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An Internship Report On

Financial Performance Analysis Of IFIC

Bank Limited

Department of Business Administration

Shahjalal University of Science & Technology, Sylhet, Bangladesh.

This internship report has been prepared for submission into the Department of Business Administration,
Shahjalal University of Science & Technology, as a partial requirement for fulfillment of BBA Program.

An Internship Report On

Financial Performance Analysis Of IFIC

Bank Limited
Course Title

: Internship & Defense

Course Code : BAN 411

Submitted To:
Examination committee 2014
Fourth year second semester
Department of Business Administration
Shahjalal University of Science & Technology
Sylhet-3114, Bangladesh.

Supervised By:
Mazharul Hasan Mazumder, PhD
Associate Professor
Department of Business Administration
Shahjalal University of Science and Technology, Sylhet

Submitted By:
Mufti Tamimul Quamar Ahmed

Reg. No. 2009731064

Date of Submission: 15 March, 2015

Depart ment o f B us iness Admi nist rat io n

Shahjala l

University o f Science & Technolog y, Sylhet, Bangladesh.

This internship report has been prepared for submission into the Department of Business Administration,
Shahjalal University of Science & Technology, as a partial requirement for fulfillment of BBA Program.

Letter Of Submittal
15 March, 2015
Mazharul Hasan Mazumder, PhD
Associate Professor
Department of Business Administration
Shahjalal University of Science and Technology
Subject: Submission Of Internship Report
Dear Sir,
As part of the requirements of the Internship Program, I have conducted a study on
Financial Performance Analysis of IFIC Bank Limited and have written an
internship report on the same. To do so, I have collected the relevant information
from available sources. I have tried to collect and incorporate all those information
and make this report as much informative as possible. Finally, I would like to request
you to accept my paper and permit me to present it before the examination
Thank you for your kind consideration and acceptance.
Mufti Tamimul Quamar Ahmed
Reg. No: 2009731064
Department of Business Administration,
Shahjalal University of Science and Technology, Sylhet, Bangladesh.

At the beginning, I would like to express my sincere gratitude to Almighty Allah, the
most merciful and beneficial for empowering me to prepare the report within the
scheduled time. Then all the people who were involved both directly and indirectly in
the preparation of this report. I would like to mention my heartiest gratitude for the
proper guidance of the internship purpose affairs to Mr. Dr. Md. Nazrul Islam,
honorable professor & Head of Department of Business Administration and Dean of
School of Management & Business Administration & Mr. Dr. Mosaddak Ahmed
Chowdhury, Associate professor, Department of Business Administration and
chairman of Internship Placement Committee 2014, Shahjalal University of Science
and Technology, Sylhet, Bangladesh.
As I was placed in Tultikar Branch, Sylhet of IFIC Bank Limited to work as an intern
from August 18th to November 17th of 2014, I want to thank all the officials of IFIC
Bank Limited who were involved. I would especially like to thank Mr. Faruk Ahmed
(Head of Branch & SAVP), Mr. Abdul Kader (principal officer), Mrs Rina (senior
officer), Mrs songkori (Senior Officer), Mr. Ashraf (senior officer-cash), Mr Moshiur
(Junior officer-Cash) for giving me time and sharing their thoughts. I would like to
thank them for giving me the required information to commence this report and for
providing the permission to do the required analytical works.

I also would like to give my gratitude to a very important person who has made it all
happen for me at IFIC Bank Limited - Mr. M. Shah Alam Sarwar


Director). In making the report, I have taken help from different books, journals, and
other scholastic write-ups. I thank all those authors. I am also indebted to my loving
friends and juniors. I sincerely appreciate the staff of Department of Business
Administration for their numerous assistance.
Finally, I take the opportunity to thank my family members without whose support
this report might not be completed. I sincerely admit their contribution.

Letter of Certificate
I am convinced to declare that Mufti Tamimul Quamar Ahmed, Registration No.
2009731064 with Academic Session: 2009-10 of the department of Business
Administration of Shahjalal University of Science And Technology, Sylhet, has
completed his internship report on the topic Financial Performance Analysis
of IFIC Bank Limited

I have supervised his throughout the preparation of the report. He has put frantic and
sincere efforts to write a contributory report on the subject matter. I also certify that,
to the best of my knowledge, the report is original and was not submitted elsewhere
before for publication in any form whatsoever.

I wish him good luck.

Mazharul Hasan Mazumder, PhD
Associate Professor
Department of Business Administration
Shahjalal University of Science and Technology
Sylhet-3114, Bangladesh.

Executive Summary
This internship report is based on my internship program and financial statements of
2011, 2012 and 2013 of IFIC Bank Limited. In my internship period, I worked in
Tultikar branch of IFIC Bank Ltd. It was a great opportunity to gather experience and
knowledge from different types of banking operations. My faculty supervisor helped
me to choose the topic- Financial Performance Analysis of IFIC Bank Limited which
is a study based on 2011-2013 year

In the new competitive business era, private banking sector is getting more
competitive in Bangladesh. In this sector the most used financial statements are the
balance sheet and profit and loss account where the balance sheet shows the financial
position and profit and loss account shows the net profit or net loss of a bank. Ratio
Analysis deals with these statements. Ratio analysis is the most popular trend to
evaluate a banks performance over years or with other companies in an industry. In
my report I had to study IFIC Bank Limiteds financial statements for the last three
years then had to analyze and give significant comments regarding the changes in the
financial position. Analysis and interpretation of these financial statements through
ratio analysis has now become an important technique for performance appraisal
because the investors, financial experts, management executives and the bankers are
always rely on these ratios to make important decisions. The management team of

any bank, investor and the government agencies always concern about liquidity ratios
and adequacy ratios of a bank which interprets the efficiency of a bank.

As a part of my B.B.A program, I have spent three months at Tultikar Branch, Sylhet
of IFIC Bank Limited for the purpose of learning the activities of different banking
operations practically. The whole working process of Tultikar Branch, IFIC Bank is
divided into three sections-1) General Banking Section 2) Credit Section 3) Foreign
Exchange Section. I have worked at all these sections gradually. I have analyzed the
financial statements of IFIC Bank Limited from the annual reports and bank affairs of
Tultikar Branch, IFIC Bank Ltd to find out its ratios by using its past and current
records. After preparing this report I came to know that analysis of financial
statements through ratios helps to overcome the past flaws and make the future
decisions and strategies.

Table Of Contents
Page No.

Chapter One: Introduction





Origin Of The Report


Objective Of The Report


General Objective

1.3.b Specific Objective


Scope Of The Report




Secondary Sources


Limitations Of The Report


Literature Review

Chapter Two: Background Of Organization



About IFIC Bank Limited



Corporate Profile Of IFIC Bank



Top Management Personnel



Milestones In The Development Of IFIC Bank



Banks Vision



Bank's Mission



Core Values



Strategic Priority



Management Structure



Hierarchy Of The Organization





Chapter Three: Job Description



Description Of The Job



Specific Responsibilities Of The Job



Different Aspects Of Job Performance



Personal Observation



Recommendations For Tultikar Branch, IFIC Bank, Sylhet.


Chapter Four: Project Findings & Analysis






Project Summary



Project Analysis


4.3.1 Loans To Total Deposit


4.3.2 Loans To Total Asset


4.3.3 Credit Risk Ratios


4.3.3.a Equity To Asset


4.3.3.b Equity To Net Loans


4.3.4 Asset Activity Ratios


4.3.4.a Fixed Asset Turnover


4.3.4.b Net Asset Turnover


4.3.5 Return On Asset


4.3.6 Return On Equity


4.3.7 Return On Deposit


4.3.8 Net Profit Margin


4.3.9 Equity Multiplier


Chapter Five: Recommendations & Conclusion








Chapter Six: References


List of References

Chapter Seven : Appendix




1.1 Introduction
Generally by the word bank we can easily understand that the financial institution
dealing with money. The whole scenario of the economy of a country can be
ascertained by examining the condition of the banking sector. Banking sector has a
vital role to play in the economic activities and development of any country. There are
different types of banks like Central Banks, Commercial Banks, Savings Banks,
Investment Banks, Industrial Banks, and Co operative banks etc. But when we use the
term bank without any prefix or restriction, it refers to the Commercial Banks.
Commercial Banks are the primary contributors to the economy of a country like
Bangladesh. In Bangladesh, the commercial banks are dominating the financial
sector and macroeconomic management largely depends on the performance of the
commercial banks as well as banking sector. Banking grew primarily in the public
sector with main emphasis on restructuring of the financial system and development
needs of the war-torn economy with gradual liberalization in subsequent years. It was
increasingly felt that banks should be allowed in the private sector for giving a fillip to
development process on the basis of private initiative. In the 80s for the first time a
number of banks in the private sector were allowed. IFIC Bank is one of them. Today
the banking concept is not continuing inside the branches or the cabin of the
branches. The bankers are now practicing the non-cabin banking. The assurance of

the availability of the service provider is main factor in bank service. As a result, it
hasbecome essential for every person to have some idea on the bank and banking
procedure. At present, there are 63 scheduled banks operating all over the country.
Out of these, 9 are state-owned (including five specialized banks), 38 are private
commercial banks and the rest 9 are foreign commercial banks. Even though banking
sector in Bangladesh is going through radical changes, it still suffers from chronic
inefficiency. The biggest problem of Bangladesh banking system is the bank loan
default problem. Various initiatives have been undertaken to tackle the loan default
problem in Bangladesh. One of them is to have a credit policy and procedures
guideline mandated by the Bangladesh Bank. Hence financial performance of a bank
includes all the necessary analysis.

1.2 Origin Of The Report

Internship Program of Shahjalal University of Science & Technology is a graduation
requirement for the BBA students, which is also a partial requirement of the
Internship program of BBA curriculum. The main purpose of internship is to get the
student exposed to the job world. Being an intern, the main challenge is to translate
the theoretical concepts into real life experience. The internship program and the
study have following purposes:
To get and organize detail knowledge on the job responsibility.
To gather experiences about the real business world.
To compare the real scenario with the lessons learned in the university

To fulfill the requirement of BBA Program.

To accomplish the internship program, I was placed at IFIC Bank Limited, Tultikar
Branch, Sylhet under the guidance of Mr. Mazharul Hasan Mazumder,PhD my
academic supervisor. The topic of the report was approved by the supervisor to satisfy
the organizational requirements and fulfillment of the internship program. As a
requirement of the completion of the internship program, I had to submit this report,
which includes an overview of the organization and financial performance analysis
of IFIC Bank Limited.

1.3 Objectives Of The Report

The objectives of the report can be viewed in two forms:
General Objective
Specific Objective

1.3. a General Objective

This internship report is prepared primarily to fulfill the Bachelor of Business
Administration (B.B.A) degree requirement under the Department of Business
Administration, Shahjalal University of Science and Technology, Sylhet

1.3. b Specific Objective

More specifically, this study entails the following aspects:
To provide a brief overview about IFIC Bank and the banks historical
To analyze the financial performance of IFIC Bank Limited in the last three
years.(2011 2013)
To present my observation and suggestion to the bank.
To identify the strength and weakness of bank based on the financial performance
in the last three years. (2011-2013).

1.4 Scope Of The Report

The report plots a chronicle outline of IFIC Bank Limited and its operations. The
information consists of the observation and the job experience acquired throughout
the internship era. The report also particularizes the internship research which
focuses on the financial performance of IFIC Bank Limited according to the 20102011, 2011-2012 & 2012-2013 financial years. This report has been prepared
according to extensive analysis of financial statements, annual reports of the bank
and review of literatures.

1.5 Methodology

In order to generate this report only secondary data has been used. The sources that
have been used to gather and collect data is given below-

1.5. a Secondary Sources

Annual Reports of IFIC Bank Limited from 2011-2013
Brochures of IFIC Bank Limited, Tultikar Branch, Sylhet
Different written document of IFIC Bank Limited
Newspapers, Journals, Articles, Books
Web sites

1.6 Limitations Of The Report

It was a great opportunity for me to work in International Finance Investment &
Commerce (IFIC) Bank Limited, at Tultikar Branch, Sylhet as an Intern. But there
were surely some limitations while making this report. They are-

Getting the information and interpreting it, on the basis of my understanding and
then implementing it.
Bankers are very busy people. I tried to contact with some high officials from main
branch at Sylhet for more detailed information and consultation but they could
not manage time for me.
This is the financial analysis of past three years.

1.7 Literature Review

The banking sector of Bangladesh is comparatively larger than many comparable
economies with similar level of development and per capita income. The total size of
the sector at present is 61% of GDP, which is proportionately large for a country with
a per capita income of only about US$870. [Source: Bangladesh Bank Quarterly
Review, 2011] The Banking sector of Bangladesh is divided into four categories of
scheduled Banks. These are Nationalized Commercial Banks (NCBs), Government
Owned Development Financial Institutions (DFIs),Private Commercial Banks (PCBs),
and Foreign Commercial Banks (FCBs). Of them, the commercial banks arethe most
dominant one, accounting for more than 80% of all financial system assets. These
commercial banksare subdivided based on ownership as state-owned commercial
banks (SOCBs), private commercial banks(PCBs) and foreign commercial banks
(FCBs). Different authors across the globe have measured financial performance of
banks based on different techniques. Of which financial ratio analysis, trend analysis,
CAMEL rating, are the most common tools used. Almazari (2011) in his study
measured the financial performance of some selected Jordanian commercial banks
for the period 2005-2009. The study used simple regression analysis. In the study,
bank size,asset management, and operational efficiency were taken as independent

variable and dependent variable was taken as financial performance represented by;
return on assets and interest income. The study concluded that banks with higher
total deposits, credits, assets, and shareholders equity does not always result in
better profitability performance. Ashraf and Rehman (2011) compared and
analyzed performance of Islamic banking and conventional banking system in
Pakistan by using of financial measures. The study analyzed the financial
performance of selected banks from five different dimensions; i) Profitability, ii)
Earnings, iii) Liquidity, iv) Credit risk and v) Asset activity for the period 2007-2010.
The study concluded that the performance of Islamic Banks in Pakistanis lagging
behind on the basis of performance because of increased operating cost and
inefficiency from the part of management
Kouser and Saba (2012) compared the performance of Pure Islamic banks, mixed
banks and conventional banks in Pakistan using CAMEL rating. The study revealed
the following facts i) Islamic banks have adequate capital and have strong asset
quality compared to other banks in sample, ii) Islamic banks in general have more
competent management compared to conventional banks, iii) the earnings of Islamic
branches of conventional banks are greater than other banks. Nimal and hasan
(2008) undertook a comparative study of financial performance of banking sector in
Bangladesh using CAMELS rating system. The study was done on 6562 Branches of

48 Banks in Bangladesh for the financial year 1999-2006. The study revealed that out
of 48 banks, 3 banks were rated 01 or Strong, 31 banks were rated 02 or satisfactory,
7 banks were rated 03 or Fair, 5 banks were rated 04 or Marginal and 2 banks
obtained 05 or unsatisfactorily rating. 1 Nationalized Commercial Bank (NCB) had
unsatisfactorily rating and other 3 NCBs had marginal rating. Chowdhury (2002)
in his study portrayed the state of banking industry of Bangladesh. In his study he
emphasized that performance of banks requires knowledge about the profitability
and the relationships between variables like market size, bank's risk and bank's
market size with profitability. The study shed a light on the importance of
performance evaluation of commercial banks in todays world. The study concluded
that the banking industry in Bangladesh is experiencing major transition for the last
two decades. The author recommended that the banks should endure the pressure
arising from both internal and external factors and prove to be profitable. Siddique
and Islam (2001) undertook a study on commercial banks of Bangladesh for the
financial year 1980-1995. The study revealed that the Commercial Banks, as a whole,
are performing well and contributing to the economic development of the country.
The average profitability of all Bangladeshi banks collectively was 0.09% during 1980
to 1995. The study concluded that although banking sector contributes to the national
economy as well as to the individual organization, the performances of different
categories of banks were not equally attractive. Brigham (2006) The average result
of the sample banks for Return on Equity (ROE) is 18.57% (ranges between53.46% to

-18.87%, = 0.11, median = 17.38%), Return on Assets (ROA) is 0.75% (ranges

between 3.15% to -22.94%, = 0.02, median = 1.01%), Earnings per Share (EPS) is
33.72(ranges between 932.00 to -8,230.00, = 712.36, median = 59.12), Cost Income
Ratio (C/I) is0.45 (ranges between 4.64 to -3.69, = 0.60, median = 0.44 ), Credit
Deposit Ratio (C/D) is 0.78(ranges between 1.15 to 0.12, = 0.16, median = 0.79),
and Financial Leverage (F/L) is 17.53(ranges between 93.88 to -27.39, = 11.91,
median = 16.43).

2.1 About IFIC Bank Limited

International Finance Investment and Commerce Bank Limited (IFIC Bank) is
banking company incorporated in the Peoples Republic of Bangladesh with limited
liability. It was set up at the instance of the Government in 1976 as a joint venture
between the Government of Bangladesh and sponsors in the private sector with the
objective of working as a finance company within the country and setting up joint
venture banks/financial institutions aboard. In 1983 when the Government allowed
banks in the private sector, IFIC was converted into a fully fledged commercial bank.
The Government of the Peoples Republic of Bangladesh now holds 32.75% of the
share capital of the Bank. Directors and Sponsors having vast experience in the field
of trade and commerce own 8.62% of the share capital and the rest is held by the
general public. IFIC Bank Limited was quite successful in achieving decent growth in
most of its business areas, like Deposits and Loans & Advances mainly due to active
monitoring of its business activities and timely & prudent decision making by the
Board and the Management. The Bank was able to register a growth of 17.00% in
Deposits over the preceding year which stood at BDT 107,778.00 million as on 31
December 2013. Total outstanding Loans & Advances of the Bank also stood at BDT
84,110.00 million as on 31 December 2013, marking an increase of 9.00% over the

previous year. The Bank earned a Profit before Taxes of BDT 2,708.00 million in
2013.In the year 2013, the Bank made direct contribution of BDT 1,869.00 million to
the government exchequer by paying Income Tax on its earnings and through
deduction of Income Tax, VAT, Customs Duties and Excise Duty at source from
various payments and services. The Bank has signed a Participation Agreement of
BDT 2,000.00 million with Bangladesh Bank for re-financing in Solar Energy, BioGas & Effluent Treatment Plant (ETP). It is intended to help increase the use of solar
energy and environment friendly alternative renewable energy to maintain ecological

2.2 Corporate Profile Of IFIC Bank

2.3 Top Management Personnel


: Salman F Rahman

Managing Director & CEO : M. Shah Alam Sarwar


1. Mohammad Lutfar Rahman

2. Monirul Islam (Independent Director)
3.Syed Anisul Huq (Independent Director)
4. Mohammed Nayem Syed (Independent Director)

5. Jalal Ahmed (Govt. Nominated Director)

6. A. R. M. Nazmus Sakil (Govt. Nominated Director)
7. Arijit Chowdhury (Govt. Nominated Director)

2.4 Milestones In The Development Of IFIC Bank

1976 - Established as an Investment & Finance Company under arrangement of
joint venture with the Govt. of Bangladesh.
1980 - Commenced operation in Foreign Exchange Business in a limited scale.
1982 - Obtained permission from the Govt. to operate as a commercial Bank, Set up
its first overseas joint venture (Bank of Maldives Limited) in the Republic of Maldives
(IFICs share in Bank of Maldives limited was subsequently sold to Maldives Govt. in
1983 - Commenced operation as a full-fledged commercial bank in Bangladesh.
1985 -Set up a joint venture Exchange Company in the Sultanate of Oman, titled
Oman Bangladesh Exchange Company

(Subsequently renamed as Oman

International Exchange, LLC)

1987 - Set up its first overseas branch in Pakistan at Karachi, Pakistan.
1993- Set up its second overseas branch at Lahore, Pakistan.
1994- Set up its first joint venture in Nepal, titled Nepal Bangladesh Bank Ltd.

1999- Set up second joint venture in Nepal for lease financing, titled Nepal
Bangladesh Finance & Leasing Co. Ltd. (merged with NBBL in 2007).
2003- Set up a new Bank in Pakistan, NDLC-IFIC Bank Ltd. (Subsequently renamed
as NIB Bank Ltd.) and the Overseas Branches of IFIC and a local leasing company,
NDLC were amalgamated with and into it.
2005- Acquired MISYS solution for real time online banking, Implementation of
Core Risk Management.
2007- Launched VISA branded Credit Card (completed full range of Cards i.e. Debit,
Credit & Prepaid by 2010).
2010- Set up Off-shore Banking Unit (OBU).
2011- Established a fully owned exchange company named IFIC Money Transfer
(UK) Ltd.
2013- Achieved the landmark of BDT 100 billion deposit.

2.5 Banks Vision

IFIC Bank Ltd wants to be the preferred financial service provider through
Innovative, sustainable and inclusive growth and deliver the best in class value to all

2.6 Banks Mission

The mission of IFIC Bank Ltd. is to provide service to their clients with the help of a
skilled and dedicated workforce whose creative talents, innovative actions and
competitive edge make the banks position unique in giving quality service to all

institutions and individuals the bank care for. The bank is committed to the welfare
and economic prosperity of the people and the community, for that the bank derive
from them their inspiration and drive for onward progress to prosperity. IFIC Bank
wants to be the leader among banks in Bangladesh and make their indelible mark as
an active partner in regional banking operating beyond the national boundary. In an
intensely competitive and complex financial and business environment, the bank
particularly focuses on growth and profitability of all concerned.

2.7 Core Values

Integrity: Upholding integrity in all that we do, always, everywhere.
Fairness: Striving to offer the best to our customers equitably with transparency.
Innovation: Encouraging and nurturing creativity.
Commitment: Committed to excellence in customer service and maximization of
stakeholders' value through teamwork.

2.8 Strategic Priority

IFIC Bank has following Strategic Priority:
1. To strive for sound business growth by ensuring customer satisfaction through
quality and timely services

2. To manage and operate the Bank in the most efficient manner to ensure
achievement of goal
3. To maintain adequate capital flow to support further growth
4. To ensure effective and efficient risk management for sustainable business growth
5. To diversify loan portfolio through structured finance and expansion of Corporate,
SME, Agriculture and retail businesses
6. To mount state-of-the-art technologies and adopt innovative ideas for inclusion
7. To groom human resources for serving customers efficiently
8. To increase brand visibility by creating positive image of the Bank
9. To be a trend-setter in serving the society and remain responsive to the
10. To ensure sound corporate governance
11. To facilitate mobility in banking by up-gradation of internet and Mobile Banking
12. To add value for all stakeholders.

2.9 Management Structure

The thirteen members of the Board of Directors are responsible for the strategic
planning and overall policy guidelines of the Bank. Further, there is an Executive
Committee of the Board to dispose of urgent business proposals. Besides, there is an
Audit Committee in the Board to oversee compliance of major regulatory and
operational issues. The CEO and Managing Director, Deputy Managing Director and
Head of Divisions are responsible for achieving business goals and overseeing the day

to day operation. The CEO and Managing Director are assisted by a Senior
Management Group consisting of Deputy Managing Director and Head of Divisions
who supervise operation of various Divisions centrally and co-ordinates operation of
branches. Key issues are managed by a Management Committee headed by the CEO
and Managing Director. This facilitates rapid decisions. There is an Asset Liability
Committee comprising member of the Senior Executives headed by CEO and
Managing Director to look into all operational functions and Risk Management of the

2.10 Organization Hierarchy




2.11 Organogram

3.1 Description Of The Job

As an interne I had to perform numerous activities. My main task was to assist
officers and executives in every aspects of their daily work. It includes every activity

that the officials performed like dealing with posting customers, computer posting,
document analysis etc.

3.2 Specific Responsibilities Of The Job

Dealing with customers
Assisting employees in their day to day operations
Maintaining different registers
Computer posting of transactions
Sorting of Cheque, vouchers

3.3 Different Aspects Of Job Performance

It helped me to learn banking activities
It has enhanced my knowledge
I was able to complete almost every task successfully

3.4 Personal Observation

During this internship period, my overall observations at Tultikar Branch, Sylhet,
IFIC bank are as following:

Office environment is not so much friendly for the customers as well as

Tasks are never left pending for the next day unless it is absolutely necessary.
Sometimes problem occurring due to delay submission of the official report
(missing the deadline)

I had seen the harshness of the top management, Specially Of Branch manager
and principal officer of that branch of IFIC Bank for any simple mistake to me as
well as to any respected employee of the branch.
The internal clash sustain between the personnel of same unit and other unit as
The huge discrimination of giving performance bonus or performance appraisal
by branch manager to the employees (some get high performance appraisal due to
the base on own region people rather than based on performance).
Dissatisfaction between some personnel due to excess work load given by force to
them, specially to two respected female employee named Rina didi and Songkori
Didi. They faced excess work load.
I have seen the reluctance among top two key personnel of the branch in making
learn something to another with a harsh manner.

3.5 Recommendations For Tultikar Branch, IFIC Bank

To recommend the branch there are certain areas where things can be improved.
First of all the work force are well but they are lesser in numbers so more people

should be hired in this branch. Another recommendation from my side is to upgrade

the computers, operating systems and software so that the work process could be
faster and better. IFIC Bank Limited has a bright future and they should move
forward with improving technology and methodology so that they can keep their
standards of excellence in banking.

4.1 Introduction
Financial statement Analysis involves a comparison of a firms performance with that
of other firms in the same line of business, which usually is identified by the firms
industry classification. Here my analysis is based on three years (2011-2013)

performance analysis which is used to determine the banks financial position so as to

identify its current strengths and weakness and to suggest action the bank might
pursue to take advantage of the strength and correct any weakness.

4.2 Project summary

Mainly here I want to show a vivid picture of financial performance of IFIC Bank
Limited and for this reason it is necessary to know how IFIC Bank is performing
through any

specific financial performance analyzing tool. Since I have already

mentioned about the background of IFIC Bank Limited, so now to evaluate

performance I have gone through ratio analysis which will help to make proper
evaluation. Basically for analysis, I have chosen some ratios and gather the
information to calculate the ratios from income statement and balance sheet for last
three years. Lastly I have interpreted the result and recommended where the
improvement might take place.

4.3 Project Analysis

Here I have used DuPont Ratios and other key performance analyzing ratios to
analyze the financial performance. The financial performance analysis of IFIC Bank is
given below:

4.3.1 Loans To Total Deposit

This is a commonly used statistic for assessing a bank's liquidity by dividing the
banks total loans by its total deposits. This number, also known as the LTD ratio, is
expressed as a percentage. If the ratio is too high, it means that banks might not have
enough liquidity to cover any unforeseen fund requirements; if the ratio is too low,
banks may not be earning as much as they could be. These ratios are used to
determine whether a bank will be allowed to open or acquire a branch outside of its
home state, and this ratio is often used by policy makers to determine the lending
practices of financial institutions.

Loans to Deposit Ratio

Total Loans
Total Deposits

Loans To Deposit Ratio

Loans to Deposit Ratio
Year 2011

Year 2012

Year 2013

Figure 1 : Loans to Deposit Ratio

The loans to total deposit ratio of IFIC Bank was 70.89% in 2011 and increased to
84.82% in 2012 and then decrease significantly in 2013 to 79.65%. The growth in
2012 was caused by loans increasing faster than deposits. It fell through 2011 and
2013 as deposits grew fast when compared to the year of 2012 , thereby improving the
banks liquidity position. In 2011 and 2013, the loans to total deposit ratio fell
significantly, improving the banks liquidity standing. The falling was attributable to a
greater growth in deposits than loans, as compared to 2012. Total credits grew only
slightly as the bank become rather cautious in giving loans and assessing credit
worthiness because of the then on-going funds crisis. Comparatively a larger growth

in deposits (made possible by increasing interest on deposits) reduced the loans to

total deposit ratio.

4.3.2 Loans To Total Asset

The loans to assets ratio measure the total loans outstanding as a percentage of total
assets. The higher this ratio indicates a bank is loaned up and its liquidity is low. The
higher the ratio, the more risky a bank may be to higher defaults. It is a commonly
used statistic for assessing a bank's liquidity by dividing the banks total loans by its
total assets.
Loans to Asset Ratio

Total Loans
Total Assets

Loans To Asset Ratio

Loans to Asset Ratio


Year 2011

Year 2012


Year 2013

Figure 2: Loans to Asset Ratio

The loans to total asset ratio of IFIC Bank was 71.27% in 2011 and decreased to
64.88% in 2012. The ratio dropped also in 2013 and turns into 65.16%. Assets as well
as loans increased as percentage comparing to 2011. This gave an upward trend of the

loans to total asset ratio and therefore a downward trend for liquidity. The ratio fell in
2012 as the bank went for expansion and bought new fixed assets. A big gap was
visible between asset and loan comparing to previous years. Despite a growth in total
credits as compared to 2011, loans as a percentage of total assets fell as a result at the
year 2013 also.

4.3.3 Credit Risk Ratios

Credit risk ratios are used to calculate the financial leverage of a company to get an
idea of the company's methods of financing or to measure its ability to meet financial
obligations. There are several different ratios, but the main factors looked at include
debt, equity, assets and interest expenses. It measures the credit risk of the company
in terms of its dependence on debt financing versus equity financing. Credit risk
ratios include equity to asset and equity to net loans ratio.

4.3.3.( a) Equity To Asset

The equity ratio is a financial ratio indicating the relative proportion of equity used to
finance a company's assets. It is used to help determine how much shareholders
would receive in the event of a company-wide liquidation. The ratio, expressed as a
percentage, is calculated by dividing total shareholders' equity by total assets of the
firm, and it represents the amount of assets on which shareholders have a residual

claim. Here the figures used to calculate the ratio are taken from the IFIC Banks
balance sheet.

Equity to Asset Ratio

Total Equity
Total Asset



Year 2011

Year 2012

Year 2013

Equity to Asset Ratio

Figure 3: Equity to Asset Ratio

The ratio follows a more or less cyclical trend from 2011 to 2013 with peaks in 2011
and dips in 2012 and 2013. The ratio was 7.28% in 2011. In 2012 however, equity to
asset dropped to an unprecedented level that is 6.86%. The increase was caused
solely by the increase in owners equity. It increased again in 2013 to 7.00%. The
reason was significant decrease of asset rather than equity.

4.3.3.(b). Equity To Net Loans

This ratio forms part of the capital and funding ratios of a bank, and measures a
company/banks financial leverage by calculating the proportion of equity and debt

the company/bank is using to finance its assets. Total equity covers total equity
reserves, total share capital and treasury stock. Net loans include loans to banks or
credit Institutions, customer net loans and loans to group companies.
Equity to Net Loan Ratio

Total Equity
Net Loans

Equity To Net Loans

Equity to Net Loans

Year 2011

Year 2012

Year 2013

Figure 4: Equity to Net Loan Ratio

The equity to net loans ratio of IFIC Bank was 10.22 % in 2011 and dropped to
10.02% in 2012. It increased again to 10.74% in 2013. The fluctuations in the ratio
from 2011 to 2013 can be explained by changes in the manner of financing. Both the
total equity and net loans increase in 2013 which results in greater equity to net loans
ratio. But in 2012 and 2011, the net loans increased significantly which took the ratio
downward again.

4.3.4 Asset Activity Ratios

They are also known as asset management ratios or efficiency ratios and are used to
judge the efficiency in management of assets. Assets are employed to generate sales
for a financial institution and these ratios determine how well the asset is utilized to
efficiently generate or convert asset into sales. High asset turnover ratios are
desirable because they mean that the company is utilizing its assets efficiently to
produce sales. The higher the asset turnover ratios, the more sales the institution is
generating from its assets. It consists of fixed asset turnover and net asset

4.3.4. (a) Fixed Asset Turnover

Fixed Asset Turnover Ratio calculates the value of revenue achieved per dollar of
investment. The fixed-asset turnover ratio measures a company/bank's ability to
generate net sales from fixed-asset investments - specifically property, plant and
equipment (PP&E) - net of depreciation.

A higher ratio indicates better asset

management and utilization and vice versa.

Fixed Asset Turnover

Net Fixed Asset

The fixed asset turnover of IFIC Bank was 261.65% in 2011. Then it continuously
increased drastically to 271.49% in 2012 and 283.62% in 2013.

Fixed Asset Turnover

Fixed Asset Turnover

Year 2011

Year 2012

Year 2013

Figure 5: Fixed Asset Turnover

An unprecedented increase in fixed assets was responsible for this trend in 2013. A
possible reason for the increasing value of fixed assets was raising inflation. This
means that the new assets bought and recorded from 2012-13 were recorded at a
higher value, increasing the amount of fixed assets exponentially.

4.3.4 (b) Net Asset Turnover

The net asset turnover ratio measures the ability of management to use the net assets
of the company/bank to generate sales revenue. A well-managed company/bank will
be making the assets work hard for the business by minimizing idle time for
machines and equipment. Too high a ratio may suggest over-trading, that is too much

sales revenue with too little investment. Too high a ratio may suggest under-trading
and the inefficient management of resources.
Net Asset Turnover

Net Asset

Net asset turnover of IFIC Bank was 6.31% in 2011. From 2011 onwards, it had been
falling at different rates. It fell to 5.51% in 2012 and 4.97% in 2013. It dropped in
2012 due to a greater percentage increase in net assets compared to revenue. In 2013
the ratio dropped drastically because of significant increase in net assets as well as
slight decrease in revenue. The downward trend of net asset turnover, which started
from 2012 and continued till 2013, can be explained by the increasing of net assets,
the rate of which is substantially greater than the rate of growth in revenue. Rapidly
growing fixed assets increased net assets, thus bringing down net asset turnover.

Net Asset Turnover

Net Asset Turnover

Year 2011

Year 2012

Figure 6: Net Asset Turnover

Year 2013

4.3.5 Return On Asset

ROA is an indicator of a companys profitability. ROA is calculated by dividing a
companys net income in a fiscal year by its total assets. It is known as a profitability
or productivity ratio, because it provides information about the management's
performance in using the assets of the small business to generate income. ROA can be
used as a valuable tool to measure progress against predetermined internal goals, a
certain competitor, or the overall industry. ROA is also used by bankers, investors,
and business analysts to assess a company's use of resources and financial strength.

Return on Asset

Net Profit

Return on asset of IFIC Bank follows a cyclic trend. It was .90% in 2011. In 2012 it
increased to .98%. After the increase in 2012, it also increased again and turns into
1.03% in 2013. The falling in 2011, caused by an economic downturn, coupled with a
reduced interest spread and a lower net profit after tax, relative to total interest

Return on Asset

Return on Asset
Year 2011

Year 2012

Year 2013

Figure 7: Return on Asset

In year 2013, total assets as well as net profit grew faster comparing to 2012 and
2011, causing the return on asset to rise during a period of high profitability. The
growth in assets resulted from a significant growth in total credit as well as fixed
assets. The return on asset drastically dropped in 2011 because profits took a huge hit
from the failing capital market and shrinking net interest margin. The interest spread
fell as interest on deposit soared, but the interest on loan could not increase as much
due to the lending cap.

4.3.6 Return On Equity

This ratio shows the amount of net income returned as a percentage of shareholders
equity. Return on equity measures a company/bank's profitability by revealing how
much profit a company generates with the money shareholders have invested. It


shareholders') money.






Return on Equity

Net Profit

The return on equity of IFIC Bank was 12.44% in 2011. After that it started to increase
and became 14.41% in 2012. Then the ratio turns into 14.83% in 2013. The fall in
2011 was caused by a lower net profit margin resulting from a lower interest rate
spread and increased provisions and operating expenses. Profitability dropped due to
a domestic economic turndown, combined with the global economic crisis. The sharp
fall in 2011 is attributable to a combination of two factors. Firstly, a fall in return is
evident from the drop in the interest spread and net profit margin. Profitability
dropped due to an increase of interest on deposits and loss in capital market

Return on Equity

Year 2011

Year 2012

Year 2013


Figure 8: Return on Equity

4.3.7 Return On Deposit

This ratio shows the amount of net income returned as a percentage of total deposits.
Return on deposit measures a companys profitability by revealing how much profit a
company generates with the money savers. It indicates a companys efficiency in
applying deposits (liabilities) to earn profit. Here IFIC Banks return on deposit of
last three years is as follows.

Return on Deposit

Net Profit
Total deposit

Return On Deposit
Return on Deposit

Year 2011

Year 2012

Year 2013

Figure 9: Return on Deposit

Return on deposits of the IFIC Bank was .90% in 2011. It slightly rose in 2012 to
1.22%. The ratio increased to 1.27% in 2013. The fall in 2011 was caused by a
substantial increase in deposits and even greater decrease in net profit. The fall in
net profit was caused by the stock market crash and the increase in return on
deposits, leading to a lower total income for the bank.

4.3.8 Net Profit Margin

Here IFIC Banks profit margin of last three years is as follows.
Net profit Margin= Net income after tax/Total operating revenue

Net profit margin of IFIC Bank was 7.30% in 2011. It rose in 2012 to 8.00%. The ratio
increased to 8.96% in 2013. The fall in net profit was caused by the stock market
crash and the increase in return on deposits, leading to a lower total income for the

Net Profit Margin

Net Profit Margin

Year 2011

Year 2012

Year 2013

Figure 10: Net profit Margin

4.3.9 Equity Multiplier

Equity multiplier is measured by the following equation
Equity Multiplier = Total Assets/Total Equity Capital

Equity Multiplier

Equity Multiplier
Year 2011

Year 2012

Year 2013

Figure 11: Equity Multiplier

The equity multiplier of IFIC Bank was 13.87% in 2011. After that it started to
increase and became 14.80% in 2012. Then the ratio turns into 14.51% in 2013. The
fall in 2011 was caused by a lower net profit margin resulting from a lower interest
rate spread and increased provisions and operating expenses. Profitability dropped
due to a domestic economic turndown, combined with the global economic crisis.

5.1 Recommendations
Some recommendations based on the Financial Performance of IFIC Bank
Limited are given below-

Before giving long-term loan a bank should consider that whether a bank has long
term deposit or not. Otherwise the bank will surely face the liquidity problem.
A bank should increase the non-funded income in order to increase the operating
income ratio.
After giving the loan to the customers, a banker should also perform certain duties
to the customers to decrease the bad debt problem. Like-monitoring, supervising
and follow up the loan that is taken by the customers.
Bangladesh Bank should impose the rule of uniformity for all types of schemes. By
this way customers can decide from where they will receive service based on the
service quality and organizational environment.
Directors interference in case of giving loan should be lessening because in this
way risk may increase and bad debt may also increase.
Employee Recruitment Process- should be done in a fare process so that
appropriate and talented employees are selected through the recruitment process
and increase the productivity and quality of the service.

The most important thing that has come to my mind concerning their
promotional activities is that they should go for print or broad cast media for
advertisement to make their customer aware about their range of services and
make the strong place in the customers mind.
They should make their services decentralized rather than centralized, so that the
process of LC as well as the loan approval will not be time consuming. And they
will be able to give faster and updated service to the clients.
They should give some power to the Branch Managers for sanctioning loans for
the purpose of foreign trade up to a certain limit. So that, they can provide loan to
their valuable clients when they are in shortfall of funds on emergency basis.
They should increase the number of additional branches in all over the country
with the permission of Bangladesh Bank. Thus, the clients in every city can enjoy
their foreign trade from their own city.

5.2 Conclusion
Modern commercial banking is exacting business. The reward are modest, the
penalties for bad looking are enormous. And commercial banks are great monetary
institutions, important to the general welfare of the economy more than any other
financial institution. IFIC Bank Limited is one of the leading commercial banks in our

country. In all economic condition of our country, IFIC Bank Limited has been
working with great confidence and competing tremendously with Government
oriented bank, local commercial banks along with the other multinational banks also.
IFIC Bank Limited always tried its level best to perform financially well. In spite of
trying to do well in some aspects IFIC Bank Limited faced some financial problems
from time to time. Some of the problems were- excessive bad loans, shortage of loans
and advances, scarcity of cash in hands due to vault limit etc. These problems arouse
time to time due to economic slowdown, interest rate fluctuation, emerging capital
market, inflation in the money market and so on. Fighting with all these problems
and competing with other banks every moment the bank is trying to do better to best.
If this thing continues we hope that IFIC Bank Limited will develop even more in the

6.1 List Of References

To prepare this report I have collected data mainly from annual reports of IFIC Bank
Limited, different articles, journals, books etc regarding ratio analysis, the websites of
Bangladesh Bank and IFIC Bank Limited and others websites about ratio analysis.
The references are given below:
Articles & Journals

Tracy, John A. (2004). How to Read a Financial Report: Wringing Vital Signs
Out of the Numbers. John Wiley and Sons. p.173.

Clausen, James. (2009). Accounting 101 Financial Statement Analysis in

Accounting: Liquidity Ratio Analysis Balance Sheet Assets and Liabilities,
Journal of financial statement.

Clausen, James. (2009), Accounting 101 Income Statement: Financial

Reporting and Analysis of Profit and Loss , Journal of income statement.

Clausen, James. (2009), Basic Accounting 101- Asset Turnover Ratio: Inventory,
Cash, Equipment and Accounts Receivable Analysis, Journal of asset turnover

Diane, White. (2008), Accounts Receivable: Analyzing the Turnover Ratio,

Journal of Account receivable.

Hutchinson, James (2010), Long Term Debt to Equity Ratio of a Business:

Understand a

Company's Value to its Investors and Owners, Journal of long

term debt to equity ratio.

Jenkins, Lucia. (2009). Contribution Margin and Breakeven Analysis:

Determining when a Company will Realize a Profit , Journal of contribution
margin and breakeven analysis.

Marshall, D., McManus, W., Viele, D. (2003). Managerial Accounting and CostVolume-Profit Relationships. Accounting: What the numbers mean,New York.

Nelgadde, Jo. (2010). Debt Collection and Debt Recovery Tools: Using Ratio
Analysis, Journal of debt collection and debt recovery tools.

Thachappilly, Gopinathan. (2009). Profitability Ratios Measure Margins and

Returns:Profit Ratios Work with Gross, Operating, Pretax and Net Profits.
Journal of Profitability ratio measure margin and return.

Thachappilly, Gopinathan. (2009). Financial Ratio Analysis for Performance

Check: Financial Statement Analysis with Ratios Can Reveal Problem Areas.
Journal of financial ratio analysis for performance evaluation.

Thachappilly, Gopinathan. (2009). Liquidity Ratios Help Good Financial

Management: Liquidity Analysis reveals likely Short-Term Financial Problems.
Journal of liquidity ratio analysis.









Viability/Leverage: The Ratio of Debt to Equity Has Implications for Return on

Equity. Journal of debt ratios analysis.

Zain, Maria. (2008). How to Use Profitability Ratios: Different Types of

Calculations that Determine a Firm's Profits , Journal of profitability ratio


Stanley, B. b., & Geoffrey, A. H. (2008 - 2009). Foundation of Financial

Management. International: McGraw-Hill.

Besley s and Brigham e.f

decisions . 14th

(2010-2011),Strategic planning and financing

Edition. Page 669-719 USA, Thomson Publication (South-


Brigham, E. F., & Gapenski, L. C. (1995). Intermediate Financial Management

(Fifth ed.). International: The Dryden Press.

Madura, J. (2008). Financial Market and Institution. USA: Thomson SouthWestern.

Weygandt, J. J, Kieso, D. E, & Kell, W. G. (1996). Accounting Principles (4th ed.).

New York, Chichester, Brisbane, Toronto, Singapore: John Wiley & Sons, Inc. p.

Weygandt, J. J, Kieso, D. E, & D, Warfield Terry (2001). Intermediate

accounting: cash ratio analysis. (10th ed.). Bearcat Company, Vol-1.p.211.

Weygandt, J. J, Kieso, D. E., & D, Warfield Terry (2001). Intermediate

Accounting: Return on assets ratio. (10th ed.). Bearcat Company, Vol-1.p.361.

Weygandt, J. J, Kieso, D. E., & D, Warfield Terry (2001). Intermediate

Accounting: Inventory turnover ratio. (10th ed.). Bearcat Company, Vol-1.p.470.

Weygandt, J. J, Kieso, D. E., & D, Warfield Terry (2001). Intermediate

Accounting: total asset turnover ratio. (10th ed.). Bearcat Company, Vol-1 p.572.

Weygandt, J. J, Kieso, D. E., & D, Warfield Terry (2001). Intermediate

Accounting: Return on asset ratio. (10th ed.). Bearcat Company, Vol-1 p.572.

Weygandt, J. J, Kieso, D. E., & D, Warfield Terry (2001). Intermediate

Accounting: Debt coverage ratio. (10th ed.). Bearcat Company, Vol-1 .p.734.

Weygandt, J. J, Kieso, D. E., & D, Warfield Terry (2001). Intermediate

Accounting: Return on equity ratio. (10th ed.). Bearcat Company, Vol-1.p. 830.

Weygandt, J. J, Kieso, D. E., & D ,Warfield Terry (2001). Intermediate

Accounting: Book value per share. (10th ed.). Bearcat Company, Vol-1.p. 831

Weygandt, J. J, Kieso, D. E., & D, Warfield Terry (2001). Intermediate

Accounting: Earning per share. (10th ed.). Bearcat Company, Vol-1.p. 831


Annual Reports of IFIC Bank Limited from 2011-2013. Available From:

< http://nk.ificbank.com.bd > Viewed: 18 November, 2014

IFIC Bank Financial Info. Available From: <

http://www.bangladeshbank.org/fnansys/bankfi.php > Viewed: 22 October,2014

Ratio Analysis of a bank. Available from:

< http://www.activemediaguide.com/busedu_banking.htm > Viewed: 25
November, 2014

Measuring Financial Performance of a Bank. Available from:

< http://www.shkfd.com.hk/glossary/eng/RA.htm > Viewed: 2 January, 2015

7.1 Appendix