CORPORATE REVIEW
MUSLIM COMMERCIAL BANK

S.KAMAL HAYDER KAZMI
Research Analyst, PAGE
May 26 - June 01, 2008

Muslim Commercial Bank Limited was incorporated by the Adamjee Group on July 9, 1947 under the Indian Companies Act, VII of 1913 as a Limited Company It was nationalized in 1974. This was the first bank to privatized in 1991 and the bank was purchased by a consortium of distinguished Pakistani corporate groups, led by Nishat Group. On May 5th, 2008 Maybank of Malyasia bought 15% of Muslim Commercial Bank of Pakistan. MCB is currently the large bank in Pakistan in terms of share of total banking assets and the largest by market capitalization. It has the largest branch network and ATM network in Pakistan. It has a market capitalization of approximately USD 4.3 Billion by end December 2007. The Authorized capital of MCB increased by 53.8% in FY2007 over FY 2006. MCB bank consists 6,283 million shares in FY07 and these include bonus shares worth 431,023 million as such the cumulative share capital in 2006 amounts to Rs 5,463 million this has increased by 15%. PACRA has assigned long term credit rating of AA+ and short term credit rating of A1+ to the bank. MCB is listed in the Karachi stock exchange.

FINANCIAL PERFORMANCE:

Financial Performance of MCB Bank Limited:

INDICATORS

GROWTH IN FY07

Total Assets

19.98%

Liquid Assets

-25.90%

Earning Assets

17.78%

Deposits

13.45%

Advances

10.45%

Investments

78.13%

Total Income

14%

Operating Expense

-15.05%

Profit After Tax

25.72%

Borrowing

64.58%

Total assets of MCB increased by 19.98 % from Rs 342,108 m recorded in 2006 to Rs 410,486 m in 2007, as a March 31,2008 the total assets were recorded 396,686m, MCB liquid assets consists of cash, cash balances with others banks and lending against Repo and call money and it has decreased by 25.9 % to Rs 445,427 m in 2007 from in 2006 recorded Rs. 601,247 m, now the liquid assets were recorded 45,036m. Earning assets comprise advances, investments, lending against Repo and call money during 2006, it was Rs 282,807 m and it has increased with 17.78 %, it increased from Rs 333,101 m in 2007 and now the earning assets were recorded 321,254 on 31 March, 2008.MCB advances in 2006 were worth of Rs 198,239 m they increased at 10.45 % to Rs 218,961 m in 2007 and now the advances were recorded 229,835m in 31 March, 2008. On December, 31.2006 total investments were of Rs 634, 86 m while in 2007 it stood at Rs 113,089 m its growth rate is 78%, now the investments were recorded 858,319 m on 31 March, 2008. Deposits have increased to Rs 292,098 m in 2007 from Rs 257,462 m in 2006 indicating 13.4 % increased now the deposits were recorded 301,670m on 31 March, 2008. Borrowings stood from Rs 2,3943m in 2006 to Rs.3, 9407m in 2007. Borrowings were increased by 64.58%, now it was recorded 154,355m on 31 March, 2008. During 2007 MCB total income earned amounted to Rs 2,9932m, it has increased by 14 % amount of Rs 2,6244 m earned in 2006. MCB operating expenses in the year 2006 were Rs 6,549 m and it has dropped at an to Rs 5,563 m for the year 2007 and decreased by 15%. The profit after tax was 25.72 % increased. In FY06 it was 12,142 m and it has increased to 15,266 in 2007.

FUTURE OUTLOOK:

The MCB bank has impressively increased its assets, deposits, advances & profit. Currently MCB is running 700 online branches which is highest. On May 5th, 2008 MCB bank sold its 15 % shares of may bank in Malaysia at a high price. MCB now has a chance to penetrate in international market with collaboration of its new partners as they have large international experience. By utilizing Islamic banking MCB will be able to gain more profit and market shares. MCB is investing in mutual assets management in order to grab audiences and to make bank strong. However the bank has increased its amount of written off, bills payable and borrowings. The competition of bank has increased due to increased in banks .the bank is facing difficulties due to unstable, political & economic situation in Pakistan.