Вы находитесь на странице: 1из 135

Table of Contents

Introduction....................................................................................4
Objectives........................................................................................................................4
Overview of the Organization..........................................................................................5
Brief History of the Organization................................................................................5
Nature of the Organization...............................................................................................9
The Meezan Team........................................................................................................9
Business Segments of the Bank...................................................................................9
VISION AND MISSION...............................................................................................10
SERVICE MISSION......................................................................................................11
ORGANIZATIONAL STRUCTURE............................................................................11
SHARIAH ADVISORY BOARD..............................................................................14
BOARD OF DIRECTORS........................................................................................15
ORGANIZATIONAL STRUCTURE OF THE BRANCH............................................16
ACCOUNTS DEPARTMENTS..................................................17
STRUCTURE AND FUNCTIONS ..............................................................................17
OBJECTIVE:...............................................................................17
FUNCTIONS:............................................................................................................17
DATA CONTROLLING:...........................................................................................17
Aspects of Data Controlling .....................................................................................18
REPORTING AND EXPENSE:................................................................................18
BUDGETARY PERFORMANCE:............................................................................19
ACCOUNT OPENING AT MEEZAN BANK..............................................................23
Business Account.......................................................................................................23
Sole proprietor accounts: ..........................................................................................23
Document required.........................................................................................................23
Partnership account: ..................................................................................................24
Document required:.......................................................................................................24
Limited company accounts: ......................................................................................24
Document required:.......................................................................................................24
Personal Account.......................................................................................................25
Club Society Account................................................................................................26
Accounts On the Basis Of Currency..........................................................................27
RUPEE CURRENT ACCOUNT...............................................................................28
DOLLAR SAVING ACCOUNT................................................................................32
KAROBARY MUNAFA ACCOUNT.......................................................................34
MEEZAN BACHAT ACCOUNT..............................................................................35
CERTIFICATE OF ISLAMIC INVESTMENT.............................................................37
Invest in Certificate of Islamic Investment................................................................37
MEEZAN AMDAN CERTIFICATE.........................................................................38
MONTHLY MUDARBA CERTIFICATE.....................................................................40

1
MEEZAN PROVIDENCE CERTIFICATE...................................................................41
DOLLAR MUDARABAH CERTIFICATE..................................................................43
CAR IJARAH-AUTO FINANCE.................................................................................45
Car Ijarah also features Used Vehicles!.....................................................................45
WORKING CAPITAL FINANCE.............................................47
Murabaha.......................................................................................................................47
Istisna’a..........................................................................................................................48
PROJECT FINANCING, EXPANSION AND BMR....................................................49
Diminishing Musharakah...........................................................................................49
Ijarah..............................................................................................................................50
ISLAMIC EXPORT REFINANCE SCHEME..............................................................51
LETTER OF GUARANTEE FACILITY..................................................................51
Letter of Guarantee Facility.......................................................................................51
ADVISORY SERVICES................................................................................................53
MONEY TRANSFER....................................................................................................55
DOLLAR MUDARABAH CERTIFICATE..................................................................56
DOLLAR SAVING ACCOUNT....................................................................................58
MEEZAN BANK TREASURY.....................................................................................59
CREDIT ADMINISTRATION DEPARTMENT......................62
“CONSERVATIVE YET DYNAMIC CREDIT POLICY”...........................................62
The overall objective of the department is to provide independent assurance
to branch management and head office credit monitoring division that lending
activities are properly controlled and monitored.......................................................62
CAR IJARAH................................................................................................................68
OBJECTIVE:...............................................................................68
THE PRODUCT :........................................................................68
Previous employer.........................................................................................................73
TREASURY AND INVESTMENT...............................................................................75
Money Market............................................................................................................75
Foreign Exchange Market..........................................................................................75
Investment..................................................................................................................75
Government Securities...............................................................................................76
Custodianship.............................................................................................................76
Financial Advisory Services......................................................................................76
ONLINE BANKING.....................................................................................................77
PHONE BANKING.......................................................................................................77
HOME FINANCE.........................................................................................................79
Buy Your Home.........................................................................................................79
Build Your Home.......................................................................................................79
Renovation Your Home..............................................................................................80
Start it Together..........................................................................................................80
Transfer......................................................................................................................80

2
Steps To Arrange a Home..........................................................................................81
FINANCIAL STATEMENT ANALYSIS...................................83
BALANCE SHEET ......................................................................................................84
HORIZONTAL ANALYSIS OF BALANCE SHEET...............................................88
COMMENTS ON HORIZONTAL ANALYSIS OF BALANCE SHEET................92
VERTICAL ANALYSIS OF BALANCE SHEET.....................................................95
COMMENTS ON VERTICAL ANALYSIS OF BALANCE SHEET......................98
INCOME STATEMENT..............................................................................................101
HORIZONTAL ANALYSIS OF INCOME STATEMENT.....................................104
COMMENTS ON HORIZONTAL ANALYSIS OF INCOME STATEMENT.......107
VERTICAL ANALYSIS OF INCOME STSTEMENT...........................................109
COMMENTS ON VERTICAL ANALYSIS OF INCOME STATEMENT.............112
RATIO ANALYSIS....................................................................114
Return on Equity..........................................................................................................114
Return on Assets...........................................................................................................115
Net Spread Margin.......................................................................................................116
Net Other Income Margin............................................................................................117
Earnings per Share.......................................................................................................118
Stock Dividend Percentage..........................................................................................120
Market Price per Share.................................................................................................121
Price Earning Ratio......................................................................................................122
Net Profit before Tax Margin ......................................................................................123
Net Profit after Tax Margin..........................................................................................124
Operating Expenses to Income....................................................................................125
Financing to Deposit Ratio..........................................................................................126
Book Value per Share...................................................................................................127
SWOT ANALYSIS.....................................................................129
STRENGTHS..............................................................................................................129
WEAKNESSES...........................................................................................................130
OPPORTUNITIES.......................................................................................................132
THREATS....................................................................................................................133
RECOMMENDATIONS.............................................................................................134

3
Introduction

Objectives

Internship is an integral part of MBA program. It provided me the opportunity to develop


practical know how of concepts which before that were only in theoretical form. My
internship in Meezan Bank Limited, Abdali Road, Branch, Multan was full of learning
regarding various aspect of banking. The report contains practical knowledge, which I gained
during my internship.

Meezan Bank limited is one of the largest private banks in Pakistan, and it has bright future
forward. All information in this report is based on my observation, interviews and practical
involvement in different tasks during my internship in Bank.

4
Overview of the Organization

Brief History of the Organization

1947

The inception of Pakistan as the first Islamic Republic created in the name of Islam.

1980

CII presents report on the elimination of Markup genuinely considered to be the first

major comprehensive work in the world undertaken on Islamic banking and finance.

1985

Commercial banks transformed their nomenclature stating all Rupee Saving Accounts as

markup-free. However, foreign currency deposits in Pakistan and foreign loans continued

as before.

1991

Procedure adopted by banks in 1985 was declared un-Islamic by the Federal Shariat

Court (FSC). The Government and some banks/DFIs made appeals to the Shariat

Appellate Bench (SAB) of the Supreme Court of Pakistan.

1997

Al-Meezan Investment Bank is established with a mandate to pursue Islamic Banking.

Mr. Irfan Siddiqui appointed as first and founding Chief Executive Officer.

5
1999

The Shariat Appellate Bench of the Supreme Court of Pakistan rejects the appeals and

directs all laws on markup banking to cease. The government sets up a high level

commission, task forces and committees to institute and promote Islamic banking on

parallel basis with conventional system.

2001

The Shariah Supervisory Board is established at Al-Meezan Investment Bank led by

Justice (Retd.) Muhammad Taqi Usmani as chairman. State Bank of Pakistan sets criteria

for establishment of Islamic commercial banks in private sector and subsidiaries and

stand-alone branches by existing commercial banks to conduct Islamic banking in the

country.

2002

Meezan Bank acquires the Pakistan operations of Societe Generale and concurrently Al

Meezan Investment Bank converts itself into a full fledged Islamic commercial bank. The

first Islamic banking license is issued to the Bank and it is renamed Meezan Bank.

President General Pervez Musharraf inaugurates the new Islamic Commercial Bank at a

formal ceremony in Karachi.

2003

Meezan Bank establishes itself as the pioneer of Islamic Banking in Pakistan and quickly

establishes branches in all major cities of the country. A wide range of products are

developed and launched consolidating the Bank’s position as the premier Islamic Bank of

6
the country Al Meezan Investment Management Limited (AMIM), the asset management

arm of Meezan Bank, introduces Meezan Islamic Fund (MIF), the country’s first open-

end Islamic Mutual Fund.

2004

The State Bank establishes a dedicated Islamic Banking Department (IBD) by merging

the Islamic Economics Division of the Research Department with the Islamic Banking

Division of the Banking Policy Department. A Shariah Board has been appointed to

regulate and approve guidelines for the emerging Islamic Banking industry. The

Government of Pakistan awards the mandate for debut of international Sukuk (Bond)

offering for USD 500 million. The offering is a success and establishes a benchmark for

Pakistan. Meezan Bank acts as the Shariah Structuring Advisor for this historic

transaction.

2005

Meezan Bank becomes the first customer of Islamic Insurance (Takaful) by signing the

first Memorandum of Understanding MoU with Pak-Kuwait Takaful Company Limited

(PKTCL). The signing of this MoU has ushered Pakistan into a new era of Islamic

Insurance (Takaful).

2006

A number of new dedicated Islamic Banks, namely Bank Islami and Dubai Islamic Bank,

commence operations in Pakistan.Meezan continues its leadership position in the industry

by more than doubling it branch network to a total of 62 branches in 21 cities, clearly

7
establishing itself as the largest Islamic Bank of the country. Meezan Bank, becomes the

first Islamic bank to introduce 8 am to 8 pm banking at selected branches in Karachi.

2007

Meezan Bank opens up its 100th branch. Two new dedicated Islamic Banks start

operations in Pakistan, namely Emirates Global Islamic Bank and Dawood Islamic Bank.

2008

With 166 Branches (including 35 sub-branches) in 40 cities across Pakistan, Meezan

Bank is clearly positioned as the leading Islamic Bank in the country. Work starts on the

construction of Meezan Bank’s new Head Office building.The financing and investment

portfolio of local Islamic banks reached Rs. 185 billion in December 2008 compared to

Rs. 137.6 billion in December 2007. Market share in the overall banking increased to five

per cent at end December 2008 compared with four per cent at end December 2007. Total

assets of Islamic banking reached Rs. 271.1 billion in December 2008 compared to Rs.

205.2 billion in December 2007.

8
Nature of the Organization

Meezan Bank is a commercial bank which receives deposits from the people who have it spare
and invests it with those who are in need of them. It has got the license of commercial banking
from the State Bank of Pakistan and is registered under the legislation of Banking Companies
Ordinance 1962. It has dedicated itself to do business of banking according to islamic rules and
regulations and is supervised by a Shariah Board who keeps an eye on the operations of the
bank and ensures that the same must be in accordance with the teachings of islam and there
must be no element of Riba in it.

The Meezan Team


Meezan Bank is managed by a team of professional bankers committed to the cause of Islamic
Banking. This single unifying factor unleashes the tremendous power of a dedicated and
motivated team committed to fulfilling the Vision and Mission of this Bank.

Business Segments of the Bank


• Corporate and Investment Banking
• Commercial and SME
• Consumer Finance
• Treasury & Financial Institutions
• Asset Management (managed through a subsidiary Al Meezan Investment
Management Limited.)

Retail Banking is organized in three Regions across Pakistan, namely South Region, Central
Region and North Region.

9
VISION AND MISSION

VISION

Establish Islamic banking as banking of first choice to facilitate the

implementation of an equitable economic system, providing a strong foundation for

establishing a fair and just society for mankind.

MISSION

To be a premier Islamic bank, offering a one-stop shop for innovative value added

products and services to our customers within the bounds of Shariah, while optimizing

the stakeholders value through an organizational culture based on learning, fairness,

respect for individual enterprise and performance.

10
SERVICE MISSION
To develop a committed service culture which ensures the consistent delivery of our

products and services within the highest quality service parameters, promoting Islamic

values and ensuring recognition and a quality banking experience to our customers.

ORGANIZATIONAL STRUCTURE

SHARIAH SUPERVISORY BOARD BOARD OF DIRECTORS AUDIT

COMMITTEE

Shariah Advisor

Internal Audit

(Dr. Muhammad Imran Usmani)

(Mr. Zia-ul-Hasan)

Product Development &

Shariah Compliance PRESIDENT & CEO

(Mr. Ahmed Ali Siddiqui) (Mr. Irfan Siddiqui)

Risk Management

(Mr. Syed Ali Azhar Naqvi)

Legal Affairs

(Mr. Atique Ahmed Siddiqui)

11
Compliance

(Mr. Saleem Wafai)

Administration

(Mr. Munawar Rizvi)

Branch Expansion

(Mr. Munawar Rizvi)

PRESIDENT & CEO

Mr. Irfan Siddiqui)

CHIEF OPERATING OFFICER

(Mr. Ariful Islam)

BRANCH NETWORK BUSINESS SEGMENT SUPPORT

SOUTH CORPORATE FINANCE

(Mr. Abdul Ghaffar Memon) (Mr. Zubair Haider)(Mr. Shabbir Hamza)

CENTRAL INVESTMENT BANKING OPERATION

12
(Mr. Rizwan Ata) (Mr. Syed Amir Ali) (Mr. Arshad

Majeed)

NORTH COMMERCIAL BANKING I.T

(MR. Saleem Khan) (Mr. Shoaib Qureshi) (Mr. Faiz-

ul-Rehman)

SME HUMAN RESOURCES

(Mr. Salim Khowaja) (Mr. Irfan

Ali Hyder)

TREASURY & FINANCIAL TRAINING INSTITUTION

(Mr. M. Abdullah Ahmed) (Mr. M. Sohail Khan)

CONSUMER BANKING SERVICE QUALITY

(Mr. Muhammad Raza) (Mr. Asadullah Ch.)

ALTERNATE DISTRIBUTION CHANNELS

(Mr. Omer Salimullah)

MARKETING

(Mr. M. Sohail Khan)

13
SHARIAH ADVISORY BOARD

The letter and spirit of Islamic Banking rest upon absolute adherence to the Shariah. The
foundations of a strong Shariah underpinning at Meezan Bank were laid from the
beginning. A world renowned Shariah Supervisory Board and a highly qualified and
experienced in house Shariah Advisor are fundamental aspects of the Bank's core USP. The
primary role of this board is to maintain and further strengthen this commitment and to
ensure strict Shariah compliance in all the Bank's operations.

The members of the Shariah Supervisory Board of Meezan Bank are Internationally-
renowned scholars, serving on the boards of many Islamic banks operating in different
countries.

The members of the Board are:

• Justice (Retd.) Muhammad Taqi Usmani (Chairman)

• Dr. Abdul Sattar Abu Ghuddah

• Sheikh Essam M. Ishaq

• Dr. Muhammad Imran Ashraf Usmani (Advisor)

14
BOARD OF DIRECTORS

The Board of Directors of Meezan Bank are:

• H. E. Sheikh Ebrahim Bin Khalifa Al-Khalifa (Chairman)

(Minister of Housing, Ministry of Housing, Kingdom of Bahrain)

• Naser Abdul Mohsen Al-Marri (Vice Chairman)

• Jassar Dakheel Al-Jassar

• Rana Ahmed Humayun

• Mohammed Azzaroog Rajab

• Ahmed Abdul Rahim Mohamed

• Nawal Ahmed

• Alaa A. Al-Sarawi

• Irfan Siddiqui (President & Chief Executive Officer)

• Ariful Islam (Chief Operating Officer)

15
ORGANIZATIONAL STRUCTURE OF THE BRANCH

Mr. Asim Saleem

Regional Manager / Branch Manager

Mr. Naveed Bari

Assistant Branch Manager

Operations Department CAD Department SMEG. Department Consumer

Department

Mr. Naveed Bari Mr. Zahid Miss. Faiza Mr. Rizwan

(Manager) (Manager) (Manager) (Manager)

IT / HR Department Corporate Department

Mian Wasf Ali Babar Tariq Mehmood Ansari

Department Head Department Head

16
ACCOUNTS DEPARTMENTS
STRUCTURE AND FUNCTIONS
Accounts department in the bank works as an internal audit department of the

organization. All the vouchers prepared and all the cheques that are processed are finally

come to the accounts department where these are sorted and summarized.

OBJECTIVE:

The objective of this department is to conduct the internal audit and to provide exact

information of daily transactions.

FUNCTIONS:

Three main functions of accounts department are as follow:

 Data controlling

 Reporting and expense

 Budgetary performance review and analysis

DATA CONTROLLING:

17
The main features of data controlling are:

 To match physical data with computer generated data

 To check authorization control of transactions

 Is the data property authorized

 To keep a track of record of all transactions (physical data) for future evidence

 To arrange the data in some order to facilitate or to ease the process of data

Retrieval

Aspects of Data Controlling

1: Customer activity

2: General ledger

Dual effect of transactions is stated like debit credit.

Firstly receiving of voucher then main sorting is done which is done on the basis of main

numbering.

REPORTING AND EXPENSE:

The major reports generated by this section are:

18
 Daily branch position

 Daily position of deposits and advances

 Daily MIS report (management information system)

 Daily foreign currency account report

 Daily fund rupee position report

 Statement of affairs

Weekly reports are of foreign exchange and then monthly and quarterly reports are made.

Daily branch position of bank is not faxed and is kept with the bank. Daily foreign

currency report is faxed to treasury. The bank deal in three foreign currencies that are:

US dollar, EURO and GBP (stands for Great Britain Pound). Daily fund rupee position is

faxed to the state bank. Statement of affairs is not faxed.

BUDGETARY PERFORMANCE:

This section includes the disbursements, which are as follows:

Modes of remittances:

 Demand draft D.D

 Telegraphic transfer T.T

 Pay order slip

19
They are also called BPG bills payable general.

Demand draft is for outstation purpose .It secures the payment because at first, the cash

is deposited in the bank and then draft is made.

Demand draft is having four copies, which are kept as follow:

One is kept with the customer. (Gray copy)

One with bank (photo copy)

One with the head office (pink)

One with the entity being financed (yellow)

Pay order is for local transfer of money that is within the city.

Two other ways of disbursement in the bank are

 Pay slip

 Cash payment voucher

Pay slip is used when the bank has to pay less then Rs.5000

Cash payment voucher is used by the bank when it has to pay more than Rs.5000.

In the accounts section I came to know about some other terms like

20
 Provision

 Rupee travelers cheque

 Deposit certificate

 Inter branch credit advice

 Inter branch debit advice

 Outward bills for collection

 Inward bills for collection

 Society for world wide transactions

 Term finance

Provisions are the amount kept separately to be debited for the expenses of bank.

Deposit certificates are being taxed as

Simple deposit-----------3% tax

Services deposit----------5% tax

21
22
ACCOUNT OPENING AT MEEZAN BANK

This accounts at Meezan Bank are divided into three categories. These are as follows.

• Business Account

• Personal Account

• Club Society Account

Business Account
This account is related to the business community. This account is also further subdivided

into three categories.

• Sole proprietor account

• Partnership account

• Limited Company account

Sole proprietor accounts:


These account are the account opened by businesses, which are owned by single persons.

The following documents are required to open the account.

Document required

• Introducer of account who is already account holder of the bank

• Copy of NIC

23
• Request on letterhead of the company

• Every signature must be stamped with company stamp

• Declaration of sole proprietorship

Partnership account:
These are the accounts specifically opened for the partnership firms. The documents

required for this type of account are as follows.

Document required:
• Introducer of account who is already account holder of the bank

• Copy of NIC of the entire partners

• Request on letterhead of the firm

• Every signature must be stamped with company stamp

• Partner ship deed

• Partnership mandate

Limited company accounts:


This account is related to limited companies either public limited or private limited. The

documents required to open this type of account are as follows:

Document required:
• Introducer of account who is already account holder of the bank

24
• Copy of NIC of all the Directors

• Request on letterhead of the company

• Copy of certificate of Incorporation

• Memorandum and Article of Association

• List of Director

• Copy of Board Resolution [prescribe format]

• Certificate of Commencement of Business.

• Latest copy of Form A-29

• Power of Attorney/Mandate [if required]

Personal Account
The accounts related to persons other than companied and partnership firms are called

personal accounts. These are further subdivided into three categories:

 Personal account

 Joint account

Personal account:

Personal account is own by only one person and not more then this. This account can be

current or saving depending upon the will of the customer.

Documents required

• Introduction of nay account holder of BAL or any other bank

25
• Copy of NIC

Joint account:

Joint accounts are those accounts that are owned by 2 or more persons. This account may

also be either saving or current depending on the customer’s will.

Documents required:

• Introduction of nay account holder of BAL or any other bank

• Copy of NIC of all the member of joint account

Club Society Account


The account opened by any NGO or any non-profit firm falls in this category. For

opening of such type of account the bank has to get permission from the head office. If

head office gives permission, the bank opens this account other wise refuse to do so.

Documents required:

• Copy of rules

• Certificate copy of resolution [prescribed format]

26
Accounts On the Basis Of Currency

This account is also divided into two categories. These are as follows:

• Local Currency account

• Foreign Currency Account

Local Currency account:

The account dealing with the local currency is called local currency account.

Foreign Currency Account: The account dealing with the foreign currency is called

foreign currency account. This account is further subdivided into following.

 USD

 GBP

 Euro

 JPY

27
RUPEE CURRENT ACCOUNT

(RIBA FREE)

Meezan Bank is offering Riba-Free Current Account, a flexible Rupee based account that

is ideal for individuals and businesses looking for Shariah compliant banking and

professionalism both under one roof.

The Meezan Bank Current Account is a comprehensive Halal method of acquiring a

secure and easily maintainable Riba Free bank account.

Bundled with 24/7 and special banking services, the Meezan Bank Current Account is an

innovative value added account which provides customers both ease of utility and

unmatched service quality.

Key features of the Riba -Free Current Account

• Free Online Banking services at all Meezan Bank branches nationwide

• Instant access to funds at any online branch

• No restriction on withdrawals or number of transactions

• Bank balance certificates & duplicate statements of account

• Stop Payment & Hold Mail instructions

• 24/7 Card your ATM & Debit Card in one

• 24/7 Call Center with complete Tele-banking services

28
• Personal financial consultancy services

• Specialized 8 to 8 Banking at selected branches

29
RUPEE SAVING ACCOUNT

A unique bank account that offers the opportunity to earn Halal profits, while enjoying a

range of added benefits. It can be opened with a minimum amount of only Rs.10000. The

profit on this account is calculated and paid on a monthly basis, and comes with a variety

of free benefits, no restrictions on transactions, priority banking and more.

• Minimum amount required to open account = Rs.10,000

• Riba Free COII Holders may open accounts without any minimum balance

requirements

Riba Free Rupee Saving Account works under the principles of Mudarabah and is strictly

in conformity with the rules of Islamic Shariah. Profit calculation and all banking

transactions are in strict adherence to the Islamic Shariah, monitored by our Shariah

Advisor and the Shariah Supervisory Board

Key features

Apart from first class service and personalized attention that our customers get when they

bank with us, we offer the following additional conveniences:

• Instant access to funds at any online branch.

• Free Online Banking services at all Meezan Bank branches nationwide

• No restriction on withdrawals or number of transactions

30
• Bank balance certificates & duplicate statements of account

• Stop Payment & Hold Mail instructions

• 24/7 Card your ATM & Debit Card in one

• 24/7 Call Center with complete Tele-banking services

• Personal financial consultancy services

• Specialized 8 to 8 Banking at selected branches

31
DOLLAR SAVING ACCOUNT
Meezan Bank is pleased to offer Riba-Free Dollar Saving Account, a foreign-currency

based investment opportunity that is set up on the principles of Shariah and as a result is

free from the element of markup.

With a minimum of only $100 you can open a Dollar Saving Account with us under a

Mudarabah arrangement that is strictly in conformity with the principles of Islamic

Shariah. The return earned on the Mudarabah pool is calculated every month and the

profit ratio for all investors is declared at the beginning of the month. If you maintain a

minimum average monthly balance of $ 500, you shall be eligible to receive profits that

shall be disbursed to you every month.

Additional Features

Apart from first class service and personalized attention that our customers get when they

bank with us, we offer the following additional conveniences to our customers:

• Personalized cheque books

• No restriction on withdrawals or number of transactions.

• 24/7 Call Center with complete Tele-banking services

• Monthly profit payment

• Taking stop payment instructions

• Taking hold mail instructions

32
• Issuance of duplicate statement of account

• Personal financial consultancy services

33
KAROBARY MUNAFA ACCOUNT
Karobari Munafa is a savings account specifically tailored for large Corporate or Govt.

controlled entities. It allows customers to earn higher returns on surplus cash balances. It

has no preset transaction limits and comes with a variety of free packaged benefits.

Key Features

• Profit will be calculated on a Daily Product Basis

• Minimum balance requirement for account opening is Rs. 1 Million

• No restriction on deposits and withdrawals

• Free facilities: chequebooks and payorders

• Dedicated account / relationship manager

The Karobari Munafa Account works under the principles of Mudarabah and is strictly in

conformity with the rules of Islamic Shariah. Profit calculation and all banking

transactions are in strict adherence to the Islamic Shariah, monitored by our Shariah

Advisor and the Shariah Supervisory Board.

34
MEEZAN BACHAT ACCOUNT
Meezan Bachat Account is a unique saving account that provides high monthly returns

with the flexibility to withdraw savings if needed. Thus Meezan Bachat Account offers a

higher expected rate of return with the convenience of a savings account.

With a Meezan Bachat Account, you are entitled for a higher the profit with a higher

account balance. You receive profit even if your balance falls below Rs. 25,000/- in any

one month. Profit is credited to your account every month and is calculated with

reference to the minimum balance maintained in the account during the preceding month.

The Riba-Free Meezan Bachat Account works under the principles of Mudarabah and is

strictly in conformity with the rules of Islamic Shariah. Profit calculation and all banking

transactions are in strict adherence to the Islamic Shariah, monitored by our Shariah

Advisor and the Shariah Supervisory Board.

Key Features

• Highest expected rate of return

• Riba-free profit paid every month

• Minimum balance for account opening is just Rs.25,000/-

• Maximum balance limit for getting highest profit rate is Rs. 1,000,000/-

35
• Waiver of application fee for Car Ijarah & Easy Home for accounts with

minimum balance of Rs. 500,000

• Free Online Banking services at all Meezan Bank branches nationwide

• Free bank balance certificates.

• 24/7 Card your ATM & Debit Card in one

• 24/7 Call Center with complete Tele-banking services

• 24/7 Internet Banking – free and instant access to your account(s) anytime &

anywhere

• Personal financial consultancy services.

• Specialized 8 to 8 Banking at selected branches

36
CERTIFICATE OF ISLAMIC INVESTMENT
The Riba Free Certificate of Islamic Investment Certificate is a Shariah compatible

investment certificate with a minimum investment of Rs. 50,000 and tenures from 3

months to 5 years. Profit on investment may be earned on the following basis:

• Monthly profit on 1, 2, 3 and 5 years (Minimum Investment Rs. 200,000)

• Quarterly profit on 1, 2, 3 and 5 years

• At maturity profit payment for all tenures

• Withdraw your investment any time during the course of your investment.

(Profit shall be paid only after completion of one month of investment)

Riba-Free Certificate of Islamic Investment (COII) works under the principles of

Mudarabah and is strictly in conformity with the rules of Islamic Shariah. Profit

calculation and all banking transactions are in strict adherence to the Islamic Shariah,

monitored by our Shariah Advisor and the Shariah Supervisory Board.

Invest in Certificate of Islamic Investment


Riba-Free COII is available at all branches of Meezan Bank Ltd. We invite you to visit

any of our branches to experience the comfort of our personalized service. To make an

investment the bank requires customers to maintain either a current or a saving account

37
with Meezan Bank. In order to open an account, fill in the Account Opening Form, bring

in the required documents, and get introduced by an existing banker.

Additional Features

Enjoy a range of valuable features including:

• High and very competitive returns

• Long-term security ensured

• Pre-mature withdrawal options available

• Free Online Banking services at any of our branches

• 24/7 Call Center with complete Tele-banking services

• Specialized 8 to 8 Banking at selected branches

MEEZAN AMDAN CERTIFICATE


The Riba-Free Meezan Aamdan Certificate (MAC) is a long-term deposit certificate with

an exceptionally high monthly profit designed especially for those individuals and

corporations who are in need of regular stream of monthly income. MAC is a monthly

income (mahana aamdani) certificate with a variety of free packaged benefits.

Working under the principles of Mudarabah, the Meezan Aamdan Certificate and is

strictly in conformity with the rules of Islamic Shariah. Profit calculation and all banking

transactions are in strict adherence to the Islamic Shariah, monitored by our Shariah

Advisor and the Shariah Supervisory Board.

38
Key Features

Enjoy a range of valuable features including:

• High and very competitive returns

• Ensured Long-term security

• Minimum investment amount: Rs. 100,000/-

• Special attraction for Widows and Senior citizens with minimum investment

of PKR 50,000/-

• Available tenures of 5½ years and 7 years

• Profit payment on monthly basis.

• Pre-mature withdrawal options available.

• Free cheque book

• Free ATM withdrawals on investment of Rs.500,000/- and above ( 5 per

month)

• Free Online Banking services at all Meezan Bank branches nationwide

• Free Internet banking facility

• 24/7 Call Center with complete Tele-banking services

• Specialized 8 to 8 Banking at selected branches

39
MONTHLY MUDARBA CERTIFICATE
Riba Free Monthly Mudarabah Certificates is a flexible rupee based investment which

has been designed to give you a monthly return. The minimum investment required is

only Rs. 100,000 and you receive profit for each complete month of investment with the

Bank.

Working under the principles of Mudarabah and in strict conformity with the rules of

Islamic Shariah, the Profit calculation of Monthly Mudarabah Certificates and all other

banking transactions are in strict adherence to the Islamic Shariah, monitored by our

Shariah Advisor and the Shariah Supervisory Board.

The weightages used for profit calculation of the Monthly Mudarabah Certificate

are in the following tiers:

• Rs. 100K up to Rs. 4.99 Mn

• Rs. 5.00 Mn up to Rs. 9.99 Mn

• Rs. 10 Mn up to Rs. 49.99 Mn

• Rs. 50 Mn up to Rs. 99.99 Mn

• Rs. 100 Mn up to Rs. 499.99 Mn

• Rs. 500 Mn & above

40
Additional Features

During your relationship with us, you would be entitled to receive the following

additional benefits.

• A 100% halal investment in strict compliance with Shariah

• Monthly profit payment to your current or saving account with us

• Pre-mature withdrawal options available

• Bank balance certificates

• Free Online Banking services at all Meezan Bank branches

• 24/7 Call Center with complete Tele-banking services

• Personal financial consultancy services

• Specialized 8 to 8 Banking and Ladies Banking at selected branches

MEEZAN PROVIDENCE CERTIFICATE


Meezan Providence Certificate is a long-term investment certificate specially designed to

cater to the needs of corporate and business concerns for purposes of investing their

Provident, Pension and Gratuity Funds.

As any prudent investor, your main concerns would be total security along with the best

returns possible, especially as these funds are a trust from your employees and one that

bears an important responsibility.

41
Meezan Providence rests on the well known and solid financial strength of Meezan Bank,

which has a strong and credible balance sheet with excellent operating profitability,

including a capital adequacy ratio that has placed the Bank at the top of the industry, a

long-term entity rating of A+, and a short-term entity rating of A1. Furthermore, our

sterling track record shows consistently beneficial and highly competitive returns for our

broad range of investors.

Finally, comes the benefit of truly Halal returns, a benefit you may not have had the

opportunity to enjoy before and one that you can now pass on to your employees, many

of whom would be grateful for such an opportunity.

Riba-Free Meezan Providence Certificate (MPC) works under the works under the

principles of Mudarabah and is strictly in conformity with the rules of Islamic Shariah.

Profit calculation and all banking transactions are in strict adherence to the Islamic

Shariah, monitored by our Shariah Advisor and the Shariah Supervisory Board.

Key Features

Enjoy a range of valuable features including:

• A 100% halal investment in strict compliance with Shariah

• High Returns

• Long-term security ensured

• Minimum investment amount: PKR 1,000,000

42
• Available tenures of 2, 3, 5 and 7 years

• Pre-mature withdrawal options available

DOLLAR MUDARABAH CERTIFICATE

The Riba Free Dollar Mudarabah Certificate is a flexible dollar based investment which

has been designed under the principles of Mudarabah and is strictly in conformity with

the rules of Islamic Shariah.

The Certificate works under the principles of Mudarabah and is strictly in conformity

with the rules of Islamic Shariah. Profit calculation and all banking transactions are in

strict adherence to the Islamic Shariah, monitored by our Shariah Advisor and the Shariah

Supervisory Board.

Key Features

Enjoy a range of valuable features including:

• High and very competitive returns

• Six monthly profit payment to your current or saving account with us

• Long-term security ensured. Minimum investment amount: USD 10,000/-

43
• Available tenures of 3 months, 6 months, 1 year, and 3 years

• Pre-mature withdrawal options available

• Bank balance certificates

• 24/7 Call Center with complete Tele-banking services

• Personal financial consultancy services

44
CAR IJARAH-AUTO FINANCE
Car Ijarah, Pakistan’s First Islamic Car Financing

As a step towards Meezan Bank’s mission to provide a one-stop shop for innovative

value added Shariah compliant products, Meezan Bank’s Car Ijarah unit provides a car

financing, based on the principles of Ijarah and is free of the element of markup.

Car Ijarah is Pakistan’s first Markup Free car financing based on the Islamic financing

mode of Ijarah (Islamic leasing). This product is ideal for individuals looking for car

financing while avoiding an markup-based transaction.

Meezan Bank’ Car Ijarah is a car rental agreement, under which the Bank purchases the

car and rents it out to the customer for a period of 3 to 5 years, agreed at the time of the

contract. Upon completion of the lease period the customer gets ownership of the car

against his initial security deposit.

Car Ijarah also features Used Vehicles!


In addition to our leasing of new cars, Meezan Bank also provides the unique opportunity

of leasing second hand, both locally assembled and imported vehicles. This feature is

specifically designed as a highly economical option. The Used Car Ijarah facility is made

available at a minimum-security deposit as low as 20%. Financing of used cars are

subject to a selection criteria.

Shariah Compliance

45
Car Ijarah, designed under the supervision of Meezan Banks Shariah Supervisory Board,

is unique to car leasing facilities provided by other banks.

Key Features of Car Ijarah

• Low monthly rental

• Rental paid after delivery, not in advanced

• Fastest processing and delivery

• Tracker option available

• Minimum security deposit as low as 10%

• All new, used, local, imported and luxury vehicles can be financed

46
WORKING CAPITAL FINANCE
Working Capital Finance Solutions

(for short term financing requirements)

Parts of the wide range of Shariah complaint solutions for the customers are

Murabaha and Istisna’a, designed to meet working capital requirements. For example, if

you need finance for purchasing raw materials for your industry or are trading in goods

then you could use Mudarabah or Istisna’a to meet your financial needs.

Murabaha
One of the most common modes of finance employed by Islamic Banks, Murabaha is

based on the exact requirements of each customer. It can be defined as a sales transaction

where Meezan Bank purchases the commodity and sells it after adding an agreed profit.

Thus, it is not a loan given on markup - it the sale of a commodity on a deferred price.

Hence Murabaha involves the purchase of a commodity by Meezan Bank on behalf of a

customer and the subsequent resale to the customer on cost-plus-profit basis. The cost

and profit margin to the bank is expressly disclosed to the customer.

Simply put, rather than advancing money to the customer, Meezan Bank buys the

commodity from a third party and sells it to the customer at an agreed price, which

includes an element of profit.

47
So what is the difference between Murabaha and a Sale?

A simple sale in Arabic is called Musawamah - a sale that does not involve disclosing or

referring to the cost of goods sold. However, when the cost price is disclosed to the client,

it is called Murabaha.

Istisna’a

Istisna’a is a sale transaction where a commodity is transacted before it comes into

existence. It is an order to manufacture a specific commodity for the purchaser. The

manufacturer (our customer) uses its own material to manufacture the required goods. In

Istisna’a, price is fixed with the consent of all parties involved. Similarly all other

necessary specifications of the finished product are agreed beforehand.

Istisna’ as a mode of financing

Istisna Finance is used to cater for the working capital requirements of a business

involved in the manufacturing of goods. It is ideally suited for exporters and

manufacturers who have export orders in the shape of Sight/Usance Letter of Credit/

Sight Export Contract D/P/ Usance Export Contract D/A.

48
PROJECT FINANCING, EXPANSION AND BMR

Project Financing, Expansion or BMR Requirement Solutions

(For medium and long term financing requirements)

Two of the most commonly used Islamic financing solutions availed by businesses today,

Diminishing Musharakah and Ijarah are ideal for expansion of businesses, BMR

requirements or other medium to long term financing requirements.

Diminishing Musharakah
Using this financing model, Meezan Bank and the customer participate in the joint

ownership of an asset. The asset is divided into a number of units and the customer

periodically purchases these units from the bank over a specified period. Over time, the

customer purchases all units owned by the bank, making him or her sole owner of the

asset or the commercial enterprise.

Diminishing Musharakah is most commonly used for the financing of fixed assets,

projects, homes and automobiles.

49
Ijarah

In contrast to diminishing musharakah, this mode of financing is based on the provision

of the required tangible assets, such as property, machinery, etc, on rental for an agreed

period of time. The concept is similar to “leasing”, which is common in conventional

banking. However there are some specific prohibitions which render conventional leasing

to be forbidden under Shariah.

Ijarah is commonly used for long and medium term fixed asset financing, project

financing and for retail products such as homes and automobiles.

50
ISLAMIC EXPORT REFINANCE SCHEME

Islamic Export Refinance Facility

The launch of this product made Meezan Bank the first Islamic bank in Pakistan

to offer Refinance facilities with complete compliance to Shariah. This product

provides for all the unique requirements of exporters and is available in both Part-

I and Part-II as per the original Export Refinance Scheme of the State Bank of

Pakistan.

LETTER OF GUARANTEE FACILITY

A complete range of products and services for importers and exporters are available.

Based on various modes of Islamic Finance, the solutions have been designed to suit the

needs of our customers. Some of the key services offered include:

Letter of Guarantee Facility


• Products for Exporters

• Export bills for collection

51
• Export (Sight) bills purchase under Salam Arrangement

• Export (Usance) bills purchase under Murabaha Arrangement

• Products for Importers

• Sight Letter of Credit

• Usance Letter of Credit

52
ADVISORY SERVICES

Realizing the increasingly diverse needs of our customers for advisory and structured

finance transactions, a specialized unit focusing on Investment Banking has been

established at Meezan Bank. The Investment Banking department provides unique

structuring capability using complex Shariah structures for transactions so as meet

customer need. Meezan Bank as torchbearer of Islamic Banking has made a significant

contribution in the Investment Banking industry by playing leading roles in business

transactions amounting to PKR 53 billion in the year 2007.

Key Services

• Syndication Structuring

• Privatization Mandates

• Mergers & Acquisitions

• Advisory Services

53
54
MONEY TRANSFER

The Meezan Bank’s remittance services are simple and reliable. They are available at

your doorstep through a wide and efficient network of corresponding banks worldwide.

Only leading global financial institutions form this network of correspondent banks.

Advantages of Meezan Home Remittance:

• Quick Remittance in major currencies i.e. USD, GBP, EUR, JPY, CHF, SGD,

AUD

• Extensive branch network in all major cities of Pakistan

• Instant online transfer within our branch network without any charges

• Free Internet banking facility

Easy Guidelines for Money Transfer

If you wish to remit money to Pakistan, simply give instructions to your existing bank for

money transfer by providing the name of your preferred Meezan Bank branch and

beneficiary account number.

55
DOLLAR MUDARABAH CERTIFICATE

The Riba Free Dollar Mudarabah Certificate is a flexible dollar based investment which

has been designed under the principles of Mudarabah and is strictly in conformity with

the rules of Islamic Shariah.

The Certificate works under the principles of Mudarabah and is strictly in conformity

with the rules of Islamic Shariah. Profit calculation and all banking transactions are in

strict adherence to the Islamic Shariah, monitored by our Shariah Advisor and the Shariah

Supervisory Board.

Key Features

Enjoy a range of valuable features including:

• High and very competitive returns

• Six monthly profit payment to your current or saving account with us

• Long-term security ensured. Minimum investment amount: USD 10,000/-

• Available tenures of 3 months, 6 months, 1 year, and 3 years

• Pre-mature withdrawal options available

• Bank balance certificates

• 24/7 Call Center with complete Tele-banking services

56
• Personal financial consultancy services

57
DOLLAR SAVING ACCOUNT

Meezan Bank is pleased to offer Riba-Free Dollar Saving Account, a foreign-currency

based investment opportunity that is set up on the principles of Shariah and as a result is

free from the element of markup.

With a minimum of only $100 you can open a Dollar Saving Account with us under a

Mudarabah arrangement that is strictly in conformity with the principles of Islamic

Shariah. The return earned on the Mudarabah pool is calculated every month and the

profit ratio for all investors is declared at the beginning of the month. If you maintain a

minimum average monthly balance of $ 500, you shall be eligible to receive profits that

shall be disbursed to you every month.

Additional Features

Apart from first class service and personalized attention that our customers get when they

bank with us, we offer the following additional conveniences to our customers:

• Personalized cheque books

• No restriction on withdrawals or number of transactions.

• 24/7 Call Center with complete Tele-banking services

• Monthly profit payment

58
• Taking stop payment instructions

• Taking hold mail instructions

• Issuance of duplicate statement of account

• Personal financial consultancy services

MEEZAN BANK TREASURY

Meezan Bank’s treasury is guided by Shariah with the objective of reviewing,

streamlining, and controlling the bank’s domestic and international treasury related

operations. Treasury caters to the branches and customers for their entire foreign

exchange requirement with efficiency and professionalism. Ready/ spot as well as all

forward cover services are provided to branches/customers within Shariah guidelines.

Customers are also provided advice on a regular basis about the currency movement by

our dealing room augmented by market outlook (without any commitment & obligation)

Treasury has enhanced its market activity with increased depth and enhanced volumes,

making an impact in the inter-bank FX market. Due to its good relationship with other

treasuries, the institution has the ability to generate sufficient amount of liquidity at a

time through inter-bank market on Shariah-approved Musharaka basis.

Meezan Bank conducts Commodity Murhaba transaction to optimize its returns on its

dollar portfolio, besides participating in local/ international sukuk issues, e.g. WAPDA,

Qatar, Dubai sukuks, etc. This treasury is the only treasury in Pakistan with a mandate to

59
provide Shariah compliant investment opportunities in capital market that provides halal

income ultimately to shareholders

Treasury Contact Details:

• Amal Zehra (Corporate Dealer):

amal.zehra@meezanbank.com

• Ahmed Usman Sheikh (Corporate Dealer):

ahmed.sheikh@meezanbank.com

• Osama Niaz Ahmed (Dealer, Interbank):

osama.ahmed@meezanbank.com

• Zia ur Rehman (Senior Dealer, Corporate Treasury):

zia.rehman@meezanbank.com

• Raza Zaidi (Dealer, Interbank)

raza.zaidi@meezanbank.com

• Murad Dhanani (Senior Dealer, Corporate Treasury):

murad.dhanani@meezanbank.com

60
• Sara Saiyed (Chief Dealer, Interbank):

sara.saiyed@meezanbank.com

• Mr. Yasir Ali Khoso (Dealer, Interbank):

yasir.khoso@meezanbank.com

61
CREDIT ADMINISTRATION DEPARTMENT

The chairman of the Bank in his review for 2007 annual report define the credit policy of

Bank as:

“CONSERVATIVE YET DYNAMIC CREDIT POLICY”

OBJECTIVE:

The overall objective of the department is to provide independent assurance

to branch management and head office credit monitoring division that lending

activities are properly controlled and monitored.

FUNCTIONS:

• Documentation

• Lodgment of documents and cash collateral

• Reimbursement audit certificate

• Limit input in bank smart

• Post disbursement monitoring

• Monitoring of irregular doubtful and bad debts

62
• Reporting

Here it is necessary that we must have an overview of at least the most important

documents that are relevant to this department.

DOCUMENTATION

• Sanction advice

• Facility offer letter

• General documentation

• Standard charge documents

• Legal document pertain to properties

• Cash collateral

• Charge with SECP

• Other securities

• Insurance covers

• Guarantees

Now we discuss above separately.

♦ Sanction advice

A type of document which is made when the senior officer of bank discuss all the

confidential terms & condition that the demanded facility should be provided or not so

63
we can say that it is a day of final decision that facility should be provided or not. At that

time borrower worthiness is checked according to that decision made.

♦ Facility offer letter

When this is decided that loan should provided to borrower than branch made facility

offer letter that what type of facility should be provided & document are required from

borrower according to this facility.

♦ General documents

After facility offer letter general document are checked these document consist of

• Complete account opening form

• Facility request letter

• BBFS

• CIB

• Credit opinion

• Search report

• Audited /unedited financial

• Borrower’s profile

• Checklist of state bank regulation

• Board resolution to borrow

• Memorandum and article of association

64
At this stage all the past records are checked & verified to ensure that past record of the

borrower matches with data provided in request letter. The most important document,

which is checked is CIB report. In this report all the past loan of borrower are showed

and their repayment record is also mentioned. The company polices are also collected and

their aim is checked that whether the company is working in the same direction which it

has mentioned.

♦ Standard charge document

 CF (Current finance)

 TF (Term finance)

 FAPCI (Finance against packing facility)

 FAFB (Finance against foreign)

 LBP (Local bill purchase)

 FBP (Foreign bill purchase)

 SLA (Sight letter of credit)

 ULE (Usance letter of credit)

 FIM (Finance against import)

 FATR (Finance against trust receipt)

 GUARANTEE

65
In this stage we see that what type of facility he or she want to take or what type of

facility he or she already have. Is the requirement according to nature of business &all

facility term & condition are change accordingly to that.

Legal document pertain to properties

 Title deeds

 Copy of record of rights

 Copy of mutation

 NEC

 PTI

 AkS shajra

 Site plan

 Valuation

 Site visit report

 Power of attorney

 Agreement to create mortgage

 Token mortgage

 Predisbursment lawyers opinion

 Perfection certificate of lawyer

66
These all documents are taken from borrower & bank make a file of these documents.

These documents are most because when some time bank have to take legal action

against borrower then bank know that who are the owner or partner of the company what

property is for mortgage its paper are taken and these all the things are provided to bank

own lawyer which finally decided that is everything right and he make a certificate or

borrower can bring this certificate himself from the recommended lawyer of bank.

 Cash collateral

 Lien on deposits

 Lien of deposits

Guarantees

 Personal guarantees of borrower

 Personal guarantees of mortgagors

 Counter guarantees

 Cross corporate guarantees

Guarantees are most important thing because in this document it is written that who is

responsible in case of default. Personal Guarantees are consider most important because

mention person has to pay whenever he is alive.

67
CAR IJARAH

OBJECTIVE:

The main objective of the car finance department is to finance all the cars manufactured

or assembled in Pakistan at a very reasonable markup.

THE PRODUCT :

I have presented the procedure of car finance department in question answer form

because in my opinion it will better explain the whole of the procedure.

Can I avail the car loan facility?

Yes, you can avail the car loan facility from Meezan Bank to purchase a brand new car if

you are:

 Pakistani national identity card holder

 Over 20 years of age maximum 60 years in case of salaried and 62 is case of a

businessperson at the time of maturity of the loan.

 Salaried, businessman or self employed.

Which cars can I apply this loan for?

All brand new Pakistani assembled / manufactured cars (unregistered)

How much loan facility can I avail?

68
Minimum amount is Rs 200,000/- and maximum is Rs.2000,000/-

What is the period of loan?

The loan can be availed from 1 year to 5 years with early adjustment facility at any time

before the maturity.

How much initial down payment do I have to make?

20% of the value of car

What other charges do I have to pay?

You have to pay one time fee of Rs 3000/- being amount of processing and

documentation charges and first year’s insurance premium.

Who will insure the car?

Meezan Bank has made arrangements with the top insurance companies who are offering

special lowest insurance rates for Meezan Bank clients.

How do I repay the loan?

You will repay the loan by making easy equal monthly installments to Meezan Bank in

the form of post-dated cheques.

Can I repay the loan before the maturity?

Yes, you have the option to repay the loan at any time during the tenure of the loan.

What is the security of the loan?

69
The car is the security, which will be hypothecated in the favors of bank and a lien will be

marked with the register.

What if I want the car in the name of my family member?

You can include your spouse, children (18 years and above) or parents as co applicants

for the car loan and the car can be registered in the names.

What documents are required to get a car loan sanctioned?

Our representatives will discuss the documents you are required to submit in detail. An

indicative list is given below:

 Two passport size photographs

 Copy of national I.D card

 Bank statement for last six months

 Salary certificate (in English) specifying the name, date of joining, designation

and salary details (for salaried individuals)

 Business proof (for a business person)

 Current utility bill of your residence in Pakistan

 Copy of the national ID card of the co-borrower (if the car is to be in the name of

the co-borrower)

How is it difficult from other financing schemes available in Pakistan?

• Easily affordable & flexible installments

70
• Flexibility of adjustment at any time during the tenure

• Quick processing

• Minimum down payment

• Minimum insurance

What is the first step I need to take?

Call or visit ort ask your family member to visit any of our branches in Pakistan

This was the whole concept which is clearly defined here .now the details of the

application form are given that what is included and what is needed to be filled in the

form under the following heads:

Personal details

• Full name

• Fathers/husband name

• Date of birth

• National ID card no

• National tax no

• Marital status

• No of dependents

• Educational qualifications

71
• Current residential address

• If rented, monthly rent

• Residential telephone no

• Residential status

• Type of accommodation

• Residing since

• Permanent home address

• Personal mobile ph no

• Existing car

• Make and model of current car

• Car status

Employment details (for salaried individuals)

 Name of present employer

 Address

 Current designation

 Employed since

 Business telephone no

 Fax no.

 Official mobile no.

72
Previous employer

 Name of the employer

 Address

 Last designation held

 Service tenure

 Office telephone no

 Fax no.

Business details ( for professional and self-employed individuals )

• Name of business

• Nature of business

• Constitution of firm

• Address

• Established since

• Registered with

• National tax no

• Business telephone no

Mobile phone no

Income details

• Regular monthly gross income (cost of equitation of dependents)

73
• Guaranteed bonus

• Other monthly income

• Source of other monthly income

• Average monthly savings

74
TREASURY AND INVESTMENT
Money Market
• Short term money market inter-bank trading.

• Active Treasury Bills trading in secondary market.

• Forward – forward inter-bank money market trading.

• Money market linked lending to and borrowing from

corporate clients.

Foreign Exchange Market

• Active trading in ready and forward USD/PKR.

• Active quotations of foreign exchange rates in fifteen major currencies.

• Information in respect of prevailing rates of most of the currencies of the

world for

corporate clients and individuals.

• Forward – Forward foreign exchange rates of USD/PKR.

• Active swap trading in USD/PKR and other major currencies such as

EUR, GBP, JPY and CHF.

Investment
• Active Investment in treasury bills (TBs).

• Active Trading in Pakistan Investment Bonds (PIBs).

75
• Active investment in Certificate of Investment (COIs)

• Active investment in Terms Finance Certificates (TFCs)

Government Securities

• Efficient service for individuals and corporate clients for buying and

selling govt. securities on their appropriate requests.

Custodianship

• Investment Securities Portfolio Accounts of Customers for holding on

their behalf Treasury Bills, Pakistan Investment Bonds.

Financial Advisory Services

• Briefing on current information available in market in respect of

prevailing rates of USD/PKR.

• Briefing on current information available in market in respect of foreign

exchange rates of major foreign currencies.

• Future expectations and sentiments on major foreign currencies

including Pak.Rs.

76
ONLINE BANKING

Meezan Bank now offers the facility of on-line banking to its customers through its

countrywide network of branches. Customers can use the ATMs or the banking counters

of any branch for day-to-day banking needs, irrespective of branch where they maintain

their accounts.

For Corporate customers centralized Cash Management facility is also offered through

on-line banking.

PHONE BANKING
"Meezan Phone banking” is available to all customers on a countrywide basis.

Customers can dial 111-225-111 (without any city code/prefix) from their respective

cities i.e. 21 cities where Meezan Bank is present, and get prompt services from the

Centralized Phone Banking Services.

Customers enjoy 24x7 Round the Clock Phone Banking Services.

77
Meezan Bank is the first bank in Pakistan to offer Centralized UAN connectivity from

21 cities to its Call Center with Hunting & ACD facilities.

78
HOME FINANCE

PRODUCTS OF HOME FINANCE

Buy Your Home

With this facility, you no longer need to just dream about the home you want for yourself

and your family .We will provide you up to Rs: 7.50 million or 70% of the purchase price

of the property (whichever is less), so that you can realize your dream and enter the

reality of owning a home!.

Payment period ranges from 3 to 20 years

Build Your Home

Family! No problem. We will provide you up to Rs:7.50 million, or 70% of the estimated

value of constructed property to enable you to say good-bye to rent forever! Even You

have a plot, and need finance to construct a home, which excites everyone in your if you

don't have a plot, we will provide you up to 60% of the value of the plot that you have

selected to purchase! Do we excite your imagination?

Payment period ranges from 3 to 20 years.

79
Renovation Your Home

You already own a home, but need extra space for a growing family. Simply apply for

financing of up to Rs: 2.50 million or 30% of the surveyed value of your home

(whichever is less) and get yourself the extra space. You can stretch payments for up to 7

years

Start it Together

The crown jewel of our Home Finance Scheme, the golden opportunity for someone

starting a career to buy an already constructed housing unit so early in life! We offer a

moratorium of up to 3 years in Principal payments, for a financing of up to 20 years. You

service only the mark-up element initially, and principal repayment starts after the end of

monitories period. Home Start is specially designed for young people to have there own

home

Transfer

Does your existing installment on a home finance leave you with nothing to spend? You

need not worry any more because we have genuinely low rates and payment options that

could leave more funds with you each month. With our BTF, repaying your home finance

80
will not make you break into a sweet! Transfer up to Rs: 7.50 million or 100 % of the

existing finance, whichever is less.

Stretch your repayment period for up to 20 years again.

Steps To Arrange a Home


• We provide you with all the information you need about Meezan Bank Home

Finance. This can be through a face-to-face meeting with our Relationship

Officer, or over the telephone, or through the post.

• You give us some basic information about your income and the amount you need

so that we can give you an agreement in principle.

• Once you have decided on the amount you want, you complete an application

form and pass it on to us, together with the required documents.

• We make some inquiries about your financial circumstances.

• We carryout a valuation of the property and verification of your income

• Once we have carried out all the initial processing, we send you our offer

through a “Facility Advice Letter”.

• You sign the Facility Advice Letter and return it to us.

• Our Documentation Control Center will get in touch with you to complete

Finance & Security documentation including legal opinion on the title, documents

of the property and also the insurances.

• You sign the Finance Agreement and Charge documents.

81
• Our legal advisor will accompany you to the Registrar’s office on the appointed

date with our cheque against the financing for conveyance of the property and

your home finance begins.

82
FINANCIAL STATEMENT ANALYSIS

83
BALANCE SHEET

2008 2007 2006 2005

2004

(000) (000) (000) (000)

(000)

Assets

Cash and bank balances 5763710 5644028 5897394 3956938

2623588

Balances with other banks 1344974 3729549 4134875 2855823

1751083

Due from financial 18108000 8850000 3700000 ----------

---------

institutions

84
Investments 14286949 10535186 2877554 1606490

1429053

Financing 39768481 34576339 27031016 19740886

12339745

Operating fixed assets 1880515 1032963 531262 305585

204737

Other assets 4123441 2810494 2266522 2210100

1349184

Total assets 85276070 67178559 46438623 30675822

19697390

Liabilities

Bills payable 1057017 1192160 563228 260732

196145

Due to other institutions 4008496 2415606 4285212 2981714

2862139

85
Deposits and other accounts 70233875 54582353 34449441 22769262

13769807

Subordinated loans ----------- ---------- ----------- -----------

-----------

Liabilities against assets ----------- ---------- ----------- -----------

-----------

subject to finance lease

Deferred tax liabilities 453038 430377 398304 170274

769631

Other liabilities 3548666 2851407 1979079 1469258

286

Net assets 5974978 5706656 4763359 3024582

2098382

Presented by:

86
Share capital 4925961 3779897 3779897 2036582

1346017

Reserves 845022 720785 528085 407235

256578

Unappropriated profits 5701141219228 448427 527123

258325

87
HORIZONTAL ANALYSIS OF BALANCE SHEET

2008 2007 2006 2005

2004

(%) (%) (%) (%)

(%)

Assets

Cash and bank balances 207 204 208 151

100

Balances with other banks 87 213 276 163

100

Due from financial 489 239 100 000

000

institutions

Investments 999 737 204 112

100

88
Financing 322 280 223 160

100

Operating fixed assets 922 506 260 149

100

Other assets 307 210 169 164

100

Liabilities

Bills payable 551 621 287 133

100

Due to other institutions 140 84 150 104

100

Deposits and other accounts 512 398 251 165

100

Subordinated loans 000 000 000 000

000

89
Liabilities against assets 000 000 000 000

000

subject to finance lease

Deferred tax liabilities 59 56 52 22

100

Other liabilities 242 195 135 100

000

Net assets 286 273 228 144

100

Presented by:

Share capital 367 281 281 151

100

Reserves 330 281 206 159

100

90
Unappropriated profits 221 472 174 204

100

91
COMMENTS ON HORIZONTAL ANALYSIS OF BALANCE
SHEET

Horizontal analysis of balance sheet shows that the cash and bank balances of Meezan

Bank Limited increased from year 2004 to year 2005 and then to year 2 006 but in the

year 2007 and year 2008 these balances remain almost stable. So far as balances with

other banks is concerned, they gradually increased to year 2006 then they started

decreasing in year 2007 and in year 2008 they fell to the extent of 87 % of that of year

2004. It may be because in year 2008 the amounts due from financial institutions is

considerably increased as compared to that of previous years. In my opinion this is not a

good sign. It shows that the liquidity of the bank is decreased in the year 2008 and this

amount is given as a loan to other financial institutions. The profit on these funds will

definitely be low as compared to the profit that might be earned from the bank’s own

customers but now this profit would be transferred to other financial institutions.

The figure of investments also show remarkable increase from year to year which shows

that bank is trying not to keep its funds idle. The amount of financing is also increased

from the year 2004 to year 2008 continuously which is a healthy sign.

92
The amount of operating fixed assets is increased continuously which is the evidence that

bank is increasing its branch net work nation wide and in order to meet the infrastructure

requirements of this network, the bank has to increase its operating fixed assets.

Other assets of the bank are increased at a regular pace from year 2004 to year 2008

which shows that the bank is fully aware of the emerging requirements of its network.

The amount of bills payable is increased from year 2004 to the year 2008 which shows

that bank is entering into contracts with other businesses for earning profits. Similarly,

the amounts due to other institutions is increased up to year 2006 but in the year 2007 this

amount is decreased to 84 % of that of year 2004 but in year 2008 this amount is

increased again to 140 %. Overall this situation shows that bank is relying on its own

funds rather than borrowing from other institutions.

The major liability of the bank i.e. deposits and other accounts is considerably increased

from year 2004 to year 2008 which shows that the customers are confident about the

stability of the bank and there is an awareness among the customers about the Islamic

way of banking.

The amount of net assets i.e. total assets less liabilities, on the whole is satisfactory

because this figure is increased from year 2004 to year 2008. in year 2008 this figure is

286 % to that of year 2004 which shows that the net assets have satisfactorily increased.

93
During all these years, the bank arranged capital by issuing extra shares from time to

time. Increase in share capital was not because of the funds needed by the bank but it was

also because the bank has distributed in the form of stock dividend. This also shows that

the bank wanted to save the liquid reserve to earn more profits by investing these funds in

its core operations.

The situation of reserves and unappropriated profits is also satisfactory and shows that

the bank has saved the sufficient amount of reserves to preserve its capital structure.

94
VERTICAL ANALYSIS OF BALANCE SHEET

2008 2007 2006 2005

2004

(%) (%) (%) (%)

(%)

Assets

Cash and bank balances 6.75 8.40 12.68 12.88

13.31

Balances with other banks 1.57 5.54 8.89 9.29

8.89

Due from financial 21.22 13.17 7.97 0.00

0.00

institutions

Investments 16.74 15.68 6.18 5.22

7.21

95
Financing 46.63 51.47 58.22 64.36

62.62

Operating fixed assets 2.20 1.53 1.14 0.98

1.02

Other assets 4.83 4.18 4.86 7.20

6.80

Liabilities

Bills payable 1.23 1.77 3.36 0.85

0.96

Due to other institutions 4.69 3.59 9.22 9.72

14.53

Deposits and other accounts 82.36 81.26 74.18 74.21

69.88

Subordinated loans 000 000 000 000

000

96
Liabilities against assets 000 000 000 000

000

subject to finance lease

Deferred tax liabilities 0.53 0.64 0.84 0.55

3.86

Other liabilities 4.15 4.24 4.24 4.76

0.00

Net assets 7.00 8.50 10.26 9.86

10.65

Presented by:

Share capital 5.77 5.61 8.12 6.62

6.81

Reserves 0.98 1.07 1.12 1.30

1.27

Unappropriated profits 0.67 1.80 0.95 1.69

1.27

97
Total Assets 100 100 100 100 100

COMMENTS ON VERTICAL ANALYSIS OF BALANCE


SHEET

In the year 2004, the cash and bank balances were13.3 percent of the total assets whereas

the balances with other banks were 8.89 percent. However the amounts due from other

financial institutions were zero percent. This shows that in this year which was actually

the second year of the bank’s operations, the scope of its operations was very limited.

Similarly the amount of investments was 7.21 percent, operating fixed assets were 1.02

percent and the other assets were only 6.80 percent. However the percentage of Financing

was62.6 percent of the total assets which shows that the bank was able to extend 62.6

percent of its total funding as loans in the form of Islamic financing.

Bills payable is the year 2004 were only 0.96 percent, the balance due to other

institutions was 14.53 percent and the deferred tax liability was 3.86 percent. However

the largest amount of liability was deposits and other accounts which were up to 70

percent of total assets. This shows that the bank was not so much efficient in managing its

98
funds because the amount extended to customers was about 62 percent but the deposits

received by the bank from the customers were about 70 percent.

The total amount of shareholders’ funds was about 9 percent which shows that the bank

was able, from its very beginning, to operate on an optimal capital structure.

In the year 2005, the cash and bank balances, balances with other banks, investments,

operating fixed assets, and other assets show a little improvement on the whole but the

amount of financing could not be improved very much. However there was a positive

change of about 2 % in the amount of financing which is not sufficient when it is

compared with the amount of deposits and other accounts which were increased from 70

percent in 2004 to 74 percent in 2005

The situation goes downward in the year 2006 when the percentage of deposits and other

accounts to total assets was 74.18 percent but the percentage of financing to total assets

was only 58.22 percent. This shows that the customers trusted on the bank and increased

the amount of deposits in islamic banking but the bank, on the other hand, could not be

equally efficient.

The situation remained continued in the year 2007 and the year 2008 where the

percentage of deposits increased to 82 percent whereas the percentage of financing

decreased to 47 percent. However the bank also realized the situation and started utilizing

99
the funds in other investments and lending to other financial institutions. This move of

the bank tried to balance the situation which was created by under utilization of the funds

collected from the customers.

100
INCOME STATEMENT

2008 2007 2006 2005

2004

(Rupees in Millions)

Profit earned on financings,

investments and placements 6803 4573 2704 1459

534

Return on deposits and

other dues expensed (3088) (2451) (1464) (690)

(250)

Net spread earned 3714 2121 1240 768

284

Less

Provision against non-

101
performing financings (net) (428) (435) (121) (68)

(16)

Provision for diminution in

value of investments

and impairment (288) (0.8) (1.2) 29.8

(1.7)

Net spread after provisions 2997 1685 1117 729

265

Other Income 707 1347 690 622

365

Total Income 3705 3033 1807 1351

630

Less

Other expenses (2713) (1764) (1027) (718)

(409)

102
Profit Before Tax 992 1269 780 633

220

Less

Taxation (371) (305) (175) (213)

Profit after tax 621 963 604 419

224

103
HORIZONTAL ANALYSIS OF INCOME STATEMENT

2008 2007 2006 2005

2004

(Rupees in Millions)

Profit earned on financings,

investments and placements 1274% 856% 506% 273%

100%

Return on deposits and

other dues expensed 1235 980 586 276

100

Net spread earned 1308 747 437 270

100

Less

Provision against non-

104
performing financings (net) 2675 2719 756 425

100

Provision for diminution in

value of investments

and impairment 16941 47 71 1853

100

Net spread after provisions 1131 636 422 275

100

Other Income 194 369 25 170

100

Total Income 588 481 287 214

100

Less

Other expenses 668 431 251 176

100

105
Profit Before Tax 451 577 355 287

100

Less

Taxation 9275 7625 4375 5425

100

Profit after tax 277 430 270 187

100

Year 2004 is taken as a base year

106
COMMENTS ON HORIZONTAL ANALYSIS OF INCOME
STATEMENT

Horizontal analysis of income statement shows that the profit earned on financing,

investments and placements has considerably increased over the years. Similarly the

return on deposits and other dues expensed was also increased with the same pace. The

situation depicts that the bank has been beneficial on the whole.

The most crucial situation that is obvious from the bank’s income statement is the amount

of provision against the non performing financings. This amount has increased over the

years at an alarming rate. It shows the bank’s inefficiency in the formulation and

implementation of credit and collection policy.

Another item on the income statement that has decreased the bank’s net income to a large

extent is the provision fore diminution in value of investments and impairment. This

amount is increased up to 16941 % in 2008 as compared to that of 2004. The bank should

seriously consider that the investment must be made carefully so that there may not be

such a huge decline in their value.

107
The other income of the bank has not played a considerable role in the income statement

however, the amount of other expenses are increased to a large extent as compared to that

of year 2004. We shall analyze later in the vertical analysis that what is the percentage of

these two items with respect to the total revenue.

Lastly, the figure of profit after tax shows an increase of 277 % from that of the year

2004. The analysis shows that the profit continuously increased from the year 2004 to

2007 but in the year 2008 this ratio decline to a large extent.

108
VERTICAL ANALYSIS OF INCOME STSTEMENT

2008 2007 2006 2005

2004

(Rupees in Millions)

Profit earned on financings,

investments and placements 100% 100% 100% 100%

100%

Return on deposits and

other dues expensed 45 54 54 47.29

46.82

Net spread earned 55 46 46 52.71

53.18

Less

Provision against non-

performing financings (net) 6.29 9.51 4.47 4.66

3.00

109
Provision for diminution in

value of investments

and impairment 4.23 0.02 0.04 2.04

0.32

Net spread after provisions 44 36.85 41.31 50

49.63

Other Income 10.39 29.46 25.52 42.64

68.35

Total Income 54.46 66 66.83 92.59

118

Less

Other expenses 39.88 38.57 38 49.21

76.59

Profit Before Tax 14.58 27.75 28.85 43.39

41.20

110
Less

Taxation 5.45 6.67 6.47 14.60

0.75

Profit after tax 9.13 21.06 22.34 28.72

42

Profit earned on financings, investments and placements is taken as a base

111
COMMENTS ON VERTICAL ANALYSIS OF INCOME
STATEMENT

The vertical analysis of the year 2004, the second year of the bank’s operations, shows

that the return by the bank to its deposit holders is about 47 %. Ultimately the gross profit

earned by the bank on the financing was 53 %. Provisions for non performing financing

kept by the bank was about 3 percent and provision for diminution in the value of

investments and impairment was only about 0.32 percent. The other income of the bank

was about 68 percent but this item has not added much in the net income of the bank

because the percentage of other expenses was about 78 percent. Hence the net income of

the bank after tax remained at 42 percent.

In the year 2005, the situation remained almost the same except that the other income of

the bank was declined to the percentage of about 43 percent of gross revenue whereas the

other expenses were also declined to 49 percent. In this year the net income after tax of

the bank was decreased to 29 percent.

In the year 2006 the return paid by the bank was increased to 54 percent leaving a net

spread of 46 percent for the bank. The other income of the bank was decreased again to

112
an extent of 25.52 percent and the other expenses were 38 percent of the gross revenue.

In this year the net income of the bank was decreased further to 22.34 percent.

In the year 2007, the situation remained almost the same with the exception that the

provision for non performing loans was considerably increased which is not a good sign.

However in this year the net income remained almost equal to that of year 2006.

The year 2008 has not been proved a good year in the history of the bank. Although in

this year the net spread earned by the bank was 55 % but the percentage of other income

of the bank was decreased with an alarming rate. In this year the percentage of other

income was only 10 % but the percentage of other expenses was about 40 percent. This

fact has worsened the situation on the whole and the bank’s net income decreased to the

maximum of only 9.13 percent which is the lowest of all the previous years.

113
RATIO ANALYSIS

Return on Equity

Return on Equity = Net Profit after Tax / Stockholders’ Equity

2008 = (621187 / 6341097) x 100 = 9.80 %

2007 = (963501 / 5719910) x 100 = 16.84 %

2006 = (604251 / 4756409) x 100 = 12.70 %

2005 = (419455 / 2970940) x 100 = 14.12 %

2004 = (224358 / 1860920) x 100 = 12.06 %

This ratio shows the profit earned by the company as a percentage of the amount of

equity capital invested by the company in the business. In the year 2004 this ratio was

about 12 percent but this ratio seems to fluctuate in the later years. In the year 2005, this

ratio is improved to 14 percent but again in the year 2006 it is declined to about 12

percent. This is because the company has increased the amount of capital in 2006 but the

net profit after tax could not be increased according to that ratio. However in the year

114
2007 the ratio was increased to the maximum of all the previous years in spite of an

increase in the stockholders’ equity. This is because the net profit was increased

proportionately to that. However in the year 2008, the situation is not so good because in

this year, the amount of profit declined and the company again has issued the equity

capital in the form of bonus shares.

Return on Assets

Return on Assets = Net Profit after Tax / Total Assets

2008 = (621187 / 85276070) x 100 = 0.73 %

2007 = (963501 / 67178559) x 100 = 1.43 %

2006 = (604251 / 46438623) x 100 = 1.30 %

2005 = (419455 / 30675822) x 100 = 1.37 %

2004 = (224358 / 19697390) x 100 = 1.14 %

Return on assets is the ratio that shows the percentage of net profit after tax to total

assets. This ratio is also called the return on investments because investment by the

115
company in the business is always in the form of different types of assets. This ratio of

Meezan Bank Limited shows that the return earned by the bank on its total investments is

decreasing from year to year. This is because the bank has continuously increasing its

investments in the total assets but against that investment the bank is not earning

sufficient amount of profits. The situation is somewhat better in the year 2007 where

because of highest of all the years’ profits, the return percentage is 1.43. The bank should

consider the situation and should try to rectify this.

Net Spread Margin

Net Spread Margin = Net return on Loans and Advances / Total Assets

2008 = (2997559 / 85276070) x 100 = 3.52 %

2007 = (1685888 / 67178559) x 10 = 1.98 %

2006 = (1117229 / 46438623) x 100 = 1.66 %

2005 = (729831 / 30675822) x 100 = 2.38 %

2004 = (265266 / 19697390) x 100 = 1.35 %

116
This ratio shows the gross earnings on financing less the return paid to the deposit

holders as a percentage of total assets. This is some sort of gross profit ratio because the

earning on financing is the main revenue of the bank where the return paid to deposit

holders is the cost of those funds. Here this ratio shows that the situation was better in the

year 200 but in the year 2006 it is again declined. Then in the year 2007 it again became

better while in the year 2008 surprisingly this ratio is the highest. Although the net profit

after tax in this year is lesser than that of the previous years but this ratio shows that the

bank has become efficient in its core operations and the problem lies with its other

income and other expenses as we have already seen in the vertical analysis of the income

statement for the year 2008.

Net Other Income Margin

Net Other Income Margin = Net Other Income / Total Assets

2008 = (707908 / 85276070) x 100 = 0.83 %

2007 = (1347893 / 67178559) x 100 = 2.01 %

2006 = (690561 / 46438623) x 100 = 1.49 %

117
2005 = (622151 / 30675822) x 100 = 2.03%

2004 = (365093 / 19697390) x 100 = 1.85 %

Net other income margin is the percentage that shows the return earned by the bank from

the sources other than its core operations. Keeping in view the intense competition among

the banks today, a bank must seriously concentrate on the other sources because in this

sheer competition a bank is not in a position to earn premium revenue on the finances

provided. For Meezan Bank, this ratio shows that there have been the fluctuations in

other income from year to year but the situation is very bad in the year 2008 where this

ratio is the minimum of all the previous years. This is the reason that the overall

performance of the bank declined in this year.

Earnings per Share

Earnings per Share = Net Profit after Tax / Number of Shares

Issued

2008 = (621187 / 492596.1) =

Rs.1.26 per Share

118
2007 = (963501 / 377989.7) =

Rs.1.96 per Share

2006 = (604251 / 377989.7) =

Rs.1.88 per Share

2005 = (419455 / 203658.2) =

Rs.1.46 per Share

2004 = (224358 / 134601.7) =

Rs.1.67 per Share

EPS is the ratio that measures how many rupees the company has earned against one

ordinary share issued to the shareholders. The greater is the ratio, the better it would be. It

is because the company will have the greater amount of profits per share to pay as

dividend to the shareholders. This ratio is the most important ratio from the shareholders’

point of view because they also want to know that how much the company is going to

pay them against the number of shares they are having. For Meezan Bank, this ratio

improved from the year 2004 to the year 2007 with a little exception in 2005 but in the

year 2008 this ratio fell to the minimum of Rs.1.26 per share which is because the

company has issued bonus shares to its shareholders as a stock dividend.

119
Stock Dividend Percentage

2008 = 8.6 %

2007 = 20 %

2006 = 10 %

2005 = 16 %

2004 = 15 %

Over the years from 2004 to 2008, the bank has been paying the stock dividend instead of

cash dividend. Although this is not a good sign but we can say that since this is because

of the consent of the shareholders that’s why it is compromisable. This ratio shows that

the bank has been paying sufficient amount of dividend to the shareholders from the year

2004 to the year 2007 but in the year 2008 this ratio is declined. This was because in the

year 2008, the bank had not earned a handsome amount of profits to justify the larger

stock dividends. Anyways, in my opinion, the bank should consider the situation and try

to declare dividend in the form of cash also.

120
Market Price per Share

2008 = Rs.21.48 per Share

2007 = Rs.38.55 per Share

2006 = Rs.19.50 per Share

2005 = Rs.23.25 per Share

2004 = Rs.16.70 per Share

The market price per share has been fluctuating from year to year but the overall impact

on the market price is encouraging. However we suggest that the bank should stop paying

stock dividends as this increases the number of shares in circulation and the ultimate

result will be the decline in the market price.

121
Price Earning Ratio

Price Earning Ratio = Market Price per Share / Earnings per Share

2008 = 21.48 / 1.26 = 17.03

2007 = 38.55 / 1.96 = 15.12

2006 = 19.50 / 1.88 = 10.51

2005 = 23.25 / 1.46 = 15.92

2004 = 16.70 / 1.67 = 10.02

The price earnings ratio is commonly used to assess the owner’s appraisal of share

value. This ratio measures the amount that investors are willing to pay for each rupee of

company’s earnings. The level of this ratio indicates the degree of confidence that

investors have in the firm’s future performance. The highest the P/E ratio; the greater the

investor confidence in the company. The figures calculated above show that the investors’

confidence in the company is increasing year by year as this ratio is increasing from

122
earlier years to the later years. In the year 2006, this ratio was decreased but soon after

that this ratio was improved in 2007 and became even better in 2008.

Net Profit before Tax Margin

2008 = 13.21 %

2007 = 21.43 %

2006 = 22.98 %

2005 = 30.42 %

2004 = 24.56 %

Net profit before tax margin represents the profit earned before tax as a percentage of

gross revenue. The need to calculate this ratio is that the actual performance of the bank

is measured before tax and not after tax. So this ratio shows that the profit earned by the

bank increased in the year 2005 but in the later years this ratio continued to decline and in

the year 2008 this ratio was only 13.21 percent as compared to that of year 2004 where it

was about 25 percent.

123
Net Profit after Tax Margin

2008 = 8.27 %

2007 = 16.27 %

2006 = 17.80 %

2005 = 20.15 %

2004 = 24.94 %

Net profit after tax margin was about 25 percent in the year 2004 whereas it started

decreasing gradually in the subsequent years. The main reason for this decrease in the net

profit was increase in the other expenses and also because of an increase in the amount of

taxation. Although the better measure for the efficiency of the management is the net

profit before tax margin but since that profit is not on the disposal of the management so

it is better to calculate the net profit after tax margin so that the disposable income of the

organization should be measured. And this ratio shows that the efficiency of the

organization is going decreasing year by year.

124
Operating Expenses to Income

2008 = 73.36 %

2007 = 67.71 %

2006 = 73.40 %

2005 = 71.21 %

2004 = 77.24 %

The operating expense to income ratio shows that the organization has been able to

control its operating expenses over the year from 2004 to 2008. This ratio was 77.27

percent in the year 2004 and in the year 2008 it is ended with a little decrease to 73.36

percent. In spite of the stability of this ratio the net profit margin of the bank declined to a

considerable extent. This was because of an increase in the other expenses of the

organization. So the bank should focus to decrease its operating expenses so that its net

profit should be improved.

125
Financing to Deposit Ratio

2008 = 51.62 %

2007 = 56.90 %

2006 = 65.68 %

2005 = 73.86 %

2004 = 69.97 %

Financing to deposit ratio is perhaps the most critical ratio for a commercial bank. This

ratio represents the amount extended as a loan by a bank to its clients compared to

deposits that the bank receives from its deposit holders. As per the definition of a

commercial bank, the bank is an institution that receives money from those who have it

spare and lends it to those who are in need of them. This ratio of Meezan Bank has been

declining from the year 2004 to the year 2008. The bank should seriously consider this

ratio because these are the core operations of the bank. If the bank could not fully utilize

the funds received from the deposit holders it would have to suffer a loss of its net

income.

126
Book Value per Share

Book Value per Share = Stockholders’ Equity / No. of Common Shares

Issued

2008 = 6341 M / 4925 M = Rs.1.29 per Share

2007 = 5720 M / 3779 M = Rs.1.95 per Share

2006 = 4763 M / 3779M = Rs.1.97 per Share

2005 = 3025 M / 2036 M = Rs.1.49 per Share

2004 = 2098 M / 1346 M = Rs.1.56 per Share

Book value per share is the ratio that shows that how much value of assets the bank has to

pay to its shareholders in the event of its winding up. If we compare the book value per

share with the market value per share we see that although the book value per share is

127
much lesser than the market value even then the shareholders are willing to pay much

higher price for the share of the bank. It shows that the shareholders have confidence in

the company that the company will the prosperous in the future. However since the

market price has declined recently, therefore the company should take corrective actions

so that the confidence of the shareholders should be maintained.

128
SWOT ANALYSIS
Meezan Bank being a quality organization strives to provide quality to all its

stakeholders, customers, employees and environment. In Pakistan, it is operating in a

very volatile economic and political environment. I have summarized its major strengths,

weaknesses, opportunities and threats in the following paragraphs.

STRENGTHS

• MBL has this privilege to be the first in the Islamic Banking sector which gives

MBL a competitive edge over all other banks and being the pioneer of this

industry MBL is enjoying major share of it.

• Being an Islamic bank, MBL has a wide national network. As an emerging

markets bank, it has branches in all the major cities of Pakistan with the facility of

online banking, it is very easy for its customers to transact all over the country.

• Online banking service means that a customer can withdraw and deposit his

money at any branch in the country. Where this service is not present, cheque has

to be presented only in that branch on which they are drawn. But with this facility,

129
a person has access to its funds at any branch of the bank. That would mean that

any person who has an account with the bank, has an account in 24 branches of it.

It provides a lot of comfort and convenience to the customers.

• There are many value added features in the products offered by the bank. ATM

cards are provided with every account. Other features are present in the various

products. The priority customers enjoy a much-pampered status at the bank.

• The employees at the bank provide impeccable customer service to their

customers. For them “the customer is the king’. Customers are treated with great

respect and honored to the utmost degree.

• The working environment of the bank is very friendly and cooperative. There is

no bossiness in the higher management. The upper management consults its staff

in making decisions and provides them independence in their job areas. For the

objective is performance and not conformance with the boss.

WEAKNESSES

• Till the last year, MBL had a totally different perspective. The management was

of the view that the customer should come to them and they don’t need to go to

the customer. But in this era of mass marketing and advertising, it is not possible

to stay in competition without these took. The bank has now changed its

130
perception arid has started an effective marketing and advertising strategy. But the

previous gaps are still there and there is lack of awareness in the people about the

bank and its products. The bank needs to improve on its marketing and

advertising areas.

• It was observed in the bank that the degree of satisfaction of the employees was

quite low. First of all, the pays are lower those offered in other banks. Secondly,

the employees are given targets that are too difficult to achieve. For example, the

targets given to the personnel in sales and services department are higher than any

other bank in the country, be it a local bank or a foreign bank. This makes the job

too stressful and tensed It is good to keep the people under a continuous move,

but to overstress them can be harmful to them and as well as to the organization.

• Due to the dissatisfaction of staff, there is high turnover among them. People who

find other alternatives do not stay with the bank. Therefore, the bank incurs loss

on their training and development. The bank should provide incentives to its

employees so that they show more loyalty. For example, there is no commission

provided to the sales personnel which otherwise is a general rule all over the

world.

• There are no sorts of training programmes for the employees. The employees who

are newly appointed are straight away placed at their positions with no prior

131
orientation. This creates problem for new personnel because they find difficult to

understand the environment and culture of the organization.

• The decision-making is carried out the upper management level and the

subordinates are not included in this process. This creates a sense of insecurity in

the lower managers and that is why there is a lack of loyalty among the personnel.

Although the upper management is very friendly with the lower managers but that

is only to the extent of cordial relationships.

OPPORTUNITIES

• The economic conditions are improving in the country. The foreign exchange

reserve has crossed the level the $ 14 Billions, which is something that was never

achieved in the past. The stock exchange index has also crossed fifty years high

recently touching 10,000 this year. This provides a better environment for

investment and growth. This would give a push to incomes of the population,

which would increase the level of savings.

• There is an inflow of foreign investment in the country. This would increase the

industrial growth Pakistan. The Islamic banks are important part of money

markets and this improvement will definitely effect their positions as well. Due to

the growth in the industrial sector, there will be an increase in the production of

132
this sector. The levels of deposits of industrial accounts would rise due to this

factor.

THREATS

• Right now there are a few banks that are providing islamic banking services in

addition to the Meezan Bank. These banks include Bank Islami, Al-Barkah Bank

and some branches of Bank Alfalah which are dedicated for islamic banking

services. That’s why we can say that although there is no intense threat for the

Meezan Bank in the near future but it is not difficult to say that more banks may

enter in this field as the awareness of islamic banking is increasing among the

public. Therefore the Meezan Bank should not be contented to its present market

share but should strive for providing better and better and modern services.

• Due to the increase in the number of conventional commercial banks, there is an

increase in competition. Also there is a lot of aggressive marketing by the

competitor banks. This is also a threat for MBL.

133
RECOMMENDATIONS

Meezan Bank is renowned for being first in Islamic banking. With such competitive edge

in the banking industry, it holds a very strong position among its competitors. Its

continuous innovation and adaptation to its changing environment has allowed it to stand

amongst the best of the lot. But I would like to give certain recommendations in this

perspective:

 First of all, I would I like to suggest that the bank must pursue a very aggressive

marketing and advertising strategy so that it can create awareness in the general

public about its Islamic products and services

 Secondly, there is a need for creating satisfaction among employees. They do not

feel any attachment to the organization. There is a requirement for building up

their loyalties so that the bank can curtail the dissatisfaction and turnover among

employees.

 The personnel in the bank should not be overstressed with workload. The

workload is of a destructive level. At that level of load the employees loose all the

comfort in their work and remain tense and frustrated.

134
 There is need of a new branch in the Lahore Main area. In our marketing research,

many traders told us that they really wanted such a good bank to open a branch in

that area. These traders have transactions of millions in a day that is why it is not

easy for them to carry that amount of cash. If MBL opens a branch in that area, it

can take hold of all those big accounts with a lot of daily transactions.

 Job training is a very important aspect that MBL is lacking in. New employees are

recruited directly without any prior training or orientation. The result is that they

do not understand the organizational structure and culture and become frustrated

in their start. This reduces their productivity and efficiency. If such a training

programmed is started, then the new employees would feel more comfortable and

adapt easily to the environment.

135