Chapter-1: Introductory1.0 Introduction:In general sense we mean
Bank as a financial institution that deals with money. There are
different types of banks like Central bank, State- owned Commercial
bank, Private Commercial bank or Merchant bank, Foreign Commercial
bank, Specialized Development bank, etc. But when we use the term
bank it generally means commercial bank that collects the deposit
from surplus unit of the society and then lends the deposits to the
deficit units of the society. But the new thing is that how it
operates and presenting its activities for the purpose of serving
customer requirements to increase their well-being in the sense of
wealth. Banks also provide many services for clients to make their
life easy in this busy environment. In this competitive environment
in todays world, the entire bank increases their facilities in
favor of their customers to retain them and capture more share of
the market to be leader. Interest is one of the main factors in
attracting customers. So, it can be said that conventional banking
systems are interest-based system. This report is an attempt to
gain the knowledge of Overall Banking Activities of ARAB BANGLADESH
BANK Ltd. in terms of productivity and effectiveness. Also, analyze
and discuss the five years performance from fiscal year 2008- 2012
to evaluate the position of ARAB BANGLADESH (AB) BANK Ltd.
1.1 Origin of the report:
As a requirement for my Bachelor of Business Administration
program I have prepared this report on Performance evaluation of an
commercial bank A Study on Arab Bangladesh Bank Limited. During the
project period, I am required to prepare a report on the
organization in my project period. My supervisor Professor
Dr.Tanbir Ahmed Chowdhury, Dean and Chairperson & Professor,
Department of Business Administration, east west university-
assigned me this topic. It is a 03 (Three) credit hours program
with duration of 12 weeks.
1.2 Objective of the report: Behind this report, obviously there
have some objectives which must have to be fulfilled. The
objectives of the report is1. To present and overview and function
of AB bank limited.2. To appraise the financial performance of AB
bank limited.3. To identify the problems of AB bank limited.4. To
recommend remedial measure for the development of AB bank limited.
1.3 Scope of the study:The scope of the organizational part covers
the organizational structure, background, vision, mission,
objective, functions and rules, restrictions, procedures of foreign
exchange transactions of the organization.1.4 Methodology of the
study:Relevant data for this report has been collected based on
secondary data by direct investigation of different records,
Documents, operational process and personnel. Information regarding
office activities of the Bank has been collected though consulting
and discussion with bank personnel. The overall data is from
2008-2012.1.4.1 Study Design:The study is design by using Microsoft
word and excel and using various types of ratio formula.1.4.2
Source of information: Primary sources of data: Different manuals
of AB Bank Limited. Different circulars of AB Bank Limited.
Personal Observation.Secondary sources of data Annual report of AB
Bank Limited Different papers of AB Bank Limited Unpublished data
Different text books Various files, balance sheet and various
documents.
1.4.3 Data analysis and interpretation:Collected information was
processed by the use of computer system, research techniques etc.
and this detail analysis work is embodied in the report.1.5
Limitations:There are some problem regarding preparing this
project. Those problems are as follows: Lack of availability of
information and data, some time there are some back dated
information. The record system of the annual report of some of the
banks is not efficient. Lack of access in many section of the bank
financial Information. Banking sector is a very vast sector where I
have a little knowledge about it which limits my report.
1.6 Structural Design:This report structure design is based on
Microsoft excel, Microsoft word, using graphs, charts etcetera. The
report structure is structuring by using the information from
Annual report and company website.
Chapter-2: Background of AB Bank Limited2.0 An overview of AB
Bank:AB Bank is the First private bank in Bangladesh. Government
permitted private banks to enter in to banking because of sustained
poor performance by the banks of nationalized sector. AB Bank
limited (ABBL) is sailed as the leading private commercial bank in
the baking suture from its journey on April 12, 1982 with opening
of its first branch at Karwan Bazar in Dhaka. It was the brainchild
of group dynamic entrepreneurs of Bangladesh.2.1 Historical
Background of AB Bank:AB Bank believes in modernization. The bank
took a conscious decision to rejuvenate its past identity an
identity that the bank carried as Arab Bangladesh Bank Limited for
twenty five long years. As a result of this decision, the bank
chose to rename itself as AB Bank Limited and the Bangladesh Bank
put its affirmative stamp on November 14, 2007 vide Bangladesh Bank
BPRD circular letter no.-10 dated 22 November 2007. Prior to that
shareholders of the bank approved the change of name in the
Extra-Ordinary General Meeting held on 4 September 2007.2.2 Vision
of AB Bank:Vision statement To be the trendsetter for innovative
banking with excellence & perfection2.3 Mission of AB
Bank:Mission statement To be the best performing bank in the
country2.4 Core Values of AB Bank:Their Compliances:they consider
adherence to national policies and objectives a priority for giving
their customers the best financial support with corporate
integrity, meaning a fully compliant bank along with involvement in
social development.Their Customers:they give the best priority on
their customer demand and through their endless effort they assure
the best satisfaction to their customers.Their Shareholders:they
assure the best return to their shareholders' by commenced
performance over a rolling year.Their Team Members:they provide
secure, satisfying employment, ensuring the contribution of each
individual to the success of ABBL.2.5 Organogram of AB Bank:Every
bank follow organogram of their own and they set up position into
the organization based on their organogram. AB Bank also follow a
organogram, AB Bank organogram is:
AB Bank follow and maintain the organogram between the
Bank.Chapter-3: Products and Services of AB Bank Limited3.0 Product
of a bank:Every Bank offer some product to their customer and they
try to offer various types of product with various features so that
they can attract the customer because a bank is always depend and
run on customer, if a bank can attract more customer by their
product they can gain the better position. 3.1 Product of AB
Bank:AB Bank also offer various product to do this thing, they
offer product as Retail Banking, Max saver, Deposit double scheme,
Monthly saving deposit scheme, Millionaire scheme account, Personal
loan, Auto loan , Educational loan, Home loan and some other
corporate banking which are describe bellow.3.2 Retail Banking:
Retail banking is one of the main product of AB Bank under retail
banking they provide3.2.0 Max Saver:It is one of the retail banking
product its type is Savings account with maximum returns.Features
is -- Account will be limited for only individual. Initial deposit
of minimum Tk. 50,000.00. No restriction on the number of
transaction. No interest forfeiting rules. Free SMS banking &
internet banking. Interest will be calculated on daily balance and
will be applied quarterly. ATM transaction limit max Tk. 80,000.00
per dayIts rate of return is 0% to 9% if the deposit amount is less
than Tk 50000 interest rate is 0%, if the deposit amount is 5000000
or above they will pay the highest interest rate 9% and between
50000 and 5000000 interest rate is varied 5% to 8% depends on the
deposit amount. In additional facility Customer will be privileged
by following facilities upon maintaining average balance of
50,000.00 and above (Free cheque book, Free Debit card, No ledger
fee.)3.2.1 Deposit Double Scheme (DDS):Features is -- Special type
of fixed deposit account. Interest rate : 12.25% Make money double
within 6 years. Minimum deposit amount is Tk.50,000 to maximum
deposit of Tk.50,00,000. Loan/overdraft facility can be availed up
to 90% of the deposited amount.
3.2.2 Monthly Savings Deposit Scheme (MSDS):Features is --
Monthly installment based savings scheme. A person can contribute
monthly installments Tk.500 or its multiple(Tk.100* for branches
outside municipal area) Account can be opened for 3, 5, 7 or 10
years. Rate of interest : 12.00% Loan/overdraft facility may be
allowed up to 90% of the deposited amount subject to minimum
BDT.15,000.
3.2.3 Monthly Income Deposit (MIDS):Features is -- Fixed deposit
scheme with monthly returns. Minimum deposit is Tk. 1,00,000.00
with the maximum amount being Tk 50,00,000 either in a single/joint
name. Account can be opened for 1, 3 or 5 years. Rate of interest :
12.00%
3.2.4 Millionaire Scheme Account (MSA):Features is -- Monthly
installment based savings scheme with fixed maturity value of BDT.
One million (10,00,000). Scope of initial investment to reduce
monthly installment. Installment size varies with tenor and initial
investment. Account can be opened for 3, 4, 5 or 6 years. Rate of
interest : 12.00% Loan/overdraft facility may be allowed up to 90%
of the deposited amount subject to minimum BDT.15, 000.3.2.5
Personal Loan:purpose to serve Personal Loan may be availed for
purchase of household items, marriage, House/Office Renovation etc.
Loan limit is minimum 50,000 and maximum 10,00,000( without
collateral). Charge for the lone is application fee tk 500 and
Processing fee 1.5% on the approved loan amount. Tenor of the loan
is minimum 12 months and maximum 60 months. Rate of interest charge
for the loan is 18.00% p.a-21.00% p.a (to be determined by ALCO
from time to time). Guarantee of the loan is Spouse/parent
guarantee, one personal guarantee. 3.2.6 Auto Loan:Purpose is to
serve to the customer to purchase of brand new car or purchase of
reconditioned car. The lone limit is 30% of the value for brand new
car or reconditioned car but not exceeding BDT 20,00,000.charge for
the loan is Application fee Tk. 500 and Processing fee 1.5% on the
approved loan amount. Tenor is Brand New: 12-72 Months,
Reconditioned car: 12-60 Months. Interest have to pay 16.00%-19.00%
p.a (to be determined by ALCO from time to time). Guarantee of the
loan is Personal guarantee of spouse/parents only.3.2.7 Education
Loan (disbursed to parents/guardian):Purpose of the loan is To
assist parents/guardians for Admission/Education fees, semester
fees, study abroad for their children/wards. Loan limit is Minimum
Tk. 50,000,MaximumTk10,00,000 (without collateral),30% of the value
of the total cost. Charge for the loan is Application fee Tk.
500,Processing fee 1.5% on the approved loan amount. Tenor is Min
12 Months, Max 60 Months. Rate of interest is 18.00% p.a - 21.00%
p.a (to be determined by ALCO from time to time). Guarantee is
Personal guarantee of spouse/parents only.3.2.8 Education Loan (for
executive):Purpose of the loan is To assist executives pursue
Higher studies/professional qualification at local/overseas
institutions.. Loan limit is Minimum Tk. 50,000,MaximumTk10,00,000
(without collateral),30% of the value of the total cost. Charge for
the loan is Application fee Tk. 500, Processing fee 1.5% on the
approved loan amount. Tenor is Min 12 Months, Max 60 Months. Rate
of interest is 18.00% p.a - 21.00% p.a (to be determined by ALCO
from time to time). Guarantee is Personal guarantee of
spouse/parents only.( N.B: in the education loan(disbursed to
parents/guardian) and (for executive) everything is same accept the
purpose of the loan. )3.2.9 Home Loan:This Loan is providing for
multiple purposes, the purpose of the Loan is to 1. Purchase of
apartment/house within the Municipal areas of town/cities in
Bangladesh. 2. Purchase of Flat/Apartment/independent house not
more than 15 years old. 3. Completion of construction of a new
house. 4. Loan takeover facility of Home Loan from other banks at a
preferential rate. Limit of the Loan is Min BDT 500,000 and Max70%
of the value of the flat or construction cost for completion but
not more than Tk. 1,00,00,000. Charge for the loan is Application
fee: Tk. 500 and Processing fee: 1.5% on the approved loan amount.
Lone tenor is Min: 3 Years Max: 15 Years. Insurance coverage under
Property insurance for Earthquake and Fire. Rate of interest is
15.00% - 18.00% p.a (to be determined by ALCO from time to time).
The purpose of security is to Registered mortgage of property along
with registered IGPA to sell the property. Guarantee for the loan
is Personal guarantee of spouse/parents / legal heir only.
3.2.10 Personal Overdraft-Secured:This lone purpose To meet
personal requirement of fund. Loan amount is Maximum 80% of the
security. This loan charge is Processing fee: 0.5% subject to Min
Tk. 2,000 and Max Tk. 10,000. Tenor of this loan is Revolving with
annual review. Interest have to pay for this loan is For ABBL FDR:
15.00% p.a-18.00% p.a, Other Banks FDR, WDB: 15.25% p.a 18.25% p.a
(To be determined by ALCO from time to time.). security is Lien
over FDR, ICB Unit certificate, RFCD, NFCD, CD account(s) etc.One
personal guarantee in case of third party cash collateral.3.2.11
Personal Loan:This loan purpose To meet personal requirement of
fund. Amount of the loan is Maximum 80% of the security. Loan
charge is Processing fee: 0.5% subject to Min Tk. 2,000 and Max Tk.
10,000. Tenor is Min 12 months and Max 36 months. This lone rate of
interest is ABBL FDR: 15.00% p.a-18.00% p.a, Other Banks FDR, WDB:
15.25% p.a 18.25% p.a (To be determined by ALCO from time to
time.). Security is Lien over FDR, ICB Unit certificate, RFCD,
NFCD, CD account(s) etc. One personal guarantee in case of third
party cash collateral.3.3 Corporate banking:At AB Bank they provide
complete range of solutions to meet Corporate
Customers'requirement. Their Corporate Banking solutions include a
broad spectrum of products and services backed by proven, modern
technologies.
Corporate LendingAB Bank specialist teams offer a comprehensive
service providing finance to large and medium-sized businesses
based in Bangladesh. For more information as to how Bank might best
meet your corporate debt needs, please contact with bank at their
Corporate Head Office.
Structured FinanceThey have a specialist Structured Finance Team
who arrange and underwrite finance solutions including Debt and
Equity Syndication for financial sponsors, management teams and
corporates. Also they provide corporate advisory services.
Bank aim to provide tailored financing solutions with a
dedicated team who can rapidly respond to client needs.
Following are some of the products and financial tools of
Corporate Banking: Project Finance Working Capital Finance Trade
Finance Cash Management Syndicated Finance, both onshore &
off-shore Equity Finance, both onshore & off-shore Corporate
Advisory Services
3.4 SME Banking (SME DEPOSIT/LOAN PRODUCTS):Considering the
volume, role and contribution of the SMEs, in the last three
decades AB Bank has been patronizing this sector by extending
credit facilities of different types and tenor. As of now around
30% of the banks total loan portfolio is segmented to the SMEs
which deserve all out attention in our plans, projections and
forecasting.
As such the bank has emphasized on the following issues: To
provide the best services to the SME sector To increase the SME
portfolio of ABBL significantly To improve the quality of ABBLs
portfolioSME Sectors in which AB Bank has participated so far: Agro
machinery Poultry Animal Feed Dairy Product Fruit Preservation
Hotel & Restaurants Garments Accessories Leather products
Plastic product Furniture : Wooden & Metal Ink Paint Printing
& Packaging Wire & Cable Aluminum Cement and Lime Plaster
Clinics and Hospitals Engineering & Scientific Instruments
3.5 Project finance (Large lone & project finance): In order
to cater the demand of client AB Bank has segmented its portfolio
in terms of loan size. As per this segmentation any loan over Tk.
10.00 Crore falls under the purview of Large Loan Unit. In AB Bank,
there is also a separate Project Finance unit who evaluate the
business. The unit is entrusted to handle the portfolio in a
focused manner. AB Bank is always in fore front to support
establishment of new projects of diverse nature which will help to
broaden the manufacturing arena vis--vis to generate to employment.
At the moment AB Bank s exposure in Large Loan & Project
Finance portfolio is distributed in the following sectors:
SLSectorABBL Exposure (Limit)(Fig. in Lac Tk.)
1Agro- Business12,717.56
2Cement Power, Glass38,691.92
3Consumer Products21,855.00
4Edible Oil36,057.53
5Engineering & Construction18,106.42
6Financial Institution1,414.70
7Food & Beverage27,044.24
8Hotel2,505.26
9Health Care3,928.62
10Printing & Packaging11,867.61
11Real Estate10,451.49
12Micro-finance5,763.15
13Export9,441.63
14RMG & Backward Linkage94,826.13
15Ship Breaking18,029.20
16Steel42,824.97
17Telecom & Computer Accessories11,479.89
18Trading77,579.89
Total ( including syndicated exposure)444,585.21
Less Syndicated Exposure51,560.29
Total Large Loan & Project Finance portfolio without
syndicated exposure3930,24.92
3.6 Loan syndication: Syndication or club financing is a growing
concept in Banking Arena of Bangladesh. Syndicated finance
diversifies the risk of one bank on a single borrower and increases
the quality of loan through consensus or cumulative judgment and
monitoring of different banks / financial institutions. AB Bank,
the first bank in the private sector also took initiative to adapt
to this growing concept. In 1997, AB Bank for the first time
arranged a club financing with Dhaka Bank Ltd to raise Tk. 6700 lac
- out of which ABBL financed Tk. 5700 Lac and Dhaka bank financed
Tk. 1000 Lac. In 1999, AB Bank arranged its second syndicated
credit facility with IPDC to raise Tk 3563 Lac. Since then AB Bank
did not look back. Since 1997 to 2007 (till date), AB Bank has
raised total Tk. 25989.56 Lac as Lead Arranger. The following banks
from time to time have been our partners in these syndications :
Dhaka Bank, IPDC, EXIM Bank, Bank Asia, Oriental Bank, NCC Bank,
The City Bank, Trust Bank, Bank Asia. AB Bank has also participated
in different syndications arranged by other Banks, out of which
till date 6 (six) syndication has successfully been completed. AB
Bank exposure in these completed syndications was Tk. 4700 Lac. At
the moment AB has participation in 19 (nineteen) syndicated
facilities. AB Banks exposure in the ongoing syndication is Tk.
51560.29 Lac which is diversified in the following ten
sectors:SLSectorABBL Participation(Fig. in Lac Tk.)
1Textile 9,533.57
2Micro-finance3,000.00
3Cement7,990.00
4Energy & Power11,997.00
5Telephone (PSTN)5,500.00
6Glass900.00
7Sugar900.00
8Steel Mills9081.72
9Paper1158.00
10Chemical1,500.00
Total51,560.29
3.7 landing Rate:ProductsMid Rate(Previous)Mid RateInterest rate
w.e.f January 01, 2013
1) Agriculture (As per Bangladesh Bank
Directives)13.00%13.00%13.00%
2) Export (As per Bangladesh Bank Directives)
7.00%7.00%7.00%
3) Large and medium scale industries
(Term)14.00%14.00%12.50%-15.50%
4) Small Industries (Term Loan)16.50%15.50%14.00%-17.00%
5) Working Capital
a) Large and medium scale
industries14.00%14.00%12.50%-15.50%
b) Small Industries16.50%16.50%14.00%-17.00%
6) Commercial Lending
a) Large and medium scale
industries15.50%15.50%14.00%-17.00%
b) Small Industries16.50%16.00%14.50%-17.50%
7) Housing Loans16.50%16.00%14.50%-17.50%
8) Consumer Credit19.50%19.50%18.00%-21.00%
9) Credit Card2.00% per month2.00% per month2.00% per month
10) Finance to NBFI's16.50%16.50%15.00%-18.00%
11) Others
i) Cash collateral-ABBL FDR (Maximum
80.00%)16.50%16.50%15.00%-18.00%
ii) Cash Collateral - Other Banks FDR or
WDB16.75%16.75%15.25%-18.25%
iii) Women Enterpreneur upto Tk 50.00 lac (As per Bangladesh
Bank Directives)10.00%10.00%10.00%
iv) Special Scheme Loans - SME16.50%16.50%15.00%-18.00%
v) Import Finance (Rice, Wheet, Edible Oil, Lentils, Peas,
Onion, Dates, Suger and Chemical
Fertilizer)14.00%14.00%12.50%-15.50%
vi) Auto Loan17.50%17.50%16.00%-19.00%
Notes: 1. For lending against ABBL FDR, the rate is minimum
3.00% above the rate of the instrument.2. Exposure under cash
collateral of other banks requires clearance from FI &
Treasury.3. For taking exposure on "Digun Loan" under Special
Scheme, the rate will be 8% above the instruments' rate; subject to
maximum 20% p.a.4. For Women Entrepreneur (above Tk. 50.00 lac),
the rate will be 15.00%-18.00%.
3.8 Deposit Rate:Interest Rate on Deposit w.e.f. Close of
Business March 4, 2014
ProductsInterest Rate
Savings Deposits6.00%
FSP (Family Savings Plan)8.00%
SND (Special Notice Deposit)
Upto 1,00,00,0004.00%
1,00,00,001 to 25,00,00,0005.00%
25,00,00,001 to 50,00,00,0006.00%
50,00,00,001 to 100,00,00,0007.00%
Above 100,00,00,0008.00%
Security Deposit Receipts(SDR)/Call Deposit3.00%
NFCDRate as per Daily FX rate
FC & RFCD (Minimum balance USD 1000 or GBP 500 or its
equivalent for other currency & minimum tenor one month)Rate as
per Daily FX rate
Fixed Deposit (Time Deposits)
1 (One) Month7.00%
3 (Three) Months
Below 10 Crore10.25%
10 Crore & Above10.50%
6 (Six) Months
Below 10 Crore11.00%
10 Crore & Above11.25%
1 (One) Year
Below 10 Crore11.25%
10 Crore & Above11.50%
2 (Two) Years11.50%
3.9 Non-Resident Bangladeshi (NRB) Banking:Facilities offered to
NRBsOpening of Foreign Currency A/C: We open Foreign Currency
Account in USD/GBP/EUR for NRBs. Foreign Currency can be remitted
by the Nationals of Bangladesh living Abroad earned by them as wage
earners or from other sources. The deposit amount can also be used
for remittance to other countries as per their requirement. Nominee
of Account holder can also able to operate this Account.
NFCD: We issued Foreign Currency Fixed Term Deposit in
USD/GBP/EUR with different tenure. Interest is paid in respective
Foreign Currency. Rates of Interest are published in our daily
Exchange Rate.Wage Earners Development Bond: These Bonds can be
issued from the balance of the FC account with tenure for five
years. Rate of interest is 11.80% p.a. in BDT.
USD Premium Bond: These Bonds can be issued from the balance of
the FC account with a tenure for Three years. Rate of interest is
7.5% p.a. in BDT.
USD Investment Bond: These Bonds can be issued from the balance
of the FC account with a tenure for Three years. Rate of interest
is 6.5% p.a. in USD.In addition to the above, we also have Drawing
Arrangements with 20 (Twenty) Exchange/Money Transfer Remittance
Houses all over the globe to facilitate fast, reliable and
hassle-free inward remittance to the expatriate Bangladeshis around
the world.
List of Exchange / Money Transfer Remittance Houses are as
follows:1.Zenj Exchange Co. P.O. Box 236,Manama,Kingdom of Bahrain.
2. Oman Exchange Company Ltd. W.L.L, Post Box # 26057, 13211 Safat,
Kuwait. 3. Security Exchange Co. WLL, Post Box # 29760, Safat,
Kuwait. 4. International Financial Line, P.O Box 2171, Safat,
Kuwait. 5. Bank Al Bilad, PO Box 140, Riyadh, KSA, Tel:
+966-011-4798888. 6. Modern Exchange Co. LLC, Post Box # 3401 PC
112, Ruwi, Sultanate of Oman. 7. Oman United Exchange Co. L.L.C ,
Near Ruwi Police Station, P.O. Box 889, Muscat, Postal Code 100,
Sultanate of Oman. 8. Majan Exchange L. L.c, C R. NO. 104446, P.O.
BOX No. 583, Postal Code 117, Sultanate of Oman. 9. Habib Exchange
Co. LLC, Central Office, Sheikh hamdan street, P.O Box-2370, Abu
Dhabi, U.A.E. 10. Al-Fardan Exchange Co. LLC, Post Pox # 339,
Mushrib Street, Doha, Qatar. 11. Gulf Overseas Exchange Co. L.L.C,
P.O. Box No. 3931, Ruwi 112, Sultanate of Oman. 12. U.A.E. Exchange
Centre LLC, Post Box # 170, Sh. Hamdan Street, Abu Dhabi United
Arab Emirates. 13. Al-Ansari Exchange Co, Head Office, Amin Tower,
Liwa Street, Post box-325, Abu Dhabi, U.A.E. 14. Habib Qatar
International Finance & Investment Ltd, Post Box # 1188,
Mushirib Street, Doha, Qatar. 15. MoneyGram Payment Systems Inc,
1550 Utica Avenue South, Minneapolish, MN 55416, USA. 16. Emirates
India International Exchange, P. O Box 7190, Dubai, United Arab
Emirates. 17. Wall Street Exchange Centre LLC, 1103,1104-Twin
Towers, Baniyans Road, P.O. Box 3014, Dubai, U.A.E. 18. Continental
Exchange Solutions, (Ria Financial Services), 13825 Cerritos
Corporate Drive Suite C'' Cerritos, California, USA. 19. Al Zaman
Exchange WLL, P O Box: 23497, Souq Najada Doha, Qatar. 20. Brac
Saajan Exchange ltd, 147 Lozells Road, Birmingham, West Midlands,
B19 2TP, United Kingdom, Tel: +44 (121)515 4008.3.10 Money
Transfer:Foreign Remittance through Exchange House For Inward
Remittance, AB Bank established extensive drawing arrangement
network with Banks and Exchange Companies located in the important
countries of the world. AB have Drawing Arrangements with 20
(Twenty) Exchange/Money Transfer Remittance Houses all over the
global.3.11 Islami Banking:To provide the Islamic banking services
in accordance with the principles of Islamic Shariah, AB Bank has
established Islamic Banking Wing and started its functioning by
opening full-fledged Islamic banking branch on 23.12.2004. The
branch is known as AB Bank Islami Banking Branch, Kakrail, and is
situated at 82, Kakrail, Ramna, Dhaka.The goals and objectives of
Islamic banking Wing are as under: To facilitate the Islamic
banking system in the country To create new entrepreneurs and to
arrange required finance for them To play effective role for socio
economic development of the country To give assistance in launching
welfare oriented economic system under Islamic valuesUnder this
wing AB Bank extends the following Islamic banking services:
Deposit services Investment services3.12 AB Securities Limited
(ABSL):AB Securities Limited (ABSL), a wholly owned subsidiary of
AB Bank Limited, provides stock broking services to its clients.
ABSL originally incorporated in December 2009 as a private limited
company, commenced operations in August, 2010, following the
transfer of the brokerage business of Arab Bangladesh Bank
Foundation (ABBF) to ABSL in August, 2010, in according with the
instruction of Bangladesh Bank. ABSL is a corporate member of both
Dhaka Stock Exchange Limited (Member # 201) and Chittagong Stock
Exchange Limited (Member # 101).3.13 AB Investment Limited
(ABIL):AB Investment Limited, a subsidiary of AB Bank Limited
incorporated under the Companies Act 1994 and running its Merchant
Banking operations being licensed by the Securities and Exchange
Commission.ABIL provides diversified services for the investors and
sponsors group of the Capital Market. The offered services are:1.
Portfolio Management Services.2. Investors' Discretionary Account
(IDA)for Local Individual and Corporate Investors.3. Managements'
Discretionary Account (MDA)for Non-Resident Bangladeshi, Foreign,
local persons and Corporate Investors.4. Investors' Discretionary
Account (NRB-IDA)for Non-Resident Bangladeshi, Foreign Individual
and Corporate Investors.5. Opening and Maintaining of FC Account
with AD Branches of AB Bank Limited(for Non-Resident Bangladeshi
and Corporate Investors).6. Issue Management Services.7. Private
Placement.8. Corporate Advisory.9. Underwriting.3.14 Cards:AB Bank
Ltd. introduces VISA debit card facility. Under this System card
holder can reload and refunded money from Banks designated Branches
Card holder also can pay utility Bills and purchase goods from
different POS (point of sale).Bank has also joined Electro ways
Transactions Network (ETN) commonly known as E-cash, recently. This
new platform will enable the Card Division to go for mass-based
card programs in the future.3.15 Services of AB Bank:AB Bank
provide various services to their customer, they try to satisfy
their customer by the services so that customer becomes loyal to
Bank. The bank provide individual and joint service, bank also
provide some extra beneficial service like mobile banking.3.16 Self
Deposit Locker: This services provide for those customer who
Looking for a safe storage place for their valuables. A Safe
Deposit Locker with AB Bank is the solution to customer concern.
Located at select branches in cities all over the country, Banks
lockers ensure the safe keeping of customers valuables. Advantage
of the locker is wide availability with various size(small, medium
& large) with varying rents and minimum rent period is one
year, rent must pay in advanced from account eligibility for the
service is An individual (not minor), firms, limited company,
associations, clubs, trusts, societies, etc. for getting the locker
services customer have to maintain and fulfill some terms and
conditions. Only some specific branches provide the facility.3.17
Mobile Banking/SMS Banking:For getting the service customer have to
register their mobile number and follow the bank procedure, first
of all bank register the number after that customer getting the
services. By using the service customer can facilitate themselves
by inquiring their balance, fund transfer, mini statement, mobile
top UP, mobile bill payment etc. if any customer taking any
facilities from these bank ensure there transaction by giving
feedback sms.
3.18 New MICR Cheque Book:AB Bank has started Issuance of new
cheque book from June 01, 2009 as per Bangladesh Bank guideline.
Customer can conveniently collect new cheque book from their
Account Opening Officer of the branch. As per Bangladesh Bank
instruction bank have implemented MICR coded cheque book from June
6, 2009, which will be customized by the Bank. MICR is a process of
printing cheques using magnetic ink and special fonts to create
machine-readable information.It is the first step towards
electronic cheque clearing process. the MICR coded cheque book will
facilitate to 1. Quick processing and faster cheque clearing time
2. Prevent cheque related fraudulent activities.3.19 Lost Cheque
Book:Service provide for lost cheque book is in case of issuance of
duplicate cheque book in lieu of lost cheque book the Account
Holder will have to submit the Bank an Application in the
prescribed preform with a copy of GD entry from local police
station regarding the loss of his cheque book. If account holder
provide those valid information bank will provide new cheque book
immediately.3.20 Lost Credit/Debit card:To recover the lost
credit/debit card customer simply call AB Bank Ltd, Card Division.
Then report the loss in writing to AB Bank Card Division or his/her
Branch where he/she opened his/her account within 24 hours and a
replacement will be ready for the customer within 7 working days.
3.21 Fund Transfer:AB Bank provide the service of fund transfer any
customer can transfer his fund to another account through his
request letter or his use AB cheque with cash deposit slip wherein
he clearly mentioned beneficiary Account Number & Name of the
customer.
3.22 Account Opening:Anyone can open account in AB Bank but
he/she has to maintain the bank procedures and provide some
information to the bank,for open a account customer have to fill up
the account opening form and provide two copies attested passport
size photograph and a valid identification card ( it might be
photocopy of passport/national ID card/Driving license etc.).3.23
Address Change:Customer can change the address if they want
customer can fill up banks prescribed address change form
(available any of our branches) or he/she can send to bank in
writing change of address with a copy of utility bill documents
showing his/her new address. instruction should be submitted to the
Branch of AB Bank Limited where he/she opened your account.
Chapter-4: Performance Evaluation of AB Bank Limited4.1 Deposit
Growth Rate:Money placed into a banking institution for
safekeeping. Bank deposits are made to deposit accounts at a
banking institution, such as savings accounts. The account holder
has the right to withdraw any deposited funds, as set forth in the
terms and conditions of the account. The "deposit" itself is a
liability owed by the bank to the depositor and refers to this
liability rather than to the actual funds that are deposited.Table
1: Deposit Growth Rate
YearAmountGrowth Rate
200753375000000
20086856000000028%
20098308700000021%
20109570200000015%
201111615200000021%
201214002600000021%
Source : Annual Report of AB Bank (2008-2012)Graph 1: Deposit
Growth Rate
When someone opens a bank account and makes a deposit to the
bank, the cash becomes an asset of the bank; the account becomes a
liability. AB Bank has the highest deposit growth rate in 2008
which is 28% in that year.
4.2 Loan To Deposit:The formula for the loan to deposit ratio is
exactly as its name implies, loans divided by deposits. The loan to
deposit ratio is used to calculate a lending institution's ability
to cover withdrawals made by its customers.Table 2: Loan to
Deposit
YearDepositLoan (loan & advance)Ratio
2008685600000005670900000083%
2009830870000007088000000085%
2010957020000008800200000092%
20111161520000009463800000081%
201214002600000010606600000076%
Source : Annual Report of AB Bank (2008-2012)Graph 2: Loan to
Deposit Ratio
Loans in the numerator of the formula are investments or assets
for a bank. Deposits in the denominator of the formula can be
considered the same as debt as the individual depositors are
essentially granting monies to the bank with a return equal to the
deposit rates and that can be called upon at any time. In these
respects, the loan to deposit ratio is similar to a liquidity ratio
and debt ratio. Here we have seen in year 2010 AB Bank has a height
Deposit ratio that is 92%.
4.3 Return on Asset: A profitability measure that indicates how
well a Bank uses its capital resources to generate income. To
calculate return on assets, divide the Banks total income by the
value of its total assets. The resulting figure, multiplied by 100,
will be a percentage; the higher the percentage, the more
efficiently the Bank uses its assets.
Table 3: Return on asset
YearNet IncomeAverage Total AssetsRatio
20082301000000738020000003.12%
20093363000000954830000003.52%
201036960000001198015000003.08%
201113280000001428270000000.93%
201214390000001634025000000.88%
Source : Annual Report of AB Bank (2008-2012)Graph 3: Return on
Asset Ratio
In 2009, this bank has a highest Return on Asset that is 3.52%.
The return on assets ratio can be helpful in comparing the
profitability of different-sized Banks because it allows investors
to see how efficiently a Bank works with what it has, regardless of
how big the Bank is. If a Bank has 30 million in net income and 100
million in total assets, its return on assets would be 30%. Return
on assets is calculated by dividing a company'snet incomeusually
annualincomeby its total assets, and is displayed as a
percentage.4.4 Return on Equity Ratio:The amount of net income
returned as a percentage of shareholders equity. Return on equity
measures a corporation's profitability by revealing how much profit
a Bank generates with the money shareholders have invested.Table 4:
Return on Equity Ratio
YearNet IncomeAverage Stock holders EquityRatio
20082301000000561750000040.96%
20093363000000844050000039.84%
201036960000001201250000030.77%
20111328000000143600000009.25%
20121439000000204435000007.03%
Source : Annual Report of AB Bank (2008-2012)Graph 4: Return on
Equity Ratio
This ratio indicates how profitable a Bank is by comparing its
net income to its average shareholders' equity. Thereturn on equity
ratio(ROE) measures how much the shareholders earned for their
investment in the Bank. The higher the ratio percentage, the more
efficient management is in utilizing its equity base and the better
return is to investors. In 2008, AB Bank has a highest Return on
Equity that is 40.96%.
4.5 Earning Per Share:Earning per share is generally considered
to be the single most important variable in determining a share's
price. It is also a major component used to calculate the
price-to-earnings valuation ratio.Table 5: Earning Per Share
YearNet IncomeNumber of Common Stock OutstandingEPS
200823010000004425000005.2
200933630000004425000007.6
201036960000004421052638.36
201113280000004426666673
201214390000004427692313.25
Source : Annual Report of AB Bank (2008-2012)
Graph 5: Earning Per Share
Here we seen that the height EPS of AB Bank is in 2010 and the
amount is 8.36. The portion of a Bank's profit allocated to each
outstanding share of common stock. Earnings per share serves as an
indicator of a Bank's profitability. When calculating, it is more
accurate to use a weighted average number of shares outstanding
over the reporting term, because the number of shares outstanding
can change over time. 4.6 Growth of Investment:Investment has been
initially recognized at cost, including acquisition charges
associated with the investment. Premiums have been amortized and
discount accredited, using the effective or historical yield
method.
Table 6: Growth of Investment
YearLoanGrowth Rate
200856709000000
20097088000000024.98%
20108800200000024.15%
2011946380000007.54%
201210606600000012.07%
Source: Annual Report of AB Bank (2008-2012)
Graph 6: Growth of Investment
We see in the invest growth ratio AB Bank investment was
reducing year to year, in 2009 we see they had the highest
investment which is 24.98%, bank also invest similar amount in 2010
but in 2011 they invest very small amount 7.54% which is so much
narrow investment between 2009-2012.
4.7 Equity Multiplier:The equity multiplier is a way of
examining how a Bank uses debt to finance its assets. Also known as
the financial leverage ratio or leverage ratio.
Table 7: Equity Multiplier
YearTotal AssetStock holders EquityTimes
200884054000000.006723000000.0012.50
2009106912000000.0010158000000.0010.52
2010132691000000.0013867000000.009.56
2011152963000000.0014853000000.0010.29
2012173842000000.0026034000000.006.67
Source : Annual Report of AB Bank (2008-2012)
Graph 7: Equity Multiplier
This ratio shows a Bank's total assets per Taka of stockholders'
equity. A higher equity multiplier indicates higher financial
leverage, which means the Bank is relying more on debt to finance
its assets. The height multiplier is 12.50 times in 2009 of AB Bank
which means higher financial leverage in that year. This Bank
equity multiplier of 2009 and 2011 are quit equal to 2008.
4.8 Price Earnings Ratio:Price Earnings Ratio compares with
current share price and its per-share earnings. In general, a high
Price earning suggests that investors are expecting higher earnings
growth in the future compared to Banks with a lower Price earning.
However, the Price earnings ratio doesn't tell us the whole story
by itself. It's usually more useful to compare the Price earnings
ratios of one Bank to other Banks in the same industry, to the
market in general or against the Bank 's own historical Price
earning.Table 8: Price Earnings Ratio
YearMarket Price of Common Stock Per ShareEarnings Per
SharePrice Earnings Ratio
2008825.215.76
20091187.615.52
20101588.3618.89
201168322.66
2012343.2510.46
Source : Annual Report of AB Bank (2008-2012)Graph 8: Price
Earnings Ratio
The Price earnings is sometimes referred to as the "multiple",
because it shows how much investors are willing to pay per Taka of
earnings. If a Banks were currently trading at a multiple (Price
earnings) of 20, the interpretation is that an investor is willing
to pay Taka 20 for Taka 1 of current earnings. It is important that
investors note an important problem that arises with the Price
earnings measure, and to avoid basing a decision on this measure
alone. The earningss is based on an accounting measure of earnings
that is susceptible to forms of manipulation, making the quality of
the Price earnings only as good as the quality of the underlying
earnings number. AB Bank height price earnings ratio is 22.66 in
2011 among last 5 years.4.9 Net Income Growth Rate:Net income is
calculated by taking revenues and adjusting for the cost of doing
business, depreciation, interest, taxes and other expenses. This
number is found on a Bank's income statement and is an important
measure of how profitable the Bank is over a period of time.Table
9: Net Income Growth Rate
YearAmountGrowth Rate
20082301000000
200933630000000.461538462
201036960000000.099018733
20111328000000-0.640692641
201214390000000.083584337
Source : Annual Report of AB Bank (2008-2012)Graph 9: Net Income
Growth Rate
Net income is calculated by starting with a Bank's total
revenue. From this, the cost of sales, along with any other
expenses that the Bank incurred during the period, is removed to
reach earnings before tax. Tax is deducted from this amount to
reach the net income number. Net income is susceptible to
manipulation through such things as aggressive revenue recognition
or by hiding expenses. When basing an investment decision on net
income numbers, it is important to review the quality of the
numbers that were used to arrive at this value. Here we have seen
that the height growth of net income of the AB Bank in 2009 that
was .46 and in 2011 it was negative.
4.10 Interest Coverage Ratio:A ratio used to determine how
easily a Bank can pay interest on outstanding debt. The interest
coverage ratio is calculated by dividing a Banks earnings before
interest and taxes (EBIT) of one period by the Banks interest
expenses of the same period.Table 10: Interest Coverage Ratio
YearEBITInterest ExpenseRatio
200842980000006970000006.16
200958020000005970000009.71
2010740900000010520000007.04
2011431200000013550000003.18
2012436300000011730000003.72
Source : Annual Report of AB Bank (2008-2012)Graph 10: Interest
Coverage Ratio
The lower the ratio, the more the Bank is burdened by debt
expense. When a Banks interest coverage ratio is 1.5 or lower, its
ability to meet interest expenses may be questionable. An interest
coverage ratio below 1 indicates the Bank is not generating
sufficient revenues to satisfy interest expenses but between
2008-2012 AB Bank interest coverage ratio never been comes below
3.5.
4.11 Net Interest Margin:A performance metric examines how
successful a Bank's investment decisions are compared to its debt
situations. A negative value denotes that the Bank did not make an
optimal decision, because interest expenses were greater than the
amount of returns generated by investments.Table 11: Net Interest
Margin
YearNet Interest MarginAverage Earning AssetsRatio
20082034000000588940000003.45%
20092908000000776740000003.74%
20103481000000986105000003.53%
201123940000001177510000002.03%
201231230000001346080000002.32%
Source : Annual Report of AB Bank (2008-2012)
Graph 11: Net Interest Margin
For example, AB Bank has a return on investment of Taka
10,00,000, an interest expense of Taka 20,00,000 and average
earning assets of Taka 1,0000,000. AB Bank net interest margin
would be -10%. This would mean that AB Bank has lost more money due
to interest expenses than was earned from investments. In this
case, AB Bank would have been better off if it had used the
investment funds to pay off debts instead to making an investment,
but AB Bank interest margin is always positive in 5 years.4.12
Growth in Assets:Asset is that which has economic value, it can be
individual or organization. It can be liquidated easily in terms of
money and asset indicate the strength of an organization. Table 12:
Growth in Assets
YearAssetsgrowth rate
200763550000000
20088405400000032.26%
200910691200000027.19%
201013269100000024.11%
201115296300000015.27%
201217384200000013.64%
Source : Annual Report of AB Bank (2008-2012)
Graph 12: Growth in Assets
AB bank has highest asset in 2008, after that the asset of the
bank decrease at a increasing rate even it becomes half in 2012
compare to 2008. In 2008 asset growth rate is 32.26% which is
highest between five years. With the reducing rate of asset bank
strength also reducing, now in 2012 asset growth becomes 13.64% if
this scenario continue growth rate might be in single digit. AB
bank not only face the reduction rate of asset bank also face the
reduction rate of asset utilization, if bank has bank can be
utilize so here the only solution is to make more asset.
4.13 Authorized Capital Growth Rate:The bank authorized capital
in 2003 is Tk.800 million and as on 31st December 2008 authorized
capital stood at Tk. 3000 million. At the end of 2012 authorized
capital stood at 6000 million, I believe this bank has ability to
increase it further.Table 13: Authorized Capital Growth Rate
yearAuthorized capitalgrowth rate
20072000000000
2008300000000050.00%
20096000000000100.00%
201060000000000.00%
201160000000000.00%
201260000000000.00%
Source : Annual Report of AB Bank (2008-2012)Graph 13:
Authorized Capital Growth Rate
According to the scenario we have seen AB Bank Limited has a
height growth in 2009, which is 100%. It showed this Bank has moved
with our economic growth. If we look back to 2009-2010 and 2010-
2011 fiscal years, where our economy had experienced pace in its
all indicators. That was good news for our economy. Another thing
is investors invest in a Bank that time, when they saw Bank is well
managed by the board.
4.14 Paid up Capital Growth Rate:The bank Paid up capital in
2003 is Tk.472 million and as on 31st December 2008 Paid up capital
stood at Tk.2230 million. At the end of 2012 Paid up capital stood
at 4423 million. Every year AB Bank increase their paid up capital
amount consecutively. Table 14: Paid up Capital Growth Rate
yearPaid up capitalgrowth rate
2007743000000
20082230000000200.13%
2009256400000014.98%
2010320500000025.00%
2011368600000015.01%
2012442300000019.99%
Source : Annual Report of AB Bank (2008-2012)
Graph 14: Paid up Capital Growth Rate
Paid up capital shows the total price of the share outstanding
in the market. Here we have seen this Bank has the height growth in
2008 which is 200.13%. A growth in paid up capital is happened by
two events. First one is trust among the individual investors and
second one is a better situation in stock market. If we looked bank
to the stock market situation in 2008-2009 fiscal year, almost all
Bank stocks gained near about four times in price that means
individual investors had 200% capital gain in all stocks.
4.15 Employment Generation:Each year AB Bank has gradually
increased their number of employee, here the scenario given.Table
15: Employment Generation
yearNumber of Employeesemployment generation
20071725
2008180479
20091952148
2010200856
2011209688
20122070-26
Source : Annual Report of AB Bank (2008-2012)
Graph 15: Employment Generation
A good economic situation, where nominal inflation rate ensure
investors not to lose their investments, which ensures better
employment generation. In 2009 AB Bank generate 148 vacancy for
their vacant position. According to managerial body, employment
generation is fully dependent with economical growth and there has
some rules to increase number of branches too. In 2012 the Bank sac
26 employees also.
4.16 New Branch Opened:For business growth, each bank needs to
setup new branches and upgrading their existing branches by adding
different customized product and services. Given data show the
number branches increased by AB Bank each year.
Table 16: New Branch Opened
yearNumber of BranchesNew Branch opened
200772
2008731
2009785
2010824
2011864
2012871
Source : Annual Report of AB Bank (2008-2012)
Graph 16: New Branch Opened
This scenario is also depending on economic growth and policies
of Bangladesh Bank. When a Bank has a growth in investment deposit
and customer satisfaction. A growth in market economy that means
growth in socio economy encouraged, a Bank to open new branches in
remote areas. Here we have found in 2009 they opened height 5
branches in different areas and in 2010 and 2011 Bank opened 4
branches in every year.
4.17 Investment (General):Amount of invest of a financial
institution reflects how efficiently they can handle their
deposits, here data are given and these shows each year investment
of AB Bank.Table 17: Investment ( general )
YearInvestment in share & securitiesGrowth Rate
20078885000000
20081139600000028.26%
20091636900000043.64%
201014563000000-11.03%
20112155600000048.02%
20122611500000021.15%
Source : Annual Report of AB Bank (2008-2012)
Graph 17: Investment In Shares & Securities Growth Rate
When a Bank sells or provide loan upon their collected deposits
in more widely known as investment in banking. Invest is the major
area of earnings for a Bank. All other factors of a annual
financial report are depend on their specific term. Find out
investors and provide lone those activities are not the end of the
task it is actually the beginning of their task. Here Bank need
advice, look after and manage the fund they had provided. Otherwise
there have good chance to lose their investment as bad debt. Here
we have seen in 2011, this bank has a highest investment growth of
48.02%. in 2010 their investment goes in negative which is -11.03.
Investment data are also reflecting some external factors like
stable economical environment, economical growth, political
situations etc.
4.18 Investment (Shares & Securities Exclude
Subsidiaries):Investment in securities shows the portfolio process
of a company. A diversified portfolio ensures safe investment. Here
data are given for investment in securities and shares for AB
Bank.Table 18: Investment ( Shares & Securities Exclude
Subsidiaries)
YearInvestment ( Shares & Securities Exclude
Subsidiaries)Growth Rate
2008289.4
2009218.95-24.34%
2010452.2106.53%
2011673.448.92%
20121034.5453.63%
Source : Annual Report of AB Bank (2008-2012)
Graph 18: Investment (Shares & Securities Exclude
Subsidiaries)
Investment in share and securities is a part of portfolio
management of a Bank. Bank would like to invest in different types
stokes and bonds for risk minimization. Here we have seen in 2010
AB Bank has a height growth that is 106.53% and 2009 the bank was
in negative investment that is -23.34% in investment in share and
securities.
4.19 Import Business:Extensive global network and bunch of trade
specialists of AB Bank offers a wide range of import services and
ensure that business is handled efficiently and without delay.
Letter of credit is an inseparable thing in both export and import,
AB Bank ensure the customer to do it well.Table 19: Import
Business
YearImport BusinessGrowth Rate
200748441000000
20087004100000044.59%
200965956000000-5.83%
20109751000000-85.22%
201179463000000714.92%
201210037300000026.31%
Source : Annual Report of AB Bank (2008-2012)
Graph 19: Import Business
Import business or business of opening LC is a type of business
which is mainly depends on domestic demands of foreign goods and
commodities. At the beginning of foreign business we have seen in
2011, AB bank made highest growth in remittance but this bank paid
highest in same year for import. That means in that specific year
our macro economy was in the best condition. It also means all
other economic indicators were good position among last five years.
If we keep close eyes on our economy which is mainly depends on
agriculture and garments (RMG). In these two types of production
commodities are also depends on import. For example if we choose
agriculture fertilizer fuel and all other factors we need to import
from outside of our country. Here we can see Bank has negative
import growth rate in 2009 and 2010 in this period our economy face
trouble.4.20 Export Business:AB Bank helps to reduce the risks of
delay or non-payment when customers undertake international trade
so they can focus on expanding their export business. Letter of
credit is an inseparable thing in both export and import, AB Bank
ensure the customer to do it well.
Table 20: Export Business
YearExport BusinessGrowth Rate
200720677000000
20082893700000039.95%
2009306400000005.89%
20104168600000036.05%
20115759200000038.16%
20126578200000014.22%
Source : Annual Report of AB Bank (2008-2012)
Graph 20: Export Business
When production exceeds domestic demands the surplus product
could be sold out the some other countries where demands for those
products have. In 2008, this bank produces highest number of
foreign currency earnings from export. 39.95% growth in single
indicator is a brilliant achievement for a bank where external
factors are highly correlated. In Bangladesh RMG is the main export
item, along with this we export jute items, leather items and so
on.4.21 Remittance Growth Rate:Remittance is the source of money
for a country comes from foreign. It is the lifeline of Bangladesh
economy, have been buoyed large number of Bangladeshi workers who
moving abroad over the past year and our remittance significantly
growth over the time.
Table 21: Remittance Growth Rate
yearRemittanceGrowth Rate
2007156000000
20081640000005.13%
200918200000010.98%
201021000000015.38%
201125000000019.05%
2012217000000-13.20%
Source : Annual Report of AB Bank (2008-2012)Graph 21:
Remittance Growth Rate
Remittance word reflects the foreign currency earnings by
Bangladeshi people in outside of our territory. Here main source of
foreign currency is Middle East. According to the data AB Bank has
a height growth of 19.05% in remittance in 2011. This statistics
make as a bit confused because as we know in 2010-2011 Bangladesh
experienced a massive slowdown in their economy and for that Bank
remittances growth is negative in 2012 is -13.20% after that there
is a statistics shown here is a reflection of increases of number
of branches in remote area and open up more new account by the
nonresident Bangladeshi.
4.22 Operating Profit Growth Rate:The profit earned from a
Bank's normal core business operations. This value does not include
any profit earned from the Banks investments, such as earnings from
Banks in which the Bank has partial interest) and the effects of
interest and taxes.
Table 22: Operating Profit Growth Rate
YearOperating ProfitGrowth Rate
20073325000000
2008429800000029.26%
2009580200000034.99%
2010740900000027.70%
20114312000000-41.80%
201243630000001.18%
Source : Annual Report of AB Bank (2008-2012)
Graph 22: Operating Profit Growth Rate
Operating profit is a calculation that shows amount of profits
that were not deducted by interest, tax and retain earning. This is
a connection and reflector of companys earnings before interest and
tax payment. In 2009 AB Bank has a height growth that is 34.99% and
in 2011 Bank has negative growth that is -41.80%.
4.23 Asset Utilization Ratio:Asset utilization ratios measure
how efficient Bank using its assets to make money. A Bank's
receivables turnover, which is defined as its credit sales divided
by the value of its accounts receivable from customers, indicates
whether a Bank is able to turn the goods and services it sells into
money that is available for other purposes.
Table 23: Asset Utilization Ratio
YearRevenueAverage Total AssetsRatio
20082301000000738020000003.11%
20093363000000954830000003.52%
201036960000001198015000003.08%
201113280000001428270000000.92%
201214390000001634025000000.88%
Source : Annual Report of AB Bank (2008-2012)
Graph 23: Asset Utilization Ratio
In 2009 AB Bank has the height asset utilization ratio that is
3.52%. With an asset utilization ratio of 3.52%, that means Bank
earned 0.0352 for each Taka of assets held by the Bank. Increasing
asset utilization means the Bank is being more efficient with each
Taka of assets it has.
Chapter-5: Problems and Suggestion5.1 Problems:According to my
observation, I have find out some problems in AB Bank Limited. Bank
need to solve those problems, if they want to grow their banking
business.
The AB Bank has the limited number of branch over the country as
a result every people cannot able to take the banking facilities of
AB Bank.
ATM booth is limited compare to the other Banks that is why
their ATM service is limited.
In 2011 AB Bank faced net loss as a result customer can come
back from the bank for their own safety.
Recently they reduce interest rate on the customer deposit as a
result customer can leave the bank and deposit their money to the
other bank. Because of this bank can face the liquidity crisis.
Small number of promotional activities compare to the other
Banks.
Although the foreign exchange business loading day by day there
are also some obstacles around the bank.
The invest little amount in the agricultural sector, but it is
not the better decision for our country.
AB Bank takes 100% margin for the new importer to avoid the
risk. Lack of enthusiastic scheme for exporter & importer.
5.2 Suggestion:There have some suggestions for the AB Bank to
develop their banking activities and customer satisfaction. These
are following:
The entire department should be well informed regarding their
goal and objectives. It is essential to execute company objective
into individual target.
There must be clear allocation of responsibilities, authority
and accountability. The bank should introduce more promotional
activities.
The bank should take initiative to develop an effective research
and development. Centre to get innovative ideas to capture the
competitive market.
Diversified schemes for export and import with fewer margins for
L/C should introduce by the bank for small entrepreneur to target a
different segment to increase volume of export and import.
Efficient and attractive marketing strategy and appearance of
the bank in the printing media and electronic media would also
increase knowledge of people about foreign trade. This is very much
useful for increase transactions in foreign exchange department of
this bank.
Tight rules and requirements for opening foreign currency
account should be relaxed and make it easy and simple.
ATM service should be available in every corner of the country
for the customer that will help the customer withdraw the money any
time anywhere.
5.3 Conclusion:
The commercial banking system dominates Bangladesh's financial
sector. There is huge number of nationalized and foreign bank
operating their banking in Bangladesh, The Arab Bangladesh Bank
Limited is promising one among these banks. The growing competition
bound AB Bank not only to compete with the other commercial bank
but also with the public banks. For the future planning and the
successful operation in achieving its prime goal in this current
competitive market, this can be helpful in international trade
financing that suggested mostly for the betterment of country.
Foreign Exchange Business is the main source of the expansion of
our economy. This is why, the importance of the effective
involvement of Bank in our economy in financing Import, Export
& Remittance business is enormous.After analysis the whole
performance and Bank activities, we can see that Banks import and
export volume and the amounts of remittance are increasing year by
year. And through this, the Comparative profit volume of the bank
is also increasing. The increasing demand of the imported and
exported goods and friendly relation with customer by the bank are
the main reasons of this growth.
5.3 References:To prepare this report I have collected data
mainly from annual reports of AB Bank, different books regarding
ratio analysis, the websites of Bangladesh Bank and DSE and others
websites about ratio analysis. The references are given
below:Source: Annual Report of AB Bank 2012 Annual Report of AB
Bank 2011 Annual Report of AB Bank 2010 Annual Report of AB Bank
2009 Annual Report of AB Bank 2008
Books and Documents: Peter S. Rose, 2010, Bank Management and
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