Profitability and NPL analysis of United

Commercial Bank Limited

By
Mohammad Naveed Hussain
ID: 1411088
 Company Profile

• United Commercial Bank Limited is a first generation bank which was established in 1983
• The bank is listed in Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange
(CSE)

• The bank provides Retail Banking, Corporate Banking, SME Banking, Off-shore Banking,
Remittance, etc.

• Currently the bank has 178 branches and 193 ATM booths all over the country
• The bank has two subsidiaries which is UCB Capital Management Limited and UCB
Investment Limited

Vision: To be the Bank of first choice through maximizing value for clients, shareholders &
employees and contributing to the national economy with social commitments.

Mission: To offer financial solutions that create, manage and increase our clients’ wealth
while improving the quality of life in the communities we serve.

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 UCB Products and Services
Liability Products:
• Current Deposit Account
• Savings Deposit Account
• UCB NRB Savings
• UCB Imperial Savings
• UCB Student Account
• Fixed Deposit
• UCB Earnings Plus
• UCB Multi-Millionaire
• RMG DPS Plus
Non-Funded Products:
• Letter of Guarantee
• Letter of Credit
• Bills of Collection
Debit Card Products:
• Visa Debit Card: Classic
• MASTER Debit Card:
Platinum
Credit Card Products:
• Visa Credit Card: Classic
• Visa Credit Card: Gold
• MASTER Credit Card: Classic
• MASTER Credit Card: Gold
Loan Products:
• Overdraft
• Export Credit
• Export Bill Purchase
• Lease Finance
• Transport Loan
• Home Loan
• Home Mortgage Loan
• Education Loan
• Bridge Financing Loan
Services:
• ATM Services
• Internet Banking Services
• Online Banking
• Electronic Fund Transfer
• Inward & Outward Remittance
• Locker Services
• Mobile Financial Services
• Underwriting Financing
Capital Market Services:
• Securities Trading (Buy-Sell)
• Margin Loan
Foreign Remittance Services:
• Inward Foreign Remittance
• Outward Foreign Remittance
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 Job Responsibilities

Job Responsibilities: Functions of UCB Agent Banking Division:

• Assisting in Acquisition Agents • Agent Acquisition

• Visiting potential Agents • Outlet location finding and selection

• Agent acquisition register • Outlet Layout and design

• Preparing training materials • Agent Approval

• Proving basic training to Agent Staffs • Managing Agents

• Assisting in preparing Agent Approval memo • Maintaining Agent register

and evaluation sheet.
• Maintenance of Agent Banking System (ABS)
• Assisting in preparing schedule of charges,
schedule of products and services.
• Customers Account Opening and approval

• Preparing necessary documents for proposed

• Provides training to Agent Staff

agents such as Agent application form, Net • Documentation Checking, NID Verification AML
worth statement, CIB report, Market research, checking at ABD
Business Financials and Forecasting.

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 UCB Agent Banking Services

• Collection of small value cash deposits.

• Cash withdrawals - ceiling should be determined by the management of the Bank from time to time in
line with the guideline of central bank.

• Foreign remittance

• Fund Transfer - Person to Person (P2P), Person to Business (P2B), Business to Person (B2P).

• Facilitating small value loan disbursement and recovery of loans, installments.

• Facilitating utility bill payment

• Balance and statement inquiry

• Collection and processing of forms or documents in relation to account opening, loan application, credit
and debit card application from public.

• Post sanction monitoring of loans and advances and follow up of loan recovery.

• Receiving of clearing cheque.

• ATM Withdrawal

• UPay & internet banking registration

• Loan application sourcing (retail, SME, Agricultural, etc.)

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 Profitability and NPL analysis of UCB

Net Interest Margin

8.0% 7.6%
6.9% 6.7% 6.7%
7.0%
6.0%
6.0% 5.7% 5.6%
4.9% 4.8%
5.0% 4.6% 4.4%
3.9% 3.8% 3.8% 3.7%
4.0% 3.4%
2.9% 2.7%
3.0%

2.0% 1.3% 1.3%

1.0%

0.0%
2012 2013 2014 2015 2016

UCBL ABBL CBL DBBL

• Decreasing trend for UCB, ABBL, CBL & DBBL

• Positive NIM indicates that the bank has invested its funds efficiently

• ABBL is the least performing bank

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 Profitability analysis

Return on Assets
1.8% 1.7%
1.6% 1.5% 1.5%
1.4% 1.4% 1.4%
1.4% 1.2% 1.3%
1.2% 1.1%
1.0%
1.0%
0.8% 0.8%
0.8%
0.8% 0.6%
0.6% 0.6%
0.6% 0.5% 0.5% 0.4% 0.4%
0.4%
0.2%
0.0%
2012 2013 2014 2015 2016

UCBL ABBL CBL DBBL

• Stable ROA for UCB from the year 2013 to 2015

• All banks performing well except ABBL

• ABBL is least performing in terms of ROA

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 Profitability analysis

Return on Equity
25%
21%

20% 18%
16% 16%
15% 15% 16% 16%
15% 14%

10% 10% 10%

10% 9% 9%
7%
6% 6% 6%
4% 5%
5%

0%
2012 2013 2014 2015 2016

UCBL ABBL CBL DBBL

• Stable ROE for UCB from the year 2013 to 2015

• UCB & DBBL is has outperformed other two banks

• ABBL is least performing in terms of Return on Equity

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 Profitability analysis

Cost-income Ratio
70.0% 65.3%
63.9%
61.6%
58.8%
60.0% 54.4%
53.9% 53.4% 52.9%
51.3% 53.6%
48.3% 47.8% 47.8%
50.0% 46.6% 45.8% 46.0%
43.4% 42.5% 43.0%
42.7%
40.0%

30.0%

20.0%

10.0%

0.0%
2012 2013 2014 2015 2016

UCBL ABBL CBL DBBL

• Increasing trend for all the banks, which is alarming issue for banks

• DBBL is least performing bank in terms of cost to income ratio

• Lower ratio is preferred and it indicates the bank is more profitable

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 Non-performing loan analysis

NPL ratio
9.0%
8.1% 8.0%
8.0% 7.5% 7.6%

7.0%
5.9% 6.0%
6.0%
5.2% 5.2% 5.2%
5.0% 4.6% 4.4%
4.0% 3.9% 3.9%
4.0% 3.7% 3.7%
3.3% 3.4% 3.2%
3.0%
3.0%

2.0%

1.0%

0.0%
2012 2013 2014 2015 2016

UCBL ABBL CBL DBBL

• It is increasing from the year 2012 to 2016 for UCB

• ABBL is performing better than other three banks in terms of NPL ratio

• CBL is has the highest percentage of NPL ratio, which is a serious concern for the bank

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 Cases of Non-performing loan

Causes of Non-performing loan: Recommendation:

• Reluctance to pay • Borrow on lower interest rate

• Couldn’t avail conditions for rescheduling • Invest in various projects

• Higher Interest rate • Reduce cost by avoiding unnecessary costs

• Lack of Proper Monitoring • Reduce the interest rate on loans

• Lack of taking Proper Action • Maintain sufficient collateral

• Loan sanctioned by corruption • Monitor the customer

• Should not sanction loan on personal

preferences

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