Chapter-1

Orientation of the Report

Introduction of the report
Background
Significance
Scope
Objectives
Methodology
Limitations

Financial Performance Analysis of Agrani Bank Ltd.

Page 1 of 51

1.1 Introduction of the Report:

Banking industry is one of the most promising industries of our country. The importance of the sector
revealed through its contribution in the economic growth of the country. This sector accelerates
economic growth through mobilizing funds from surplus unit to the deficit unit. Banking industry is
moving towards rapid changes due to technological innovation and diversicified needs of its
customers.As a student of Bachelor of Business Administration (BBA) in every student has to
conduct a practical orientation in any organization for fulfilling the requirements of the 12 weeks
Internship Program. The main purpose of the program is to expose the students to the real world
situation .I was assigned to do my internship in Agrani Bank Ltd, Shewrapara branch, Begum Rokeya
Sarani. My report is on the Financial Performance &evaluation of Agrani Bank Limited.

1.2Background of the Report:

It is an opportunity for the students to acquire an in-depth knowledge about the practical orientation
and experiences of dynamic business world through the internship program. It is obligatory to
undertake an extensive study to prepare a report for the students of Business Administration, BUBT,
who are desirous to the successfully completion of their BBA program. As part of the program, I am
highly proud to join with Agrani Bank Ltd as internee and selecting topic Financial Performance
evaluation of Agrani Bank Ltd. I had work there in several departments, but I had to select an area of
study in which I can make detail research and present my understanding in the report. This report,
Financial Performance evaluation of Agrani Bank Limited, has been prepared to fulfill the partial
requirement of BBA program as a mean of Internship Program. While preparing this report, I had a
great opportunity to have an in depth knowledge of all the banking activities of Agrani Bank Ltd.

1.3Significance of the Report:

Education will be the most effective when theory and practice blends. Theoretical knowledge gets its
perfection with practical application. And the internship is designed to bridge the gap between the
theoretical knowledge and real application. The prime reason of this study is to become familiar with
the practical business world and to attain 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.

1.4

Scope of the Report:

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The report is mainly confined to the Financial Performance evaluation of Agrani Bank Limited. In
order to conduct study on this main issue, the following aspects come within the span of the study.

An overview of Agrani Bank Limited

To know the function of different division of ABL
Evaluation of financial performance of ABL through trend analysis of financial ratios of ABL

1.5Objective of the Report:

The main objective of education is to acquire knowledge. There are two types of objectives of the
report. One is primary objective and the other is Secondary objective.

Primary Objective:
The primary objective of this report is to analyze financial performance of AgraniBank Ltd.

Secondary Objectives:
The secondary objectives are as follows:

To calculate the financial ratios and identify the areas of corners.

To calculate and interpret the liquidity ratio, debt ratio, activity ratio & profitability ratio of

Agrani Bank Ltd.

To compare financial position of Agrani Bank Ltd. with industry average.
To draw some findings & give some recommendations to improve the financial performance
of Agrani Bank Ltd.

1.6Methodology:
For smooth & accurate study everyone has to follow some rules & regulations, the study impute were
collected from two sources :

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1.6.1 Primary Sources :

Practical desk work
Face to face conversation with officer
Direct observation

1.6.1

Secondary sources :
Annual report of ABL
Demo & circulars
Various publication of bank
Website

1.6.2 Instruments used for data analysis :

The ratio analysis is used to analyze the financial performance of ABL. Different type of computer
software such as- Microsoft word, Microsoft Excel etc. are used for analyzing and reporting purpose
of the study. The ratio analysis is conducted in form of trend analysis and comparative analysis.

1.6.3.1 Trend Analysis :Trend analysis is the analysis of the firms performance over the time
using ratios. It is really important to analyze trends in ratios as well their absolute levels. This analysis
informs us whether a companys financial condition improving.

1.6.3.2 Comparative Analysis : Comparative analysis is the comparison of banks performance

with the industry average. The study compares the profitability of the bank with industry average.

1.7 Limitations:
The study mainly covers the financial performance of ABL only. Apart from this the following
limitations of the study can be mentioned.

Time Limitation: To complete the study, time was limited by three months. It was really very short
time to know details about an organization like Agrani Bank Ltd.

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Inadequate Data: Lack of available information about of Agrani 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: Unavailability of sufficient written documents as required making a

comprehensive study was another problems. 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.

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Chapter-2
Company profile
Historical Background of Agrani Bank Ltd.
Mission
Vision
Mottos
Value
Strategic objectives
Ethical Principles
Managerial Hierarchy
Product & Services

Page 6 of 51

Financial Performance Analysis of Agrani Bank

Ltd.

Page 7 of 51

2.1History of Agrani Bank Limited:

Agrani Bank Limited, a leading commercial bank with 902 outlets strategically located in almost all
the commercial areas throughout Bangladesh, overseas Exchange Houses and hundreds of overseas
Correspondents, came into being as a Public Limited Company on May 17, 2007 with a view to take
over the business, assets, liabilities, rights and obligations of the Agrani Bank which emerged as a
nationalized commercial bank in 1972 immediately after the emergence of Bangladesh as an
independent state. Agrani Bank Limited started functioning as a going concern basis through a
Vendors Agreement signed between the ministry of finance, Government of the People's Republic of
Bangladesh on behalf of the former Agrani Bank and the Board of Directors of Agrani Bank Limited
on November 15, 2007 with retrospective effect from 01 July, 2007.
Agrani Bank Limited is governed by a Board of Directors consisting of 13 (thirteen) members headed
by a Chairman. The Bank is headed by the Managing Director & Chief Executive Officer; Managing
Director is assisted by Deputy Managing Directors and General Managers. The bank has 11 Circle
offices, 29 Divisions in head office, 62 zonal offices and 902 branches including 27 corporate and 40
AD (authorized dealer) branches.

2.2

Mission:

To operate ethically & fairly within the stringent framework set by our regulators and to assimilate
ideas & lessons from best practices to improve our business policies and procedure to the benefit of
our customers & employees.

2.3Vision:
To become the best leading state owned commercial bank of Bangladesh operating at International
level of efficiency, quality, sound management, customer service & strong liquidity.

2.4Motto:
To adopt & adapt to modern approaches to stand supreme in the banking arena of Bangladesh with
Global presence.

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2.5 Values:
We value in integrity, transparency, accountability, dignity, diversity growth and professionalism to
provide high level of services to all our customers & stakeholders.

2.6 Strategic Objectives:

Winning at least 6.5% share of deposit & 5.5% share of loan and advance Bangladeshi market,

Gaining competitive advantage by lowering overall cost compared to that of competitors,

Overtaking competitors by providing quality customer service,

Achieving technological leadership among the peer group,

Strengthening the banks brand recognition,

Contributing towards the economic wellbeing of the country by focusing particularly on SME and
agricultural sector,
Strengthening research capability for innovative product.

2.7

Ethical Principles:
Customer Focus and Fairness: At ABL, our prime focus is to achieve perfection is our
customer service. Customers are our first priority and driving force. We wish to gain
customer confidence and be their trusted partner. We believe in fair treatment to all customer,

depositors, borrowers and client without any discrimination.

Quality:Quality service experience is a paramount to our customer and we are strongly
committed to fulfill this idea. We have a culture of timely compliance of regulatory
requirements.

Honesty and Integrity:We ensure the highest level of integrity to our customer, creating
an ongoing relationship of trust and confidence. We treat our customers with honesty, fairness
and respect.

Belief in Our People:Recognize that employees are our most valuable asset and our
competitive strength. We respect the worth and dignity of individual employees who devote
Page 9 of 51

their careers for the progress of the bank. We trust in equal treatment to all shareholders

irrespective of their individual size of shareholdings.

Teamwork:We are a firm believer in team work and feel that loyal and motivated terms can
produce extraordinary results. We are driven by a performance culture where recognition and

rewards are based on individual merit and demonstrated track record.

Good Corporate Governance: Effective corporate governance procedures are essential to
achieve and maintain public trust and confidence in any company, more so in a banking
company. At ABL, we are committed to following best practices resulting in good corporate
governance.

Corporate Social Responsibility:As a responsible corporate citizen, we consider it

important to act on a responsible manner towards the environment and society. Our
commitment had always been to behave ethically.

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2.8

Managerial Hierarchy of Agrani Bank Limited

There is a figure given below which expresses the employee hierarchy of Agrani Bank Ltd.

Page 11 of 51

2.9 Product and Services of ABL:

AgraniBank

Ltd.

extends

all

the

Banking

facilities

and

services

to

customers.

The Bank has a very wide network of activities and services both in urban and rural areas through its
902 branches all over the country.

2.9.1 Services :
Retail / Personal banking
Credit programs
Micro Enterprises & Special credits
Rural banking
International banking
Foreign Remittance

2.9.2 Deposit product:

Current deposit account > short term deposit
Saving bank deposit account > Fixed deposit
Foreign currency deposit > Monthly saving scheme
Agrani bank Savings Pension scheme
Agrani bank deposit scheme
Education deposit scheme
Medical deposit scheme

2.9.3 Credit Product :

Term loan > Trade Finance > Import Finance
Export Finance > SME Financing > Micro Credit
Agricultural & Rural credit > Consumer credit
Home loan > Loan for Merchant Banking

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2.9.4 E-Services :
Speedy Remittance Western Union Money Transfer
Automated clearing
Internet banking

ATM banking

2.9.5 ATM Operation:

Debit card operation

Salary card operation

2.10 Function of Agrani Bank:

Agrani bank performs all types of functions of a commercial bank, which generally includes:
Mobilization of saving of the people & safe keeping of all types of deposit account
Providing banking services to common people through the branches
Introduce modern banking services in the country
Discounting and purchasing bills
Finance for both capital machinery & working capital
Developing marketing campaigns
Monitoring & forecasting
Finance for household durables
Work supplication studies
Finance under small business of selfemployed clients

2.11 Different department of ABL:

The Bank divides its operation mainly three parts
General Banking
Foreign Exchange
Loan Advances

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2.11.1 General Banking:

General banking is the starting point of all the banking operating. General banking department aids in
taking deposit and simultaneously provides some ancillaries services. It provides those customer who
come one time in banking for enjoying ancillary services.
In some general banking activities, there is no relation between banker & customer who will take
only one service form bank. Bank in confined to provide the service everyday general banking is also
known as retail banking.
General banking consists of the many sections in the branch. These are

General

Banking

Account Opening
Section
Local Remittance
section
Bills & Clearing
Section

Cash

section

Dispatch

section

2.11.2 Foreign Exchange:

Every sovereign country in the world has a currency, which is a legal tender in its territory, and this
currency cannot be used as money outside its boundaries. So whenever a country buys or sells goods
and services from across its boundaries, the resident of the two countries have to exchange currencies.

Feature of the foreign Exchange Market

Global markets
24 hours markets
No Geographical location

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 Foreign Exchange rates & Products

TT
Bills of collection rate
OD transfer rate
TDY
Spot
Tom

Fwd

2.11.3 Deposit Schemes:

Savings Deposit
Short term Deposit
Term Deposit
Agrani Deposit Pension Scheme
.

2.11.4Other Banking Services:

ABL with its wide ranging branch network and skilled personnel provides prompt and personalized
services like issuing

Demand Draft
Telegraphic Transfer
Mail Transfer
Pay order
Security Deposit Receipt

2.11.5 Computerized Banking Services:

More than 300 major branches already have been computerized and massive computerization
program is going on.

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2.11.6 One Stop Service:

ABL first among the Nationalized Commercial Banks in Bangladesh, has introduce one stop service.
There are some feature of this system are as under
A customer can deposit & withdraw money from a single counter

The system of Token & Scroll has been discontinued

Customer are getting prompt & personalized services from a single counter
Verification of signature is very easy as the same is stored in the computer

2.12 General Credit line:

The main focus of ABL credit line is financing business, trade & industrial activities through

an effective delivery system.

ABL offers credit to almost all sectors of commercial activities having productive purpose.
The loan portfolio of the bank encompasses a wide range of credit programs covering about

200 items.
Credit is also offered to 15 trust sectors, as earmarked by the Government.
At a reduced interest rate to develop frontier Industries.
Credit facilities are offered to individuals, businessmen, small & big business houses, traders,

manufactures, corporate bodies etc.

Loan pricing system in customer is friendly
Prime customer enjoy prime rate in lending & other services
Quick appreciation, appraisal, decision & disbursement are ensured
Credit facilities are extended as per guide-line of Bangladesh Bank and operational

procedures of the bank

The rates may change time to time depending on the level of competition in the financial
sector.

2.13 Rural Credit Program:

A vast majority of the Bangladesh live in the rural areas and their main source of income is
agriculture and agro-business.ABL has opened branches in rural areas to cater to the banking needs of
rural people. Apart from accepting deposits from the rich and moderately well-off villagers, ABL
encourage the poor people to make small saving through different mechanism. It also lends to the
poor landless so that they can make living. The average loan size is about 20,000 taka.

Special Agricultural credit program / short term crop production loan

Horticulture development
Fish & Shrimp Production
Fishery loan program
Credit program for fish cultivation
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Shrimp culture credit program

Irrigation & agricultural equipment

2.13.1 Objective:

To increase Agricultural production & improvement its quality

To gear up socio-economic activities among rural people
To create employment opportunities among rural people through economic support
Creating confidence among the beneficiaries on institutional credit and their access to

improved production practices.

To build up asset by creating saving habit among the rural population
Poverty reduction.

2.13.2 ForeignRemittance:

ABL has a network of more than 880 domestic branches in Bangladesh covering whole of the

country including the rural areas

Remittance services are available at all branches and foreign remittances may be sent to any

branch by remitters favoring their beneficiaries

Remittances are credited to the account of beneficiaries instantly or within shortest possible

time
ABL has correspondent banking relationship with all major banks & exchange houses located
in almost all the countries. Expatriates Bangladeshis may send their hard earned foreign
currencies through those bank and exchange house or may contact any renowned banks
nearby to send their money to their dear on in Bangladesh.

Chapter-3
Theoritical Aspect
Page 17 of 51

Financial performance analysis

Balance sheet
Incomes Statement
Ratio Analysis
Significance of using ratios
Types of ratio comparisons
Groups of Financial ratios

Financial Performance Analysis of Agrani Bank Ltd.

3.1 Financial Performance Analysis:

Financial Performance is a subjective measure of how well a firm can use assets from its primary
mode of business and generate revenues. This term is also used as a general measure of a firm's
overall financial health over a given period of time, and can be used to compare similar firms across
the same industry or to compare industries or sectors in aggregation.

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Financial performance analysis refers to an assessment of the viability, stability and profitability of a
business, sub-business or project. It is performed by professionals who prepare reports using ratios
that make use of information taken from financial statements and other reports. These reports are
usually presented to top management as one of their bases in making business decisions.

3.2 Balance sheet:

In financial accounting, a balance sheet or statement of financial position is a summary of the
financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and
ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet
is often described as a "snapshot of a company's financial condition". Of the four basic financial
statements, the balance sheet is the only statement which applies to a single point in time of a
business' calendar year. A standard company balance sheet has three parts: assets, liabilities and
ownership equity.

3.3 Income Statement:

Income statement also referred as profit and loss statement (P&L), earnings statement, operating
statement or statement of operations is a company's financial statement that indicates how the revenue
is transformed into the net income. It displays the revenues recognized for a specific period, and the
cost and expenses charged against these revenues, including write-offs (e.g. depreciation and
amortization of various assets) and taxes. The purpose of the income statement is to show managers
and investors whether the company made or lost money during the period being reported.

3.4Ratio Analysis:
A tool used by individuals to conduct a quantitative analysis of information in a companys financial
statements. Ratios are calculated from current year numbers and are then compared toprevious years,
other companies, the Industry, or even the economy to judge the performance ofthe company. The

Page 19 of 51

basic inputs to ratio analysis are the firms income statement and balance sheet for the periods to be
examined. Ratio analysis is predominately used by proponents offundamental analysis.
In finance, a financial ratio or accounting ratio is a ratio of two selected numerical values taken from
an enterprises financial statements. There are many standard ratios used to try to evaluate the overall
financial condition of a corporation or other organization. Financial ratios may be used by managers
within a firm, by current and potential shareholders (owners) of a firm, and by a firms creditors.
Security analysts use financial ratios to compare the strengths and weaknesses in various companies.
If shares in a company are traded in a financial market, the market price of the shares is used in
certain financial ratios.
In short, ratio analysis is essentially concerned with the calculation of relationships which, after
proper identification and interpretation may provide information about the operations and state of
affairs of a business enterprise. The analysis is used to provide indicators of past performance in
terms of critical success factors of a business. This assistance in decision-making reduces reliance on
guesswork and intuition and establishes a basis for sound judgment.

3.5 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.

3.6 Types of ratio comparisons:

Three types of ratio comparisons can be made:
1. Cross-sectional Analysis:Cross-sectional analysis involves the comparison of different
firms financial ratios at the same point in time. The typical business is interested in how well
it has performed in relation to its competitors.
Page 20 of 51

2. Time- series Analysis:Time-series analysis is applied when a financial analyst evaluates

performance over time. Comparison of current to past performance utilizing ratio analysis
allows the firm to determine whether it is progressing as planned.
3. Combined Analysis:The most informative approach to ratio analysis is one that Combine
cross-sectional and time-series analyses.

3.7Groups of Financial Ratios:

Financial ratios can be divided into four basic groups or categories. They are
A. Liquidity ratios
B. Activity ratios
C. Debt ratios and
D. Profitability ratios
Liquidity measures the ability to maintain positive cash flow, while satisfying immediate obligations.
Activity ratio measures the speed with which accounts are converted into sale or cash. Debt ratio
measures the amount of other peoples money used in generating profit. Profitability measures the
ability to earn income and sustain growth in both short-term and long-term. A company's degree of
profitability is usually based on the income statement, which reports on the company's results of
operations.

3.7.1 Analyzing Liquidity:

Liquidity refers to the ability of a firm to meet its short-term financial obligations when and as they
come due. It also refers to the solvency of the firms overall financial position.The main concern of
liquidity ratio is to measure the ability of the firms to meet their short-term maturing obligations.
Failure to do this will result in the total failure of the business, as it would be forced into liquidation.
The three basic measures of liquidity arePage 21 of 51

Current Ratio:
The Current ratio expresses the relationship between the firms currentassets and its current liabilities.
A measure of liquidity calculated by dividing the firms current assets by current liabilities.
Current Ratio=Current assets/Current liabilities

Net Working Capital:

A measure of liquidity calculated by subtracting total current assets by current liabilities.Current
assets normally include cash, marketable securities, accounts receivable and inventories. Current
liabilities consist of accounts payable, short term notes payable, short-term loans, current maturities
of long term debt, accrued income taxes and other accrued expenses (wages).
Net Working Capital=Total Current Assets-Total Current Liabilities

Quick Ratio:
Quick ratio measures assets that are quickly converted into cash and they are compared with current
liabilities. This ratio realizes that some of current assets are not easily convertible to cash likeinventories. The quick ratio, also referred to as acid test ratio, examines the ability of the business to
cover its short-term obligations from its quick assets only. The quick ratio is calculated as follows:
Quick (Acid-test) Ratio= (Current assets-Inventory)/Current liabilities

3.7.2 Analyzing Activity:

If a business does not use its assets effectively, investors in the business would rather take their
money and place it somewhere else. In order for the assets to be used effectively, the business needs a
high turnover. Unless the business continues to generate high turnover, assets will be idle as it is
impossible to buy and sell fixed assets continuously as turnover changes. Activity ratios are therefore
used to assess how active various assets are in the business. Activity ratios are discussed next.

Page 22 of 51

Total Asset Turnover:

Total asset turnover is the relationship between sales and assets.
Total Asset Turnover=Sales/Total Asset

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 disburse by the bank as long and
advance or as investment. The ratio is calculated as follows
Investment to Deposit ratio = Total investment / Total deposit

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3.7.3 Analyzing Debt:

The debt position of the firm indicates the amount of other peoples 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 used to describe the magnification of risk and return introduced through the
use of fixed-cost financing such as debt and preferred stock.

Debt Ratio:
This is the measure of financial strength that reflects the proportion of capital which has been funded
by debt, including preference shares. A debt ratio greater than 1.0 means the company has negative
net worth, and is technically bankrupt. This ratio is calculated as follows:
Debt Ratio=Total liabilities/Total assets

Debt-equity Ratio:
This ratio indicates the extent to which debt is covered by shareholders funds. It reflects the relative
position of the equity holders and the lenders and indicates the companys policy on the mix of capital
funds. The debt to equity ratio is calculated as follows:
Debt-equity Ratio = Long-term debt / Stockholders equity

Time Interest Earned Ratio:

This ratio measure the extent to which earnings can decline without causing financial losses to the
firm and creating an inability to meet the interest cost
Time Interest Earned Ratio=EBIT/Interest

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3.7.4 Analyzing Profitability:

Profitability is the ability of a business to earn profit over a period of time. Although the profit figure
is the starting point for any calculation of cash flow as already pointed out profitable companies can
still fail for lack of cash.

Operating Profit Margin:

The operating profit margin represents what are often called the pure profits earned on each sales
dollar. A higher operating profit margin is preferred. The operating profit margin is calculated as
follows:
Operating Profit Margin=Operating Profit/Sales

Net Profit Margin:

It measures the percentage of each sales dollar remaining after all costs and expenses, including
interest, taxes, and preferred stocks dividend have been deducted.Net Profit Margin is calculated as
follows:
Net Profit Margin=Net Profit after Tax/ Sales

Return on Investment:
Income is earned by using the assets of a business productively. The more efficient the production, the
more profitable the business. The rate of return on total assets indicates the degree of efficiency
which management has used the assets of the enterprise during an accounting period.
Return on Investment=Net Profit after Tax/Total Assets

Return of Asset (ROA):

Return on asset measures the overall effectiveness of management in generating profits with its
available assets also called the Return of Asset.
Return of Asset (ROA) = Net profit after taxes / total asset

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Return on Equity (ROE):

This ratio shows the profit attributable to the amount invested by the owners of the business. It also
shows potential investors into the business what they might hope to receive as a return. The
stockholders' equity includes share capital, share premium, distributable and non-distributable
reserves. The ratio is calculated as follows:
Return on Equity=Net Profit after Tax / Stockholder's equity

Earnings per Share (EPS):

The firms earning per share are generally of interest to present or prospective shareholders and
management. The EPS represent the number of taka earned on behalf of each outstanding share of
common stock.
EPS = Net profit after tax / Number of share outstanding

Market Ratio :
Relate the firmmarket value, as measured by its current share price, to certain accounting values.
These ratios give insight into how well investors in the market place feel the firm are doing in term of
risk and return.

Price / Earnings Ratio (P/E Ratio):he price / Earnings Ratio of a stock measure of the price paid
for a share relative to income earned by the firm per share. P/E Ratio measures the amount that
investors are willing to pay for each taka of firms earning. The level of this ratio indicates the degree
of confidence investors have in the firms future performance. The higher the P/E Ratio the greater
the investor confidence is
P/E Ratio = Market price per share / earning per share

Page 26 of 51

Chapter-4
Financial Performance Analysis
Current ratio
Net working Capital
Total Assets Turn Over
Investment to Deposit ratio
Debt Ratio
Time Interest Earned Ratio
Net Profit Margin
Return on Assets
Return on Equity
Cost to Income ratio

Financial Performance Analysis of Agrani Bank Ltd.

Page 27 of 51

4.1 Liquidity Ratio:

Liquidity ratiosattempt to measure a banks ability to pay off its short term debt obligations.

Current Ratio:
The current ratio, one of the most commonly cited financial ratios, measures the firms ability to meet
its short term obligations. The higher the current ratio, the better the liquidity position of the firm. It is
expressed as:
Current Ratio=Current Asset / Current Liabilities.
(*Taka in Millions)

Year

2009

2010

2011

2012

2013

Current Asset

90965.12

118291.71

146011.69

128292.54

123648.94

Current Liabilities

42981.49

586941.20

874171.27

800617.81

55839.65

Current Ratio

2.12

2.02

1.67

1.60

2.21

Table : Current Ratio

Source : Annual report of ABL(2009-2013)

Graphical Presentation

Current Ratio
2.50
2.00 2.12

2.02

2.21
1.6

1.50
1.00
0.50
0.00
2009

2010

2011
Year

Page 28 of 51

2012

2013

Figure : Current ratio

Interpretation:
Generally higher current ratio indicates a greater degree of liquidity. The above graph shows a
fluctuating trend of ABLs liquidity position from 2009 to 2013. In 2009, 2010 & 2013 ABL
maintains satisfactory level of current ratio. In 2011 & 2012 ABL current ratio decreased to 1.67 &
1.60. But in 2013 ABL maintains satisfactory level of current ratio.

Net Working Capital:

The proportion of investment that is requires to conduct the business is called working capital. It is
the blood of the firm. Net working capital is the difference between the firms current assets and its
current liabilities. Net working capital, although not actually a ratio is a common measure of a firms
overall liquidity a measure of liquidity ratio calculated byNet Working capital=Current Asset Current Liabilities
(*Taka in Millions)

Year
Current Asset
Current Liabilities
Networking Capital

2009

2010

2011

2012

90965.12

118291.71

146011.69

128292.54

42981.49

586941.20

874171.27

800617.81

4.79

5.95

5.8

4.82

2013
123648.94
55839.65
6.78

Table :Net working capital

Source :Annual report of ABL(2009-2013)

Graphical Presentation:

Net Working Capital

8.00
6.00
4.00

4.79

5.95

5.8

6.78
4.82

2.00
0.00
2009

2010

2011
Year

Page 29 of 51

2012

2013

Figure : Net working capital

Interpretation
Working capital is blood for every firm because without working capital a firm cant run its daily
activities perfectly. Fromabove figure we can see that, a fluctuating trend in ABLs working capital
position from 2009 to 2013.In 2009 net working capital was 4.79 & gradually it increased in 2010 to
2013 except in 2012. The bank increased its liquidity position to 6.78 in 2013. It implies that the bank
has sufficient asset to meet the payment of current liabilities when it requires.

Page 30 of 51

4.2 Analyzing Activity Ratio :

Activity ratio measures how effectively the bank using the assets employed. In other word, it
measures the speed with which various accounts are converted into sales or cash inflows.

Total Asset Turn Over :The total asset turnover indicate the efficiency with which the firm is able
to use all its assets to generate sales.
Total Asset TurnOver = Sales Income / Total Assets
(*Taka in Millions)

Year

2009

2010

2011

2012

2013

OI
TA
TATO(Times)

644
21406
0.030

1086
26485
0.041

1474
34882
0.042

1007
37872
0.026

1064
44416
0.023

Table : Total Asset Turnover

Source : Annual report of ABL(2009-2013)

Graphical Presentation :
Total Asset Turn Over
0.05

0.04

0.04
0.03
0.03

0.03

0.02

2012

2013

0.02
0.01
0.00
2009

2010

2011
Year

Figure :Total Asset Turnover

Interpretation :
We know that the higher total asset turnover ratio is more efficient. The ABLs total asset turnover
ratio was increasing in the year 2010 & 2011. After that it was decreasing in 2012 & 2013 which is
not positive sign for the bank. This indicates ABL has failed to use its assets efficiently.

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Investment to Deposit Ratio :

Investment to deposit ratio shows the operating efficiency of a bank in promoting its investment
product in terms of total deposit.

Investment to Deposit Ratio = Total Investment / Total deposit

(*Taka in Millions)

Year

2009

2010

2011

2012

2013

Total Investment
Total Deposit
Investment to
Deposit Ratio

4089
16628
24.59%

4264
20633
20.66%

8376
25221
33.21%

8921
29243
30.51%

14566
34868
41.77%

Table : Investment to Deposit Ratio

Source : Annual report of ABL(2009-2013)

Graphical Presentation :
Investment to Deposit Ratio
0.50
0.40
24.59%
0.30

41.77%
30.51%
20.66%

0.20
0.10
0.00
2009

2010

2011

2012

2013

Year

Figure : Investment to Deposit Ratio

Interpretation :
From the graph we have seen that Investment to Deposit Ratio of ABL was fluctuating in 2009 to
2013. In 2013 Investment to Deposit Ratio is higher than other years. In 2009 to 2012 this ratio
fluctuates their position. That means ABL was less efficient in converting their deposit into
investment.

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4.3 Debt ratio:

Debt ratio measures of the degree of protection for long- term creditors and investors.

Debt Ratio:
The Debt Ratio measures the proportion of total assets financed by the firms creditors.
Debt Ratio= Total Liabilities / Total Assets
(*Taka in Millions)

Year
Total Asset
Total Liabilities
Debt Ratio (%)

2009
214062.87
202621.94
94.65%

2010

2011

2012

2013

264852.02
249134.74
94.06%

349178.12
323502.41
92.65%

378906.23
372084.30
98.19%

444506.11
409026.69
92.02%

Table :Debt Ratio

Source :Annual report of ABL(2009-2013)

Graphical Presentation:

Debt Ratio
1.00
0.95 94.65%

98.19%

94.06%

92.02%

0.90
0.85
2009

2010

2011
Year

Figure :Debt Ratio

Interpretation:

Page 33 of 51

2012

2013

In 2009, 2010 & 2012 Debt ratio was 94.65%, 94.06% & 98.19% respectively. That means ABL used
more debt. In 2011 & 2013 debt ratio was 92.65% & 92.02% which was decreased than other
financial year.

Page 34 of 51

Time Interest Earned Ratio:

Times interest earned ratio measures the firms ability to make contractual interest payments;
sometimes called the interest coverage ratio.
Time Interest Earned Ratio =Earnings before Interest & Taxes / Interest expenses
(*Taka in Millions)

Year

2009

2010

2011

2012

2013

Time Interest Earned

1.7

2.11

1.00

2.5

4.69

Ratio (Times)
Table :Time Interest Earned Ratio
Source :Annual report of ABL(2009-2013)

Graphical Presentation:

Time Interest Earned Ratio

5.00
4.00
3.00

4.69
2.11

2.00
1.001.7
0.00
2009

2.5
2010

1
2011

2012

2013

Year

Figure :Time Interest Earned Ratio

Interpretation:
The graph shows that a fluctuating trend in ABLs time interest earned ratio in 2009 to2013. In 2009,
2010, 2011 ABLs Time Interest Earned Ratio was 1.7, 2.11 & 1 times respectively. In 2012 & 2013 it
increased from 2.5 to 4.69 times.

Page 35 of 51

4.4 Profitability Ratio:

Profitability ratio measures of the degree of successor failure of a given enterprise or division for a
given period of time.

Net Profit Margin:

The net profit margin measures the percentage of each dollar revenue remaining after all expenses,
including taxes, have deducted. The higher net profit margin is better for the firm. The net profit
margin is a commonly cited measure of the companys success with respect to earnings on revenue.

Net Profit margin=

Earnings Available for common stock holders

Sales
(*Taka in Millions)

Year

2009

2010

2011

2012

2013

Net Profit Margin

21%

32%

17%

-1.84%

22%

Table :Net Profit Margin

Source :Annual report of ABL(2009-2013)

Graphical Presentation:

Figure :Net Profit Margin

Interpretation:
Net Profit margin of ABL was fluctuating over the period of 2009 to 2013. In 2009 the bank NPM
was 21.00% which is lower than from 2010 of 32.00%. We see this figure in 2011, 2012 & 2013 the
net margin are 17.00%, (1.84%) & 22.00% which is decreased than previous year.

Page 36 of 51

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.

ROA=

Earnings available for common stockholders

100
Total Asset
(*Taka in Millions)

Year

2009

2010

2011

2012

2013

Return on Asset

.63%

1.33%

.72%

-4.92%

2.04%

Table :Return on Asset

Source :Annual report of ABL(2009-2013)

Graphical Presentation:

Figure :Return on Asset

Interpretation:

Page 37 of 51

In this graph shows that ABL Return on Asset has lower for the year 2009 which was 0.63%. In 2012
Return on Asset has decreased (4.92%) that was a negative sign for the bank. In 2010 , 2011 & 2013
ABL Return on Asset was 1.33% ,0.72% & 2.04% respectively Return on Equity(ROE):
The return on equity measures the return earned on the owners (both preferred and common
stockholders) investment. Generally the higher return the better off the owners.

ReturnonEquity=

Earningsavailableforcommonstockholders
ShareholdersEquity

100

(*Taka in Millions)

Year
Return on Equity

2009

2010

2011

2012

2013

53.75

22.38

9.64

-259.94

25.39

Table :Return on Equity

Source :Annual report of ABL(2009-2013)

Graphical Presentation:-

Figure :Return on Equity

Interpretation:
This figure represent the ROE of ABL was a fluctuating trend from 2009 to 2013. In 2009, 2010
2011& 2012 ABLs return on equity is 53.75%, 22.38% ,9.64%& (259.94) . Management should
work hard to increase return in terms of equity. In 2013 bank increase to 25.39% .

Page 38 of 51

Page 39 of 51

Cost to income ratio:

Cost-income ratio is the ratio between operating expenses and operating income. It is a measure of
how costs are changing compares to income. It is one of the main key performance indicators of a
banks efficiency the lower the ratio the more efficient the bank.
Cost to income ratio = Operating cost/ operating income
(*Taka in Millions)

Year

2009

2010

2011

2012

2013

Cost to income ratio

60.63

54.77

55.34

72.78

74.15

Table :Cost to Income Ratio

Source :Annual report of ABL(2009-2013)

Graphical Presentation:
80.00
70.00
60.63
60.00
50.00
40.00
30.00
20.00
10.00
0.00
2009

72.78
54.77

55.34

2010

2011

74.15

2012

2013

Year

Figure :Cost to Income Ratio

Interpretation:
The cost to income ratio shows the efficiency of a firm in minimizing costs while increasing profits.
In 2009 to 2013 ABLs cost to income ratio is fluctuating trend. In 2009 cost to income ratio was
60.63% & in 2010 & 2011 its decreased 54.77% & 55.34%.In 2012 & 2013 it increased 72.78% &
74.15%.We know, the lower the cost to income ratio, the more efficient the firm is running. So bank
should decrease the cost.

Page 40 of 51

Chapter-5
Comparative Analysis of ABL with
Industry Average
Cost to Income ratio
Return on Asset
Return on Equity

Financial Performance Analysis of Agrani Bank Ltd.

5.1 Cost to Income ratio:

Page 41 of 51

Year

ABL

Industry Avg.

2009

60.63

72.6%

2010

54.77

70.8%

2011

55.34

68.6%

2012

72.78

74.0%

2013

74.78

76.8%

Table: Cost Income ratio

Source :Annual report of ABL& Bangladesh Bank

Graphical Presentation:
90
8072.6
70
60.63
60
50
40
30
20
10
0
2009

70.8

68.6

54.77

55.34

74
72.78

76.8
74.15

ABL
Industry Avg.

2010

2011

2012

2013

Figure: Cost of Income ratio

Interpretation:
The graph shows that, the cost to income ratio of the ABL is lower than industry average from 2009
to 2013. In 2009 & 2010 ABL Cost to Income Ratio was 60.63% & 54.77%. In 2011, 2012 & 2013 it
was 55.34%, 72.78 %& 74.78% respectively. We know, the lower cost to income ratio is the more
efficient the firm is running. So bank should decrease the cost.

5.2 Return of Asset:

Page 42 of 51

Year

ABL

Industry Avg.

2009

0.63

1.4%

2010

1.33

1.8%

2011

0.72

1.5%

2012

-4.92

1.6%

2013

2.04

1.9%

Table: Return of Asset

Source :Annual report of ABL& Bangladesh Bank

Graphical presentation:

Figure : Return on Asset ratio

Interpretation:
The graph shows that, the ROA of ABL is higher than industry average in 2013. On the other hand the
performance of ABL in ROA is decreased than in the banking industry average from 2009 to 2012. So
their earnings position is less in compare to industry. They should try to improve their position .

5.3 Return on Equity:

Year

ABL

Industry Avg.

2009

53.75

21.7%

2010

22.38

21.0%

2011

9.64

17.0%

Page 43 of 51

2012

-259.94

18.0%

2013

25.39

20%

Table : Return on Equity

Source :Annual report of ABL & Bangladesh Bank

Graphical Presentation:

Figure :Return on Equity ratio

Interpretation:
The graph shows that the ROE of ABL is higher than industry average except 2011 & 2012. In 2009
& 2010 ABL ROE was 53.75% & 22.38 %. However the ROE of ABL has decreased from 9.64% to
(259. 94)% in 2012. This is not good sign for the bank .

Chapter-6
Page 44 of 51

Major Findings, Recommedations&

Conclusion
Findings
Recommendation
Conclusion

Financial Performance Analysis of Agrani Bank Ltd.

Page 45 of 51

6.1 MajorFindings:
While working at Agrani Bank Ltd. Shewrapara Branch, I have attained a newer kind of
experience. After the collecting & analyzing of data I have got some findings.
There is a fluctuating trend in current ratio of ABL. The current ratio of ABL was 2.12 in
2009 to 2.21 in 2013
Net Working Capital of ABL has increased & this is good sign for the bank.
The ABLS Total Asset Turn Over ratio was decreasing in 2012 & 2013. This is a negative
sign for the bank.
There is a fluctuating trend in Investment to Deposit ratio of ABL Bank. It was 24.59% in
2009 to 41.77% in 2013.
ABLs Net Profit Margin was fluctuating trend over the period of 2009 to 2013. But it
decreased badly in 2012 to (1.84%). This is not a good sign for the bank.
ABLs Return on Asset was not a satisfactory level in 2009 to 2012. In 2012 it decreased from
0.72 to (4.92%). But in 2013 bank improved their position. The ROA was lower than
industry average except in 2013 to 2.04%.
The ROE of ABL was fluctuating trend over the last 5 years . But it was lowest at (259.94%).
This is negative sign for the bank . It indicates that shareholders equity is not utilized
effectively to generate profit. On the other hand , ROE is higher than industry average except
in 2011 & 2012.
Cost to Income Ratio is increasing year by year. It indicates that the bank has failed to reduce
its cost relative to income. Cost to Income Ratio is below at Industry average.
ABLs TIE ratio was quite low . But it increased in 2013 to 4.69 times .

Page 46 of 51

6.2 Recommendations:
After analyzing the financial performance of ABL, I want to put some suggestion here which I think it
followed would be definitely help ABL. To promote financial position and there-by its contribution in
the whole economy The ABL should maintain its CA against CL to meet up short term obligation.
The ABL should efficiently use its assets to convert it into sales, so that the Total Asset
Turn Over has increased.
ABL should efficient in converting their deposit into investment.
The cost to income ratio shows the efficiency of a bank in minimizing costs while
increasing profits. Gradually, ABLs cost has increased. So bank should decrease the
cost.
ABLs ROE should increase otherwise the owners cannot be benefited this return. It is
lower than industry average in 2010 to 2012 . It increased in 2013 to 25.39% .
ABLs Return on Asset was decreased over the years & below the industry average
except in 2013. Management should try to improve their position.

6.3 Conclusion:
Page 47 of 51

Economy of Bangladesh is in group of world most under developed economies. One of the reason
may be its under developed banking system. Government as well as different International
organizations have also identified that under developed banking system causes some obstacles to the
process of economic development. So, they have highly recommended for reforming financial sector.
Since 1990, Bangladesh Government has taken a lot of financial sector reform measurements for
making financial sector as well as banking sector more transparent, and formulation &
implementation of these reform activities. At last it can be said that ABL should improve its overall
banking system to influence customers & investors. Customer relation should be increased to give
appropriate service to them and treat them as an asset of the company.

Page 48 of 51

Chapter-7
Company Profile
Bibliography
Appendix

Financial Performance Analysis of Agrani Bank Ltd.

Page 49 of 51

Bibliography:
Principal of Managerial Finance by Lawrence J Gitman (12 th Edition)
Research Methodology by C. R. Kothari (2nd Revised Edition)
Intermediate Accounting by Donald E. Kieso, Jerry J. Weygandt, Terry d. Warfield (11 th
Edition)
Bangladesh Bank 2013 Annual Report http://www.bb.org.bd.pub/annual/anreport/bar10
Agrani Bank Ltd, Annual Report of 2009-2013
Agrani Bank Ltd, www.agranibank.org/

Page 50 of 51

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