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Internship Report
On
A Comparative Financial Performance Analysis
of Three Branches of National Bank Limited
Tapash Chandra Paul
BBA Program 2014 (17th
Batch)
Roll: 35
Internship Report
On
A Comparative Financial Performance Analysis
of Three Branches of National Bank Limited
Tapash Chandra Paul
BBA Program 2014 (17th
Batch)
Roll: 35
Supervisor
Dr. Syed Golam Maola
Professor
Department of Management
Faculty of Business Studies
University of Dhaka
28th
February, 201
iii
Executive Summary
This study aims at measuring and comparing the financial performance of three branches of
National Bank Limited in Bangladesh. In a competitive financial market bank performance is
very important because it provides signal to depositors and investors whether to invest or
withdraw funds from the bank. Similarly, it flashes direction to bank managers whether to
improve its deposit service or loan service or both to improve its finance. Regulator is also
interested to know for its regulation purposes. Specifically two objectives were pointed out in
these study as to analyze comparative branch financial performance among three branches in
the light of growth and profitability performance and evaluate comparative branch financial
performance among three branches in the light of employee performance.
For comparative branch performance analysis three branches are being selected. For the
organization part, much information has been collected both from the primary sources and as
well as from the secondary sources. The bank personnel usually don’t want to disclose all the
statistical information about their organization due to obvious reasons of scrutiny and
confidentiality. Time is another major limitations the duration of the program was 45 days only
and being a temporary member of the organization.
The emergence of National Bank Limited in the private sector was an important event in the
Banking arena of Bangladesh. When the nation was in the grip of severe recession, the
government took the farsighted decision to allow the private sector to revive the economy of
the country. Several dynamic entrepreneurs came forward for establishing a bank with a motto
to revitalize the economy of the country.
Among three branches Kaliakoir branch performed very well in term of collecting deposits. By
providing large amount of advances to import business, Bogra branch sanctioned excess loans
and advances from its budgeted ones. Kaliakoir branch achieved high growth rate profit among
three branches due to increase in interest received from loans and advances, increase in interest
received from IBTA and there was no interest paid on IBTA. Growth rate of per employee
deposit in Kaliakoir branch was high which was being meant high employee performance
comparison among three branches. Bogra branch was high employee performance in terms of
per employee advances. In terms of per employee profit-loss Kaliakoir branch was high
employee performance among three branches. Overall performance of Kaliakoir branch of
National Bank Limited was high among three branches in terms of growth and profitability
performance and employee performance of a branch. Bogra branch of NBL should give equal
focus on all schemes of deposit. On the other hand Pabna branch of NBL should give a good
attention regarding loan and advances sanction. Bogra branch should decrease its interest
payment on IBTA and operating expense in order to turn back increasing profit trends.
Employees of Bogra branch should more concentrate on their customer segments, markets,
product-use profiles and financial position of loan seeker in order to reduce loan loss.
However, National Bank Limited is a new generation Bank. It is committed to provide high
quality financial services or products to contribute to the growth of GDP of the country through
stimulating trade and commerce, accelerating the pace of industrialization, boosting up export,
creating employment opportunity for the educated youth, poverty alleviation, raising standard
of living of limited income group and overall sustainable socio-economic development of the
country.
iv
Letter of Transmittal
28th
February, 2015
Dr. Syed Golam Maola
Professor
Department Of Management
University Of Dhaka
Sub: Submission of Internship Report.
Dear Sir,
I am glad to submit my internship report covering the topic “A Comparative Financial
Performance Analysis of Three Branches of National Bank Limited” after the completion
45 days internship program in National Bank Limited (Kaliakoir Branch, Gazipur).
This report is an integral part of the completion of the BBA program. For preparing this report
I tried my level best to accumulate relevant and up-to-date information from all available
sources. It is prepared on the primary and secondary data from different sources.
Recommendations are only subjective judgment of mine.
It is my sincere hope that you would find the report useful.
Sincerely Yours,
……………………..
Tapash Chandra Paul
BBA Program 2014
Roll No: 35
Section: A
Batch: 17th
Department Of Management
University Of Dhaka
v
Declaration
I Tapash Chandra Paul, hereby declare that the presented report of internship named “A
Comparative Financial Performance Analysis of Three Branches of National Bank
Limited” is being prepared by me under the supervisor Dr. Syed Golam Maola, Professor,
Department Of Management, University Of Dhaka. No part of this report has been previously
submitted to any other University/ College/ Institution/ Organization for any academic
certificate/ degree/ diploma/ qualification.
I also conform that the report is only being prepared to meet my academic requirement not for
any other purpose. It will not act anything that will hamper Bank’s confidentiality and interests.
It might not be used with the interest of opposite bodies of National Bank Limited.
………………………..
(Tapash Chandra Paul)
vi
Supervisor’s Certificate
This is to certify that the internship report entitled “A Comparative Financial Performance
Analysis of Three Branches of National Bank Limited” has been prepared by Tapash
Chandra Paul as a partial fulfillment of the requirement of Bachelor of Business Administration
(BBA) degree from the Department of Management, University of Dhaka under my guidance
and supervision.
I wish him every success in life.
……………………………..
Dr. Syed Golam Maola
Professor
Department Of Management
University Of Dhaka
vii
Acknowledgement
Giving all praise and honor to God for enabling me to complete my Internship report with good
and sound health within scheduled time. The successful accomplishment of this Internship
report is the outcome of the contribution and involvement of a number of people, especially
those who took the time to share their thoughtful guidance and suggestions to improve the
report. It’s difficult for me to thank all of those people who have contributed something to this
report. There are some special people who cannot go without mention.
First of all, I would like to thank our honorable academic supervisor Dr. Syed Golam Maola,
Professor, Department Of Management, University Of Dhaka. I am thankful to him for his
continuous support and supervision, suggestions and providing me with valuable information
that was very much needed for the completion of this presentation.
Then, I express my sincere gratitude Md Mahbub Anan Siddique, Senior Asst. Vice President,
National Bank Limited for giving me the opportunity, appointment for the Internship Program
that I have completed. Finally, I take this opportunity to show my profound gratitude to
Mohammad Ferdous Alam, Senior Executive Officer, Md. Liton Khan, Executive Officer, all
the Officers and staff members in National Bank Limited, Kaliakoir Branch, Gazipur for their
all-out co-operation by providing required information and enabling me to prepare my report
so informative. Without their help this report might not have been a comprehensive one.
(Tapash Chandra Paul)
viii
A Comparative Financial Performances Analysis
of Three Branches of National Bank Limited
Table of Contents
Contents
Page No.
Executive Summary iii
Letter of Transmittal iv
Declaration v
Supervisor’s Certificate vi
Acknowledgement vii
Chapter I Introduction 1-3
1.1 Background of the Study 2
1.2 Objectives 2
1.3 Scope 3
1.4 Limitations 3
Chapter II Methodology 4-6
2.1 Sources of Data 5
5
5
2.1.1 Primary Sources
2.1.2 Secondary Sources
2.2 Methods of Data Collection 6
2.3 Tools of Analysis 6
Chapter III Organization Profile of NBL 7-12
3.1 A Brief History 8-9
3.2 Vision and Mission 9
3.3 Organogram 10-11
3.4 Products & Services 11
3.5 Conclusion 12
ix
Chapter IV Corporate Financial Performance 13-19
4.1 Introduction 14
4.2 Highlights of corporate financial performance 15-19
4.2.1 Loans to Deposit Ratio (LDR) 16
4.2.2 Return on Assets (ROA) 17
4.2.3 Return on Equity (ROE) 18
4.2.4 Earnings Per Share (EPS) 19
4.3 Conclusion 19
Chapter V Profile of Three Branches 20-24
5.1 Basic facts of three branches 21-23
5.2 Branch management organogram 24
5.3 Conclusion 24
Chapter VI Analysis and Findings 25-35
6.1 Growth and profitability performance analysis of three
branches
6.1.1 Deposits
6.1.2 Advances
6.1.3 Profit / Loss
26-30
26-27
27-28
29-30
6.2 Employee efficiency performance analysis of three
branches
6.2.1 Per Employee Deposits
6.2.2 Per Employee Advances
6.2.3 Per Employee Profit / Loss
30-33
31
32
33
6.3 Manpower assessment of three branches 34
6.4 Conclusion 35
Chapter VII Conclusion and Recommendations 36-38
7.1 Conclusion 37
7.2 Recommendations 38
Appendix 39-40
Appendix – I 39-40
References 41
1
2
Chapter I: Introduction
This study aims at measuring and comparing the financial performance of three branches along
with my internship placement Kaliakoir branch of National Bank Limited in Bangladesh
through extensive use of financial ratios that mainly indicate the growth and profitability
performance analysis and employee performance analysis.
The concept of financial performance and its measurement is well advanced within finance and
management fields. Generally, the financial performance of banks and other financial
institutions has been measured using a combination of financial ratios analysis, benchmarking,
measuring performance against budget or a mix of these methodologies (Avkiran, 1995).
Financial ratio analysis involves methods of calculating and interpreting financial ratios to
analyze and monitor firm’s performance. The basic inputs to ratio analysis are the firm’s
income statement and balance sheet. The study findings can be helpful for management of NBL
also for three branches of NBL to improve their financial performance and formulate policies
that will improve their performance in future.
1.1 Background of the Study
There is a far gap between theoretical knowledge and practical field. Internship program has
been launched mainly to bridge this gap. The internship is a part of the Bachelor Business
Administration (BBA) degree that provides the job experience to students. I was placed at
National Bank Limited, Kaliakoir Branch, Gazipur as an internee for 45 days duration.
The presented report of internship named “A Comparative Financial Performances Analysis of
Three Branches of National Bank Limited” is originated from the partial fulfillment of the
Bachelor Business Administration (BBA) degree conducted by the Department Of
Management, University Of Dhaka. During the internship program, I was under the faculty
supervisor Dr. Syed Golam Maola, Professor, Department Of Management, University Of
Dhaka and organizational supervisor Md. Liton Khan, Executive Officer, National Bank
Limited, Kaliakoir Branch, Gazipur.
1.2 Objectives
1.2.1 Broad Objective
The main objective of the report is to compare and analyze financial performance of three
branches of National Bank Limited.
1.2.2. Specific Objectives
The following specific objectives have been covered by this study:
 to analyze comparative branch financial performance among three branches in the light
of growth and profitability performance.
 to evaluate comparative branch financial performance among three branches in the light
of employee performance.
3
1.3 Scope
This particular subject is extremely extensive in nature. To evaluate comparative the financial
performance among three branches of National Bank Limited it is being required to three
branches as a whole. This report tried to concentrate only on the financial performance issues
while evaluation of the performance measures also requires some other considerations. The
study findings can be helpful for management of National bank ltd. always for branch manager
to improve their financial performance and formulate policies that will improve overall their
performance. The study also identified specific areas for bank to work on which can ensure
sustainable growth for these banks.
1.4 Limitations
Comparing and analyzing the broad performance of three branches of a bank are not that easy.
Moreover due to obvious reasons of scrutiny and confidentiality, the bank personnel usually
don’t want to disclose all the statistical information about their organization. Time is another
major limitation s the duration of the program was 45 days only and being a temporary member
of the organization, it was not possible on my part to notice or express some of the sensitive
issues and other aspects. 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 by 45 days. It was really
very short time to know details about an organization like National 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 study 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.
4
5
Chapter II: Methodology
While conducting the study, sources were explored for primary information and data. But
hardly any updated data could be found. In the absence of updated information or data
dependence on secondary data has been inevitable. However, whenever possible primary data
has been used. Data were also collected by interviewing the responsible officers and from some
documents & statements printed by the National Bank Limited. Personnel of Kaliakoir Branch,
National Bank Limited also helped me in collecting data providing books and Bank’s annual
report.
2.1 Sources of Data
The following sources have been used for the purpose of gathering and collecting data as
required.
2.1.1 Primary sources of data
Collecting data directly from the practical field is called primary source of data. Sources of
Primary data are follows:
a) Face to face conversation with respective officers of the NBL.
b) Personal interview with respective officers of the NBL.
c) Practical experience gained during internship period
2.1.2 Secondary sources of data
Collecting data indirectly from the practical field is called Secondary data. Sources of
Secondary data are follows:
a) Annual reports (2009-13) of NBL
b) Brochures, manuals and publication of the NBL
c) Branch highlights report (2013 and 2014) of Kaliakoir branch, Pabna branch and Bogra
branch of NBL
d) Website of NBL
e) Selected books.
6
2.2 Methods of Data Collection
The following methods have been used for the purpose of gathering and collecting data as
required.
2.2.1 Interview method:
The face-to-face informal interview was taken for collecting primary data. Manger and officers
of Kaliakoir branch were mainly interviewed by me.
2.2.2 Record review:
As part of the requirement analysis, some current and previous documents and brochures
related to branch financial information had been reviewed.
2.2.3 Discussion:
Formal and informal discussion with the manger and officers of Kaliakoir branch, NBL were
held to gather information of the current work procedures.
2.3 Tools of Analysis
This is a descriptive report mainly aiming to evaluate financial performance three selected
branches of NBL in the term of growth and profitability performance and employee
performance. The data gathered from both primary and secondary sources were arranged
orderly to get a clear picture of three branches financial performance of NBL. To evaluate and
analyze the financial performance mainly trend analysis and ratio analysis technique are being
used.
a) 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.
b) Ratio analysis: Ratio analysis tools are used to analyze the gathered data with the help
of computer software Microsoft Excel.
c) Tables/boxes: Several tables/boxes had been used to display and analyze multiple set
of variation in data over years.
d) Charts: Several charts had been used to display and analyze the trends and ratio
analysis of data. Several charts had been used such as Clustered column, 3D- Clustered
column, Stacked Line, Line with Markers, Stacked Line with Markers.
7
8
Chapter III: Organization Profile of National Bank Limited
3.1 A Brief History
National Bank Limited was born as the first hundred percent Bangladeshi owned Bank in the
private sector. From the very inception, it was the firm determination of National Bank Limited
to play a vital role in the national economy. We are determined to bring back the long forgotten
taste of banking services and flavors. We want to serve each one promptly and with a sense of
dedication and dignity. The then President of the People's Republic of Bangladesh Justice
Ahsanuddin Chowdhury inaugurated the bank formally on March 28, 1983 but the first branch
at 48, Dilkusha Commercial Area, Dhaka started commercial operation on March 23, 1983.
The 2nd Branch was opened on 11th May 1983 at Khatungonj, Chittagong.
At present, NBL has been carrying on business through its 179 branches & Agri Branches
spread all over the country. Since the very beginning, the bank has exerted much emphasis on
overseas operations and handled a sizable quantum of home bound foreign remittance. It has
drawing arrangements with 415 correspondents in 75 countries of the world, as well as with 37
overseas Exchange Companies located in 13 countries. NBL was the first domestic bank to
establish agency arrangements with the world famous Western Union in order to facilitate
quick and safe remittance of the valuable foreign exchanges earned by the expatriate
Bangladeshi nationals.
NBL was also the first among domestic banks to introduce international Master Card in
Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card. The
Bank has in its use the latest information technology services of SWIFT and REUTERS. NBL
has been continuing its small credit program for disbursement of collateral free agricultural
loans among the poor farmers of Barindra area in Rajshahi district for improving their
livelihood. National Bank, has now acquired strength and expertise to support the banking
needs of the foreign investors. NBL stepped into a new arena of business and opened its Off
Shore Banking Unit at Mohakhali to serve the wage earners and the foreign investors better
than before.
Since its inception, the bank was aware of complying with Corporate Social Responsibility. In
this direction, we have remained associated with the development of education, healthcare and
have sponsored sporting and cultural activities. During times of natural disasters like floods,
cyclones, landslides, we have extended our hand to mitigate the sufferings of victims. It
established the National Bank Foundation in 1989 to remain involved with social welfare
activities. The foundation runs the NBL Public School & College at Moghbazar where present
enrolment is 1140. Besides awarding scholarship to the meritorious children of the employees,
the bank has also extended financial support for their education. It also provided financial
9
assistance to the Asiatic Society of Bangladesh at the time of their publication of Banglapedia
and observance of 400 years of Dhaka City.
3.2 Vision and Mission
3.2.1 Vision
Ensuring highest standard of clientele services through best application of latest information
technology, making due contribution to the national economy and establishing ourselves firmly
at home and abroad as a front ranking bank of the country are our cherished vision.
3.2.2 Mission
Efforts for expansion of our activities at home and abroad by adding new dimensions to our
banking services are being continued unabated. Alongside, we are also putting highest priority
in ensuring transparency, account ability, improved clientele service as well as to our
commitment to serve the society through which we want to get closer and closer to the people
of all strata. Winning an everlasting seat in the hearts of the people as a caring companion in
uplifting the national economic standard through continuous up gradation and diversification
of our clientele services in line with national and international requirements is the desired goal
we want to reach.
10
3.3 Organogram
Source: NBL Booklets
Sponsor Directors
Managing
Director
Committees
Executive
Committee
Audit
Committee
Management
Committee
Risk
Management
Committee
Asset Liability
Management
Committee
EVP
VP VP
Public
relation
AVP, NBL
Train. Ins
AVP,
admin
EVP EVP EVP
SVP
SVP
Loan &
Recovery
DMD Admin
Establishment
EVP
DMD
Operator
SVP
AVP
AVP AVP
AVP
AVP
AVP
AVP
AVP
AVP
SVP
AVP
AVP
VP
Computer
VP
EVP
AVP
Establish
AVP
AVP
Develop
Board of Directors
11
Sponsor Directors of NBL consists of 18 members. Board of Directors of NBL consists of 15
members where 1 Chairman, 10 Directors, 3 Independent Directors, and 1 Managing
Director. There are five committees who conduct whole operations of NBL. These
committees are 8 members of Executive Committee, 3 members of Audit Committee, 27
members of Management Committee, 3 members of Risk Management Committee and 7
members of Asset Liability Management Committee.
3.4 Products & Services
National Bank Limited offers different types of Corporate and Personal Banking Services
involving all segments of the society within the purview of the rules and regulations as laid
down by the Central Bank and other Regulatory Authorities. Following products and services
are offered by NBL:
Table 3.4: Products and Services offered by NBL
Deposit Products
Savings deposit
Current deposit
Term deposit
Foreign currency deposit
Monthly saving scheme
Monthly income scheme
Double benefit scheme
Millionaire income scheme
Credit products
Overdraft
Lease financing
House building
Small medium enterprise
Consumer credit scheme
Trade finance
Credit & Debit cards
Gold International
Gold Local
Silver International
Silver Local
Power Card
12
3.5 Conclusion:
National Bank Limited has its prosperous past, glorious present, prospective future and under
processing projects and activities. Established as the first private sector bank fully owned by
Bangladeshi entrepreneurs, NBL has been flourishing as the largest private sector Bank with
the passage of time after facing many stress and strain. The members of the board of directors
are creative businessmen and leading industrialists of the country. To keep pace with time and
in harmony with national and international economic activities and for rendering all modern
services, NBL, as a financial institution, automated all its branches with computer networks in
accordance with the competitive commercial demand of time. Moreover, considering its fourth-
coming future, the infrastructure of the Bank has been rearranging. The expectation of all class
businessmen, entrepreneurs and general public is much more to NBL. At present we have 179
branches under our branch network. In addition, our effective and diversified approach to seize
the market opportunities is going on as continuous process to accommodate new customers by
developing and expanding rural, SME financing and offshore banking facilities.
13
14
Chapter IV: Corporate Financial Performance
4.1 Introduction
A corporation's operating performance is frequently measured using accounting ratios such as
return on sales and return on investment. These ratios provide a great deal of information about
a firm's financial performance of by means of comparisons with prior years' performance and
with other companies in the same industry. Nevertheless, there are limitations to the use of
these measures. One is that financial ratios may fail to consider the value of management's
actions and investment decisions taken with the intent of affecting future as opposed to current
performance. For example, a business that defers such things as maintenance and research and
development can appear to be performing well based on accounting ratios even though these
actions may impair the future performance of the business. Another limitation is that
accounting ratios aggregate many aspects of performance such as financing, marketing, and
production.
A firm may appear to be performing well even if it is poorly managed on certain of these
dimensions as long as it compensates by performing particularly well on other dimensions.
Financial performance analysis of a company is very important to get an overall view about an
organization. It generally consists of interpretation of balance sheet and interpretation of
income statement. By using these two sources one can perform the ratio analysis and trend
analysis which are the major tools for analyzing the financial performance of a bank. National
Bank Limited (NBL) setting new standards in the banking arena in the time of turbulent
economic conditions. As part of the long term financial reform and modernization plan of the
government, the bank had been converted into a public limited company.
15
4.2 Highlights of corporate financial performance
(Tk. in million)
Particulars 2009 2010 2011 2012 2013
Income statement
Interest income 7006.63 9616.14 14434.75 19103.18 18934.86
Interest expenses 4490.34 5577.09 9188.82 13679.66 16166.14
Profit before taxes and
provision
3397.69 8940.60 9591.94 3725.20 3539.91
Net Profit after taxation 2070.47 6860.34 6085.70 1487.91 2116.59
Balance Sheet
Authorized capital 7450.00 17500.00 17500.00 17500.00 17500.00
Paid-up Capital 2846.54 4412.13 8603.65 14196.03 14196.03
Reserve Funds & surplus 6070.22 14693.47 12918.92 8178.24 9733.61
Total Shareholders’ equity 8916.76 19105.60 21522.57 22374.27 23929.64
Total Deposits 76834.13 102471.83 128215.97 157331.73 193642.97
Total Loans and Advances 65129.29 92003.56 115388.89 126169.79 151098.98
Investment 12315.20 24993.32 30334.63 54326.46 56827.52
Total Assets 91931.63 134732.31 169037.38 205207.33 235173.80
Foreign exchange Business
Import 77539.77 96442.57 104570.90 94137.40 113492.00
Export 38398.85 47812.47 60893.90 69062.90 75912.41
Remittance 44381.50 49145.30 54469.40 66513.90 58224.10
Regulatory and Capital
Measures
Total Capital (Tier-I+II) 9124.62 19190.79 24905.13 26460.36 27705.46
Total Risk Weighted
Assets
105986.20 156148.60 196812.10 206732.40 236911.20
Total Capital adequacy
ratio
8.61% 12.29% 12.65% 12.80% 11.69%
Credit Quality
Percentage of Classified
Loans against total Loans
and Advances
5.96% 3.96% 2.83% 4.32% 3.24%
Operating Performance
Advance Deposit ratio 84.77% 89.78% 90.00% 80.19% 78.03%
Cost of Funds 6.45% 6.52% 7.29% 8.75% 8.81%
ROA 2.52% 6.05% 4.01% 0.80% 0.96%
ROE 27.53 48.96% 29.96 6.78 9.14
No of shares
outstanding(million)
284.65 441.21 860.37 1419.60 1419.60
EPS 4.69 7.97 4.29 1.05 1.49
Market Price per Share 64.63 191.60 66.80 22.10 11.80
Price Earnings Ratio
(Times)
13.78 24.04 15.88 21.05 7.92
Rating
Long term A1 AA3 AA2 AA- AA-
Short term ST-2 ST-1 ST-1 ST-1 ST-2
16
Financial performance analysis of NBL consists of interpretation of balance sheet and
interpretation of income statement. Only four indicators loans to deposits ratio, returns on
assets, returns on equity and earning per share are mainly interpreted in this study. These are
interpreted in below:
4.2.1 Loans to deposits Ratio (LDR)1
Loan to deposit is the most important ratio to measure the liquidity condition of the bank. Here,
loan means the advances for the conventional banks. Bank with Low LDR is considered to
have excessive liquidity, potentially lower profits, and hence less risk as compared to the bank
with high LDR. However, high LDR indicates that a bank has taken more financial stress by
making excessive loans and also shows risk that to meet depositors’ claims bank may have to
sell some loans at loss. A high figure denotes lower liquidity.
Figure 4.2.1 Loans to Deposit Ratio (LDR) trends
In perspective of bank total deposits percentage of total loans calculate. Higher the ratio means
less liquid and taking more risk. So bank has to maintain certain ratio for following the central
bank policy and keep sustainable position in the competitive market. Bank total loan against
deposit was 90% in 2011 which reached highest point around this period and minimum 78.03%
in year 2013. Lower rate of ratio means more liquidity of bank. According to above graph
indicate that is NBL current LDR well consistent compare previous years. Liquidity position
of this bank improved the ratio that refers bank has more liquidity than other time compare to
present.
1
Loans to deposit Ratio (LDR) =
Total Loans
Total deposits
84.77%
89.78% 90.00%
80.19%
78.03%
72.00%
74.00%
76.00%
78.00%
80.00%
82.00%
84.00%
86.00%
88.00%
90.00%
92.00%
2009 2010 2011 2012 2013
Loans To Deposit Ratio (LDR)
17
4.2.2 Return on Assets (ROA)2
The return on assets ratio, often called the return on total assets, is a profitability ratio that
measures the net income produced by total assets during a period by comparing net income to
the average total assets. Return on Assets (ROA) shows the ability of management to acquire
deposits at a reasonable cost and invest them in profitable investments (Ahmed, 1995).
Generally, a higher ratio means better managerial performance and efficient utilization of the
assets of the firm and lower ratio is the indicator of inefficient use of assets. ROA can be
increased by Banks either by increasing profit margins or asset turnover but they can’t do it
simultaneously because of competition and trade-off between turnover and margin. So bank
maintain higher ROA will make more the profit.
1.
Figure 4.2.2: Return on Assets (ROA) trends
Last year was another challenging year for the banking sector if we are compare to 2009-2011.
During the year average interest margin has decreased due to bank investment of fund to the
low yield and government securities. With expansion of business, asset profile of the bank also
increased gradually. Total asset of bank grew up 14.60% at December 2013 against last year.
The significant increase in asset was mainly achieved due to rise in loan and advance,
investment, cash and balance with other bank and institutions. This factor is effecting the
calculation of ROA. NBL performs most effectively in 2010. But in last year there some hope
that it will try to reach previous position. It indicates that total asset of the bank increased but
net profit did not increase with the assets. This shows the management inefficiency in using
the bank asset to generate profit.
2
ROA =
Net Income after Provision & Tax
Total assets
2.52%
5.09%
3.60%
0.73% 0.90%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
2009 2010 2011 2012 2013
Return on Assets (ROA)
18
4.2.3 Return on Equity (ROE)3
The return on equity ratio or ROE is a profitability ratio that measures the ability of a firm to
generate profits from its shareholders investments in the company. In other words, the return
on equity ratio shows how much profit each dollar of common stockholders' equity generates.
So a return on 1 means that every dollar of common stockholders' equity generates 1 dollar of
net income. This is an important measurement for potential investors because they want to see
how efficiently a company will use their money to generate net income. ROE is also an
indicator of how effective management is at using equity financing to fund operations and grow
the company.
Figure 4.2.3: Return on equity (ROE) trends
Lower ROE in 2012 was 6.65%., if we compare to last 5 year ROE. The earnings per share
was Tk. 1.49 in 2013 increasing 41.90% over Tk. 1.05 previous year. In graph ROE reached
highest point 35.91% at 2010 than its getting lower towards. NBL earn maximum ROE 35.91%
in 2010 and minimum 6.65% in 2012. In accordance with prudent capital structure plan, the
bank has a consistent dividend policy. In addition NBL declared high stock dividend as and
when possible to strengthen the capital base. Bank current ROE position need to change if we
compare to last 5 years except of 2012. So the management should work hard to increase the
return associated with equity.
3
ROE=
Net Income after Provision & Tax
Total Shareholders’ equity
23.22%
35.91%
28.28%
6.65%
8.85%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
2009 2010 2011 2012 2013
Return on Equity (ROE)
19
4.2.4 Earnings Per share4
Earnings per share (EPS) measures the profit available to equity shareholders on a per share
basis, that is, the amount that they can get on every share held (Khan & Jain, 2007). This ratio
is usually used to find out the operating efficiency of the firm against its‟ total number of share
outstanding. The EPS of the banks in the last 5 years are as follows:
Figure 4.2.4: Earnings per Share (Tk.) trends
Higher EPS in 2010 was 15.55 (Tk.), if we compare to last 5 year EPS of National Bank
Limited because of achieving high profit after tax 6860.34 (Tk. in million) though opening 14
new branches and appointing 482 new employees in 2010 according to plan for bank
expansions. The numbers of shares outstanding share was gradually increased over last 5 year.
But net profit after tax was gradually decreased and increased by one year after. Operating
efficiency of National Bank Limited in the formed of the earnings of the firm against its each
share or stock was continuously poor. Earnings per share of NBL should be increase to attract
investors.
4.3 Conclusion
NBL helps to mobilize the resources to stay strong in the key areas of operation. In the areas
of treasury operation, NBL remains the key player in the country’s foreign exchange and
money market enhancing profitability through careful pricing and assessment of risk and return
on investment, the treasury dealing is being strengthened to facilitate transactions requiring
more sophisticated products and services for larger institutional and corporate clients. Though
it has a wide range of network and confidence from the customers but it has some problems
those problems reduce it income.
4
EPS =
Net Profit after tax
No of shares outstanding
7.17
15.55
7.07
1.05 1.49
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
2009 2010 2011 2012 2013
Earnings Per Share (Tk.)
20
21
Chapter V: Profile of Three Branches
5.1 Basic facts of three branches
For comparative branch performance analysis three branches are being selected along with my
internship placement. Basic facts of these three branches are given in the below:
5.1.1 Kaliakoir Branch
Opening of Kaliakoir Branch was 2007. At present a senior executive officer is in-charge.
Total number of employees are 20.
Financial Information
(Tk. in million)
Sl Particulars 31.12.2013 31.12.2014
1 Interest Received from loans and advances 40.48 64.45
2 Interest Received from IBTA 145.88 146.23
3 Total Interest Received (1+2) 186.36 210.69
4 Interest Paid on deposit 121.70 138.34
5 Interest Paid on IBTA - -
6 Total Interest Paid (4+5) 121.70 138.34
7 Net Interest Income (3-6) 64.66 72.35
8 Non-Interest Income 6.38 5.43
9 Operating Income (7+8) 71.04 77.78
10 Operating Expense 13.52 14.98
11 Profit/(Loss) (9-10) 57.53 62.799
12 Total Income (3+8) 192.74 216.12
13 Total Expenditure (6+10) 135.22 153.32
14 Employee Expenditure 7.97 8.40
15 Average Advance 235.90 389.46
16 Average Deposit 1379.71 1674.02
17 Average High Cost Deposit 1025.87 1277.02
18 Average Bills Payable 10.34 23.86
19 Number of Average Voucher 1376 2580
20 Number of Employee 20 20
22
5.1.2 Bogra Branch
Opening of Bogra Branch was 1984. At present a senior vice president is in-charge. Total
number of employees are 34.
Financial Information
(Tk. in million)
Sl. Particulars 31.12.2013 31.12.2014
1. Interest Received from loans and advances 185.82 312.38
2. Interest Received from IBTA -
3. Total Interest Received (1+2) 192.12 312.38
4. Interest Paid on deposit 95.95 90.04
5. Interest Paid on IBTA 21.40 114.27
6. Total Interest Paid (4+5) 117.35 204.31
7. Net Interest Income (3-6) 74.77 108.07
8. Non-Interest Income 15.49 14.61
9. Operating Income (7+8) 90.26 122.67
10 Operating Expense 26.85 113.93
11 Profit/(Loss) (9-10) 63.41 8.74
12 Total Income (3+8) 207.61 326.98
13 Total Expenditure (6+10) 144.20 318.24
14 Employee Expenditure 8.36 22.39
15 Average Advance 1489.96 2217.70
16 Average Deposit 1127.60 1128.59
17 Average High Cost Deposit 524.60 814.83
18. Average Bills Payable 14.22 27.30
19. Number of Average Voucher 1450 1550
20. Number of Employee 33 34
23
5.1.3 Pabna Branch
Opening of Pabna Branch was 1988. At present a vice president is in-charge. Total number of
employees are 24.
Financial Information
(Tk. in million)
Sl Particulars 31.12.2013 31.12.2014
1 Interest Received from loans and advances 44.82 39.29
2 Interest Received from IBTA 101.70 105.69
3 Total Interest Received (1+2) 146.53 144.99
4 Interest Paid on deposit 95.66 103.47
5 Interest Paid on IBTA - -
6 Total Interest Paid (4+5) 95.66 103.47
7 Net Interest Income (3-6) 50.87 41.52
8 Non-Interest Income 6.91 4.25
9 Operating Income (7+8) 57.78 45.77
10 Operating Expense 16.98 18.46
11 Profit/(Loss) (9-10) 40.80 27.30
12 Total Income (3+8) 153.44 149.24
13 Total Expenditure (6+10) 112.63 121.93
14 Employee Expenditure 11.81 12.97
15 Average Advance 265.41 272.37
16 Average Deposit 1079.21 1206.57
17 Average High Cost Deposit 815.28 945.03
18 Average Bills Payable 16.23 22.98
19 Number of Average Voucher 1468 1572
20 Number of Employee 24 23
24
5.2 Branch management organogram
All the branches are followed almost same branch management organogram. The main
functions of NBL branches are divided into five parts. These are (a)cash division, ( b)clearing,
bills and remittance division, (c)deposit division, (d)accounts division and (e) advance division.
Some branch has a separate remittance division.
Figure 5.2: Branch management organogram
5.3 Conclusion:
At present, NBL has been carrying on business through its 179 branches & Agri Branches
spread all over the country. Since the very beginning, the bank has exerted much emphasis on
overseas operations and handled a sizable quantum of home bound foreign remittance. It has
drawing arrangements with 415 correspondents in 75 countries of the world, as well as with 37
overseas Exchange Companies located in 13 countries.
2nd Man Branch In-Charge
General Banking
Deposit
Advance
Cash
Accounts
Branch In-Charge
Accounts
Clearing, Bills
& Remittance:
25
26
Chapter VI:Analysis and Findings
6.1 Growth and profitability performance analysis of three branches
Three financial indicators are being used to compare and analyze growth performance among
three branches. These are growth rate of deposit collection, growth rate of sanctioning loans
and advances and growth rate of profit-loss.
6.1.1 Deposits
A strong deposit base is necessary for the success of a bank. Bank deposit account is an
arrangement with a bank that allows the customer to pay take out money. The bank keeps a
record of all the payment and deposits (transaction) in the customer’s name. It binds the banker
and the customer into a contractual relationship. Using an account, a customer may deposits
and withdrawals of money from his/her account. It is also called the primary and fiduciary
relationship between bank and customer. Opening deposit account with a bank is the way of
creating banker relationship.
Table 6.1.1: Deposit collection (Tk. in million)
Particulars
2013 2014 Average
Budget Actual
(31.12.13)
Budget Actual
(31.12.14)
Budget
Achievement
Pabna Branch 1200.00 1187.09 1450.00 1344.03 95.81%
Bogra Branch 1300.00 1159.71 1430.00 1199.88 86.56%
Kaliakoir Branch 1600.00 1600.28 2000.00 1861.71 96.56%
Source: Branches inspection report of NBL
During the year 2013-2014 National Bank Limited mobilized a substantial amount of deposits
from mid-level income group people under Deposits Savings Scheme. In 2013 Pabna branch
achieved 98.93% of its budgeted deposit collection, Bogra branch achieved 89.21% of its
budgeted deposit collection and Kaliakoir branch achieved 100.02% of its budgeted deposit
collection. In 2014 Pabna branch achieved 92.69% of its budgeted deposit collection, Bogra
branch achieved 83.91% of its budgeted deposit collection and Kaliakoir branch achieved
93.09% of its budgeted deposit collection.
27
Budgeted deposit collection is high for the newly opening branch than the old branch of NBL.
Budgeted deposit collection was high for Kaliakoir branch than other two branches. And it
performed very well in close to achieve it budgeted deposit.
Figure 6.1.1 Branches deposit collection
All deposits aren’t the same. Banks can tailor product and sales strategies when they know their
customers’ rate sensitivity and deposit stickiness. Three branches of national banks that use
advanced elasticity-based pricing models discover differences in rate sensitivity and
competitive conditions. Those differences reveal themselves across customer segments,
markets, product-use profiles and balance levels. Kaliakoir branch can be treated as benchmark
for Pabna and Bogra branch in terms of deposit collection growth.
6.1.2 Advances
In evaluating the performance of a banking institution, it is important to assess the extent to
which clients have availed of institutional credit. The Bank’s Loans and Advances portfolio
also indicates an impressive growth. A major source of bank failures has been irrecoverable
loans that were made to related companies or individuals. Loans to affiliated companies,
shareholders or directors are not always made on a strictly commercial basis and represent a
potential source of impairment of the bank's capital.
0
500
1000
1500
2000
2013 2014
Tk.inmillion
Deposits
Pabna Branch Bogra Branch Kaliakoir Branch
28
Table 6.1.2: Advances (Tk. in million)
Particulars
2013 2014
Average
Budget Actual
(31.12.13)
Budget Actual
(31.12.14)
Budget
achievement
Pabna Branch 450.00 262.38 400.00 326.28 69.94%
Bogra Branch 1500.00 1489.60 1900.00 2832.73 124.2%
Kaliakoir Branch 260.00 339.23 450.00 480.90 118.67%
Source: Branches inspection report of NBL
In 2013 Pabna branch achieved 58.31% of its budgeted loan and advance, Bogra branch
achieved 99.31% of its budgeted loan and advance and Kaliakoir branch achieved 130.47% of
its budgeted loan and advance. In 2014 Pabna branch achieved 81.57% of its budgeted loan
and advance, Bogra branch achieved 149.09% of its budgeted loan and advance and Kaliakoir
branch achieved 106.87% of its budgeted loan and advance. In 2014 Pabna branch achieved
81.57% of its budgeted loan and advance but its budgeted loans was reduced due to growth of
import loan decreased.
Figure 6.1.2: Branches advance
Bogra branch was closed to achieve its budgeted loan and advance target in the year 2013. But
in the year 2014 Bogra branch sanctioned excess from its budgeted loan and advance because
of providing a large amount of loan to import business. On the other hand growth rate of loan
and advance increased in Kaliakoir branch due to providing loan to the industrial sectors
especially Ready-made-garment’s (RMG). Bogra branch can be treated as benchmark for
Pabna and Kaliakoir branch in terms of sanctioning loans and advances growth.
0.00
500.00
1000.00
1500.00
2000.00
2500.00
3000.00
2013 2014
Tk.Inmillion
Advances
Pabna Branch Bogra Branch Kaliakoir Branch
29
6.1.3 Profit / Loss
The most common measure of bank branch performance is profitability performance.
Generally, accounting profits are the difference between revenues and costs. Profitability is
considered to be the most difficult attributes of a firm to conceptualize and to measure. These
ratios are used to assess the ability of the business to generate earnings in comparison with its
all expenses and other relevant costs during a specific time period.
More specifically, these ratios indicate firm’s profitability after taking account of all expenses
and income taxes, the efficiency of operations, firm pricing policies, profitability on assets and
to shareholders of the firm Profitability ratios are generally considered to be the basic bank
financial ratio in order to evaluate how well bank is performing in terms of profit. For the most
part, if a profitability ratio is relatively higher as compared to the competitor(s), industry
averages, guidelines, or previous years’ same ratios, then it is taken as indicator of better
performance of the bank. Study applies these criteria to judge the profitability of the National
banks Limited.
Table 6.1.3: Profit-Loss (Tk. in million)
Particulars 2013 2014 Average
Budget Actual
(31.12.13)
Budget Actual
(31.12.14)
Budget
achievement
Pabna Branch 59.00 40.80 50.00 27.30 61.88%
Bogra Branch 60.00 63.41 80.00 8.74 58.32%
Kaliakoir Branch 57.50 57.52 75.00 62.80 91.88%
Source: Branches inspection report of NBL
In 2013 Pabna branch achieved 69.15% of its budgeted profits, Bogra branch achieved
105.68% of its budgeted profits and Kaliakoir branch achieved 100.03% of its budgeted profits.
In 2014 Pabna branch achieved 54.60% of its budgeted profits, Bogra branch achieved 10.96%
of its budgeted profits and Kaliakoir branch achieved 83.73% of its budgeted profits.
Growth rate of profit decreased in Pabna branch due to increase in interest paid on deposit from
95.66(tk. in million) to 103.47 (tk. in million), increase in operating expense from 16.98 (tk.
in million) to 18.46 (tk. in million), increase in employee expenditure from 11.81 (tk. in
million) to 12.97 (tk. in million), and decrease in interest received from loans and advances
from 44.82 (tk. in million) to 39.29 (tk. in million), decrease in non-interest income from 6.91
(tk. in million) to 4.25 (tk. in million).
30
Figure 6.1.3: Profit-Loss
Profit Growth rate decreased in Bogra branch because of increasing interest paid on IBTA from
21.40 (tk. in million) to 114.27 (tk. in million) and increasing of operating expense from
26.85 (tk. in million) to 113.93 (tk. in million). Growth rate of profit increased in Kaliakoir
branch due to increase in interest received from loans and advances from 40.48 (tk. in million)
to 64.45(tk. in million), increase in interest received from IBTA from 145.88 (tk. in million) to
146.23 (tk. in million) and there was no interest paid on IBTA. In term of high growth rate of
profit Kaliakoir branch can be treated as benchmark for Pabna and Bogra branch.
6.2 Employee Performance Analysis of the Selected Branches
Ratio analysis is a method of interpreting the financial statements of a branch. A single ratio
by itself is not of much use (Kevin, 2009). Three financial ratio are being used to compare and
analyze employee performance among three branches. These are per employee deposit
collection, per employee sanctioning loans and advances and per employee profit-loss.
0
10
20
30
40
50
60
70
2013 2014
Tk.inmillion Profit / Loss
Pabna Branch Bogra Branch Kaliakoir Branch
31
6.2.1 Per Employee Deposit 5
It is the main component of the liability side of the balance sheet of a bank. Interest is to be
paid on the deposits received from the public and the other parties. Interest paid constitutes the
major part of the total expenditure of a commercial bank. This ratio has been computed by
dividing the amount of total deposits by the number of employees in the bank.
Figure 6.2.1: Per Employee Deposit
In Pabna branch the trend wise growth rate has shown an increasing trend 18.16 % per
employee deposit in general as shown in the above graph and in absolute terms from 49.46 (tk.
in million) per employee deposit to 58.44 (tk. in million) per employee deposit. In Bogra
branch the trend wise growth rate has shown an increasing trend 0.40 % per employee deposit
in general as shown in the above graph and in absolute terms from 35.15 (tk. in million) per
employee deposit to 35.29 (tk. in million) per employee deposit.
And in Kaliakoir Branch the trend wise growth rate has shown an increasing trend 16.35 % per
employee deposit in general as shown in the above graph and in absolute terms from 80.01 (tk.
in million) per employee deposit to 93.09 (tk. in million) per employee deposit. Comparing
among three branches growth rate of per employee deposit in Pabna Branch was high means
as high employee performance.
5
Per Employee Deposit=
𝐓𝐨𝐭𝐚𝐥 𝐃𝐞𝐩𝐨𝐬𝐢𝐭
𝐍𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐄𝐦𝐩𝐥𝐨𝐲𝐞𝐞
49.46
58.44
35.15 35.29
80.01
93.09
0.00
50.00
100.00
2013 2014
Tk.inmillion
Per Employee Deposit
Pabna Bogra Kaliakoir
32
6.2.2 Per Employee Advance 6
The main earning of a commercial bank is from the advances provided to the private and the
industry. Ultimately, the interest is to be earned from this major factor only. Interest constitutes
the main part of the total income of the commercial bank. This ratio has been computed by
dividing the amount of total advances by the number of employees in the bank.
Figure 6.2.2 Per Employee Advance
In Pabna Branch the ratio has shown an upward trend (in absolute terms) 10.93 (Tk. in million)
per employee to 14.19 (Tk. in million) per employee in general as shown in graph and banks
has 29.83 % the trend wise growth rate for the period 2013-2014. In Bogra Branch the ratio
has shown an upward trend (in absolute terms) 45.14 (Tk. in million) per employee to 83.03
(Tk. in million) per employee in general as shown in graph and banks has 83.94% the trend
wise growth rate for the period 2013-2014.
In Kaliakoir Branch the ratio has shown an upward trend (in absolute terms) 16.96 (Tk. in
million) per employee to 24.05 (Tk. in million) per employee in general as shown in graph
and banks has 41.80% the trend wise growth rate for the period 2013-2014. Comparing among
three branches trend wise growth rate of per employee advance in Bogra Branch was high
means as high employee efficiency performance.
6
Per Employee Advance =
Total Advance
Number of Employee
10.93
14.19
45.14
83.03
16.96
24.05
2013 2014
Tk.Inmillion
Per Employee Advance
Pabna Bogra Kaliakoir
33
6.2.3 Per Employee Profit/ Loss7
Below graph deals with profit per employee which is calculated by profit divided by no. of
employees. Every business exists in order to earn profit. Without profit no commercial activity
can sustain for a long period. Similarly, profit earning has become the main motive of
commercial banks operating in India. Profit earning and timely growth in the profit earning is
an essential feature for the continued success of a bank.
Figure 6.2.3 Per Employee Profit/ Loss
An analysis of data on the basis of percentage growth rate per employee profit-loss over the
base year shows that the maximum-minimum percentage growth rate was recorded in 2013 to
2014 respectively Pabna branch (-30 %) in 2014, Bogra branch (-86.46%) in 2014 and
Kaliakoir branch (9.03%) in 2014. In terms of per employee profit-loss Kaliakoir branch was
high employee efficiency performance among three branches.
7
Per Employee Profit/ Loss =
Net Profit/ Loss
Number of Employee
1.70
1.19
1.92
0.26
2.88
3.14
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2013 2014
Tk.Inmillion
Per Employee Profit/ Loss
Pabna Bogra Kaliakoir
34
6.3 Manpower assessment
The grade wise position of manpower of the branch in the period 2014 is appended below
Table 6.3: Manpower assessment among branches
Branch Pabna Branch Bogra Branch Kaliakoir Branch
Branch In-Charge (Grade) Vice President Sr. Vice President Senior Executive
Officer
Number of Employee 23 34 20
Excess (short) of Employee (2) 7 (5)
The grade wise position of branch in-charge in Pabna branch is vice president whereas in Bogra
branch is senior vice president and in Kaliakoir branch is senior executive officer. In terms of
the grade wise position of Branch Pabna branch is high branch weight than other two branches.
Figure 6.3: Manpower Assessment
In the manpower assessment among three branches it is found that Pabna branch requires 2
more employees and Kaliakoir branch requires 5 more employees to maintain banking
activities. On the other hand Bogra branches has a number of 7 excess employees.
-10
0
10
20
30
40
Number of Employee Excess (Short) of Employee
Manpower Assessment
Pabna Branch Bogra Branch Kaliakoir Branch
35
6.4 Conclusion
The performance evaluation of bank branches is a difficult task. One of the main reasons for
this difficulty is the complexity inherent in the variety of aspects to be considered in the
evaluation, and the multiple and conflicting interests of the different stakeholders involved.
Three branches of National Banks that use advanced elasticity-based pricing models discover
differences in rate sensitivity and competitive conditions. Those differences reveal themselves
across customer segments, markets, product-use profiles and balance levels.
Comparing three branches Kaliakoir branch performed very well in term of collecting deposits.
Bogra branch over exceeded from its budgeted loan and advance because of providing a large
amount of loan to import business in the year 2013. Growth rate of profit increased high in
Kaliakoir branch comparing three branches due to increase in interest received from loans and
advances, increase in interest received from IBTA and there was no interest paid on IBTA.
Comparing among three branches year wise growth rate of per employee deposit in Pabna
branch was high means as high employee efficiency performance. Comparing among three
branches year wise growth rate of per employee advance in Bogra branch was high means as
high employee efficiency performance. In terms of per employee profit-loss Kaliakoir branch
was high employee efficiency performance among three branches. Overall performance of
Kaliakoir branch of National Bank Limited is high among three branches in terms of growth
and profitability performance and employee efficiency performance of a branch.
36
37
Chapter VII: Conclusion and Recommendations
7.1 Conclusion
The concept of financial performance and its measurement is well advanced within finance and
management fields. Generally, the financial performance of banks and other financial
institutions has been measured using a combination of financial ratios analysis, benchmarking,
measuring performance against budget or a mix of these methodologies.
In this study bank branches performance compared through the growth of deposit collection,
sanctioning loan and advance and profit-loss against budget. Employee performance among
three branches is being measure and analyze with the help of per employee deposit, per
employee advance and per employee profit-loss. It has been prepared on the primary and
secondary data from different sources.
Despite of severe unfavorable economic conditions of last few years, NBL achieved a worthy
performance in all core areas of banking operation. This paper highlighted the performance of
NBL over the Financial 2009-2013. The results indicate that the overall bank performance in
terms of profitability performance (ROA, ROE and EPS) has been declining if we took 2010
figure as benchmark year. Banks increased the size of their portfolios during the period but net
profit did not increase with the assets as well as with equity and share. This shows the
management inefficiency in using the bank asset to generate profit. On the other hand loans to
deposit ratios (LDR) were satisfactory range in comparing to last 5 years and also it was
decreasing trend. NBL is also contributing to the advancement of the socioeconomic condition
of the country.
Pabna branch achieved average 95.81% from its budgeted deposit collection in the period 2013
and 2014. But in terms of sanctioning loans and advances Pabna branch achieved average
69.94% only from its budgeted ones. In terms of achieving profit budget is not satisfactory at
all. It achieved average 61.88% from its budgeted ones.
Bogra branch achieved average 86.56% from its budgeted deposit collection in the period 2013
and 2014. Bogra branch achieved average 124.20% from its budgeted ones in terms of
sanctioning loans and advances. It achieved average 58.32% profit from its budgeted ones
which is not satisfactory at all. Comparing among three branches growth rate of per employee
advance in Bogra Branch was high.
Kaliakoir branch achieved average 96.56% from its budgeted deposit collection in the period
2013 and 2014. In terms of sanctioning loans and advances Kaliakoir branch achieved average
118.67% from its budgeted ones. It achieved average 91.88% profit from its budgeted ones
which is satisfactory. Comparing among three branches growth rate of per employee deposit
and per employee profit in Kaliakoir Branch was high.
To keep pace with the current market and demand, NBL is following several strategies and
taking new initiatives, offering new products and services to the customers. NBL have a strong
position in the competitive market. It is among one of the fastest growing Bank. Income, total
assets, investment activity, export, import and remittance are all showing positive trends even
after the global challenges that we are facing today. But the little concerned on financial
stability of the bank decreased in recent year, this may be because of opening of new branches
in different business centers and the instability in the economy of the world.
38
7.2 Recommendations
A bank's primary business is to generate funds from customers and lend or invest these funds
at a yield that exceeds the cost of these funds. If a bank is unable to do this, the efficiency with
which they process account transactions will be a moot issue. Management of NBL should be
focused more on consolidation of its core business so that major business parameters deposits,
advances, import and export show moderate to satisfactory growth. The following aspects are
recommended in order to improve the financial performance of three branches:
o Bogra branch of NBL should give equal focus on all schemes of deposit. Management
of NBL should try to update all types of deposit schemes and it is necessary to increase
the rate of interest of deposit.
o Pabna branch of NBL should give a good attention regarding loan and advances
sanction. Management of NBL should increase their loan facility on deposit schemes
and the credit proposal evaluation process and time should be shortened.
o Bogra branch should decrease its interest payment on IBTA and operating expense in
order to turn back increasing profit trends. NBL should increase its finance on
diversified projects to achieve more clients.
o Employees of Bogra branch should study more on their customer segments, markets,
and product-use profiles to increase it’s per employee deposit.
o Employees of Kaliakoir branch should focus on sanctioning more loan by reducing
credit proposal evaluation process which would help increasing it’s per employee
advance.
o Employees of Bogra branch should more concentrate on their customer segments,
markets, product-use profiles and financial position of loan seeker in order to reduce
loan loss.
o Management of NBL should appoint one asst. vice president and one principal officer
in Kaliakoir branch. Because growth rate of deposit collection, earning profit, per
employee deposit, per employee profit in this branch is high among three branches and
at present it is being charged only by one senior executive officer.
o Motivated and talented manpower is giving good results in the banking sector. So, all
three branches should focus on motivated and talented manpower who can motivate
customer. For survival and growth management in banks is adopting different strategies
to improve employee productivity.
39
Appendix- I
Statement of affairs of Bogra Branch, Bogra as on 01.01.2015
Liabilities Taka Assets Taka
Current Deposit 11,03,68,954.60 Cash in Local Currency 1,34,47,613.56
Savings Bank Deposits 11,16,76,880.97 Cash in FC (Gen.) 2,92,477.50
Special Notice Deposit 5,11,64,421.94 Bangladesh Bank 1,04,16,082.56
Monthly Saving Scheme - Balance with Local Bank 10,916.25
NBL Monthly Scheme 10,24,44,251.00 Investments 31,09,500.00
New NBL Monthly Savings 3,09,29,592.60
Special Deposits Scheme 99,880.00 Loan (General) 27,19,33,083.00
Monthly Benefit Scheme 4,98,600.0 HBL (Staff) (EHBL) 1,57,19,025.00
Double Benefit Scheme 12,78,79,571.00 HB Loan (General) 35,34,222.00
Fixed Deposit 50,89,20,151.00 SOD (General) 9,28,81,353.82
Sundry Deposit 5,61,36,055.03 Cash Credit 2,35,68,25,424.51
Foreign Currency Deposits 2,728.22 LTR 8,50,20,808.00
RFCD 7,49,541.06 PAD (Cash) -
Monthly Income Scheme 1,32,77,010.00 Car Loan (Staff) 3,49,983.00
School Banking Deposit 69,046.00 Rural Credit for Agri. 2,11,974.00
NBL Millionaire Dep.
Scheme
2,04,49,776.00 Women’s Refinancing
Scheme
1,75,392.00
NBL Super Saver’s Term 1,07,31,666.00
PO Issued 2,62,71,241.50 Furniture & Fixture 1,18,883.41
PS Issued 13,346.00 Office Equipment 7,68,532.40
Demand Draft Issued
(Local)
60,861.25 Suspense A/c 1,26,800.00
Demand Draft Payable A/c 9,49,851.00 Sundry Assets 51,20,440.22
Stationery in Hand 1,10,873.02
Bangladesh Bank ACSP
Loan
45,50,000.00 Stamp in Hand 950.00
Advance Deposits 54,050.00
Interest Suspense A/c 3,05,61,708.00
Bills of Collection (Local) 2,80,446.00 Local Bill Lodged 2,80,446.00
Banker’s Liability LG
(Local)
7,41,15,320.83 Cust. Liability LG
(Local)
7,41,15,320.83
Banker’s Liability LG
(Foreign)
14,86,67,000.00 Cust. Liability LG
(Foreign)
14,86,67,0
00.00
CIBTA 163,59,41,012.54
Income 47948.00 Expenditure 4,657.00
Total Liabilities Taka 308,32,93,908.08 Total Assets Taka 308,32,93,908.08
Total Deposit Tk.114,53,98,125.42
Total Bills Payable Tk. 2,72,95,299.75
Total Advances Tk.282,66,51,265.33
40
Statement of affairs of Pabna Branch, Pabna as on 15.01.2015
Liabilities Taka Assets Taka
Current Deposits 58134523.49 Cash in Hand 4359928.00
Savings Bank Deposits 146454778.37 Cash in Foreign Currency 63157.50
Special Notice Deposits 48085035.56 Sonali Bank 10720090.24
Monthly Savings Scheme 863600.00 Investment 500.00
NBL Monthly Scheme 153952262.10
New NBL Monthly Savings 48303063.00
Monthly Benefit Scheme Loan (General) 52258596.81
Double Benefit Scheme 176105630.00 House Building Loan staff 1696559.00
Fixed Deposits 540974146.00
Sundry Deposits 5227117.85 S.O.D Draft 124297339.79
FC Accounts (WES) 389.74 Cash Credit 116988591.75
Resident for Curn. Dep.
(RFCD)
18855.94
Monthly Income Scheme 19700000.00
School Banking Deposit 440891.00 Car Loan 1083331.00
NBL Millionaire Dep. Sche. 32436364.00 Consumer Credit Scheme
NBL Serious Saving A/c 153.00 Retail Banking(RTL) 804112.00
Double Benefit Account 2248538.00 Small Enterprise
Finance(SEF)
167606.00
Monthly Earning Scheme 8100000.00 Lease Rental Receivables
NBL Micro Loan (MCL) 3389333.00
PO Issued 43547566.84 Furniture, Fix. & Fitt. 1976211.01
PS Issued 4240.00 Office Equipment 964866.67
DD Payable Account 1705529.00
Suspense A/c
Interest Payable on Deposit 15562563.00 Sundry Assets
Acc. Exp. Payable FR Supplies 111418.00 Stationery in hand 42335.13
Leave Fare Assistance Stamp in Hand 11050.00
Advance Deposits 29900.00
Local Bills for Collection 531000.00 Local Bills lodged 531000.00
Banker’s Liab. L/G(L) 24225200.00 LDB lodged
Banker’s Liab. L/G(Forn) 771000.00 Cust. Liab. L/G (Local) 24225200.00
Cust. Liab. L/G (Foreign) 771000.00
CIBTA CIBTA A/c 983137699.12
Income 101229.20 Expenditures 86687.07
Total Liabilities Taka 1327605094.09 Total Assets Taka 1327605094.09
(Fig. in Taka)
Total Deposit 124,10,45,348.05
Total Bills Payable 4,52,57,335.84
Total Advances 30,06,85,469.35
41
References
Ahmed, F. (1995), Performance of Commercial Banks in Bangladesh-A Note on Current
Trends. Journal of the Institute of Bankers, Bangladesh. Vol. 36-41, June.
Avkiran, N. K (1995): “Developing an Instrument to Measure Customer Service Quality in
Branch Banking”; International Journal of Bank Marketing, Vol. 12(6), pp. 10 – 18.
Kevin, S. (2009), Security Analysis and Portfolio Management, PHI Learning Private Limited,
New Delhi.
Khan, M.Y. & Jain, P.K. (2007), Financial Management, McGraw-Hill, New York.
NBL (2010), Annual report
…… (2011), Annual report
….... (2013), Annual report
…… (2015), Inspection Report, Bogra Branch
…… (2015), Inspection Report, Kaliakoir Branch
…… (2015), Inspection Report, Pabna Branch

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Internship Report

  • 1. Internship Report On A Comparative Financial Performance Analysis of Three Branches of National Bank Limited Tapash Chandra Paul BBA Program 2014 (17th Batch) Roll: 35
  • 2. Internship Report On A Comparative Financial Performance Analysis of Three Branches of National Bank Limited Tapash Chandra Paul BBA Program 2014 (17th Batch) Roll: 35 Supervisor Dr. Syed Golam Maola Professor Department of Management Faculty of Business Studies University of Dhaka 28th February, 201
  • 3. iii Executive Summary This study aims at measuring and comparing the financial performance of three branches of National Bank Limited in Bangladesh. In a competitive financial market bank performance is very important because it provides signal to depositors and investors whether to invest or withdraw funds from the bank. Similarly, it flashes direction to bank managers whether to improve its deposit service or loan service or both to improve its finance. Regulator is also interested to know for its regulation purposes. Specifically two objectives were pointed out in these study as to analyze comparative branch financial performance among three branches in the light of growth and profitability performance and evaluate comparative branch financial performance among three branches in the light of employee performance. For comparative branch performance analysis three branches are being selected. For the organization part, much information has been collected both from the primary sources and as well as from the secondary sources. The bank personnel usually don’t want to disclose all the statistical information about their organization due to obvious reasons of scrutiny and confidentiality. Time is another major limitations the duration of the program was 45 days only and being a temporary member of the organization. The emergence of National Bank Limited in the private sector was an important event in the Banking arena of Bangladesh. When the nation was in the grip of severe recession, the government took the farsighted decision to allow the private sector to revive the economy of the country. Several dynamic entrepreneurs came forward for establishing a bank with a motto to revitalize the economy of the country. Among three branches Kaliakoir branch performed very well in term of collecting deposits. By providing large amount of advances to import business, Bogra branch sanctioned excess loans and advances from its budgeted ones. Kaliakoir branch achieved high growth rate profit among three branches due to increase in interest received from loans and advances, increase in interest received from IBTA and there was no interest paid on IBTA. Growth rate of per employee deposit in Kaliakoir branch was high which was being meant high employee performance comparison among three branches. Bogra branch was high employee performance in terms of per employee advances. In terms of per employee profit-loss Kaliakoir branch was high employee performance among three branches. Overall performance of Kaliakoir branch of National Bank Limited was high among three branches in terms of growth and profitability performance and employee performance of a branch. Bogra branch of NBL should give equal focus on all schemes of deposit. On the other hand Pabna branch of NBL should give a good attention regarding loan and advances sanction. Bogra branch should decrease its interest payment on IBTA and operating expense in order to turn back increasing profit trends. Employees of Bogra branch should more concentrate on their customer segments, markets, product-use profiles and financial position of loan seeker in order to reduce loan loss. However, National Bank Limited is a new generation Bank. It is committed to provide high quality financial services or products to contribute to the growth of GDP of the country through stimulating trade and commerce, accelerating the pace of industrialization, boosting up export, creating employment opportunity for the educated youth, poverty alleviation, raising standard of living of limited income group and overall sustainable socio-economic development of the country.
  • 4. iv Letter of Transmittal 28th February, 2015 Dr. Syed Golam Maola Professor Department Of Management University Of Dhaka Sub: Submission of Internship Report. Dear Sir, I am glad to submit my internship report covering the topic “A Comparative Financial Performance Analysis of Three Branches of National Bank Limited” after the completion 45 days internship program in National Bank Limited (Kaliakoir Branch, Gazipur). This report is an integral part of the completion of the BBA program. For preparing this report I tried my level best to accumulate relevant and up-to-date information from all available sources. It is prepared on the primary and secondary data from different sources. Recommendations are only subjective judgment of mine. It is my sincere hope that you would find the report useful. Sincerely Yours, …………………….. Tapash Chandra Paul BBA Program 2014 Roll No: 35 Section: A Batch: 17th Department Of Management University Of Dhaka
  • 5. v Declaration I Tapash Chandra Paul, hereby declare that the presented report of internship named “A Comparative Financial Performance Analysis of Three Branches of National Bank Limited” is being prepared by me under the supervisor Dr. Syed Golam Maola, Professor, Department Of Management, University Of Dhaka. No part of this report has been previously submitted to any other University/ College/ Institution/ Organization for any academic certificate/ degree/ diploma/ qualification. I also conform that the report is only being prepared to meet my academic requirement not for any other purpose. It will not act anything that will hamper Bank’s confidentiality and interests. It might not be used with the interest of opposite bodies of National Bank Limited. ……………………….. (Tapash Chandra Paul)
  • 6. vi Supervisor’s Certificate This is to certify that the internship report entitled “A Comparative Financial Performance Analysis of Three Branches of National Bank Limited” has been prepared by Tapash Chandra Paul as a partial fulfillment of the requirement of Bachelor of Business Administration (BBA) degree from the Department of Management, University of Dhaka under my guidance and supervision. I wish him every success in life. …………………………….. Dr. Syed Golam Maola Professor Department Of Management University Of Dhaka
  • 7. vii Acknowledgement Giving all praise and honor to God for enabling me to complete my Internship report with good and sound health within scheduled time. The successful accomplishment of this Internship report is the outcome of the contribution and involvement of a number of people, especially those who took the time to share their thoughtful guidance and suggestions to improve the report. It’s difficult for me to thank all of those people who have contributed something to this report. There are some special people who cannot go without mention. First of all, I would like to thank our honorable academic supervisor Dr. Syed Golam Maola, Professor, Department Of Management, University Of Dhaka. I am thankful to him for his continuous support and supervision, suggestions and providing me with valuable information that was very much needed for the completion of this presentation. Then, I express my sincere gratitude Md Mahbub Anan Siddique, Senior Asst. Vice President, National Bank Limited for giving me the opportunity, appointment for the Internship Program that I have completed. Finally, I take this opportunity to show my profound gratitude to Mohammad Ferdous Alam, Senior Executive Officer, Md. Liton Khan, Executive Officer, all the Officers and staff members in National Bank Limited, Kaliakoir Branch, Gazipur for their all-out co-operation by providing required information and enabling me to prepare my report so informative. Without their help this report might not have been a comprehensive one. (Tapash Chandra Paul)
  • 8. viii A Comparative Financial Performances Analysis of Three Branches of National Bank Limited Table of Contents Contents Page No. Executive Summary iii Letter of Transmittal iv Declaration v Supervisor’s Certificate vi Acknowledgement vii Chapter I Introduction 1-3 1.1 Background of the Study 2 1.2 Objectives 2 1.3 Scope 3 1.4 Limitations 3 Chapter II Methodology 4-6 2.1 Sources of Data 5 5 5 2.1.1 Primary Sources 2.1.2 Secondary Sources 2.2 Methods of Data Collection 6 2.3 Tools of Analysis 6 Chapter III Organization Profile of NBL 7-12 3.1 A Brief History 8-9 3.2 Vision and Mission 9 3.3 Organogram 10-11 3.4 Products & Services 11 3.5 Conclusion 12
  • 9. ix Chapter IV Corporate Financial Performance 13-19 4.1 Introduction 14 4.2 Highlights of corporate financial performance 15-19 4.2.1 Loans to Deposit Ratio (LDR) 16 4.2.2 Return on Assets (ROA) 17 4.2.3 Return on Equity (ROE) 18 4.2.4 Earnings Per Share (EPS) 19 4.3 Conclusion 19 Chapter V Profile of Three Branches 20-24 5.1 Basic facts of three branches 21-23 5.2 Branch management organogram 24 5.3 Conclusion 24 Chapter VI Analysis and Findings 25-35 6.1 Growth and profitability performance analysis of three branches 6.1.1 Deposits 6.1.2 Advances 6.1.3 Profit / Loss 26-30 26-27 27-28 29-30 6.2 Employee efficiency performance analysis of three branches 6.2.1 Per Employee Deposits 6.2.2 Per Employee Advances 6.2.3 Per Employee Profit / Loss 30-33 31 32 33 6.3 Manpower assessment of three branches 34 6.4 Conclusion 35 Chapter VII Conclusion and Recommendations 36-38 7.1 Conclusion 37 7.2 Recommendations 38 Appendix 39-40 Appendix – I 39-40 References 41
  • 10. 1
  • 11. 2 Chapter I: Introduction This study aims at measuring and comparing the financial performance of three branches along with my internship placement Kaliakoir branch of National Bank Limited in Bangladesh through extensive use of financial ratios that mainly indicate the growth and profitability performance analysis and employee performance analysis. The concept of financial performance and its measurement is well advanced within finance and management fields. Generally, the financial performance of banks and other financial institutions has been measured using a combination of financial ratios analysis, benchmarking, measuring performance against budget or a mix of these methodologies (Avkiran, 1995). Financial ratio analysis involves methods of calculating and interpreting financial ratios to analyze and monitor firm’s performance. The basic inputs to ratio analysis are the firm’s income statement and balance sheet. The study findings can be helpful for management of NBL also for three branches of NBL to improve their financial performance and formulate policies that will improve their performance in future. 1.1 Background of the Study There is a far gap between theoretical knowledge and practical field. Internship program has been launched mainly to bridge this gap. The internship is a part of the Bachelor Business Administration (BBA) degree that provides the job experience to students. I was placed at National Bank Limited, Kaliakoir Branch, Gazipur as an internee for 45 days duration. The presented report of internship named “A Comparative Financial Performances Analysis of Three Branches of National Bank Limited” is originated from the partial fulfillment of the Bachelor Business Administration (BBA) degree conducted by the Department Of Management, University Of Dhaka. During the internship program, I was under the faculty supervisor Dr. Syed Golam Maola, Professor, Department Of Management, University Of Dhaka and organizational supervisor Md. Liton Khan, Executive Officer, National Bank Limited, Kaliakoir Branch, Gazipur. 1.2 Objectives 1.2.1 Broad Objective The main objective of the report is to compare and analyze financial performance of three branches of National Bank Limited. 1.2.2. Specific Objectives The following specific objectives have been covered by this study:  to analyze comparative branch financial performance among three branches in the light of growth and profitability performance.  to evaluate comparative branch financial performance among three branches in the light of employee performance.
  • 12. 3 1.3 Scope This particular subject is extremely extensive in nature. To evaluate comparative the financial performance among three branches of National Bank Limited it is being required to three branches as a whole. This report tried to concentrate only on the financial performance issues while evaluation of the performance measures also requires some other considerations. The study findings can be helpful for management of National bank ltd. always for branch manager to improve their financial performance and formulate policies that will improve overall their performance. The study also identified specific areas for bank to work on which can ensure sustainable growth for these banks. 1.4 Limitations Comparing and analyzing the broad performance of three branches of a bank are not that easy. Moreover due to obvious reasons of scrutiny and confidentiality, the bank personnel usually don’t want to disclose all the statistical information about their organization. Time is another major limitation s the duration of the program was 45 days only and being a temporary member of the organization, it was not possible on my part to notice or express some of the sensitive issues and other aspects. 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 by 45 days. It was really very short time to know details about an organization like National 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 study 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.
  • 13. 4
  • 14. 5 Chapter II: Methodology While conducting the study, sources were explored for primary information and data. But hardly any updated data could be found. In the absence of updated information or data dependence on secondary data has been inevitable. However, whenever possible primary data has been used. Data were also collected by interviewing the responsible officers and from some documents & statements printed by the National Bank Limited. Personnel of Kaliakoir Branch, National Bank Limited also helped me in collecting data providing books and Bank’s annual report. 2.1 Sources of Data The following sources have been used for the purpose of gathering and collecting data as required. 2.1.1 Primary sources of data Collecting data directly from the practical field is called primary source of data. Sources of Primary data are follows: a) Face to face conversation with respective officers of the NBL. b) Personal interview with respective officers of the NBL. c) Practical experience gained during internship period 2.1.2 Secondary sources of data Collecting data indirectly from the practical field is called Secondary data. Sources of Secondary data are follows: a) Annual reports (2009-13) of NBL b) Brochures, manuals and publication of the NBL c) Branch highlights report (2013 and 2014) of Kaliakoir branch, Pabna branch and Bogra branch of NBL d) Website of NBL e) Selected books.
  • 15. 6 2.2 Methods of Data Collection The following methods have been used for the purpose of gathering and collecting data as required. 2.2.1 Interview method: The face-to-face informal interview was taken for collecting primary data. Manger and officers of Kaliakoir branch were mainly interviewed by me. 2.2.2 Record review: As part of the requirement analysis, some current and previous documents and brochures related to branch financial information had been reviewed. 2.2.3 Discussion: Formal and informal discussion with the manger and officers of Kaliakoir branch, NBL were held to gather information of the current work procedures. 2.3 Tools of Analysis This is a descriptive report mainly aiming to evaluate financial performance three selected branches of NBL in the term of growth and profitability performance and employee performance. The data gathered from both primary and secondary sources were arranged orderly to get a clear picture of three branches financial performance of NBL. To evaluate and analyze the financial performance mainly trend analysis and ratio analysis technique are being used. a) 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. b) Ratio analysis: Ratio analysis tools are used to analyze the gathered data with the help of computer software Microsoft Excel. c) Tables/boxes: Several tables/boxes had been used to display and analyze multiple set of variation in data over years. d) Charts: Several charts had been used to display and analyze the trends and ratio analysis of data. Several charts had been used such as Clustered column, 3D- Clustered column, Stacked Line, Line with Markers, Stacked Line with Markers.
  • 16. 7
  • 17. 8 Chapter III: Organization Profile of National Bank Limited 3.1 A Brief History National Bank Limited was born as the first hundred percent Bangladeshi owned Bank in the private sector. From the very inception, it was the firm determination of National Bank Limited to play a vital role in the national economy. We are determined to bring back the long forgotten taste of banking services and flavors. We want to serve each one promptly and with a sense of dedication and dignity. The then President of the People's Republic of Bangladesh Justice Ahsanuddin Chowdhury inaugurated the bank formally on March 28, 1983 but the first branch at 48, Dilkusha Commercial Area, Dhaka started commercial operation on March 23, 1983. The 2nd Branch was opened on 11th May 1983 at Khatungonj, Chittagong. At present, NBL has been carrying on business through its 179 branches & Agri Branches spread all over the country. Since the very beginning, the bank has exerted much emphasis on overseas operations and handled a sizable quantum of home bound foreign remittance. It has drawing arrangements with 415 correspondents in 75 countries of the world, as well as with 37 overseas Exchange Companies located in 13 countries. NBL was the first domestic bank to establish agency arrangements with the world famous Western Union in order to facilitate quick and safe remittance of the valuable foreign exchanges earned by the expatriate Bangladeshi nationals. NBL was also the first among domestic banks to introduce international Master Card in Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card. The Bank has in its use the latest information technology services of SWIFT and REUTERS. NBL has been continuing its small credit program for disbursement of collateral free agricultural loans among the poor farmers of Barindra area in Rajshahi district for improving their livelihood. National Bank, has now acquired strength and expertise to support the banking needs of the foreign investors. NBL stepped into a new arena of business and opened its Off Shore Banking Unit at Mohakhali to serve the wage earners and the foreign investors better than before. Since its inception, the bank was aware of complying with Corporate Social Responsibility. In this direction, we have remained associated with the development of education, healthcare and have sponsored sporting and cultural activities. During times of natural disasters like floods, cyclones, landslides, we have extended our hand to mitigate the sufferings of victims. It established the National Bank Foundation in 1989 to remain involved with social welfare activities. The foundation runs the NBL Public School & College at Moghbazar where present enrolment is 1140. Besides awarding scholarship to the meritorious children of the employees, the bank has also extended financial support for their education. It also provided financial
  • 18. 9 assistance to the Asiatic Society of Bangladesh at the time of their publication of Banglapedia and observance of 400 years of Dhaka City. 3.2 Vision and Mission 3.2.1 Vision Ensuring highest standard of clientele services through best application of latest information technology, making due contribution to the national economy and establishing ourselves firmly at home and abroad as a front ranking bank of the country are our cherished vision. 3.2.2 Mission Efforts for expansion of our activities at home and abroad by adding new dimensions to our banking services are being continued unabated. Alongside, we are also putting highest priority in ensuring transparency, account ability, improved clientele service as well as to our commitment to serve the society through which we want to get closer and closer to the people of all strata. Winning an everlasting seat in the hearts of the people as a caring companion in uplifting the national economic standard through continuous up gradation and diversification of our clientele services in line with national and international requirements is the desired goal we want to reach.
  • 19. 10 3.3 Organogram Source: NBL Booklets Sponsor Directors Managing Director Committees Executive Committee Audit Committee Management Committee Risk Management Committee Asset Liability Management Committee EVP VP VP Public relation AVP, NBL Train. Ins AVP, admin EVP EVP EVP SVP SVP Loan & Recovery DMD Admin Establishment EVP DMD Operator SVP AVP AVP AVP AVP AVP AVP AVP AVP AVP SVP AVP AVP VP Computer VP EVP AVP Establish AVP AVP Develop Board of Directors
  • 20. 11 Sponsor Directors of NBL consists of 18 members. Board of Directors of NBL consists of 15 members where 1 Chairman, 10 Directors, 3 Independent Directors, and 1 Managing Director. There are five committees who conduct whole operations of NBL. These committees are 8 members of Executive Committee, 3 members of Audit Committee, 27 members of Management Committee, 3 members of Risk Management Committee and 7 members of Asset Liability Management Committee. 3.4 Products & Services National Bank Limited offers different types of Corporate and Personal Banking Services involving all segments of the society within the purview of the rules and regulations as laid down by the Central Bank and other Regulatory Authorities. Following products and services are offered by NBL: Table 3.4: Products and Services offered by NBL Deposit Products Savings deposit Current deposit Term deposit Foreign currency deposit Monthly saving scheme Monthly income scheme Double benefit scheme Millionaire income scheme Credit products Overdraft Lease financing House building Small medium enterprise Consumer credit scheme Trade finance Credit & Debit cards Gold International Gold Local Silver International Silver Local Power Card
  • 21. 12 3.5 Conclusion: National Bank Limited has its prosperous past, glorious present, prospective future and under processing projects and activities. Established as the first private sector bank fully owned by Bangladeshi entrepreneurs, NBL has been flourishing as the largest private sector Bank with the passage of time after facing many stress and strain. The members of the board of directors are creative businessmen and leading industrialists of the country. To keep pace with time and in harmony with national and international economic activities and for rendering all modern services, NBL, as a financial institution, automated all its branches with computer networks in accordance with the competitive commercial demand of time. Moreover, considering its fourth- coming future, the infrastructure of the Bank has been rearranging. The expectation of all class businessmen, entrepreneurs and general public is much more to NBL. At present we have 179 branches under our branch network. In addition, our effective and diversified approach to seize the market opportunities is going on as continuous process to accommodate new customers by developing and expanding rural, SME financing and offshore banking facilities.
  • 22. 13
  • 23. 14 Chapter IV: Corporate Financial Performance 4.1 Introduction A corporation's operating performance is frequently measured using accounting ratios such as return on sales and return on investment. These ratios provide a great deal of information about a firm's financial performance of by means of comparisons with prior years' performance and with other companies in the same industry. Nevertheless, there are limitations to the use of these measures. One is that financial ratios may fail to consider the value of management's actions and investment decisions taken with the intent of affecting future as opposed to current performance. For example, a business that defers such things as maintenance and research and development can appear to be performing well based on accounting ratios even though these actions may impair the future performance of the business. Another limitation is that accounting ratios aggregate many aspects of performance such as financing, marketing, and production. A firm may appear to be performing well even if it is poorly managed on certain of these dimensions as long as it compensates by performing particularly well on other dimensions. Financial performance analysis of a company is very important to get an overall view about an organization. It generally consists of interpretation of balance sheet and interpretation of income statement. By using these two sources one can perform the ratio analysis and trend analysis which are the major tools for analyzing the financial performance of a bank. National Bank Limited (NBL) setting new standards in the banking arena in the time of turbulent economic conditions. As part of the long term financial reform and modernization plan of the government, the bank had been converted into a public limited company.
  • 24. 15 4.2 Highlights of corporate financial performance (Tk. in million) Particulars 2009 2010 2011 2012 2013 Income statement Interest income 7006.63 9616.14 14434.75 19103.18 18934.86 Interest expenses 4490.34 5577.09 9188.82 13679.66 16166.14 Profit before taxes and provision 3397.69 8940.60 9591.94 3725.20 3539.91 Net Profit after taxation 2070.47 6860.34 6085.70 1487.91 2116.59 Balance Sheet Authorized capital 7450.00 17500.00 17500.00 17500.00 17500.00 Paid-up Capital 2846.54 4412.13 8603.65 14196.03 14196.03 Reserve Funds & surplus 6070.22 14693.47 12918.92 8178.24 9733.61 Total Shareholders’ equity 8916.76 19105.60 21522.57 22374.27 23929.64 Total Deposits 76834.13 102471.83 128215.97 157331.73 193642.97 Total Loans and Advances 65129.29 92003.56 115388.89 126169.79 151098.98 Investment 12315.20 24993.32 30334.63 54326.46 56827.52 Total Assets 91931.63 134732.31 169037.38 205207.33 235173.80 Foreign exchange Business Import 77539.77 96442.57 104570.90 94137.40 113492.00 Export 38398.85 47812.47 60893.90 69062.90 75912.41 Remittance 44381.50 49145.30 54469.40 66513.90 58224.10 Regulatory and Capital Measures Total Capital (Tier-I+II) 9124.62 19190.79 24905.13 26460.36 27705.46 Total Risk Weighted Assets 105986.20 156148.60 196812.10 206732.40 236911.20 Total Capital adequacy ratio 8.61% 12.29% 12.65% 12.80% 11.69% Credit Quality Percentage of Classified Loans against total Loans and Advances 5.96% 3.96% 2.83% 4.32% 3.24% Operating Performance Advance Deposit ratio 84.77% 89.78% 90.00% 80.19% 78.03% Cost of Funds 6.45% 6.52% 7.29% 8.75% 8.81% ROA 2.52% 6.05% 4.01% 0.80% 0.96% ROE 27.53 48.96% 29.96 6.78 9.14 No of shares outstanding(million) 284.65 441.21 860.37 1419.60 1419.60 EPS 4.69 7.97 4.29 1.05 1.49 Market Price per Share 64.63 191.60 66.80 22.10 11.80 Price Earnings Ratio (Times) 13.78 24.04 15.88 21.05 7.92 Rating Long term A1 AA3 AA2 AA- AA- Short term ST-2 ST-1 ST-1 ST-1 ST-2
  • 25. 16 Financial performance analysis of NBL consists of interpretation of balance sheet and interpretation of income statement. Only four indicators loans to deposits ratio, returns on assets, returns on equity and earning per share are mainly interpreted in this study. These are interpreted in below: 4.2.1 Loans to deposits Ratio (LDR)1 Loan to deposit is the most important ratio to measure the liquidity condition of the bank. Here, loan means the advances for the conventional banks. Bank with Low LDR is considered to have excessive liquidity, potentially lower profits, and hence less risk as compared to the bank with high LDR. However, high LDR indicates that a bank has taken more financial stress by making excessive loans and also shows risk that to meet depositors’ claims bank may have to sell some loans at loss. A high figure denotes lower liquidity. Figure 4.2.1 Loans to Deposit Ratio (LDR) trends In perspective of bank total deposits percentage of total loans calculate. Higher the ratio means less liquid and taking more risk. So bank has to maintain certain ratio for following the central bank policy and keep sustainable position in the competitive market. Bank total loan against deposit was 90% in 2011 which reached highest point around this period and minimum 78.03% in year 2013. Lower rate of ratio means more liquidity of bank. According to above graph indicate that is NBL current LDR well consistent compare previous years. Liquidity position of this bank improved the ratio that refers bank has more liquidity than other time compare to present. 1 Loans to deposit Ratio (LDR) = Total Loans Total deposits 84.77% 89.78% 90.00% 80.19% 78.03% 72.00% 74.00% 76.00% 78.00% 80.00% 82.00% 84.00% 86.00% 88.00% 90.00% 92.00% 2009 2010 2011 2012 2013 Loans To Deposit Ratio (LDR)
  • 26. 17 4.2.2 Return on Assets (ROA)2 The return on assets ratio, often called the return on total assets, is a profitability ratio that measures the net income produced by total assets during a period by comparing net income to the average total assets. Return on Assets (ROA) shows the ability of management to acquire deposits at a reasonable cost and invest them in profitable investments (Ahmed, 1995). Generally, a higher ratio means better managerial performance and efficient utilization of the assets of the firm and lower ratio is the indicator of inefficient use of assets. ROA can be increased by Banks either by increasing profit margins or asset turnover but they can’t do it simultaneously because of competition and trade-off between turnover and margin. So bank maintain higher ROA will make more the profit. 1. Figure 4.2.2: Return on Assets (ROA) trends Last year was another challenging year for the banking sector if we are compare to 2009-2011. During the year average interest margin has decreased due to bank investment of fund to the low yield and government securities. With expansion of business, asset profile of the bank also increased gradually. Total asset of bank grew up 14.60% at December 2013 against last year. The significant increase in asset was mainly achieved due to rise in loan and advance, investment, cash and balance with other bank and institutions. This factor is effecting the calculation of ROA. NBL performs most effectively in 2010. But in last year there some hope that it will try to reach previous position. It indicates that total asset of the bank increased but net profit did not increase with the assets. This shows the management inefficiency in using the bank asset to generate profit. 2 ROA = Net Income after Provision & Tax Total assets 2.52% 5.09% 3.60% 0.73% 0.90% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 2009 2010 2011 2012 2013 Return on Assets (ROA)
  • 27. 18 4.2.3 Return on Equity (ROE)3 The return on equity ratio or ROE is a profitability ratio that measures the ability of a firm to generate profits from its shareholders investments in the company. In other words, the return on equity ratio shows how much profit each dollar of common stockholders' equity generates. So a return on 1 means that every dollar of common stockholders' equity generates 1 dollar of net income. This is an important measurement for potential investors because they want to see how efficiently a company will use their money to generate net income. ROE is also an indicator of how effective management is at using equity financing to fund operations and grow the company. Figure 4.2.3: Return on equity (ROE) trends Lower ROE in 2012 was 6.65%., if we compare to last 5 year ROE. The earnings per share was Tk. 1.49 in 2013 increasing 41.90% over Tk. 1.05 previous year. In graph ROE reached highest point 35.91% at 2010 than its getting lower towards. NBL earn maximum ROE 35.91% in 2010 and minimum 6.65% in 2012. In accordance with prudent capital structure plan, the bank has a consistent dividend policy. In addition NBL declared high stock dividend as and when possible to strengthen the capital base. Bank current ROE position need to change if we compare to last 5 years except of 2012. So the management should work hard to increase the return associated with equity. 3 ROE= Net Income after Provision & Tax Total Shareholders’ equity 23.22% 35.91% 28.28% 6.65% 8.85% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 2009 2010 2011 2012 2013 Return on Equity (ROE)
  • 28. 19 4.2.4 Earnings Per share4 Earnings per share (EPS) measures the profit available to equity shareholders on a per share basis, that is, the amount that they can get on every share held (Khan & Jain, 2007). This ratio is usually used to find out the operating efficiency of the firm against its‟ total number of share outstanding. The EPS of the banks in the last 5 years are as follows: Figure 4.2.4: Earnings per Share (Tk.) trends Higher EPS in 2010 was 15.55 (Tk.), if we compare to last 5 year EPS of National Bank Limited because of achieving high profit after tax 6860.34 (Tk. in million) though opening 14 new branches and appointing 482 new employees in 2010 according to plan for bank expansions. The numbers of shares outstanding share was gradually increased over last 5 year. But net profit after tax was gradually decreased and increased by one year after. Operating efficiency of National Bank Limited in the formed of the earnings of the firm against its each share or stock was continuously poor. Earnings per share of NBL should be increase to attract investors. 4.3 Conclusion NBL helps to mobilize the resources to stay strong in the key areas of operation. In the areas of treasury operation, NBL remains the key player in the country’s foreign exchange and money market enhancing profitability through careful pricing and assessment of risk and return on investment, the treasury dealing is being strengthened to facilitate transactions requiring more sophisticated products and services for larger institutional and corporate clients. Though it has a wide range of network and confidence from the customers but it has some problems those problems reduce it income. 4 EPS = Net Profit after tax No of shares outstanding 7.17 15.55 7.07 1.05 1.49 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 2009 2010 2011 2012 2013 Earnings Per Share (Tk.)
  • 29. 20
  • 30. 21 Chapter V: Profile of Three Branches 5.1 Basic facts of three branches For comparative branch performance analysis three branches are being selected along with my internship placement. Basic facts of these three branches are given in the below: 5.1.1 Kaliakoir Branch Opening of Kaliakoir Branch was 2007. At present a senior executive officer is in-charge. Total number of employees are 20. Financial Information (Tk. in million) Sl Particulars 31.12.2013 31.12.2014 1 Interest Received from loans and advances 40.48 64.45 2 Interest Received from IBTA 145.88 146.23 3 Total Interest Received (1+2) 186.36 210.69 4 Interest Paid on deposit 121.70 138.34 5 Interest Paid on IBTA - - 6 Total Interest Paid (4+5) 121.70 138.34 7 Net Interest Income (3-6) 64.66 72.35 8 Non-Interest Income 6.38 5.43 9 Operating Income (7+8) 71.04 77.78 10 Operating Expense 13.52 14.98 11 Profit/(Loss) (9-10) 57.53 62.799 12 Total Income (3+8) 192.74 216.12 13 Total Expenditure (6+10) 135.22 153.32 14 Employee Expenditure 7.97 8.40 15 Average Advance 235.90 389.46 16 Average Deposit 1379.71 1674.02 17 Average High Cost Deposit 1025.87 1277.02 18 Average Bills Payable 10.34 23.86 19 Number of Average Voucher 1376 2580 20 Number of Employee 20 20
  • 31. 22 5.1.2 Bogra Branch Opening of Bogra Branch was 1984. At present a senior vice president is in-charge. Total number of employees are 34. Financial Information (Tk. in million) Sl. Particulars 31.12.2013 31.12.2014 1. Interest Received from loans and advances 185.82 312.38 2. Interest Received from IBTA - 3. Total Interest Received (1+2) 192.12 312.38 4. Interest Paid on deposit 95.95 90.04 5. Interest Paid on IBTA 21.40 114.27 6. Total Interest Paid (4+5) 117.35 204.31 7. Net Interest Income (3-6) 74.77 108.07 8. Non-Interest Income 15.49 14.61 9. Operating Income (7+8) 90.26 122.67 10 Operating Expense 26.85 113.93 11 Profit/(Loss) (9-10) 63.41 8.74 12 Total Income (3+8) 207.61 326.98 13 Total Expenditure (6+10) 144.20 318.24 14 Employee Expenditure 8.36 22.39 15 Average Advance 1489.96 2217.70 16 Average Deposit 1127.60 1128.59 17 Average High Cost Deposit 524.60 814.83 18. Average Bills Payable 14.22 27.30 19. Number of Average Voucher 1450 1550 20. Number of Employee 33 34
  • 32. 23 5.1.3 Pabna Branch Opening of Pabna Branch was 1988. At present a vice president is in-charge. Total number of employees are 24. Financial Information (Tk. in million) Sl Particulars 31.12.2013 31.12.2014 1 Interest Received from loans and advances 44.82 39.29 2 Interest Received from IBTA 101.70 105.69 3 Total Interest Received (1+2) 146.53 144.99 4 Interest Paid on deposit 95.66 103.47 5 Interest Paid on IBTA - - 6 Total Interest Paid (4+5) 95.66 103.47 7 Net Interest Income (3-6) 50.87 41.52 8 Non-Interest Income 6.91 4.25 9 Operating Income (7+8) 57.78 45.77 10 Operating Expense 16.98 18.46 11 Profit/(Loss) (9-10) 40.80 27.30 12 Total Income (3+8) 153.44 149.24 13 Total Expenditure (6+10) 112.63 121.93 14 Employee Expenditure 11.81 12.97 15 Average Advance 265.41 272.37 16 Average Deposit 1079.21 1206.57 17 Average High Cost Deposit 815.28 945.03 18 Average Bills Payable 16.23 22.98 19 Number of Average Voucher 1468 1572 20 Number of Employee 24 23
  • 33. 24 5.2 Branch management organogram All the branches are followed almost same branch management organogram. The main functions of NBL branches are divided into five parts. These are (a)cash division, ( b)clearing, bills and remittance division, (c)deposit division, (d)accounts division and (e) advance division. Some branch has a separate remittance division. Figure 5.2: Branch management organogram 5.3 Conclusion: At present, NBL has been carrying on business through its 179 branches & Agri Branches spread all over the country. Since the very beginning, the bank has exerted much emphasis on overseas operations and handled a sizable quantum of home bound foreign remittance. It has drawing arrangements with 415 correspondents in 75 countries of the world, as well as with 37 overseas Exchange Companies located in 13 countries. 2nd Man Branch In-Charge General Banking Deposit Advance Cash Accounts Branch In-Charge Accounts Clearing, Bills & Remittance:
  • 34. 25
  • 35. 26 Chapter VI:Analysis and Findings 6.1 Growth and profitability performance analysis of three branches Three financial indicators are being used to compare and analyze growth performance among three branches. These are growth rate of deposit collection, growth rate of sanctioning loans and advances and growth rate of profit-loss. 6.1.1 Deposits A strong deposit base is necessary for the success of a bank. Bank deposit account is an arrangement with a bank that allows the customer to pay take out money. The bank keeps a record of all the payment and deposits (transaction) in the customer’s name. It binds the banker and the customer into a contractual relationship. Using an account, a customer may deposits and withdrawals of money from his/her account. It is also called the primary and fiduciary relationship between bank and customer. Opening deposit account with a bank is the way of creating banker relationship. Table 6.1.1: Deposit collection (Tk. in million) Particulars 2013 2014 Average Budget Actual (31.12.13) Budget Actual (31.12.14) Budget Achievement Pabna Branch 1200.00 1187.09 1450.00 1344.03 95.81% Bogra Branch 1300.00 1159.71 1430.00 1199.88 86.56% Kaliakoir Branch 1600.00 1600.28 2000.00 1861.71 96.56% Source: Branches inspection report of NBL During the year 2013-2014 National Bank Limited mobilized a substantial amount of deposits from mid-level income group people under Deposits Savings Scheme. In 2013 Pabna branch achieved 98.93% of its budgeted deposit collection, Bogra branch achieved 89.21% of its budgeted deposit collection and Kaliakoir branch achieved 100.02% of its budgeted deposit collection. In 2014 Pabna branch achieved 92.69% of its budgeted deposit collection, Bogra branch achieved 83.91% of its budgeted deposit collection and Kaliakoir branch achieved 93.09% of its budgeted deposit collection.
  • 36. 27 Budgeted deposit collection is high for the newly opening branch than the old branch of NBL. Budgeted deposit collection was high for Kaliakoir branch than other two branches. And it performed very well in close to achieve it budgeted deposit. Figure 6.1.1 Branches deposit collection All deposits aren’t the same. Banks can tailor product and sales strategies when they know their customers’ rate sensitivity and deposit stickiness. Three branches of national banks that use advanced elasticity-based pricing models discover differences in rate sensitivity and competitive conditions. Those differences reveal themselves across customer segments, markets, product-use profiles and balance levels. Kaliakoir branch can be treated as benchmark for Pabna and Bogra branch in terms of deposit collection growth. 6.1.2 Advances In evaluating the performance of a banking institution, it is important to assess the extent to which clients have availed of institutional credit. The Bank’s Loans and Advances portfolio also indicates an impressive growth. A major source of bank failures has been irrecoverable loans that were made to related companies or individuals. Loans to affiliated companies, shareholders or directors are not always made on a strictly commercial basis and represent a potential source of impairment of the bank's capital. 0 500 1000 1500 2000 2013 2014 Tk.inmillion Deposits Pabna Branch Bogra Branch Kaliakoir Branch
  • 37. 28 Table 6.1.2: Advances (Tk. in million) Particulars 2013 2014 Average Budget Actual (31.12.13) Budget Actual (31.12.14) Budget achievement Pabna Branch 450.00 262.38 400.00 326.28 69.94% Bogra Branch 1500.00 1489.60 1900.00 2832.73 124.2% Kaliakoir Branch 260.00 339.23 450.00 480.90 118.67% Source: Branches inspection report of NBL In 2013 Pabna branch achieved 58.31% of its budgeted loan and advance, Bogra branch achieved 99.31% of its budgeted loan and advance and Kaliakoir branch achieved 130.47% of its budgeted loan and advance. In 2014 Pabna branch achieved 81.57% of its budgeted loan and advance, Bogra branch achieved 149.09% of its budgeted loan and advance and Kaliakoir branch achieved 106.87% of its budgeted loan and advance. In 2014 Pabna branch achieved 81.57% of its budgeted loan and advance but its budgeted loans was reduced due to growth of import loan decreased. Figure 6.1.2: Branches advance Bogra branch was closed to achieve its budgeted loan and advance target in the year 2013. But in the year 2014 Bogra branch sanctioned excess from its budgeted loan and advance because of providing a large amount of loan to import business. On the other hand growth rate of loan and advance increased in Kaliakoir branch due to providing loan to the industrial sectors especially Ready-made-garment’s (RMG). Bogra branch can be treated as benchmark for Pabna and Kaliakoir branch in terms of sanctioning loans and advances growth. 0.00 500.00 1000.00 1500.00 2000.00 2500.00 3000.00 2013 2014 Tk.Inmillion Advances Pabna Branch Bogra Branch Kaliakoir Branch
  • 38. 29 6.1.3 Profit / Loss The most common measure of bank branch performance is profitability performance. Generally, accounting profits are the difference between revenues and costs. Profitability is considered to be the most difficult attributes of a firm to conceptualize and to measure. These ratios are used to assess the ability of the business to generate earnings in comparison with its all expenses and other relevant costs during a specific time period. More specifically, these ratios indicate firm’s profitability after taking account of all expenses and income taxes, the efficiency of operations, firm pricing policies, profitability on assets and to shareholders of the firm Profitability ratios are generally considered to be the basic bank financial ratio in order to evaluate how well bank is performing in terms of profit. For the most part, if a profitability ratio is relatively higher as compared to the competitor(s), industry averages, guidelines, or previous years’ same ratios, then it is taken as indicator of better performance of the bank. Study applies these criteria to judge the profitability of the National banks Limited. Table 6.1.3: Profit-Loss (Tk. in million) Particulars 2013 2014 Average Budget Actual (31.12.13) Budget Actual (31.12.14) Budget achievement Pabna Branch 59.00 40.80 50.00 27.30 61.88% Bogra Branch 60.00 63.41 80.00 8.74 58.32% Kaliakoir Branch 57.50 57.52 75.00 62.80 91.88% Source: Branches inspection report of NBL In 2013 Pabna branch achieved 69.15% of its budgeted profits, Bogra branch achieved 105.68% of its budgeted profits and Kaliakoir branch achieved 100.03% of its budgeted profits. In 2014 Pabna branch achieved 54.60% of its budgeted profits, Bogra branch achieved 10.96% of its budgeted profits and Kaliakoir branch achieved 83.73% of its budgeted profits. Growth rate of profit decreased in Pabna branch due to increase in interest paid on deposit from 95.66(tk. in million) to 103.47 (tk. in million), increase in operating expense from 16.98 (tk. in million) to 18.46 (tk. in million), increase in employee expenditure from 11.81 (tk. in million) to 12.97 (tk. in million), and decrease in interest received from loans and advances from 44.82 (tk. in million) to 39.29 (tk. in million), decrease in non-interest income from 6.91 (tk. in million) to 4.25 (tk. in million).
  • 39. 30 Figure 6.1.3: Profit-Loss Profit Growth rate decreased in Bogra branch because of increasing interest paid on IBTA from 21.40 (tk. in million) to 114.27 (tk. in million) and increasing of operating expense from 26.85 (tk. in million) to 113.93 (tk. in million). Growth rate of profit increased in Kaliakoir branch due to increase in interest received from loans and advances from 40.48 (tk. in million) to 64.45(tk. in million), increase in interest received from IBTA from 145.88 (tk. in million) to 146.23 (tk. in million) and there was no interest paid on IBTA. In term of high growth rate of profit Kaliakoir branch can be treated as benchmark for Pabna and Bogra branch. 6.2 Employee Performance Analysis of the Selected Branches Ratio analysis is a method of interpreting the financial statements of a branch. A single ratio by itself is not of much use (Kevin, 2009). Three financial ratio are being used to compare and analyze employee performance among three branches. These are per employee deposit collection, per employee sanctioning loans and advances and per employee profit-loss. 0 10 20 30 40 50 60 70 2013 2014 Tk.inmillion Profit / Loss Pabna Branch Bogra Branch Kaliakoir Branch
  • 40. 31 6.2.1 Per Employee Deposit 5 It is the main component of the liability side of the balance sheet of a bank. Interest is to be paid on the deposits received from the public and the other parties. Interest paid constitutes the major part of the total expenditure of a commercial bank. This ratio has been computed by dividing the amount of total deposits by the number of employees in the bank. Figure 6.2.1: Per Employee Deposit In Pabna branch the trend wise growth rate has shown an increasing trend 18.16 % per employee deposit in general as shown in the above graph and in absolute terms from 49.46 (tk. in million) per employee deposit to 58.44 (tk. in million) per employee deposit. In Bogra branch the trend wise growth rate has shown an increasing trend 0.40 % per employee deposit in general as shown in the above graph and in absolute terms from 35.15 (tk. in million) per employee deposit to 35.29 (tk. in million) per employee deposit. And in Kaliakoir Branch the trend wise growth rate has shown an increasing trend 16.35 % per employee deposit in general as shown in the above graph and in absolute terms from 80.01 (tk. in million) per employee deposit to 93.09 (tk. in million) per employee deposit. Comparing among three branches growth rate of per employee deposit in Pabna Branch was high means as high employee performance. 5 Per Employee Deposit= 𝐓𝐨𝐭𝐚𝐥 𝐃𝐞𝐩𝐨𝐬𝐢𝐭 𝐍𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐄𝐦𝐩𝐥𝐨𝐲𝐞𝐞 49.46 58.44 35.15 35.29 80.01 93.09 0.00 50.00 100.00 2013 2014 Tk.inmillion Per Employee Deposit Pabna Bogra Kaliakoir
  • 41. 32 6.2.2 Per Employee Advance 6 The main earning of a commercial bank is from the advances provided to the private and the industry. Ultimately, the interest is to be earned from this major factor only. Interest constitutes the main part of the total income of the commercial bank. This ratio has been computed by dividing the amount of total advances by the number of employees in the bank. Figure 6.2.2 Per Employee Advance In Pabna Branch the ratio has shown an upward trend (in absolute terms) 10.93 (Tk. in million) per employee to 14.19 (Tk. in million) per employee in general as shown in graph and banks has 29.83 % the trend wise growth rate for the period 2013-2014. In Bogra Branch the ratio has shown an upward trend (in absolute terms) 45.14 (Tk. in million) per employee to 83.03 (Tk. in million) per employee in general as shown in graph and banks has 83.94% the trend wise growth rate for the period 2013-2014. In Kaliakoir Branch the ratio has shown an upward trend (in absolute terms) 16.96 (Tk. in million) per employee to 24.05 (Tk. in million) per employee in general as shown in graph and banks has 41.80% the trend wise growth rate for the period 2013-2014. Comparing among three branches trend wise growth rate of per employee advance in Bogra Branch was high means as high employee efficiency performance. 6 Per Employee Advance = Total Advance Number of Employee 10.93 14.19 45.14 83.03 16.96 24.05 2013 2014 Tk.Inmillion Per Employee Advance Pabna Bogra Kaliakoir
  • 42. 33 6.2.3 Per Employee Profit/ Loss7 Below graph deals with profit per employee which is calculated by profit divided by no. of employees. Every business exists in order to earn profit. Without profit no commercial activity can sustain for a long period. Similarly, profit earning has become the main motive of commercial banks operating in India. Profit earning and timely growth in the profit earning is an essential feature for the continued success of a bank. Figure 6.2.3 Per Employee Profit/ Loss An analysis of data on the basis of percentage growth rate per employee profit-loss over the base year shows that the maximum-minimum percentage growth rate was recorded in 2013 to 2014 respectively Pabna branch (-30 %) in 2014, Bogra branch (-86.46%) in 2014 and Kaliakoir branch (9.03%) in 2014. In terms of per employee profit-loss Kaliakoir branch was high employee efficiency performance among three branches. 7 Per Employee Profit/ Loss = Net Profit/ Loss Number of Employee 1.70 1.19 1.92 0.26 2.88 3.14 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 2013 2014 Tk.Inmillion Per Employee Profit/ Loss Pabna Bogra Kaliakoir
  • 43. 34 6.3 Manpower assessment The grade wise position of manpower of the branch in the period 2014 is appended below Table 6.3: Manpower assessment among branches Branch Pabna Branch Bogra Branch Kaliakoir Branch Branch In-Charge (Grade) Vice President Sr. Vice President Senior Executive Officer Number of Employee 23 34 20 Excess (short) of Employee (2) 7 (5) The grade wise position of branch in-charge in Pabna branch is vice president whereas in Bogra branch is senior vice president and in Kaliakoir branch is senior executive officer. In terms of the grade wise position of Branch Pabna branch is high branch weight than other two branches. Figure 6.3: Manpower Assessment In the manpower assessment among three branches it is found that Pabna branch requires 2 more employees and Kaliakoir branch requires 5 more employees to maintain banking activities. On the other hand Bogra branches has a number of 7 excess employees. -10 0 10 20 30 40 Number of Employee Excess (Short) of Employee Manpower Assessment Pabna Branch Bogra Branch Kaliakoir Branch
  • 44. 35 6.4 Conclusion The performance evaluation of bank branches is a difficult task. One of the main reasons for this difficulty is the complexity inherent in the variety of aspects to be considered in the evaluation, and the multiple and conflicting interests of the different stakeholders involved. Three branches of National Banks that use advanced elasticity-based pricing models discover differences in rate sensitivity and competitive conditions. Those differences reveal themselves across customer segments, markets, product-use profiles and balance levels. Comparing three branches Kaliakoir branch performed very well in term of collecting deposits. Bogra branch over exceeded from its budgeted loan and advance because of providing a large amount of loan to import business in the year 2013. Growth rate of profit increased high in Kaliakoir branch comparing three branches due to increase in interest received from loans and advances, increase in interest received from IBTA and there was no interest paid on IBTA. Comparing among three branches year wise growth rate of per employee deposit in Pabna branch was high means as high employee efficiency performance. Comparing among three branches year wise growth rate of per employee advance in Bogra branch was high means as high employee efficiency performance. In terms of per employee profit-loss Kaliakoir branch was high employee efficiency performance among three branches. Overall performance of Kaliakoir branch of National Bank Limited is high among three branches in terms of growth and profitability performance and employee efficiency performance of a branch.
  • 45. 36
  • 46. 37 Chapter VII: Conclusion and Recommendations 7.1 Conclusion The concept of financial performance and its measurement is well advanced within finance and management fields. Generally, the financial performance of banks and other financial institutions has been measured using a combination of financial ratios analysis, benchmarking, measuring performance against budget or a mix of these methodologies. In this study bank branches performance compared through the growth of deposit collection, sanctioning loan and advance and profit-loss against budget. Employee performance among three branches is being measure and analyze with the help of per employee deposit, per employee advance and per employee profit-loss. It has been prepared on the primary and secondary data from different sources. Despite of severe unfavorable economic conditions of last few years, NBL achieved a worthy performance in all core areas of banking operation. This paper highlighted the performance of NBL over the Financial 2009-2013. The results indicate that the overall bank performance in terms of profitability performance (ROA, ROE and EPS) has been declining if we took 2010 figure as benchmark year. Banks increased the size of their portfolios during the period but net profit did not increase with the assets as well as with equity and share. This shows the management inefficiency in using the bank asset to generate profit. On the other hand loans to deposit ratios (LDR) were satisfactory range in comparing to last 5 years and also it was decreasing trend. NBL is also contributing to the advancement of the socioeconomic condition of the country. Pabna branch achieved average 95.81% from its budgeted deposit collection in the period 2013 and 2014. But in terms of sanctioning loans and advances Pabna branch achieved average 69.94% only from its budgeted ones. In terms of achieving profit budget is not satisfactory at all. It achieved average 61.88% from its budgeted ones. Bogra branch achieved average 86.56% from its budgeted deposit collection in the period 2013 and 2014. Bogra branch achieved average 124.20% from its budgeted ones in terms of sanctioning loans and advances. It achieved average 58.32% profit from its budgeted ones which is not satisfactory at all. Comparing among three branches growth rate of per employee advance in Bogra Branch was high. Kaliakoir branch achieved average 96.56% from its budgeted deposit collection in the period 2013 and 2014. In terms of sanctioning loans and advances Kaliakoir branch achieved average 118.67% from its budgeted ones. It achieved average 91.88% profit from its budgeted ones which is satisfactory. Comparing among three branches growth rate of per employee deposit and per employee profit in Kaliakoir Branch was high. To keep pace with the current market and demand, NBL is following several strategies and taking new initiatives, offering new products and services to the customers. NBL have a strong position in the competitive market. It is among one of the fastest growing Bank. Income, total assets, investment activity, export, import and remittance are all showing positive trends even after the global challenges that we are facing today. But the little concerned on financial stability of the bank decreased in recent year, this may be because of opening of new branches in different business centers and the instability in the economy of the world.
  • 47. 38 7.2 Recommendations A bank's primary business is to generate funds from customers and lend or invest these funds at a yield that exceeds the cost of these funds. If a bank is unable to do this, the efficiency with which they process account transactions will be a moot issue. Management of NBL should be focused more on consolidation of its core business so that major business parameters deposits, advances, import and export show moderate to satisfactory growth. The following aspects are recommended in order to improve the financial performance of three branches: o Bogra branch of NBL should give equal focus on all schemes of deposit. Management of NBL should try to update all types of deposit schemes and it is necessary to increase the rate of interest of deposit. o Pabna branch of NBL should give a good attention regarding loan and advances sanction. Management of NBL should increase their loan facility on deposit schemes and the credit proposal evaluation process and time should be shortened. o Bogra branch should decrease its interest payment on IBTA and operating expense in order to turn back increasing profit trends. NBL should increase its finance on diversified projects to achieve more clients. o Employees of Bogra branch should study more on their customer segments, markets, and product-use profiles to increase it’s per employee deposit. o Employees of Kaliakoir branch should focus on sanctioning more loan by reducing credit proposal evaluation process which would help increasing it’s per employee advance. o Employees of Bogra branch should more concentrate on their customer segments, markets, product-use profiles and financial position of loan seeker in order to reduce loan loss. o Management of NBL should appoint one asst. vice president and one principal officer in Kaliakoir branch. Because growth rate of deposit collection, earning profit, per employee deposit, per employee profit in this branch is high among three branches and at present it is being charged only by one senior executive officer. o Motivated and talented manpower is giving good results in the banking sector. So, all three branches should focus on motivated and talented manpower who can motivate customer. For survival and growth management in banks is adopting different strategies to improve employee productivity.
  • 48. 39 Appendix- I Statement of affairs of Bogra Branch, Bogra as on 01.01.2015 Liabilities Taka Assets Taka Current Deposit 11,03,68,954.60 Cash in Local Currency 1,34,47,613.56 Savings Bank Deposits 11,16,76,880.97 Cash in FC (Gen.) 2,92,477.50 Special Notice Deposit 5,11,64,421.94 Bangladesh Bank 1,04,16,082.56 Monthly Saving Scheme - Balance with Local Bank 10,916.25 NBL Monthly Scheme 10,24,44,251.00 Investments 31,09,500.00 New NBL Monthly Savings 3,09,29,592.60 Special Deposits Scheme 99,880.00 Loan (General) 27,19,33,083.00 Monthly Benefit Scheme 4,98,600.0 HBL (Staff) (EHBL) 1,57,19,025.00 Double Benefit Scheme 12,78,79,571.00 HB Loan (General) 35,34,222.00 Fixed Deposit 50,89,20,151.00 SOD (General) 9,28,81,353.82 Sundry Deposit 5,61,36,055.03 Cash Credit 2,35,68,25,424.51 Foreign Currency Deposits 2,728.22 LTR 8,50,20,808.00 RFCD 7,49,541.06 PAD (Cash) - Monthly Income Scheme 1,32,77,010.00 Car Loan (Staff) 3,49,983.00 School Banking Deposit 69,046.00 Rural Credit for Agri. 2,11,974.00 NBL Millionaire Dep. Scheme 2,04,49,776.00 Women’s Refinancing Scheme 1,75,392.00 NBL Super Saver’s Term 1,07,31,666.00 PO Issued 2,62,71,241.50 Furniture & Fixture 1,18,883.41 PS Issued 13,346.00 Office Equipment 7,68,532.40 Demand Draft Issued (Local) 60,861.25 Suspense A/c 1,26,800.00 Demand Draft Payable A/c 9,49,851.00 Sundry Assets 51,20,440.22 Stationery in Hand 1,10,873.02 Bangladesh Bank ACSP Loan 45,50,000.00 Stamp in Hand 950.00 Advance Deposits 54,050.00 Interest Suspense A/c 3,05,61,708.00 Bills of Collection (Local) 2,80,446.00 Local Bill Lodged 2,80,446.00 Banker’s Liability LG (Local) 7,41,15,320.83 Cust. Liability LG (Local) 7,41,15,320.83 Banker’s Liability LG (Foreign) 14,86,67,000.00 Cust. Liability LG (Foreign) 14,86,67,0 00.00 CIBTA 163,59,41,012.54 Income 47948.00 Expenditure 4,657.00 Total Liabilities Taka 308,32,93,908.08 Total Assets Taka 308,32,93,908.08 Total Deposit Tk.114,53,98,125.42 Total Bills Payable Tk. 2,72,95,299.75 Total Advances Tk.282,66,51,265.33
  • 49. 40 Statement of affairs of Pabna Branch, Pabna as on 15.01.2015 Liabilities Taka Assets Taka Current Deposits 58134523.49 Cash in Hand 4359928.00 Savings Bank Deposits 146454778.37 Cash in Foreign Currency 63157.50 Special Notice Deposits 48085035.56 Sonali Bank 10720090.24 Monthly Savings Scheme 863600.00 Investment 500.00 NBL Monthly Scheme 153952262.10 New NBL Monthly Savings 48303063.00 Monthly Benefit Scheme Loan (General) 52258596.81 Double Benefit Scheme 176105630.00 House Building Loan staff 1696559.00 Fixed Deposits 540974146.00 Sundry Deposits 5227117.85 S.O.D Draft 124297339.79 FC Accounts (WES) 389.74 Cash Credit 116988591.75 Resident for Curn. Dep. (RFCD) 18855.94 Monthly Income Scheme 19700000.00 School Banking Deposit 440891.00 Car Loan 1083331.00 NBL Millionaire Dep. Sche. 32436364.00 Consumer Credit Scheme NBL Serious Saving A/c 153.00 Retail Banking(RTL) 804112.00 Double Benefit Account 2248538.00 Small Enterprise Finance(SEF) 167606.00 Monthly Earning Scheme 8100000.00 Lease Rental Receivables NBL Micro Loan (MCL) 3389333.00 PO Issued 43547566.84 Furniture, Fix. & Fitt. 1976211.01 PS Issued 4240.00 Office Equipment 964866.67 DD Payable Account 1705529.00 Suspense A/c Interest Payable on Deposit 15562563.00 Sundry Assets Acc. Exp. Payable FR Supplies 111418.00 Stationery in hand 42335.13 Leave Fare Assistance Stamp in Hand 11050.00 Advance Deposits 29900.00 Local Bills for Collection 531000.00 Local Bills lodged 531000.00 Banker’s Liab. L/G(L) 24225200.00 LDB lodged Banker’s Liab. L/G(Forn) 771000.00 Cust. Liab. L/G (Local) 24225200.00 Cust. Liab. L/G (Foreign) 771000.00 CIBTA CIBTA A/c 983137699.12 Income 101229.20 Expenditures 86687.07 Total Liabilities Taka 1327605094.09 Total Assets Taka 1327605094.09 (Fig. in Taka) Total Deposit 124,10,45,348.05 Total Bills Payable 4,52,57,335.84 Total Advances 30,06,85,469.35
  • 50. 41 References Ahmed, F. (1995), Performance of Commercial Banks in Bangladesh-A Note on Current Trends. Journal of the Institute of Bankers, Bangladesh. Vol. 36-41, June. Avkiran, N. K (1995): “Developing an Instrument to Measure Customer Service Quality in Branch Banking”; International Journal of Bank Marketing, Vol. 12(6), pp. 10 – 18. Kevin, S. (2009), Security Analysis and Portfolio Management, PHI Learning Private Limited, New Delhi. Khan, M.Y. & Jain, P.K. (2007), Financial Management, McGraw-Hill, New York. NBL (2010), Annual report …… (2011), Annual report ….... (2013), Annual report …… (2015), Inspection Report, Bogra Branch …… (2015), Inspection Report, Kaliakoir Branch …… (2015), Inspection Report, Pabna Branch