CHAPTER-1 INTRODUCTION Introduction The recruitment and selection processes of an organization are two of its most important financial activities. The basic purpose of recruiting is to ensure a sufficient pool of applicants from which the most qualified individuals may be selected. Effective recruiting is important because sufficient number of qualified applicants is needed to ensure that selection can be successfully accomplished. Origin of the Report This report is a requirement of the internship program which is an important part of the BBA (ion’s) degree requirement. As the supervisor has advised me to develop a thorough understanding of the recruitment and selection processes of SOCIAL ISLAMI BANK LTD. (SIBL), this report will be prepared on those aspects of the Financial Statement Analysis of SIBL. Objectives of the Study The objectives of this study will be: To evaluate the current recruitment and selection policy and process of SOCIAL ISLAMI BANK LTD.. To find out the weaknesses of the current policy. To suggest improvements to the policy. Theoretical analysis of recruitment and selection Analysis current recruitment and selection of SOCIAL ISLAMI BANK LTD. Recommendations regarding the recruitment and selection of SOCIAL ISLAMI BANK LTD.
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CHAPTER-1INTRODUCTION
Introduction
The recruitment and selection processes of an organization are two of its most
important financial activities. The basic purpose of recruiting is to ensure a sufficient
pool of applicants from which the most qualified individuals may be selected.
Effective recruiting is important because sufficient number of qualified applicants is
needed to ensure that selection can be successfully accomplished.
Origin of the Report
This report is a requirement of the internship program which is an important part of the
BBA (ion’s) degree requirement. As the supervisor has advised me to develop a
thorough understanding of the recruitment and selection processes of SOCIAL
ISLAMI BANK LTD. (SIBL), this report will be prepared on those aspects of the
Financial Statement Analysis of SIBL.
Objectives of the Study
The objectives of this study will be:
To evaluate the current recruitment and selection policy and process of
SOCIAL ISLAMI BANK LTD..
To find out the weaknesses of the current policy.
To suggest improvements to the policy.
Theoretical analysis of recruitment and selection
Analysis current recruitment and selection of SOCIAL ISLAMI BANK LTD.
Recommendations regarding the recruitment and selection of SOCIAL
ISLAMI BANK LTD.
Methodology
In the preparation of this report, data has been collected from both primary and
secondary sources. In-depth interviews of some of the employees of the Finance
Division of SOCIAL ISLAMI BANK LTD.have been conducted to gather necessary
information. Also, the Financial Analysis Statement of SIBL has been consulted in
preparing this report. Moreover, text books, the internet, the annual report of SOCIAL
ISLAMI BANK LTD.etc. have been used to collect information.
Scope
The scope of this study is only the recruitment and selection policy and processes of
SOCIAL ISLAMI BANK LTD..
Limitation
The major limitation of this report is that some confidential information was not
available for the purposes of this report.
CHAPTER-2
CONCEPTUAL ISSUE
2.1 Background of SOCIAL ISLAMI BANK LTD. (SIBL)
The Bank was incorporated in the year 1959 under the name and style of The Eastern
Mercantile Bank Limited under Companies Act 1913. After liberation of the country in
1971, the Bank was nationalized as per policy of the Government of the People’s
Republic of Bangladesh under the Bangladesh Bank (Nationalization) Order 1972 (PO
No 26 of 1972) and was renamed as National Bank. Subsequently, the Bank was
denationalized in the year 1983 and was again incorporated in Bangladesh under the
name and style of SOCIAL ISLAMI BANK LTD. in that year. Since then SOCIAL
ISLAMI BANK LTD. has been rendering all sorts of Commercial Banking services as
the largest bank in private sector through its 386 number of branches network all over
the country.
The principal activities of the Bank are to provide all kinds of commercial banking
services within the stipulations laid down by Bank Companies Act 1991 and directives
as received from Bangladesh Bank from time to time through its 386 branches all over
Bangladesh. The Bank is listed in the Dhaka and Chittagong stock exchanges as a
publicly quoted company for its general class of shares. The Bank also carries out
Brokerage Business under the license issued by the Securities and Exchange
Commission (SEC), Bangladesh.
Board of Directors
Mr. Md. Anisul HoqueChairman
Alhaj Sk. Mohammad RabbanAli Vice Chairman
Mr. Md. Sayedur RahmanVice Chairman
Major (Retd.) Dr. Md. RezaulHaque
Director
Alhaj Sultan MohmoodChowdhury
Director
Mr. Abdul Awal PatwaryDirector
Alhaj Sultan MohmoodChowdhuryDirector
Alhaj NasiruddinDirector
Mr. Mohammad AzamRepresentative of Namreen
Enterprise Limited
Mr. Mohammad FazlayMorshedDirector
Mr. Abdul JabbarMollahIndependent Director
Mr. Md. Shafiqur RahmanManaging Director (CC)
2.2 Vision, Mission & Objectives
2.2.1 Vision
To hold the position of best private commercial Bank in Bangladesh with adherence to
meticulous compliance of rules and regulations and strong commitment to Corporate
Social Responsibility.
2.2.2 Mission
To become most remarkable and admirable private commercial bank in the country.
To get recognition as a dynamic, innovative and customer service oriented bank. To
keep momentum of continuous & steady growth with maximum transparency and to
diversify products and resources. To expedite continuous of date of information and
technology with all modern facilities to copy with demand and challenges of the time.
2.2.3 Objective
Major objectives of the bank include the following:
Growth
Value Addition
Quality Standard
2.3 Core Operations
Banks act as payment agents by conducting checking or current accounts for
customers, paying cheques drawn by customers on the bank, and collecting cheques
deposited to customer& current accounts. Banks also enable customer payments via
other payment methods such as telegraphic & mail transfers, POS, and ATM etc..
Banks borrow money by accepting funds deposited on current accounts, by accepting
term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend
money by making advances to customers on current accounts, by making installment
loans, and by investing in marketable debt securities and other forms of money
lending.
Banks provide almost all payment services, and a bank account is considered
indispensable by most businesses, individuals and governments. Non-banks that
provide payment services such as remittance companies are not normally considered
an adequate substitute for having a bank account.
Banks borrow most funds from households and non-financial businesses, and lend
most funds to households and non-financial businesses, but non-bank lenders provide a
significant and in many cases adequate substitute for bank loans, and money market
funds, cash management trusts and other non-bank financial institutions in many cases
provide an adequate substitute to banks for lending savings to.
Like other commercial banks SIBL also provides all the services mentioned above.
Major activities of the bank include the following:
Accepting money on term deposit and lending money by way of overdraft,
installment loan or otherwise.
Providing documentary and standby letters of credit (trade finance), guarantees,
performance bonds, securities underwriting commitments and other forms of
off- balance sheet exposures
Issue of banknotes (promissory notes issued by a banker and payable to bearer
on demand)
Issuing bank drafts and bank cheques and processing of payments by way of
telegraphic/mail transfer, POS, internet banking or other means.
Currency exchange and safekeeping of documents and other items in safe
deposit boxes.
CHAPTER-3CONCEPTUAL ISSUE
3.1 Deposit Collection and Mobilization
Being the largest private commercial bank of the country the bank accepts a variety of
deposits through its 386 branches located all over the country. The bank also provides
all sorts of deposit mobilization activities to its customers. Total deposit of the bank as
on 31 December 2012 stood at taka 8846.33 crore with highest exposure in Savings
account of 34.66 %.
14.50%
2.93%
34.66%
22.34%
12.95%7.72%
4.91%0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Currentdeposit
Bills payable SavingsBank deposit
Fixed deposit Short termsdeposit
Pensionschemes
Others
Credit Operations
For the last couple of years banks operations in connection with loans and advances
has increased significantly which is contributing a lot to sustainable growth of the
bank. The bank provides all sorts of advances to almost all sector of the economy
within the stipulation laid down in Banking Company Act. 1991.
Besides regular credit operations the bank has started brokerage business since January
2009, consequently got stock dealing license and started Stock dealing operation from
March 2012.
Personal Loan
For the purchase of household appliances, computers, marriage, medical treatment and
education for self or dependents etc.
For the purchase of household appliances, furnishings, for household
refurbishment, marriage, medical treatment, education.
Maximum BDT 500K but not less than BDT 75K per loan.
Ill. Consumer Loan to be disbursed through the savings account to be opened
with SOCIAL ISLAMI BANK LTD.
Repayment in 12, 24, 36, 48 monthly installments. Prepayments are allowed
anytime at his/her convenience.
Auto Loan
For the purchase of a passenger car (unregistered reconditioned or brand new) to be
used for personal transport purposes by the obligor. The vehicle will be registered in
the bank’s name and the obligor will be issued a authority letter by the bank to use it
for his personal purpose.
Vacation Loan
For taking an overseas vacation, purchase of tickets, purchase of TC’s etc.
Purchase of Air ticket(s) in the name of the obligor and family and purchase of
FX for hotel and other expenses as allowed by the BBFX Manual.
IL Maximum amount BDT 500K but not less than BDT 75K.
Repayment in 24, 36 and 48 monthly installments. Prepayments allowed
anytime at his/her convenience.
FX to be purchased from our bank branches.
Ticket bookings are required to be done from any of our enlisted Travel
Agents.
Consumer Loan to be disbursed through the savings account to be opened with
SOCIAL ISLAMI BANK LTD..
Safety Locker Services
Clients can use the locker facility of SOCIAL ISLAMI BANK LTD. Limited and thus
have the option of covering their valuables against any unfortunate incident. SIBL
offers security to its locker service as afforded to the Bank’s own property at a very
competitive price.
Utility Bills Services
SOCIAL ISLAMI BANK LTD. Limited offers a multi-mode utility bill payment
facility for its customers. Whether it is cellular phone bill, telephone bill, electricity
bill or water bill, SIBLoffers various modes and convenient ways to make bill payment
easy for its clients. Clients can use SIBLATM cards to pay bills at their convenience or
visit SIBL branches to make payment for bills. Currently, Grameen Phone and City
Cell mobile phone bills are accepted at all SIBL branches. More utility providers will
soon be added to this service for the client’s convenience.
Lease Financing
Although there are separate financial institutions in the lease financing market, banks
are entering in this business day by day. SOCIAL ISLAMI BANK LTD. offers Lease
Financing for acquiring of capital machinery, equipment and other items. The rental
payable under lease financing is treated as revenue expenditure and thus is deductible
for tax purposes.
Finance & Advisory Services
Given the needs of its large and varied base of corporate clients SOCIAL ISLAMI
BANK LTD. will be positioning itself to provide investment banking advisory
services. These could cover a whole spectrum of activities such as Guidance on means
of raising finance from the local Stock markets, Mergers and Acquisitions, Valuations,
Reconstructions of Distressed companies and other expert knowledge based advice. By
this means SOCIAL ISLAMI BANK LTD. hopes to play the role of strategic
counselor to blue-chip Bangladesh companies and then move from the level of advice
to possible implementation of solutions to complex financing problems that may arise
from time to time. This would be an extra service that would complement the normal
financing activities that SOCIAL ISLAMI BANK LTD. already offers to corporate
business houses.
CHAPTER-4FINDING OF THE REPORT
Annual Report
Annual Report of SOCIAL ISLAMI BANK LTD. Limited is a very useful report for
analysis of its financial Statement analysis. This report explained about financial
strength, customer service, risk management, corporate social responsibility, and good
governance. Directors’ Report section explained the global economy and Bangladesh
economy. This report tried to accumulate all the relevant data and topics regarding
financial performance. This report would be very helpful and handy for potential
investors and policy makers.
This report also explained different accounting policies. But the report lacks about the
in- depth analysis of financial position. In addition to that, it does not discuss about the
industry performance. Moreover, the report does not tell me about the trend of
financial performance. In addition to that, emphasis is given on that information that
creates positive impression about the company and presents the information in their
own way.
2.5.1 Key Financial as on 31 December, 2012
Income statements & Balance sheets
PROFIT AND LOSS ACCOUNT
(Combined for Main and offshore banking unit)for the ear ended 31 December 2012
CASH FLOW STATEMENT
(Combined for Main and Offshore banking)For the year ended 31 December 2012
Last 5 years financial highlights
Financial Statement Analysis of SOCIAL ISLAMI BANK LTD.
The purpose of this chapter is to discover financial Statement analysis of SOCIAL
ISLAMI BANK LTD. Limited so that management and the public can identify the
most critical problems inside the Bank and develop ways to deal with those problems.
Banks today are under great pressure — to meet the objectives of their shareholders,
employees, depositors and borrowing customers, while somehow keeping government
regulators satisfied that the bank’s policies, loans, and investments are sound. I have
separated 10 significant ratios into three broad categories after analyzing some
important findings from Income statement and balance sheet of last five years of the
bank.
The ratios are as follow:
A. Profitability Ratios
1. Return on Assets (ROA)
2. Return of Equity (ROE)
3. Net Interest Margin (NIM)
4. Price/Earnings Ratio (P/E Ratio)
5. Earnings Per Share (EPS)
6. Book Value Per Share
7. Loan deposit Ratio
8. Payout Ratio
9. Dividend Yield Ratio
B. Liquidity Ratio
1. Current ratio
2. Inventory turnover ratio
3. Gross Profit ratio
4. Net Loan to Total Assets
C. Debt Utilization Ratio
1. Debt to Total Assets
2. 2. Times Interest Earned Ratio (TIE)
Apart from the above mentioned ratio analysis, I have conducted the followinganalysis:
1. Cash Flow Statement Analysis;
2. Stockholders’ Equity Statement Analysis;
Income Statement & Balance Sheet
Total Income
Total income of SIBL has been on increase for last five years except in 2008. The
following figure shows the total income of SIBL in past five years. The trend is quite
clear. Total income increases significantly from 2008 to 2012.
Profit Trend
The nominal value of profit is increasing each year. From Tk.628 million in the year
2008, the figure has now grown to Tk. 1193 million in the year 2012. But the growth
in last 5 years in profit is not very high. The rate as the figure indicates has settled for a
stable position.
010002000300040005000600070008000
2008 2009 2010 2011 2012
Total Income (in million)
Taka
Income Expenditure Comparison
The percent of expense to the income has remained steady over the years. It was
lowest in 2008 and then it increases 3% each year in 2008 and 2012.
Deposit and advance comparison
The advance and deposit ratio has been increased over the years. From 75.7% in 2008,
it reached almost 82% in 2012. So the bank is getting more aggressive as it is getting
older.
Ratios
Liquidity ratio measures the SOCIAL ISLAMI BANK LTD.’s short-mn ability to pay
its maturing obligations. Two most important liquidity ratios, current ratio and net loan
to total assets, are discussed in this section.
Current Ratio: The current ratio is the ratio of total current asset to total current
liabilities of the bank. This ratio is also helpful in evaluating working capital position
because working capital is the excess of current assets over current liabilities. The
figure, depicted on the next page, shows the current ratio of the bank over the past five
years:
The above figure shows that the current ratio of the bank was increasing from the year
2008 till 2012. After 2012, current ratio started to decline and the year 2012 saw the
lowest current ratio for the bank. So it can be said that the liquidity position of the
bank is relatively weak.
Net Loan to Total Assets: Another way of measuring liquidity for financial institution
is to measure the net loan to total assets. It will help to measure amount the bank
disburse in the form of loans and advances from the assets. The ratios of net loan to
total assets are represented by the following figure.
2008
59%
2009
62%
2010
59%
2011
71%
2012
71%
2005
2006
2007
2008
2009
2010
2011
2012
2013
As the above figure suggests the Net loan to total assets ratio has increased notably in
last two years. Again it can be observed that the liquidity position of the bank is
relatively weak.
Cash Flow Statement Analysis
In the previous chapter, I have analyzed the ratio that is mostly related to income
statement and balance sheet. In this section, I will discuss cash flow statement that is
the single most important element of survival. Creditors examine the cash flow
statement carefully because they are concerned about being paid.
A good starting point of the analysis of the cash flow statement is to find net cash
provided by operating activities. In case of SIBL, net cash flow from operating
activities show an increasing trend except in the year 2012 when it dramatically went
down to negative figure. The following figure shows the trend of net cash flow from
operating profits over the past five years:
Stockholder’s Equity Statement AnalysisSeveral ratios use stockholders’ equity related amounts to evaluate a company’s
profitability and long-term solvency. The following three ratios are discussed and
illustrated in this regard:
Rate of Return on Common Stock Equity: A widely used ratio that measures
profitability from the common stockholders view point is rate of return on common
stock equity. This ratio shows how many dollar of net income were earned for each
dollar invested by the owners of the bank. The following figure shows the trend of rate
of return on common stock equity of the bank over the past five year:
The figure represented above shows that the trend is not very much fluctuating. It has
been stable over past five years. In 2012, the return was 22.74% compared to the
previous year’s 20.89%.
Capital Adequacy Ratio: Capital adequacy focuses on the total position of bank’s
capital and protects the depositors from the potential shocks of losses that the bank
might incur. Banks in Bangladesh have to maintain a minimum Capital Adequacy
Ratio (CAR) of not less than 9.00 percent of risk-weighted assets. The figure,
represented on the next page, shows the capital adequacy ratio of the bank over the last
five years:
2008
9%
2009
11%
2010
11%
2011
11%
2012
9%
2005
2006
2007
2008
2009
2010
2011
2012
2013
The above figure shows that SOCIAL ISLAMI BANK LTD. is not well capitalized by
local standards with a total CAR of 9.43% in 2012. There was a sharp decline in the
rate from the year 2011 when CAR was 11 .00%. The bank is not in a position to