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Financial Performance Analysis

A Study on
NRB Global Bank Limited
(THIS INTERNSHIP REPORT IS SUBMITTED FOR THE PARTIAL FULFILMENT OF THE DEGREE OF MASTERR
OF BUSINESS ADMINISTRATION WITH A MAJOR IN FINANCE)

Prepared by:
Mohammad Refat Hossain
Id No: 1502120801941
Program: MBA
Major: Finance

Internship Duration: 5th November, 2016 - 5th February, 2017


Submission Date:

Faculty of Business Studies

Premier University

ACKNOWLEDGEMENT
I have completed my internship at NRB Global Bank Ltd (Nasirabad Branch) from November 5,
2016 to February 5, 2017 .This report would not have been fulfilled without the support and
guidance of the following individuals.

I am indebted to my respected teacher and supervisor Mr. Rajib Datta, Assistant Professor,
Faculty of Business Studies for his help and cordial guidance given for this study.

I am thankful to Mr. Mohammad Nasir Uddin, (AVP & Branch Manager) of NRB Global
Bank Limited, Nasirabad Branch, for permitting me to conduct my internship program in this
branch.

I am deeply thankful to very important person Mr. Fazlul Kabir Chowdhury, (FAVP &
Manager Operation), for his cooperation & enabling me to doing my job in a favorable
environment.

I also admire all the personnel for their co-operation and cordial assistance to me specially, Mr.
Joynal Abedin (Assistant Officer), Mr. Ahammed Doza (Management Trainee Officer), Mr.
Adnan Chowdhury (Assistant Officer & Head of Credit Division), Mr Shafayat Ibne Rashid
(Management Trainee Officer), Mishkatul Irfan (Assistant Officer) and other staffs for their
friendly behavior, cooperation and other services during my studies.

I am also grateful to my parents, sister, relatives and my friends whose influence and inspiration
has enabled me to complete this report.

Finally, I thank all the persons who have directly and indirectly contributed in preparing this
report.

Mohammad Refat Hossain


ID no: 1502120801941
Major: Finance
Faculty of Business Studies
Premier University

EXECUTIVE SUMMARY
The report is based on three months working experience in
NRB Global Bank (Nasirabad Branch). The topic of my report is Financial Performance of
Banking CompanyA study on NRB Global Bank Limited.

NRB Global Bank Limited as a 4 th generation bank since its operation from 2013 has been
striving hard to be one of the most agile & responsive banks in the country. Despite challenges of
acute competition in the banking industry, its number of clients, amount of deposit and investment
increases day by day.
In my report I have analyzed the financial statements of NRB Global Bank Limiteds financial
statements and given significant comments regarding the changes in the financial performance.
Analyses of financial performance now become an important issue for investors, financial experts,
management executives and the bankers because they are rely on these to make important
decisions. In the overall report I have tried my best level to put up as much information that I
could gather from the internship program duration in my host bank and from annual report of
NRB Global Bank, but there are also some limitations that I have faced.

There are five chapters in this report. The first chapter contains the background of the study. The
second chapter contains the overview of NRB Global Bank Limited. The third chapter describes
the theoretical aspect of financial performance. The fourth chapter describes the Financial
Performance of NRB Global Bank Limited. The last chapter identifies the major findings and
recommendations from the study.

The working environment of NRB Global Bank (Nasirabad Branch) is very friendly. The staffs
are specialized in their respective fields. I hope in spite of all my limitations this experience of
sharing works with such working environment; will help me a lot in my professional life.

Finally, this report will help the reader to understand how financial performance of a bank can
evaluate.

TABLE OF CONTENT
Particular
Page
Number
Chapter-1 Background of the Study

1.1 Introduction 2

1.2 Objective of the Study 3

1.3 Methodology of the Study 3

1.4 Scope of the study 4

1.5 Limitations of the Study 4

Chapter-2 Overview of NRB Global Bank Limited

2.1 An Overview of NRB Global Bank limited 6

2.2 Goal of NRB Bank Limited 6

2.3 Vision of NRB Global Bank 6

2.4 Mission of NRB GLOBAL BANK 7

2.5 Corporate Information at a Glance 7

2.6 Highlights of NRB Global Bank Limited 8

2.7 Functions of the NRB Global Bank Limited 8

2.8 Board of Directors 9

2.9 Branches of NRB Global Bank Limited 10

2.10 Organizational Structure of NRB Global 11


Bank Limited

2.11 Products and services 12

2.12 NRB Global Bank Limited Nasirabad Branch 14

2.13 Internship Experience 15

Chapter-3 Project Part-Theoretical Aspect of Financial


Performance

3.1 Definition of Financial Performance Analysis 17

3.2 Project Objective 17

3.3 Financial Statement 18

3.4 Ratio Analysis 19

3.5 Special Ratios to Evaluating Banks Financial 26


Performance

Chapter-4 Financial Performance of NRB Global Bank Limited

4.1 LIQUIDITY RATIO 29

4.1.1 Current RATIO 29

4.2 Activity RATIO 30


4.2.1 Cost-Income Ratio
30

4.3 Financial Leverage RATIO 31

4.3.1 Debt Ratio 31

4.3.2 Time Interest Earned Ratio 32

4.4 Profitability Ratio 33

4.4.1 Net Profit Margin 33

4.4.2 Return On Assets (ROA) 34

4.4.3 Return On Equity (ROE) 35

4.5 Market Ratio 36

4.5.1 Earning Per Share (EPS) 36

4.6 Other important ratios for banks 37

4.7 Other graphical presentation to identify 41


financial performance

Chapter-5 Findings, Recommendation & Conclusion

5.1 Findings 46

5.2 Recommendations 48

5.3 Conclusion: 49
Chapter 1:
Background of the Study

Contents
1.1 Introduction..............................................................................................................

1.2 Objective of the Study..............................................................................................

1.3 Methodology of the Study........................................................................................

1.4 Scope of the Study....................................................................................................

1.5 Limitations of the Study...........................................................................................

1.1 Introduction
Today a large section of people, who have minimal financial literacy, are keen to know the financial
performance status of the banks where their deposits are vested. They may be as an investor, manager,
employee, owner, lender, customer, government and public at large.

Generally, financial performance analysis is the process of identifying the financial strengths &
weaknesses of the firm by properly establishing the relationship between the items of balance sheet and
profit & loss account. It also helps in short-term & long term growth forecasting. Financial performance is
not easily available from the records and files in any
organization. It has to be derived by the usage of financial statement analysis techniques.

Avkiran,( 1995) stated that, the financial performance of banks & other financial institutions has been
measured using a combination of financial ratios analysis.
Pandey (2006) stated that the easiest way to evaluate the performance of a firm is to compare its present
ratio with the past ratio. It gives an indicator of the direction of change & reflects whether the firms
financial performance has improved, deteriorated or remained constant over time.

Performance of financial institution like bank is generally measured by applying quantitative


techniques of financial measurement. The selection and usage of technique is subject to the
option of the user. Some of the important and commonly used techniques are: Ratio Analysis,
Cross section analysis, Comparative statement analysis, Time series analysis, Common size
analysis, and DuPont Analysis. Although, most commonly used technique is ratio analysis for
evaluating financial performance of any organization.

Financial performance evaluation of commercial banks is especially important today because of


the fierce competition. Also performance of banks is very important to the individual consumers
of bank deposit & loan services, stockholders, employees, government regulators, management &
to the entire economy.
Therefore, it is necessary to evaluate the financial performance of banks in order to identify;
how to optimally use their scarce financial resources, their strengths & weaknesses in their
managerial skills & competencies which can be strengthened to enhance the services of they
provide.

As a mandatory requirement of the Master of Business Administration (MBA) program under Faculty of
Business Studies at Premier University, during my 3 months internship program, I have tried my best to
know about the financial performance of NRB Global Bank Limited by this report titled -Financial
Performance Analysis- A Study on NRB Global Bank Limited. The report identifies how the NRB
Global Bank Limited is performing in banking sector of our country.

1.2 Objective of the Study


The main objective of the study is to analyze the Financial performance of NRB Global Bank
Limited.

For analysis following specific objectives are set for the study:

To interpret the financial ratios related to financial performance


To evaluate financial performance from 2015 to 2013 by calculating several ratios
To compare the performance from 2015 to 2013
To identify the findings & raise possible recommendations for improving the
Performance of NRB Global Bank Limited
1.3 Methodology of the Study
Data Source:
The secondary data sources used to prepare these reports, which are stated below:

Secondary Data:
Annual Financial & Management Reports of NRB Global Bank Limited
Web-site of NRB Global Bank Limited
Web-sites of Bangladesh Bank
Previous Internship Report, etc
Different Books

1.4 Scope of the Study


Since NRB Global Bank has just started its journey it still has a long way to go. To achieve long
term goal it must take every step very carefully.
The report mainly focuses only on NRB Global Bank Limited & prepared on the basis of the
Balance Sheet, Income Statement & Cash Flow Statement. All information for calculation and
interpretation has been gathered from the annual report of the company. This study is analyzing
the financial performance of NRB Global Bank by using ratio analysis with a view to give
meaningful interpretations for the stakeholders of the bank. Moreover the report has dealt with
financial strength & weakness and overall financial performance of the company.

1.5 Limitations of the Study


It is not possible to reflect actual situation by considering limited sources. With a very short
period of time it is not easy to complete all the aspects of banking clearly. But I have tried my best
to fulfill all the shortcoming s & try to gather necessary data so far as possible.
There are some limitations in conducting the study which are as follows:

I had to collect most of the information from the website to complete this report
Another important limitation is the shortage period of internship.
Office secrecy was one of the most important problems. Disclosing of some information
was restricted.
The officers were quite busy with their regular activities. For this reasons it was also a
little problem to collect detail information from them.

Chapter 2:
Overview
Of
NRB Global Bank
Limited
Contents
2.1 An Overview of NRB Global Bank Limited..........................................................................6

2.2 Goal of NRB Global Bank Limited.........................................................................................6

2.3 Vision of NRB Global Bank.....................................................................................................6

2.4 Mission of NRB GLOBAL BANK..........................................................................................7

2.5 Corporate Information at a Glance........................................................................................7

2.6 Highlights of NRB Global Bank Limited...............................................................................8

2.7 Functions of the NRB Global Bank Limited..........................................................................8

2.8 Board of Directors....................................................................................................................9

2.9 Branches of NRB Global Bank Limited...............................................................................10

2.10 Organizational Structure of NRB Global Bank Limited..................................................11

2.11 Products and services...........................................................................................................12

2.12 NRB Global Bank Ltd Nasirabad Branch.........................................................................14

2.13 Internship Experience..........................................................................................................15

2.1 An Overview of NRB Global Bank


Limited
On 2012 Bangladesh Bank approved nine banks as fourth generation banks. In which, three
banks have the funding of nonresident Bangladeshi (NRB) people, NRB Global Bank Limited is
one of those banks to materialize the dream of people having the goal to keep Bangladesh well
connected with other advanced nations. After hard labor of complying with all regulatory rules
and regulations, NRB Global Bank as one of the fourth generation private sector banks got the
final approval on July 25, 2013 from the regulatory body to run the banking business in
Bangladesh.
Its head office is situated at Khandker Tower, 94 Gulshan
Avenue, Gulshan 1, Dhaka 1212; also this bank has opened its first branch at the same premise on
October 23, 2013.
Mr. Nizam Chowdhury is the founding Chairman of this bank having a long professional
experience of 26 (twenty six) years in the U.S.A and other Directors are also well reputed in their
own sectors of business. Their mission to increase economic development of Bangladesh by
providing bank service with the help of Bangladeshi expatriates residing in different countries.
NRB Global Bank Limited mission is to bring the huge unbanked people under banking.

It seems that many Non-Resident Bangladeshi (NRB) people are little confused to invest in
Bangladesh although they have huge fund to do so. NRB Global Bank Limited is assuring them
about their investment in Bangladesh, which will create huge employment opportunities.

2.2 Goal of NRB Global Bank Limited

2.3 Vision of NRB Global Bank


To become exceptional brand in the financial sector by offering service excellence and
creating value for everybody encompassing customers, shareholders, partners, society and
economy through transparency, technology, innovation and integrity

2.4 Mission of NRB GLOBAL BANK


Build confidence among the NRBs for investment.
Provide fast, accurate and adequate customer service upholding business ethics and
transparency.
Strengthen inflow of remittance.
Create value for communities, societies and economies in which we operate by ensuring
growth and sustainability.
Matching technology with the help of well educated professionals and experienced
sponsors of the Bank.
Create dignified working environment for Employees.

2.5 Corporate Information at a


Glance

Name of the Bank NRB Global Bank Limited


Chairman Mr. Nizam Chowdhury
Managing Director Mr. Proshanta K Halder
Deputy Company Mr. Manjur Hossain
Secretary
Legal Form Public Limited Company
Date of incorporation July 21, 2013
Registered Office Khandker Tower
94 Gulshan Avenue
Gulshan 1, Dhaka 1212
Authorized Capital Tk. 12,000 Million
Paid Up Capital Tk. 4250 Million
Phone +8809617176037
E-mail info@ nrbglobalbank.com
Website www.nrbglobalbank.com

(Source: NRB Global Bank Website & Annual Report of 2014)

2.6 Highlights of NRB Global Bank


Limited

Particular Taka In Million

Year 2015 Year 2014 Year 2013


Authorized Capital 12000 12000 12000

Paid-up Capital 4250 4250 4250

Total Capital 4380.17 4294.37 4269.98

Total Assets 31430.03 18300.57 7497.19

Total Deposits 26687.08 13906.93 3176.75

Total Loans & Advances 20846.13 10238.20 2580.02

Credit Deposit Ratio 78.02% 76.83% 83.77%

Profit After Tax & Provision 18.97 (74.65) (10.76)

Return On Investment (ROI) 0.45% (1.77%) (0.49%)

Return On Assets (ROA) 0.02% (0.17%) (0.28%)

Income From Investment 217.36 12.85 -

Earning Per Share (EPS) 0.04 (0.18) (0.03)

Net Income Per Share 0.04 (0.18) (0.03)

2.7 Functions of the NRB Global


Bank Limited
The basic functions of the NRB Global Bank Ltd are given below:
Main task is accepting deposit from various customers through various types of accounts.
Providing loans on easy terms and condition
Investment on profitable sector by its funds
Transfer money by Demand Draft, Pay Order, etc
Providing service on bill of exchange, cheque, on behalf of the clients
Help in foreign exchange by issuing Letter of
Credit (L/C)

2.8 Board of Directors

Nizam Chowdhury
Chairman

Belal Ahmed

Vice-Chairman

Ataur Rahman Dr. Mohammed Ghulam


Director Faruque Mohammed

Director Director

Mohammad Mohammed Rashed Uddin


Shahjahan Meah Mahmud
Manzoor Alam
Director Director
Director

Maimuna Khanam Osman Goni Jahangir Hossain


Chairman
Director Director Director

Sarwar Jahan Ms. Danny Subrata Kumar


Maleque Chowdhury Bhowmick
Chairman
Director Director Director

Mohammad Fazley Mohammad


Morshed Morshedul Alam
Director Director

2.9 Branches of NRB Global Bank


Limited

Branches in Dhaka Division (14 Branches)

Gulshan Motijheel Naya Paltan Dhanmondi Uttara Banani


Corporate Branch Branch Branch Branch branch
Branch (Motijheel (Naya Paltan (Dhanmondi ( Uttara (Kamal
(Gulshan C/A) VIP Road) R/A) Model Town, Ataturk
Avenue) sector 13) Avenue,
Banani)
Mawa Branch Ulokhola Beldi Bazar
(South Branch Branch (Beldi Ashulia Panthapat Mohakhali
Medinimondol, (Nagar Bazar, Branch h Mahila Branch (Bir
Munshigang) Kaliganj, Narayangonj) (Savar) Branch Uttam AK
Gazipur) (Kalabagan) Khandakar
Road,
Mohakhali)

Kaliachapra Nawab pur


Branch Road
( Thana: Branch
Pakundia, (Wari)
Kishorgonj)

Branches in Chittagong Division (19 Branches)

Agrabad Dohazari Gunabati Patherhat Panchgachi Cox's Bazar


Corporate Branch Branch Branch a Bazaar Link Road
Branch (Dohazari, (Chauddagram (Noapara, Branch Branch
(Agrabad C/A, Chandonish) , Comilla) Raozan) (Feni Sador) (Shahartoli
Chittagong) Link Road,
Coxsbazar
Sadar)

Anwara Nasirabad Jubilee Road Rowshan Adunagar Nandipara


Branch (Mahal Branch Branch (S.M.A Hat Branch Branch Bazar
Khan Bazar) (Afford Tower, Jubilee (Arkan Sarak, (Adhunagar, Branch
Sultan Road) Chandanaish Lohagara) (Sonaimuri,
Elysium, ) Noakhali)
CDA Avenue

Khatungonj Feni Shindurpur Patiya Kashipur Dakbangla


Branch Branch Branch Branch Bazar Bazar
(Ramjoy (Feni Sadar) (Shindurpur (Delal Miah Branch Branch
Mohazon Lane, Bazar, Feni) Shopping (Sonaimuri, (Sonagazi,
Kotwali) Complex) Noakhali) Feni)

Bashkhali
Branch
(Chambal,
Bashkhali)

Branches in Other Divisions (3 Branches)

Khulna Branch (Khan Plaza, KDA Avenue)

Bogra Branch (Saikat Complex, Sharpur Road, Bogra Sadar)

Sylhet Branch ( Optimum Tower, Chayatoru VIP Road, Lamabazar)

2.10 Organizational Structure of NRB


Global Bank Limited

Managing Director

Deputy Managing Director

Senior-Executive Vice President


Executive Vice President

Senior Vice President

Vice President

First Vice President

Senior Assistant Vice President

Assistant Vice President

Senior Principal Officer

Principal Officer

Senior Officer

Officer

Junior Officer

Assistant Officer

Trainee Assistant
Officer

2.11 Products and services:


NRBGB is offering the following products or services to the client:

Regular Deposit Scheme

1. NGB Current (Non interest bearing account where frequent cash transactions made)
2. NGB Savings (Interest bearing account)
3. NGB Perfect (Allows an individual to manage savings and transaction simultaneously)
4.NGB Queen (An interest bearing account designed exclusively for woman)
5. NGB Freshers (For students)
6. NGB Junior (For children aged between 3 to 18 years but account is operated by parents

until Child attain his/her maturity at age 18)


7. NGB DPS (Allow to build up savings through regular monthly deposit)
8. NGB Salary (Employer can credit monthly salary/paycheck every month will

credit to account)

Fixed Deposit Receipt & Special Benefit Scheme

1. NGB Double Benefit Scheme (Help to double deposited money on maturity)


2. NGB Monthly Benefit Plan (Helps to earn extra income from every month of deposited
money which lets to earn yearly benefit every month)
3. NGB Fixed Deposit Scheme (Higher interest on savings for long term investment)

Loan Products

Personal 1. NGB Adhoc Loan (Unsecured retail loan for salaried and self-employed
Loan professionals)

2. NGB Executive Loan (Personal loan for corporate executives)

3. NGB Travel Loan (Travel loan where applicant has to declare travel purpose.

4. NGB Festival Loan (To meet festival expenses)

5. NGB Marriage Loan (For covering the marriage expenses)

6. NGB Professional Loan (Professionals, for doctors & engineers)

7. NGB Auto Loan (car loan facility)

8. NGB Home Loan

9. NGB Health Support Loan

10. NGB Education Loan


SME Loan 1. NGB Uddom (For men, no provision of collateral)

2. NGB Kishan ( For Farmer)

3. NGB Nandini ( For women entrepreneur)

4. NGB Proshar (For men, there is provision of collateral)


Credit Loan 1. Term Loan (advances made by the bank with a fixed repayment schedule)
Product
2. Continuous Loan (advances having no fixed repayment schedule but have an
date at which it is renewable on satisfactory performance of the clients)

3. Demand Loan (In opening letter of credit (L/C), the clients have to provide the
full L/C amount in foreign exchange to the bank. To purchase this foreign
exchange, bank extends demand loan to the clients at stipulated margin)

4. Import Finance

5. Export Finance
6. Local Bill Purchase

7. Staff Loan

Other Service

1. Locker Service
2. Internet Banking
3. SMS Banking
4. Debit Card

Upcoming Service

1. Agent Banking
2. Green Banking
3. Western Union
4. Money Gram
5. Credit Card

2.12 NRB Global Bank Ltd Nasirabad


Branch
The Nasirabad branch is one of the urban branches of NRB Global Bank Limited. It was
established on 27 November 2014 at Afford Sultan Elysium, 331/A, C.D.A Avenue,
East Nasirabad, Chittagong.
At present Mr. Mohammad Nasir Uddin acts as an Assistant vice President and Head of Branch.
There are 19 employees including Executive and Officer Level are in this branch and 6 staffs. The
bank behaves with its customer in such way what is really expected by their customers. All of the
officers are so much cordial to each other also with customer. They help the customer by all
means. They even help the customer to write the cheque, PO, DD, even account opening form
also written by officer this kind of service are rare in city based bank.

Departmentsinin
Departments
NRBGB(Nasirabad
NRBGB (Nasirabad
Branch)
Branch)
Customer Care Department
Cash Department
Accounts Department
Credit Department
Clearing Department
Foreign Exchange Department

OrganizationalStructure
Organizational Structureofof
NRBGB(Nasirabad
NRBGB (Nasirabad
Branch)
Branch)
AVP

FAVP

Senior Officer

Officer

Trainee Officer

2.13 Internship Experience


In November 5, 2016, I was assigned as an intern by the NRB Global Bank HR department in the
Nasirabad Branch. During my internship program I enjoyed the work at the bank but most
importantly I learned how to work under pressure with great responsibilities. Throughout this time
I have got the opportunity to work with different department of NRB Global Bank Limited.

JOB DESCRIPTION:

I had to do a number of works regularly. The descriptions of my routine works are given below:

Account Opening Form Fill up: Account opening form fill up is one of the task assigned
to an intern by bank. So as an intern I fill up many accounts opening form, which is
commonly known as KYC (Know Your Customer) form. There are different kinds of bank
accounts starting from current, savings, DPS, proprietorship account, partnership account
etc. Every form has different rules for maintain. These rules are declared by Bangladesh
Bank.
Clearing Cheques: The scheduled banks clear the
cheques drawn upon one another through the clearinghouse of Bangladesh Bank. The
whole clearing process is done through NRB Global Banks own clearing software named
Automated Cheque Clearing. Before doing the clearing tasks through the software there
are also some manual tasks to do. Like- gives clearing seal, authorization seal, and
signature on the back side of the cheque. In my internship I learned to do these manual
tasks. After finishing the manual job clearing process, the next step is to scan all the
cheques through a scanner that is connected to a particular computer which is done by
officer in clearing department.

Arranging the cheque books: The bank receives the requisition for cheque books by
clients. All the cheque books are prepared after 7 working days from the date of
requisition request. Then all the cheque books are needed to be arranged properly in order
to give the cheque books to the clients quickly when they come to receive their cheque
books. I used to arrange the cheque books throughout my internship period in NRB Global
Bank Limited (Nasirabad Branch).

Fill up LC form: I also spend few days in Foreign Exchange Department. In that
department main task is to fill up the Letter of Credit form and keep record of all LCs in
register book.

Chapter 3:
Project Part-
Theoretical Aspect
Of
Financial Performance
Contents

3.1 Definition of Financial Performance Analysis...............................................17

3.2 Project Objective..............................................................................................17

3.3 Financial Statement.........................................................................................18

3.4 Ratio Analysis...................................................................................................19

3.5 Special Ratios to Evaluating Banks Financial Performance......................26

3.1 Definition of Financial


Performance Analysis
Financial performance analysis is the process of critically examining in detail accounting
information given in the financial statements & evaluating relationship between component parts
of financial statement to obtain a better understanding of firm's position and performance.
The most important objective of this analysis is to identify the strength and weakness of a
business organization so that a short-term and long term decision making for growth can be made.
Performance of financial institution like bank is generally measured by applying quantitative techniques
of financial measurement. Some of the important and commonly used techniques are: Ratio Analysis,
Cross section analysis, Comparative statement analysis, Time series analysis, Trend analysis, Common
size analysis, and DuPont Analysis.
But the easiest & scientific way to evaluate the performance of a firm is ratio analysis where
compare present ratio with the past ratio, which gives an indicator of the direction of change and
reflects whether the firms financial performance has improved, deteriorated or remained constant
over time.
There are some objectives of financial performance
analysis which are:
Evaluating the financial position of the company in terms of solvency, Profitability &
earnings ratios.
Analyzing the financial changes over a period.
Suggesting effective measures in the existing system of the company

3.2 Project Objective


The main objective of the project is to analyze the financial performance of NRB Global Bank
Limited in the last three years (2015-2013) by using ratio analysis. Basically for analysis I have
chosen some ratios and gather the information to calculate the ratios from financial statement.
Financial statement basically includes three major statements, which are:

Income Statement
Balance Sheet
Cash Flow Statement

3.3 Financial Statement:


Financial Statement is formal statements prepared by a business organization to disclose its
financial information. The financial statements are prepared with a view to depict the financial
position of the business. They are based on the recorded facts and are usually expressed in
monetary terms. The financial statement are prepared periodically that is generally for the
accounting period.
Basically there are three major financial statements which are the balance sheet, the income
statement and the cash flow statement.
Balance Sheet:
It provides an overview of how well the company is managing assets and liabilities for a
particular accounting period. Analysts can find information about long-term & short-term debt on
the balance sheet. They can also find information about what kind of assets the company owns.
Income Statement
The income statement summarizing the firms revenues & expenses over an accounting period. Also
referred to as the profit & loss statement. The income statement provides the gross profit margin, the
cost of goods sold, operating profit margin and net profit margin. It also provides an overview of the
number of shares outstanding as well as a comparison against
prior year performance.
Cash Flow Statement
This statement shows the actual or anticipated incomings & outgoings of cash in a firm over and
accounting period. The cash flow statement is a combination of both the income statement and the
balance sheet.

3.4 Ratio Analysis


Ratio analysis is a widely used tool of financial performance analysis. The term ratios refer to the
numerical or quantitative relationship between two variables. Financial ratios are usually
expressed as a percent or as times per period.
A tool used by individuals to conduct a quantitative analysis of information in a company's
financial statements. Ratios are calculated from current year numbers and are then compared to
previous years, other companies, the industry, or even the economy to judge the performance of
the company. Ratio analysis is predominately used by proponents of fundamental analysis.
(Investopedia)
Basically following
ratios are
generally
used for

analyzing overall all


of the organizations
financial performance:

Financial ratios, of an organization should be compared with their previous performance or


industry average. Though there are many other types of ratios used in analyzing financial
performance of organization varies in types of organizational form.
Liquidity Ratio:
Liquidity ratios measure the ability of the firm to meet its a current obligation. These ratios
emphasize on the current assets and current liabilities to quickly convert the assets to cash.
Following ratios are generally fall under liquidity ratio:
Current Ratio: The current ratio compares a companys liquid asset with short-term liabilities.
That means the ability of the company to pay the short term liabilities (within 1 Year) with the
current assets such as accounts receivables, cash etc. The higher the current ratio, the more liquid
the company is. The ideal current ratio is 2:1

Current Ratio=

Quick Ratio: A reliable test of liquidity is the quick ratio test that excludes inventory from
current asset. It considered the ability to use its quick assets to pay its current liabilities. This
approach can be acceptable since inventory of many companies cannot be quickly converted into
cash. The ideal quick ratio is 1:1

Quick Ratio =

Net working Capital: working capital is the capital which is needed for meeting day to day
requirement of the business concern, such as payment to creditors, salary to worker, purchasing
raw materials etc. It is also known as short-term capital. There are two concepts of working
capital, which are:
Gross working capital: Means the total current assets
Net working capital: Is the difference between current assets & current liabilities
Positive net working capital means that the company is able to pay off its short-term liabilities.
Negative net working capital means that a company currently is unable to meet its short-term
liabilities with its current assets (cash, accounts receivable and inventory)

Net Working Capital= Current Assets-Current Liabilities


Cash Conversion Cycle: It is measure the total number of days to sell inventory, collection of
money due to company that is account receivable and payment of accounts payable. Generally the
lower the number of days is better for the company.

Cash Conversion Cycle= Inventory Conversion Period + Receivable Collection Period -


Payables Deferral Period

Inventory Conversion Period=

Receivables Collection Period =


Payables Deferral Period=

Activity Ratio:
Activity ratios assess how effectively a company is able to generate revenue in the form of cash
and sales based on its asset, liability and capital share accounts. Activity ratio are sometimes are
called efficiency ratio. Following ratios are generally fall under activity ratio:

Cost Income Ratio: It shows a companys costs in relation to its income. To get the ratio,
Operating Costs (administrative & fixed cost, excluding of bad debts) are divided by Operating
Income. Lower ratios generally indicate the higher efficiency of banks.

Cost-income ratio =

Total Asset Turnover Ratio: Asset turnover is a financial ratio that measures the efficiency of a
company's use of its assets in generating sales revenue or sales income to the company.
Companies with low profit margins tend to have high asset turnover, while those with high profit
margins have low asset turnover.

Total Asset Turnover=

Inventory Turnover Ratio: In accounting, the Inventory turnover is a measure of the number of
times inventory is sold or used in a time period such as a year. The equation for inventory
turnover equals the Cost of goods sold divided by the average inventory. Inventory turnover is
alsoknown as inventory turns, stock turn, stock turns, turns, and stock turnover. The bigger the
inventory turnover ratio the more liquidity a company has.

Inventory Turnover Ratio =

Account Receivable Ratio: Accounts receivable ratio is an activity ratio that measures how
many times a firm can turn accounts receivable into cash during a period. It measures how many
times a company can collect average accounts receivable during a year. An efficient companys
collection period is 30 days.

Accounts Receivable Ratio =


Account Payable Ratio: Accounts payable turnover ratio
measures the speed of any company to pay its suppliers. The ideal accounts payable ratio is
between 45 to 65 days. On the contrary, if the turnover ratio drops from one period to the next,
this indicates that the company is paying its suppliers more slowly which can badly affect the
companys financial position.

Accounts Payable Ratio =

Fixed Asset turnover:


Fixed-asset turnover is the ratio of sales to the value of fixed assets.
It indicates how well the business is using its fixed assets to generate sales. Generally the higher
the ratio, the better, because a high ratio indicates the business has less money tied up in fixed
assets for each unit of currency of sales revenue. A declining ratio may indicate that the business
is over-invested in plant, equipment, or other fixed assets.

Fixed Asset Turnover =

Financial Leverage Ratio:


Financial leverage ratios indicate the amount of other peoples money being used in attempting to
generate profits. The greater its financial leverage the greater the business risk on the stockholder
of the business because debt holders who received fixed return bear none of the business risk.
Following ratios are generally fall under financial leverage ratio:

Debt Ratio: Debt Ratio is a financial ratio that indicates the percentage of a company's assets that
are provided via debt. It is the ratio of total debt (the sum of current liabilities and long-term
liabilities) and total assets (the sum of current assets, fixed assets, and other assets such as
goodwill). The higher the ratio, the greater risk will be associated with the firms operation. In
addition, high debt to assets ratio may indicate low borrowing capacity of a firm, which in turn
will lower the firms financial flexibility.

Debt Ratio =

Times interest earned (TIE) ratio: Times interest earned (TIE) or interest coverage ratio
Measure Companys ability to cover its debt payments. Low ratio is a danger signal that the firm
is using excessive debt and doesnt have the ability to debt payment.

Time Interest Earned Ratio =


Equity-Capital Ratio: It indicates the financial strength of
a company. Equity capital is the amount of money invested in a company by its shareholders. If
the ratio is greater than 1, some of the company's assets have been financed by debt.

Equity-Capital Ratio =

Debt to Equity Ratio: The debt to equity ratio compares a companys total liabilities to the total
shareholders equity. This is a measurement of how much suppliers, lenders and creditors have
committed to the company against the shareholders have committed. The standard debt to equity
ratio is 1:1. The lower the ratio, lower the debt and higher the equity of shareholders.

Debt to Equity Ratio =

Profitability Ratio:
Profitability ratios evaluate how well the company utilized its resources in generating profit and
shareholder value. There are two types of profitability ratios profit margin ratio and the rate of
return ratios. Profit margin ratio shows the relationship between profit and sales. Popular profit
margin ratios are gross profit margin and net profit margin ratio. Rate of return ratio reflects
between profit and investment. The important rates of return measures are rate of return on total
assets and return on equity. A higher value is desirable than a lower one and it indicates company
is making profit from their operations. Following ratios are generally fall under financial
leverage ratio:

Net Profit Margin: Net profit margin, profit margin, net margin, all refer to net income per taka
of sales. This ratio also evaluates how well a company manages the expenditures relative to the
net sales. The standard ratio is 10% to 20%. Companies can achieve higher ratios either by
producing more incomes while keeping expenditures constant or keep revenues constant and
lower expenditures.

Net Profit Margin =

Gross Profit Margin: It is calculates the percentage of sales that exceeds the cost of goods sold.
It is the result of the relationship between costs, prices & sales volume. High ratio of gross profit
margin implies that the cost of production of the firm is relatively low. It may also be indicative of
a higher sales price without a corresponding increase in the cost of goods sold. Low ratio of gross
profit margin has the opposite implications.

Gross Profit Margin =

Return on Equity (ROE): ROE measures the ability of a firm to generate profits from the
shareholders investments in the company. The higher the ratio is, the more efficient the company
is in utilizing the equity and the better return they can provide to the investors. ROEs between
15% and 20% are generally considered good.
Return on Equity =

Return on Assets (ROA): ROA measures how efficiently a company can manage their assets to
generate incomes during a period. Higher the percentage of return, higher the efficiency of assets.

Return on Asset =

Market Ratio:
It helps to outsider investors who are reviewing companys market performance as well as
financial performance. It allows the analyst to understand how other investors feel about owning a
share of a companys stock.

Price Earning Ratio (P/E): The P/E ratio is the ratio for valuing a company that measure
companys current share price relative to its per-share earning. Company with high P/E ratio
usually indicated positive future performance and investor are willing to pay more for the
companys shares. On the opposite, company with low P/E ratio usually indicated poor current &
future performance; this could prove to be a poor investment.

Price Earning Ratio =

Earning Per Share (EPS): The EPS represent the number of taka earned on behalf of each
outstanding share of common stock. The higher the ratio, higher will be the earning from the
common shares.

Earning Per Share=

Dividend Payout Ratio: Is the percentage of earnings paid to shareholders in dividends. It


provides an indication of how much money a company is returning to shareholders & how much
money it is keeping on hand to reinvest for growth, pay off debt or add to cash reserve.
Interpretation of the dividend payout ratio based on basically companys level of maturity.
A new, growth oriented that aims to expand, develop new products & move into new markets
would be expected to reinvest most or all of its earning & should maintain low or zero payout
ratio. If a company has few growth possibilities the pay out
ratio should be consistent to proportion of earning but not equal to 100%.

Dividend Payout Ratio =

3.5 Special Ratios to Evaluating


Banks Financial Performance:
There are some also unique ratios to measure banks financial performance, which are:

Core Deposit Ratio: Core deposits are deposits from local customers that are considered unlikely
to be withdrawn on short notice and so carry lower liquidity requirements. Banks measure core
deposit as a stable source of funds for their lending base.

Core Deposit Ratio =

Deposit Composition Ratio: Deposit composition ratio is the ratio of demand deposits to
time deposits, where demand deposits are subject to immediate withdrawal by check writing,
while time deposits have fixed maturities. It measures how stable a funding base, the bank
possesses.

Deposit Composition Ratio=

Loans to Deposit Ratio (LTD): This is used 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. Tradition & prudence indicate that the ideal LTD is between 80%-90%.
A high ratio means that he bank is issuing out of more of its deposits in the form of interest-
bearing loans which in turn means it will generate more income. But the problem is banks loans
are not always repaid, plus the bank has to repay depositors on request, so high ratio puts the bank
at high risk.
A very low ratio means that the bank is at low risk but it
also means that it is not using its assets properly to generate income and may even end up losing
money.
This ratio is often used by policy makers to determine the lending practices of financial
institutions.

Loans to Deposit Ratio =

Return on Deposit Ratio: This ratio shows the amount of net income returned as a percentage of
total deposits. It indicates a firm's profitability efficiency in applying deposits (liabilities) to earn
profit.

Return on Deposit Ratio =

Interest Spread: Interest spread is the difference between the average yields receives from loans
and other interest-accruing activities and the average rate it pays on deposits and borrowings. The
net interest rate spread is a key determinant of a financial institutions profitability or lack thereof.

Interest Spread =

CASA Ratio: CASA ratio stands for current and savings account ratio. It indicates how much of
banks total deposits are in current and savings accounts. A higher CASA ratio indicates a lower
cost of funds, because banks do not usually give any interests on current account deposits & the
interest on savings account is usually very low around 3-4%. If a large part of banks deposits
comes from these funds, it means that the bank is getting those funds at a relative lower cost.

CASA Ratio =
Chapter 4:
Financial
Performance
Of
NRB Global Bank
Limited

Contents

4.1 LIQUIDITY RATIO:.............................................................................................................29

4.1.1 Current RATIO:.......................................................................................... 29

4.2 Activity RATIO:.....................................................................................................................30

4.2.1 Cost-Income Ratio:................................................................................... 30

4.3 Financial Leverage RATIO:..................................................................................................31

4.3.1 Debt Ratio:................................................................................................ 31

4.3.2 Time Interest Earned Ratio:...................................................................32


4.4 Profitability Ratio:.................................................................................................................33

4.4.1 Net Profit Margin:.................................................................................... 33

4.4.2 Return On Assets (ROA):.........................................................................34

4.4.3 Return On Equity (ROE):.........................................................................35

4.5 Market Ratio:.........................................................................................................................36

4.5.1 Earning Per Share (EPS):........................................................................36

4.6 Other important ratios for banks:........................................................................................37

4.7 Other graphical Presentation to identyfy Financial Performance:...................................41

4.1 LIQUIDITY RATIO:

Liquidity ratio, expresses a companys ability to repay short-term creditors out of its total cash.
Generally, the higher the liquidity ratios are, the higher the margin of safety that the company
possesses to meet its current liabilities.

4.1.1 Current RATIO:

The higher the current ratio, the better the liquidity position. It is expressed as:

Current Ratio=

Year 2015 Year 2014 Year 2013


Current Assets 2982,75,47,225 1693,42,01,325 655,40,85,245
Current Liabilities 2673,58,86,070 1394,64,13,558 317,67,49,250
Current Ratio 1.12 1.21 2.06
Interpretation: Though year after year current ratio has been fallen, NRBGBs current ratios
were satisfactory last three years because it maintain more 1 taka as current assets against taka 1
current liabilities, whereas banking industry normally maintains 1:1 current ratio.

4.2 Activity RATIO:

Activity ratios assess how effectively a company is able to generate revenue.

4.2.1 Cost-Income Ratio:

The cost-to-income ratio shows the efficiency of a firm in minimizing costs while
increasing profits. The lower the cost-to-income ratio, the more efficient the firm is running. The
higher the ratio, the less efficient management is at reducing costs. It is expressed as:

Cost-income ratio =

Year 2015 Year 2014 Year 2013


Total Operating Expense 93,69,99,480 53,48,22,282 8,55,40,356
Total Operating Income 124,82,48,098 58,56,67,658 12,07,67,611
Cost-Income Ratio 75% 91% 71%
Interpretation: We see that in year 2013 and year 2015 NRBGBs cost income ratio was
relatively in good position compare to year 2014 because they minimized their operating cost,
though ratio was high. This is bad sign for bank.

4.3 Financial Leverage RATIO:

Leverage ratios are used to understand a companys ability to meet it long term financial
obligation.

4.3.1 Debt Ratio:

Total debt to total asset ratio measures a banks financial risk. It determines how much of the
banks assets have been financed by the debt. The higher the ratio, higher the risk. It is expressed
as:

Debt Ratio =

Year 2015 Year 2014 Year 2013


Total Liabilities 2721,94,13,938 1412,24,95,987 325,79,49,202
Total Asset 3143,00,29,968 1830,05,66,578 749,71,91,536
Debt Ratio 87% 77% 43%
Interpretation: This graph shows that, in 2013 the debt
ratio was low; it was happened because of new capital injection from shareholders. After that in
2014 & 2015 it grew gradually as the deposit rise which is the common nature of the business.
Lower the ratio, it is less risky. Since it is in an increasing trend which is not a good sign for a
bank. Generally every banks works by taking the deposits from the general and invest it in
different sectors. In this case if NRBGB defaults in any investment than the depositors will also
be defaulted.

4.3.2 Time Interest Earned Ratio:

The times interest earned ratio, sometimes called the interest coverage ratio, measures the
firms ability to make contractual interest payments. This ratio measure the extent to which
operating income cane decline before the firm is unable to meet its annual interest cost. Low ratio
is a danger signal that the firm is using excessive debt and doesnt have the ability to debt
payment. It is expressed as:

Time Interest Earned Ratio =

Year 2015 Year 2014 Year 2013


Earning Before Interest & Taxes 15,00,60,505 -4,14,59,896 44,94,005
Interest paid 187,65,19,837 84,94,55,588 6,56,90,068
Time Interest Earned Ratio (time) 0.08 -0.05 0.07
Interpretation: From the above analysis we can say that
time interest earned ratio of NRBGBs is not satisfying. In 2015 and 2013 ratio was relatively
equal but too low. In 2014 it was worst case that the value was negative -0.05 time, because EBIT
was unprofitable. We can say that in 2014, NRBGBs hadnt enough earning to cover expense
which affect adversely on income.

4.4 Profitability Ratio:

Profitability ratios evaluate a firm's overall efficiency and performance. A higher value is
desirable than a lower one and it indicates company is making profit from their operations.

4.4.1 NET PROFIT MARGIN:


The net profit margin measures the percentage of each revenue taka remaining after all expenses,
including taxes, have deducted. Higher the ratio is better. It is expressed as:

Net Profit Margin =

Year 2015 Year 2014 Year 2013


Net Profit After Tax 1,89,71,822 -7,46,49,851 -1,07,57,666
Total Operating Income 124,82,48,098 58,56,67,658 12,07,67,611
Net Profit Margin 1.52% -12.75% -8.91%
Interpretation: From the analysis, it is seen that among three years from 2013 to 2015 the
banks net profit margin was negative in two years and too low in one year. That means banks
was not successful making profit, make more expenditure than income. Overall its profit margin
isnt satisfactory.

4.4.2 Return On Assets (ROA):

The return on asset (ROA), which is often called the firms return on total assets, measures the
overall effectiveness of management in generating profits with its available assets. The higher the
ratio is better. It is expressed as:

Return on Asset =

Year 2015 Year 2014 Year 2013


Net Profit/loss After Tax 1,89,71,822 -7,46,49,851 -1,07,57,666
Total Asset 3143,00,29,968 1830,05,66,578 749,71,91,536
Return on Assets 0.06% -0.41% -0.14%
Interpretation: From year 2013 to 2014 NRBGBs ROA
percentages were -0.14%, and -0.41% respectively, that implies NRBGB lost taka 0.14 & 0.41 for
each taka assets from 2013 to 2014. Thus the positive return on assets in 2015 was also poor,
0.06%, so that NRBGB should careful to invest in assets and use their assets efficiently.

4.4.3 Return On Equity (ROE):

ROE measures the ability of a firm to generate profits from the shareholders investments in the
company. The higher the ratio is, the more efficient the company is in utilizing the equity and the
better return they can provide to the investors. It is expressed as:

Return on Equity =

Year 2015 Year 2014 Year 2013


Net Profit/loss After Tax 1,89,71,822 -7,46,49,851 -1,07,57,666
Total Shareholders Equity 421,06,16,031 417,80,70,591 423,92,42,334
Return on Equity 0.45% -1.79% -0.25%
Interpretation: NRBGBs ROE indicates that, from 2013
to 2015 the ratios were -0.25%, -1.79% & 0.45% respectively. The ROE ratios
showing a negative trend in two year and positive but poor value in one year which may not
satisfactory for the investors to invest in NRBGB since they want high return. In 2013 & 2014 the
return had negative effect because net loss occurred so the return on equity shows worse result in
2013 & 2014.

4.5 Market Ratio:

These ratio measure investors responses to owning companys stock & also concerned with
return on investment for shareholder.

4.5.1 Earning Per Share (EPS):

Earnings per share (EPS) are the values of earning from each outstanding common shares of a
company. The higher the ratio, higher will be the earning from the common shares. It is
expressed as:

Earning Per Share=

Year 2015 Year 2014 Year 2013


Net Profit/loss After Tax 1,89,71,822 -7,46,49,851 -1,07,57,666
No. of Share Outstanding 42,50,00,000 42,50,00,000 42,50,00,000
EPS 0.04 -0.18 -0.03
Interpretation: Over the last three years, EPS has a fluctuating trend. EPS of NRBGB is not
improved year to year even there were two negative values in year 2013 & 2014. In 2013 EPS
-0.03 which means that company is loosing money per share by 0.03 taka and in year 2014 EPS
-0.18 which means that company is loosing money per share by 0.18 taka. It is also negative
result for NRBGBs shareholders. This negative EPS occurred only due to NRBGB could not
make profit in those years.

4.6 Other important ratios for banks:

There are some other ratios which are used to measure specially for banking sector to identify
banks solvency and performance. These are enumerating below:

Core Deposit Ratio: Core deposits are deposits from local customers that are considered unlikely
to be withdrawn on short notice and so carry lower liquidity requirements. Banks measure core
deposit as a stable source of funds for their lending base. It is also help to measure predictable
cost for bank. It is expressed as:

Core Deposit Ratio =

Year 2015 Year 2014 Year 2013


Core Deposit (DPS) 2475,78,39,736 1296,19,67,624 303,68,35,454
Total Deposit 2662,67,27,248 1381,99,32,223 317,67,49,250
Core Deposit Ratio 93% 94% 96%
Interpretation: The higher the core deposit ratio, the better for the bank. Though ratios are at
high position but there is decreasing trend over the period of three years. NRB Global Bank has in
good position in maintaining core deposit but management should be concerned for maintaining
steady growth of the core deposit ratio.

Return on Deposit: This ratio shows the amount of net income returned as a percentage of total
deposits. It indicates a firm's efficiency in applying deposits to earn profit. It is expressed as:

Return on Deposit Ratio =

Year 2015 Year 2014 Year 2013


Net Profit/loss After Tax 1,89,71,822 -7,46,49,851 -1,07,57,666
Total Deposit 2662,67,27,248 1381,99,32,223 317,67,49,250
Return on deposit 0.07% -0.54% -0.34%
Interpretation: Return on deposits was -0.34% in year 2013. It rose by -0.54% in year 2014. But
positive increase happened in year 2015 by 0.07%. It indicates bank could not manage deposits
(liabilities) properly to earn profit.

Year 2015 Year 2014 Year 2013


Current A/C & Other A/C 112,30,72,706 59,79,56,521 11,01,66,926
Saving A/c 74,39,74,875 25,87,33,041 2,97,46,870
Total Deposit 2662,67,27,248 1381,99,32,223 317,67,49,250
CASA Ratio 7.01% 6.20% 4.40%

CASA Ratio: CASA ratio stands for current and savings account ratio. It indicates how much of
banks total deposits are in current and savings accounts. A higher CASA ratio indicates a lower
cost of funds, because banks do not usually give any interests on current account deposits & the
interest on savings account is usually very low. It is expressed as:

CASA Ratio =
Interpretation: At the graph we see that over the last five years CASA ratio has an increasing
trend. The CASA ratio of NRBGB was 4.40%, 6.20%, and 7.01% from 2013 to 2014 to 2015
respectively. It is gradually improved year to year. Though percentage is low but these increasing
trends over the three year is good sign for NRBGB.

Loans to Deposit Ratio (LTD): This ratio measures the outstanding loans versus the total
deposits on hand as a indicator of bank liquidity. The ideal LTD is between 80%-90%.
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. It is expressed as:

Loans to Deposit Ratio =

Year 2015 Year 2014 Year 2013


Total Loans & Advances 2084,61,30,626 1023,81,98,510 258,00,16,928
Total Deposit 2662,67,27,248 1381,99,32,223 317,67,49,250
Loans to Deposit Ratio 78% 74% 81%
Interpretation: The loans to total deposit ratio was 81% in
2013, 74% in 2014, & 78% in 2015. In 2014 the ratio fall from ideal value compare to 2013 &
2015. We can say that NRBGB efficiently utilize deposits to generating profit.
But as a new bank NRBGB has to maintain some expenses and provision on loan thats why
profit is not satisfactory though efficiently managing deposits and loans.

4.7 Other graphical Presentation to identyfy Financial Performance:

Graphical Presentation of Total Deposit, Total Loan & Net Profit/Loss

Year 2015 Year 2014 Year 2013


Total Deposit BDT 26,626,727,248 BDT 13,819,932,223 BDT 3,176,749,250
Total Loans & Advances BDT 20,846,130,626 BDT 10,238,198,510 BDT 2,580,016,928
Year 2015 Year 2014 Year 2013
Net Profit After Tax BDT 18,971,822 -BDT 74,649,851 -BDT 10,757,666

Interpretation: From the graph we can say that collection of deposit increasing year by year &

also loan & advances increasing year by year subsequently. Difference between deposit amount &

loan amount not so much high, that is NRGB tried to utilize its deposits properly.
But the net profit was only positive in year 2015 by taka

18,971,822 and at 2013 & 2014 net loss occurred by -BDT 10,757,666 & -BDT 74,649,851 which

is not good sign for bank.

Though deposit collection and loan disbursement are in good position accordance with each other

amount but NRBGB faced net loss & net profit, where profit relatively in little amount.

This occurred because as a new bank NRBGB is still in the process of improving the position in

banking industry, setting risk management unit, setting recovery unit, setting legal department,

overcoming the dependence on high costly term deposit, recruiting sufficient and experienced

staff at various departments etc for its full functioning which leads to high cost than income.

Graphical Presentation of Total Shareholders Equity

Year 2015 Year 2014 Year 2013


Total Shareholders Equity 421,06,16,031 417,80,70,591 423,92,42,334

Interpretation: At the graph we see that there is fluctuating trend in Total Shareholders Equity
from year 2013 to year 2015. This is not good sign for bank.

Graphical Presentation of Net Interest Income & Expense


Year 2015 Year 2014 Year 2013
Interest Income from Loans & Advances 282,77,80,425 139,26,51,424 18,61,68,279
Interest Expense to Deposit & Borrowing 187,65,19,837 84,94,55,588 6,56,90,068
Net Interest Income 95,12,60,588 54,31,95,836 12,04,78,211

Interpretation: Interest income has an increasing trend than interest expense from the year 2013
to year 2015. And also net income has increasing trend year by year. This indicates loan and
advances is increase year by year.

Chapter 5:
Findings,
Recommendation
&
Conclusion
Contents

5.1 Findings:.............................................................................................................46

5.2 Recommendations:............................................................................................48

5.3 Conclusion:........................................................................................................49

5.1 FINDINGS:

I analysis the financial performance of NRB Global Bank Limited and found some findings; these
are:
The liquidity position of the bank is good. The current ratio is avobe 1 but has
decreasing trend.
We know that cost income ratio measures the

operating efficiency of the bank. From the analysis, the operating efficiency of the

NRBGB was in good position in the year 2013 & 2015. But in 2014 cost income ratio

was not in good position, because they were not able to minimize their operating cost.

Debt ratio measures the proportion of total assets provides by the firms creditors. The

banks debt ratio was in increasing trend from 2013 to 2015 which is not good sign for a

bank.

Time interest earned ratio of NRBGB is not satisfying. It was relatively equal but in low

position in the year 2015 & 2013. But in the year 2014 year it was going to negative

value because of earning before interest & taxes was negative that is loss occurred.

Banks measure core deposit as a stable source of funds for their lending base. NRBGBs

core deposit ratios are at high position but there is decreasing trend over the period of

three years.

Return on asset has negative trend except year 2015. Also positive ROA in year 2015

was not too much satisfactory.

EPS of NRBGB was not improved. It indicates a bad sign.


Banks interest income is increasing more than interest expenses, which means the

amount of loans & advances is increasing year by year.

Net profit margin was in worse position of NRBGB due to unfavorable economic

condition. In the year 2013 & 2015 net profit was negative that is net loss occurred and

net profit low in amount in 2014. Overall its profit margin is not satisfactory.

Drop in the net profit occurred because as a new bank NRB Global Bank has to bear

some additional expense to compete with other established competitor in banking

industry of the country, which leads to high expense and net loss.

The shareholders equity value was in fluctuating trend. As, shareholders equity is

fluctuating year to year bank may face to insolvency risk.

Banks Loan- Deposit ratio was fluctuating, which may cause lower growth in earnings.

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.

CASA ratio percentage is satisfactory and increasing trend. A higher CASA ratio

indicates a lower cost of funds, because banks do not usually give any interests on
current account deposits & the interest on savings

account is usually very low.

Though NRB Global Bank is new 4 th generation bank but its deposit amount increasing

year by year from 2013 to 2015, which is good sign for bank.

NRB Global Bank Limited try to establish favorable reputation in the banking

industry of the country. The bank has already shown growth in collection of deposits

and disbursement of loan.

The bank focused on high-quality human resources with expertise and

professional skills developing the Human Resources Re-engineering and Development

Plan. They also recruit young people who are energetic to doing banking task smoothly.

NRB Global Bank has an interactive corporate culture. The working environment is

very friendly, interactive and informal. There are no hidden barriers or boundaries while

communication between superior and subordinate. This corporate culture provides as a

great motivation factor to the employees.

5.2 RECOMMENDATIONS:

Some recommendations based on the financial performance of NRB Global Bank Limited are
given below-

Current Ratio of NRBGB is satisfactory but decreasing trend. So, management should
concentrate on the quick ratio since it can go far beyond the ideal ratio 1:1.
The Cost income ratio of the NRBGB was not in good position because they were not able
to minimize their operating cost. They should minimize their operating cost as well
maximize the operating income
Debt Ratio of the NRBGB was not satisfactory because it was increasing trend. So
management should try to decrease of this ratio by increasing assets.
NRBGB should try to increase net profit margin for increasing efficiency.
NRBGBs ROA was negative trend except the year of 2015, so it should manage its
investment in asset by proper utilization to generate their profit.
To attract the investor NRBGB should try more to increase its EPS by increase profit.
Though term deposit is costly to bank but it is one of the major sources of lending.
NRBGBs term deposit is decreasing which identified by decreasing trend in core deposit
ratio. On the other hand CASA ratio increasing, where bank has to pay little or no interest
on current & saving account but the problem is amount of deposit has to repay depositors
on immediate request. In this case, bank has to develop policy and strategy by which it can
properly utilize their term as well as current & saving deposit with low cost to earn profit.
NRBGB should revise the policies and procedures
about asset management to avoid unfavorable situation in upcoming days otherwise it can
affect the profitability of the company.
NRBGB should do more marketing activities to improve their presence in the minds of
their potential target market. Media coverage of NRBGB is not so strong. To attract new
clients, they should go for mass media coverage like TV, internet, newspaper, face book
etc.
NRBGB should upgrade its website regularly and provide details information about
deposit scheme, loam scheme, quarterly financial report etc.
Overall the financial performance of NRB Global Bank is not satisfactory because net loss
occurred during two year, which affects every parameter of financial performance
measurement. So NRBGB should try to overcome all barrier and heavy cost as well as
increase profit.

5.3 CONCLUSION:

In modern civilization bank is playing its splendid role to keep to the economic development
wheel moving. We can see lot of new commercial banks has been established in last few years &
these banks have made this banking sector very competitive. The major task for banks, to survive
in this competitive environment is by managing its assets and liabilities in an efficient way.

As a new 4th generation bank NRB Global Bank Limited has been working with great confidence
and competing tremendously with Government oriented bank, local commercial banks along
with the multinational banks also.

NRB Global Bank Limited always tried its level best to perform financially well. In spite of trying
to do NRB Global Bank Limited faced some financial problems from time to time. These
problems arouse time to time due to cope with banking industry, 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 NRB Global Bank Limited will develop
more in the future.

I hope this working experience of internship program in NRB Global Bank Limited, Nasirabad
Branch helped me to enhance my knowledge beyond the text books. Also I have gained practical
knowledge regarding the corporate environment which will support me a lot in the future
professional life.

REFERENCES

Annual Financial Report of NRB Global Bank Limited, year 2015-2013


www.nrbglobalbank.com
www.bangladeshbank.com
www.investopedia.com
www.wikipedia.org
Financial Management: Text, Problems & Cases-M Y Khan & P K Jain, 6th

edition, Tata Mc-Grawhill Publishing company Ltd.


Commercial Bank Management -Peter S. Rose, 5th edition
Fundamentals of Financial Management - Brigham & Houston, 10th edition
Pandey, I. M. (IIMA),Financial Management (theory and practices)
Some Internship Reports
Different websites