Académique Documents
Professionnel Documents
Culture Documents
On
Bank Fund management
Course Code: FIN-435
Submitted to:
Sabrina Akhter
Lecturer
Department of commerce
Faculty of business & economics
Daffodil International University
Submitted by:
Mustak Ahmed 081-11-047
Md. Emanul Islam 081-18-1099
Md. Aminul Islam 062-18-913
Md. Tafiqul Islam 073-11-2224
Masum Kamal 072-11-1943
1
Acknowledgement
All praises to the Almighty Allah for enabling to complete our “Term Paper” with good
and sound health.
At this point, we would like to acknowledge some of people who have made a
major contribution to it preparation. It will be great achievement for us that our
honorable teacher Sabrina Akhter Lecturer, Department of Commerce,
faculty of Business & economics. Daffodil international University has given
necessary suggestions for preparing our Term Paper.
We would like to thank Hafiz Md.Shalauddin who helps us to prepare this term
paper.
2
Letter of Transmittal
Dear Madam
We submit here our report as you assigned us to prepare. You asked us to
prepare a report on “Performance evalution & Fund Mangement of Prime Bank
Ltd , Shahjalal Islami Bank LID IFIC Bank Ltd”.This report paper has helped us to
increase our understandability on business. During preparing this report paper we have
enforced our best effort. Surely it enriches our knowledge and promotes our study. We
have also learned much about the dynamic business world previously unknown.
Thank you for giving us such an opportunity for working on the tropic. We will be
honored to provide you any additional information, if necessary.
Sincerely yours,
3
Executive Summary
In BBA program one of the important parts of each course is to prepare a report on the
assigned topic related to the course.
4
Objective
To assist the genuine and capable entrepreneurs for acquiring Capital Machinery
and Equipments to undertake enterprises without equity.
5
Scope
The main purpose of the report is to show the Performance evalution & Fund
Mangement of CB So, we had opportunity to work on to “Performance evalution &
Fund Mangement of commercial Bank in BD.
6
Methodology
Methodology of the report is mainly based on collection of the Primary & secondary
as well as using appropriate method for estimating different issues not mentioned
therein.
Data Collection
Deferent types of secondary data are used in this analysis with a view to making the
report preparation worthwhile. In doing so, relevant information have been taken
from,
7
Origin of the report
This report has been prepared as a requirement of the course curriculums, as a part of
course no (FIN-435). The report title is the “Performance evalution & Fund
Mangement of Shahjalal Islami Bank Ltd., IFIC Bank Ltd course started on January
2011 and report submitted on April118, 2011. Our honorable course teacher Sabrina
Akhter lecturer, Department of commerce,faculty of business & economics, Daffodil
International University (DIU) assigned the report.
8
Limitation
Large-scale research was not possible due to constraints and restrictions post
by data limitation,
Some important information could not be exposed for the lack of authorization.
9
Company Profile
History of the Prime Bank ltd
Prime Bank started its journey in the year 1995 with the firm commitment of excellence
customer service with a Difference. Its vision remained to be the best private commercial bank in
Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management and
profitability. Having recorded progress in all areas PBL has now established itself as the leading
and strongest of
Private commercial banks in Bangladesh. PBL was formally launched in April 1995 with one
branch at Motijheel Commercial Area, Dhaka. It started its Islamic
Banking operations in December of the same year. It was listed with both the bourses of
Bangladesh viz. Dhaka Stock Exchange and Chittagong Stock Exchange in 1999 through initial
public offering. It was registered as Merchant Banker with the Securities and Exchange
Commission, Bangladesh in 2000 for starting its Investment Banking and Advisory services. In
2003 PBL became primary dealer for buying and selling securities under the license issued by
Bangladesh Bank.
10
For our Customers
To provide the most courteous and efficient service in every aspect of its business.
By forging ahead and consolidating its position as a stable and progressive financial
institution
By generating profits and fair return on their investment
For our Community
11
Part-1
Performance Analysis
The bank’s performance has been exemplary in its limited history given the
Challenging operating environment and the track record of most other banks in
The system.
Risk Assessment: Six types of risks are given below:
Credit Risk
Liquidity risk
Market Risk
Interest Risk
Earnings Risk
Solvency Risk
Credit Risk: Credit risk is an investor's risk of loss arising from a borrower who does
not make payments as promised. Such an event is called a default. Another term for credit
risk is default risk.
Provision for loan loss
Ratio =
Total loan & lease
1933702561
In 2009 = ×100
89252220000
= 2.16%
1774225560
×100
In 2008 = 75156210000
= 2.36%
12
Shahjalal Islami Bank Ltd.
80000000+125000000
In 2009 = ×100
43958260711
= .47%
500000+140000000
In 2008 = ×100
32918773668
= .44%
IFIC Bank
310000000
In 2009 = ×100
37793886723
= .82%
305000000
In 2008 = ×100
33018385382
= .92%
13
Liquidity risk: the danger of not having sufficient cash and borrowing capacity to
meet depositors withdrawals loan damnd & cash needs.
Purchased fund
Ratio = ×100
total assets
47664000000
×100
In 2009 = 124806380000
= 3.19%
3534307999
×100
in 2008 = 110437100000
= 3.20%
43753260711
In 2009 = ×100
58920895401
= 74.26%
32773773668
In 2008 = ×100
44109502922
= 74 .30%
14
IFIC Bank
37483886723
In 2009 = ×100
62901864980
=59.6%
32713385382
In 2008 = ×100
45729473190
= 71.54%
15
Market Risk: Market risk is the risk that the value of a portfolio, either an
investment portfolio or a trading portfolio, will decrease due to the change in value of
the market risk factors.
Banks book value of assets
Ratio =
Market value of assets
11745398000
×100
In 2009 = 23212109000
= 50.60%
6696747000
×100
In 2008 = 15349141
= 43.63%
Interest Rate Risk: Interest rate risk is the risk (variability in value) borne by an
interest-bearing asset, such as a loan or a bond, due to variability of interest rates. In
general, as rates rise, the price of a fixed rate bond will fall, and vice versa. Interest
rate risk is commonly measured by the bond's duration.
7294428427
×100
In 2009 = 7138749421
= 102.18%
16
7801258015
×100
In 2008 = 7861245879
= 93.34%
47441407393
In 2009 = ×100
47459231493
= 99.96%
34062963068
In 2008 = ×100
34279739993
= 99.37%
IFIC Bank
46876837867
In 2009 = ×100
50017960808
= 93.72%
38248269634
In 2008 = ×100
17
36092169540
= 105.9%
Earnings Risk: the danger that banks rate of return on assets or equity or net
earning may fall.
Solvency Risk: Solvency risk is the risk that a creditor will lose his entire
investment if a debtor cannot repay him in full, even if all the debtor’s assets are
liquidated. Traders call this counterparty risk.
Ratio analysis
PrimeBank
Profitability ratio:
2823473302
×100
In 2009 = 124984702326
= 2.26%
1231832174
×100
In 2008 = 110437103311
= 1.12%
18
1070568293
In 2009 = ×100
58920895401
= 1.82%
817709533
In 2008 = ×100
44109502922
= 1.85%
IFIC Bank
899518416
In 2009 = ×100
62901864980
=1.46%
657310698
In 2008 = ×100
45729473190
= 1.44%
Interpretation:
19
Return on asset (ROA) is primarily and indicators of managerial efficiency, it indicates
how capably the management of the bank has been covering the institutions asset into net
earnings.
2823473302
×100
In 2009 = 11796677214
= 23.93%
1231832174
×100
In 2008 = 6696770778
= 19.74%
1070568293
In 2009 = ×100
4926633268
= 21.73%
817709533
In 2008 = ×100
3605440674
= 1.85%
IFIC Bank
20
4899418416
In 2009 = ×100
4197456238
=21.43%
657310698
In 2008 = ×100
3196727045
= 20.56%
Interpretation:
ROE is a measure of rate of return flowing to the bank shareholders. It approximates the
net benefit that this shareholders have received from investing there capital in the bank.
(That means placing there funds at risk in the hope of earning a suitable earning profit
10856114605−8426000000
×100
In 2009 = 124984702326
= 1.94%
9095891683−7126000000
×100
In 2008 = 110437103311
21
= 1.78%
1330603851
In 2009 = ×100
58920895401
= 2.26%
1273775380
In 2008 = ×100
44109502922
= 2.89%
IFIC Bank
1102178581
In 2009 = ×100
62901864980
=1.75%
1168701198
In 2008 = ×100
457294473190
= 2.55%
22
Interpretation:
Net interest margin is measure of efficiency indicating how well mgt and staff have been
able to kept the growth of reserves (which come primarily from the banks loan,
investment and service fees) ahead of raising cost (principally the interest on deposit and
money market borrowings and employee salaries and benefits) It measures how large a
spread between interest revenue and interest cost management has been able to achieve
by close control over the banks earning asset.
Prime Bank
5790000000−2907000000
×100
In 2009 = 124984702326
= 2.31%
3808000000−1931000000
×100
In 2008 = 110437103311
= 1.69%
IFIC Bank
1959518416
In 2009 = ×100
23
62901864980
=3.11%
1622310698
In 2008 = ×100
457294473190
= 3.55%
Interpretation:
The Non Interest Margin measures the amount of non interest revenue steaming from
deposit service charges and other service fees the bank have been able to collect(called
fee income) relating to the amount of non interest cost incurred including salaries and
wages, repair and maintenance cost on bank facilities and loan loss expenses. For most
banks, the non interest margin is negative.
2823473302
In 2009 = 36045878
= 78.33 Tk.
24
1231832174
In 2008 = 28047181
= 43.92 Tk.
IFIC Bank
In 2009 = 51.58Tk.
Interpretation:
EPS is a measure of efficiency indicating how much a share of a particular economy can
earn from is net profit. Here 1 share of this bank earns in 2007 tk. 61.57, in 2008 is tk.
43.92 & in 2009 is tk. 78.33 from its profit.
25
8262859422
×100
In 2009 = 124984702326
= 6.61%
5819245747
×100
In 2008 = 110437103311
= 5.27%
2916761866
In 2009 = ×100
58920895401
= 4.95%
2322991357
In 2008 = ×100
44109502922
= 5.27
IFIC Bank
3724356154
In 2009 = ×100
62901864980
26
=5.92%
3179603897
In 2008 = ×100
457294473190
= 6.95%
Interpretation:
AU is a measure of asset mgt efficiency it reflects portfolio mgt policies, specially the
mix and yield on the bank assets. By carefully allocating the banks assets to the highest
yielding loans and investments while avoiding excessive risk management cab raise the
banks average yield on its assets.
Prime Bank
Total assets
7. the degree of equity multiplier(EM) =
Total equity
124984702326
In 2009 = 11796677214
= 10.59
110437103311
In 2008 = 6696770778
= 16.49
27
Shahjalal Islami Bank Ltd.
58920895401
In 2009 =
27401287
= 2150 Tk.
44109502922
In 2008 =
27403134
= 1609 Tk.
IFIC Bank
62901864986
In 2009 =
17439286.86
=3606 Tk.
45729473190
In 2008 =
17439923
= 2622 Tk.
28
Interpretation:
EM or the employment of financial leverage to raise net earnings for this stakeholders it
reflects leverage or financing policies, choosing the sources of financing debt or equity.
The multiplier is a direct measure of this banks degree or financial leverage-how many
dollars of asset must be supported by each dollar of equity capital and how much of the
banks resources therefore must rest on debt because equity must absorber losses on the
bank assets, the larger the multiplier, the more exposed to failure risk the bank is however
the larger the multiplier the greater the banks potential for high return for its stoc
Stock valuation
In financial markets, stock valuation is the method of calculating theoretical values of
companies and their stocks. The main use of these methods is to predict future market
prices, or more generally potential market prices, and thus to profit from price movement
– stocks that are judged undervalued (with respect to their theoretical value) are bought,
while stocks that are judged overvalued are sold, in the expectation that undervalued
stocks will, on the whole, rise in value, while overvalued stocks will, on the whole, fall.
D1
Po=----------------------
R-G
Here,
P = Current mkt price of stock
D =D (1+g) Current year Dividend
P=Discount Rate
G=Growth Rate of dividend
CAMELS RATING
29
1. Capital Adequacy = ×100
Total Risk weighted Asset
Tier I + Tier II
=
Total Risk weighted Asset
9057000000+3112000000
×100
In 2009 = 82710000000
= 14.71% Rating-1(strong)
6265000000+1594000000
×100
In 2008 = 72253000000
= 10.17% Rating-1(strong)
4926633268
In 2009 = ×100
38832820000
= 12.67% Rating-1(strong)
30
3605440674
In 2008 = ×100
29463930000
= 12.24% Rating-1(strong)
IFIC Bank
4197456238
In 2009 = ×100
36521634500
=11.49% Rating-1(strong)
Classified Loan
2.Asset Quality Ratio = ×100
Total loan
1144100000
×100
In 2009 = 89252220000
= 1.29% Rating-1(strong)
1322600000
×100
In 2008 = 75156210000
= 1.76% Rating-1(strong)
31
596700000
In 2009 = ×100
43958260711
= 1.36% Rating-1(strong)
IFIC Bank
2320307000
In 2009 = ×100
37793886723
Prime Bank
1+1+1+5
3. Management Rating = 4
= 2 ( Satisfactory )
32
1+1+1+2
Management Rating = 4
= 1.25 Rating-1(strong)
IFIC Bank
1+3+1+1
Management Rating = 4
= 1.5 ( Satisfactory ) 2
Prime Bank
2823473302
×100
In 2009 = 124984702326
= 2.26% Rating-1(strong)
1231832174
×100
In 2008 = 110437103311
= 1.12% Rating-1(strong)
Shahjalal Islami Bank Ltd.
33
1070568298
In 2009 = ×100
58920895401
= 1.82% Rating-1(strong)
IFIC Bank
899518416
In 2009 = ×100
62901864980
=1.43% Rating-1(strong)
Prime Bank
Liquide assets
5. Liquidity ratio = ×100
Total Demand deposit
27600000
×100
In 2009 = 18629464838
18800000
×100
In 2008 = 13787934249
34
= 0.14% Rating-5 (Unsatisfactory )
11600278117
In 2009 = ×100
47107812102
= 24.62% ( Satisfactory ) 2
IFIC Bank
46876837867
In 2009 = ×100
48738681486
=96.18% Rating-1(strong)
Prime Bank
1+1+1+5+2
In 2009 = 5
= 2 ( Satisfactory )
35
Shahjalal Islami Bank Ltd.
1+1+1+1+2
In 2009 =
5
= 1.2% Rating-1(strong)
IFIC Bank
1+3+2+1+1
In 2009 =
5
=1.6% 2 ( Satisfactory )
36
Part -2
Fund management
• Good franchise, growing customer deposits and satisfactory liquidity
Position
• Although reported capitalization appears adequate, the bank’s adjusted capital
Position is less healthy given the challenging operating environment, and
Injection of new capital will be credit positive.
Sources of Fund
Uses of Fund
Sources of Fund:
Capital
Deposit
Borrowing
Capital: capital is the first source of bank fund. Bank also collects fund through
selling of long term debentures .Generally, bank collects owners’ fund through issuing
shares. The more the shares are purchased by the shareholders, the more the capital is
collected.
Deposit:
deposit is the largest sources of bank find.it are assumed that a medium sized bank
collects 85%-95% of its funds through deposits. Deposits accounts can be classified into
three categories.
Current deposit account
Savings deposit accounts
Fixed deposit accounts
From the view point of bank fund management, the highest cost is involved in fixed
deposit accounts, but the banker gets more income from this account. On the other
37
hand cost of collecting current deposit account is almost zero. Saving deposit account
holds the futures of the both the previously mentioned both the types of accounts.
Thus from the saving account bank earns more than the current account but less than
the fixed deposit account
Borrowed Fund:
bank collects fund from both short term & long term borrowings, bank collects long tern
funds from long term borrowing by following contemporary rules & regulations. Long
term funds thus act as capital.
Uses of Fund: bank collect fund from deposit debt & capital including other
sources most of the collected funds when used able to earn profit. Fund is used for two
purposes one is loan & another is investment.
1. Lending function: bank uses most of the fund mobilized as loans & advance.
In develop countries 50%- 65% of fund of commercial bank are utilized from
extending loan & advance, but the same ranges from 65%-75% in the developing
countries. Loans are classified in two ways one for business such as investment or
working capital & another for non business. Such as car loan, house loan, medical
loan etc.
3. Cash assets function: cash assets indicate that portion of bank fund which is
used to maintain banks liquidity in different forms.
38
The assets in which funds are invested are:
4. Cash vault
5. Items in the process of collection
6. Balance with the central bank
7. Balance with sister banks
4. Other functions: for a new bank huge funds are used to purchase quality
equipments, technology, building office etc. in order create & impression that will
attract larger no. of customers. On the other hand exiting bank requires fund for
replacement, modernization or for maintenance purpose.
39
Findings & analysis
They provide ATM booth facility, but their ATM Booth Are not available in rural area.
They provide the most courteous and efficient service in every aspect of its business.
They try to innovative in the development of new banking products and services by
promoting their well-being through attractive remuneration and fringe benefits.By
promoting good staff morale through proper staff training and development, and
provision of opportunities for career development.
40
Conclusion & Recommendation
The Bank operates as a Scheduled Bank under a Banking license issued by Bangladesh
Bank, the Central Bank of the country. They play a great role in the economy of
Bangladesh. It grow up or spread in the local area and it rapidly make a good reputation
in the country. But if they follow some rule then their bank will be improve their
Rating.They should developed their internet fasilities for communicate with people.
41