Annual Report 2006 Smooth sailing all the way Full steam ahead MCBs leadership - steering customers through new waves of success. Annual Report 2006 Taking command of every situation command Taking It comes from pLanning ahead of time It comes from kEeping a steady course It comes from tAking on challenges It comes from aDding value to our service It comes from sEcuring common interests It comes from bRidging the distances It comes from aSsociating with you 03 Annual Report 2006 Navigating to achieve consistent success consistent toachieve Navigating Vision Challenging and Changing the way you bank Mission MCB Banks team of committed professionals is dedicated to maintaining long-term customer relationships through outstanding service and convenience Core Values Trust Customer Focus Innovation 05 Teamwork Achievement Social Responsibility Annual Report 2006 Shining throughShining matters it where matters, it when Corporate Information Board of Directors Mian Mohammad Mansha Secretary Chairman Tahir Hassan Qureshi S. M. Muneer Auditors Vice Chairman KPMG Taseer Hadi & Co. Tariq Rafi Chartered Accountants Shahzad Saleem Riaz Ahmad & Co. Sarmad Amin Chartered Accountants Mian Umer Mansha Legal Advisors Aftab Ahmad Khan Mandviwalla & Zafar Atif Yaseen Advocates & Legal Consultants Dr. Muhammad Yaqub Mohammad Aftab Manzoor Registered Office President & Chief Executive MCB Building, F-6/G-6, Jinnah Avenue, Islamabad. Advisor Raza Mansha Principal Office MCB Tower, Audit Committee I. I. Chundrigar Road, Karachi. Dr. Muhammad Yaqub - Chairman 07 Tariq Rafi - Member Registrar's and Share Registration Office Main Umer Mansha - Member THK Associates (Pvt.) Ltd., Aftab Ahmad Khan - Member Shares Department, Ground Floor, State Life Building No.3, Chief Financial Officer Dr. Ziauddin Ahmed Road, Karachi. Ali Munir Annual Report 2006 We give direction to your financial vision toyourfinancial direction We give Contents 16 Directors' Report to Members 99 Pattern of Shareholding 20 Six Years Progress 102 Categories of Shareholders 22 Statement of Compliance with the 103 Notice of Annual General Meeting Code of Corporate Governance 106 Directors' Report on 23 Auditors' Review Report to the Members Consolidated Financial Statements 24 Auditors' Report to the Members 107 Auditors' Report to the Members 25 Balance Sheet 108 Consolidated Balance Sheet 26 Profit & Loss Account 109 Consolidated Profit & Loss Account 27 Cash Flow Statement 110 Consolidated Cash Flow Statement 09 29 Statement of Changes in Equity 112 Consolidated Statement of Changes in Equity 31 Notes to the Financial Statements 114 Notes to the Consolidated Financial Statements 98 Branch Network 171 Form of Proxy Annual Report 2006 Guiding you to the shores of security shores youtothe Guiding Management Committee (left to right) Mohammad Aftab Manzoor, Ali Munir, Ali Muhammad Mahoon, Aamer Hassan Zaidi, 11 Tahir Ayub, Tahir Hassan Qureshi, Salman Ahmed Usmani, Shahid Sattar, Agha Saeed Khan, Sadia P. Saeed. Annual Report 2006 Board of Directors (Starting from the top) Mian Mohammad Mansha, (from left to right) S. M. Muneer, Dr. Muhammad Yaqub, Mian Umer Mansha, Shahzad Saleem, Atif Yaseen, 13 Tariq Rafi, Sarmad Amin, Aftab Ahmad Khan, Mohammad Aftab Manzoor. Products and Services The largest network of over 600 online branches in the country and growing. Providing customers with 24/7 real time online transaction facilities. Enjoy the convenience of extended banking hours from 9 to 5, even on Saturdays. To satisfy your banking needs at all MCB Full Day Banking branches across the country we now serve you a wide range of services throughout the day. A deposit account for customers with substantial balances, offering profit on a daily product basis with the facility of unlimited withdrawals. MCB Special Rupee Term Deposits MCBs Special Rupee Term Deposits offer a very attractive long-term investment option with ease and convenience. Tenure options available are of 3 months, 6 months, 1 year, 3 years and 5 years. You can also avail a credit facility up to 75% of your total deposit. LOCKERS The best protection for your valuables. Lockers of different capacities are available nationwide. International remittances with a two-way messaging facility delivered at your door-step within 24 to 72 hours. MCB Islamic Banking provides Riba Free and Shariah Compliant solutions to various customer segments in a growing number of cities. With the help of Shariah Specialists, lawyers and Professional Commercial Bankers, we have the best solutions to cater to your needs - the Islamic way. MCB Smart Savings Account gives you the optimum value you deserve. A savings account where not only you get a competitive return but also enjoy unlimited number of fringe benefits. VIRTUAL INTERNET BANKING MCB provides the convenience of banking on the internet. Whether at office, home or traveling log on to www.mcb.com.pk and enjoy 24-hour access to all your accounts at MCB for the largest array of services such as Inter Bank Funds Transfer, Utility Bill Payments, Mobile Top-ups and many more. Theres no easier way to bank than the new enhanced MCB Call Center, which blends innovation and convenience to provide you banking services that go beyond your expectations. We make sure your banking needs are met 24/7 from the comfort of your very home because we at MCB, are just a call away! MCB Personal Loan is simply a clean cash facility extended for personal use. It offers a fixed installment loan Annual Report 2006 that provides you access to cash instantly without any collateral. Financing available is up to 5 years for amount up to Rs. 1 million. A suite of Classic and Gold Credit Cards focusing primarily on providing convenience, safety, shopping pleasure and security giving a different feel to the world of Credit Cards through innovative features. These unique features include i-revolve which makes the variable mark-up rate available to you upon revolving and is the first of its kind in Pakistan. Other ad-ons include comprehensive insurance plans, installment plans, reward points, upfront loyalties and much more. Banking at your finger tips. SMS anytime to get information regarding balance and mini statements. The nations largest network of over 260 ATMs and still growing. Get 24-hour convenience of cash withdrawal, mini-statement, utility bill payment, funds transfer services and much more. MCB on wheels. Now not only do you get a world class banking service but we make sure of your convenience. Our new classy mobile ATMs ensure that you are given a service closer to you. MNET is an electronic hub for ATM sharing plus other touch points. Members include 16 local and foreign financial institutions enjoying ATM sharing and bureau services. SmartCard A secure instrument of payment providing Cash Free Convenience. It is more than just an ordinary Debit Card offering customers the peace of mind through unmatched and convenient services including easy bill payments, funds transfer, 24-hour cash withdrawal, balance inquiry and unlimited shopping pleasure. MCB Business Sarmaya is a Running Finance facility against your residential property. It offers Running Finance up to 20 million with low mark-up and BTF facility at competitive rates. Corporate Financing Providing access to diversified financing options, including working capital loans, term loans, trade finance services and investment banking. Instant Financing Get a loan instantly at any MCB branch. Offering same day financing facility against liquid collateral at competitive pricing. Rupee Travelers Cheque A safe and secure way to make payments nationwide. MCB Rupee Travelers Cheque, being the market leader, is the most widely accepted way to pay cash for travel-related purposes. easy billpay MCB Easy Bill Pay is an easy solution to pay your Utility and Mobile Phone bills. MCB ATM Card or MCB SmartCard holders can easily pay their bills through MCB ATMs, MCB Virtual-Internet Banking and MCB Call Centre with security and peace of mind. MCB Pyara Ghar is an ideal Home Finance product that lets you purchase, renovate or construct your home the way you have always wanted. Financing available is up to 20 years for amount up to Rs. 20 million. MCB CAR4U Auto Finance is your power move that gets you not only a car of your own choice but leads you to the best in life. It is affordable with competitive mark-up, flexible conditions, easy processing and above all, 15 no hidden costs. MCB Sabzazar is an agricultural financing scheme for farmers that offers two financing plans, MCB Shadabi SSabzazarabzazar Plan for short-term financial needs and MCB Khushali Plan for long-term financial requirements. Directors Report to Members I am pleased to place before you, on behalf of the Board of Directors, During the year, your Bank maintained its strategy of concentrating on the 59th annual report of your Bank for the year ending December 31, growth while placing its customers at the centre of its activities. This 2006. was achieved with the consistent dedication shown by our teams of committed professionals in all divisions. Long-term customer relations Economy have been developed through enhancement in service quality, growth in branch networking, investment in technology & people and Pakistan's economy turned in a strong performance for yet another year, improvement in Risk Management processes. recording real GDP growth of 6.6% for the fiscal year 2005-06. This was achieved due to the proactive economic policies of the Government, Challenging the status quo to anticipate future needs, your Bank resulting in broad based advancement in the services sector supported continued to deliver innovative solutions to meet the requirements by growth in Large Scale Manufacturing as well as expansion in trade of the growing number of customers. In the process, the Consumer and private investment. The telecom, banking, auto and retail sectors segment of the Retail Banking Group successfully launched Pakistan's performed particularly well. The economy thus presented outstanding first EMV Compliant Chip Credit Card and re-introduced the Personal opportunities to businesses and consequently attracted substantial Loans.