Professional Documents
Culture Documents
INTRODUCTION
Background of the Report
After completing my BBA from BANGLADESH UNIVERSITY. I wanted to do
Internship in a reputed Bank that would be helpful for my future professional
career. I got the opportunity to perform my internship in the NATIONAL BANK
LIMITED. I worked in MOHAKHALI BRANCH. Since I worked here I used the
chance fully. It was a three months long practical orientation program. This report
is originated as the requirement of National Bank Ltd.
Generally by the word "Bank" we can easily understand that the financial
institution deals with money. But there are different types of banks like. Central
Banks, Commercial Banks. Savings Banks, Investment Banks, Industrial Banks,
Cooperative Banks etc. But when we use the term "Bank" without any prefix, or
qualification. It refers to the 'Commercial Banks'. Commercial Banks are the
primary contributors to the economy of a country. So we can say Commercial
banks is a profit-making institution that holds the deposits of individuals &
business in checking & savings accounts and then uses these funds to make loans
For these people and the government is very much dependent of these banks as
the financial intermediary. As, banks are profit-earning concern; they collect
deposit at the lowest possible cost and provide loans and advances at higher cost.
The differences between two are the profit for the bank.
Banking sector is expanding its hand in different financial events every day, at the
same time the banking process is becoming faster, easier and the banking arena is
becoming wider. As the demand for better service increases day by day, they are
coming with different innovative ideas & products. In order to survive in the
competitive field of the banking sector, all banking organizations are looking for
better service opportunities to provide their fellow clients. As a result, it has
become essential for every person to have some idea on the bank and banking
procedure.
Internship program is essential for every student, especially for the students of
Business studies which helps them to know the real life situation. For this reason a
2
pects and challenges
student takes the internship program at the last stage of the master's degree, to
launch a career with some practical experience.
Deregulation of interest rates, raising competition from bank and non-bank
competitors and continuing development of innovative ways to provide financial
services are all contributing to a growing interest in evaluating bank performance.
Various groups of individuals are particularly interested in evaluating bank
performance.
First, bank shareholders are directly affected by bank performance. Investors take
advantage of bank information to develop expectations concerning future
performance that can be used to price common shares appropriately.
Second, bank management traditionally is evaluated on the basis of how well the
bank performs relative to previous years and compared with similar banks. Hence,
employees salaries and promotions are frequently tied to the performance of the
banks. Bankers also need to be informed the condition of other banks with which
they have dealings.
Third, regulators concerned about the safety and soundness of the banking system
and the preservation of public confidence, monitor banks using on-site
examinations and computer oriented early warning systems to keep track on
bank performance.
Fourth, depositors may be interested in how well the bank is doing, especially if
they hold deposits in excess of the insured amount and must depend on the banks
funds for their continued operations.
Fifth, and last, the business community and public should be concerned about
their banks performance to the extent that their economic prosperity is linked to
the success or failure of their bank.
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pects and challenges
1.4 Methodology
Research approaches and techniques to be applied to conduct systematic and
smooth completion of the whole assignment up to the submission of research
report along with the suggestion were as follows:
1. My first task was to prepare a comprehensive research program covering
all aspect of the National Bank Ltd.
2. Work out a rationale systematic selection procedure as per available
information & standard sampling method, which are considered to be
reliable base for giving my recommendation about the population
parameter.
3. Discuss with cardholders and merchants about the master card. Complete
the assignment by specified time and submission of research report by the
following procedure.
4. Collect available management policy, guidelines, project document and
necessary dates from credit card division of National Bank Ltd.
A. Data Collection
In order to accomplish the successfully completion of the report and to form an
opinion on the research along with the necessary recommendations for solving the
problem adequate data and information are necessary for the effective termination
of the research work.
B. Study sample
I have to be design sampling in accordance with International Auditing Guideline
# 19. Dhaka city was divided form the viewpoint of commercial area. There are 6
commercial area and one hundred cardholders ware selected (randomly) from
Dhaka for sample survey.
C. Instrument to be used
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pects and challenges
Questionnaire method was followed for data collection. In case of data collection,
I was follow individual basis either in interview or in filling up the questionnaire.
That means I was visit cardholders and merchants to collect data.
5
pects and challenges
6
pects and challenges
2.1 Vision
The vision of the National Bank Limited is to develop Bangladesh's economy by
profitable investment of public money and build up their confidence to the private
institution.
2.2 Mission
The missions of the National Bank are as follows:
We aim to come one of the leading Banks in Bangladesh by our prudence,
fair and quality of operation.
We intend to meet the needs of our clients and enhance our profitability
by creating corporate culture.
We believe in strong capitalization.
We aim to ensure our competitive advantages by upgrading banking
technology and information system.
We maintain high standard of corporate and business Seth's.
We provided high quality financial services to strengthen the well being
and success of individual, industries and business communities.
We intend to plat more important role in the economic development of
Bangladesh and its finical relations with the rest of the world by interlining
both domestic and international l operations.
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pects and challenges
The objective of NBL is not only earn profit but also to keep the social
commitment and to ensure its co-operation to the person of all level, to the
businessman, industrialist -especially who are engaged in establishing
large scale industry by consortium and the agro-based export oriented
medium and small industries by self inspiration.
NBL is committed to ensure its contribution to national economy by
increasing its profitability through professional and disciplined growth
strategy for its customer and by creating corporate culture in international
banking area.
NBL believes in building up strong-based capitalization of the country.
NBL is the first and largest private bank is committed to continue its
endeavor by rapidly increasing the investment of honorable shareholders
into assets.
NBL has been working from the very beginnings to ensure the best uses
of its creativity, well disciplined, well manage and perfect growth.
NBL is playing a vital role in socio-economic development of Bangladesh
by was of linkage with rest of the world by developing worldwide network
in domestic and international operation.
NBL is preoccupied to encourage the investors for purchasing its share by
creating the opportunity of long-term investment and increasing the value
of share through prosperity as developed by day.
NBL is committed to continue its activities in the new horizon of business
with a view to developing services oriented industry and culture of
morality and its maintenance in banking.
8
pects and challenges
st
assets of the bank were Tk. 48732.1 million as on 31 December 2001, which is
higher than Tk. 1584.02 million than the previous year. This is the sign of good
management. The management processes are as follows:
Planning:
The strategic planning approach in NBL is top-down. Top management formulates
strategy at the corporate level, and then it is transmitted through the division to the
individual objectives. Board of directors or Executive committee usually takes the
decision. In this process lower level manager are detached in making process,
even brainstorming of lower level manager is absent in decision-making and
planning process.
Organizing:
Organizing of the National Bank Limited is based on Departmentalization. The
organization is divided into twelve departments headed by Executive vice
President or Senior Vice President. In the National Bank Limited the whole
operation is centralized and authority is delegated by written guidelines. These
guidelines are:
Operational manual approved by Head Office, where each aspect or
banking operation is elaborately defined.
Advance manual including advances limit for different management level.
Bad and doubtful recovery manual.
Code of conduct.
Foreign banking guidelines.
Central bank directives.
Different management position holders in departments and branches practice their
authorized power in different cases with administrative loophole.
Staffing:
Entry-level recruitment process of the National Bank Limited is conducted in
three ways.
9
pects and challenges
officer has one year probation period. After completion of probation period the
officer joins as officer grade III (b). The career path of probationary officer is
headed toward different management positions. Second way of recruitment is to
recruit non-probationary officer who joins as an assistant officer. The career path
of an assistant officer is lengthier than probationary officer. The third way of
recruitment is recruitment of staff and sub-staff such as typist, messenger, driver,
guard, attendant, cleaner and other lower level positions. Promotion policy of
NBL is basically based on seniority basis. Sometimes, employees are promoted to
the higher position for their outstanding performance. However, it is found that
the average length of a position held by an employee is around five years.
Controlling
The bank has strict control over its all-organizational activities. The Bangladesh
Bank directives indicate some control measures. The central bank conducts credit
inspection by a team. The National Bank Limited has audit and inspection
department to take controlling measures in internal operations. Audit and
inspection team send to the branches now and then and is responsible for
preparing report that will be submitted to the chief Administration to take
necessary actions.
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pects and challenges
Computer Division
Credit Division
Dispatch Division
Financial
Administration Division
International Division
Merchant Banking
Division
Share Division
Marketing Division
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pects and challenges
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pects and challenges
Organogram of NBL
CHAIRMAN
Board Secretariat
BOARD OF
DIRECTORS
Monitoring &
Implementation
COMMITTEES
Budget & Exp. Control
MANAGING
DIRECTOR
DMD
Operation
DMD
Admin & Establishment
EVP
VP
EVP
Public
Relation
AVP NBL
Train. Ins
VP
EVP
VP Gen.
Banking
VP
Computer
EVP
SVP
EVP
CCD
SVP
VP
Industrial
Credit
AVP
Audit
EVP
SVP
SVP
AVP Acc
& Fin
VP
Develop
AVP
Admin.
VP
Establis
h
VP Gen.
Credit
AVP
Inspection
AVP
OS.
DEPWING
AVP
F.MAN&
OS.OP
AVP
AVP
RECON&ST
GERMENTS
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pects and challenges
Board of Directors
14
pects and challenges
Profit
In 2001 NBL earned profit of Tk. 1016.64 million, which is higher the previous
Year by 92.48 million.
Dividend:
The board of director recommends 30% cash dividend from profit of2001 of the
shareholder.
Import:
In 2001, NBL handled import business worth Tk. 20773.20 million as against Tk.
2420.04 million in the previous year.
Export:
In 2001 total export was Tk. 22071.00 million, which is higher by Tk. 22420.04
million from the previous year.
Fixed Assets:
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pects and challenges
The fixed assets of the rose to Tk. 797.81 million in 2001 from Tk. 485.64
million of 2000 The bank owns a ten-storied building in KDA C/A, khulna, a
five-storied building in Rampura, Dhaka and commercial valuable land Kawran
Bazar and at Agrabd CA Chittagong.
Consortium Financing:
To the country industrialized a large amount of money should invest. It is a
challenge of 21st century for any individual bank it is very hard and risky to face
the challenge. The bank is giving credit facilities in productive and priority sectors
with the policy guidelines of its own and Bangladesh Bank, side by side the bank
has invested in large-scale industries in consortium with other bank. Among these
with the notable private sectors- E TV, Pepsi-cola, Pacific Bangladesh Telecom
limited, Apollo Hospital, etc.
16
pects and challenges
for TK.7.00 million. Moreover, NBL has been- - participating in Agro Based
Industries and Teleological Development Project
USAID since 1996, NBL has got the fund Tk.140.00 million as agriculture credit
from that ATDP project and along With its respective fund the bank has
distributed the total amount to the sub- sector through selective branches in 2001.
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pects and challenges
Deposit
Easy
Convenient
Classic
Standard
50000/100000/200000/500000/-
Deposit)
100000/200000/400000/1000000/-
Accidental
Death
Benefit
18
pects and challenges
depositor shall get the amount of Tk. 40100/- and Tk. 1125000/- depositing Tk.
500/- per month for the duration of 5 years or 10 years respectively and in the
same way depositor get Tk. 80100/-and Tk. 224500/- for depositing Tk.1000/- per
month for the duration of 5 years and 10 years respectively.
Monthly
Return
Installment
500.00
1000.00
year
40100.00
80100.00
after
5 Return
after
10
year
112500.00
224500.00
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pects and challenges
During the year the bank has ousted a profit of Tk. 96.70 million from credit card
business. NBL also get licenses from international brand Visa Card, very soon, it
will lunched.
General Banking
1. opening section (set numbering)
2. Deposit section
3. Cash section
4. Remittance section
5. Clearing section
6. Accounts section
3.1Acc
In NBL Motijheel Branch, the following departments are under general banking
section:
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pects and challenges
Account opening is the gateway for clients to enter into business with bank. It is
the foundation of banker customer relationship. This is one of the most important
sections of a branch, because by opening accounts bank mobilizes funds for
investment. Various rules and regulations are maintained and various documents
are taken while opening an account. A customer can open different types of
accounts through this department. Such as:
Step 2
Step 3
Step 4
Step 5
Step 6
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pects and challenges
Partnership Account:
Limited company:
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pects and challenges
3.3Deposit Section
Deposit is the lifeblood of a bank. From the history and origin of the banking
system. We know that deposit collection is the main function of a bank.
Accepting deposits
The deposits that are accepted by NBL like other banks may be classified in to,a) Demand Deposits
b) Time Deposits
Demand deposits
These deposits are withdrawn able without notice, e.g. current deposits. National
Bank Limited accepts demand deposits through the opening of
a) Current account
b) Savings account
c) Call deposits from the fellow bankers
Time deposits
A deposit which is payable at a fixed date or after a period of notice is a time
deposit. National Bank Limited accepts time deposits through Fixed Deposit
Receipt (FDR), Short Term Deposit (STD) and Beard Certificate Deposit (BCD)
etc. While accepting these deposits, a contract is done between the bank and the
customer. When the banker opens an account in the name of a customer, there
arises a contract between the two. This contract will be valid one only when both
the parties are competent to enter into contracts. As account opening initiates the
fundamental relationship & since the banker has to deal with different kinds of
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pects and challenges
persons with different legal status, National Bank Limited officials remain very
much careful about the competency of the customers.
Cash Section
Banks, as a financial institution, accept surplus money from the people as deposit
and give them opportunity to withdraw the same by check, etc. But amount the
banking activities, cash department play an important role. It does the main
function of a commercial bank i. e, receiving the deposit and paying the cash on
demand. As this department deals directly with the customers, the reputation of
the bank depends much on it. The functions of a cash department are described
bellow:
Cash Receipt
3.5Allocation of currency
Local carrying cash money is troublesome and risky, that's why money can be
transferred from one place to another through banking channel. This is called
remittance. Remittances of funds are one of the most important aspects of the
Commercial Banks in rendering services to its customers.
24
pects and challenges
Pay Order
Demand Draft
TT
Pay order gives Demand Draft is an order of Issuing
branch
the payee the issuing bank on another requests
right to claim branch of the same bank to branch
payment
another
to
pay
to payee on demand.
demand
by
Telegraph/
Payment
payment
from
issuing
Generally
only
Within
used to
Remit fund
Payment
from Payment
from
Telephone
ordered Payment
branch branch
from
ordered branch
clearinghouse
area
of
issuing
branch. country
Process of
made
the paying
clearing
purchaser.
is 1. Confirm that the DD is 1. Confirm
through
bank
with
issuing branch
sent 2. Confirm Payee
advice
3. Check the 'Test Code'
4. Make payment
A/C
3. Confirm
amount
4. Make payment
Charge
Only
Commission
5. Receive advice
Commission +
telephone
25
pects and challenges
with
the
prime
26
pects and challenges
Clearing House:
Clearing House is a place where the representatives of different banks
get together to receive and deliver cheques with another banks.
Member of clearing House:
National Bank LTD is a scheduled Bank. According to the Article 37(2)
of Bangladesh Bank Order, 1972, the banks, which are the member of
the clearinghouse, are called as Scheduled Banks. The scheduled banks
clear the Cheque drawn upon one another through the clearinghouse.
Types of Clearing:
A) Outward Clearing: When the Branches of a Bank receive Cheque
form its customers drawn on the other Banks within the local clearing
zone for collection through Clearing House, it is Outward Clearing.
B) Inward Clearing: When the Banks receive cheques drawn on them
from other Banks in the Clearing House it is Inward Clearing.
Types of clearing house: There are two type of clearing house: Those are
1) Normal clearing house
2) Same day clearing house
27
pects and challenges
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pects and challenges
3.7(b)(1) OBC
OBC means Outward Bills for Collection. OBC exists with different branches of
different banks outside the local clearinghouse.
Normally two types of OBC:
1) OBC with different branches of other banks
2) OBC with different branches of the same bank
Procedure of OBC
1) Entry in the OBC register.
2) Put OBC number in the cheque.
29
pects and challenges
3) "Crossing seal" on the left corner of the cheque & "payees account will
be credited on realization" seal on the back of the cheque with signature of
the concerned officer.
4) Dispatch the OBC cheque with forwarding.
5) Reserve the photocopy of the cheque, carbon copy of the forwarding and
deposit slip of the cheque in the OBC file.
3.7(b)(2) IBC
IBC means Inward Bills for Collection. When the banks collect bills as an agent
of the collecting branch, the sys tem is known as IBC. In this case the bank will
work as an agent of the collection bank. The branch receives a forwarding letter
and the bill.
Procedure of IBC:
1. IBC against OBC: To receive the OBC cheque first we have to give entry in
the IBC Register. The IBC number should put on the forwarding of the OBC
with date.
2. Deposit of OBC amount: OBC cheque amount is put into the "sundry deposit
sundry Creditors account", prepare debit & credit vouch of it. If the OBC
cheque is honored, send credit advice (IBCA) with signature & advice number
of the concern branch for the OBC amount.
3. If the OBC cheque is dishonored, the concerned branch is informed about it.
4. Again place in the clearing house or send the OBC cheque with Return Memo
to the issuing branch according to their information.
3.8Accounts section
Accounts Department is called as the nerve Center of the bank. In banking
business, transactions are done every day and these transactions are to be recorded
properly and systematically as the banks deal with the depositors' money.
Improper recording of transactions will lead to the mismatch in the debit side and
in the credit side. To avoid these mishaps, the bank provides a separate
department; whose function is to check the mistakes in passing vouchers or wrong
30
pects and challenges
31
pects and challenges
SOD (general)
32
pects and challenges
SOD (Others)
Investment allowed against assignment of work order or execution of contractual
works falls under this head. This advance is generally allowed for a definite
period and specific purpose i.e. It is not a continuous credit. It falls under the
category "others".
SOD (Export)
Advance allowed for purchasing foreign currency for payment against L/Cs (Back
to Back) where the exports do not materialize before the import payment. This is
also an advance of temporary period that is known as export finance and under the
category "commercial lending".
33
pects and challenges
34
pects and challenges
Introduction:
House building Investment is one of the common credit pokiness of
banking sector. There was only one institution in our country, which is
specified in HBFC, Bangladesh House Building Finance Corporation. Now
days, besides this bank many commercial banks and Leasing Company
provides house-building Investment to the customers.
Profit rate:
Profit rate may changes from time to time depending on the market profit
rate. From the customer point of view this changes have an adverse impact
on the customers. Some times if thy have to bear a higher profit one he
principal amount which causes a great burden on them.
Made of repayment:
The Investment shall be adjusted by monthly installment basis. The
repayment will start from 6 (Six) months, of the date of first disbursement
(it may change according to the terms and conditions of the agreement).
Collateral:
The land and the contraction on the land are normally given as collateral. It
may changes:
35
pects and challenges
3. Letter of installment.
4. Letter of guarantee.
5. Letter of under taking.
6. Letter of agreement.
7. Irrevocable general power of attorney.
8. Memorandum of deposit of title deed.
9. Any other documents if considered
36
pects and challenges
37
pects and challenges
38
pects and challenges
as the primary security. The client submits the unasked bill and the bank discounts
it. This temporary liability is adjustable from the proceeds of the bills.
4.2.2Securities:
To make the Investment secured, charging sufficient security on the credit
facilities is very important. The banker cannot afford to take the risk of non-
39
pects and challenges
recovery of the money lent. National Bank charges the following two types of
security.
1. Primary security: These are the security taken by the ownership of the items
for which bank provides the facility.
2. Collateral security: Collateral securities refer to the securities deposited by the
third party to secure the advance for the borrower in narrow sense. In wider
sense, it denotes any type of security on which the bank has a personal right of
action on the debtor in respect of the advance.
2. Hypothecation:
In case of hypothecation the possession and the ownership of the goods
both rest the borrower. The borrower to the banker creates an equitable
charge on the security. The borrower does this by executing a document
known as Agreement of Hypothecation in favor of the lending bank.
3. Lien:
Lien is the right of the banker to retain the goods of the borrower until the
Investment is repaid. The banker's lien is general lien. A banker can retain
all securities in his possession till all claims against the concern person are
satisfied.
4. Mortgage:
40
pects and challenges
Profit Ratio
1. Return on Equity (ROE)
The rate of return on equity is a good condition last five years. ROE
indicates the rate of return on equity capital. Generally bank stockholders
prefer ROE to be high. Here, ROE is increased last four years, but last
years ROE indicates lower than previous year. It is possible, however, that
an increase in ROE indicates increased banks risk.
Return on Equity (%) = Net Income/Total Equity Capital*100
Year
Total Equity
ROE (%)
1999
2000
2001
2002
2003
Tk.)
788500
2286200
2744400
1461900
881200
Capital
2581888.77
3241190.04
3308687.04
3604555.39
3666895.56
30.53
70.54
82.94
40.55
24.03
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pects and challenges
From the table we can see that ROE of NBL increasing except 2003. ROE of NBL
were 30.79%, 70.54%, 82.94%, 40.55%, and 24.03% in the year 1999, 2000,
2001, 2002 and 2003 respectively. ROE has been increased as Net Income of the
Bank has been increased over the years.
2. Return on Asset
The rate of return on assets (ROA) measures the ability of management to
utilize the real and financial resources of the bank to generate returns. ROA
is most commonly used to evaluate bank management.
Return on Asset = Net Income/Total Asset*100
Year
Total Assets
ROA (%)
1999
2000
2001
2002
2003
Tk.)
78,8500
228,6200
274,4400
146,1900
88,1200
36,545,2800
47,148,0800
48,732,1000
45,719,1300
47,929,5700
1.21
1.48
1.56
2.58
2.61
From the table we can see that ROA of NBL has been increased and decreased
over the year from 1999 to 2003. Both ROA and TA of NBL over the last five
years.
Net Income
Operating
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pects and challenges
1999
2000
2001
2002
2003
Revenues
5936394
178201875
416072285
683963080
679432070
78,8500
228,6200
274,44000
146,19000
88,120000
(%)
13.28
1.28
6.59
2.13
12.96
Asset Utilization
The asset utilization ratio represents the ability of management to employ asset
effectively to generate revenue. The more income generated per Taka of assets,
the more profitable is the bank.
Asset utilization = Operating Revenue/ Total Asset
Year
Operating
Total Assets
Revenues
1999
2000
2001
2002
2003
Asset
utilization
5936394
178201875
416072285
683963080
679432070
36,545,2800
47,148,0800
48,732,1000
45,719,1300
47,929,5700
0.01
0.37
0.85
1.49
1.41
Unraveling Profit
1st Formula: The relationship between the ROE and ROA can be expressed by the
following formulaROE = ROA * Equity Multiplier
Net Income/ Total Equity = Net Income/ Total Assets* Total assets/ Total
Equity
This formula shows that ROE as the product of ROA and a ratio indicating the
extent to which the bank is using financial leverage, known as the equity ( or
leverage) multiplier
Year
1999
2000
2001
ROA (%)
Equity
ROE (%)
1.21
1.48
1.56
Multiplier
14.15
14.54
14.72
17.12
20.33
29.86
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pects and challenges
2002
2003
2.58
2.61
12.68
13.07
33.69
34.11
2nd Formula: Another useful formula for unraveling profit ratio is as follow
ROE = Profit Margin* Asset Utilization* Equity Multiplier
Net Income/Total Equity = Net Income/ operating Revenue*Operating
Revenue/Total Assets *Total Assets/Total Equity
This formula breaks down ROA into product of profit margin and asset utilization.
Together these two ratios enable the bank analyst to gain insight into the
derivation of ROA.
Year
1999
2000
2001
2002
2003
Asset
Equity
(%)
13.28
1.28
6.59
2.13
12.96
utilization
0.01
0.37
0.85
1.49
1.41
Multiplier
14.15
14.54
14.72
12.68
13.07
ROE (%)
30.53
70.54
82.94
40.55
24.03
EPS-Earning per share or EPS indicates how much Taka per share earns.
EPS = Net Income/ No. Of shares
Year
No. Of
EPS (Tk.)
1999
2000
2001
2002
2003
Tk.)
78,850000
228,620000
274,440000
146,190000
88,120000
Share
430273250
430273250
430273250
430273250
430273250
0.18
0.53
0.63
0.34
0.20
We can see from the table that EPS of NBL has increasing since 2001 and
decreasing 2002 & 2003. EPS indicates profit of the bank. In 1999, it was
profit only 0.18; but in 2000 & 2001 it was increasing 0.53 & 0.63. But next
two years it was decreasing 0.34 & 0.20.
44
pects and challenges
Net Interest Margin measures the net return on the banks earning assets.
Net Interest Margin = Net Interest Income/ Average Earning Assets
Year
Net interest
Average Earning
1999
2000
2001
2002
2003
Income
199446574
204733395
2057444277
214358977
234230989
Assets
2832451056
1603789542
2870616342
1703202877
1460551083
(%)
7.04
12.76
71.67
12.58
16.03
Risk Ratio
Provision for Loan Losses
This ratio measures the proportion of total operating income that goes to pay
for the investment loss.
Provision for Loss Ratio = Provision for Loan Loss/ Total Loan & Leases
Year
1999
2000
2001
2002
2003
Losses
600,000,000
610,000,000
616,000,000
620,000,000
650,000,000
Leases
18,698,654,785
19,589,691,541
20,200,636,731
21,677,960,687
22,257,150,000
Ratio (%)
3.20
3.11
0.30
2.86
2.92
From the above table we can see Profit for Loan Losses of NBL. In 1999, it
was 3.11. PLLL of NBL has been decreasing from the year 2000 to 2003. The
bank takes PLLL ratio low, as its recovery rate is very high.
Loan Ratio
The loan ratio indicates the extent to which assets are devoted
to loan as opposed to other assets.
Loan Ratio = Total Loan /Total Assets
Year
Loans
Total Assets
Loan
45
pects and challenges
1999
2000
2001
2002
2003
18,698,654,785
19,589,691,541
20,200,636,731
21,677,960,687
22,257,150,000
36,545,280,000
47,148,080,000
48,732,100,000
45,719,130,000
47,929,570,000
Ratio(%)
51.16
41.54
41.45
47.41
46.43
From the table we can see that Loans and Advances Ratio of the bank has been
increasing and decreasing. As bank generate its major portion of income from
interest income. So, bank generates its major portion of income from interest
income. So, bank has to disburse more Loans and Advances for maximizing
their income. In the year 2003, the bank engaged 61.39% of its TA in loans and
advances.
Interest Expense RatioInterest Expense Ratio reveals how much interest expenses needed for the
bank compared to its TA. The lower the ratio indicates the better performance
of the bank.
Year
Interest
1999
2000
2001
2002
2003
Expense
1,320,789,100
1,350,691,442
1,486,691,442
1,623,175,670
1,801,186,051
Total Assets
Interest Expense
36,545,280,000
47,148,080,000
48,732,100,000
45,719,130,000
47,929,570,000
Ratio(%)
3.61
2.86
3.05
3.55
3.75
The table shows that the Interest Expense Ratio of NBL has been increasing.
Wages & Salaries RatioThis ratio indicates how much expenses required regarding Wages & Salaries
to TA of a bank. Lower the ratio indicates that the bank has been performing
well.
Year
Wages &
Salaries
Total Assets
46
1999
2000
2001
2002
2003
300,566,100
399,888,100
486,335,427
529,271,513
555,990,256
36,545,280,000
47,148,080,000
48,732,100,000
45,719,130,000
47,929,570,000
We can see that the NBL has been performing badly, as the ratio of the bank
has been increasing from the year 1999 to 2003.
Occupancy Ratio
Occupancy Ratio indicates the occupancy expenses of the Bank to its total
assets. The lower ratio indicates better performance of the bank.
Year
1999
2000
2001
2002
2003
Occupancy
75,895,100
76,987,100
79,656,977
85,015,468
84,430,658
Total Assets
Occupancy Ratio
36,545,280,000
47,148,080,000
48,732,100,000
45,719,130,000
47,929,570,000
(%)
0.20
0.16
0.16
0.18
0.17
We can see that the NBL has been lowering its occupancy ratio. So, the banks
performance is better than the previous years comparing to the year 2003.
Other Expenses RatioCash RatioCash ratio is measured by dividing cash by total assets of the bank.
Year
1999
2000
2001
2002
2003
Cash
1,988,784,969
2,066,774,122
2,073,718,685
2,417,617,968
2,589,899,555
Other Ratio
Total Assets
36,545,280,000
47,148,080,000
48,732,100,000
45,719,130,000
47,929,570,000
Cash
Ratio (%)
54.41
56.66
42.55
46.63
54.03
47
pects and challenges
Tax Rate
The tax exposure of the bank can be assessed by the following ratio
Tax rate (%) = Total tax paid/ Net income Before Tax *100
Year
1999
2000
2001
2002
2003
Total Taxes
Paid
Tax
124,740,000
105,130,000
126,200,000
104,130,000
247,970,000
203,590,000
333,750,000
400,640,000
250,320,000
336,090,000
We can see that the tax rate of NBL is 61.27% in 1999. But the rate is lower in
2000 to2002- 31.49%, 31.49% & 41.59. But the rate is very high in 200373.78.
Total Deposit
Total Shareholders
20,258,720,000
23,616,280,000
24,896,640,000
26,327,260,000
27,762,120,000
Equity
1,495,895,002
1,504,789,564
1,572,752,012
1,628,372,451
1,635,873,211
Ratio (times)
13.54
15.89
15.56
16.16
16.97
Deposit to capital ratio of NBL has been increasing over the years. It was
13.54times in the year 1999 and 16.97 times in the year 2003. That means the
deposit of the bank has been increasing much more than its equity capital.
48
pects and challenges
This ratio indicates how much Taka is deposited by each employee in the
bank. Higher the ratio indicates the better the position of the banks.
Year
Total Deposit
Number of
Ratio (times)
employees
1999
2000
2001
2002
2003
20,258,720,000
23,616,280,000
24,896,640,000
26,327,260,000
27,762,120,000
1868
2025
2073
2171
2185
10845130
11662360
12009956
12126789
12705775
The table reveals that each employee of NBL mobilized deposit of TK. 10845130
in the year 1999 and it has been increased to TK. 12705775 in the year 2003. This
indicates the better performance of the bank.
Invest to Deposit RatioThe ratio indicates that how much Taka is invested to total deposit.
Year
Total
Total Deposit
Investment
1999
2000
2001
2002
2003
2371350000
2626620000
2891970000
3839600000
4044200000
Ratio
(times)
20,258,720,000
23,616,280,000
24,896,640,000
26,327,260,000
27,762,120,000
0.117
0.111
0.116
0.145
0.1456
49
pects and challenges
50
pects and challenges
The card limit of gold local card is Tk.50000 to Tk. 100000 and silver local card
is below Tk.50000.
Card fee
Gold US$70.00
Card
International
card
Local Gold card
Tk.2000.00
Local Silver Card
Tk.1200.00
* Source: National Bank brochure 2005
51
pects and challenges
52
pects and challenges
limit) a monthly charge of 2.5% is to be charged from the date of withdraw. In that
case the card holder will not get the 45 days credit payment facility.
53
pects and challenges
Financing in Cultivation
54
pects and challenges
SWOT Analysis
SWOT analysis is the detailed study of an organization's exposure and potential in
perspective of its strength, weakness, opportunity and threat. This facilitates the
organization to make their existing line of performance and also foresee the future
to improve their performance in comparison to their competitors. As though this
tool, an organization can also study its current position, it can also be considered
as an important tool for making changes in the strategic management of the
organization.
Strengths:
National Bank Limited has already established a favorable reputation in the
banking industry of the country. It is one of the leading private sector commercial
banks in Bangladesh. The bank has already shown a tremendous growth in the
profits and deposits sector.
National Bank Limited has already achieved a high growth rate accompanied by
an impressive profit growth rate in 2001. The number of deposits and the loans
and advances are also increasing rapidly.
National Bank has the reputation of being the provider of good quality services
too its, potential customers.
Weakness:
The main important thing is that the bank has no clear mission statement and
strategic plan. The banks not have any long-term strategies of whether it wants to
focus on retail banking or become a corporate bank. The path of the future should
be determined now with a strong feasible strategic plan.
The bank failed to provide a strong quality-recruitment policy in the lower and
some mid level position. As a result the services of the bank seem to be Deus in
the present days.
The poor service quality has become a major problem for the bank. The quality of
the service at National Bank is not higher than the Dhaka Bank, Prime Bank or
55
pects and challenges
Dutch Bangla Bank etc. So the bank has to compete with the multinational Bank
located here.
Some of the job in National Bank has no growth or advisement path. So lack of
motivation exists in persons filling those positions. This is a weakness of National
Bank that it is having a group of unsatisfied employees.
In terms of promotional sector, National Bank has to more emphasized on the.
They have to follow aggressive marketing campaign.
Opportunity:
In order to reduce the business risk, National Bank has to expand their business
portfolio. The management can consider options of starting merchant banking or
diversify into leasing and insurance sector.
The activity in the secondary financial market has direct impact on the primary
financial market. Banks operate in the primary financial market. Investment in the
secondary market governs the national economic activity. Activity in the national
economy controls the business of the bank.
Opportunity in retail banking lies in the fact that the countries increased
population is gradually learning to adopt consumer finance. The bulk of our
population is middle class. Deferent types of retail lending products have great
appeal to this class. So a wide variety of retail lending products has a very large
and easily pregnable market.
A large number of private banks coming into the market in the recent time. In this
competitive environment National Bank must expand its product line to enhance
its sustainable competitive advantage. In that product line, they can introduce the
ATM to compete with the local and the foreign bank. They can introduce credit
card and debit card system for their potential customer.
In addition of those things, National Bank can introduce special corporate scheme
for the corporate customer or officer who have an income level higher form the
service holed. At the same time, they can introduce scheme or loan for various
56
pects and challenges
service holders. And the scheme should be separate according to the professions,
such as engineers, lawyers, doctors, etc.
Threats:
All sustain multinational banks and upcoming foreign, private banks posse's
enormous threats to National Bank Limited. If that happens the intensity of
competition will rise further and banks will have to develop strategies to compete
against an on slough of foreign the banks.
The default risks of all terms of loan have to be minimizing in order to sustain in
the financial market. Because default risk leads the organization towards to
bankrupt. National Bank has to remain vigilant about this problem so that
proactive strategies are talent to minimize this problem if not elimination.
The low compensation package of the employees from mid level to lower level
position threats the employee motivation. As a result, good quality employees
leave the organization and it effects the organization as a whole.
57
pects and challenges
RECOMMENDATION
Although the bank is making a huge amount of profit and gencratil1g a large
volume of deposit, based on my working experience at Nationa1 13ank limited,
Credit card division, I would like to put up the following recommendations.
The bank may circulate student credit card and the card limit will be Tk.
5000.
The may sort out the cardholder who paid their payment regular and issue
another credit card to their spouse without any security
To increase the number of cardholder the bank may decrease the annual
fee and interest.
Credit card division should improve their customer service
58
pects and challenges
Conclusion
During the 12 weeks internship program at NBL, almost all the desk has been
observed more or less. Gaining knowledge of practical banking and to compare
this practical knowledge with theoretical knowledge. Though all departments and
sections are covered in the internship program, it is not possible to go to the depth
or each activities of division because of time limitation. So, objectives of this
internship program have not been fulfilled with complete satisfaction. However,
highest effort has been given to achieve the objectives the internship program.
59
pects and challenges
Bibliography
BenTon E.Gup, James W. Kolari Commercial Banking the Management of
Risk. (Third Edition)
MasterCard book let Operation
Internet: www creditcard.com
NBL Annual Report -2003, 2004 & 2005
NBL Procedure Manual- 1990
Credit card application form of NBL
Credit card merchant of NBL
Web site of the NBL: www.nblbd.com
60
pects and challenges
ANNEXURE
TERMS USED IN THE REPORT
ABP
CIBT
CCS
HBL
LIM
LRA
LTR
PO
Pay order
PC
Packing credit
SOD
SDS
TT
Telegraphic transfer