Internship Report On National Bank Limited

Internship Report
on
Financial Statement Analysis of National Bank Limited
Submitted to the Department of Business Administration,

Daffodil International University in Partial Fullfillment of the
Requirements for the Award of BBA degree Major in Accounting
Under the Supervision of

Professor Dr. Md. Abul Hossain
Coordinator (MBA Program)
Faculty of Business & Economics
Prepared By:
Kazi Ashraf Ahsan
ID: 103-11-213
Major in Accounting
Program: BBA
Date of Submission: 13th September, 2018
© Daffodil International University

Letter of Transmittal
September 13, 2018
Professor Dr. Md. Abul Hossain

Department of Business Administration
Faculty of Business and Economics
Daffodil International University
Subject: Submission of Internship Report.
Dear Sir,
“Financial Statement Analysis of National Bank Limited” is the internship report to fulfill the
BBA course of the undersigned. The internee is grateful to you for giving him an opportunity
for preparing such a report which will enable him to get an overview about how a Bank can
satisfy its customers by providing financial services as per need of the customer.
Again the internee give thanks to you from the core of his heart for giving your valuable time
to help him to complete this report and pray that the mistakes (if any) in this report will be
kindly excused. He would be delighted to clarify any question regarding this report, or if you
have any specific opinion on any of the issue rose.
Sincerely Yours
( Kazi Ashraf Ahsan )

Student ID: 103-11-213
BBA in Accounting, 27th Batch
© Daffodil International University ii

SUPERVISOR’S CERTIFICATION
This is to certify that Mr. Kazi Ashraf Ahsan , Student ID: 103-11-213, BBA Program,
Department of Business Administration, Faculty of Business & Economics, Daffodil
international University, has done this internship report on “Financial Statement Analysis of
National Bank Limited” as a partial requirement of BBA degree. I hereby declare that this
work has been done by him and has not been submitted elsewhere for the award of any
degree or diploma.
I wish him every success in life.
(Professor Dr. Md. Abul Hossain )

Faculty of Business and Economics
© Daffodil International University iii

DECLARATION
It is declared hereby that this internship report has been done by me under the supervision of
Professor Dr. Md. Abul Hossain, Department of Business &Economics, Daffodil
International University that is required to fulfill my BBA degree in Department of Business
Administration, Faculty of Business and Economics, Daffodil International University. Cited
sources of literature, which are literally or in general matter taken out of publications or other
resources, are marked as such. The report was not submitted previously in same or similar
form to another examination committee and was not yet published.

© Daffodil International University iv

ACKNOWLEDGEMENT
The writing of this report would have been next to impossible without the help of many
people. Here I want to thank each and every one of them who has been so kind to help me
with their time and wise suggestions.
Want to express my deepest gratitude and respect to Professor Dr. Md .Abul Hossain,
Department of Business Administration, Daffodil International University, my supervisor of
the internship program, who helped and guided me in different phases of the internship;
whenever I faced problems he was there to help me with every sort of suggestions and
motivations.
My heartfelt gratitude and respect goes to my class mates who helped me suggesting many
key issues in writing this report.
Also would like to thank the Officers of National Bank, Gazipur Branch- Mr. Sumon Pal, Ms.
Sumi Akter, Mr. Ashraf, Mr. Ruhul Amin, Mr. Musfiqur, Mr. Ibrahim, Mr. Shahidullah, Mr
Shamim Reza for their continuous support, inspiration and giving me the opportunity to deal
with different clients. Most of all my gratitude goes to the managers of this Branch Mr. Md.
Fazlul Haque who has extended his kind cooperation by sharing information much needed for
this report.

© Daffodil International University v

Abstract
The internship report includes introduction, origin of the report, objective of the report,
methodology, limitations and scope of the report in chapter one. The company profile,
company background, and nature of business, objectives, products and services, history of
NBL, functions of National Bank, SWOT analysis, and values have discussed in chapter two.
The third chapter consists of theoretical aspects, financial performance analysis, tools of
financial analysis balance sheet, income statement, ratio analysis etc.
The assigned part consists of financial analysis of NBL in chapter four. There are eleven ratio
presented with five years review.
And the last chapter five has discussions about findings, recommendation and conclusions. In
this report, it is tried level best to find out some recommendation issues that might be an
accurate way to overcome the drawbacks of National Bank Limited.
© Daffodil International University vi

TABLE OF CONTENTS
Contents
Letter of Transmittal ii
Certificate of Supervisor iii
Declaration iv
Acknowledgement v
Abstract vi
List of Tables and Figures viii
Glossary of terms and abbreviations ix
Chapter 1 : Introduction 1-3
1.1 Origin of the Report 2
1.2 Objectives of the Study 2
1.3 Scope of the Report 2
1.4 Methodology of the Study 2-3
1.6 Limitations of the study 3
Chapter 2 : Company Overview 4-9
2.1 National Bank 5
2.2 Overview of NBL 5
2.3 NBL’s Network 5-6
2.4 Awards and Recognition 6
2.5 NBL’s Green Banking 6-7
2.6 Functions 7
2.7 Internal Control System 7-8
2.8 SWOT Analysis of National Bank 8-9
2.9 Banking Services of NBL 9
2.10 Products and Services of NBL 9
Chapter 3 : Theoretical Aspects of Financial Statement Analysis 10-17
3.1 Introduction 11
3.2 Financial Statement 11
3.3 Various Types of Financial Statement 11-12
3.4 Tools of Financial Analysis 12-17
Chapter 4 : Financial Statement Analysis of NBL 18-29
4.1 Introduction 19
4.2 Ratio and Trend Analysis 19-29
Chapter 5: Findings, Recommendation and Conclusion 30-35
5.1 Findings 31-32
5.2 Recommendations 33-34
5.3 Conclusion 35
Refferences 36
© Daffodil International University vii

List of Tables & Figures
Figure Page
No. Topic No
1.1 NBL at a glance 5
1.2 Vertical analysis of balance sheet 12
1.3 Vertical analysis of income statement 13
1.4 Horizontal analysis of balance sheet 14
1.5 Vertical analysis of income statement 14
1.6 Current Ratio 19
1.7 Net working capital 20
1.8 Cost income ratio 21
1.9 Total asset turnover ratio 22
2.1 Investment to Deposit Ratio 23
2.2 Net profit margin 24
2.3 Return on asset 25
2.4 Return on equity 26
2.5 Earning per share 27
2.6 Price or earning (P/E) ratio 28
2.9 Debt Ratio 29
© Daffodil International University viii

GLOSSARY OF TERMS AND ABBREVIATIONS
NBL National Bank Limited
CRR Cash Reserve Requirement
SLR Secondary Liquidity Requirement
ATM Automated Teller Machine
LG Loan General
SOD Secured Overdraft
CC Cash Credit
TT Telegraphic Transfer
DD Demand Draft
PO Pay Order
© Daffodil International University ix

Chapter 01
__________________________________
Introduction

1
1.1 Origin of the Report
This report has been prepared as an integral part of the internship program for the BBA
Program at the Department of Business Administration, Daffodil international University.
National Bank was nominated as the organization for the internship attachment while
honorable faculty Professor Dr. Md. Abul Hossain, Department of Business Administration,
rendered his kind consent to academically supervise the internship program.
1.2 Objectives of the Study
The wide objectives of the report are to study the Financial Statement Analysis of National
Bank. The specific objective of this report includes-
(i) To gain practical experiences and observe the application of theoretical
knowledge in the real life
(ii) Exploring the financial statement of National Bank Limited and focus its
overall financial performance.
(iii) To know five years financial performance of NBL by calculating and
analyzing different types of ratio.
(iv) And to give some recommendation for the development of NBL.
1.3 Scope of the Report
This report has been prepared through extensive discussion with bank employees, clients and
officers and on the information gathered from the annual report and prospectus of National
Bank Limited. I have got the great opportunity to have an in-depth knowledge of the financial
statement of NBL.
1.4 Methodology of the Study
There are many sources for collecting data. But there are two main way for collecting data.
(a) Primary data source.
(b) Secondary data source.
(a) Primary data source:
Primary data sources are those sources from which the researcher collects data directly by
field work. Here it also used by
2
(i) Chatting with mangers, senior officers and staffs.
(ii) Studying different relevant files like registers books.
(iii) Practical work during the internship program.
(b) Secondary data source:
In secondary data source data is collected from another researchers work, books, internet and
etc. Here it is used by
(i) NBL web site.
(ii) Dissimilar books.
(iii) Dissimilar journals and blogs.
1.5 Limitations of the study:
There are so many limitations are faced during completing the study. Here some are listed.
(i) Only three months is not enough to know an organization. For this reason, the
whole organization is not observed. Limitation of time was a barrier to
complete the study.
(ii) Another limitation was rush office hours. All the time the employees are busy
to do their own assigned task. So it was hard to get them free. But they
cooperated with any matter.
(iii) There were lacks of proper secondary information completing the study.

3
Chapter 02
__________________________________
Overview of National Bank Limited

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2.1 National Bank
National bank (NBL) is one of the leading banks among the Bank. It is unique for its banking
service and highly popular for its services towards the customer.
2.2 Overview of NBL
The National Bank Limited was established in 1983, first 100 percent Bangladeshi owned bank.
By the end of 2017 it has 200 branches operating both in rural and urban areas. It has wide
variety of products including credit and debit cards. It starting with 2 branches it has now
reached to the top position in the country. It always focuses on using modern technology to
satisfy customers e.g. world renowned banking software: Temenos T24, to be in competition
and to win the competition. It is always careful about its stakeholders. It contributes highly in
social corporate responsibility. For example in different natural calamities it donates huge
amount of fund, it is operating a school for slum children, and it provides scholarship to
meritorious student of the country. It has a consistent dividend policy; its performance is getting
better day by day. It is going for expansion in each year. In the last five years the bank has
opened 37 branches. Also, management is spreading its ATM branches significantly to make
its customer’s cash handling easier than before. National Bank's branch banking license in
Bangladesh allows it to offer a full range of banking services. The below table shows the NBL
in Bangladesh at glance-
National Bank in Bangladesh
Currency Bangladesh Taka (BDT)
Main offices/ branches National Bank Limited , Head Office
18 Dilkusha Commercial Area, Dhaka, Bangladesh
Contact numbers Phone:88-02-956-3081,88-02-966-6584
Fax:88-02-956-3953,88-02-966-9404
Email email :ho@nblbd.com
WEB http://www.nblbd.com
Table Figure 1.1: NBL at a glance.
2.3 NBL’s Network

At present, NBL has been carrying on business through 200 branches across the country.
Including the neglected remote rural areas, keeping in mind the responsibilities to the society.
Since inception, the bank has exerted much emphasis on overseas operations and handled a
sizeable quantum of homebound foreign remittance. It has drawing arrangements with 415

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correspondents in 75 countries of the world, as well as with 37 overseas Exchange Companies
located in 13 countries. NBL was the first domestic bank to establish agency arrangements with
the world famous Western Union in order to facilitate quick and safe remittance of the valuable
foreign exchange earned by expatriate Bangladeshi nationals. This means the expatriates can
remit their hard earned money to the country with much ease, confidence, safety and speed.
Also, NBL is operating Off - shore Banking Unit (OBU) to attract foreign investors and local
entrepreneurs. NBL was also the first among domestic banks to introduce international Master
Card in Bangladesh. In the meantime, NBL has also introduced the VISA card. The Bank has
in its use the latest information technology services of SWIFT and REUTERS. NBL has been
continuing its small credit program for disbursement of collateral free Agricultural loans
among poor farmers of Barindra area in Rajshahi district for improving their livelihood.
2.4 Awards & Recognitions
NBL cares in providing banking services in truly accountable and transparent manner for which
it has been rewarded several times. In recognition of framework of financial Information, Core
Risk Management, Annual Report Review, Corporate Governance, Human Resource
Management and Corporate Social Responsibility, NBL won the Best Corporate Award from
the Institute of Cost & Management Accountants of Bangladesh (ICMAB) and Certificate of
Merit from The Institute of Chartered Accountants of Bangladesh (ICAB) for best published
accounts and reports in different years. All these testify that we always care about disclosing
all relevant information for investors and shareholders in impressive way to make prudent
decisions.
2.5 NBL’s Green Banking
Green Banking is defined as promoting eco-friendly banking practices and reducing emitted
carbon mark from banking activities. Green banking mainly focuses on two prolonged
approaches. First, it puts emphasis on green revolution of internal operations of all banks,
meaning all banks should adopt proper ways of consuming renewable energy, digitalization
and other measures to minimize carbon mark from banking sectors. Secondly, all banks should
adopt financing in an environment-friendly way. Generally Green Banking exposure includes:
sustainable banking, ethical banking, green mortgages, green loans, green credit cards, mobile
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banking, online banking etc. The main objective of green banking is to minimize filth and gives
importance to environment and society. As per requirement of Bangladesh Bank, to facilitate
green initiatives of the bank, National Bank Limited has a green banking unit; a bank specific
green banking policy and a green strategic plan are in place. The bank invests in in-house
environmental management, provides training to employees continuously as part of
accelerating bank’s green initiatives. National Bank Limited has also introduced green finance
to support environmental friendly projects. Online banking, SMS banking and the debit card
are already in place to broaden the payment options for customers. The bank is committed to
take the challenges for strengthening green banking responsibilities over time.
2.6 Functions:
The functions of National Bank are specified below-
(i) Maintaining deposit Accounts.
(ii) Making investment.
(iii) Conducting other Banking services.
(iv) Conducting social welfare activities.
(v) Working for continues business innovation and improvements.
(vi) Ensuring the best uses of its creativity, well disciplined, well manages and
perfect growth.
2.7 Internal Control System
The board duly acknowledges its overall responsibility to maintain a sound control system with
a view to achieving Bank’s objectives in an effective and efficient manner, reliability and
timeliness of financial reporting, compliance with applicable laws, regulations & internal
policies and safe-guarding the Bank’s assets as well as stakeholders investments. Effective
control system results in better internal and external risk management in terms of identification,
measurement, monitoring and mitigation of risk that could adversely affect the achievement of
Bank’s goal, Keeping this in mind, an appropriate control structure and process has been
developed and adopted in line with the policy guidelines of Bangladesh Bank and other
regulatory bodies. The effectiveness and implementation status of the process are reviewed by
the Board, Audit Committee and Risk Management Committee. In 2017, the Internal Control
& Compliance Division (ICCD) conducted Comprehensive Routine Inspection at 200
Branches and 25 Divisions at Head Office. They accomplished Risk Based Inspection at 38
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Branches and Special Inspection at 11 Branches & Investigation at 28 Branches. They also
accomplished Comprehensive Audit for reporting in “Online Foreign Exchange Transaction
Monitoring System” at 43 Authorized Dealer (AD) Branches (including Off shore Banking
Unit) and Anti Money Laundering & Combating Finance for Terrorism (AML & CFT)
inspection at 20 Branches. Bangladesh Bank carried out Comprehensive & Special Inspection
at 47 Branches and Foreign Exchange Inspection at 09 Branches. They also conducted audit
on yearly accounts and Special Inspection on 06 Core Risks. Besides the above, other key
components of control structures like Risk Management Committee, Asset Liability Committee
(ALCO), Management Committee (MANCOM), and Senior Management Team (SMT) are
also contributing in strengthening the risk based control system identifying the weaknesses and
recommending solutions. External Auditors also review the functions of internal control system
(ICS) on yearly basis. Outcome of these structured processes with suggestion there against are
properly addressed, evaluated and monitored by the Board, Audit committee, Risk
Management Committee and Higher Management. It acts as bridge between Management and
Board; and also works as watchdog to ensure safe, sound and compliant operations in the Bank.
2.8 SWOT Analysis of National Bank
All organization has some strength, weakness, opportunities and threats. So NBL has also some
swot’s. This analysis short listed its strength, weakness, opportunities and threats.
Strengths:
(i) Competitive organization.
(ii) Efficient management group.
(iii) Good employee-employer relationship.
(iv) All branches are located good location.
Weaknesses:
(i) Insufficiency of diversified products and service.
(ii) Manual registers are used in some cases.
(iii) The retail sector is very price sensitive.
(iv) Interest rates are very competitive.
(v) Less promotion campaign.

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Opportunities:
(i) NBL has very goodwill.
(ii) Very little charge on its transactions.
(iii) Sophisticate customer service scheme.
(iv) Global marketing events.
Threats:
(i) Exposed to the international nature of trade.
(ii) The market for banking sector is very competitive.
(iii) The new technology emerges to protecting the currency value & use options for
better credit rate earnings.
(iv) Competitors are developing alternative brands.
(v) It has to deals in different currencies and so costs and margins are not stable
over long periods of time.
2.9 Banking Services of NBL
(i) General Banking.

(ii) Credit and investment.
(iii) Foreign Trade (Import, Export & Remittance).
2.10 Products and Services of NBL

Products and services of NBL:
(i) Special Deposit Scheme
(ii) Monthly Savings Scheme
(iii) Credit Card
(iv) NBL ATM Service
(v) Western Union Money Transfer
(vi) Saving Insurance Scheme
(vii) NBL Saving Scheme
(viii) Consumer Deposit Scheme

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Chapter 03
_________________________________
Theoretical Aspects of Financial
Statement Analysis
© Daffodil International University 10

3.1 Introduction
When any one wants to buy or invest money in a company he or she first sees the
financial condition of the company. Financial performance is very important. Financial
performance can be measured by analyzing its balance sheet, income statement, or ratio
analysis.
3.2 Financial Statement
In financial statements we usually found a lot of information. It includes balance sheet,

income statement, statement of retained earnings and cash flow.
3.3 Various Types of Financial Statement
As there are so many financial statements so here some are described.
3.3.1 Balance Sheet
In financial accounting, a balance sheet or statement of financial position is a summary of

the financial balances of an individual or organization, whether it be a sole proprietorship,
a business partnership, a corporation, private limited company or other organization such
as Government or not-for-profit entity. In balance sheet usually we found the summery of
financial balances. All the components are listed a specific date. The components are
assets, liabilities and ownership equity. And it is also known as a snapshot of a company.
A standard company balance sheet has three parts: assets, liabilities and ownership equity.
3.3.2 Income statement
Another name of income statement is profit and loss statement or operating statement. In
income statement all the revenues and expenses are listed accordingly with a specified
date. An investor easily knows about the money made or lost by studying it.
3.3.3 Ratio Analysis
A ratio analysis is a quantitative analysis of information contained in a company’s

financial statements. Ratio analysis is used to evaluate various aspects of a company’s

operating and financial performance such as its efficiency, liquidity, profitability and
solvency.
3.4 Tools of Financial Analysis
i) Vertical Analysis
ii) Horizontal Analysis
iii) Ratio Analysis
3.4.1 Vertical Analysis

Vertical analysis is the representation of financial statement in each line of the base figure
as percentage. It means every line item on an income statement is stated as a percentage
of gross sales, while every line item on a balance sheet is stated as a percentage of total
assets.
3.4.1.1 Vertical Analysis of Balance Sheet
An example of vertical analysis of balance sheet is shown here

Particular Tk. Totals Percent
Assets
Current Asset 533000 43.30%
Long-term investment 177500 14.40%
Plant asset (net) 470000 38.20%
Intangible asset 50000 4.10%
Total asset 1230500 100%
Liabilities
Current liabilities 243000 19.70%
Long-term liabilities 200000 16.30%
Total liabilities 443000 36%
Stockholders equity:
Preferred 6% stock, Tk. 100 per 150000 12.20%
Common Stock, Tk 10 per 50000 40.60%
Retained earnings 137500 11.20%
Total Stockholder’s equity 7787500 64%
Total liabilities and 1230500 100%

stockholder’s equity
Table Figure 1.2: Vertical analysis of balance sheet
3.4.1.2 Vertical Analysis of Income Statement
The table shown below is an example of vertical analysis of income statement.
Tk. Percent
Sales 1498000 100.00%
Cost of goods sold 1043000 69.60%
Gross profit 455000 30.40%
Selling expenses 191000 12.80%
General expenses 104000 6.90%
Total operating expenses 295000 19.70%
Operating Income 160000 10.70%
Other Income 8500 0.60%
168500 11.30%
Other expenses 6000 0.40%
Income before income tax 162500 10.90%
Income tax 71500 4.80%
Net income 91000 6.10%
Table Figure 1.3: Vertical analysis of income statement
3.4.2 Horizontal Analysis
Horizontal analysis represents the current financial statements to a previous year’s

financial information. And anyone can put several years information in it. Its makes
easier for manager or the investor to take decision.
3.4.2.1 Horizontal Analysis of Balance Sheet
An example of horizontal analysis of balance sheet is shown here

Particular 2016 2017 Increase Or Decrease
Assets Taka Taka Amount Percentage
Current Asset 550000 533000 17000 3.2%
Long-term investment 95000 177500 82500 (46.5)%
Plant asset (net) 444500 470000 25500 (5.4)%
Intangible asset 50000 50000 --
Total asset 1139500 1230500 91000 (7.4)%
Liabilities
Current liabilities 210000 243000 33000 (13.60)%
Long-term liabilities 100000 200000 100000 (50)%
Total liabilities 310000 443000 133000 (30)%

Stockholders equity:
Preferred 6% stock, Tk. 100 per 150000 150000 -- --
Common Stock, Tk 10 per 500000 50000 -- --
Retained earnings 179500 137500 42000 30.50%
Total Stockholder’s equity 839500 7787500 42000 5.30%
Total liabilities and stockholder’s
equity 1139500 1230500 91000 (7.40)%
Table Figure 1.4: Horizontal analysis of balance sheet
3.3.2.1 Horizontal Analysis of Income Statement
The table shown below is an example of vertical analysis of income statement.
2017 2016 Increase or decrease

Tk. Tk. Amount Percent
Sales Tk.1498000 Tk.1200000 Tk.298000 24.80%
Cost of goods sold 1043000 820000 223000 27.20%
455000 380000 75000 19.70%
Selling expenses 191000 147000 44000 29.90%
General expenses 104000 97400 6600 6.80%
Total operating expenses 295000 244400 50600 20.70%
Operating Income 160000 135600 24400 18.00%
Other Income 8500 11000 (2500) (22.70)%
168500 146600 21900 14.90%
Other expenses 6000 12000 (6000) (50)%
Income before income tax 162500 134600 27900 20.70%
Income tax 71500 58100 13400 23.10%
Net income Tk.91000 Tk.76500 Tk14500 19.00%
Table Figure 1.5: Vertical analysis of income statement
3.4.3 Ratio Analysis
Financial ratios can be divided into four basic groups or categories.

i) Liquidity ratios
ii) Activity ratios
iii) Debt ratios &
iv) Profitability ratios
3.4.3.1.1 Liquidity Ratio

Liquidity ratio analysis helps to observe the ability to pay its bills in timely manner. The
entire liquidity ratio is described below
3.4.3.1.1 A Current Ratio
This ratio is the indicator of any company to pay short term and long term obligations.
The formula for calculating a company’s current ratio is:
Current Ratio=Current Asset/Current Liabilities
3.4.3.1.1. B Quick Ratio
This ratio shows how quickly a company pays its debtors by its most liquid assets.
Quick ratio is calculated as follows:
Quick Ratio= Total current Asset- Inventory/ Total Current Liabilities
3.4.3.1.1 C Net Working Capital
This ratio measured the net working capital of a company by subtracting current
liabilities from current asset. To calculate net working capital, we will use the following
formula:
Net Working Capital=Total Current Assets - Total Current Liabilities
3.4.3.1.2 Activity Ratio
Activity ratios measure the speed with which accounts are converted into sale or cash.
3.4.3.1.2 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 = Net Sales/ Total Average Asset
3.4.1.2. Investment to Deposit ratio
This ratio helps us to identify how much amount is invested comparing with how much
amount is deposited.

Investment to Deposit Ratio = Total Investments / Total Deposits
3.4.3.1.3 Debt Ratio
This ratio shows the extent of a company’s leverage. Another way it tells us the portion of
assets that are financed by debt.
3.4.3.1.3. A Debt Ratio
This ratio helps us to identify the company’s creditors by the proportion of total assets.
Debt Ratio = Total Liabilities / Total Assets
3.4.3.1.3 B Equity Capital Ratio
This is the indication of company’s financial strength. The shareholder invested money is
the equity of a company.
Equity Capital Ratio = Total Shareholder’s Equity/ Total Assets
3.4.3.1.3. C Time Interest Earned Ratio
This ratio helps to identify the debt obligations meeting ability.
Time Interest Earned Ratio-=EBIT/ Interest Expense
3.4.3.1.4 Profitability Ratio
By profitability ratio we can know the profitability of a company or firm. And also we
can know whether the firm is doing well or not.
3.4.3.1.4. An Operating Profit Margin
This ratio shows the profit after paying all production cost. The operating profit margin
is calculated as follows:
Operating Profit Margin = Operating Profit / Sales
3.4.3.1.4. B Net Profit Margin
Net profit margin is the percentage of revenue remaining after all operating expenses,
interest, taxes and preferred stock dividends (but not common stock dividends) have been
deducted from a company's total revenue. The net profit margin is calculated as follows:

Net profit Margin = Net profit after Taxes / Sales
3.4.3.1.4. C Return on Equity (ROE)
Return on equity (ROE) is the amount of net income returned as a percentage

of shareholders' equity. Return on equity (also known as "return on net worth" [RONW])
measures a corporation's profitability by revealing how much profit a company generates
with the money shareholders have invested. ROE is expressed as a percentage and
calculated as:
Return on Equity (ROE) = Net profit after Taxes / Average stockholder’s Equity
3.4.3.1.4. D Price/ Earnings ratio (PE ratio)
This ratio is the measure of price paid of a share to the income earned by it’s per share..
Price/Earning ratio = Stock price per share / earnings per share
3.4.3.1.4 E Earning per share (EPS)
This is very important for the investor. EPS indicates the profitability of a company.
EPS = Net income/ Number of share outstanding

Chapter 04
_________________________________
Financial Statement Analysis of
National Bank Limited

4.1 Introduction
In the previous chapter the theoretical review has been discussed. Now ratio of different
category of National Bank Ltd. is shown and analysis of ratio is performed.
4.2. Ratio and Trend Analysis

All the ratio’s and trend with interpretation is discussed here.
4.2.1 Current Ratio
This ratio is very important. It compares a firm's current assets to its current liabilities, and
is expressed as follows:
Current Ratio = Current Asset/ Current Liabilities

Current Ratio
Year 2013 2014 2015 2016 2017
Current Ratio 1.18 1.21 1.26 1.23 1.24
Graphical Presentation
Current Ratio
1.28
1.26
1.24
1.22
1.2
1.18
1.16
1.14
2013 2014 2015 2016 2017
Current Ra tio
Figure 1.6: Current Ratio

Interpretation
The chart shows that there is a upward trend from 2013 to 2015. And then It was a slight
downward in 2016. But in 2017 there is a slight upward in the slope. NBL maintain a
good position in current ratio which indicates they are able to pay to the debtors with its
current assets.

4.2.2 Net Working Capital
Short term liquidity is expressed by this ratio.
Net Working Capital= Current Assets – Current Liabilities
Net Working Capital

Year 2013 2014 2015 2016 2017
Net Working Capital 709.38 853.04 1166.04 1097.48 1343.58
Net Working Capital

1600.00
1400.00
1200.00
1000.00
800.00
600.00
400.00
200.00
0.00
2013 2014 2015 2016 2017
Net Worki ng Ca pi tal
Figure 17: Net working capital
Interpretation
In 2013 the net working capital was Tk. 709.38 m. which was gradually increased to Tk.
1166.04 m. in 2015. Then in 2016 NBL didn’t do well but in 2017 they really do well.

4.2.3 Cost income Ratio
The portion of operating income is dividing by total operating expenses. It is expressed as

follows:
Cost income Ratio = Total Operating Expenses /Total Operating Income
Cost Income Ratio

Year 2013 2014 2015 2016 2017
Cost Income Ratios 39.23 35.54 36.83 34.11 36.02
Graphical Presentation:
Cost Income Ratios

40
39
38
37
36
35
34
33
32
31
2013 2014 2015 2016 2017
Cos t Income Ra tios
Figure 1.8: Cost income ratio
Interpretation
In 2013 the cost income ratio is highest but after that it is decreasing. So it can be said that
the operating efficiency of NBL is becoming good. That means they are successful in
minimizing their operating cost.

4.2.4 Total asset turnover ratio
Total asset turnover ratio is an efficiency ratio that measures a company's ability to generate
sales from its assets by comparing net sales with average total assets. In other words, this
ratio shows how efficiently a company can use its assets to generate sales. It is expressed
as follows:
Total asset turnover ratio= Net Sales / Average Total Assets
Total Asset Turnover

Year 2013 2014 2015 2016 2017
Total Asset Turnover(Times) 0.048 0.05 0.047 0.054 0.047
Total Asset Turnover(Times)

0.056
0.054
0.052
0.05
0.048
0.046
0.044
0.042
2013 2014 2015 2016 2017
2013 2014 2015
2016 2017
Figure 1.9: Total asset turnover ratio
Interpretation
The chart shows a fluctuating trend in asset turnover. Its total asset turnover is lowest in
2015, but it is highest in 2016. This indicates that NBL is becoming more well-organized
in use its property to generate operating profits.

4.2.5 Investment to Deposit Ratio
Previous literature chapter it is discussed. Here we will see the result of the ratio.
Investment to Deposit Ratio= Total Investment / Total Asset
Investment to Deposit
Year 2013 2014 2015 2016 2017
Investment to Deposit Ratios 0.29 0.27 0.27 0.25 0.22
Investment to Deposit Ratios

0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2013 2014 2015 2016 2017
2013 2014 2015
2016 2017
Figure 2.1: Investment to Deposit Ratio
Interpretation
From above the chart it is seen that in 2013 highest investment was made but later on it
decreases gradually. This indicates NBL reduces investment to hold cash.

4.2.6 Net Profit Margin
Actual net profit margin represents how much amount in the form of percentage. Here we
will see the result of this ratio.
Net Profit Margin=Net profit after tax/operating income
Net Profit Margin

Year 2013 2014 2015 2016 2017
Net Profit Margin 0.19 0.21 0.29 0.34 0.29
Net Profit Margin

0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2013 2014 2015 2016 2017
2013 2014 2015
2016 2017
Figure 2.2: Net profit margin
Interpretation
From the graph it has seen that the net profit margin is raising position in 2013 to 2016
except 2017. Therefore profit margin is in strong position.

4.2.7 Return on Asset (ROA)
In the previous chapter the theory has been discussed. So we will see the result comparison.
Return on Asset (ROA) = Net profit after tax / Total Assets
Return on Asset
Year 2013 2014 2015 2016 2017
Return on Asset 0.96 1.08 1.43 1.9 1.43
Return on Asset
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2013 2014 2015 2016 2017
Return on As s et
Figure 2.3: Return on asset
Interpretation
This ratio is used annually to compare the business performance to its norms. The company
return on asset was increasing from 0.96 to 1.90 in the preceding 4 years. It can be said that
NBL’s earning capacity is increasing year by year. This is good sign for the Company. But
in 2017 they didn’t do well.

4.2.8 Return on Equity (ROE)
This ratio shows the return on equity.
Return on Equity=Net Profit after Tax/ Shareholders equity
Return on Eqity
Year 2013 2014 2015 2016 2017
Return on Eqity 9.14 10.45 12.74 15.96 12.27
Return on Eqity
18
16
14
12
10
8
6
4
2
0
2013 2014 2015 2016 2017
2013 2014
2015 2016
2017
Figure 2.4: Return on equity
Interpretation
The return on equity ratio was increasing in 2013 to 2016. That was increased from
9.14% to 15.96%. This is admirable. Return on equity has drastically decreased in 20l7
from previous year, which is not a good sign.

4.2.9 Earnings per Share
EPS calculation is showed below. The earnings per formula is:
Earning Per Share =Earnings available for common stock holder/Number of shares
of common stock outstanding
Earning Per Share

Year 2013 2014 2015 2016 2017
Earning Per Share 1.36 1.55 1.95 2.35 1.98
Earning Per Share

2.5
1.5
0.5
0
2013 2014 2015 2016 2017
2013 2014 2015
2016 2017
Figure 2.5: Earning per share
Interpretation
From 2013 to 2016 NBL did well but in 2017 they did slight bad.
4.2.10 Price Earnings Ratio

P/E ratio represents the earnings comparing to price. The price Earning (P/E) ratio is
calculated as follows:
Price Earnings Ratio=Market price per share of common stock/Earning per share
Price Earnings Ratio

Year 2013 2014 2015 2016 2017
Price Earnings Ratio 8.68 7.35 4.82 3.62 6.57
Price Earnings Ratio

10
9
8
7
6
5
4
3
2
1
0
2013 2014 2015 2016 2017
2013 2014 2015

2016 2017
Figure 2.6: Price or earning (P/E) ratio
Interpretation
From the graph it has seen that in year 2013 the investors has paid maximum amount of
price for per unit of earnings in which the company issued its share in the market. And then
there is downward trend till 2016. This indicates the investors are paying less and not
willing to invest in NBL. But the condition in 2017 was changed. This indicates investors
have back and keep their trust on NBL.

4.2.11 Debt Ratio
Debt Ratio is a financial ratio that indicates the percentage of a company's assets that are
provided via debt. It is the ratio of total debt (long-term liabilities) and total assets (the sum
of current assets, fixed assets, and other assets such as 'goodwill'.
Debt ratio= Total Liabilities/Total Assets
Debt Ratio
Year 2013 2014 2015 2016 2017
Debt Ratio 8.83 8.51 7.39 7.44 7.69
Debt Ratio
9
8.5
7.5
6.5
2013 2014 2015 2016 2017
2013 2014 2015

2016 2017
Figure 2.7: Debt Ratio
Interpretation
The graph shows that debt ratio of NBL is fluctuating. The NBL has reduced its debt
ratio and thereby it has reduced financial leverage and financial risk.

Chapter 05
_________________________________
Findings, Recommendations and
Conclusion.

5.1 Findings
Now, the findings of this study can be expressed as follows:
1. Current Ratio
Current Ratios of NBL were 1.18 times, 1.21 times, 1.26 times, 1.23 times and 1.24 times
respectively in 2013, 2014, 2015, 2016 and 2017. Over the period current ratio of NBL
was stable the standard. In terms of standard of current ratio, liquidity position of NBL
is satisfactory.
2. Net Working capital
Net Working Capital of National Bank Limited was Tk709.38 million, Tk853.04 million,
Tk1166.04 million, Tk1057.48 million and Tk1343.58 million respectively in 2013, 2014,
2015, 2016 and 2017. After 2013 net working capital of NBL increased. It is good Sign
for the company.
3. Cost Income Ratio
Cost income ratio of National Bank Limited was 39.23%, 35.54%, 36.83%, 34.11% and
36.02% respectively in 2013, 2014, 2015, 2016 and 2017. After 2013 cost income ratio of
NBL decreased. It' is bad sign for the company.
4. Total Asset Turnover Ratio
Total Asset Turnover Ratio of NIBL was 0.048 times, 0.050 times, 0.047 times, 0.054
times ' and 0.047 times respectively in 2013, 2014 2015, 2016 and 2017 Over the period
total asset turnover ratio of NBL was below the standard. In terms of standard of total
asset turnover ratio, liquidity position of NBL is not satisfactory.
5. Investment to Deposit Ratio
Investment to deposit ratio of National Bank Limited were 29%, 27%, 27%, 25%, & 22%
respectively in 2013, 2014, 2015, 2016 and 2017. Investment to Deposit Ratio has been

showing a decline trend. It indicated that NBL was not able to utilize its deposited fund
properly.
6. Net Profit Margin
Net Profit Margin of National Bank Limited was 19%, 21%, 29%, 34% and 29%
respectively in 2013, 2014, 2015, 2016 and 2017. After 2013 Net Profit Margin of NBL
increased. It is good sign for the company.
7. Return on Assets
In 2016 Return on Assets was the highest (1.90). After 2013 return on assets increased, it
is a good sign for the company.
8. Return on Equity
Return on equity was 9.14%, 10.45%, 12.74%, 15.76% & 12.27% respectively in 2013,
2014, 2015, 2016 and 2017. Return on Equity was the lowest (9.14%) in 2013. After
2013 NBL was able to increase its Return on Equity.
9. Earnings-Per Share
In 2016 Earnings-per Share was the highest (Tk2.35). After 2013 EPS of NBL increased
gradually & it was the highest in 2016. After 2013, EPS of NBL increased. It’s a good
sign for company.
10. Debt Ratio
Debt ratios of NBL were 88.30%, 85.10%, 73.90%, 74.40% and 76.90% respectively in
2013, 2014, 2015, 2016 and 2017. In 2017 it was the highest. After 2014 debt ratio of
NBL decreased. It is a good sign for the company.
11. Price Earnings Ratio
Price Earnings Ratios of NBL were 8.68times, 7.35times, 4.82times, 3.62times and
6.57times respectively in 2013, 201‘, 2015, 2016 end 2017.

5.2 Recommendations:
The recommendations are:
1. Over the period current ratio of NBL was below the standard. NBL should increase
its current assets to improve liquidity position.
2. In 2017 net working capital was the highest Tk.1343.58m. NBL should try to
decrease its net worth.
3. In 2013 cost income ratio was the highest (39.23%). NBL should work hard
to decrease its cost income ratio to improve profitability.
4. In 2016 total asset turnover on assets was the highest (0.054). Over the period current
ratio of NBL was below the standard. In terms of standard of current ratio,
liquidity position of NBL is not satisfactory. So we should high the standard of total asset
turnover. Then NBL position will be satisfactory.
5. Investment to deposit ratio has been showing a decline trend since 2014.
Management of NBL should work hard to utilize deposited fund properly.
6. Over the period net profit margin of NBL was below the standard. NBL should
increase it’s to improve probability position.
7. In 2016 return on assets was the highest (1.90). Company should try to utilize its
assets properly to increase return associated with total assets. In 2013 Price/Earnings
ratio was the highest. After 2013 it was decreased. So, NBL should try to increase
Price/Earnings Ratio to boost investor’s confidence.

8. Return on equity was highest in 2016 (15.96). Equity was the lowest (9.14%) in 2013.
After 2013 NBL was able to increase its Return on Equity. It will help the company
to increase ROE. It is satisfactory for the company.
9. Debt ratios of NBL were the highest in 2013. After 2013 debt ratio of NBL decreased.
It should increase debt ratios. In terms of standard of liquidity position of NBL
is satisfactory.
10. In 2016 Earnings-per share was the highest (Tk2.35). So they should increase EPS
for establish of the company.

5.3 Conclusion
In the beginning of the year 2017 the financial market was tremendously unstable that
affected the Banking sector in Bangladesh. Within the period of market inconsistency
National Bank Ltd remained much persevered. Their capital base was strong; their capital
to Risk Weighted Asset Ratio (CRAR) was above the level of regulatory requirement.
Beside this, NBL’s liquidity position also remained reasonable. At present NBL are in a
different business environment operation which is very unstable than just a few years
ago. Consequently the financial services industries are changing rapidly and NBL is
embracing the change slowly but steady.

References
A. Books
1. Bodie Z, Kane. A, Marcus. A.J, (2012), Investments, (10th ) edition, Tata McGraw-
Hill
2. Nanda, K.C. (2010) Credit and Companying. New Delhi/London
3. Khan, A R. (2008). Company Management: A Fund Emphasis, Ruby Publications,
Dhaka
B. Internal Document of NBL:
1. Different Booklet paper of NBL

2. Annual Reports of NBL
3. Prospectus of NBL.
3.Web Sites:
1. NBL, Official Site: www.nblbd.com

2. www.bangladesh-bank.org
3. http://pubs.sciepub.com/jbe/2/5/3/index.html , retrieved on 14/07/2018 19.49 pm
4. www.google.com
5. http://www.assignmentpoint.com/business/finance/financial-performance-
evaluation-national-bank.html , retrieved on 1/08/2018 at 08.49 pm
6. http://pubs.sciepub.com/jbe/2/5/3/index.html , retrieved on 1/08/2018 22.42 pm

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Internship Report

Financial Statement Analysis of National Bank Limited

Submitted to the Department of Business Administration,

Under the Supervision of

Date of Submission: 13th September, 2018

© Daffodil International University

September 13, 2018

Professor Dr. Md. Abul Hossain

Subject: Submission of Internship Report.

( Kazi Ashraf Ahsan )

© Daffodil International University ii

I wish him every success in life.

(Professor Dr. Md. Abul Hossain )

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( Kazi Ashraf Ahsan )

© Daffodil International University iv

( Kazi Ashraf Ahsan )

© Daffodil International University v

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NBL National Bank Limited

CRR Cash Reserve Requirement

SLR Secondary Liquidity Requirement

ATM Automated Teller Machine

SOD Secured Overdraft

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1.2 Objectives of the Study

1.3 Scope of the Report

1.4 Methodology of the Study

(a) Primary data source:

(b) Secondary data source:

1.5 Limitations of the study:

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2.2 Overview of NBL

2.3 NBL’s Network

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2.4 Awards & Recognitions

2.5 NBL’s Green Banking

2.7 Internal Control System

2.8 SWOT Analysis of National Bank

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2.9 Banking Services of NBL

(i) General Banking.

2.10 Products and Services of NBL

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3.2 Financial Statement

In financial statements we usually found a lot of information. It includes balance sheet,

3.3 Various Types of Financial Statement

As there are so many financial statements so here some are described.

3.3.1 Balance Sheet

In financial accounting, a balance sheet or statement of financial position is a summary of

3.3.2 Income statement

3.3.3 Ratio Analysis

A ratio analysis is a quantitative analysis of information contained in a company’s

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3.4 Tools of Financial Analysis

3.4.1 Vertical Analysis

3.4.1.1 Vertical Analysis of Balance Sheet

An example of vertical analysis of balance sheet is shown here