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Capital structure and profitability analysis

Dhaka Bank:HistoryThe Bank 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 million and paid up capital of Tk. 100 million.

Strategic Objectives Their objectives are to conduct transparent and high quality business operation based on market mechanism within the legal and social framework spelt in our mission and reflected in our vision.

Their greatest concerns are their customers to provide them continually efficient, innovative and high quality products with excellent delivery system.

Company Overview

Products and Services of Dhaka Bank Ltd.

Capital structure

The capital structure of Dhaka Bank

Ltd. is quite strong. Its authorized

capital is Tk 6,000 million and paid up

capital is Tk 2,128 million. Market

price per share is tk 780.

Products/Services

Products

Services: Internet Banking SMS Banking Locker ATM Card VISA Credit Card Utility Bill BBbILLBill/TuitioFeeCollection

Liability Products:• Savings Bundled Product• Deposit Pension Scheme• Special Deposit Scheme• Deposit Double Scheme• Gift Cheque

Asset Products:• Home loan• Personal loan• Vacation loan• Car loan• Any Purpose loan

Company overview of Beximco Textile.

IFIC Bank 2.9 History

IFIC Bank operates as a scheduled Bank under banking license issued by Bangladesh Bank, the central bank of Bangladesh. This Bank is having an authorized capital of Tk. 500 million and Paid up Capital Tk. 406.44 million sponsored by 14 members of board of directors.

Capital Structure Analysis

Product and ServicesBesides traditional Banking services, IFIC Bank Limited has added a wide range of products/services in its service portfolio. Various products & services offered by IFIC Bank Ltd. include:

Deposit Schemes Loan Schemes

Current Account Deposits General Loan Scheme;

Savings Bank Deposit Lease Finance

Fixed Deposit Consumer Credit Scheme

Short Term Deposit Car Loan

Monthly Benefit Deposit Scheme Loan Against Salary

Special Deposit Scheme Doctors loan

Pension Savings Scheme House Building Loan/Apartment Loan Scheme

Double Benefit Scheme SME Loan

Credit Card

Educational Loan

DepositThe deposit base of the Bank continued to register a steady growth and stood at Tk.60, 918 million excluding call as of 31 December 2009 compared to Tk. 56,986 million of the previous year registered a 7% growth.

DepositThe deposit base of the Bank continued to register a steady growth and stood at Tk.60, 918 million excluding call as of 31 December 2009 compared to Tk. 56,986 million of the previous year registered a 7% growth.

Deposit

28439

4155448731

5698660918

0

10000

20000

30000

40000

50000

60000

70000

2005 2006 2007 2008 2009

Year

Tak

a in

Mil

lio

n

Deposit

Deposit MixDeposit Mix of the Bank as of 31 December 2009 was as follows:

Deposit MixDeposit Mix of the Bank as of 31 December 2009 was as follows:

Deposit Mix

9% 10%

5%

69%

4% 4% Current & Other

Savings

STD

Fixed Term

DPS/MDS

Bills Payable

Sources and Uses of Fund

Sources of fund and uses of fund of the Bank as of 31 December 2009 was as follows:Sources of fund and uses of fund of the Bank as of 31 December 2009 was as follows:

Sources of Fund

3% 4%

78%

4%11% Paid up Capital

Reserve and Surplus

Deposits

Borrowing from Banks

Other Liabilities

Uses of Fund

68%

11%

0%3%1%

17%

Loan & Advance

Investment

Money at Call

Other Assets

Premises & FixedAssets

Cash & Balance withBank

Geographical location wise loans and advances

36,419.76

8,974.34

620.293,371.40

0.00

5,000.00

10,000.0015,000.00

20,000.0025,000.00

30,000.0035,000.00

40,000.00

Dhaka Chittagong Sylhet Other

Region

Geographical location wise loans and advances

2009

2008

From the graph it is seen that Dhaka bank provides most of the portion of loan and advances in urban area, whereas they provide a little portion in rural area. As we seen before that this bank provide more loan and advances in other industries than agricultural industries. Because of this their contribution to urban area is more than rural area.

Credit/ deposit Ration

Credit to deposit ratio measures what portion of deposit collected from surplus unit lend to deficit unit. Greater this ratio shows greater ability to utilize its liability to revenue sector.

Credit to deposit ratio has increased from 82.03% to 87.21% in 2007 to 2008. Where as it has decrease from 87.21% to 86.85% in 2008 to 2009. This ratio is increasing but not a steady rate.

Credit/Deposit Ratio

82.03%

87.21%

86.85%

78.00% 80.00% 82.00% 84.00% 86.00% 88.00%

2007

2008

2009

Credit/Deposit Ratio

Non Performing Loan

As of 31 December 2009, 94.43% of the total Bank's loan portfolio was regular while only 5.57% of the total portfolio was non-performing as compared to 3.84% of 2008. Bank made required provision as of 31 December against performing and non -performing loans as per rate and classification norm provided by Bangladesh Bank. The volume of non-performing loans stood at Tk.2, 946 million in 2009 from Tk. 1,908 million in 2008. Of the total loan provision of Tk.2, 113 million, Tk.625 million was general provision, which was 30% of the total provision. The rest Tk.1, 488 million was against the classified accounts.

Non Performing Loan

As of 31 December 2009, 94.43% of the total Bank's loan portfolio was regular while only 5.57% of the total portfolio was non-performing as compared to 3.84% of 2008. Bank made required provision as of 31 December against performing and non -performing loans as per rate and classification norm provided by Bangladesh Bank. The volume of non-performing loans stood at Tk.2, 946 million in 2009 from Tk. 1,908 million in 2008. Of the total loan provision of Tk.2, 113 million, Tk.625 million was general provision, which was 30% of the total provision. The rest Tk.1, 488 million was against the classified accounts.

Non performing Loan

94.43%

5.57%

Regular Loan

Non Performing Loan

InvestmentThe Bank's Investment during the year 2009 were mostly in long term Government Securities which stood at Tk.8,660 million as against Tk, 7,239 million making a growth of 20% over the last year.

InvestmentThe Bank's Investment during the year 2009 were mostly in long term Government Securities which stood at Tk.8,660 million as against Tk, 7,239 million making a growth of 20% over the last year.

3926

53785972

7239

8660

0

10002000

3000

40005000

6000

70008000

9000

2005 2006 2007 2008 2009

Year

Investment

Investment

Income from InvestmentIncome from Investment

Return on investment

10.63%

9.18%

8.00%

8.50%

9.00%

9.50%

10.00%

10.50%

11.00%

2009 2008

YearR

OI Return on

investment

From the graph we can see that return on investment in 2008 is 9.18% and 10.63% in 2009. so the firm gradually improving their income from investment.

From the graph we can see that return on investment in 2008 is 9.18% and 10.63% in 2009. so the firm gradually improving their income from investment.

IFIC BankIFIC Bank

Deposit MixDeposit Mix

From the Graph it can be said that the maximum portion of deposit comes from fixed deposit 44% of total deposit, 23% of that comes from current deposit. Where saving deposit and other deposit provides 18% and 15% respectively.

From the Graph it can be said that the maximum portion of deposit comes from fixed deposit 44% of total deposit, 23% of that comes from current deposit. Where saving deposit and other deposit provides 18% and 15% respectively.

Performance of Different Types of

Loans

Performance of Different Types of

Loans

Type of Loan2009 2008 2007

Amount ( In Lac) % Amount( In Lac) % Amount( In Lac) %

Loan General 7191 29.35 6155 23.69 3833 20.03

House building 1902 7.76 2240 8.62 2159 11.28

Lease finance 2864 11.69 2917 11.23 2978 15.56

Hire Purchase 5632 22.99 5922 22.79 5918 30.92

Cash Credit 4198 17.14 3554 13.68 2155 11.26

SOD (Work order) 321 1.31 261 1 423 2.21

SOD General 2387 9.75 4933 18.99 1671 8.73

Total 24496 100 25982 100 19137 100

Loans in Different Economic Sectors

Sector2009 2008 2007

Amount ( In Lac) % Amount ( In Lac)  % Amount ( In Lac) %

Garments 7342 29.97 7131 27.45 7103 37.12

Manufacturing 8875 36.23 6954 26.76 3358 17.55

Service 352 1.44 553 2.13 948 4.95

Trade 1362 5.56 15 0.06 16 0.08

Transportation 2713 11.08 417 1.60 473 2.47

House building 1669 6.81 329 1.26 331 1.73

Investment 405 1.65 1377 5.30 594 3.10

IT service 9 0.04 2997 11.54 2961 15.48

Importer 521 2.13 1713 6.59 1984 10.37

Exporter 316 1.29 347 1.34 483 2.52

Personal 933 3.81 4149 15.97 885 4.63

Total 24496 100 25982 100 19137 100

Investment

Investments

9,082,951,144

3,515,483,197

01,000,000,0002,000,000,0003,000,000,0004,000,000,0005,000,000,0006,000,000,0007,000,000,0008,000,000,0009,000,000,000

10,000,000,000

2009 2008

Year

Am

ount

Investments

Major portion of the investment of IFIC Bank was in the Government sector. The investment of the IFIC Bank is increasing. In the year of 2008 it was Tk 3515.48 million and in 2009 it increase to Tk 9002.95 million.

Income from investment

Return on investment

11.68%

13.22%

10.50%

11.00%

11.50%

12.00%

12.50%

13.00%

13.50%

2009 2008

Year

Am

ount

Return oninvestment

Income from investment of IFIC Bank is decreasing that we can see in the graph. The return on investment was 13.22% in 2008 and it is decreased to 11.68% in 2009.

Findings

Both Dhaka Bank and IFIC Bank collected maximum deposit from fixed deposit, 69% and 44% respectively. Dhaka Bank provides loan to the textile and garments industry (18%) and IFIC Bank provides loan maximum in manufacturing sector 36% Dhaka Bank provide maximum amount of loan to Dhaka region.Credit to loan ratio is increasing for both company, it is higher in 2009 for IFIC Bank 91% than Dhaka Bank 86.85%. Interest income from Loan and advance is higher for Dhaka Bank 6907.66 million than IFIC Bank 3872.14 million.

Findings

Non performing loan is for Dhaka Bank is 5.57% which is less than IFIC Bank 8.68%. The income from investment of Dhaka Bank is increased to 10.63% from 9018%. But reverse situation for IFIC bank their income from investment is decreased to 11.68% from 13.22%. But in compare to this two Banks the IFIC Bank is in good position in 2009. Both the company invests major portion of investment money in government sector.

Recommendation

Non performing loan is higher more or less for both the bank. They should give more emphasize on better monitoring after paying loan to the borrower.

The income from investment is decreasing for Dhaka Bank they should invest in more profitable sector, and they should do proper analysis before investment.

In government sector, such as T-bill, the return is so low so they should reduce the amount from government sector and invest in profitable portfolio so that their profit from investment is increased.

Dhaka bank is less capable to provide loan in compare to deposit, so they should seek potential eligible borrower in which they can earn extra profit.

Non performing loan is higher more or less for both the bank. They should give more emphasize on better monitoring after paying loan to the borrower.

The income from investment is decreasing for Dhaka Bank they should invest in more profitable sector, and they should do proper analysis before investment.

In government sector, such as T-bill, the return is so low so they should reduce the amount from government sector and invest in profitable portfolio so that their profit from investment is increased.

Dhaka bank is less capable to provide loan in compare to deposit, so they should seek potential eligible borrower in which they can earn extra profit.

Thank You All