2. 2
A Report On
Financial performance and analysis of Brace Bank
Submitted To:
Ms. Reshma Nowreen
Lecturer in Finance
Submitted By:
SL
NO.
Name ID
1. Farzana Zerin 141
2. Rebeka Sultana 148
3. Md.Sakib Ahmed 154
4. Mahfuza Akter 155
5. Mohammad Shibly Rahman 163
Bangladesh University of Business & Technology (BUBT)
Date of submission-
3. 3
Letter of Transmittal
Date
To
Ms. Reshma Nowreen
Lecturer in Finance
Subject: Approval of Report
Dear Sir,
With due respect we would like to inform you that it’s a great pleasure for us to
submit our report “Financial performance and analysis of BRAC Bank” as integral
requirement of our BBA program. Throughout the completion of this report we
have earned in depth, knowledge about the bank. We feel this report writing
experience will help us to prepare more quality one in future.
Therefore, I firmly believe that our report will meet your approval. I would
genuinely aspire any corrections and guideline as you feel necessary. Your kind
advice will lead me further to the best.
Sincerely yours,
On behalf of
All group members of
Group Orions
4. 4
Acknowledgement
At the very beginning we are very pleased to successfully complete our Report
writing “Financial performance and analysis of BRAC Bank”. We would like to
express our gratitude to our honorable Ms. Reshma Nowreen, Lecturer in Finance
Studies without whose proper supervision the report would have remain
incomplete.
5. 5
Table of Contents
Contents Page
Executive summary 6
Introduction 7
Background 7-8
Objectives 8
Methodology 8-9
Limitation 9
Overview of BRAC Bank 10-12
Theoretical Aspect 13-17
Trend Analysis
Status of loan classification
Ratio analysis
18-20
21-22
22-26
Finding analysis 27
Conclusion 27
6. 6
Executive summary
The information received from the secondary data. We visit the Branch of the
BRAC Bank. Then we find out the services availability to the customer. Then we
find out the financial performance and analysis of that bank. At the same time we
are faced some problem such as there are some information lacking. Some web-
pages of that bank are not displayed etc. BRAC Bank Limited is a scheduled
commercial bank in Bangladesh. BRAC Bank is providing various services to its
customers and trying to improve every time. The service providers of BRAC bank
are the people who are related to the development of bank and customer.
.
7. 7
Chapter: 1
1.1 Introduction
BBL is a full service scheduled commercial bank. It has both local and
international institutional shareholder. The bank is primarily driven with a
view of creating opportunities and pursuing. Market niches not traditionally
meet by conventional banks. BRAC Bank has been motivated to provide “best-in-
the-class” services to its diverse assortment of customers spread across the
country under an on-line banking dais. Today, BRAC Bank is one of the fastest
growing banks in the country. In order to support the planned growth of its
distribution, network and its various business segments. The bank wants to
build a profitable and socially responsible financial institution. The bank
maintains a high level of standards in everything for our customers, our
shareholders, our Acquaintances and our communities upon, which the future
affluence of our company rests.
1.2 Background
BBL is a scheduled commercial bank in Bangladesh. It established in Bangladesh
under the Banking companies Act, 1991 and incorporated as private limited
company on 20 May 1999 under the companies Act, 1994. The primary objective
of the bank is to provide all kinds of banking business. BRAC Bank Limited is a
fully operational commercial bank that was founded in July 2001 by BRAC
NGO, one of the largest development finance institutions in the world. The
bank’s objectives include providing comprehensive commercial banking
services, building a profitable and modern, full-service financial institution, and
8. 8
pursuing profitable market niches in the Small and Medium Enterprise (SME)
business sector not traditionally met by conventional banks.
1.3 Objectives
The main purpose for making is to known the financial performance of BRAC
Bank Ltd. The specifics objective maybe show as under-
To know the historical background of BBL
To know the trend analysis of BBL
To know the loan classification of BBL
To know the ratio analysis of BBL
To acquire knowledge about the overall banking system
1.4 Methodology
In order to meet the needs of fulfilling the objectives of the report secondary data
are required. The information for the organization part of the report was collected
from secondary sources.
There are two types of sources
Primary Data Sources.
Secondary Data Sources.
In this report we don’t used any kind of primary data source.
9. 9
Secondary data are collected through
Manuals & Annual Report of BRAC Bank Limited.
Official web site.
Banking Journals.
Research Paper.
1.5 Limitation
There might be some information that might be inaccurate, since the time invested
in the work is not sufficient enough to completely know about the company.
Another limitation was getting the information and interpreting it, on the basis of
our understanding and then implementing it. The main constraint of the study was
insufficiency of information that was highly required for the study.
10. 10
Chapter: 2
2.1 Overview of BRAC Bank
BRAC Bank Limited (BBL) is a fully operational commercial bank that
was founded in July 2001 by BRAC NGO, one of the largest development
finance institutions in the world. The bank’s objectives include providing
comprehensive commercial banking services, building a profitable and modern,
full-service financial institution, and pursuing profitable market niches in the
Small and Medium Enterprise (SME) business sector not traditionally met by
conventional banks. The bank’s main portfolio products include loans for
small and medium sized entrepreneurs; personal loans, credit cards and multiple
deposit accounts for retail customers; and specialized retail products tailored to
religious restrictions. The bank also provides corporate deposit and loan products
as well as non-resident Bangladeshi remittance services. BRAC’s distribution
network of 151 branches including 81 branches, 48 SME Krishi Branches,
22 SME service center, 429 SME unit offices and 280 ATMs across
Bangladesh and now reach more than 10,00,000 retail customers. The Bank is
constantly coming up with new products. Recently BBL has introduced Visa Silver
and Visa Gold both Local and International credit cards; and further more the Bank
is in the process of introducing VISA Debit card. In the years ahead BRAC Bank
expects to introduce many more services and products as well as add a wider
network of SME unit offices, Retail Branches and ATMs across the country. The
Banks operate under a “Double Bottom Line” agenda where profit and social
responsibility to hand in hand as it strives towards a poverty free, enlightened
Bangladesh
11. 11
Vision for the Future
Building profitable and socially responsible financial institution focused on market
and business with growth potential thereby assisting BRAC and stakeholders to
build a just enlightened healthy democratic and poverty free Bangladesh.
Corporate Mission
Sustained growth in Small & Medium Enterprise sector
Continuous low-cost deposit Growth with controlled growth in retail assets.
Corporate Assets to be funded through self-liability mobilization. Growth in
Assets through syndications and investment in faster growing sectors.
Continuous endeavor to increase non-funded income
Keep our debt charges at 2% to maintain a steady profitable growth
Achieve efficient synergies between the bank’s branches, SME unit offices
and BRAC
field offices for delivery of remittance and Bank’s other products and
services
Manage various lines of business in a full controlled environment with no
compromise on service quality
Keep a divers, far flung team fully controlled environment with no
compromise on service quality
Keep a diverse, far flung team fully motivated and driven towards
materializing the bank’s vision into reality.
12. 12
Organ gram
The Board of Directors is the top management and policy-making body of BRAC
Bank Limited. Presently the Boars consist of a chairman and four directors. It is to
be noted that the managing Director, is also a member of the Board. Directors are
appointed from amongst those who have had experience and shown capacity in
the field of finance and banking, trade, commerce, industry agriculture. The Chief
Operations officer executes all the activities under the direction of the board. The
officers and the other line and staff personnel are appointed by Bank’s own
Recruitment Committee.
Managing Director
Deputy Managing
EVP & Chief
operation
VP& Head of SME
A VP & Head of
credit
13. 13
Chapter: 3
Theoretical Aspect
Trend analysis
Deposit:
In deposit terminology, the terms Bank Deposit refers to an amount of money in
cash or check form or sent via a wire transfer that is placed into a bank account.
The target bank account for the Bank Deposit can be any kind of account that
accepts deposits.
Bank Deposit Example:
For example, a Bank Deposit is generally made when opening an account or in the
course of routine business or personal transactions that involve placing funds with
the bank for future use.
Growth rate of deposit:
Growth rate of deposit is calculated by=
(Current year-previous year)/previous year *100
Loans & Advances:
Loan- The act of giving money, property or other material goods to another party
in exchange for future repayment of the principal amount along with interest or
other finance charges. A loan may be for a specific, one-time amount or can be
available as open-ended credit up to a specified ceiling amount.
14. 14
Advance- Sums paid or received before the fulfillment of an obligation, such as
supply of goods or provision of services.
Growth rate of loan:
Growth rate of loan is calculated by =
(Current year-previous year)/previous year
Investment trends:
An asset or item that is purchased with the hope that it will generate income or
appreciate in the future. In an economic sense, an investment is the purchase of
goods that are not consumed today but are used in the future to create wealth. In
finance, an investment is a monetary asset purchased with the idea that the asset
will provide income in the future or appreciate and be sold at a higher price.
Growth rate of investment:
Growth rate of investment is calculated by=
(Current year-previous year)/previous year
15. 15
Status of loan classification
Classified loan:
Any bank loan that is in danger of default. Classified loans have unpaid interest
and principal outstanding, and it is unclear whether the bank will be able to recoup
the loan proceeds from the borrower. Banks usually categorize such loans as
adversely classified assets on their books.
Substandard loan:
Bank loan or other interest-earning asset that is protected inadequately by current
net worth and paying capacity of the borrower, or the collateral pledged. Loans
classified as substandard are characterized by the distinct possibility that the lender
will sustain some loss if the deficiencies are not corrected. Some loss of interest is
anticipated, or may have already occurred, but loss of principal is considered
unlikely.
Doubtful Loan:
Loan in which full repayment is considered uncertain. Some losses are expected. A
loan classified as doubtful has all the characteristics of a substandard loan well-
defined credit weaknesses, with the added characteristic that credit weaknesses
make full collection or liquidation in full highly questionable and improbable. Fifty
percent of loans classified as doubtful are deducted from adjusted bank capital in
computing regulatory capital adequacy.
16. 16
Bad/Loss:
A classified loan which period is 1 year and seems no chance to recover the money
from borrower can be traced as Bad/Loss loan.
Ratio Analysis
Current Ratio:
A liquidity ratio that measures a company's ability to pay short-term obligations.
The Current Ratio formula is:
Debt ratio:
A ratio that indicates what proportion of debt a company has relative to its assets.
The measure gives an idea to the leverage of the company along with the potential
risks the company faces in terms of its debt-load.
17. 17
Credit to Deposit Ratio:
The amount of a bank's loans divided by the amount of its deposits at any given
time. The higher the ratio, the more the bank is relying on borrowed funds, which
are generally more costly than most types of deposits. Forming part of the
Liquidity ratios of a bank, this ratio is often used by policy makers to determine the
lending practices of financial institutions. The higher the Loan-to-deposit ratio, the
more the bank is relying on borrowed funds.
Formula = Net Loans / Total Deposits
Cost Income Ratio:
The cost-to-income ratio is a key financial measure, particularly important in
valuing banks. It shows a company’s costs in relation to its income. To get the
ratio, divide the operating costs (administrative and fixed costs, such as salaries
and property expenses, but not bad debts that have been written off) by operating
income. The ratio gives investors a clear view of how efficiently the firm is being
run – the lower it is, the more profitable the bank will be. Changes in the ratio can
also highlight potential problems: if the ratio rises from one period to the next, it
means that costs are rising at a higher rate than income, which could suggest that
the company has taken its eye off the ball in the drive to attract more business.
Cost Income ratio = Operating Cost/Operating Income
18. 18
Chapter: 4
4.1 Trend Analysis
Year 2008 2009 2010 2011 2012
Deposit 58007 75220 88158 103726 134646
Growth rate of
deposit
30% 17% 18% 30%
Interpretation:
Here the analysis of data five years shows that the total amount of deposit are
increasing yearly which is a good for the bank and the growth rate of deposit are
fluctuating yearly. In recent year 2012s this rate is 30%.As the higher growth rate is
better for the bank for more investment, so the bank should try to maintain high
growth rate for deposit.
2008 2009 2010 2011 2012
58007
75220
88158
103726
134646
Deposit
Year Deposit
Year
2009, 30
%
Year
2010, 17
%
Year
2011, 18
%
Year
2012, 30
%
Growth rate
Growth rate of deposit
19. 19
Loans and Advances
Year 2008 2009 2010 2011 2012
Loans & Advances 52677 64151 82461 90882 103624
Growth rate of Loans &
Advances
22% 29% 10% 14%
Interpretation:
Here the analysis of data five years shows that the total amount of loans and advances
are increasing yearly which is a good for the bank but on the other hand growth rate of
loans and advances fluctuating yearly. So the bank should try to increase the growth
rate for profitability.
2008 2009 2010 2011 2012
52677
64151
82461
90882
103624
Loan and Advances
Loans & Advances Year
Year
2009, 22%
Year
2010, 29%
Year
2011, 10%
Year
2012, 14%
Growth rate of loan & advances
Growth rate of Loans & Advances
20. 20
Investment
Year 2008 2009 2010 2011 2012
Investment 8245 10375 12856 1419 25373
Growth rate of
Investment
26% 24% -89% 105%
Interpretation:
The analysis shows that investment of bank increase yearly from 2008 to 2010 and
decreases in 2011but in 2012 the amount of investment goes up which is better for
bank to earn more profit but the growth rate is fluctuating so the bank should try to
invest more in safe sector after maintaining the required liquidity for earnings.
2008 2009 2010 2011 2012
8245 10375 12856 1419
25373
Investment
Investment Year
Year
2009, 26
%
Year
2010, 24
%
Year
2011, -
89%
Year201
2, 105%
Growth rate Investment
21. 21
4.2 Status of loan classification
Classified Loan
Year 2009 2010 2011
Substandard Loan 1504126278 1142795194 1584001808
% 39% 29% 41%
Doubtful 990855828 1430876989 1288798013
% 26% 37% 33%
Bad/Loss 1382674637 2355885993 2366742729
% 36% 61% 61%
Total Classified Loan 3877656743 4929558176 5239542550
Graph:
29%
37%
61%
2010
Substandard loan Doubtful Bad & loss
41%
33%
61%
2011
Substandard loan Doubtful Bad and loss
22. 22
Interpretation:
Here the analysis of loan classification of 2010and 2011 show that, the percentage
of bad/loss loan on total classified loans is higher than the substandard and
doubtful loan, which is not good for the bank. So the bank should try to reduce the
amount of bad/loss loan and also the amount of total classified loans.
Chapter: 5
Ratio Analysis
Current Ratio:
Year 2008 2009 2010 2011 2012
Current
assets
21076570130 56253999506 59190423909 43441909590 64713854091
Current
liabilities
32038481403 48134555867 40886797840 56533704881 71235869906
Current
Ratio
0.657851721 1.168682218 1.447665922 0.768424954 0.908444779
23. 23
Graph:
Interpretation:
In this analysis we can show that the current ratios of the bank are fluctuating
yearly and the past two years this ratio shows that the bank has less current asset to
meet up its liabilities which is not a good sign for the bank.
Debt Ratio:
Year 2008 2009 2010 2011 2012
Total
Liabilities
72441893391 95127222246 119150087964 133201048438 173676792029
Total
Assets
67004367741 86976267833 109738202407 123598443600 163522243477
Debt
Ratio
108% 109% 109% 108% 106%
Year
2008, 0.65785
1721
Year
2009, 1.16868
2218
Year
2010, 1.44766
5922
Year
2011, 0.76842
4954
Year
2012, 0.90844
4779
Current Ratio
24. 24
Graph:
Interpretation:
In this problem analysis we see that the percentage of ratio has increased from 2008
to 2009 and 2010 but decreased from 2010 to 2011 and 2012 in the bank because
their asset was increased at a higher rate than from the last year. Here the bank
maintains approximately same level of debt ratio from past five years. This is a good
sign for the bank.
Cost income ratio:
Year 2008 2009 2010 2011 2012
Operating
expense
2862277587 3546573197 4571309242 574960576 5164822269
Operating
income
6036183837 7264162137 9539934262 1089480177 1013473342
Cost
income
ratio
47% 49% 48% 53% 51%
Year
2008, 108%
Year
2009, 109%
Year
2010, 109%
Year
2011, 108%
Year
2012, 106%
Debt Ratio
Debt Ratio
25. 25
Graph:
Interpretation:
The analysis shows that the cost of ratio fluctuating yearly. It is one of the main key
performance indicators of a bank's efficiency: the lower the ratio the more efficient the
bank. Here the ratio is higher in recent year, so it is not a good sign for bank business.
Credit Deposit Ratio:
Year 2008 2009 2010 2011 2012
Loans 52676716740 64150835159 84302789317 103624438 9082217467
Deposits 58006887010 75219615155 88157908331 1346464485 1037255292
Credit
Deposit
Ratio
91% 85% 96% 77% 88%
Year
2008, 47%
Year
2009, 49%
Year
2010, 48%
Year
2011, 53%
Year
2012, 51%
Cost income ratio
Cost income ratio
26. 26
Graph:
Interpretation:
The credit deposit ratio state that the higher the ratio the better but too much higher
is not good because it can create liquidity risk. Here the ratio is fluctuating yearly
but the bank should maintain moderate cost to deposit ratio.
Year
2008, 91%
Year
2009, 85%
Year
2010, 96%
Year
2011, 77%
Year
2012, 88%
Credit Deposit Ratio
Series4
27. 27
Chapter 6
6.1 Finding and analysis:
We find the deposit growth of 2009-12. The rate of deposit was decreasing
in 2010-11 but increasing in 2012.
The loan rate was decreasing in the year of 2010 to 2012.
Investment growth was decreasing over 2010-2011 but highly increased in
2012.
Classified loan situation or percentage is increasing year to year.
We found the Current ratio, Debt ratio, Cost income ratio and Credit to
deposit ratio.
Found the financial position of BRAC Bank at a glance over 2009-2012.
6.2 Conclusion:
Overall the financial position of BRAC Bank is quite well over the previous year.
But somehow in some specific area it’s doing not so good. It’s may be either the
operational or technical fault of bank management and finance department of the
bank. The BRAC Bank can overcome these situations quickly because as we all
know it’s one of the leading banks of our country.
