Internship Report
on
“An Analysis of Financial Performance of BRAC Bank Ltd”
Supervised By:
Sk. Habibur Rahaman
Senior Lecturer
Manarat International University
Prepared by:
Al Sukran
ID-1413MBA50346
Manarat International University
Department of Business Administration
MANARAT INTERNATIONAL UNIVERSITY
Date of Submission: January 30, 2015
Internship Report
on
“An Analysis of Financial Performance of BRAC Bank Ltd”
Supervised By:Sk. Habibur Rahaman
Senior LecturerManarat International University
Signature of Supervisor
Prepared by:Al Sukran
ID-1413MBA50346Manarat International University
Department of Business Administration
MANARAT INTERNATIONAL UNIVERSITY
Date of Submission: January 30, 2015LETTER OF TRANSMITTAL
January 30, 2015
ToSk. Habibur RahamanSenior LecturerDepartment of Business AdministrationManarat International University
Subject: Submission of Internship Report on “An Analysis of Financial Performance of BRAC Bank Ltd”
Dear Sir,
With due respect to state that I am AL SUKRAN, ID-1413MBA50346 is a student of Masters of Business Administration of Manarat International University. I am delighting to submit here with a copy of internship report for your kind evaluation and appreciation.
I have given my best effort to prepare the report with relevant information that I have collected from BRAC BANK LTD and from other sources during my internship program. I have the immense pleasure to have the opportunity to study on “An Analysis of Financial Performance of BRAC Bank Ltd”. There is no doubt that the knowledge I have gathered during the study will help me in real life.
For your kind consideration I would like to mention that there might be some errors and mistakes due to limitations of my knowledge. I hope that you will forgive me considering that I am still learner and in the process of leaning.
Thanking for your cooperation.
Sincerely
………………………………………….Al SukranID-1413MBA50346Major in AccountingDepartment of Business AdministrationManarat International University
DECLARATION
I do hereby solemnly declare that the work presented in this Internship Report has been
carried out by me and has not been previously submitted to any other University College /
Organization for an academic qualification / certificate / diploma or degree.
The work I have presented does not breach any existing copyright and no portion of this
report is copied from any work done earlier for a degree or otherwise.
I further undertake to indemnify the Department against any loss damage arising from breach
of the foregoing obligations.
…………………………. …………….Al Sukran ID-1413MBA50346 Department of Business Administration Manarat International University
SUPERVISORS CERTIFICATE
This is to certify that the Internship Report on “An Analysis of Financial Performance of
BRAC Bank Ltd” in the bona-fide record at the report is done by AL SUKRAN bearing
ID-1413MBA50346 as a partial fulfillment of the requirement of Master of Business
Administration (MBA) from the Business Administration Department of Manarat
International University.
The report has been prepared under my guidance and is a record of bona fide work carried
out successfully.
……………………………… Signature of the Supervisor ………………….. Date
ACKNOWLEDGEMENT
First of all, I would like to express my deep gratitude to the Almighty Allah for fruitfully
preparing this Internship report.
I uttered a wholehearted thankfulness to my supervisor Sk. Habibur Rahaman, Senior
Lecturer, Department of Business Administration, Manarat International University (MIU)
who has given me the opportunity and directions to prepare such a meaningful thesis paper. I
am so satisfied to work under her supervision and care. Also it would be rather incomplete
without express thanks my Internal and External Supervisions again & again.
It is my pleasure to them and my grateful appreciation goes to BRAC BANK LTD’s
authority for rendering me their expertise, knowledge and giving me the opportunity of
having a practical experience through this internship program.
I would like to show my gratitude towards MD. Enamul Haque, Manager of Pallabi SME
Branch, Md. Murad Hossain, Unit office of Pallabi SME Branch & all the staff of Brac Bank
Ltd, Pallabi SME Branch who co-operate with me friendly. They have explained everything I
asked for in details. Throughout time they were never impatience. They did not allow me to
feel uncomfortable for even a single moment. I am really grateful to all for their supportive
and friendly behavior.
EXECUTIVE SUMMARY
This internship report is prepared as a partial fulfillment for the MBA
program of the department of Business Administration under Manarat
International University. This report focuses working experiences in BRAC
BANK LTD. This report will give a clear idea about BRAC BANK LTD & its
Customer Services. The report contains two main parts.
In my first chapter I have explained about my given topic. Here, I have
discussed about Background of the Report, Object of the Report,
Methodology of the Report, Justification of the Report, Scope of the
Report, Structure of the Report & Limitations of the Report
In my second chapter I have tried to describe Literature Review of Brac
Bank Ltd.
In chapter three I have projected a short profile of Overview of the
Organization Background of BRAC Bank Ltd Capital Structure of BRAC
Bank Ltd Corporate Vision, Corporate Mission, Core Values, Management
of Organizational & Function of Organization, organizational structure.
In chapter four I have discussed Financial Performance of Brac Bank which
is including Different Types of Ratio Analysis, Ratio Analysis of BRAC BANK
LTD & Findings of Report.
In chapter five includes Recommendations, Conclusions.
TABLE OF CONTENTS
Contents PageCover Page
Title page
Letter of Transmittal i
Declaration ii
Supervisors Certificate iii
Acknowledgement iv
Executive Summary v
Table of Contents vi
Chapter 1
Introduction
1.1 Background of the Study 1
1.2 Scope of the Study 1
1.3 Objectives of the Study 2
1.4 Methodology of the Study 2
1.5 Instruments used for analysis 3
1.6 Limitations of the Study 4
Chapter 2
Overview of the Organization
2.01 Background of BRAC Bank Ltd 5
2.02 Capital Structure of Brac Bank Ltd 6
2.03 Board of Directors 7
2.04 Our Subsidiaries 8
2.05 Corporate Vision 9
2.06 Corporate Mission 9
2.07 Core Values 10
2.08 Management of Organizational 11
2.09 Function of Organization 12
Chapter 3
Analysis and Findings
3.1 Definition of Financial Ratio Analysis 15
3.2 Different Types of Ratio Analysis 15
3.3 Ratio Analysis of BRAC BANK LTD. 17
3.3.01 Current ratio 17
3.3.02 Operating Cash Flow Ratio 18
3.3.03 Cost Income Ratio 19
3.3.04 Total Asset Turnover Ratio 20
3.3.05 Investment to Deposit ratio 21
3.3.06 Debt Ratio 22
3.3.07 Time Interest Earned Ratio 23
3.3.08 Net Profit Margin 24
3.3.09 Return on Asset (ROA) 25
3.3.10 Return on Equity (ROE) 26
3.3.11 Earnings per Share 27
3.3.12 Cost of Fund 28
3.3.13 Credit Deposit Ratio 29
3.3.14 Return on Investment 30
3.3.15 Net Asset Value Per Share 31
3.4 Findings 32
Chapter 4
Recommendations & Conclusions
4.1 Recommendations 33
4.2 Conclusions 34
Reference 35
Appendix 36-40
CHAPTER 1
Introduction
1.1 Background of the Study
This is a report on my internship at BRAC BANK LTD this report details my experiences at
the company.
The internship and this report are part of my MBA requirements for the ACCOUNTING at
major at Manarat International University. As an accounting student I have to work with
accounting related topic. I discuss about An Analysis of Financial Performance of BRAC
Bank Ltd. So I analysis some data base on different ratio analysis.
1.2 Scope of the Study:
In spite of limitation I also got some facility to complete my internship report. The
employees whose held a responsible post in the entire department helped me lot. They gave
me all essential data and conversation with me. My university internship supervisor also
helped me a lot. He gave me a guidelines how to prepare my report more attractive and
perfect. This bank has given me the opportunity to observe the banking environment for the
first time indeed. I got an opportunity to gather experience by working in the different
departments of the branch under the supervision of different departmental heads.
1.3 Objective of the Study:
The objective of this study is to have a clear concept and some practical experience about
Financial Ratio Analysis Systems of an organization. However, we had some textbook
knowledge but had little in real life, practice so ever.
This report is designed to know more about the Financial Ratio Ananlysis of BRAC
BANK LTD. and analyze the ratio of this organization and identify the financial condition
of this organization. In addition, the study seeks to achieve the following objectives:
To analysis the Financial Statement of Brac Bank Ltd.
To calculate the financial ratios and identify the areas of concern.
To identify and assess the present Financial Ratio Analysis of Brac Bank Limited.
1.4 Methodology of the Study:
This report is prepared by two sources
Primary Sources.
Secondary Sources.
Primary Sources: Basically this type of Sources included working at bank and interviews
with others the bankers of BRAC BANK LTD.
Secondary Sources: Secondary data were collected in the following ways:
Data gathered within the organization itself.
Data gathered from Texts
Internet sources.
General reports
Annual reports
Official documents
Credit manual and foreign exchange manual of the bank.
1.5 Instruments Used For Analysis:
A. Ratio Analysis
B. Trend Analysis
A. Ratio Analysis: The quantitative (such as ratio analysis) tools are used to analyze the
gathered data & different types of computer software are used for reporting the gathered
information from the analysis such as- Microsoft Word, Microsoft Excel etc. Ratio can be
classified into four broad groups-
Liquidity Ratio.
Activity Ratio.
Debt Ratio.
Profitability Ratio.
B. Trend analysis: It is really important to analysis trends in ratios as well as their
absolute levels. This analysis informs us whether a company’s financial condition
improving or deteriorating.
1.6 Limitations of the Study:
In this report I have tried to use, as much as information possible but in some cases the
information were not enough. Lacking of some essential footnotes hampered our work in
some steps. The area of banking operating is very large. I had been working in this bank
about three months. This time is not enough to understand all the banking functions of
foreign exchange. Beside this, the employees were always busy under tremendous
workload. So, they could not able to extend their cooperation properly. I faced some
problems when I collect information about the organization because the information was
strictly private and confidential.
However the some of the limitations I have face while preparing this Report are listed as
follows:
Time Limitation: To complete the study, time was limited. It was really very short
time to know details about an organization like BRAC Bank Ltd.
Inadequate Data: Lack of available information about export & import business
operations of National Bank Ltd. Because of the unwillingness of the busy key
persons, necessary data collection became hard. The employees are extremely busy to
perform their duty.
Lack of Record: Large-scale research was not possible due to constrains and
restrictions posed by the organization. Unavailability of sufficient written documents
as required making a comprehensive study. In many cases up-to-date information was
not available.
Lack of experiences: Lack of experiences has acted as constraints in the way of
meticulous exploration on the topic. Being a member of the organization; it was not
possible on my part to express some of the sensitive issues. Lack of adequate
knowledge about export & import business of any organization.
CHAPTER 2
Overview of the Organization
2.01 Background of BRAC Bank Ltd
BRAC Bank Ltd is a scheduled commercial bank in Bangladesh. It established in Bangladesh
under the Banking Companies Act, 1991 and incorporated as private limited company on 20
May 1999 under the Companies Act, 1994. The primary objective of the Bank is to provide
all kinds of banking business. At the very beginning the Bank faced some legal obligation
because the High Court of Bangladesh suspended activity of the Bank and it could fail to
start its operations till 03 June 2001. Eventually, the judgment of the High Court was set
aside and dismissed by the Appellate Division of the Supreme Court on 04 June 2001 and the
Bank has started its operations from July 04, 2001.
Now, BRAC Bank Limited is one of the leading private banks in Bangladesh. BRAC
Bank has received the commercial banking license from Bangladesh Bank in 2001. Since
then it has established its name and branding with its quality of service and products. In a
very short time BRAC Bank became one of the successful and fastest growing private
banks in Bangladesh.
BRAC Bank is owned partially by BRAC, the largest non-government organization in the
world, International Finance Corporation (IFC), the private sector arm of The World Bank
Group, and Shore Cap International. The head office of the bank is situated at Gulshan,
Dhaka. BRAC Bank Ltd is operating its business in whole Bangladesh. BRAC Bank is
expanding its branch network rapidly throughout the country.
Currently, BRAC Bank Ltd has 157 Branches, more than 300 ATMs and 458 SME Unit
offices across the country. It has disbursed over BDT 10,000 crores of SME loan and has
over 500,000 individual customers who access online banking facilities. Its services cuts
across all strata of clientele are it corporate, retail or SME.
BRAC Bank LTD provides all sort of banking service to the mass people of Bangladesh.
Among them, BRAC Bank is well known for its SME Banking in Bangladesh.
2.02 Capital Structure of BRAC Bank Ltd
BRAC Bank has started with an initial capital of amount BDT 250 million, while the
authorized capital is BDT 1,000 million. Over time the bank has increased its capital base
because of its steady growth and within three years of operations, it has doubled its capital
base to BDT 500 million. BRAC Bank originated with Local and International Institutional
shareholding including BRAC as promoter with International Finance Corporation. Details
Capital Structure of recent Banking information is give below:
Name of Shareholder Total Shares % of Total Share
BRAC 316,598,451 44.64
International Finance Corp 38,002,483 5.36
Sir Fazle Hasan Abed 7,020 0.001
Mr. Syed Humayun kabir 7,020 0.001
Mr. A.S Mahmud 5,872 0.001
Mr. Faruq A. Chowdhury 5,872 0.001
Dr. Saleh Uddin Ahmed 4,825 0.001
Ms. Tamara Hasan Abed 5,872 0.001
Mr. Shib Narayan Kairy 5,341 0.001
Ms. Nihad Kabir 5,872 0.001
General Public 354,638,693 50.00
Total Paid-up Share 709,287,321 100.00
As on 04.06.2013
2.03 Board of Directors
Sir Fazle Hasan Abed, KCMG
Chairman
Muhammad A. (Rumee) Ali
Director
Shib Narayan Kairy
Director
Tamara Hasan Abed
Director
Nihad Kabir
Director (Independent)
Dr. Hafiz G.A. Siddiqi
Director
Zahida Ispahani
Director
Syed Mahbubur Rahman
Managing Director and CEO
2.04 Our Subsidiaries
BRAC EPL Stock Brokerage Limited
BRAC EPL Stock Brokerage Limited is one of the leading stock brokers in the country. BRAC EPL Stock Brokerage Limited has membership at both of the country's stock exchanges; the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE).
BRAC EPL Investment Limited
BRAC EPL Investment Limited delivers a whole range of Investment Banking services including traditional merchant banking activities such as Issue Management, Corporate Advisory, Corporate Finance, Underwriting and Portfolio Management.
BRAC SAAJAN Exchange Limited
BRAC Saajan Exchange Limited mainly provides remittance services to the large Bangladeshi Communities living in UK. Apart from its remittance services the Company also caters to the investment needs of the NRBs through its parent organization BRAC Bank.
bKash
bKash Limited (a subsidiary of BRAC Bank) operates with an objective to ensure access to a broader range of financial services (mobile fund transfer facility) for the people of Bangladesh. It has a special focus to serve the low income masses of the country to achieve broader financial inclusion by providing services that are convenient, affordable and reliable.
BRAC IT Services Ltd. (biTS)
BRAC IT Services Ltd. (biTS) is an IT Solution and Services company and is a subsidiary jointly owned by BRAC Bank and BRAC. biTS has been formed in 2013 through the merger of a subsidiary IT company. It strives to become the most trustworthy company in Bangladesh providing technology solutions and managed IT Services.
biTS provides end-to-end solutions for industries like Banks, Non-Banking Financial Institutes, Educational Institutes, Micro-Finance, NGOs, FMCG etc. It has a team of highly capable and professional individuals committed to deliver high productivity, efficiency as well as creativity. We are committed to help our customers to achieve operational efficiency through transforming their existing operations using our best value solutions and services.
2.05 Corporate Vision
Building profitable and socially responsible financial institution focused on Market and
Business with Growth potential, thereby assisting BRAC and stakeholders to build a just,
enlightened, healthy democratic and poverty free Bangladesh”.
2.06 Corporate Mission
Sustained growth in Small & Medium Enterprise sector
Continuous low-cost deposit Growth with controlled growth in retail assets.
Corporate Assets to be funded through self-liability mobilization. Growth in
Assets through syndications and investment in faster growing sectors.
Continuous endeavor to increase non-funded income
Keep our debt charges at 2% to maintain a steady profitable growth
Achieve efficient synergies between the bank’s branches, SME unit offices
and BRAC field offices for delivery of remittance and Bank’s other products
and services
Manage various lines of business in a full controlled environment with no
compromise on service quality
Keep a divers, far flung team fully controlled environment with no
compromise on service quality
Keep a diverse, far flung team fully motivated and driven towards
materializing the bank’s vision into reality
2.07 Core Values
Our Strength emanates from our owner - BRAC. This means, we will hold the following
values and will be guided by BRAC as we do our work.
Value the fact that one is a member of the BRAC family
Creating an honest, open and enabling environment
Have a strong customer focus and build relationships based on integrity,
superior service and mutual benefit
Strive for profit & sound growth
Work as team to serve the best interest of our owners
Relentless in pursuit of business innovation and improvement
Value and respect people and make decisions based on merit
Base recognition and reward on performance
Responsible, trustworthy and law-abiding in all that we do.
2.08 Management of Organizational
BRAC Bank Limited has two sets of reporting lines, one that reports directly to the MD and
another that reports to the DMD. MD is the representative of the Board of Directors as well
as responsible for all the business decisions taken by the bank. The Support Manager assists
him. Under him work the Heads of the Business and some of the Support Units. They are:
Head of SME Banking, Head of Retail Banking, Head of Corporate Banking, Head of
Probashi Banking, Head of Treasury & Financial Institutions, Head of Marketing &
Corporate Affairs, Head of Enterprise Risk Management, Head of Human Resources, Head
of Financial Administration,
Company Secretary & Head of Regulatory & Internal Control, Head of Impaired Assets
Management, Manager-Complaint Handling Cell & Credit Inspector. There is another part of
the Organ gram, which deals with the reporting line of Deputy Managing Director & COO.
This line constitutes of the Heads of the Support Units.
The Units are: Head of Retail Banking Operation, Head of Corporate Banking Operations,
Head of SME Banking Operations, Head of Probashi Banking Operations, Senior Manager-
Card Operations, Head of Business Solutions, Head of Technology, Head of General
Infrastructure Services, Head of Central Operations, Senior Manager-Call Centre, Senior
Manager, Project Admin, Service Quality, and Operations Risk Mgt. & Operations MIS.
2.09 Function of Organization
BRAC Bank has a centralized banking structure through online banking system that
resembles the ABN.AMRO Model. Overall, BRAC Bank is divided into three major units –
business unit, operations unit and support unit. All the functional divisions are discussed
below. Besides these divisions, there is another support division for infrastructural support of
BBL – Channel Infrastructure Development and one more operations divisions – General
Infrastructure Services. Among the functional units only five are business units and the rest
work as support units. They are:
Small and Medium Enterprise
Retail Banking
Corporate Banking
Probashi Banking
Other Functions
Small and Medium Enterprise:
The biggest operational division of BRAC bank is the SME (Small & Medium Enterprise)
Division. SME is directly related to business of the bank. BRAC Bank extends loans to
potential small and medium trading, manufacturing and service enterprises. This loan is able
to provide quick and quality banking services to targeted business at any places of the
country. Potential women entrepreneurs will also get the facilities of SME loan; this initiation
is to play a role in the socioeconomic development of the country by expansion of business
as well as creation of employment. BRAC Bank was titled to be the fastest growing bank in
2004 & 2005, and it had a profit of 14 crore taka. The profitability of the bank came mostly
from the SME sector. SME division is enriched with more than 700 staffs and it has 367 unit
offices all over the country.
Retail Banking:
Retail Banking is known as general banking where the individual customers get services time
to time from the local branches of the larger commercial banks. In BRAC Bank Retail
section has been divided into four parts –
Distribution – Serve the acquired customers
Sales – Business acquisition.
Non Funded Business, Alternate Delivery Channels, Priority Banking
Phone Banking
They are interdependent and work closely with each other. Retail offers different types of
competitive banking products to the customers. The retail division of the BRAC Bank also
offers some special types of deposits and loan scheme for the customer attention.
Corporate Banking:
Corporate department has also two different wings – Corporate Banking division & Cash
Management. Corporate Banking is a specialized area of BRAC Bank, which addresses the
diverse financial needs of Corporate Clients. This division exists to provide banking services
and financial partnership with local and foreign business houses (Public and Private Limited
Companies), NGO’s, trading houses, joint ventures and various government
bodies/corporations etc. As the financial partner of choice for the corporate sector, BRAC
Bank wants to be distinguished by its:
Quality of service
Value of innovative solutions
Level of trust with clients
Customer knowledge
Probashi Banking:
This offers an array of products and services that are targeted towards the nonresident
Bangladeshis living in different parts of the world, a milestone for BRAC bank as to
becoming the pioneer in such operation. The official launching of Probashi Subidha Account
took place on 16 January 2007 with a prospective to catering the beneficiaries of NRB
customers with their different banking needs.
With a goal to provide fast and expeditious services to deliver remittances even in the most
remote corner of Bangladesh, the network of electronically connected field offices have been
expanded more than 1200 BDP outlets across the country for remittance payment. In 2007
the remittance services has turned out to be one of the core business areas of the Bank. The
year remained as a rewarding and successful one in terms of new tie-ups and partnerships
with a focus on pursuing unexplored and niche markets around the world.
Other Function
Apart from these five business units, BBL has other support units, which provide the
functional assistance to smoothly run the business. These are:
Card
Treasury & Financial Institutions
Central Operations
Enterprise Risk Management
Financial Administration
General Infrastructure Services
Credit
Consumer Service Delivery (CSD)
Impaired Assets Management
Information Technology
Human Resources
Marketing & Corporate Affairs
Company Secretariat
Chapter 3
Analysis and Findings
3.1 Definition of Financial Ratio Analysis
Financial ratios are mathematical comparisons of financial statement accounts or categories.
These relationships between the financial statement accounts help investors, creditors, and
internal company management understand how well a business is performing and areas of
needing improvement.
Financial ratios are the most common and widespread tools used to analyze a business'
financial standing. Ratios are easy to understand and simple to compute. They can also be
used to compare different companies in different industries. Since a ratio is simply a
mathematically comparison based on proportions, big and small companies can be use ratios
to compare their financial information. In a sense, financial ratios don't take into
consideration the size of a company or the industry. Ratios are just a raw computation of
financial position and performance.
3.2 Different Types of Ratio Analysis
Ratios allow us to compare companies across industries, big and small, to identify their
strengths and weaknesses. Financial ratios are often divided into four main categories:
Analyzing Liquidity Ratio
Analyzing Activity Ratio
Analyzing Debt Ratio
Analyzing Profitability
Analyzing Liquidity Ratio:
The liquidity of a business firm is measured by its ability to satisfy its short term obligations
as they come due. Liquidity refers to the solvency of the firm’s overall financial position.
Analyzing Activity Ratio:
Activity ratios measure the speed with which accounts are converted into sale or cash. With
regard to current accounts measures of liquidity are generally inadequate because differences
in the composition of a firm’s current accounts can significantly affects its true liquidity.
A number of ratios are available for measuring the activity of the important current accounts
which includes inventory, accounts receivable, and account payable. The activity (efficiency
of utilization) of total assets can also be assessed.
Analyzing Debt Ratio:
The debt position of that indicates the amount of other people’s money being used in
attempting to generate profits. In general, the more debt a firm uses in relation to its total
assets, the greater its financial leverage, a term use to describe the magnification of risk and
return introduced through the use of fixed-cost financing such as debt and preferred stock.
Analyzing Profitability:
These measures evaluate the bank’s earnings with respect to a given level of sales, a certain
level of assets, the owner’s investment, or share value. Without profits, a firm could not
attract outside capital. Moreover, present owners and creditors would become concerned
about the company’s future and attempt to recover their funds. Owners, creditors, and
management pay close attention to boosting profits due to the great importance placed on
earnings in the marketplace.
3.3 Ratio Analysis of BRAC BANK LTD.
There is some most important ratio analyses of Brac Bank Ltd are showing below:
3.3.01 Current ratio:
The current ratio, one of the most commonly cited financial ratios, measures the firm’s ability to meet its short term obligations. It is expressed as
Current Ratio=Current Asset/Current Liabilities
Current Ratio
Year 2010 2011 2012 2013
Current Asset 108,791,34
2,196 120,691,016
,472 157,898,
600,871 157,010,788,
637
Current Liability 95,407,908,332107,837,411,84
3 144,202,510,136 139,510,917,
707
Current Ratio
1.14 1.
12
1.09 1.
13 Source: Annual report of Brac Bank Ltd 2010-11
Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 20131.061.071.081.091.1
1.111.121.131.141.15
Current Ratio
Figure: Current Ratio
Interpretation
In this analysis it has seen that in 2008 BBL’s current ratio was highest and 2012 it was lowest among all the year. And company increased their current ratio in 2013. Normally banks maintain current ratio 1:1 and we have seen that BBL maintains current ratio more than 1:1 ratios. It indicates that BBL’s liquidity position is not bad.
1.14
1.12
1.09
1.13
3.3.02 Operating Cash Flow Ratio
A measure of how well current liabilities are covered by the cash flow generated from a company's operations. It is expressed as
Operating Cash Flow Ratio=Operating Cash Flow/Total Debt
Operating Cash Flow Ratio
Year 2010 2011 2012 2013
Operating Cash Flow (1,439,2
05,626) 933,830,374 19,855
,243,700 (5,679,858,
459)
Current Liability 95,407,908,332 107,837,411,843144,202,510,13
6 139,510,917,
707
Operating Cash Flow Ratio -0.02 0.01 0.14 -0.04Source: Annual report of Brac Bank Ltd 2010-11
Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 2013
-0.05
0
0.05
0.1
0.15
Operating Cash Flow Ratio
Figure: Operating Cash Flow Ratio
Interpretation
In this analysis it has seen that in 2012 BBL’s operating cash flow was highest and 2013 it was lowest among all the year. Less operating cash flow means more profit. So BBL enables to reduce operating cash flow after 2012.
-0.020.01
0.14
-0.04
3.3.03 Cost Income Ratio:
It measures a particular Bank’s operating efficiency by measuring the percent of the total operating income that the Bank spends to operate its daily activities. It is calculated as follows:
Cost Income Ratio = Total operating Expenses/Total Operating Income
Cost Income ratio
Year 2010 2011 2012 2013
Total Operating Income 9,527,52
7,784 10,134,733,
422 10,894,8
01,767 12,460,835,
400
Total Operating Expenses 4,751,30
9,242 5,164,822,
269 5,749,6
05,759 6,535,958,
634
Cost Income Ratio
0.50 0
.51
0.53 0
.52 Source: Annual report of Brac Bank Ltd 2010-11
Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 20130.48
0.50
0.52
0.54
Cost Income Ratio
Figure: Cost Income Ratio
Interpretation
We know that this ratio measures the operating efficiency of the bank by measuring the portion if the total operating costs relative to the total operating income of that bank and the higher the ratio, the lower the operating efficiency. In 2018 the operating cost of BBL is low but in 2012 it is high. So it can be said that the efficiency of the BBL has been unable to minimize its operating cost during the time period. But in year 2013 Cost Income Ratios of BBL lower than previous few years. But BBL maintains an average around .50 cost income ratio which is really good for a bank industry.
0.500.51
0.530.52
3.3.04 Total Asset Turnover Ratio:
The total asset turnover indicates the efficiency with which the firm is able to use all its assets to generate sales.
Total Asset Turnover= Operating Income/Total Asset
Total Asset TurnoverYear 2010 2011 2012 2013
Total Operating Income 9,527,527,78
4 10,134,733,422 10,894,801,76
7 12,460,835,400
Total Asset 117,297,555,74
8 133,201,048,438 173,676,792,02
9 171,901,669,638
Total Asset Turnover Ratio 0.0
8 0.08 0.0
6 0.07 Source: Annual report of Brac Bank Ltd 2010-11
Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 20130
0.010.020.030.040.050.060.070.080.09
Total Asset Turnover Ratio
Figure: Total Asset Turnovers
Interpretation
The banks total asset turnover ratio fluctuates from .06 to .08. We know the greater the total asset turnover; it is more efficient. In year 2010 & 2011 Total asset turnover was 0.08 but in 2012 it became 0.06 but in 2013 BBL able to increase their Total asset turnover ratio at 0.07. We can tell that total asset turnover is very good and the percentage of it does not movie so much.
0.08 0.08
0.060.07
3.3.05 Investment to Deposit ratio:
Investment to Deposit Ratio shows the operating efficiency of a particular Bank in promoting its investment product by measuring the percentage of the total deposit disbursed by the Bank as long & advance or as investment. The ratio is calculated as follows:
Investment to Deposit Ratio = Total investment/Total Deposit
Investment To Deposit RatioYear 2010 2011 2012 2013
Total Investment 12,855,98
5,261 14,198,827,5
11 25,372,525,28
2 21,298,625,6
61
Total Deposit 88,157,90
8,331 103,725,529,2
25 134,646,448,482.00
0 124,746,344,0
37
Investment to Deposit Ratio
0.15 0.
14 0.1
9 0.
17 Source: Annual report of Brac Bank Ltd 2010-11
Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 20130
0.020.040.060.080.1
0.120.140.160.180.2
Investment To Deposit Ratio
Figure: Investment to Deposit ratio
Interpretation
Investment to deposit ratio is showing that which amount of deposit is used to as investment. BBL’s investment to deposit ratio is decreasing in years 2010 to 2011 which conveys negative signal for the bank. But in 2012 it’s again increasing and in 2013 it decrease at 0.17. But overall investment to deposit ratio is around 0.16.
0.08 0.140.19
0.17
3.3.06 Debt Ratio:
The debt ratio measures the preparation of total assets provided by the firm’s creditors.
Debt ratio= Total Liabilities/Total Assets
Debt RatioYear 2010 2011 2012 2013
Total Liabilities 107,879,663,
647 123,598,443,6
00 163,522,243,4
77 160,314,216,1
68
Total Asset 117,297,555,
748 133,201,048,4
38 173,676,792,0
29 171,901,669,6
38
Debt ratio 0.92 0.93 0.94 0.93Source: Annual report of Brac Bank Ltd 2010-11
Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 20130.91
0.9150.92
0.9250.93
0.9350.94
0.945
Debt Ratio
Figure: Debt Ratio
Interpretation
Debt ratio indicates how much portion of total assets is financed by the debt. When debt capital increases the cost of capital also increase and which decrease the firm’s value. In case of decreasing debt capital the situation is vice versa. So every organization should give more emphasize on equity capital than debt capital. So lower the ratio, it is less risky. So the bank works hard to decrease this ratio. Average Debt ratio of BBL is around 1.00 which is very good for a banking industry.
0.92
0.93
0.94
0.93
3.3.07 Time Interest Earned Ratio:
The times interest earned ratio, sometimes called the interest coverage ratio, measures the firm’s ability to make contractual interest payments.
Time Interest Earned Ratio =Earnings before interest & Taxes/Interest
Time Interest Earned Ratio Interest Earned Time Ratio
Year 2010 2011 2012 2013
Earning Before Interest & Tax 4,956,21
8,541 5,164,822,2
69 5,145,196,00
8 5,924,876,7
66
Interest 1,984,71
1,371 2,053,030,0
38 1,987,929,12
0 2,900,072,5
24
Time Interest Earned Ratio
2.50 2.
52 2.5
9 2.
04 Source: Annual report of Brac Bank Ltd 2010-11
Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 20130
0.5
1
1.5
2
2.5
3
Time Interest Earned Ratio
Figure: Time Interest Earned Ratio
Interpretation From the analysis it has seen that BBL’s TIE ratios were not fluctuating in 2010, 2011 and 2012. It was highest which indicates positive sign that mean BBL’s interest payment capacity were increasing trend. But in 2013 the TIE ratio decrease so much which not good for a company.
2.50 2.52 2.592.04
3.3.08 Net Profit Margin
The net profit margin measures the percentage of each sales dollar remaining after all expenses, including taxes, have deducted. The higher the firm’s net profit margin is better. The net profit margin is a commonly cited measure of the company’s success with respect to earnings on sales.
Net Profit Margin=Net profit after tax/operating income
Net Profit MarginYear 2010 2011 2012 2013
Net Profit after Tax 1,670,36
1,526 1,702,381,8
69 540,381,0
91 1,246,324,1
01 Total Operating Income
9,527,527,784
10,134,733,422
10,894,801,767
12,460,835,400
Net Profit Margin
0.18 0.
17 0.
05 0.
10 Source: Annual report of Brac Bank Ltd 2010-11
Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 20130
0.05
0.1
0.15
0.2
0.18 0.17
0.050.1
Net Profit Margin
Figure: Net Profit Margin
Interpretation
In the year 2010 & 2011 BBL’s net profit margin is good. But in 2012 BBL’s net profit margin decrease too much because of but situation of recession period of time. But in 2013 BBL’s increase their net profit margin at 0.10. This is very good operating result of the bank.
0.18 0.17
0.05
0.10
3.3.09 Return on Asset (ROA):
The return on asset (ROA), which is often called the firm’s return on total assets, measures the overall effectiveness of management in generating profits with its available assets. The higher the ratio is better.
Return on Asset (ROA) =Net Profit after tax/Total Asset
Year 2010 2011 2012 2013
Return on Asset (ROA)
1.55%
1.36%
0.35%
0.72%
Source: Annual report of Brac Bank Ltd 2010-11Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 20130.00%0.20%0.40%0.60%0.80%1.00%1.20%1.40%1.60%1.80%
Return on Asset
Figure: Returns on Asset
Interpretation
From the analysis it has seen that BBL’s Returns on Asset were good in 2010 & 2011. But it was lowest at 0.35%. And in 2013 BBL’s able to improve their ROA.
1.55%1.36%
0.35%
0.72%
3.3.10 Return on Equity (ROE):
The return on equity measures the return earned on the owner’s (both preferred and common stockholders’) investment. Generally the higher the return is the better of the owner’s.
Return on Equity=Net Profit after Tax/ Shareholders equity
Return on EquityYear 2010 2011 2012 2013
Return on Equity 18.95%
17.90%
5.47% 11.46%
Source: Annual report of Brac Bank Ltd 2010-11Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 20130.00%2.00%4.00%6.00%8.00%
10.00%12.00%14.00%16.00%18.00%20.00%
Return on Equity
Figure: Returns on Equity
Interpretation
The banks return on equity of BBL’s was around 18% in 2010 and 2011. In 2012 because of recession and bad market position Return on Equity reduced unbelievably at 5.47%. But in 2013 BBL’s able to increase their ROE at 11.46%.
18.95% 17.90%
5.47%
11.46%
3.3.11 Earnings per Share
The firm’s Earning per share (EPS) are generally of interest to present or prospective stockholders and management. The Earning per share represent the number of dollars earned on behalf of each outstanding share of common stock. The earnings per share is calculated as follows
Earnings per Share =Earnings available for common stock holder/No of shares of common stock
Year 2010 2011 2012 2013
Earnings per Share 5.68
5.54
1.52
3.20
Source: Annual report of Brac Bank Ltd 2010-11Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 20130
1
2
3
4
5
6
Earnings Per Share
Figure: Earnings per Share
Interpretation
The bank’s average earnings per share is 5.50 in 2010 & 2011 But in 2012 EPS was decrease at 1.52 and in 2013 again BBL’s EPS remain increase. Therefore, earning per share of BBL should be increase to attract investors.
5.68 5.54
1.52
3.20
3.3.12 Cost of Fund:
The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one of the most important input costs for a financial institution, since a lower cost will generate better returns when the funds are deployed in the form of short-term and long-term loans to borrowers. The spread between the cost of funds and the interest rate charged to borrowers represents one of the main sources of profit for most financial institutions.
Cost of FundYear 2010 2011 2012 2013
Cost of Fund 8.54% 8.66% 8.43% 8.13%Source: Annual report of Brac Bank Ltd 2010-11
Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 20137.80%7.90%8.00%8.10%8.20%8.30%8.40%8.50%8.60%8.70%8.80%
Cost of Fund
Figure: Cost of Fund
Interpretation
The BBL’s Average Cost of Fund is around 8.00% which is really good for a bank industry maintain their cost of fund.
8.54%8.66%
8.43%
8.13%
3.3.13 Credit Deposit Ratio:
It is the ratio of how much a bank lends out of the deposits it has mobilized. It indicates how much of a bank's core funds are being used for lending, the main banking activity. A higher ratio indicates more reliance on deposits for lending.
Credit Deposit RatioYear 2010 2011 2012 2013
Credit Deposit Ratio 95.63% 84.82% 76.96% 82.30%Source: Annual report of Brac Bank Ltd 2010-11
Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 20130.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
Credit Deposit Ratio
Figure: Credit Deposit Ratio
Interpretation
The BBL’s credit deposit ratio was reducing from 2010 to 2012. But in 2013 BBL’s able to increase their Credit Deposit at 82.30%. Overall average credit ratio of BBL’s 80% last four year which is really good.
95.63%84.82% 76.96% 82.30%
3.3.14 Return on Investment:
Return on investment (ROI) is the benefit to the investor resulting from an investment of some resource. A high ROI means the investment gains compare favorably to investment cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. In purely economic terms, it is one way of considering profits in relation to capital invested.
Return on InvestmentYear 2010 2011 2012 2013
Return on Investment 9.00% 12.41% 3.44% 6.05%Source: Annual report of Brac Bank Ltd 2010-11
Annual report of Brac Bank Ltd 2012-13
2010 2011 2012 20130.00%2.00%4.00%6.00%8.00%
10.00%12.00%14.00%
Return on Investment
Figure: Return on Investment
Interpretation
The firm’s ROI fluctuates from 12.41% to 3.44% in 2011 to 2012. It was bad market situation. It indicates bank’s ROI was not good in 2012; But in 2013 BBL’s able to increase their ROI.
9.00%
12.41%
3.44%6.05%
3.3.15 Net Asset Value Per Share
The net asset value per share can be defined as an expression for net asset value that indicates the value per share for a fund (exchange-traded, mutual, and closed-end) or a company.Net Asset Value per Share (NAVPS) refers to the value of a single unit, or share, or a fund. This number for a mutual fund indicates the price at which shares are bought and sold. Since closed-end and exchange traded funds are listed and traded like stocks, which are influenced by market forces, their NAVPS and selling/buying prices per share can be different.
Net Asset Value Per ShareYear 2010 2011 2012 2013
Net Asset Value Per Share 33.29 28.80 26.34 26.14Source: Annual report of Brac Bank Ltd 2010-11
Annual report of Brac Bank Ltd 2012-13
Figure: Net Asset Value Per Share
Interpretation:Net Asset Value Per Share of BBL’s was 33.29 in 2010. But it is decreasing year by year. But it maintains an average 26.00 last two years; this is very good for company.
2010 2011 2012 201305
101520253035
Net Asset Value Per Share33.29
28.80 26.34 26.14
3.4 Findings:
In the analysis it has seen that in 2010 BBL’s current ratio was highest and 2012 it was lowest among the years. It has seen that BBL maintains current ratio more than 1:1 ratios. It indicates that BBL’s liquidity position is not bad.
In 2010 BBL’s Cost Income Ratio was lowest it indicates positive sign. We know that the lowest the ratio, the higher the operating efficiency. But company maintains an average around .50 per year.
The greater the total asset turnover; it considered more efficiency. From the analysis it has seen that in year 2010 to 2012 total asset turnover ratio of BBL decreasing but at 2013 it’s higher than previous which indicate better efficiency of BBL.
BBL’s investment to deposit ratio is decreasing in years 2010 to 2011 which conveys negative signal for the bank. But in 2012 it’s again increasing. Company maintains an average Investment to deposit ratio around 0.16.
From the analysis it has seen that BBL’s debt ratios were satisfactory range in compare to other banks and also it was decreasing trend.
In the year 2010 to 2012 BBL’s net profit margin decreasing year by year which indicate that the bank’s operating result were not improving. But in 2013 it improved better than previous year.
From the analysis it has seen that BBL’s Returns on Asset were gradually decreasing and in 2010 to 2012. But it’s improved from 2012 to 2013.
From the analysis return on equity of BBL’s was around 18% in 2010 and 2011. In 2012 because of recession and bad market position Return on Equity reduced unbelievably at 5.47%. But in 2013 BBL’s able to increase their ROE at 11.46%.
From the analysis we found that earnings per share is 5.50 in 2010 & 2011 But in 2012 EPS was decrease at 1.52 and in 2013 again BBL’s EPS remain increase.
From analysis Net Asset Value Per Share of BBL’s was 33.29 in 2010. But it is decreasing year by year. But it maintains an average 26.00 last two years
Chapter 4
Recommendations & Conclusion
4.1 Recommendations:
It is seen in the study that the liquidity ratio of B.B.L during 2012 & 2013. The
liquidity of the bank should be reds by improving current & quick ratio. But company
should maintain this properly and has to improve.
It is further seen that the loan to deposit ratio of the bank was lower during 2012 &
2013. Therefore the loan to deposit ratio must be improve by increasing need loan.
Assets utilization ratio was also lower in 2011 & 2012. In case B.B.L. This ratio
should also be increased by increasing operating income.
Finally, at the end of the year we can see that although there have some difficulties
but we can overcome those difficulties by removing all the weaknesses to develop the
product effectively and grab more opportunity hidden in the banking industry and the
bank should also increase the strength with their solid brand image, experience and
skills of the employees. With their strengths BRAC BANK LTD. can also reduce the
threats existing in the market.
4.2 Conclusion
Banking sector is the chief financial intermediaries in a country. It’s also true for Bangladesh.
BRAC BANK LTD is a very challenging institution. In the age of globalization and free
trade, the process and the system of running a bank is changing. BBL is continuously
managing itself with this changing environment. The days are gone for banks to keep their
functions confined within the periphery of accepting deposit and lending money as well as
making a profit. The company strategies are clear and concise. The return is pretty good. If
the company performs this way, we can expect that in near future BBL may become one of
the top performer in banking sector of our country. They are also able to contribute to our
economy in better way. The working environment of the bank is impressive. It was also
found that the bank is doing better in most of the sectors and their performance is better than
average.
Finally it can be said that the bank is doing very good in the competitive market and if it can
continue to perform this way it can become a leading banking institution which can play a
pivotal role in the development of the country.
To cope up with the new millennium’s electronic banking, bank should reinvent and redesign
itself for customer satisfaction. Some recommendations may be put forward in this regard.
The bank should launch some new products as automatic teller machine, money link, Tele
bank for better customer service.
References
Books: Weygandt, Kieso, & Kimmel; Managerial Accounting; 11th Edition; Wiley Global
Education, 2011
Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel; Principle Accounting; 7th
Edition; Wiley, 2005
Annual Report Annual Report of BRAC BANK LTD 2010
Annual Report of BRAC BANK LTD 2011
Annual Report of BRAC BANK LTD 2012
Annual Report of BRAC BANK LTD 2013
Report on Financial Ratio Analysis of Other Banks
Different Internship report of Manarat International University
Websites: http://www.bracbank.com
http://www.wikipedia.org
www.investopedia.com
www.google.com
www.accountingcoach.com
Appendix
