MUSLIM COMMERCIAL BANK

IQRA UNIVERSITY NORTH CAMPUS

ASSIGNMENT
Bachelors in Business Administration
Subject: Introduction to Business and Finance
Topic: Financial analysis Of “Muslim Commercial Bank
(MCB)”

Submitted by:

Muhammad Talha Khan (2848)

FahadMazhar (2849)

Zohaib Abdul Karim (3229)

Submitted to :

Sir Iqbal
Nayan
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MUSLIM COMMERCIAL BANK

Muslim Commercial Bank

(MCB)

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MUSLIM COMMERCIAL BANK

Table of Contents
Foreword

Introduction

Vision

Mission

Strategic Objectives

Core Values

 Integrity
 Innovation
 Excellence
 Customer Centricity
 Respect

Awards

Corporate Information

Board of Directors

Financial Analysis

COMPARISON OF TWO YEAR RATIOS & INTERPRETATION

Common size Balance Sheet
Income Statement

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MUSLIM COMMERCIAL BANK

Foreword
29th April 2015

“Just a final review and then we can mail it”, announced Talha as we all
compiled our research gathered in bits and pieces in the past one
month on this project.

This work has been a compiled effort of our team and all of us have
tried our best to gather the most accurate data and information about
the organizational aspects of MUSLIM COMMERCIAL BANK. The
analysis has been based on the available facts and news gathered from
various sources as well as our intuitive understanding of various
aspects of the industry.

Our special thanks to Mr. Naseem the operation manager of MCB

Bank for providing their valuable insights.

We thank our Prof. Mr. Iqbal Nayani for introducing us to the various
aspects of Introduction to Business Finance. We tried to incorporate
the elements of our learning on our own approach of working as a
team so as to eliminate inefficiencies and bank upon the
competencies of each individual member while allowing everyone to
explore the marches of their comprehension and creativity. This
course has been a wholesome learning experience for us and we would
be glad to extend the learning process by welcoming criticism and
suggestions on our work.

IBF group members:

Muhammad Talha Khan,
Fahad Mazhar,
Zohaib Abdul Karim.

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MUSLIM COMMERCIAL BANK

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MUSLIM COMMERCIAL BANK

Introduction:-
MCB Bank Limited (the "Bank") is a banking company incorporated in Pakistan and is engaged in
commercial banking and related services. The ordinary shares are traded on the bank on all stock
exchanges in Pakistan while her global depositary receipts (GDRs) represent two ordinary shares
are traded on the system the International Order Book (IOB) of the London Stock Exchange. The
Bank operates 1,208 branches including 27 Islamic banking branches within Pakistan and 9
branches outside the country. May bank International is a major shareholder in the bank.

Vision:-
To be the leading financial services provider, partnering with our customers for a more
prosperous and secure future.

Mission:-
We are a team of committed professionals, providing innovative and efficient financial solutions
to create and nurture long-term relationships with our customers. In doing so, we ensure that our
shareholders can invest with confidence in us.

Strategic Objectives:-
 Achieve significant returns for stakeholders, and sustainable performance, Exceeded
market expectations and shareholders.
 Providing value-added services through operational expansion and geography And
systems developer.
 Building institutional equality, trust and team spirit as a culture we are still Intended to be
a socially responsible organization.

Core Values:-
 Integrity:
We are trustees of public funds and the service of our society with integrity. We believe in being
the best in always doing the right thing. We offer to our responsibilities and obligations to our
customers as well as our colleagues.

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MUSLIM COMMERCIAL BANK

 Innovation:-
We encourage and reward people who challenge the status quo and think beyond traditional
boundaries. Our teams are working together for the smooth and effective implementation of ideas
and initiatives.

 Excellence:-
We take personal responsibility for our role as leaders in the pursuit of excellence. We are driven
by performance, result oriented organization where merit is the only Standard for the reward.

 Customer Centricity:-
Our customers are at the heart of everything we do. We thrive on the challenge To understand
their needs and aspirations, realized and unrealized alike. We Make every effort to exceed
customer expectations through superior service and solutions.

 Respect:-
We respect our customers' values and beliefs, culture and history. We appreciate equality Of
equality and diversity in experience and education brought by employees With them. We create
an environment where everyone is enabled for Success.

Awards:-
2013 The Asset Triple A:

Best Domestic Bank – Pakistan

2012 ICAP and ICMAP:

2nd Best Corporate Report Award 2011 - Banking Sector

2011 SAFA:

Joint 2nd Runner-up for BCR 2010

2010 MMT:

Best Bank Led MMT Service

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MUSLIM COMMERCIAL BANK

Corporate Information
Board of Directors:-
 Mian Mohammad Mansha

(Chairman)

 S. M. Muneer

(Vice Chairman)

 Tariq Rafi
 Shahzad Saleem
 Sarmad Amin
 Mian Raza Mansha
 Aftab Ahmad Khan
 Mian Umer Mansha
 Ahmad Alman Aslam
 Dato’ Seri Ismail Shahudin
 Muhammad Ali Zeb
 Imran Maqbool

(Presidents and CEO)

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MUSLIM COMMERCIAL BANK

Financial Analysis
Computation of financial ratios:
S.NO RATE OR RATIO FORAMULAS YEAR-2013- YEAR-2012-
PREVIOUS YEAR CURRENT YEAR
Profitability Ratio:
1) Spread Ratio =MARKUP 65,064 x 100 68,356 x 100
EARNED/INTEREST 27,196 27,500
EXPENSE*100
= 239.24 % = 248.56 %

(37,868 - 27,196) x100 (40,856 -27,500)x100

=TOTAL INTEREST 815,508 767,075
2) Net Interest Margin Ratio INCOME – TOTAL
INTEREST = 1.30 % = 1.74 %
EXPENSE/TOTAL
ASSETS*100

= 21,495 x 100 = 20,673 x 100

3) Return on Assets (ROA) =NET PROFIT 815,508 767,075
AFTER TAX/TOTAL
ASSETS*100 =2.63% = 2.69%

=(21,495x 100) = 20,673x 100)

4) Return on Equity (ROE) =NET PROFIT 97271 88877
AFTER TAX/SHARE
HOLDERS’ = 22.0 % = 23.2%
EQUITY*100

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5) Non-Interest Income to Total =NON-MARKUP = 11,171x 100 = 9,153x 100

Assets Ratio INCOME/TOTAL 815,508 767,075
ASSETS*100
= 1.36% = 1.19%

=40,756x 100 =40,565x 100

6) Net Interest Income after = Net Interest Income
815,508 767,075
Provision to Total Assets after Provision/Total
assets*100
=4.99% =5.2%

Liquidity Ratio:

7) Cash and Balances with =Cash and

=59,946x 100 =57,420x 100
Banks to Total Assets Banks/total
815,508 767,075
assets*100
=7.35% =7.48%

=705,277x 100 =664,604x 100

8) Total Liabilities to Total =Total
815,508 767,075
Assets Liabilities/Total
Assets*100
=86.4% =86.6%

Capital/Leverage
Ratios:
= 97271 x 100 =88877 x 100
=Total share holders’
815,508 767,075
9) equity/total
Capital Ratio assets*100
=11.9% =11.5%

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COMPARISON OF TWO YEAR RATIOS & INTERPRETATION:

1. Efficiency/Profitability Ratio:
a. Spread Ratio:
Formula Computation 2013 Computation 2012

=INTEREST 65,064 x 100 239.24 % 68,356 x 100

EARNED/INTEREST 27,196 27,500 248.56 %
EXPENSE*100

INTERPRETATION:
Spread ratio shows the difference between interest earned on their investments & interest paid on
customers’ investment. According to bank financial statement in 2012 they earn 248.56% more
against their interest expense.it is a good percentage as compared to 2013 due to some of the
reasons 9.32% decrease in spread ratio

b. Net interest margin ratio:

Formula Computation 2013 Computation 2012

=TOTAL 40,856-
INTEREST (37,868- 27,500)x100
INCOME – TOTAL 27,196)x100 = 1.30% 767,075 = 1.74 %
INTEREST 815,508
EXPENSE/TOTAL
ASSETS*100

INTERPRETATION:
Net interest margin ratio shows the firms profit on their total assets
employed.in simple words we can say that how much firm earn to utilized
their 100% assets. After analyzing the MCB bank data they earn 1.74% profit
in 2012 by utilizing all the resources but in 2013 gradually decreases from
0.44% due to increase in total assets.
c. RETURN ON ASSETS:
Formula Computation 2013 Computation 2012

=NET PROFIT = 21,495 x 100 = 20,673 x 100

AFTER 815,508 =2.63% 767,075 = 2.69%
TAX/TOTAL
ASSETS*100

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INTERPRETATION:
The return on assets formula measures how well an organization has regenerate all of its
resources into profit before contractual obligations must be paid. In 2012 the ROA is
2.69% but if we look on 2013 the ROA is 2.63% which means that the ROI is decrease in
2013 as compared to previous year
d. Return on equity:
Formula Computation 2013 Computation 2012

=NET PROFIT =(21,495 x 100) = 20,673 x 100)

AFTER 97271 = 22.0% 88877 = 23.2%
TAX/SHARE
HOLDERS’
EQUITY*100

Interpretation:
It indicates that MCB bank is not efficiently earning a good amount of income on stockholders’ equity.
On the investments of stockholders’ equity MCB Bank earned 23.2% in 2012 & 22.0% in 2013.The rate
of return is continuously decreasing which is not a good sign for the stockholders of the shares

e. Non-interest income to total asset ratio:

Formula Computation 2013 Computation 2012

=NON-MARKUP
INCOME/TOTAL = 11,171x 100 = 9,153x 100
ASSETS*100 815,508 = 1.36% 767,075 = 1.19%

Interpretation:
This ratio defines how much income is generating other than interest through other activities of the MCB
bank by the allocation of total assets.in 2012 bank generate 1.19% of the net income on total assets & the
ratio of other income increases gradually in 2013 from 0.17% so, the ratio of 2013 is 1.36%.
f. Net interest income after provision to total assets:
Formula Computation 2013 Computation 2012

= Net Interest =40,756 x 100 =40,565 x 100

Income after 815,508 =4.99% 767,075 =5.2%
Provision/Total
assets*100

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Interpretations:
It shows the earnings on assets after the provision. Bank earned 5.2% in 2012
& 4.99% in 2013 on total assets.

Liquidity Ratio:
a. Cash and Balances with Banks to Total Assets:
Formula Computation 2013 Computation 2012

=Cash and
Banks/total =59,946x 100 =7.35% =57,420 x 100 =7.48%
assets*100 815,508 767,075

INTERPRETATION:
In 2012 bank had 7.48% of the total assets available in the form of liquid but in 2013 it decreases
& reaches on 7.35% which were available in the form of pure cash.

b. Total liabilities to total assets:

Formula Computation 2013 Computation 2012

=Total =705,277x 100 =664,604x 100

Liabilities/Total 815,508 =86.4% 767,075 =86.6%
Assets*100

Interpretation:
The ratio shows the proportion of banks assets, which are financed through debt. Results shows 86.6%
of the total assets is financed through debts in 2012 & it decreases little bit in 2013 from 0.2% or
reaches on 86.4%.

1. Capital/Leverage Ratios:
a. Capital Ratio:

Formula Computation 2013 Computation 2012

=Total share = 97271 x 100 =88877 x 100

holders’ equity/total 815,508 =11.9% 767,075 =11.5%
assets*100

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Interpretation:
The ratio between shareholders‟ equity and total assets expresses the percentage of equity in
total Assets. Shareholders equity is 11.5% of total assets in 2012 but in 2013 it increases&
reaches on 11.9%.

Common Size Balance Sheet

2013 2012
Rs. Mln % Rs. Mln %
Statement of Financial Position
Assets
Cash and balances with treasury banks 59,946 7% 57,420 8%
Balances with other banks 1,537 0.2% 1,192 0.2%
Lending’s to financial institutions 1,225 0.2% 1,551 0.2%
Investments 449,006 55% 402,069 52%
Advances 248,243 30% 239,583 31%
Operating fixed assets 28,595 4% 23,738 3%
Other assets 26,956 3% 41,520 5%

815,508 100% 767,075 100%

Liabilities
Bills payable 10,139 1% 9,896 1%
Borrowings 38,543 5% 78,951 10%
Deposits 632,330 78% 545,061 71%
Deferred tax liabilities 4,201 1% 9,530 1%
Other liabilities 20,064 2% 21,166 3%

705,277 87% 664,604 86%

Net Assets 110,231 14% 102,471 13%

Represented by
Share capital 10,118 1% 9,199 1%
Reserves 46,601 6% 44,253 6%
Unappropriated profit 40,552 5% 35,425 4%
Surplus on revaluation of assets - net of tax 12,959 2% 13,594 2%

110,231 14% 102,471 13%

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Income statement:
2013 2012

Profit & Loss account

Mark-up/ return earned Rs. Mln 65,064 68,356
Mark-up/ return expensed ““ 27,196 27,500
Fund based income ““ 37,868 40,856
Fee, Commission, brokerage & FX income ““ 8,108 7,131
Dividend and capital gains ““ 3,063 2,022
Total income ““ 49,039 50,010
Operating expenses ““ 19,639 18,077
Operating profit before tax and provision ““ 29,400 31,933
Provisions / write-offs ““ (2,888) 291
Profit before tax ““ 32,288 31,642
Profit after tax ““ 21,495 20,673

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