.11 70824959/24020172 2.94

Muslim Commercial Bank Limited Working Capital Ratio Ratio Analysis Muslim Commercial Bank Limited Working Capital ratio = Current Assets - Current Liability 2007 2008 2009 Working Capital Ratio 62411535-22201551 40209984 67584827-31897249 35687578 70824959-24020172 46804787

Working of Current Assets 2007 (Rs) 2008 2009 Cash and balances with treasury banks 39683883 39,631,172 38,774,871 Balances with other banks 3807519 4,043,100 6,009,993 Landings to financial institutions 1051372 4,100,079 3,000,000 Other assets – net 17868761 19,810,476 23,040,095 Total 62411535 67584827 70824959

Working of Current Liabilities 2007 (Rs) 2008 2009 Bills payable 10479058 10,551,468 8,201,090 Other liability 11722493 21,345,781 15,819,082 Total 22201551 31897249 24020172

Leverage Ratios

Muslim Commercial Bank Limited Debt Ratio Ratio Analysis Muslim Commercial Bank Limited Debt Ratio = Total Debt / Total Assets 2007 2008 2009 Debt Ratio 355365842/410485517 0.86 385179850 /443615904 0.868 439483714/509,223,727

Working of Total (Liability) Debt Total debt 2007 (Rs) 2008 2009 Bills payable 10479058 10,551,468 8,201,090 Borrowing 39406831 22,663,840 44,662,088 Deposit and other account 292098066 330,181,624 367,604,711 Other liability 11722493 21,345,781 15,819,082 Deferred tax liabilities – net 1180162 437,137 3,196,743 Sub-ordinate loan 479232 - Total 355365842 385,179,850 439,483,714

Working of Total Assets 2007 (Rs) 2008 2009 Cash and balances with treasury banks 39683883 39,631,172 38,774,871 Balances with other banks 3807519 4,043,100 6,009,993 Lending to financial institution 1051372 4,100,079 3,000,000 Investment 113089261 96,631,874 167,134,465 Advances 218960598 262,135,470 253,249,407 Other asset 17868761 19,810,476 23,040,095 operating fixed Assets 16024123 17,263,733 18,014,896 Deferred tax Assets - Total 410485517 443615904 509223727

Muslim Commercial Bank Limited Debt / Equity Ratio Ratio Analysis Muslim Commercial Bank Limited Debt to Equity Ratio: = Total liabilities (Debt) / Shareholder equity 2007 2008 2009 Debt / Equity Ratio 355365842 /55119675 6.44 385179850 / 58436054 6.59 439483714 / 69740013 0.63

Working of Shareholder Equity = Total Assets – Total Liabilities

Muslim Commercial Bank Limited Times Interest Earned Ratio Analysis Muslim Commercial Bank Limited Time Interest Earned Ratio = (EBIT) / Interest expenses 2007 2008 2009 Time Interest Earned 29173568 / 7,865,533 3.70 33428306 /11,560,740 2.89 38996408 /15,841,463 2.46

Interest / markup Expenses are available in P&L Account Working of EBIT EBIT 2007 (Rs) 2008 2009 Profit before tax 21308035 21,867,566 23,154,945 Add) interest / markup expenses 7865533 11,560,740 15,841,463 Total 29173568 33428306 38996408 Interest / markup Expenses are available in P&L Account

TOTAL CAPITALIZATION RATIO Ratio Analysis Muslim Commercial Bank Limited Total Capitalization Ratio = Long term debt / Long term debt + Share holder equity 2007 2008 2009 Total Capitalization ratio 1659394 / 1659394+551196751659394 / 56779069 0.02 437137 / 437137+58436054 437137 / 58873191 0.13 3196743 / 3196743+ 69740013 3196743 / 72936756 0.04

Working of long term liabilities Year 2007 (Rs) Year 2008 Year 2009 Sub-ordinates loans 292098066 - Deferd tax liability 1180162 437,137 3,196,743 Liabilities against assets subject to finance lease 479232 Total 293757460

Activity Ratios

Muslim Commercial Bank Limited Total Assets Turnover Ratio Analysis Muslim Commercial Bank Limited Total Assets Turnover = Sales / Total Assets 2007 2008 2009 Total Asset Turnover 31786595 /410485517 0.07 40043824 /443615904 0.09 51616007 /509223727 0.10

Muslim Commercial Bank Limited Fixed Assets Turnover Ratio Analysis Muslim Commercial Bank Limited Fixed Assets Turnover = Sales / Total Fixed Assets 2007 2008 2009 Fixed Assets Turnover 31786595 /16024123 1.98 40043824 / 17263733 2.31 51616007 / 18014896 2.86

Sale is the value of "Net Sales" or "Sales" from the company's income statement Total Fixed Assets Total fixed assets are the value of all the assets which is not current assets. Total Fixed assets are available in the balance sheet.

Profitability Ratios

Muslim Commercial Bank Limited Net Profit Margin Ratio Analysis Muslim Commercial Bank Limited Net Profit Margin = Net Income / sales *100 2007 2008 2009 Net profit Margin 20,808,390 / 31786595 0.65 or 65.4% 20,526,669 / 40043824 0.51 or 51.2% 24,710,953 / 51616007 0.47 or 47.8%

Working of Net Income Net Income 2007 2008 2009 Net mark–up / interest income after provisions 20856011 24,463,963 28,452,223 Add) Non–mark–up / interest income 6011291 5,791,440 5,642,885 Less) Non–mark–up / interest expenses 26867302 8,387,837 10,940,163 Profit before tax 21308035 21,867,566 23,154,945 Less) taxes 6042473 6,492,966 7,659,648 Profit after tax 15265562 15,374,600 15,495,297 Less) other expenses 5542828 5,152,069 9,215,656 Net income 20808390 20,526,669 24,710,953

Muslim Commercial Bank Limited Return on Assets Ratio Analysis Muslim Commercial Bank Limited Return on Assets = Net income after tax / Total Assets * 100 2007 2008 2009 Return on Assets 15265562/410485517*100 3.71% 15374600/443615904*100 3.46% 15495297/509223727*100 3.04%

Working of Net income after tax 2007 2008 2009 Net mark–up / interest income after provisions 20856011 24,463,963 28,452,223 Add) Non–mark–up / interest income 6011291 5,791,440 5,642,885 Less) Non–mark–up / interest expenses 26867302 8,387,837 10,940,163 Profit before tax 21308035 21,867,566 23,154,945 Less) taxes 6042473 6,492,966 7,659,648 15265562 15,374,600 15,495,297

Operating Income Margin Ratio Analysis Muslim Commercial Bank Limited Operating margin = operating Income / Net sales*100 2007 2008 2009 Operating income margin 24,369/31786595 7.66 % 25,910 / 40043824 6.47% 30,620 / 51616007 5.93%

Operating Income = Available in Six year Analysis of the company

Return on Operating Assets Ratio Analysis Muslim Commercial Bank Limited Return on operating Assets = sales / operating assets 2007 2008 2009 Return on operating Assets 31786595/16082781 1.97 40043824 / 17320485 2.31 51616007 / 18099010 2.85

Working of operating Assets 2007 2008 2009 Capital work–in–progress 233390 510,226 1,099,749 Property and equipment 15607660 16,562,309 16,666,905 Intangible asset 183073 191,198 248,242 Total 16024123 17,263,733 18,014,896

Muslim Commercial Bank Limited Return on Equity Ratio Analysis Muslim Commercial Bank Limited Return on Equity = Net income after tax / Total Equity* 100 2007 2008 2009 Return on equity 15265562/45414156*100 33.6% 15374600/52244865* 100 29.4% 15495297/61075932* 25.4%

Working of Total Equity 2007 2008 2009 Share capital 6282768 6,282,768 6,911,045 Reserves 34000638 36,768,765 38,385,760 Un appropriated profit 5130750 9,193,332 15,779,127 Total 45414156 52,244,865 61,075,932

Gross Profit Margin Ratio = Gross Profit / Net Sales Ratio Analysis Muslim Commercial Bank Limited Gross Profit Margin Ratio = Gross Profit / Net Sales 2007 2008 2009 Gross Profit Margin 23921062 / 31786595 0.75 28483084 / 40043824 0.71 35774544 / 51616007 0.69

Working of Gross Profit 2007 2008 2009 Mark–up / return / interest earned 31786595 40,043,824 51,616,007 Less) Mark–up / return / interest expensed 7865533 11,560,740 15,841,463 Total 23921062 28,483,084 35,774,544

DuPont Return on Assets Ratio Analysis Muslim Commercial Bank Limited DuPont Return on Assets = Net Income * Sales_____ Sales Total Assets 2007 2008 2009 DuPont return on assets 20,808,390/31786595 * 31786595/410485517 0.65*0.07 0.04 20,526,669 / 40043824 * 40043824 /443615904 0.41*0.09 0.03 24,710,953 / 51616007 * 51616007 /509223727 0.47*0.10

Market Ratios

Muslim Commercial Bank Limited Dividend Per Share Ratio Analysis Muslim Commercial Bank Limited Dividend per share = Dividend paid to share holder Average common share outstanding 2007 2008 2009 Dividend per share 4728496/ 691104527 400.0 9834175/ 691104527 125.9 6735510 / 691104527 219.7

Dividend paid to share holder Source: Cash flow statement of MCB Average common share outstanding source: financial statement analysis notes of MCB Note # 32 page # 106

Muslim Commercial Bank Limited Earning Per Share Ratio Analysis Muslim Commercial Bank Limited Earning Per share = Profit Available to shareholders or Net income after tax No of shares outstanding 2007 2008 2009 Earning per share 20,808,390 / 1102183 22.09 20,526,669 / 921304 22.25 24,710,953 / 1118648 22.42

No of shares outstanding = Net income after tax EPS EPS is available in balance sheet Net income is available in P&L account of the MCB

Muslim Commercial Bank Limited Price Earning Ratio Ratio Analysis Muslim Commercial Bank Limited Price Earning Ratio = Current market Share price / Earning Per Share 2007 2008 2009 Price Earning ratio 18.11 * 22.09 400.0 5.66 *22.25 125.9 9.80 * 22.42 219.7

Working of Price Earning Ratio EPS is available in balance sheet PE Ratio is available in year analysis of the company. Current market Share price = PE * EPS

Conclusion The overall analysis shows that MCB is in good condition throughout the analysis years 2007 In the next year 2008 & 2009, there is decrease in the value of profit as compare to previous year. During this year the operating cost was max and its operational profit was minimum as compare to previous year .The reason behind this due to uncertainty in the process of increase in payables, increase in capital work in progress and less investment during this year. Earning per share is also increase during these years for the stocks holders and the persons interested in MCB investment. Insufficient Staff in branches

Recommendation MCB Should focus more on training needs of staff in line with practical banking, especially IT based products Bank should acquire modern automation system to provide efficient and prompt service to the customers Before lending loan to the client or financing a project a team of expert should physically visit the site and then evaluate its feasibility for investment. If the investment and project is profitable then should go on otherwise should not invest. Increase in Mobile Banking including ATM , online Banking etc. Take step to increase the profit. Investment in assets should be appropriate.

Thank You !