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Topic:
MeezanBank Pvt, Ltd.
Subject:
Practice and Law of Banking in Pakistan
Submitted to:
Ms Haleema Tariq
Submitted by:
HM Aqib Munir (BC13-201)
Gulzar Ahmed (BC13-202)
Umar Farooq (BC13-216)
Faisal Mehmood Khan (BC13-221)
Semester 6th
, Section C (Morning)
Session 2013-2017
HAILEY COLLEGE OF COMMERCE
UNIVERSITY OF THE PUNJAB
LAHORE
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Table of Contents
1. History...................................................................................................................................5
2. Introduction of The Bank..........................................................................................................6
3. Executive summary.................................................................................................................. 6
3.1. Our Vision...................................................................................................................... 6
3.2. Our Mission.................................................................................................................... 6
3.3. Our Objectives................................................................................................................ 7
4. BOARD OF DIRECTORS...........................................................................................................7
5. Shariah Board & Executive Committee ........................................................................................ 7
6. Description of No. of Branches and Operations............................................................................. 8
7. Performance reward................................................................................................................. 9
8. Market Share.......................................................................................................................... 9
9. Shareholding Structure of the Bank.......................................................................................... 10
10. Islamic Mode of Finance...................................................................................................... 10
10.1. Mudarabah................................................................................................................ 10
10.2. Musharka.................................................................................................................. 11
10.3. Ijrah......................................................................................................................... 11
13.4. Takaful........................................................................................................................... 11
11. Introduction of products and services.................................................................................... 11
11.1. Types of products............................................................................................................... 11
11.1.1. Meezan Rupee Recent Bank account................................................................................... 11
11.1.2. Karobari Munafa Bank account......................................................................................... 12
11.1.3. Meezan Company Plus Bank account................................................................................. 12
11.1.4. Meezan Business Plus account.......................................................................................... 12
11.1.6. Meezan Bachat Bank account........................................................................................... 13
11.1.7. Meezan Kids Golf Club Bank account ................................................................................ 13
11.1.8. Meezan Adolescents Golf Club Bank account...................................................................... 13
11.1.9. Meezan Kafalah.............................................................................................................. 14
11.1.10. Foreign exchange Recent Bank account............................................................................. 14
11.1.11. Car or truck Ijarah......................................................................................................... 14
11.1.12. Online Banking ............................................................................................................. 14
11.1.13. Meezan VISA Debit Credit card....................................................................................... 15
11.1.14. Debit Credit card.......................................................................................................... 15
11.2. Services offered by Meezan Bank ........................................................................................... 15
11.2.1. Portable Banking App ..................................................................................................... 15
11.2.2. Meezan ATM Multilevel.................................................................................................. 16
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11.2.3. World wide web Banking ................................................................................................ 16
11.2.4. Meezan Quick Pay......................................................................................................... 16
11.2.5. TXT Banking................................................................................................................. 16
11.2.6. TXT Notifies................................................................................................................. 17
12. Performance of Meezan Bank............................................................................................... 17
13. Financial Analysis............................................................................................................... 17
13.1. Ratio Analysis............................................................................................................. 18
13.1.1. Return on Equity................................................................................................ 18
13.1.2. Return on Assets................................................................................................. 18
13.1.3. Earnings Per Share.............................................................................................. 19
13.1.4. Market Price per Share ........................................................................................ 20
13.1.5. Net Profit Before Tax Margin................................................................................ 20
13.1.6. Net Profit after Tax Margin................................................................................... 20
13.1.7. Operating Expenses to Income .............................................................................. 20
13.1.8. Book Value per Share........................................................................................... 21
14. Major Competitors............................................................................................................. 22
14.1. Comparison of Meezan Bank with Competitor’s Worth..................................................... 22
15. Competitive Analysis (SWOT).............................................................................................. 23
15.1. Strengths.................................................................................................................. 23
15.2. Weaknesses................................................................................................................ 24
15.3. Opportunities ............................................................................................................ 24
15.4. Threats..................................................................................................................... 24
16. Suggestion and Recommendation.......................................................................................... 25
17. Conclusion........................................................................................................................ 26
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1. History
In 1947 the inception of Pakistan as the first Islamic Republic created in
the name of Islam. Commercial banks transformed their nomenclature stating
all Rupee Saving Accounts as interest-free. However, foreign currency deposits
in Pakistan and foreign loans continued as before. In 1991 Procedure adopted
by banksin 1985wasdeclared un-Islamicbythe FederalShariatCourt(FSC).The
Governmentand somebanks/DFIsmadeappeals to the ShariatAppellate Bench
(SAB)of theSupremeCourtof Pakistanthen in 1997Al-MeezanInvestmentBank
is established with a mandate to pursue Islamic Banking. Mr. Irfan Siddiqui
appointed as first and founding Chief Executive Officer. In 2001 the Shariah
Supervisory Board is established at Al-Meezan Investment Bank led by Justice
(Ret.) Muhammad Taqi Usmani as chairman.
In 2002 Meezan Bank acquires thePakistan operations of Society General
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 formalceremony in Karachi.
In 2003 a widerange of products aredeveloped and launched consolidating the
Bank’s position as the premier Islamic Bank of 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. In 2005 Meezan Bank becomes the first customer of
Islamic Insurance(takaful) by signing the first Memorandum of Understanding
with Pak-KuwaitTakafulCompany Limited (PKTCL). The signing of this MoU has
helped Pakistan into a new era of Islamic Insurance (Takaful).
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2. Introduction of The Bank
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 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.
The Shariah Supervisory Board is established at Al-Meezan Investment
Bank led by Justice (Ret.) Muhammad Taqi Usmani as chairman. State Bank of
Pakistan sets criteria for establishment of Islamic commercial banks in private
sector and subsidiaries and stand-alonebranches by existing commercial banks
to conduct Islamic banking in the country.
3. Executive summary
Meezan is a publicly listed company first incorporated on January 27, 1997. It
started operationsas an investmentbankin Augustof the sameyear.InJanuary,
2002 in an historic initiative, Meezan Bank was granted the nation's first full-
fledged commercial banking license dedicated to Islamic Banking, by the State
Bank of Pakistan.
3.1. Our Vision
Establish Islamic banking as banking of first choice to facilitate the
implementation of an equitable economic system,providingastrongfoundation
for establishing a fair and just society for mankind.
3.2. Our Mission
To be a premier Islamic bank, offering a one-stop shop for innovative value
added products and services to our customers within theconstraints of Shariah,
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while boosting the stakeholders value through an organizational culture based
on learning, fairness, respect for individual enterprise and performance.
3.3. Our Objectives
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
4. BOARD OF DIRECTORS
1. H. E. Sheikh Ebrahim Bin Khalifa Al-Khalifa (Chairman)
(Undersecretary, Ministry of Finance& National Economy, State of
Bahrain)
2. Naser Abdul Mohsen Al-Marri (Vice Chairman)
3. Yousif Saleh Khalaf
4. Zaigham Mahmood Rizvi
5. Muhammad Hussain
6. Tarik Kivanc
7. Mazen Khalid Al-Braikan
8. Irfan Siddiqui(President& Chief Executive Officer)
9. Ariful Islam(Chief Operating Officer)
10.Rana Ahmad Humayun
5. Shariah Board & Executive Committee
The members of the Shariah Board of Meezan Bank Are Internationally-
renowned scholars serving on the boards of many Islamic banks operating in
different countries.
Shariah Board Executive Committee
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Justice (Retd.) Muhammad Taqi Usmani Naser Abdul Mohsen Al Marri
Dr. Abdul Sattar Abu Ghuddah Zaigham Mahmood Rizvi
Sheikh Essam M- Ishaq Mohammad Abdul Rehman Hussain
Dr.Muhammad Imran Usmani Company Secretary
Audit Committee Gohar Iqbal Shaikh
Zaigham Mahmood Rizvi General Advisory
Mohammad Abdul Rehman Hussain Dr. Muhammad Imran Usmani
Irfan Siddiqui Zafar Aziz Osmani
Legal Advisor Auditors
Rizvi, Isa, Afridi & Angell A.F. Ferguson & Co
6.Description of No. of Branches and Operations
With over 428 branches in 117 cities across Pakistan, Meezan Bank is thelargest
Islamic Bank and the 8th largest Bank (in terms of Branch Network) in Pakistan.
This is a milestone that is not only the successstoryof Meezan Bank but also the
continuing success story of Islamic banking in Pakistan. With this extensive
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network, our existing and potential customers are now closer than ever in
benefiting fromIslamicBanking attheir doorstep.Allbranchesprovidereal-time
online banking facilities to customers.
As the first and largest dedicated Islamic bank in Pakistan, Meezan Bank
team continues to build on its Vision of establishing "Islamic Banking as Banking
of First Choice". One of the key objectives of the Bank is to have its footprint
strategically placed throughout the country enabling the public to avail the
benefits of Shariah-compliant banking in their neighborhood.
7. Performance reward
Multiple International Awards by Asset Triple A — Hong Kong
Meezan Bank has been awarded Pakistan's 'Best Islamic Bank',
'Best Islamic Retail Bank' and 'Best Islamic Trade Finance Bank' by
Asset Triple an Awards, Hong Kong. The Bank has also been
awarded 'Best Islamic Deal — Pakistan' as a Joint arranger for
Pakistan Mobile Communications syndicated Islamic finance
facility, and 'Highly Commended Deal - Pakistan' as the Lead adviser and
arranger for the Kot Addu Power Company short-term Sukuk.
In 2007 The Bank introduced Istisna financing to accommodate to the
workingcapital needs of customers.MeezanBankwas awarded'Best IslamicBank
in Pakistan' by Islamic Finance News of RED money Group, Malaysia. Depositbaseof
the Bank grew to over Rs. 54 billion and the Bank earned profit after tax of Rs.
963million. TradeFinancebusinessreachedRs. 70billion. 2009wasawatershed
year for Meezan Bank.
8. Market Share
Meezan accounts for approximately 50% of the market share of Islamic
banks in Pakistan a sector that is growing very rapidly. The accounts were
Consumer banking
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approved by the Board of Directors of Meezan Bank in its 50th Meeting held on
October 22, 2012 in Dubai presided over by the Chairman H.E. Sheikh Ebrahim
Bin Khalifa Al Khalifa. The Board appreciated the excellent performance of the
Bank despite difficult market and economic conditions.
9. Shareholding Structure of the Bank
Shareholding structure Rs. in Millions %
Noor financial investment
Co. Kuwait
4924 49.11
Pakistan Kuwait investment
company (pvt)Ltd
3008 30.00
Islamic development
Pakistan Jeddah
935 9.32
Others 1160 11.57
Paid up capital 10027 100
10. Islamic Mode of Finance
Thesemodesof financing havebeen written byMaulana Taqi Usmaniwho
is the former Chairman of Shariah board of Meezan Bank. After studying these
we will be in a position to understand the 90% working of the bank. The
important modes of financing are:
10.1. Mudarabah
The term refers to a form of business contract in which one party brings
capital and the other personal effort. The proportionate share in profit is
determined by mutual agreement. But the loss, if any, is borne only by the
owner of the capital, in which casethe entrepreneur gets nothing for his labour.
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The financier is known as ‘rabal-maal’ and the entrepreneur as ‘mudarib’. As a
financing technique adopted by Islamic banks, it is a contract in which all the
capital is provided by the Islamic bank while the business is managed by the
other party. The profit is shared in pre-agreed ratios, and loss, if any, unless
caused by negligence or violation of terms of the contract by the ‘mudarib’ is
borne by the Islamic bank. The bank passes on this loss to the depositors.
10.2. Musharka
Islamic principle that is applied to joint ventures where interest is not charged
by the creditor of the loan, instead an agreement is made between the creditor
and the buyer as to the sharethe creditor will get fromthe profitmade fromthe
venture. This also applies to any losses made in the business.
10.3. Ijrah
An exchange transaction applicable in Islamic regions. It is trading a specified
asset available in for a payment where the ownership of the asset is not
transferred. This is similar to a type of mortgage loan with no requirements for
down payment, such as a rent-to-own 1
13.4. Takaful
a type of insurance system devised to comply with the sharia laws, in which
money is pooled and invested.
11. Introduction of products and services
11.1. Types of products
11.1.1. Meezan Rupee Recent Bank account
This is a checking account that will functions on such basis as 'Qard' and offers
the simplicity of executing day-to-day purchases. There's no reduction upon
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withdrawals as well as variety of purchases along with there is no discount
associated with assistancecharges if your harmony maintained is actually lower
11.1.2. Karobari Munafa Bank account
Meezan Bank's Karobari Munafa Bank account is really a piggy bank wherever
earnings is actually calculated upon day-to-day harmony along with paid in to
the accounts from month to month. The minimum expense necessary for
cracking open a merchant account is actually Rs; 1 mil. There's no reduction
upon withdrawals as wellas variety of purchases along with thereis no discount
associated with assistancecharges if your harmony maintained is actually lower
11.1.3. Meezan Company Plus Bank account
Meezan Bank's Rupee Savings offers regular earnings and also a number of free
packaged benefits. Profit is actually calculated upon day-to-day harmony along
with paid in to theaccounts frommonth to month.Minimum expensenecessary
for cracking open a merchant account is actually Rs. 100 along with there is no
discount associated with assistance charges if your harmony maintained is
actually lower.
11.1.4. Meezan Business Plus account
Meezan Company Plus is really a piggy bank very suitablefor work with as being
an organization accounts. The minimum expense necessary for cracking open a
merchant account is actually Rs. 100. Consumer can get a large number of free
servicesaswell asfree TXTAlertassistance,freeinter-city eradicating, and many
others. There's no reduction upon withdrawals as well as variety of purchases
along with there is no discount associated with assistance charges if your
harmony maintained is actually lower
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11.1.6. Meezan Bachat Bank account
Meezan Bachat Bank account is really a piggy bank which offers some greater
predicted earnings. The minimum expense necessary for cracking open a
merchant account is actually Rs. 50, 000. Profit is actually calculated that has a
higher weightagepertaining to balanceup to Rs. 25 million. There's no reduction
upon withdrawals as wellas variety of purchases along with thereis no discount
associatedwith assistancechargesif yourharmonymaintained is actually lower.
11.1.7. Meezan Kids Golf Club Bank account
Meezan Kids Golf Club Bank account is actually launched pertaining to young
children within age 12 several years to grow the behavior associated with
conserving in the earlier severalyears. The accounts can be started out fromRs.
500. With cracking open the accounts having Rs. 10,000 father/guardian is
actually eligible to find free accidental Takaful insurance policy coverage for
example calendar year. The earnings are actually compensated upon regular
schedule. VISA Debit credit card charge is actually waived for your initial
calendar year. Fascinating items pick up to Kids Golf club customers upon
accounts cracking open.
11.1.8. Meezan Adolescents Golf Club Bank account
Meezan Adolescents Golf Club Bank account is actually Pakistan's initial
adolescents accounts made to serve the prerequisites from the age bracket
associatedwith 12 to eighteen severalyears.AdolescentsGolf club accountscan
be started out from Rs. 1, 000. With cracking open the accounts having Rs. 10,
000 father/guard is actually eligible to free informativeTakafulinsurancepolicy
coverage for example calendar year. The earnings are actually compensated
upon regular schedule. VISA Debit credit card charge is actually waived for your
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initial calendar year. Fascinating accounts cracking open items anticipate the
Adolescents Golf club customers
11.1.9. Meezan Kafalah
Meezan Kafalah is really a cost savings approach having appreciation Takaful
insurance policy coverage by which buyers can save their particular upcoming
optionssuch aseducation as wellas weddingof their kid,choosingHajj,planning
retirement yearsand many others. Meezan Kafalah is really a Shariah-compliant
replacement for bancassurancehaving quick quit solution at any time. Options
can be found from 3 to 15 several years
11.1.10. Foreign exchange Recent Bank account
Meezan Foreign Exchange Recent Bank account is really a Qarz based accounts
which might be started outhaving simply justUSD/ Pound/Euro 100. There's no
discount associated with assistance charges if your harmony is actually lower.
11.1.11. Car or truck Ijarah
Determined by Ijarah basic principle, Car or truck Ijarah is surely an automotive
financial centre. This can be an automobile procurementagreement within that
your Bank buys some sort of new/used automobile from the client's decision
along with housing costs the item out there to get a period of 1 to 7 several
years, contracted at the time of the deal. Local rental payments start following
shipping and delivery associated with automobile towards consumer. The
financial institution in addition offers Takafulhandle fromthe automobile along
with free accidental passing away insurancepolicy coverageup to Rs. 400, 000.
11.1.12. Online Banking
Meezan Bank delivers free Online Banking centre upon almost all Pak Rupee
Accounts to it is Online Banking customers. This gives the Bank’s customers to
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gain access to their particular balances and conductbankingpurchasesfromany
of Meezan Bank's 428 branches nationwide, regardless of which branch or
location they've got their particular accounts in. This facility offers excellent
comfortfor depositing along with withdrawing cash, generating fork out orders
along with availing numerous other banking companies
11.1.13. Meezan VISA Debit Credit card
Meezan VISA Debit Credit card offers comfort to buyers to gain access to their
particular cash anytime along with anywhere, by any means shops along with
ATMs showing the VISA symbol. Meezan VISA Debit Credit card is actually
acknowledged on over 40 mil shops along with only two. 3 mil ATMs globally.
Together with Meezan VISADebit Creditcard, buyersgain access to your money
in their accounts in which they are, whenever they wish, in which they
understand the VISA symbol.
11.1.14. Debit Credit card
Meezan MasterCardTitanium Debit Creditcard may bethe initial Titanium debit
credit card launched by Meezan Bank in Pakistan. The debit credit card comes
set with benefits for your recurrent visitor featuring free entry to air-port
lounges over the Midst Eastern, in conjunction with severalexceptional delivers
along with reductions inside Pakistan along with globally, the Debit Credit card
delivers affordable in it is course
11.2. Services offered by Meezan Bank
11.2.1. Portable Banking App
Made for the customer on the road, the request is available to obtain through
The search engines Perform along with The apple company App Retailers.
Compatible with almost all key Operating system along with iOS designs, the
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App makes it possible for buyers to watch accounts task, pay bills, top-up cell
phone 'tokens', along with transfer money inside a rapidly, hassle-free along
with a safe technique more than a simple to operate.
11.2.2. Meezan ATM Multilevel
Meezan Bank provides a country wide network associated with more than 352
ATMs found on it is branches along with on visible off-site areas nationally.
11.2.3. World wide web Banking
Meezan’sWorldwideweb Bankingcentreoffersbuyersworldwideentryto their
particular accounts twenty-four hours a day, few days 7 days. The web Banking
centre provides a suite associated with capabilities such as accounts assertion
sights, payment associated with utility bills having Quick Pay assistance, money
transfercentre, check out rankassociated with cheques, recordalong with track
problems, along with start ask check out eBooks, fork out orders, and prevent
payment.
11.2.4. Meezan Quick Pay
Meezan Quick Paymakes it possiblefor buyers to spend utility bills, cell phone
expenses along with top-ups through Meezan Bank's ATMs, World wide web
banking& PortableApp, and thusthey no longer haveto delay in lists to spend
these expenses.
11.2.5. TXT Banking
Meezan TXT Banking is surely an interactive assistance allowing each of our
buyers to gain access to their particular accounts upon desireanytime, between
their particular cell phone. It is not only easy and simple but additionally
liberated to work with.
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11.2.6. TXT Notifies
Meezan Bank's TXT Notifies assistancekeeps buyers knowledgeable in relation
to TXT Notifies routines in their balances; empowering these phones keep track
of their particular financial purchases. When the consumer signs-up pertaining
to TXT Notifies, he/she will probably obtain a great TXT whenever we have a
debit as well as credit financial transaction in their accounts. The TXT will give
you financial transaction specifics along with the most recent balance.
12. Performance of Meezan Bank
2014 2013 Growth
Branch Network 428 Branches 351 Branches 22%
Presence 117 Cities 103 Cities 14%
Deposits Rs. 380 Billion Rs. 290 Billion 31%
Total Assets Rs. 437 Billion Rs. 330 Billion 33%
Profit After Tax
Rs. 4.57
Billion
Rs. 3.96
Billion 16%
Equity
Rs. 23.3
Billion
Rs. 17.9
Billion 30%
Trade Business (Import and
Export) Rs. 376 Billion Rs. 315 Billion 19%
13. Financial Analysis
Pakistan has continued to suffer from the fallout of the international financial
crises that began in 2008. Sincethe inception of Meezan bank economic shocks
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were usual and banks are not exemption to these shocks. The instability of the
economy has also affected the bank to some extent. Currentyear’s profitrating
shows the managements’ effective policies and viability.
13.1. Ratio Analysis
A ratio analysis is very important measure to judge the performance of an
organization and to compare that performance ratio with previous year ratio
and future of the position of the organization. In this portion we’ll analyse the
importantfinancial ratiosof Meezan Bank, also the comparativeresults in yearly
form are depicted to study the trend of ratios and reasons for increase or
decrease shall be explained.
13.1.1. Return on Equity
Return on Equity Net Profit after Tax / Stockholders’ Equity
2013 (3956776/17908150) x 100 = 22.09%
2012 (3508116/15493638) x 100 = 22.64%
2011 (3391543/13323888) x100 = 25.45%
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. I have
analysed last three years ROE to have a better understanding of the company’s
ratio of investment in the business. In the year 2011, this ratio was 25 percent
but this ratio seems to fluctuate in the later years. In the year 2012, this ratio
decrease to 2 percent. However, in the year 2013 this is because the company
has increased the amount of capital but the net profit after tax could not be
increased according to that ratio.
13.1.2. Return on Assets
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Return on Assets Net Profit after Tax / Total Assets
2013 (3956776/329724631) x 100 = 1.20%
2012 (3508116/274436510) x 100 = 1.27%
2011 (3391543/200550394) x 100 = 1.23%
Return on assets is the ratio that shows thepercentage of net profit after tax to
total assets. This ratio is also called the return on investments because
investment by the company in the business is always in the form of different
types of assets. This ratio of Meezan Bank Limited shows thatthe return earned
by the bank on its total investments is fluctuating from year to year. This is
becausethe bank has continuously increasing its investments in the total assets
but againstthat investment the bank is not earning sufficient amountof profits.
The situation is somewhatbetter in the year 2012 wherebecause of highest of
all the years’ profits, the return percentage is 1.27. The bank should consider
the situation and should try to rectify this.
13.1.3. Earnings Per Share
Earnings per Share Net Profit after Tax / Number of Shares Issued
2013 (3956776/10027379) = 3.95 per share
2012 (3508116/9033675) = 3.88 per share
2011 (3391543/8029933) = 4.22 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 shareto pay as dividend to the shareholders. This ratio is the most
important ratio fromthe shareholders’ pointof view becausethey also want to
know that how much the company is going to pay them against the number of
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shares they are having. For Meezan Bank, the year 2011 this ratio is 4.22 and in
the year 2012 earning per ratio is 3.88 but in the
year 2013 there is a slight increase of Rs.3.95 per share which is because the
company has issued bonus shares to its shareholders as a stock dividend.
13.1.4. Market Price per Share
The marketprice per sharehas been fluctuating
from year to year but the overall impact on the
market price is encouraging.
13.1.5. Net Profit Before Tax Margin
Net profit before tax margin represents the
profitearned beforetax as a percentage of gross
revenue. The need to calculate this ratio is that
the actual performanceof the bank is measured
before tax and not after tax. So this ratio shows that the profit earned by the
bank in the year 2011 ratio is 21.21% and in 2012 years this ratio is increased
but in the year 2013 this ratio was 22.58% percent which is satisfactory good.
13.1.6. Net Profit after Tax Margin
Net profit after tax margin was about 17 percent
in the year 2011 whereas it started decreasing
gradually in the subsequent years. The main
reason for this decrease in the net profit was
increasein the other expenses and also becauseof an increasein the amountof
taxation.
13.1.7. Operating Expenses to Income
2013 Rs.39.38per share
2012 Rs.30.05per share
2011 Rs.17.38per share
2013 22.58%
2012 21.57%
2011 21.21%
2013 14.83%
2012 14.47%
2011 16.51%
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The operating expense to income ratio shows that the organization has been
able to control its operating expenses over the
year from 2011 to 2013. This ratio was 51.60
percent in the year 2011 and in the year 2013 itis
ended with a little increase to 59.41 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.
13.1.8. Book Value per Share
Book Value per Share Stockholders’ Equity/No. of common share Issued
2013 17908M/10027M = Rs.1.78 per share
2012 15494M/9034M = Rs.1.71 per share
2011 13324M/8030M = Rs.1.65 per share
Book value per shareis 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 wecompare
the book value per share with the market value per share we see that although
the book value per share is 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 thatthe shareholders haveconfidencein the company that the company
will the prosperous in the future.
2013 59.41%
2012 55.97%
2011 51.60%
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14. Major Competitors
The augmentation in the banking industry, specifically Islamic banking
segments, of Pakistan has directed to an increase in the number of banks both
domestically and internationally to be established and create a competitive
industry.ForMBL its competitors comein the formof a mixture of domestic and
international banks established in Pakistan.
Meezan Bank limited feels that its major competitors are as follows:
Bank Islami Pakistan Limited
Albaraka Islamic Bank B.S.C. (E.C.), Pakistan Operations
Dubai Islamic Bank Pakistan Limited
Dawood Islamic Bank Limited
Emirates Global Islamic Bank
14.1. Comparison of Meezan Bank with Competitor’s Worth
Name of the Banks Assets Deposits Equity in millions
Meezan 329,725 289,811 10027
Dib Limited 32,607 25,451 5,262
Dawood islamic
Limited
13,777 7,370 5,051
Al Baraka 25,604 19,574 2,194
Bank Islami 29,094 22,861 4,823
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Emirates global
Islamic bank
20,185 14,820 3,659
15. Competitive Analysis (SWOT)
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 havepersonally conducted interviews of someof the employees of the branch
to do a SWOTanalysisof MBL in the light of their experience in thebanking field.
My analysis, consolidated with theirs', is given below;
15.1. Strengths
1. MBL hasthe privilege of being the firstin the IslamicBanking sector which
gives MBL a competitive edge over all other banks.
2. Having renowned Shariah Scholars, backed up by the Kuwaiti sponsors
who held vast knowledge of banking and have high networking and vast
range of Islamic Products, MBL is enjoying major share in the market.
3. “Everybranchis yourownbranch”,thereareverynominalservicecharges
deducted by the bank for its banking facilities.
4. There aremany valueadded features in the productsofferedby 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.
5. The employees at the bank provide flawless customer service to their
customers.
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15.2. Weaknesses
1. Lack of proper marketing strategy.
2. Delayed performance of the departments.
3. High employee turnover rate.
4. Low salaries, low employee motivation at workplace.
5. 201 branches are opened so far but the networking within the branches
needs to be worked out.
6. Excess liquidity.
7. Markets are not open from the point of view of investments. Being an
Islamic bank it has to carefully examine the opportunities available to
invest its money.
8. Lagging behind technologically wise as compared to the other banks.
15.3. Opportunities
1. Increasing growth of the Islamic banking sector
2. MBL can capitalize its first mover’s advantage
3. Development of shariah compliant products
4. New markets to explore
5. It can establish Full-fledged consumer banking menu in Pakistan
6. Opportunities are available in the remote area as compared to the big
cities.
15.4. Threats
1. Economic downfall of the country.
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2. New entrants; There is an increasing competition in the Islamic banking
sector
3. Minimum capital requirement
4. It may lag behind due to the aggressivemarketing strategies adopted by
its competitors
5. Acceptability of Islamic banking as it is still an emerging concept in
Pakistan.
6. If the growth of the Islamic banking sector is an opportunity, it is in the
meanwhile threat as well.
7. Employee turnover rate may increase further if it is not controlled by the
management by giving incentives
16. Suggestion and Recommendation
Based on my experience & observation regarding the operations and policies of
Meezan Bank, I have tried to stipulate some recommendations for further
improvement.
Meezan Bank Limited should establish a Department of Human Resource
Management.
Meezan Bank Limited should continue to expand its business, by increasing its
deposit portfolio through aggressive market penetration strategies.
Meezan Bank Limited needs to improve its website.
More information relating to financial performance of the bank should be
available on the website.
Management should distribute work equally among different employees.
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Some of the employees are overburdened whilesome sections are overstaffed.
Related jobs should be assigned to the employees so that they can work more
efficiently.
Cheques, which are drawn on Meezan Bank Branch and returned unpaid in
clearing, are not reflected in the Statement of Accountof the customers. These
cheques must be reflected in the accounts so that credibility of the customers
may be assessed.
The employees should be signed jobs for specific period and then they should
have shifted to other department so that they gain knowledge of other jobs.
Lockers, ATM, all these facilities should be provided to attract morecustomers.
Increase the Size of waiting room.
17. Conclusion
The organization has been not growing both in sizeand profitfor pastfew years
and butrepute in the marketis good. The employee turnover is very high which
they have to cut down as they are losing a number of good trained employees
due to its poor policy. The year 2007 is expected to offer increased competition
in the secured assets business as more Islamic banks are in the market. With
their focusedstrategyand productdevelopmentinitiatives planned forthe year,
Meezan Bank is stronglypositioned to meet these challenges. The bank hasvery
well repute in the market. Overall bank is going well and doing a good business
but there are few problems for that I have tried to give few recommendations
that might help company to improve.
