m.c.b final draft

8/7/2019 M.C.b Final Draft

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First of all I am thankful to ALLAH Almighty who has created us, gave us the power to understand and the power to gainknowledge. Without HIS kind guidance I would have not been able to complete any task given to me.

Strategic Marketing Management

Submitted to: Mr.Asad Awan

2010

[ M.C.B STUDENTLOAN ][Type the abstract of the document here. The abstract is typically a shortsummary of the contents of the document. Type the abstract of thedocument here. The abstract is typically a short summary of the contents of the document.]

M.C.B Student Loan[Strategic Marketing Management]ARSENELS

Imran Karamat 070634-052Ali Furqan 070634-019M.Awais 070634-002M.Haider 070634-044Hassan Ali 070634-003

Submitted To Sir Asad Awan

2010

U.M.T14/1/2010


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Dated: 07/01/2010


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Acknowledgment

For whom who created us, fed us, brought us up and gave us knowledge.

Who is the most merciful, most beneficial and most forgiver. "In the name of

God, the Merciful, the Compassionate. Say (O Muhammad) He is God the One

God, the Everlasting Refuge, who has not begotten, nor has been begotten,

and equal to Him is not anyone." For whom who is more loving and kinder

than a mother to her dear child? For whom who are the First and the Last?

We are very thankful to Mr. Asad awan at UMT who gave us a chance to

prove ourselves, to gain something, to learn something, to experience

something and test ourselves. We really appreciate our friends valuable

suggestions and their initiative in our project. We are greatly thankful Mr.

Asad Awan who gave us the opportunity to learn the deep complexities of

market.


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M.C.B Bank PVT Ltd

The Bank You Trust that push you towards education

1.Company Description:

MCB Ltd formerly known as Muslim Commercial Bank Limited wasincorporated by the Adamjee Group on July 9, 1947, under the IndianCompanies Act, VII of 1913 as a limited company. The bank was establishedwith a view to provide banking facilities to the business community of theSouth Asia.

The bank was nationalized in 1974 during the government of Zulfikar Ali Bhutto . This was the first bank to privatized in 1991 and the bank waspurchased by a consortium of distinguished Pakistani corporate groups led byNishat Group. As of June 2008, the Nishat Group owns a majority stake in thebank.

MCB is Pakistans fourth largest bank by assets having an asset base of

US$6.7 billion, and the largest by market capitalization having a marketcapitalization of US$4.1 billion. The Bank has a customer base of approximately 4 million and a nationwide distribution network of 1,026branches, including 8 Islamic banking branches, and over 300 ATMs, in amarket with a population of 160 million.

In 2008, MCB reported a profit after tax of PKR16.4 billion (US$270 million)and generated a return on average equity of 38% and a net interest marginof 8.08%.

During the last fifteen years, the Bank has concentrated on growth throughimproving service quality, investment in technology and people, utilizing itsextensive branch network, developing a large and stable deposit base andmanaging its non-performing loans via improved risk management processesand getting mergers with different banks.

In 2005, the management of the bank changed its name from MuslimCommercial Bank Limited to MCB Bank Limited (MCB). The reason was to
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explore international markets as they were facing resistance specially fromWestern Countries to avail license. In 2008 the head office of MCB was shiftedto Lahore in a newly constructed building, namely MCB House, located atSharea Ghous-ul-Azam (formerly known as Jail Road) from Karachi.

The MCB Tower in Karachi serves as the MCB's headquarters, and is also thetallest building in Pakistan . MCB , advised by Merrill Lynch , became the fourthPakistani company (the other three being Hubco, PTCL and Chakwal Cement -they all have been delisted) to list on the London Stock Exchange when itraised US$150 million global depositary receipts.

M.C.B Mergers & Acquisition

In May 2008 Malaysian bank, Maybank and MCB sponsors Nishat Groupsigned an agreement, whereby Maybank will acquire up to 20% of the

ordinary shares in MCB from Nishat Group. The acquisition is in-line withMaybanks strategy, as Malaysias financial services leader in the region, tobuild its presence in key growth markets across the region. It also paves theway for MCB, one of Pakistans premier financial services groups, to engageMaybank as its exclusive foreign commercial bank strategic partner.

Maybank initially acquired from Nishat Group 94,241,527 ordinary shares inMCB, representing a 15% stake in the Bank, for a cash price of PKR470 pershare. The total consideration paid was approximately US$686 million. Thepurchase price represented a 11.4% premium to MCBs closing share price of PKR 422 on May 2, 2008, and a premium of 12.9% to the average closingshare price for MCB over the 30 trading days immediately preceding the dateof this announcement.

As part of the transaction, Maybank and MCB are also expected to enter intoa business cooperation arrangement which will include, among others,Islamic banking, retail banking, credit cards, asset management and SMEbanking. Leveraging Maybanks leadership and experience in these segmentscoupled with MCBs brand and broad distribution network, Maybank and MCBbelieve that significant revenue synergies can be attained. Both Maybank andMCB are also expected to benefit from increased business ties and trade

flows between Pakistan and Malaysia.

M.C.B Buys R.B.S Pakistan

The MCB announced the signing of the agreement while the RBS said it hadreached an agreement, in principle, for sale of its 99.37 per cent holding.The
http://en.wikipedia.org/wiki/MCB_Towerhttp://en.wikipedia.org/wiki/Karachihttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Merrill_Lynchhttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Companyhttp://en.wikipedia.org/wiki/Cementhttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/Maybankhttp://en.wikipedia.org/wiki/MCBhttp://en.wikipedia.org/wiki/RBShttp://en.wikipedia.org/wiki/MCB_Towerhttp://en.wikipedia.org/wiki/Karachihttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Merrill_Lynchhttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Companyhttp://en.wikipedia.org/wiki/Cementhttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/Maybankhttp://en.wikipedia.org/wiki/MCBhttp://en.wikipedia.org/wiki/RBS


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shares of RBS got the lowest price as compared to previous deals madeduring the last six years in the country.

The MCB will acquire 1.707 billion (1,707,107,891) ordinary shares for a cashprice of Rs4.22 per share. The MCB succeeded to strike the deal at the lowest

price.In the previous deals, the Union Bank was sold at a price of Rs93 pershare while Prime Bank was acquired by ABN AMRO (Now RBS Pakistan ) atthe rate of Rs54 per share, PICIC DFI got Rs78 per share, Saudi Pak Bank gotRs29.3 per share and MCB Bank sold its shares at a price of Rs470 per shareto May Bank , Malaysia .

The total consideration to be paid will be Rs7.2 billion (US$87 million). Inaddition, the MCB would make a tender offer for the remaining 0.63 per centof ordinary shares not owned by the majority shareholder.

We are delighted to confirm today that we have successfully entered into asale agreement with the MCB for RBS Pakistan which comprises Retail,Commercial, Islamic and onshore GBM (Global Banking and Markets) and GTS(Global Transaction Services) businesses in Pakistan, said MohammadAurangzeb, chairman of RBS Pakistan.

RBS Pakistan is a leading international bank in Pakistan with a branchnetwork of over 75 in 24 cities, of which 30 serve the affluent retail customersegment and three are Islamic banking branches, and has over 90 ATMs. OnDec 31, 2008, RBS Pakistan had total assets of Rs108 billion.

As a result of the transaction, based on latest available pro forma numbersthe total number of branches of combined MCB and acquired bank (RBSPakistan) will increase to 1,139, the total consolidated deposits wouldincrease to Rs413 billion and consolidated gross advances to Rs324 billion.

2.Strategic focus & plan:

1) VISION

To be the leading financial services provider, partnering with our customersfor a more prosperous and secure future.

2) MISSION

We are looking to play an increasingly progressive role in economy byproviding innovative and value-added products and services to a diversecustomer base. Our Mission is to support the economy with numerous ways
http://en.wikipedia.org/wiki/RBShttp://en.wikipedia.org/wiki/MCBhttp://en.wikipedia.org/wiki/Union_Bankhttp://en.wikipedia.org/wiki/Prime_Bankhttp://en.wikipedia.org/wiki/ABN_AMROhttp://en.wikipedia.org/w/index.php?title=RBS_Pakistan&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=PICIC&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Saudi_Pak_Bank&action=edit&redlink=1http://en.wikipedia.org/wiki/MCB_Bankhttp://en.wikipedia.org/wiki/May_Bankhttp://en.wikipedia.org/wiki/Malaysiahttp://en.wikipedia.org/wiki/RBShttp://en.wikipedia.org/wiki/MCBhttp://en.wikipedia.org/wiki/Union_Bankhttp://en.wikipedia.org/wiki/Prime_Bankhttp://en.wikipedia.org/wiki/ABN_AMROhttp://en.wikipedia.org/w/index.php?title=RBS_Pakistan&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=PICIC&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Saudi_Pak_Bank&action=edit&redlink=1http://en.wikipedia.org/wiki/MCB_Bankhttp://en.wikipedia.org/wiki/May_Bankhttp://en.wikipedia.org/wiki/Malaysia


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like to facilitate the education sectors with best which we can do throughstudents long term financing loans at nominal rate of return.

3) STRATEGIC GOALS1. Aims at bringing Education within the reach of students and help them to improve

their quality of life and be the supportive element in booming the economy.

2. Our foremost goal is to sustain our current position under these circumstances toremain listed in London stock exchange.

3. Objective for this student loan is to capture the financial activities of educationalinstitutions of Pakistan on national level and provide them with financialassistance, they might require.

4. While retaining our existing customer base, our major emphasis is on their childrens future education plan and to affiliate with them on an emotional track.

5. Through this student loan our goal is to provide an opportunity to the localpotential and place them in our diversified business units thus, helping inreducing the unemployment.

6. For sustaining the stakeholders equity, approximately net 10% Interest p.a shallbe charged on the issued loans.

4) SUSTAINABLE COMPETITIVE ADVANTAGE

(SCA)

1. MCB is the leader of local commercial bank supported by its increasing

trends of revenue, all over Pakistan.

2. It was the first Bank which introduced ATM Technology in Pakistan.

3. All over Pakistan, it has most ATM Machines, and most Branches

available, and now the network transaction can be done through

mobile phones as well.

4. Not only in Pakistan, MCB has also come up with an idea of introducingshares in LSE (London stock exchange).

5. Time and structure of repayment loan is also providing us the

competitive edge.

6. Our processing time and disbursement of loan is very flexible from

which student convenience is much higher than others.


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2. Situation analysis:

2.1 External analysis:

Industry Analysis:

Financial Sector in Pakistan possesses a wide spectrum of financialinstitutions, Commercial banks, specialized banks, national savingsschemes, insurance companies, development finance institutions,investment banks, stock exchanges, corporate brokerage houses, leasingcompanies, discount houses, micro-finance institutions and Islamic banks.

They offer a whole range of products and services both on the assets andliabilities side. Financial deepening has intensified during the last severalyears but the commercial banks are by far the predominant playersaccounting for 90 percent of the total financial assets of the system.Among the commercial banks, 12 foreign and 20 domestic banks togetherhold 80 Percent of the banking system assets - a feat that is unparalleledamong developing countries. Foreign banks enjoy the same facilities andsame access as the domestic banks and there is no preferential treatmentfor domestic institutions. Unlike many countries, foreign banks can have100 percent ownership, can open their branches or establish localsubsidiary with full ownership. Foreign companies are also provided levelplaying fields as they can raise finances of all types and tenures from thedomestic banking system.

Pakistan Banking overview:

The Banking sector is an integral part of the countrys financial servicesindustry. The sector witnessed a phenomenal growth in 2005-07 wheredeposits rose by almost 100%. There are 39 scheduled banks (including11 foreign banks) operating in Pakistan. Competition is relatively high,especially after the challenging capital adequacy benchmarks set by theState Bank of Pakistan to nourish a stable banking system. Attractingforeign investment and winning profitable customers are the only optionsleft to banks for survival.Opportunities for foreign banks, especially in consumer and retail banking,are greater than ever before. In the financial year of 2007-08, the bankingsector experienced growth rates of 21% and 36% in its deposit andadvances portfolio respectively, which in turn, has increased the banksstability as compared to the preceding year. A significant shift of focusfrom industrial lending to consumer products has allowed the banks toenjoy enormous spreads. However, the manufacturing sector is stillenjoying the highest share in credit facilities extended by the bankingindustry.

The industry is passing through a transitional period from long establishedpatterns and norms to the unknown land of threats and opportunities.


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Structure of the banking sector:

Structure of the Pakistani banking sector has substantially changed in the

last decade, particularly following the privatization of the state-ownedbanks. In 1990, the banking system was dominated by five commercialbanks which were all state-owned. The 1990 amendments to the BankingCompanies Ordinance launched the process of financial sector reforms byallowing privatization of the state-owned banks. During the first round of reform, two of the state-owned banks, Muslim Commercial Bank (MCB)and Allied Bank (ABL), were privatized between 1991 and 1993. Thereforms process was subsequently delayed for several years and resumedsignificantly only in the early 2000s. With the privatization of the thirdlarge bank, United Bank (UBL), in 2002, the domination of the state-ownedbanks was ended. As of September 2003, the asset share of local privatebanks and public sector commercial banks was 47 percent and 41 percent

respectively.Another large state-owned bank, Habib Bank (HBL), completed itsprivatization n process in February 2004. As a result of this privatization,the share of banking system assets held by public sector commercialbanks decreased to less than 25 percent. The largest bank in the country,National Bank of Pakistan (NBP), with a market share of approximately 20percent, remains state-owned and its privatization prospects are uncertainat this stage, although the government divested approximately 25 percentof its capital in 2001-03.

The privatization of state-owned banks has been accompanied by theliberalization in the financial system and the openness to domestic andforeign competition. The number of commercial banks and various

nonblank financial institutions grew rapidly in the early 1990s (the numberof commercial banks increased to more than 40 by the year 1995).Worried by the health and soundness of the newly entering smaller banks,the authorities imposed a cessation on the establishment of new banks in1995, which still remains in force. In addition, the authorities sought toconsolidate the banking sector by increasing the minimum capitalrequirement from PRs 500 million to PRs 750 million from end-December2001 and to PRs 1 billion (around US$17 million) from end December2002.Efforts have been made in recent years to promote Islamic bankingservices. In particular, the State Bank of Pakistan (SBP) exempted Islamiccommercial banks from the moratorium on the establishment of new

banks, and the first full-fledged Islamic bank, Meezan Bank, was licensedin 2002. Several conventional banks have also opened branches thatprovide only Islamic financial services.

Competitive analysis:


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There are 39 banks currently operating in Pakistan. However, there areonly 4 competitors of MCB. These include ABL, UBL, NBP and HBL. Thecompetitor analysis has been done using graphs and charts in thefollowing pages. The description of 2 banks is also given below.


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Market share of banks in Pakistan (2007)


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1. Increasing diversity within the commercial banking industry

Diversity is making the head way at a rapid speed pattern of operations,market focus, advertising emphasis and use of information technology. Nowthe banks are inclined to build their organizations to look different from theirmarket competitors by pursuing divergent and distinctive strategies and byintroducing novel products and services through product differentiation.

2. Intensifying pressure of competition

Competition is scaling new heights in the banking industry and it will gainfurther force. A number of factors are expanding the frontiers of competitionin both funding and asset use. Competition for all kinds of savings willcontinue to deepen and broaden but constant consumer awareness aboutdifferent markets; situations and alternatives will surely block the capacity of banks to collect savings at lower rates than said by their aggressive marketcompetitors. On the other hand, market pressures will compel the banks to

make loans in unknown areas loosening the rope of risk management

3. Profit trends in banking industry

Current key ratios indicate a striking upward trend in the banking industrywith huge banking spreads, particularly during the last half decade.

4. Soaring loan losses

Provision for loan losses is on the rise over the years. Troubled loans or nonperforming advances are regarded as a cancer for banking industry. It can besaid that quality loans is the ultimate goal for bankers today.

5. Merger mania

Merger game is going to take front seat in the world. A craze for giant banksis developing to benefit effectively from the future market openings and totame ever increasing competition. But there are inherent constraints in thismania. The economies of scale vanish automatically after a certain level of expansion in the banking industry.


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Market analysis:

Porter five forces model:

1.Threat of new entrants:

The threat of new entrants is very low, as all of the commercial banksalready operating in Pakistan can introduce this offer.

2.Bargaining power of customers:

The bargaining power of customers for this industry is very low, as thecustomers are in need for any such package thatll satisfy their needs, andfor this their bargaining power is very low.

3.Bargaining power of suppliers:

The teaching institutes are the suppliers in this case and their bargainingpower is low in this case as more student loans shall result in more

BargainingPower of customer

BargainingPower of supplier

Threat of

substituteproducts or

services

Rivalry

Threat of newentrants


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students footfall in the institutes, which on the end of the day will turn inmore revenues for the universities.

But some of the institutes have high bargaining power, such as UMT, asthey on their own are giving away student loans, on easy installments and

that also without any interest.

4.Threat of substitute products:

The threat for substitute product is low in this case, the substitute productbeing offered for this currently is easy loans or discounts being offered byeducational institutes, which in long term is not sustainable at all.

5.Rivalry:

The level of competition in this segment is medium, although there is no

such direct competition, but as they are offering this loan at interest rateand NBP is offering the loan at no interest basis, but still they are facing alot of difficulties in gaining the market share due to their poor strategicstance.

Environmental analysis:

PESTPakistan being a developing country and having a relatively low level of income, is required growth rate is low as there is hardly any savings. Thestandard of living along with the quality of life is the newer concept inPakistan which emphasizes on individual aspects of human nature. Thesehave led to foreign aids which have been the holding force to bridge the gapfor us between our savings and investments. Nevertheless, these aids havebecome the drowning force for our country. By virtue of being a member of the most western aid consortium, the famous IMF occupies a pivotal role inour economies sphere by influencing our international financial transactionsand creates the pace of our development policies. IMFs main objective forPakistan is to maintain stable exchange rates, multi lateral credit system andinternational liquidity so as to recover the country from its worst economiccrisis. But Pakistans economic problem can mainly be aspired by internaldevelopment and avoidance of any major international role.

Political:

The current weak political scenario of the country has already led infleeing of many investors

The weak, unfaithful leadership has made the country to come at abackward and defensive stance in the world


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The current war against terror has badly reputed our image worldwideand also its relations with the business community.

Economical:

The uncertain economic conditions have also badly affected theindustrial and the business sector, as stable economic indicators aredirectly proportional to the investment being done

The current warfare against terrorism has badly shattered the trust of the investors and most of them are withdrawing from expandingfurther or investing more into the market.

National income & GDP is recessive as well There is an economic recession globally.

Social:

Social factors are also the major factors affecting any organization, andspecially if operating in an environment which has influence of conservatives, extremists, seculars all in one

It becomes really easy to mould the minds with an average literacyrate of 37.6% in any desired direction

Most of the companies use this to falsely propagate against theircompetitors most of the time.

People are much conscious about brands now in Pakistan.

Technological:

Pakistan has a significant importance geographically being in the heartof South Asia

And it is already on its way to becoming an international hub for tradeand commerce

Technology is advancing and in these conditions the introduction of student loans, if made available nationwide shall result in highcustomer attraction.

2.2 Internal analysis:SWOT ANALYSIS

STRENGTHS

1. MCB has the highest ROE amongst its competitors

2. MCB has the highest Net Interest Margin compared to HBL, NBP, etc.


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3. It has lowest average deposit rates.

4. It has a high consumer loan growth rate.

5. It has an extensive branch network

It has AA+ rating for long term and A1+ for short term by PACRA showinghigh credit quality and low credit risk.

OPPORTUNITIES

1. MCB can focus on consumer banking to increase yields2. It can work to improve the conditions of NPLs3. During recession, it can take advantage of decreased Cash Reserve Requirement.4. It can expand its Islamic banking.5. M.C.B has an opportunity to work with education institutions

WEAKNESSES

1. It has an increasing rate of NPLs (from 4.67% to 6.69%).2. Its EPS growth rate is decreasing over the past years.3. Does not have international recognition.4. Though its investments are increasing but 40% are confined to investment in

government securities only. This reduces its returns.

THREATS

1. MCB has threat from banks like UBL which has 67% low cost deposit base2. It also has threats from banks including NBP and UBL that are increasing their

branch network to encourage deposit raising.3. Threats from Government if it raises CRR and SLR.4. It has threats from Al-Falah and UBL as far as Car Financing is concerned

Similarly NBP is a threat in house financing.


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Current strategySegmentation:

In this project we have divided the market into four different segments which

are based on government institutions, semi government institution, privateand foreign universities. In the we will focused on government and semigovernment institution to facilitate the students regarding to the hurdleswhich they face to full fill their academic career.

Target market:

In the introductory phase we will target the major cities of Pakistan likeLahore, Karachi, Islamabad, Faisalabad and Peshawar. Our target market isbased upon the students of graduation and post graduation. We will facilitatethem not only in their tution fee but also in their other expenditure like

laptops, medical equipments.etc

Approved courses;

1) Medical

2) Engineering

3) Management

4) Commerce

5) Business & Economics6) Accounting & finance

7) Arts

8) Fashion designing

9) Mass communication

Loan amount:

Our loan amount starts from 50000-700000 and the interest rate will chargefrom 10%-18% annually and it will depend on the amount borrowed.

Rate of interest:

10% to 18% annually.

Fee structure:


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1) Based on educational institution

2) Annually

3) Semi annually

4) Trimester

5) Quarterly

Terms & conditions:

Terms and conditions are varied from loan amount.

1) Previous documentation plugged

2) Three person referential undertaking

3) 70% above mark sheet in previous class4) Father NIC copy with written undertaking

5) Submission of original papers of the valuable assets. (if required)

Pay back Time period:

Varies from the loan amount and degree time duration.

m.c.b final draft

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