Financial Performance Evaluation of DBBL
1.0. Introduction of the Project Report: The project program is an integral part of Bachelor of Business Administration (BBA). This program creates a unique opportunity for the student to apply their theoretical knowledge into practice and gain valuable real world business experience. During the program, student can also realize existing business condition apart from having opportunities to solve the problem using various analytical tools. In the age of modern civilization bank is playing its spending role to keep the economic development wheel moving. The corporation of the bank is needed in every economic activity. In fact there is hardly any aspect of development activity where state inspired or otherwise where bank do not have role to play. Modern banks play an important part in promoting economic development of a country. Banks provide necessary funds for executing various programmers underway in the process of economic development. They collect savings of large masses of people scattered through out the country, which in the absence of banks would have remained ideal and unproductive. One of the reasons may be its underdeveloped banking system. Government as well as different international organizations have also identified that underdeveloped banking system causes some obstacles to the process of economic development. So it has become essential for every person to have some idea on the bank and banking procedure. As our educational system is predominantly text based, inclusion of practical orientation program, as an academic component is an exception to the norm. Recognizing the importance of practical experience, three months practical exposure is one of the most important parts of BBA program. This is because theoretical knowledge gets its perfection with practical application. By a research program in bank, students can get vast knowledge, which helps to know the real life situations, helping them to launch a career with some deep experience. As a part of the project/research work of BBA course requirement, I decided to research about the performance of Dhaka Bank Limited for this period in the 11th semester (10th September, 2010 to 25th January, 2011).
1.1 Background of the Project Report: Project/research work is a pre-requisite for completes the graduation degree under the Bachelor of Business Administration (BBA) program of ASA university. The Project/research work is generally executed in the last semester & it has got the same weight as other courses in the evaluation process. As the classroom discussion alone cannot give proper picture of real business situation, therefore it is as opportunity for the students to know about real life and vast knowledge through these working activities. Dhaka Bank is one of the largest and oldest private-sector commercial bank in Bangladesh, with years of experience. Adaptation of modern technology both in terms of equipment and banking practice ensures efficient service to clients. 24 branches at home and 29 affiliates worldwide create efficient networking and reach capability. Dhaka Bank is a bank that serves both clients and country. My project supervisor Shah Md. Al-Emran Sarker, Assistant Professor, Department of BBA, ASA university has selected the topic for project/research activities on the “Performance Evaluation of Dhaka Bank Limited (DBL).� While preparing this report, I had a great opportunity to have an in depth knowledge of all the banking activities of Dhaka Bank Ltd. 1.2. Significance of the Project Report: Education will be the most effective when theory and practice blends. Theoretical knowledge gets its perfection with practical application. And the project/research is designed to bridge the gap between the theoretical knowledge and application widely. We all know that there is no alternative of practical knowledge, which is more beneficial than theoretical aspects. The prime reason of this study is to become familiar with the practical business world and to gather the vast and practical knowledge about the overall Banking and Corporate world, which is so much essential for each and every student to meet the extreme growing challenges in job market. 1.3. Scope of the Project Report: In order to maintain the speed of development now banks must compete in the market place both with local institution as well as foreign ones. The presentation of the organizational structure and policy of Dhaka Bank Limited and investigating the
strategies applies by it provide the scope of this report. An infrastructure of the organization has been detailed and looks into the future. The scope of this report is limited to the overall description of the company, its services, its position in the industry, its financial performance analysis the practical progress of its operation. The scope of the study is limited to organizational setup, functions and performances. • •
Recent performance of DBL in terms of deposit, investment and foreign exchange. To analyze the banks current financial flows performed by DBL.
•
To obtain practical experience about general banking activities by involving such type of program.
•
To build professional carrier in the banking sectors as well as any credit providing institution.
1.4. Objectives of the Project Report: 1.4.1. General Objective The prime objective of the report is to analyze “Financial Performance Evaluation of Dhaka Bank Limited.” 1.4.2. Specific Objectives The following aspects can be listed as the specific objectives for this practical orientation in Dhaka Bank Limited: • To identify and assess the present financial performance of Dhaka Bank Limited. • To calculate the financial ratios and identify the areas of concern. • To understand the implications in analyzing and interpreting the financial ratios. • To compare the financial situation of Dhaka Bank Limited with the two other banks- Prime Bank Limited and Eastern Bank Limited. • To identify the findings and raise possible recommendations for improving the performance of Dhaka Bank Limited. 1.5. Methodology of the Project Report:
1.5.1. Research Design This report is a descriptive type of research, which briefly reveals the overall activities performed by Dhaka Bank Ltd. It has also been administered by collecting secondary data. Annual ports of DBL were the major secondary data sources in this regard. Ratio analysis and trend analysis have also been used as major tools for the financial performance analysis. The study is performed based on the information extracted from different sources collected by using a specific methodology. This report is analytical in nature. Type of Research: This is a “Descriptive study”, which tries to focus on the evaluation of financial performance of DBL. Collections of primary and secondary data have been required for the analysis. Annual reports of DBL were the source of secondary data in this regard. 1.5.2. Sources of data: •
•
Primary Sources of Data: •
Conversations with the different officials of Dhaka Bank Limited.
•
Focus group discussion.
•
Take expert opinion from the officers.
•
Direct Observation.
Secondary Source of data: A. Annual Report of DBL. B. Different text book & journals. C. Various reports & articles related to study like General reports. D. Some of my course elements as related to this report. E. Web base support from the internet. F. Data gathered within the organization itself. G. Data gathered from Texts. H. Official documents.
1.5.3. Data Collection Procedure & Instruments: Types of Data Used In order to analyze the financial performance of DBL two types of data have been used. They are• Primary Data-data observed or collected from first hand experience. • Secondary Data-published data and the data collected in the past or by other parties. • Collection of Primary Data:
All the relevant data and information were mainly collected from the observation, Informal discussion, group discussion, conversation and so on. •
Collection of Secondary Data:
Secondary data are collected basically from Annual Reports, Journals, Brochures, Paper, Magazines, Publications, Books and others form of publications, Official websites. For the “Financial Performance Evaluation of Dhaka Bank Limited” I mainly used Secondary data. Besides this I also collect some information by taking expert opinion from the officers and direct observation while I visiting the bank. 1.5.4. Instruments Used For Analysis: •
Ratio analysis.
•
Trend Analysis.
•
DuPont Analysis.
•
SWOT analysis.
•
Computer software (MS word, MS excel).
•
Ratio Analysis:
The quantitative (such as ratio analysis) tools are used to analyze the gathered data & different types of computer software are used for reporting the gathered information from the analysis such as- Microsoft Word, Microsoft Excel etc. Ratio can be classified into four broad groups1) 2) 3) 4)
Liquidity Ratio. Activity Ratio. Debt Ratio. Profitability Ratio.
•
Trend analysis:
It is really important to analysis trends in ratios as well as their absolute levels. This analysis informs us whether a company’s financial condition improving or deteriorating. DuPont Analysis: A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are measured at their gross book value rather than at net book value in order to produce a higher return on equity (ROE).
•
SWOT analysis
SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. • Strengths: characteristics of the business or team that give it an advantage over others in the industry. • Weaknesses: are characteristics that place the firm at a disadvantage relative to others. • Opportunities: external chances to make greater sales or profits in the environment. • Threats: external elements in the environment that could cause trouble for the business. 1.6. Limitations of the Project Report Analyzing and observing the broad performance of a bank and one of its branches are not that easy. Moreover due to obvious reasons of scrutiny and confidentiality, the bank personnel usually don’t want to disclose all the statistical information about their organization. However the some of the limitations I have face while preparing this Report are listed as follows: • •
•
•
Time Limitation: To complete the study, time was limited. It was really very short time to know details about an organization like Dhaka Bank Ltd Inadequate Data: Lack of available information about export & import business operations of Dhaka Bank Ltd. Because of the unwillingness of the busy key persons, necessary data collection became hard. The employees are extremely busy to perform their duty. Lack of Record: Large-scale research was not possible due to constrain and restrictions posed by the organization. Unavailability of sufficient written documents as required making a comprehensive study. In many cases up-to-date information was not available. Lack of experiences: Lack of experiences has acted as constraints in the way of meticulous exploration on the topic. Being a member of the organization; it was not possible on my part to express some of the sensitive issues. Lack of adequate knowledge about export & import business of any organization.
2.0. OVERVIEW OF DHAKA BANK LIMITED
The name bank derives from the Italian word banco "desk/bench", used during the Renaissance by Florentines bankers, who used to make their transactions above a desk covered by a green tablecloth. However, there are traces of banking activity even in ancient times. In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, from which the words banco and bank are derived. As a moneychanger, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Rome- that of the Imperial Mint. The definition of a bank varies from country to country. Under English law; a bank is defined as a person who carries on the business of banking, which is specified as: •
Conducting current accounts for his customers
•
Paying cheque drawn on a him, and
•
Collecting cheque for his customers
2.1. History of Dhaka Bank Limited: Dhaka Bank Limited was incorporated as a public limited company under the Companies Act 1994. The Bank started its commercial operation on July 05, 1995 with an Authorized Capital of Tk.1,000.00 million and Paid Up Capital of Tk.100.00 million. The present Paid Up Capital of the Bank is Tk. 2,128 million as on June 30, 2009. The total equity (capital and reserves) of the Bank as on June 30, 2009 stood at Tk.4,966. The Bank has 54 branches and 2 Offshore Banking Units across the country and a wide network of correspondents all over the world. The Bank has a plan to open more branches in the current fiscal year to expand the network. Dhaka Bank Limited offers the full range of banking and investment services for personal and corporate customers, backed by the latest technology and a team of highly motivated officers and staffs. In the effort to provide excellence in banking services, the Bank has launched online banking service, joined a countrywide-shared ATM network and has introduced a cobranded credit card. A process is also underway to provide e-business facility to the bank's clientele through online and home banking solutions. 2.2. Vision of Dhaka Bank Limited: At Dhaka Bank, we draw our inspiration from the distant stars. Our team is committed to assure a standard that makes every banking transaction a pleasurable experience. Our
endeavor is to offer you razor sharp sparkle through accuracy, reliability, timely delivery, cutting edge technology, and tailored solution for business needs, global reach in trade and commerce and high yield on your investments. Our people, products and processes are aligned to meet the demand of our discerning customers. Our goal is to achieve a distinct foresight. Our prime objective is to deliver a true reflection of our vision- Excellence in Banking. 2.3. Mission of Dhaka Bank Limited: To be the premier financial institution in the country providing high quality products and services backed by latest technology and a team of highly motivated personnel to deliver Excellence in Banking. 2.4. Goals of Dhaka Bank Limited: Our people, products and processes are aligned to meet the demand of our discerning customers. Our goal is to achieve a distinction like the luminaries in the sky. Our prime objective is to deliver a quality that demonstrates a true reflection of our vision – Excellence in Banking. 2.5. Values of Dhaka Bank Limited: •
Customer Focus.
•
Integrity.
•
Team Work.
•
Respect for Individual.
•
Quality.
•
Responsible Citizenship.
2.6. Objective of Dhaka Bank Limited:
The main objectives of the Dhaka Bank Limited are as follows: a) To establish, maintain, carry on, transact, undertake and conduct all types of banking, financial, investment and trust business of in Bangladesh and abroad. b) To form, establish and organize any bank, company, institutions or organization either singly and/or in joint collaboration of partnership with any individual company, financial institution, bank, organization or any government and or government agency for the purpose of carrying on banking, financial investment and trust business and/or any other business as provided hereafter.
c) To carry on any business relating to Wage Earner Scheme as may be allowed by Bangladesh Bank from time to time including maintaining of foreign currency accounts and any other matter related thereto. d) To contract or negotiate all kinds of loan and/or assistance, private or public from any source, local or foreign, and to take all such steps as may be required to be complete such deals. e) To form, organize assets, participate or aid in forming, promoting or organizing any company, bank, syndicate, consortium institute or any holding and subsidiary company in Bangladesh or abroad for the purpose of undertaking any banking financial investment and trust business. f) To take part in the formation, management, supervision or control of business or operations of any company or undertaking and for that purpose to render technical managerial and administrative services and act as administrator, manager and secretary. g) To amalgamate or reconstruct or recognize with any commercial bank, or body corporate or association in cooperation with any person, commercial bank or association. h) To establish and open offices and branches to carry on all or any of the above business abroad and within the country provided prior permission is obtained from the Bangladesh Bank. i) To establish provident fund, gratuity, pension, and other fund for the welfare and benefit of the employees and staffs, former or present and any matter related thereon. j) To act as official liquidator and receiver. 2.7. Functions of the Dhaka Bank Limited: Dhaka Bank Limited performs all types of functions of a modern commercial bank, which generally includes: 1)
Mobilization of savings of the people and safe keeping of all types of deposit account.
2)
Making advances especially for productive activities and for the other commercial and socio-economic needs.
3)
Providing banking services to common people through the branches.
4)
Introduce modern Banking services in the country.
5)
Discounting and purchasing bills.
6)
Providing various information, guidance and suggestions for promotion of trade and industry keeping in view of the overall economic development of the country.
7)
Industrial finance for both capital machinery and working capital.
8)
Finance relating to constructions of both commercial and residential.
9)
Finance under small business of self employed clients.
10) Finance of farming and non-farming activities to rural people including purchase of agricultural equipments. 11) Ensuing proper utilization of credit disbursed. 12) Developing new products. 13) Market surveys before making any finance. 14) Finance for small transport. 15) Monitoring and forecasting. 16) Developing marketing campaigns. 17) Finance for household durables. 18) Work simplification studies. 19) Monitoring diversification of portfolio among different sectors. 20) Pricing and minimum size of transaction ship. 2.8. Management System Since its journey as Commercial Bank in 1995 Dhaka Bank Limited (DBL) has been laying great emphasis on the use of improved Technology. It has gone to Online Operation System since 2003. And the new Banking Software FLEXCUBE is newly installed. As a result the Bank will able to give the services of international standards. 2.9. Functional Department of DBL.
If the Jobs are not organized considering their interrelationship and are not allocated in a Particular Department it would be very difficult to control the system effectively. If the any Departments are not fitted for the Particular Works there would be Haphazard Situation and the Performance of a Particular Department would not be measured. Dhaka Bank Limited (DBL) has does this work very well. Different Departments of Dhaka Bank Limited (DBL) are as follows: •
Human Resources Division
•
Personal Banking Division
•
Treasury Division
•
Operations Division
•
Computer and Information Technology Division
•
Credit Division
•
Finance & Accounts Division
•
Financial Institution Division
•
Audit & Risk Management Division
2.10. Dhaka Bank At A Glance: Name of company
:
Dhaka Bank Limited
Legal form
:
A public limited company incorporated in Bangladesh on 6 th April 1995 under companies Act 1994 and listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited.
Founded
:
Registered office
:
Incorporated on April 06, 1995, commercial banking operation from the July 05, 1995 Biman Bhaban (1st floor), 100 Motijheel C/A, Dhaka 1000, Bangladesh
Telephone
:
+880 2 9554514, 9571395
Telefax
:
+880 2 9556584
Swift code
:
DHBLBDDH
E-mail Core Management Team
:
info@dhakabank.com.bd Khondoker Fazle Rashid - Managing Director Mr. Tanweer Rahim - Deputy Managing Director (Business Banking) Mr. Kaiser Tamiz Amin - Deputy Managing Director (Operation) Mr. Neaz Mohammad Khan – Deputy Managing Director (Risk Mgt)
Auditors
:
ACNABIN
Tax Consultant
:
Howladar, Yunus & co. Chartered Accountants
Managing Director (CC)
:
Khondker Fazle Rashid
Company Secretary
:
Arham Masudul Huq
The Authorized Capital Paid -up Capital
Chartered Accountants
BDT 6,000.00 million(2009) BDT2,127.68million(2009)
Capital Surplus Income from Investments Total assets Total Deposits Total Loans and Advances Website URL
BDT 652 million(2009) BDT 920 million(2009) BDT 77,767.41 million(2009) BDT 60,918.37 million(2009) BDT 52,909.81 million(2009) http://www.dhakabankltd.com Table 1: Dhaka Bank At A Glance Source: Dhaka bank Portals
2.11. Organizational Hierarchy of Dhaka Bank Ltd.: BOARD BOARD OF OF DIRECTORS DIRECTORS
MANAGING MANAGING DIRECTOR DIRECTOR
DEPUTY DEPUTY MANAGING MANAGING DIRECTOR DIRECTOR RISK RISK MANAGEMENT MANAGEMENT
DEPUTY DEPUTY MANAGING MANAGING DIRECTOR DIRECTOR BUSINESS BUSINESS
BANKING BANKING
SENIOR SENIOR EXECUTIVE EXECUTIVE VICE VICE PRESIDENT PRESIDENT
EXECUTIVE EXECUTIVE VICE VICE PRESIDENT PRESIDENT
SENIOR SENIOR VICE VICE PRESIDENT PRESIDENT
VICE VICE PRESIDENT PRESIDENT
SENIOR SENIOR ASSISTANT ASSISTANT VICE VICE PRESIDENT PRESIDENT
FIRST FIRST ASSISTANT ASSISTANT VICE VICE PRESIDENT PRESIDENT
ASSISTANT ASSISTANT VICE VICE PRESIDENT PRESIDENT
PRINCIPAL PRINCIPAL OFFICER OFFICER
DEPUTY DEPUTY MANAGING MANAGING DIRECTOR DIRECTOR OPERATIONS OPERATIONS
SENIOR SENIOR OFFICER OFFICER
JUNIOR JUNIOR OFFICER OFFICER
OFFICER OFFICER
PROBATIONERY PROBATIONERY OFFICER OFFICER
ASSISTANT ASSISTANT OFFICER OFFICER
Figure-1: ORGANIZATIONAL HIERARCHY 2.12. Financial Performance of Dhaka Bank Limited Position of the Dhaka bank at a glance for the last 6 years. Particulars
2004
2005
2006
2007
2008
2009
Interest Income
2,011
2,897
4,342
5,636
7,171
7,466
Interest Expense
1,389
2,149
3,380
4,049
5,214
5,407
Net Interest Income
622
748
962
1,587
1,958
2,059
Non Interest Income
648
739
1,110
1,582
1,929
2,175
Non Interest Expense
523
594
889
1,159
1,353
1,424
Net Non Interest Income
125
145
221
423
576
751
Profit before Tax &
747
893
1,183
2,010
2,533
2,810
Provision for Loans & Assets
114
125
233
479
669
675
Provision for Tax (including Deferred Tax)
275
305
370
827
1,025
1,176
Profit after Tax
358
463
580
704
839
959
Authorize Capital
1,000
2,650
2,650
6,000
6,000
6,000
Paid up Capital
664
1,228
1,289
1,547
1,934
2,128
Reserve Funds & Other Reserve
824
988
1,262
1,578
2,065
2,838
Shareholders' Equity (Capital & Reserve)
1,488
2,216
2,551
3,125
4,000
4,966
Deposits (Base & Bank excluding Call)
22,270 28,439 41,554 48,731 56,986 60,918
Loans & Advances
16,539 23,372 34,049 39,972 49,698 52,910
Investments
3,078
3,926
5,378
5,972
7,239
8,660
Fixed Assets
125
122
217
291
387
424
Total Assets(excluding off-balance sheet items)
28,178 33,072 47,594 57,443 71,137 77,767
Income Statement
Provision
Balance Sheet
Foreign Exchange Business
Import Business
28,048 30,213 46,277 49,496 65,737 46,160
Export Business
8,881
13,505 23,268 31,081 39,038 33,305
Guarantee Business
3,663
6,099
6,473
Inward Foreign Remittance
1,110
3,377
16,764 10,609 11,834 9,786
Core Capital (Tier I)
1488
2216
2551
3126
3964
4634
Supplementary Capital (Tier II)
163
237
373
554
844
1000
Tier I Capital Ratio
9.47
9.94
8.23
8.80
9.77
9.30
Tier II Capital Ratio
1.04
1.06
1.2
1.56
2.08
2.01
Total Capital
1651
2,453
2,924
3,680
4,808
5634
Total Capital Ratio
10.51
11.00
9.43
10.36
11.84
11.31
271
351
554
1,258
1,908
2,946
% of NPLs to Total Loans & 1.65 Advances Provision for unclassified Loans 162
1.51
1.64
3.15
3.84
5.57%
236
372
465
620
625
Provision for Classified Loans
76
103
172
439
825
1,488
Share Information Number of Shares Outstanding
6.64
12.28
12.89
15.47
19.34
21.28
Earning per Share (Taka)
61
44
45
36
43
45
Book Value per share (Taka)
224
180
198
202
207
233
Market Price per share (Taka)
850
469
466
706
361
484
Price Earning Ratio (Times)
14.03
10.66
10.32
15.33
8.31
10.72
Price Equity Ratio (Times)
3.79
2.60
2.35
3.49
1.74
2.07
Cash Dividend (%)
10
20
10
-
15
-
Bonus Share
7:20
1:20
1:5
1:4
1:10
1:4
Net Interest Margin
3.57
3.43
3.77
4.54
4.60
4.56
Credit / Deposit Ratio (%)
74.26
82.18
81.94
82.03
87.21
86.85
Current Ratio (Times)
1.60
1.33
1.24
1.38
1.28
2.10
Return on Equity (ROE) %
24.06
20.89
22.74
22.53
20.97
19.32
Return on Assets (ROA) %
1.27
1.40
1.22
1.23
1.18
1.29
Cost of Deposit (%)
6.75
8.13
9.15
8.97
9.40
8.68
75.44
78.14
72.15
72.16
70.85
6,523
7,887
6,462
Capital Measures
Credit Quality Volume of Non-performing loans
Dividend per Share:
Operating Performance Ratio
Cost / Income ratio in operating 71.91 business (%)
Table 1: Financial Performance of Dhaka Bank Ltd.
2.13. Capital and Reserves of DBL: Dhaka Bank Limited has been consistently maintaining the 'Capital Adequacy Ratio', as prescribed by Bangladesh Bank. This has been made possible by a policy of building up both capital and reserves. It started with an Authorized and Paid-up Capital of Tk.1,000.00 million and Tk.276.00 million respectively in 1995. Authorized and Paid up Capital increased to Tk.6,000.00 million and Tk. 2,128 million respectively in 2009. In addition to Paid up Capital, the Bank has built up a strong reserve base over the years. 2.14. Strength and Performance DBL: With the active support and guidance from Bangladesh Bank, clients and patrons, the Bank has been maintaining sound financial strength and showing a steady and impressive business performance. Dhaka Bank Limited is one of the few mentionable banks, which maintains Capital Adequacy ratio and has more than required provision as per Bangladesh Bank criteria. Starting with a modest deposit of only Tk.10,749.00 million in 1996, the Bank had closed its business with a deposit of Tk.48,731 million as of December 31, 2007. The total deposits stood at Tk.60,918 million as of December 31, 2009. Total credit stood at Tk. 52,910 million as on December 31, 2009 against Tk. 49,698 million last year. Bank has posted a profit before tax and provision of Tk.2,810 million during the year ended December 31, 2009 against 2,533 million last year with a growth of 11%. Earning per share (EPS) is Tk.45.00 as on December 31, 2009 against Tk.43.00 as on December 31, 2008. Dhaka Bank has received ICAB National Award 2007 in the financial sector for their published Accounts and Reports. 2.15. Products & Service of DBL: The Bank has an array of tailor made financial products and services. Such, products are Bundled savings product, Deposit pension Scheme, Lease Finance, Home Loan etc. DBL also introduced ATM cards for its valued customers giving 24 hours banking services. Like some other Banks Dhaka Bank Limited (DBL) has also some Services that it provides its Potential Customers. The Services of the Bank for its Customers are:
• • •
o Corporate Banking Services: Floating of Public Issues Loan Syndication Personal Banking Services: o Deposit Accounts -
Current Account
o o o o o o o o o o o o
Savings Account Short Term Deposit Account Fixed Deposit Account Excel Account
Foreign Exchange Transactions Consumer Credit Scheme E-Cash 24 Hour Banking Phone Banking Branch Banking Dhaka Bank Credit Card Secured Overdraft Personal Loan Car Loan Safe Deposit Lockers Private Foreign Currency Accounts Utility Bill Payments
• International Trade & Foreign Exchange • Lease Financing • Capital Market Services 2.16.1 Highlights of different services offered by DBL: Bank provide means and mechanism of transferring command over resources from those who have an excess of income over expenditure to those who can make use of the same for adding to the volume of productive capital. The bank provide them with the safety, liquidity, profitability by means of different savings media offering varying degrees of a mix of liquidity, return and safety of savings. The bank uses this savings in higher degrees of return and maximizes their profit in business. In this age of competition, every bank is passing the operational functions in hard competition. Yet it a newborn bank though it is affected by this danger. DBL is marching in an aggressive way to reach the all levels of clients and customers, which ensure certain, and mentioning position in the market. DBL as one of the leading commercial bank provides various services to its customers. These services are given below: 2.16.1.1. Corporate banking services of DBL: Speedy approvals and efficient processing fully satisfying customer providing a tailored solution is the essence of our Corporate Banking services. Dhaka Bank recognizes that
Corporate Customers' needs vary from one to another and a customized solution is critical for the success of their business. Dhaka Bank offers a full range of tailored advisory, financing and operational services to its corporate client groups combining trade, treasury, investment and transactional banking activities in one package. Whether it is a Project Finance, Term Loan, Import or Export Deal, Working Capital Requirement or Forward Cover for a Foreign Currency Transaction, our Corporate Banking Managers will offer customer the right solution. Customer will find top-class skills and in-depth knowledge of market trends in our Corporate Banking Specialists requirements - altogether a gratifying experience. At the moment Dhaka Bank’s exposure (as of December 31, 2009) under Corporate Banking Business is distributed in the following sectors: Sl.
Sector
DBL’s Exposure (BDT in Crore)
1
Agricultural
30
2
Chemical
130
3
Electronics and Automobile
09
4
Energy and power
58
5
Engineering and Metal Including Ship Breaking
394
6
Food and Allied
350
7
Housing and Construction
692
8
Pharmaceuticals
56
9
Services
158
10
Textile and Garment
973
11
Transport and Communication
191
12
Others
2249 Table 3: Corporate banking services of DBL
Others 42%
Chemical Agricultural 2% 1%
Transport & Communication 4%
Electronics & Automobile 2%
Energy & Power 1%
Engineering & Metal including Ship Breaking Food & Allied 7% 6%
Service 3% Textile & Garment 18%
Housing & Construction 13%
Pharmaceuticals 1%
Figure 02: Investment in corporate Banking business. 2.16.1.2 Personal banking service: Personal Banking services of Dhaka Bank Limited offer wide-ranging products and services matching the requirement of every customer. DBL offers the Personal Banking Services like Current Deposit Account, Savings Deposit Account, Short Term Deposit Account, and Fixed Deposit Accounts. It also offers attractive rates on various deposit schemes. The banks make every endeavor to ensure the clients' satisfaction. 2.16.1.3 Other services of Dhaka Bank Limited: Finance & Advisory Services Given the needs of its large and varied base of corporate clients Dhaka Bank will be positioning itself to provide investment banking advisory services. These could cover a whole spectrum of activities such as Guidance on means of raising finance from the local Stock markets, Mergers and Acquisitions, Valuations, Reconstructions of Distressed companies and other expert knowledge based advice. By this means Dhaka Bank hopes to play the role of strategic counselor to blue-chip Bangladesh companies and then move from the level of advice to possible implementation of solutions to complex financing problems that may arise from time to time.
Vacation Loan Like the Car Loan, Vacation Loan of Dhaka Bank Limited is a term financing facility to individuals to aid them in their pursuit of spending a vacation in the country or abroad. The facility becomes affordable to the clients as the repayment is done through fixed installment s commonly known as EMI (equal monthly installment) across the facility period. Depending on the size and purpose of the loan, the number of installments varies from 12 to 48 months. Foreign Trade International Trade forms the major business activity undertaken by Dhaka Bank Ltd. The Bank with its worldwide correspondent network and close relationships with key financial institutions provides an extensive trade services network to handle your transactions efficiently. Project Finance Project financing is an innovative and timely financing technique that has been used to fund large-scale corporate projects. It includes understanding the rationale for project financing, preparing the financial plan, assessing the risks, designing the financing mix, and raising the funds. Project finance is different from traditional forms of finance because the financier principally looks to the assets and revenue of the project in order to secure and service the loan. Project financing relies primarily on the project's cash flow for repayment, with the project's assets, rights, and interests held as secondary security or collateral. Dhaka Bank offers a full range of services to the entrepreneurs implementing a project including structuring mode of financing, mitigation of different risks and providing advisory service for successful implementation of the project. Working Capital Finance Dhaka Bank caters to the working capital needs of the client taking into account the current asset requirement of the client. Dhaka bank extends different types of working capital facility like Back-to-Back LC, Loan against Trust Receipt (LTR), Cash Credit (CC), Overdraft (OD) facility, Short Term Loan (STL), Bank Guarantee, etc. to facilitate the business operation of the client. 2.16.1.4 Other highly customized services of DBL: •
E-Cash 24hours Banking:
Dhaka Bank E-Cash ATM Card enables you to withdraw cash and do a variety of banking transactions 24 hours a day. E-Cash ATMs are conveniently located covering major shopping centers, business and residential areas in Dhaka. ATMs in Chittagong, Sylhet and other cities will soon start be introduced. The network will expand to cover the whole country within a short span of time. With Dhaka Bank E-Cash ATM card customer can: •
Withdraw cash from your account.
•
Make balance enquiry.
•
Pay your BTTB Telephone bills.
More utility providers are being included in the network for payment of their bills. For your Dhaka Bank E-Cash ATM card, just call our Personal Banking centers or contact any of our branches. How much withdrawal is possible? You can withdraw any amount up to Taka 5,000 per transactions with maximum Taka 20,000 per day. However, you may use your card as many times as you want to carry out other transactions. •
Phone Banking
Dhaka Bank Phone Banking service allows the clients to conduct a variety of transactions by simply making a phone call from anywhere. They can enquire about the balance in their account, check transaction details or request for their account statement by fax or mail. They can also talk to an officer to discuss their loan requirement or any other transaction details. Phone banking is available to all customers of our Local office, Foreign Exchange, Banani, in Dhaka and Agrabad branch in Chittagong. Non-customers may also avail the service to obtain general information and enquire about our products and services. Phone banking is being broadened to cover all our branches in the near future. The following services are available through Phone Banking: •
Balance inquiry
•
Balance on a particular date
•
Deposit details
•
Last 5 transactions by voice
•
Statement by fax
•
Statement by mail
•
Cheque inquiry
•
Voice mail service
•
Talk to an Officer
•
Change Personal Identification Number (PIN)
All customers having an account in the Local Office, Foreign Exchange, Banani, in Dhaka and Agrabad branch in Chittagong can avail the Phone Banking service. Customers of other branches and non-customers may also use the system to enquire about Dhaka Banks products and services Phone banking service helps them to obtain their account details from anywhere by simply making a phone call. They don't have to visit our branch or wait in the queue to obtain their account related information. They can conduct a variety of transactions from the comfort of home, office or car. A unique Personal Identification Number (PIN) is given to every customer that ensures the confidentiality of your transactions. The PIN is your secret password to access your account related information. The PIN can be changed any time to assure its secrecy and prevent unauthorized access to your account information. No. It is absolutely free. All you need to do is have an account with us. It's very simple. Contact your branch and submit your request in the prescribed form, we shall do the rest. •
Online Banking
Convenience is the key feature of DBL service. DBL’s aim is to provide every customer easy access to his/her account from any branch and ultimately from anywhere. Recognizing the need of customers DBL has networked all of its branches all over the country to permit its valued customers to carry out transactions from any branch. Cash withdrawal or deposit or any type of personal banking transactions can be performed using the any Branch office. •
Internet & SMS Banking
Dhaka Bank has recently landed its mark in modern banking arena by introducing Internet and SMS Banking to add to its wide range of other banking products. All single
savings account holders of DBL are eligible for Internet and SMS Banking. Through Internet Banking an account holder can: 1. Access account information anytime from anywhere 2. Transfer funds 3. Open and close Term Deposit 4. Request for cheque book and account statements 5. Place stop cheque instruction 6. Enquire interest and foreign currency rates and many more Through SMS Banking an account holder can: •
Access account information anytime from anywhere
•
Request for cheque book and account statements
•
Make cheque status enquiry
•
Place stop cheque instruction
•
Make utility bill payment •
Any Branch Banking
Convenience is the key feature of DBL Personal banking programmed. Their aim is to provide every customer easy access to his/her account from any branches and ultimately from anywhere. Recognizing the need of customers, Dhaka Bank has recently networked all the branches in Dhaka, Narayanganj, Chittagong and Sylhet to permit our valued customers to carry out transactions from any branch. Cash withdrawal or deposit or any type of personal banking transactions can be performed using the any branch banking service. All transactions under Any Branch Banking are absolutely free of charge. The following services are available under Any Branch Banking: •
Cash withdrawal from clients account from any branch of the bank.
•
Cash and cheque deposit into their account from any branch of the bank.
•
Cash and cheque deposit in other's account from any branch of the bank
•
Transfer of money from their account with any branch of the bank.
•
Cash withdrawal by self (any amount subject to availability of balance.)
•
Cash withdrawal by third party/bearer (per transaction Tk. 100,000 only.)
•
Cash deposit/transfer (unlimited.) •
Islamic Banking
Dhaka Bank Limited offers Shariah based Islamic Banking Services to its clients. The bank opened its First Islamic Banking Branch on July 02,2003 at Motijheel Commercial Area, Dhaka. The second Islamic Banking branch of the bank commenced its operation at Agrabad Commercial Area, Chittagong on May 22, 2004.Dhaka Bank Limited is a provider of on line banking services and any of its clients may avail Islamic Banking services through any of the branches of the bank across the country. Dhaka Bank Islamic Banking Branches offer fully Shariah based, Interest free, Profit-Loss Sharing Banking Services. Dhaka Bank Shariah Council is closely monitoring its activities. Besides, Dhaka Bank is an active member of Islamic Banking Consultative Forum, Dhaka and Central Shariah Board of Bangladesh. The valued clients of DBL. may have the following accounts with the Islamic Banking Branches of DBL. 01. Al-Wadeeah Current Account. 02. Mudaraba Savings Account. 03. Mudaraba Term Deposit Account. 04. Mudaraba Special Notice Account. 05. Mudaraba Hajj Savings Account. 06. Mudaraba Pension Scheme Account. 07. Mudaraba Special Deposit Scheme Account. 08. Mudaraba Foreign Currency Deposit Account. Dhaka Bank Limited Islamic Banking Branches offer the following products: 01. Mudaraba Purchase Order. 02. Bai Muazzal Industrial.
03. Bai Muazzal Others. 04. Mudaraba Post Import Trust Receipt. 05. Mudaraba Term Financing Industrial. 06. Mudaraba Term Financing Others. 07. Sirkatul Milk. 08. Ijara Transport. 09. Ijara Machinery & Equipment. 10. Quard. •
ATM Card service
Automated Teller Machine (ATM), a new concept in modern banking, has already been introduced to facilitate subscribers 24 hour cash access through a plastic card. The network of ATM installations will be adequately extended to enable customers to nonbranch banking beyond banking. Anyone who opens the account (Savings a/c, Current a/c, Salary a/c) in DBL they can received the ATM card facility. ATM card service for the 1st year it is free. From the 2nd year the bank takes its charge Tk.230 P.A. Card Features: • Cash Withdrawals – up to Tk.50,000 per day • Multi-account access • Fund Transfers • Mini Statements • PIN • Safe Deposit Lockers
Dhaka Bank ATM/ Debit Card
Clients could use the locker facility of Dhaka Bank Limited and thus have the option of covering their valuables against any unfortunate incident. They offer security to our locker service as afforded to the Bank's own property at a very competitive price. They would be at their service from Sunday through Thursday from 10:00 am to 4:00 pm. There are 3 sizes of lockers. Those areSmall, Medium, and Large. Before takes the locker facility the person must have to open an account in Dhaka Bank Limited. 3.1. Ratio Analysis: Ratio analysis involves methods of calculating and interpreting financial ratios to assess the bank’s performance and status. The basic inputs to ratio analysis are the bank’s income statement and balance sheet. 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.The basic inputs to ratio analysis are the firm’s income statement and balance sheet for the periods to be examined. Ratio analysis is predominately used by proponents of fundamental analysis. 3.2. Significance of Using Ratios The significance of a ratio can only truly be appreciated when: 1.
It is compared with other ratios in the same set of financial statements.
2. It is compared with the same ratio in previous financial statements (trend analysis). 3. It is compared with a standard of performance (industry average).Such a standard may be either the ratio which represents the typical performance of the trade or industry, or the ratio which represents the target set by management as desirable for the business. 3.3. Types of Ratio Comparisons: Ratio analysis is not merely the application of a formula to financial data to calculate a given ratio. More important is the interpretation of the ratio value. To answer such questions as is it too high or too low? Is it good or bad? Two types of ratio comparisons can be made: Cross-sectional & Time-series analysis. •
Time-series Analysis:
Time-series analysis evaluates performance over time. Comparison of current to past performance, using ratios, allows the firm to determine whether it is progressing as planned. Additionally, time-series analysis is often helpful in checking the reasonableness of a firm’s projected financial statements. •
Cross-Sectional Analysis:
Cross-Sectional analysis evaluates performance of different firms` financial ratios at the same point in time. •
Combined Analysis:
The most informative approach to ratio analysis is one combines cross-sectional and time-series analysis. A combined view permits assessment of the trend in the behavior of ratio in relation to the trend for the industry. 3.4. Cautions about Ratio Analysis Before discussing specific ratios, we should consider the following cautions: •
A single ratio does not generally provide sufficient information from which to judge the overall performance of the firm.
•
Be sure that the dates of the financial statements being compared are the same.
•
It is preferable to use audited financial statements for ratio analysis.
•
Be certain that the data being compared have all been developed in the same way.
3.5. Groups of Financial Ratios Financial ratios can be divided into four basic groups or categories: i. Liquidity ratios ii. Activity ratios iii. Debt ratios & iv. Profitability ratios Liquidity, activity, and debt ratios primarily measure risk, profitability ratios measure return. In the near term, the important categories are liquidity, activity, and profitability, because these provide the information that is critical to the short-run operation of the firm. Debt ratios are useful primarily when the analyst is sure that the firm will successfully weather the short run Groups of the financial ratios are given below: Financial Ratios
Liquidity Ratio
Activity Ratio
Debt Ratio
Profitability Ratio
Inventory Turnover Net Working Capital
Average Collectio n Period
Current Ratio
Average Payment Period
Quick (Acid-Test) Ratio
Degree of Indebtednes s Debt Ratio
DebtEquity Ratio
The Ability to Service Debt Time Interest Earned Fixed Payment Coverag e Ratio
Fixed Asset Turnover Total Asset Turnover
Gross Profit Margin Operating Profit Margin Net Profit Margin Returns on Investmen t Return on Equity
Earning Per Share Price/Earn ing Ratio
Figure -3: Groups of Financial Ration 3.5.1. Analyzing Liquidity: The liquidity of a business firm is measured by its ability to satisfy its short term obligations as they come due. Liquidity refers to the solvency of the firm’s overall financial position. The three basic measures of liquidity are3.5.1. a. Net Working Capital: Net Working Capital, although not actually a ratio is a common measure of a firm’s overall liquidity. A measure of liquidity is calculated by subtracting total current liabilities from total current assets. Net Working Capital = Total Current Asset – Total Current Liabilities.
3.5.1. b. Current Ratio:
One of the most general and frequently used of these liquidity ratios is the current ratio. Organizations use current ratio to measure the firm’s ability to meet short-term obligations. It shows the banks ability to cover its current liabilities with its current assets. Current Ratio = Current Asset/Current Liabilities Standard ratio: 2:1
3.5.1. c. Quick Ratio: The quick ratio is a much more exacting measure than current ratio. This ratio shows a firm’s ability to meet current liabilities with its most liquid assets. Quick Ratio=Cash + Government Securities + Receivable / Total Current Liabilities. Standard ratio: 1:1
3.5.1. d. Operating Cost to Income Ratio: It measures a particular Bank’s operating efficiency by measuring the percent of the total operating income that the Bank spends to operate its daily activities. It is calculated as follows: Cost Income Ratio = Total Operating Expenses / Total Operating Income
3.5.2. Analyzing Activity: Activity ratios measure the speed with which accounts are converted into sale or cash. With regard to current accounts measures of liquidity are generally inadequate because differences in the composition of a firm’s current accounts can significantly affects its true liquidity. A number of ratios are available for measuring the activity of the important current accounts, which includes inventory, accounts receivable, and account payable. The activity (efficiency of utilization) of total assets can also be assessed. 3.5.2. a. Total Asset Turnover: The total asset turnover indicates the efficiency with which the firm is able to use all its assets to generate sales. Total Asset Turnover = Sales/ Total Asset 3.5.2. b. Investment to Deposit Ratio:
Investment to Deposit Ratio shows the operating efficiency of a particular Bank in promoting its investment product by measuring the percentage of the total deposit disbursed by the Bank as long & advance or as investment. The ratio is calculated as follows: Investment to Deposit Ratio = Total Investments / Total Deposits 3.5.2. c. Inventory turnover: A ratio showing how many times a company's inventory is sold and replaced over a period. Inventory Turnover= Cost of goods sold/ Average Inventory
The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand or "inventory turnover days". This ratio should be compared against industry averages. A low turnover implies poor sales and, therefore, excess inventory. A high ratio implies either strong sales or ineffective buying. High inventory levels are unhealthy because they represent an investment with a rate of return of zero. It also opens the company up to trouble should prices begin to fall. 3.5.2. d. Average Collection Period: Average collection period is useful in evaluating credit and collection policies. This ratio also measures the quality of debtors. It is arrived at by diving the average daily sales into the accounts receivable balance: Average Collection Period=Accounts receivable/ (Credit sales/365) A short collection period implies prompt payment by debtors. It reduces the chances of bad debts. Similarly, a longer collection period implies too liberal and inefficient credit collection performance. It is difficult to provide a standard collection period of debtors. 3.5.2. e. Average Payment Period: Average payment period ratio gives the average credit period enjoyed from the creditors that means it represents the number of days by the firm to pay its creditors. A high creditor’s turnover ratio or a lower credit period ratio signifies that the creditors are being paid promptly. This situation enhances the credit worthiness of the company. However a very favorable ratio to this effect also shows that the business is not taking
the full advantage of credit facilities allowed by the creditors. It can be calculated using the following formula: Average Payment Period=Accounts payable/ Average purchase per day 3.5.2. f. Fixed Asset Turnover: A financial ratio of net sales to fixed assets. The fixed-asset turnover ratio measures a company's ability to generate net sales from fixed-asset investments - specifically property, plant and equipment (PP&E) - net of depreciation. A higher fixed-asset turnover ratio shows that the company has been more effective in using the investment in fixed assets to generate revenues. The fixed-asset turnover ratio is calculated as: Fixed Asset Turnover=Gross Turnover/ Net fixed assets 3.5.3. Analyzing Debt The debt position of that indicates the amount of other people’s money being used in attempting to generate profits. In general, the more debt a firm uses in relation to its total assets, the greater its financial leverage, a term use to describe the magnification of risk and return introduced through the use of fixed-cost financing such as debt and preferred stock. 3.5.3. a. Debt Ratio: The debt ratio measures the proportion of total assets provided by the firm’s creditors. Debt Ratio = Total Liabilities / Total Assets 3.5.3. b. Equity Capital Ratio: The ratio shows the position of the Bank’s owner’s equity by measuring the portion of total asset financed by the shareholders invested funds and it is calculated as follows: [
Equity Capital Ratio = Total Shareholder’s Equity / Total Assets The ability to service debt: It refers the ability of a firm to meet the contractual payments required on a scheduled basis over the life of a debt. The firm’s ability to meet certain fixed charges is measured using coverage ratios. 3.5.3. c. Time Interest Earned Ratio:
This ratio measures the ability to meet contractual interest payment that means how much the company able to pay interest from their income. Time Interest Earned Ratio=EBIT/ Interest 3.5.4. Analyzing Profitability These measures evaluate the bank’s earnings with respect to a given level of sales, a certain level of assets, the owner’s investment, or share value. Without profits, a firm could not attract outside capital. Moreover, present owners and creditors would become concerned about the company’s future and attempt to recover their funds. Owners, creditors, and management pay close attention to boosting profits due to the great importance placed on earnings in the marketplace. 3.5.4. a. Operating Profit Margin: The Operating Profit Margin represents what are often called the pure profits earned on each sales dollar. A high operating profit margin is preferred. The operating profit margin is calculated as follows: Operating Profit Margin = Operating Profit / Sales 3.5.4. b. Net profit Margin: The net profit margin measures the percentage of each sales dollar remaining after all expenses, including taxes, have deducted. The higher the net profit margin is better. The net profit margin is calculated as follows: Net profit Margin = Net profit after Taxes / Sales
3.5.4. c. Return on Asset (ROA): 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 ratio is better. Return on Asset (ROA) = Net profit after Taxes / Total Assets 3.5.4. d. Return on Equity (ROE): The Return on Equity (ROE) measures the return earned on the owners (both preferred and common stockholders) investment. Generally, the higher this return, the better off the owners. Return on Equity (ROE) = Net profit after Taxes / Stockholders Equity
3.5.4. e. Price/ Earnings ratio (PE ratio): The Price/ Earnings ratio (price-to-earnings ratio) of a stock is a measure of the price paid for a share relative to the income or profit earned by the firm per share. P/E ratio = Price per share / Earnings per share
3. 5.4. f. Earnings per share (EPS): Earnings per share (EPS) are the earnings returned on the initial investment amount. EPS= Net income/no. of share outstanding 3.6. Du Pont Analysis The Du Pont system of analysis is used to dissect the firm’s financial statements and to assess its financial condition. It merges the income statement and balance sheet into two measures of profitability: return on total assets (ROA) and return on common equity (ROE). The DuPont system of analysis is a diagnostic tools used to find the key areas responsible for the firm’s financial Performance. ROE = Net Profit Margin × Total Asset Turnover × Equity Multiplier 4.0. Quantitative Analysis of Dhaka Bank Limited 4.1 Ratio Analysis:
1. Current ratio The current ratio, one of the most commonly cited financial ratios, measures the firm’s ability to meet its short-term obligations. It is expressed as Current Ratio=Current Asset/Current Liabilities Year
Current Ratio 2008 1.28
2007 1.38
Table-4: Current Ratio Source: Annual Report of DBL Graphical Presentation:
2009 2.10
Current Ratio
3
2.1 2
1.38
1.28
2007
2008
Series1
1 0 2009
Figure-4: Current Ratio Interpretation: That is the higher the current ratio; the more liquid the firm is considered to be. But DBL, Current ratio is not good because it maintains 2.1tk current assets against 1tk current liabilities where as normally banking industry maintains 1: 1 current ratio. 2 .Net Working capital Net working capital, although not actually a ratio is a common measure of a firm’s overall Liquidity a measure of liquidity ratio calculated by Net Working capital=Current Asset-Current Liabilities
Year
Net Working Capital 2007 2008 24723220094 18178885197 Table-3: Net Working capital Source: Annual Report of DBL
Graphical Presentation:
2009 25197646993
Net working capital 3E+10
24723220094
25197646993
2.5E+10 18178885197
2E+10 1.5E+10
Series1
1E+10 5E+09 0 2007
2008
2009
Figure 5: Net Working Capital Interpretation: Net working capital of DBL is fair, in 2008 it is decreased but in 2009 it is improving. Because of their increasing total current assets, this is good indeed. However, the bank is able to meet up its current obligations. 3. Cost Income Ratio:
Cost Income Ratio=Total operating Expenses/Total Operating Income
Cost Income ratio Year
2007 36.56%
2008 34.82% Table-4: Cost Income Ratio Source: Annual Report of DBL
Graphical Presentation:
2009 33.64%
Cost Income Ratio 36.56%
37.00% 36.50% 36.00% 35.50% 35.00% 34.50% 34.00% 33.50% 33.00% 32.50% 32.00%
34.82% 33.64%
2007
2008
2009
Figure-6: Cost Income Ratio Interpretation
We know that this ratio measures the operating efficiency of the bank by measuring the portion if the total operating costs relative to the total operating income of that bank and the higher the ratio, the lower the operating efficiency. In 2007 the operating cost of DBL is high but in 2009 it is low. So it can be said that the efficiency of the DBL has been able to minimize its operating cost during the time period. 4. Total Asset Turnover Ratio: The total asset turnover indicates the efficiency with which the firm is able to use all its assets to generate sales. Total Asset Turnover= Operating Income/Total Asset
Year
2007 .055
Total Asset Turnover 2008 .054 Table-5: Total Asset Turnover Source: Annual Report of DBL
Graphical Presentation:
2009 .054
Figure-7: Total Asset Turnovers Interpretation The banks total asset turnover ratio fluctuates from .055-.054, which means 5.5 to 5.4 times. We know the greater the total asset turnover; it is more efficient. DBL’s total asset turnover ratio is decreasing day by day which is not good 5. Debt Ratio: The debt ratio measures the preparation of total assets provided by the firm’s creditors. Debt ratio= Total Liabilities/Total Assets
Debt Ratio Year
2007 .94
Table-6: Debt Ratio Source: Annual Report of DBL Graphical Presentation:
2008 .94
2009 .94
Debt Ratio 0.94
0.94
1
0.94
0.5 0 Series1
2007
2008
Series1
2009
Figure-8: Debt Ratios Interrelation: The debt ratio of the firm’s is stable in last three years. Debt ratio indicates how much portion of total assets is financed by the debt. We know that when debt capital increases the cost of capital also increase and which decrease the firm’s value. In case of decreasing debt capital the situation is vise versa. So every organization should give more emphasize on equity capital than debt capital. So lower the ratio, it is less risky. The deposit of the bank is considered as the debt to the bank. I think debt ratio of DBL is satisfactory. 6. Time Interest Earned Ratio: The times interest earned ratio, sometimes called the interest coverage ratio, measures the firm’s ability to make contractual interest payments. Time Interest Earned Ratio =Earnings before interest & Taxes/Interest
Time Interest Earned Ratio Year
2007 1.39
Table-7: Time Interest Earned Ratio Source: Annual Report of DBL Graphical Presentation:
2008 1.29
2009 1.37
1.39
1.4
Time Interest Earned Ratio 1.37 1.29 Series1
1.2 2007
2008
2009
Figure-9: Time Interest Earned Ratio Interpretation Time Interest earned ratio on DBL’s is highly dissatisfying. Because, in 2008 it is only 1.29 and in 2009 it was slightly increase to 1.37. So DBL should enhance its earnings by minimizing its operating costs in order to get adequate earnings to satisfying interest obligations 7. Investment to Deposit ratio: Total investment/Total Deposit
Year
Investment To Deposit Ratio 2007 2008 .120 .127
2009 .141
Table-8: Investment to Deposit Ratio Source: Annual Report of DBL Graphical Presentation:
Investment to Deposit ratio 0.141
0.15 0.14 0.13 0.12
0.127 0.12
0.11 0.1 2007
2008
Figure–10: Investment to Deposit ratio
2009
Interpretation Investment to deposit ratio shows that which amount of deposit is used to as investment. DBL’s investment to deposit ratio is increasing from years 2007 to 2009.That means DBL depends on its deposits than the share investment. 8. Loan to Deposit ratio Total Loan/Total Deposit
Year
2007 0.82
Loan To Deposit Ratio 2008 0.86
2009 0.87
Table-9: Investment to Deposit Ratio Source: Annual Report of DBL Graphical Presentation:
Loan to Deposit Ratio 0.9 0.82
0.85
0.86
0.87
0.8
Series1
0.75 2007
2008
2009
Figure–11: Loan to Deposit ratio Interpretation Loan to deposit ratio shows that which amount of deposit is used to as loan. DBL’s loan to deposit ratio is increasing from years 2007 to 2009. It conveys the positive sign because it indicates DBL’s using its deposit properly. 9. Net Profit Margin: The net profit margin measures the percentage of each sales dollar remaining after all expenses, including taxes, have deducted. The higher the firm’s net profit margin is
better. The net profit margin is a commonly cited measure of the company’s success with respect to earnings on sales. Net Profit Margin=Net profit after tax/operating income
Net Profit Margin Year
2007
2008
2009
.22
.21
.23
Table-10: Net Profit Margin Source: Annual Report of DBL Graphical Presentation:
Net Profit Margin 100%
0.22
0.21
0.23
80% 60% 40% 20% 0% 2007
Interpretation:
2008
2009
Figure–12: Net Profit Margins
In year 2007 the net profit margin of DBL is 22%, which indicates that profit margin is in good situation. And in 2008 it goes down but in 2009 DBL’s net profit margin is increasing which indicates that the banks profit is increasing. 10. Return on Asset (ROA): The return on asset (ROA), which is often called the firm’s return on total assets, measures the overall effectiveness of management in generating profits with its available assets. The higher the ratio is better. Return on Asset (ROA) =Net Profit after tax/Total Asset Return On Asset
Year
2007 1.22
2008 1.18
2009 1.23
Table-11: Return on Asset Source: Annual Report of DBL Graphical Presentation: 1.24 1.22
1.23
Return on Asset
1.22
1.2
1.18
1.18
2007 2008
1.16 1.14 2007
2008
2009
Figure-13: return on Asset Interpretation The banks return on asset increasing from 1.22 to 1.23 in the preceding 3 years. So the DBL earns more profit from the assets. This is good for the bank. 11. Return on Equity (ROE): The return on equity measures the return earned on the owner’s (both preferred and common stockholders’) investment. Generally the higher the return, the better off the owner’s. Return on Equity=Net Profit after Tax/ Shareholders equity
Return on Equity Year
2007 22.53
2008 20.97 Table-12: Return on Equity Source: Annual Report of DBL
Graphical Presentation:
2009 19.32
Return on Equity 24
22.53
22
20.97 19.32
20 18 16 2007
2008
2009
Figure-14: Return on Equity Interpretation The banks return on equity deviates from 22.53 to 19.32 in the preceding 3 years and the highest value can be observed in 2007 and the lowest value can be observed during the 2009, which is not desirable. So the management should work hard to increase the return associated with equity. 12. Earning Per Share The firm’s Earning per share (EPS) are generally of interest to present or prospective stockholders and management. The Earning per share represent the number of dollars earned on behalf of each outstanding share of common stock. The earnings per share is calculated as follows Earning Per Share =Earnings available for common stock holder/No of shares of common stock outstanding
Earning Per Share Year
2007 36
2008 43 Table-13: Earning per Share Source: Annual Report of DBL
Graphical Presentation:
2009 45
Earning Per Share
50
36
40
43
45
30 20 10 0 2007
2008
2009
Figure-15: Earning Per Share Interpretation The bank’s earnings per share is increasing from 36 to 45. Therefore, earning per share of DBL should be increase to attract investors. In 2007 which was 36 and it decreased gradually in 2008 it stands 43 and in last in 2009 it stands 45. 13. Price Earnings RatioThe price or earning (P/E) ratio is commonly used to assess the owners’ appraisal of share value. The P/E represents the amount investors are willing to pay for each dollar of the firm’s earnings. The higher the P/E ratio, the greater the investor confidence in the firm’s future. The price Earning (P/E) ratio is calculated as follows: Price Earning Ratio=Market price per share of common stock/Earning per share
Price Earning Ratio Year
2007 15 times
2008 8 times Table-14: Price Earning Ratio Source: Annual Report of DBL
Graphical Presentation:
2009 10 times
Price Earning Ratio 20
15 8
10
10
0 2007
2008
2009
Figure-16: Price Earning Ratio Interpretation The firm’s price earning ratio fluctuates from 15 to 10 times in the preceding 3 years. In Bangladesh the average P/E ratio of Banking industry in 2009 is 16 times but DBL P/E ratio is below 16 times which convey good position of the bank. 4.2.2. Du Pont System of Analysis: In about 1919 the Du Pont Company began to use a particular approach to ratio analysis to evaluate the firm’s effectiveness. One variation of this Du Pont approach has special relevance to understanding a firm’s return on investment. Neither the net profit margin nor the total asset turnover ratio by itself provides an adequate measure of overall effectiveness. The net profit margin ignores profitability on interest income. Return on equity compares net profit after taxes with equity that shareholders have invested in the firm. When we multiply the net profit margin of the firm by the total asset turnover, we obtain the return on investment, or earning on total assets. To investigate the return more fully, we can utilize a Du Pont Approach ROE=Net Profit margin*Total Asset Turnover*Equity Multiplier
DuPont System Year
NPM
TAT
EM
ROE
2007
22
5.5
18.38
22.24
2008
21
5.4
17.78
20.16
2009
23
5.4
15.66
19.45
Table-15: DuPont Analysis Graphical Presentation:
25
22 21 23
DuPont System 18.38 17.78 15.66
20
22.24 20.16
15 10
19.45 2007 2008 2009
5.55.45.4
5 0 NPM
TAT
EM
ROE
Figure-17: Du Pont Analysis Interpretation We know that net profit margin is used to measure of performance and more the ratio is more the company’s profitability. From the Du Pont approach, we can see that net profit margin of DBL in 2007 to 2009 is increasing which is good for the bank. In 2007, DBL’s total asset turnover was 5.5 and this ratio is decreased to 5.4 in 2009. We know the greater the total asset turnover; it is more efficient and 4 to 6 times is slandered position. So the bank’s total asset turnover is good and the firm should remain this trend. Equity multiplier is presented by total asset divided by shareholders equity. If it decreases shareholder equity and total asset remain constraint. Then the equity multiplier will increase. On the other hand, if it increases shareholder’s equity then the EM is vise versa. Here equity multiplier of DBL fluctuates from 18.38 to 15.66 in the preceding 3 years. We can see that, between 2007 to 2009 DBL’s highest EM in year 2007, which is 18.38.That means, in year 2007 they were more highlights on debt capital than other two years. We know that the Return on Equity (ROE) measures the return earned on the owner’s (both preferred and common stockholders) investment. Generally higher this return, the better off the owner’s equity. ROE often the firm’s acceptance of strong investment opportunities and effective expense management. Here Return on Equity fluctuates from 22.24 to 19.45 in the preceding 3 years. In 2007 ROE provides a highest return than the year 2008 and 2009, because in year 2007, TAT and EM both are increase. But we know that increasing EM indicates that shareholder’s equity can be
decreases. Which results DBL can face financial risk. In 2009 and NPM was increased, in 2009 DBL’s TAT and EM were decreased. As a result the bank’s ROE also decreased. 5.0. Comparative Quantitative Analysis of DBL with PBL & EBL: 5.1. Liquidity Ratio: a. Current Ratio
Year 2007 2008 2009
Current Ratio DBL PBL EBL 1.38 0.97 0.88 1.28 0.88 1.10 2.10 0.96 1.45 Table-16: Current Ratio Source: Annual Report (2007-2009) of DBL, PBL & EBL
Graphical Presentation: 2.1
2.5 2 1.5
Current Ratio
1.28 1.38
1.1
0.97 0.88 0.960.88
1
1.45 2007 2008 2009
0.5 0 DBL
PBL
EBL
Figure-18: Current Ratio Interpretation We know that, the current ratio measures a firm’s liquidity by measuring the portion of its current asset relative to its current liabilities and the higher the ratio, the higher the liquidity of the firm where as normally banking industry maintains 1: 1 current ratio. So, after observing the graph, it can be said that PBL current ratio is better than DBL & EBL. So it can be said that both the bank is suffering from liquidity problem.
b. Operating Cost to Income Ratio:
Year 2007 2008
Operating Efficiency Ratio DBL PBL 36.56% 31.45% 34.82% 33.59%
EBL 33.15% 31.30%
2009
33.64% 35.51% 34.55% Table- 17: Operating Cost to Income Ratio
Source: Annual Report (2007-2009) of DBL, PBL & EBL Graphical Presentation:
36.56% 37.00% 36.00% 35.00% 34.00% 33.00% 32.00% 31.00% 30.00% 29.00% 28.00%
Operating Efficiency Ratio 33.64% 33.59%
34.55% 33.15%
31.45%
DBL
Interpretation
35.51%
34.82%
PBL
31.30%
2007 2008 2009
EBL
Figure-19: Operating Cost to Income Ratio
We know that this ratio measures the operating efficiency of a particular bank by measuring the portion of the total operating costs relative to the total operating income of that bank and the higher ratio, the lower the operating efficiency. So after observing the figure drawn above, DBL’s cost income ratio is satisfactory because of efficiency of the DBL has been able to minimize its operating cost during the time period whereas PBL and EBL’s operating efficiency is not satisfactory. 5.2. Analyzing Activity: a.
Total Asset Turnover Ratio:
Total Asset Turnover Year 2007 2008 2009
DBL PBL EBL .055 0.049 0.045 .054 0.053 0.051 .054 0.066 0.057 Table-18: Total Asset Turnover Source: Annual Report (2007-2009) of DBL, PBL & EBL Graphical Presentation:
Total Asset Turnover 0.066
0.08 0.06
0.057 0.054 0.053 0.054 0.051 0.055 0.049 0.045
0.04
2007 2008
2009 2008 2007
0.02 0 DBL
PBL
2009
EBL
Figure-20: Total Asset Turnover Ratio Interpretation We know the greater the total asset turn over; it is more efficient. After observing the graph, over the three years the total asset turnover ratio of PBL is more efficient in using their assets to generate income than the other two banks EBL & DBL. b.
Year 2007 2008 2009
Investment to Deposit Ratio: Investment To Deposit Ratio DBL PBL 0.120 0.196 0.127 0.222 0.141 0.186 Table-19: Investment to Deposit Ratio
EBL 0.141 0.145 0.153
Source: Annual Report (2007-2009) of DBL, PBL & EBL Graphical Presentation:
0.25 0.2 0.15 0.1 0.05 0
0.186 Investment to Deposit Ratio 0.141 0.153 0.222 0.127 0.145 0.196 0.12 0.141
2009 2008 2007 DBL
PBL
EBL
Figure-21: Investment to Deposit Ratio Interpretation:
2007 2008
Investment to deposit ratio shows that which amount of deposit is used to as investment. After observing the above graph Prime bank had the higher level of investment to the deposit than the Dhaka Bank & Eastern Bank Limited that means PBL depends on its deposits than the share investment. 5.3. Analyzing Debt. a.
Debt Ratio:
Debt Ratio Year 2007 2008 2009
DBL .94 .94 .94
PBL 0.86 0.94 0.98 Table-20: Debt ratio
EBL 0.78 0.88 0.95
Source: Annual Report (2007-2009) of DBL, PBL & EBL Graphical Presentation:
1 0.8
0.94
0.98 0.94 0.94 0.94 0.86
0.95 0.88
0.78
0.6
2007 2008 2009
0.4 0.2 0
Figure-22: Debt Ratio Interpretation Every organization should give more emphasize on equity capital than debt capital. Here, we can see that the Prime Bank & Eastern Bank’s debt ratio is increasing year by year whereas debt ratio of Dhaka bank is stable in preceding last 3 years, which is lower than other two banks. The deposit of the bank is considered as the debt to the bank. So debt ratio of PBL is satisfactory than DBL and EBL. 5.4. Analyzing Profitability a. Net Profit Margin:
Net Profit Margin
Year 2007 2008 2009
DBL .22 .21 .23
PBL EBL .29 0.23 .21 0.22 .18 0.23 Table-21: Net Profit Margin Source: Annual Report (2007-2009) of DBL, PBL & EBL Graphical Presentation:
Net Profit Margin 0.3
0.29
0.23 0.220.21
0.2
0.230.22 0.23 0.21 0.18 2007 2008
0.1
2009
0 DBL
PBL
EBL
Figure-23: Net Profit Margin Interpretation From the above graph, it can be said that the EBL profit margin is fluctuating year to year and PBL’s profit margin is high in 2007 but it becomes lower in 2009. DBL’s profit margin has generated maximum amount of net profit margin than EBL & PBL. b. Return on Asset:
Return On Asset Year 2007 2008 2009
DBL 1.22 1.18 1.23
PBL 1.54 1.95 1.50 Table- 22: Return on Asset
EBL 1.32 1.22 1.20
Source: Annual Report (2007-2009) of DBL, PBL & EBL Graphical Presentation:
1.95 2 1.5
1.22
1.23 1.181.54
ROA
1.5
1.32
1.22
1
1.2
2007 2008
2009 2008 2007
0.5 0 DBL
PBL
EBL
Figure-24: Return on Asset Interpretation: After having a careful view on the graph, over the three years PBL has maximum return on asset than DBL & EBL in 2008. But in 2009 it decreases but comparing with other two banks it remains more efficient to generate additional ROA than the DBL & EBL. c. Return on Equity (ROE):
Return on Equity Year 2007 2008 2009
DBL 22.53% 20.97% 19.32%
PBL EBL 15.75% 16.45% 18.62% 14.88% 23.93% 18.64% Table-23: Return on Equity Source: Annual Report (2007-2009) of DBL, PBL & EBL
Graphical Presentation: 23.93%
25.00%
20.97% 22.53%
ROE
19.32% 18.62% 15.75%
20.00%
18.64%
14.88% 16.45%
15.00% 10.00%
2009 2008 2007
5.00% 0.00% DBL
PBL
EBL
Figure-25: Return on Equity (ROE) Interpretation:
2007 2008 2009
We know that the ROE means return earned from the owner’s investments. DBL’s ROE is in decreasing trend from preceding 3 years. But PBL’s ROE is increasing in 2007 to 2009. From the graph we can say that the PBL has the better position to earn from the owners investment than DBL and EBL. So the management should work hard to increase the return associated with equity. d.
Earning Per Share:
Earnings Per Share Year 2007 2008 2009
DBL 36 43 45
PBL EBL 62 35 45 28 35 42 Table-24: Earning per Share Source: Annual Report (2007-2009) of DBL, PBL & EBL
Graphical Presentation:
45
80 60
43
EPS 62 45 35
42
35 28
36
40
2007
2009 2008 2007
20 0 DBL
PBL
2008
EBL
Figure-26: Earning Per Share (EPS) Interpretation: In this figure we have seen that, in 2009 DBL EPS higher in compare to 2007 and 2008.and among three banks DBL’s EPS is consistently increasing recent three years. From the graph we can say that the earning per share of DBL is better than PBL and EBL. e.
Price Earning Ratio-
Price Earnings Ratio (Times) Year 2007 2008
DBL 15 8
PBL 15 13
EBL 25 10
2009
10
14 Table- 25: Price Earnings Ratio
8
Source: Annual Report (2007-2009) of DBL, PBL & EBL Graphical Presentation:
Price Earning Ratio 25 25 20 15 10 5 0
15
10 8
15
13
14
10
8
2009 2008 2007 DBL
PBL
EBL
Figure-27: Price Earning Ratio Interpretation: In Bangladesh the average P/E ratio of banking industry. From the graph, we have seen that Dhaka Bank P/E ratio is gradually decreasing which is positive sign. And we have seen Eastern banks P/E ratio is better among the three banks. 5.5. Comparative Du Pont Analysis of DBL, PBL and EBL: ROE = Net Profit Margin × Total Asset Turnover × Equity Multiplier
DBL Year
PBL
EBL
NPM
TAT
EM
ROE
NPM
TAT
EM
ROE
NPM
TAT
EM
ROE
2007
22
5.5
18.38
22.24
29
4.9
15.09
21.44
23
4.5
12.45
12.89
2008
21
5.4
17.78
20.16
21
5.3
16.49
18.35
22
5.1
13.54
15.20
2009
23
5.4
15.66
19.45
18
6.6
17.75
21.09
23
5.7
15.75
20.32
Table-26: Du Pont Analysis Source: Annual Report (2007-2009) of DBL, PBL & EBL
Graphical Presentation:
Du Pont Analysis 2009
N M P TA EM E O R M P N TA EM E O R M P N TA EM E O R
70 60 50 40 30 20 10 0
DBL
PBL
2008
EBL
Figure-28: Du Pont Analysis
Interpretation From this figure we can say that over the three years DBL’s NPM is increasing year by year where as PBL’s NPM is decrasing & EBL’s NPM is flactuating that means DBL is more profitable than PBL & EBL. In case of TAT, the greater the total asset turnover, it is more efficient and 4 to 6 times are standard position. DBL’s total asset turnover is decreasing a little in 2008 and remains same in 2009 where EBL’s TAT is fluctuating & PBL has increase but after comparison PBL has better position than DBL & EBL. We know that, higher EM indicates that the bank has less shareholders equity. PBL’s dependency on debt capital is less than EBL & DBL dependency on debt capital over the three years. As a result, PBL’s ROE is more than DBL & EBL. On the other hand, ROE of DBL is decreasing year by year where PBL has higher position in 2009. So in case of comparison PBL has better position in all factors. This indicates more efficiency or earning power of PBL. 6.0.
SWOT Analysis of Dhaka Bank Limited
6.1.
Strength of Dhaka Bank Limited
1. Developed management system: The management system which is developed by the Board of Governance of Dhaka Bank is really efficient to manage all banking activities smoothly. 2. More funds for investment: For adequate financial ability the Dhaka Bank can extend their loan facility to the investment clients. 3. Adequate finance: The cash reserve or liquidity of Dhaka Bank is enough to operate the banking activities. That’s why they needn’t borrow money from Bangladesh Bank. 4. Honest and reliable employees
All of the employees of Dhaka Bank are reliable and honest also. They are always devoted themselves to the works for better customer service. Their corruption reports are satisfactory. 6.2.
Weakness of Dhaka Bank Limited
1.
Lack of adequate employees: The number of employees in DBL is not
sufficient to maintain the huge amount of work volume. 2.
Lack of up to date equipment’s: The world is becoming developed very
first. So according to this trend the DBL is not acquiring the up to date equipment which is needed in this competitive worlds. 3.
Lack of flexible online banking facility: DBL is providing the online
banking facilities for their customers. But some times the customer is not getting this facility for the technological problem. 6.3.
Opportunities of Dhaka Bank Limited
1. Credit banking: DBL offers the credit banking opportunity to the people. That’s why the people can take the facility from the bank. 2. Social development: The DBL has a lot of opportunity to develop the society. If the society becomes developed the customer of the bank will increase. 3. Evening banking: The Dhaka Bank has a lot of opportunity to introduce the evening banking. The customer who, service holder can’t go to the bank for transaction because of their busyness, if the evening banking introduce that time the customer will be facilitate. 4. Foreign Brunches: Dhaka Bank has a lot of opportunities to open the foreign brunches, because a lot of people in our country work different foreign countries. 6.4.
Threats of Dhaka Bank Limited
1. Competitors: There are a lot of competitors in the banking sectors in Bangladesh. Not only the home bank but also the foreign banks are becoming the threats in the way of Dhaka Bank Limited.
2. Rules and regulations: The rules and regulations of Bangladesh are not fully favorable in sound banking. The Bangladesh Bank changes their regulation without any reason. 7.1. Major Findings of Dhaka Bank Limited From the analysis we have seen Dhaka Bank Ltd Financial performance is much better than other two banks (Prime Bank & Eastern Bank) except in some cases. •
The higher the current ratio; the more liquid the firm is considered to be. But DBL, Current ratio is not good because it maintains 2.1tk current assets against 1tk current liabilities where as normally Banking industry maintains 1: 1 current ratio.
•
From the trend analysis we have seen that DBL’s Net profit margin is increasing year by year. It indicates positive operating result of DBL.
•
From the analysis we see that DBL’s Earning per Share is better than other two banks, which indicates better earnings for the bank.
•
The investment of the DBL is increasing year to year. This is very good sign for the bank. Because if the investment is increased in the bank which help to gain maximum profit.
•
Loan to deposit ratio shows that which amount of deposit is used to as loan. DBL’s loan to deposit ratio is increasing from years 2007 to 2009. It conveys the positive sign because it indicates DBL’s using its deposit properly.
•
From the comparative analysis we have seen three banks (Such as Dhaka Bank Ltd ,Prime Bank & Eastern bank) P/E ratio is below 20 times which indicates very good sign.The investor who wants to buy shares of these banks they enjoy the loan margin facilituies of capitalk market.
•
The Total Assets Turnover of DBL is higher than both of Prime Bank & Eastern bank.that means DBL efficienly used their total assets incompare to Prime Bank & Eatern bank.
•
DBL’s Time interest ratio is not satisfactory because, they have only 1.37 tk. earning against 1 taka interest obligation, which is not good.
•
The bank’s ROA is fluctuating but PBL is more efficient to generate additional ROA than the DBL & EBL.
•
ROE are decreasing in preceding year 2007 to 2009 but on an average DBL has better position from other two banks.
•
There is a very little practice for increasing Motivation in the Employees by the Management of Dhaka Bank Limited (DBL), which discourages them to provide the best Service to the Customers.
•
One of the greatest problems for Dhaka Bank Limited (DBL) is the Shortage of Manpower in every Division than PBL & EBL. During the Working Hours of the Bank, the Employees have to be fatigued and cannot provide proper attention that type of Services, which create dissatisfaction of the Customers.
Du Pont Analysis •
From Du Pont Analysis, we can say that, DBL is more depending on debt capital than equity capital in 2007. In year 2009, ROE provides a lowest return than year 2008 and 2007, because in year 2009, TAT is fluctuating and NPM is increasing. EM has no effect on the ROE. DBL’s ROE decreased in year by year.
8.1. Conclusion: Dhaka Bank Limited (DBL) setting new standards in the banking arena in the time of turbulent economic conditions. As part of the long-term financial reform and modernization plan of the government, the bank had been converted into a public limited company. DBL helps to mobilize the resources to stay strong in the key areas of operation. In the areas of treasury operation, DBL remains the key player in the country’s foreign exchange and money market enhancing profitability through careful pricing and assessment of risk and return on investment, the treasury dealing is being strengthened to facilitate transactions requiring more sophisticated products and services for larger institutional and corporate clients. Though it has a wide range of network and confidence from the customers but it has some problems those problems reduce it income .It is PLC but the authority is not that flexible and it takes time to take decision. From the researching and analyzing point of view I can declare boldly that I really have enjoyed my project working at about the Dhaka bank. Moreover, this project working that is mandatory for my B.B.A program, although short-date, obviously has helped my farther thinking about my career. I have tired my soul to incorporate the research report with necessary relevant information in my report.
In the view of applying ratio analysis and du Pont analysis theory on an organizations financial activities, I have worked on Dhaka Bank Ltd., analysis the data of 2007 to 2009 financial activities to find out the performance over three years and also the weakness. Although excellence in Banking is the Moto of Dhaka Bank Limited meeting the demand of the discerning customer is not the sole objective of the Bank. Customer relation should be increased to give appropriate service to them. And treat them as an asset of the company. Despite of these problems Dhaka Bank Limited trying to improve this condition and take some necessary measure to improve its condition. 8.2. Some Recommendation for Dhaka Bank Limited It is not unexpected to have problems in any organization. There must be problems to operate an organization. But there must be remedies to follow. The following commendations can be suggested to solve the above-mentioned problems: •
• • •
•
• •
•
As we have seen that Current Ratio of DBL is satisfactory range so first it is recommended that, DBL should maintain this ratio for smoothly operates their business. Although DBL net profit margin is increasing trend they try to more for increasing their operating efficiency. From the trend analysis we have seen ROA of DBL is fluctuating. So they should try improving this and should take necessary steps to increase ROA. As, Total Asset Turnover shows the efficiency of the bank, DBL should also try to improve their Total asset turnover although their total assets turnover is higher than that of Prime Bank & Eastern bank. DBL’s investment to deposit and Loan to Deposit ratio both are increasing trend that is the positive sign towards the profitability of the bank. So the bank should work hard for maintaining this trend. As, DBL’s Time interest ratio is not satisfactory they should increase their EBIT or reduces the debt capital in order to smoothly satisfy the interest obligations. In our country the average P/E ratio of banking industry is 16 times but DBL P/E ratio is 10 times which indicates very good sign. They should try to maintain this ratio. From the trend analysis we have seen operating cost of DBL is increasing year by year, it may adversely affect the profitability of the bank. So, they should give more concentration to reduce operating cost.