Internship Report
on
Analysis of Performance of BRAC Bank Limited
Submitted To
Mohammad Rifat Rahman
Assistant Professor
Department of Banking & Insurance
University of Chittagong.
Submitted By
Md. Shamim Anwar
ID: 14306105
Session: 2017-2018
Program: MBA
Department of Banking & Insurance
University of Chittagong.
Date of Submission: June 20, 2021
Letter of Transmittals
Date: June 20, 2021
To
Mohammad Rifat Rahman
Assistant Professor
Department of Banking & Insurance
Faculty of Business Administration,
University of Chittagong.
Subject: Submission of Report.
Dear Sir,
This is my pleasure to inform you that I have successfully completed my report on
“Analysis of Performance of BRAC Bank Limited” I am pleased to present this report
after a long and rigorous effort. I have tried to incorporate all the knowledge to make this
report as informative, reliable and relevant as possible. I would like to express my
gratitude to you for your endless support, valuable suggestion and guidance in preparing
this report. Writing this report has been a great experience for me.
I would like you to kindly accept my report and to acknowledge my devotion and efforts. I
will be glad to answer any of your queries regarding the report.
Yours Sincerely
Md. Shamim Anwar
ID: 14306105
2nd Semester, MBA
Session: 2017-2018
Department of Banking & Insurance,
University of Chittagong.
I
ACKNOWLEDGEMENT
At first I want to thank the Almighty without whose help this report cannot be completed.
Then I would like to express my deepest appreciation to all those who provided me the
possibilities to complete this.
I would like to acknowledge my heartiest gratitude and indebtedness to my respected
supervisor Mohammad Rifat Rahman, Assistant Professor, Department of Banking &
Insurance, University of Chittagong for his guidance, supervision and help in all stages of
carrying out my work and also in preparation of the report. He deserves my special thanks
for giving me much of his valuable time in spite of his busy schedule for reviewing my
report thoroughly.
I am also grateful to all those people who have at least minimum effort and contribution to
complete report. I feel so much lucky to get their co-operation.
II
Supervisor Approval
This is to certify that the report entitled “Analysis of Performance of BRAC Bank
Limited” submitted as a partial fulfillment of requirement of the degree of Masters of
Business Administration (MBA) in Banking & Insurance at University of Chittagong has
been carried out by Md. Shamim Anwar bearing ID: 14306105, Session: 2017-2018 under
my guidance and supervision.
Mohammad Rifat Rahman
Assistant Professor
Department of Banking & Insurance
University of Chittagong.
III
EXECUTIVE SUMMARY
The principal reason of banks chartered by the government and the central bank is to make
loans to their customers. Banks are expected to support their communities with an
adequate supply of credit for all the legitimate business and consumer financial need and
to price that credit reasonably in line with competitively determined interest rates. Indeed,
making loans is the principal economic function of banks to fund consumption and
investment spending by businesses, individuals, and unit of government. How well a bank
performs its function has a great deal to do with the economic health of fits region,
because banking performance support the growth of new businesses and job within the
banks trade territory and promote economic vitality. Moreover, bank loans often seem to
convey positive information to the market place about a borrower’s credit quality,
enabling a borrower to obtain more and perhaps somewhat cheaper funds from the sources.
Therefore, the objective of evaluating financial performance of BRAC Bank Limited is to
find out the bank’s growth, potentiality and problems.
As the competition is increasing, the commercial banks are constantly looking for scope to
develop credit operation and performance appraisal to the market. However tight control
on the part of the Central Bank, Bangladesh Bank restricts the scope for maneuvering in
the market with new performance and credit operation. Therefore, bank require finding out
untapped market space for growth.
Moreover. In this hard time of COVID-19, it is crucial for banks to be able to perform
efficiently and effectively. So, to perform well in this hard time proper planning and
management efficiency are badly needed.
IV
TABLE OF CONTENTS
Contents
Chapter One: Background of the Study
1.1 Introduction
1.2 Origin of the Report:
1.3 Objective of the Report:
1.4 Methodology:
1.5 Scope of the Study:
1.6 Limitations of the study:
Chapter Two: Overview of BRAC Bank Limited
2.1 About BRAC Bank Limited
2.2 Mission, Vision and Values
2.3 Company Philosophy
2.4 Achievements and Recognitions
2.5 Key Milestones Achieved in 2020
2.6 Management Practices
2.7 HRM Practices of BRAC Bank Limited
2.8 Compensation and Benefit System
2.9 Organogram of BRAC Bank Limited
2.10 Products and Services of BRAC Bank Limited
2.11 Future plan of BRAC Bank Operations
Chapter Three: Methodology of the Analysis
3.1 Ratio Analysis
3.2 Profitability Ratio
3.3 Credit Risk Performance
3.4 Managerial Efficiency
3.5 Management Ability
3.6 Sample Size
Chapter Four: Performance Analysis of BRAC Bank Limited
4.1 Ratio Analysis for Return on Asset (ROA)
4.2 Ratio Analysis for Return on Equity (ROE)
4.3 Ratio Analysis for Equity to Total Assets (ETA)
4.4 Ratio Analysis for Capital Adequacy Ratio (CAR)
4.5 Analysis for Income to Expense Ratio (IER)
4.6 Analysis for Asset Utilization Ratio (AUR)
4.7 Conclusion
Chapter Five: Recommendations and Guidelines
5.1 Recommendations and Guidelines
References
Appendix
Page No.
1-3
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14
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18-25
18
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V
CHAPTER: ONE
Background of the Study
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1.1 Introduction
BRAC Bank Limited is full service schedule commercial bank. It has both local and international
institutional shareholders. The bank is primarily driven with a view of creating opportunities and
pursuing market niches not traditionally meet by conventional banks. BRAC Bank has been
motivated to provide “best-in-the –class” services to its diverse assortment of customers spread
across the country under an on-line dais.
Today, BRAC Bank is one of the fastest growing banks in the country. In order to support the
planned growth of its distribution, network and its various business segment, BRAC Bank is
currently looking for impressive growth oriented, enthusiastic, individual for various business
operations.
The banks wants to build a profitable and socially responsible financial institution. It carefully
listen to the market and business potentials. It is also assisting BRAC and shareholders to build a
progressive, healthy, democratic and poverty free Bangladesh. It helps make communities and
economy of the country stronger and to help people achieve their financial goals. The bank
maintains a high level of standers in everything for customer, shareholders, acquaintances and
communities upon, which the future affluence of the company rests.
1.2 Origin of the Report:
The report is an essential part of MBA program of Department of Banking & Insurance,
University of Chittagong and it is prepared as a part of course outline. This report basically
covers performance of BRAC Bank from the year 2011 to 2020.
1.3 Objective of the Report:
The objectives of the report are as follows:
 To know about the current status of BRAC Bank Limited
 To review the ratio based performance measured of BRAC Bank Limited
 To analyze the performance of BRAC Bank Limited from the year 2011 to 2020
 To give recommendations and guidelines for the improvement of the bank
1.4 Methodology:
This report is analytical in nature. The information was collected from secondary sources of data.
Data Sources:
 Website of the bank
 Annual Report of the bank
 Different text books
 Different research papers
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1.5 Scope of the Study:
This report mainly covered the performance of BRAC Bank Limited from the year 2011 to 2020.
1.6 Limitations of the Study:
 Lack of Experience
Due to inexperience some unintentional error may occur.
 Privacy of Information
Every establishment has its secrecy that is not shared with everyone. So this confidentiality of
information was also an obstacle.
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Chapter Two
Overview of BRAC Bank Limited
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2.1 About BRAC Bank Limited
BRAC Bank is a private bank which has started its journey on 4th July, 2001 as a commercial
bank. It was founded by Sir Fazle Hasan Abed. Back then there were only few people who have
access to banking and the small and medium enterprises were not even counted under general
banking. Thus an idea came into Sir Fazle Hasan Abed KCMG and he came up with the idea of
BRAC Bank that would basically work with SME services. Its main target was the large number
of unbanked people and the bank facilitated them with Small and Medium Enterprise services.
This makes BRAC Bank unique than their competitors. Bangladesh Rural Advanced Committee
(BRAC), a leading NGO worked a lot to promote this bank. Selim RF Hussain is the current
managing director and CEO of BRAC Bank. Currently, 8000 employees are working under this
bank and till now there are 187 branches and 457 SME units are operating in all over the country.
It has 457 ATM booth of its own with 90 CDM. In Bangladesh, BRAC Bank has got the highest
credit rating for three consecutive years by Moody’s Investor Service and the rating is Ba3.
This is how BRAC Bank creates value:
Value Input
Value Output
Deposit and Borrowing
Loans and Investment
Interest expense
Interest Income
Infrastructure and technology
Investment income
Human resource
Commission income
Other administrative expense
Other income
Figure 2.1: Value creation of BBL
2.2 Mission, Vision and Values
Figure 2.2: Mission, Vision and Values
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2.2.1 Corporate Vision:
Building a profitable and socially responsible financial institution focused on market and
business with growth potential, thereby assisting BRAC and its stakeholders to build a just,
enlightened, healthy democratic and poverty free Bangladesh.
2.2.2 Mission:









Sustainable growth in Small & Medium Enterprise sector;
Continuous low-cost deposit Growth with controlled growth in retail assets;
Corporate Assets to be funded through self-liability mobilization;
Growth in Assets through syndications and investment in faster growing sectors;
Continuous endeavor to increase non-funded income;
Keep debt charges at 2% to maintain a steady profitable growth
Achieve efficient synergies between the bank’s branches, SME unit offices and BRAC
field offices for delivery of remittance and the bank’s other products and services;
Manage various lines of business in a full controlled environment with no compromise
compliance and on service quality;
Keep a diverse, far flung team fully motivated and driven towards materializing the
bank’s vision into reality.
2.2.3 Values:





Creating a environment which is very honest, open and enabling
Making efforts to have more profits with a sound growth
Respecting people and making decisions based on merits
Giving reward based on performance
Be responsible and law-abiding in all that they do
2.3 Company Philosophy
BRAC Bank is always dedicated to the people as they believed in hope and faith of those people.
As the bank is one of the major player in the in the financial market area, they influence the
people and the environment directly or indirectly. They care for the planet and that is why they
work in a sustainable way. They try to do expand their green banking and working on it. The
bank also believes in prosperity that is why they invest and work for the community.
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2.4 Achievements and Recognitions
 In capital market, BBL has capitalization amount is US$ 1 billion
 They got Asia money’s ‘Best Bank for SMEs’ in 2017
 Another achievement of BBL is the SAFA award for the Best Presented Annual
Report in 2016
 They also got ICMAB Best Corporate Awards in 2016
 Information Security by ISO Certification is also a big achievement for BBL
 Women’s Market Champion Award by Global Banking Alliance
 Most Progressive Bank on Gender Strategy and Implementation 2017 by Asian
development Bank
 Most Progressive Bank on Gender Strategy and Implementation 2017 by Asian
development Bank
 “Excellence in MasterCard POS Acquiring Business, 2019-20”, a category of
MasterCard
Figure 2.3 Achievements and Recognitions
2.5 Key Milestones Achieved in 2020
Some of the major progress achieved during the year comprised the following:
2.5.1 Customer service initiatives:

Introduced paperless PIN for debit cards, thus enhancing customer convenience

Collaborated with the SME Foundation to provide collateral-free loans to shoemanufacturers

Launched tab-based customer feedback system at selective branches, hence deepening
engagement with our customers
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
Organized a workshop on “Mastering FX Market and Technical with Bourse Game” on
21-22 February 2020 in Cox’s Bazar district with foreign exchange dealers from 27
banks, including from Bangladesh Bank.

Launched Visa contactless credit cards for customers to experience cashless payments.

Enabled self-registration for Internet Banking service for credit cardholders.

Launched remittance service for the bank’s Visa cardholders

Launched ‘Agami’, a bouquet of solutions to help students travelling abroad for studies
2.5.2 For Shareholders:
 Organized earnings disclosure for the financial year 2019 through an online virtual
platform for the first-time ever.
 Retained the “Ba3” rating, the highest for any Bangladeshi bank rated by Moody’s
Investors Service for the fourth successive year.
 Retained long and short-term issuer credit ratings of “B+” and “B”, respectively, from
S&P Global Ratings
2.5.3 External validations:
Emerged as the first bank in Bangladesh to receive the ISO 18788:2015 certification
for standards of management of security operations
2.5.4 Community enrichment:

Recruited four acid survivors as the bank’s employees, thus offering a respectable
livelihood opportunity.

Inaugurated three Mujib Corners at the bank’s head office and also at Sylhet and Sherpur
branch offices.

Contributed 50,000 blankets to the Prime Minister’s Relief and Welfare Fund for helping
the underprivileged cope in the harsh winter months.
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2.5.5 Fight against COVID-19:
 Remained as amongst the first bank in Bangladesh to rigorously embrace social
distancing norms in all active branch offices, with clear decals on the floor for customers
to mark a safe distance from each other inside the premises.
 Contributed BDT 5 cr to the Prime Minister’s Relief and Welfare Fund to help in the
fight against COVID-19.
 Employees made a financial contribution of BDT 1.73cr to BRAC’s “COVID-19:
Emergency food assistance” fund to help the vulnerable sections of the society cope with
the pandemic.
 Provided a specialized freezing van to Anjuman Mufidul Islam for safe handling of the
deceased with suspected/confirmed COVID-19.
2.6 Management Practices
BRAC Bank is one of the leading banks in Bangladesh. It is growing very fast and now it is a
very successful in the financial sector. To be a successful bank in the industry, the management
has a big role to play. A good management practice makes sure a company is fulfilling its goal
that they need to be achieved. Management organizes the resources and distributes it accordingly.
It also specifies the mission and vision of a company and works to achieve it.
2.6.1 Board of directors
 Dr. Ahsan H. Mansur, Chairman.
 Nihad Kabir, Nominated Director.
 Kazi Mahmood Sattar, Independent Director.
 Kaiser Kabir, Nominated Director.
 Asif Saleh, Nominated Director.
 Fahima Choudhury, Independent Director.
 Farzana Ahmed, Independent Director.
 Selim R. F. Hussain, Managing Director & CEO.
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2.7 HRM Practices of BRAC Bank Limited
BRAC Bank Limited has more than 8000 people working with them along with 1011 working
people in subsidiaries. BBL believes in diversity and recruits people from all over the country no
matter what religion, gender or ethnicity they have.
2.8 Compensation and Benefit System
Performance based reward: BBL believes in a compensation policy which is totally performance
driven. Employees will get their reward by judging how they are performing and completing
their professional goals and targets. Their compensation policy only reflects “Pay for Result”.
They follow this rule to avoid biasedness in work. BBL tries to give value of their workers
continuous effort and their hard work. The main objective is to build a team that will be
motivated and inspired.
2.9 Organogram of BRAC Bank Limited
Figure 2.4: Corporate Organogram
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2.10 Products and Services of BRAC Bank Limited
BRAC Bank mainly offering different financial services to its customers and the services are
 SME Banking:
Products offered by SME banking are given below:

Anonno Loan

Prapti Current Account

Shadhin Current Account

Shonchoy SME Deposit
 Retails Banking:
Products of retail banking are given below:
 Home Loan
 Deposit Account
 Triple Benefit Savings Account
 Golden Benefit Savings Account
 Happy Savers Account
 Credit Card:
These type of cards are offered by BBL
 Signature Card
 Platinum Card
 Gold Card
 Classic Card
 Debit Card:
Types of debit cards are:

Visa/ Master Card
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
Apollo Health Card

Hajj Prepaid Card

Visa Prepaid Gift Card

Foreign Exchange & Related Services

Wholesale Banking & Custodial Service

Probashi Banking

Probashi Current Account

Probashi Savings Account

Probashi Fixed Deposits

Probashi Abiram Account
2.11 Future plan of BRAC Bank Operations
 BRAC Bank will introduce document management system (DMS).
 Settlement of cards and ATM card reconciliation will be done automatically.
 The process for card booking system will also be automated.
 Using SWIFT with Finacle will be mandatory to do faster work for their customers.
 Tracking system will be introduced where they can Home Loan or other loans too.
 The ledger keeping and teller machine reconciliation will be automated too.
 The main target is to digitalized the organization while having more automated process to
decrease the cost while increase the efficiency and profitability of the organization.
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Chapter Three
Methodology of the Analysis
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3.1 Ratio Analysis
There are several tools to measure the financial performance of banks; in this report, ratio
analysis measurements are used to analyze the performance of the selected bank.
Ratio analysis is the comparison of line items in the financial statements of a bank. It is used
to evaluate a number of issues with an entity, such as its liquidity, efficiency of operations,
and profitability.
Ratio analysis has been adopted by many researchers, such as Chen and Shimerda (1981), Sabi
(1996), and Ahmad and Hassan (2007). In this analysis, data has been collected from the annual
report of the bank. The financial data used in this analysis are obtained from the annual report of
the bank spanning from 2011 to 2020.
3.2 Profitability Ratio:
 Return on Asset Ratio (ROA)
 Return on Equity (ROE)
i. Return on Asset Ratio (ROA): ROA ratio is an indicator to measure a company's profitability
and managerial efficiency, which indicates how excellently a company can use its total assets.
Managers, Investors, Analysts, Brokers, Dealers, and other agencies can collect a clear idea
about a company’s financial soundness by analyzing this indicator.
ROA ratio is calculated by dividing a company’s net income by its total asset. In accordance
with the formula, it would be expressed as:
Return on Assets = Net Profit / Total Asset
Higher the ratio indicates the more efficient managerial ability which is an indicator of better
financial performance. Over 5% Return on assets are generally considered a good ratio.
ii. Return on Equity Ratio (ROE): ROE ratio is also used to measure profitability and
managerial efficiency. It measures the return or the financial performance of a bank or company
in relation to the total equity. ROE is an indicator of how effectively a bank can utilize its equity
to generate output.
ROE ratio is calculated by dividing a company’s net profit by its total equity. In accordance with
the formula, it would be expressed as:
Return on Equity= Net Profit / Total Equity
Higher the ratio indicates the more standard of managerial performance.
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3.3 Credit Risk Performance:


Equity to Total Assets (ETA)
Capital Adequacy Ratio (CAR)
i. Equity to Total Assets (ETA): ETA ratio is an indicator to measure a bank's competency and is
also used in the measurement of the Credit Risk Performance of a bank. The Equity to Total
Asset Ratio shows the amount of equity the bank has compared to the total assets it owns. It
helps the bank to protect itself against any shocks in financial performance. ETA ratio shows the
capacity of the bank to absorb shock for unexpected losses of loaned assets.
ETA ratio is calculated by dividing a company's equity by its total assets. In accordance with the
formula, it would be expressed as:
Equity to Total Asset= Common Equity/Assets
Higher the percentage lower the bank or company is leveraged. A ratio of less than 70% is not
good at all because it can put a bank or an institution at a risky level and also reduce its ability to
borrow.
ii. Capital Adequacy Ratio (CAR): The capital adequacy ratio is used to measure a bank’s
capital availability as a percentage of its risk-weighted credit exposure. This ratio is also called
capital-to-risk weighted credit exposure (CRAR), measured by the efficiency and durability of
the financial system that helps protect the depositors. Tier I Capital and Tier II Capital are
measured in this ratio. Tier I Capital can absorb losses without ceasing operations. In contrast,
Tier II Capital absorbs losses at the time of a bank's winding-up, which means Tier II capital
serves a less degree of protection to the depositors.
CAR is calculated by dividing a company’s Tier I capital and Tier II capital by its risk-weighted
assets. In accordance with the formula, it would be expressed as:
CAR= Tier One Capital + Tier Two capital / Risk Weighted Assets
For a bank, the minimum CAR under BASEL III is 8%.
3.4 Managerial Efficiency:

Income to Expense Ratio (IER)
i. Income to Expense Ratio (IER): The Income to Expense Ratio indicates the amount of
income eared against per currency of bank operating expense. In the banking sector, the income
to expense ratio is probably the most popular ratio used to evaluate the management efficiency in
generating return by minimizing operating expenses.
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IER is calculated by dividing a company’s total income by its total operating expense. In
accordance with the formula, it would be expressed as:
IER = Total Income / Total Operating Expenses
Higher the IER notify the more efficiency of management in generating profit against bank’s
total operating expense.
3.5 Management Ability:

Asset Utilization Ratio (AUR)
i. Asset Utilization Ratio (AUR): Asset Utilization Ratios measures the revenue earned by a
Bank against each Taka of assets it owns. This ratio indicates the bank's management's efficiency
in generating output by utilizing its assets, which has a significant and positive impact on
shareholders’ equity (Ross et al., 2005).
AUR is calculated by dividing a company's total revenue by its total assets. In accordance with
the formula, it would be expressed as:
AU = Total revenue / Total Assets
The Higher the ratio means more the ability to utilize bank’s assets. Lower ratio means banks has
not ability to use its assets properly so some assets should be disposed.
3.6 Sample Size:
The aim of this study is to evaluate the performance of BRAC Bank Limited using the ratio
analysis. Data has been collected for 10 years period 2011 to 2020. The data are collected from
the annual report of the bank.
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Chapter Four
Performance Analysis of BRAC Bank Limited
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Table 4.1
Ratio Analysis for Return on Asset (ROA)
Bank
BBL
(%)
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
1.28
0.31
0.78
1.02
1.08
1.79
1.81
1.76
1.53
1.42
Mean
S.D
1.28
0.46
Source: Appendix-1
Figure 4.1
The total assets of a company are the invested that the shareholders have made. Therefore it is
pertinent from the investor's perspective to see how the company can generate returns from their
investments. The higher return, the more efficient the management is in utilizing its assets.
Return on assets of BBL from 2011 to 2020 were 1.28%, 0.31%, 0.78%, 1.02%, 1.08%, 1.79%,
1.81%, 1.76%, 1.53% and 1.42%. The mean ROA shows that BBL earned 1.28% after tax for
each Taka invested in their assets. Simultaneously, the risk level of this profitability measured by
standard deviation is small for the bank.
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Table 4.2
Ratio Analysis for Return on Equity (ROE)
Bank
BBL
(%)
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
17.72
5.32
11.76
11.78
12.94
20.80
20.20
17.53
14.51
9.66
Mean
S.D
14.22
4.65
Source: Appendix-1
Figure 4.2
ROE measures how much the stockholders earned for their investment in the company. This
ratio measured the ability of management of the company to generate adequate return for their
capital invested by the owners of a company. ROE of BBL from 2011 to 2020 were 17.72%,
5.32%, 11.76%, 11.78%, 12.94%, 20.80%, 20.20%, 17.53%, 14.51% and 9.66%. The 10 years
average of ROE 14.22. The risk level of this profitability measured by standard deviation is
4.65%.
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Table 4.3
Ratio Analysis for Equity to Total Assets (ETA)
Bank
BBL (%)
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
7.21
5.85
6.61
8.68
8.38
8.62
8.98
10.03
10.54
11.82
Mean
S.D
8.67
1.73
Source: Appendix-1
Figure 4.3
The ETA ratio is used to measure a bank's credit risk performance. This shows the potential of
bank's protection against investments and assets. It also demonstrates the ability to absorb shock
for potential loan losses and how bank uses its equity funds to support bank assets. The higher
ratio is favorable for the bank as it represents the bank's strong efficiency in maintain asset losses.
The table shows the ETA of BBL from 2011 to 2020 were 7.21%, 5.85%, 6.61%, 8.68%, 8.38%,
8.62%, 8.98%, 10.03%, 10.54% and 11.82% respectively. Average ETA of BBL is 8.67% and
standard deviation is 1.73%.
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Table 4.4
Ratio Analysis for Capital Adequacy Ratio (CAR)
Ban
k
BBL
(%)
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
11.60
11.44
11.33
14.72
12.21
12.26
12.72
13.67
15.07
14.55
Mean
S.D
12.96
1.36
Source: Appendix-1
Figure 4.4
Capital Adequacy Ratio of BRAC Bank (2011-2020)
16
13.67
14
Capial Adequacy Ratio
12
15.07
14.72
11.6
11.44
11.33
2011
2012
2013
12.21
12.26
2015
2016
14.55
12.72
10
8
6
4
2
0
2014
2017
2018
2019
2020
Year
The capital adequacy ratio is a measurement of a bank's accessible capital expressed as a
percentage of a bank's risk-weighted credit exposures. The higher a bank has the capital
adequacy ratios, the greater the level of unanticipated losses it can absorb in the time of distress.
From the table and graph it is seen that the CAR of BBL from the 2011 to 2013 were almost
constant. In 2014 it was increased drastically. Though in 2015 CAR was deceased, it was in
increasing trend from the year 2016 to 2019. But in 2020 CAR became 14.55% from 15.07%.
The average CAR from the 2011 to 2020 was 12.96% and standard deviation was 1.36%.
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Table 4.5
Analysis for Income to Expense Ratio (IER)
Bank
BBL
(%)
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
354.29
366.31
365.54
340.62
324.4
4
289.2
4
280.1
2
297.2
0
315.0
5
284.18
Mean
S.D
321.7
31.9
Source: Appendix-1
Figure 4.5
The income to expense ratio (IER) in the banking sector is used to evaluate the managerial
efficiency of total revenue generation by controlling operating expenses. The Income to Expense
ratio of BBL from the year 2011 to 2020 were 354.29%, 366.31%, 365.54%, 340.62%, 324.44%,
289.24%, 280.12%, 297.20%, 315.05% and 284.18% respectively. From the table and chart it is
clearly seen that IER ratio of BBL is in decreasing trend. Though in 2019 the ration was
increased, in 2020 it again decreased. But average IER is looked well. The risk level of IER is
31.9% which is comparative higher.
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Table 4.6
Analysis for Asset Utilization Ratio (AUR)
Bank
BBL (%)
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
7.61
6.27
7.04
6.55
6.72
6.93
6.46
6.08
5.79
5.16
Mean
S.D
6.46
0.65
Source: Appendix-1
Figure 4.6
Asset Utilization Ratios measure the effectiveness with which the bank or firm uses its asset to
generate revenue to reach its goal. A higher ratio for any particular bank indicates that the bank
has an efficient management team. The table and chart show that the AU of BBL in 2011 was
7.61% which was highest in last ten years. Decreased by 1.34% in 2012 the ratio was 6.27% and
2013 it was increased. From the year 2016 to 2020 the AU ratios were in decreasing trend. The
average AU is 6.46% and standard deviation is 0.65%.
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4.7 Conclusion:
At the end it can be said BBL has a strong financial base. The performance of BBL is well. They
are taking higher risk to get higher return which helps them to bring the success. Not only that,
they have very efficient management who take the right decision at the right time. They are
performing well but still they can do better by decreasing their cost to income ratio and they
increase ROA and ETA. They can use their human and other resources more efficiently and
make them more digitalized to increase the profitability while decreasing the cost.
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Chapter Five
Recommendations and Guidelines
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5.1 Recommendations and Guidelines
In ratio analysis it is quite visible that BBL is performing well. But it has some areas to address.
So from the analysis there are some recommendation and guidelines for the BBL:
1. Though ROE of BBL is satisfactory, ROA of BBL is not good enough. BBL should increase
managerial efficiency to utilize asset properly so that they can increase their ROA ratio.
2. Credit risk performance of BBL is satisfactory. The CAR is quite satisfactory but BBL should
increase ETA ratio. The condition of ETA is not look good. BBL should increase equity level by
increasing profit and reducing cost.
3. Income to expense ratio of BBL is excellent but its standard deviation is comparatively higher.
The IER were fluctuated over the periods. BBL should aware about this.
4. Asset utilization ratio expresses the management ability of a bank. The condition of AU of
BBL is average. BBL should increase AU ratio by ensuring proper utilization of asset.
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References
1. www.bracbank.com
2. Annual Report 2020, BRAC Bank Limited.
3. Annual Report 2019, BRAC Bank Limited.
4. Annual Report 2018, BRAC Bank Limited.
5. Annual Report 2017, BRAC Bank Limited.
6. Annual Report 2016, BRAC Bank Limited.
7. Annual Report 2015, BRAC Bank Limited.
8. Annual Report 2014, BRAC Bank Limited.
9. Annual Report 2013, BRAC Bank Limited.
10. Annual Report 2012, BRAC Bank Limited.
11. Annual Report 2011, BRAC Bank Limited.
12. Bank management & Financial Services, Peter Rose & Sylvia C. Hudgins
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Appendix-1
Ten Years’ Financial Summary
BDT in million, unless otherwise specified
Particulars
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total Assets
133201
173677
179713
204592
224493
248605
289501
315417
369404
397502
Total Equity
9603
10155
11883
17755
18815
21441
25991
31638
38919
46995
110285
111494
126391
133930
166622
188431
209351
233713
244401
276175
Tier
One
Capital
8238
8651
10051
16005
17114
19707
23534
28780
33784
36437
Tier
Two
Capital
4551
4101
4274
3712
3260
3389
3100
3157
3038
3709
Total
Income
18299
21063
23939
22600
23785
23000
27060
30739
36042
33837
Total
Operating
Expense
5165
5750
6549
6635
7331
7952
9660
10343
11440
11907
Net Profit
1702
540
1397
2091
2435
4460
5250
5547
5646
4541
Total
Revenue
10134
10894
12655
13408
15085
17229
18710
19165
21388
20508
Risk
Weighted
Asset
Source: www.bracbank.com (Annual Report 2011-2020)
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Formulas:
1. Return on Asset (ROA) = Net Profit/Total Asset.
2. Return on Equity (ROE) = Net Profit/Total Equity.
3. Equity to Total Asset (ETA) = Common Equity/Total Asset.
4. Capital Adequacy Ratio (CAR) = (Tier One Capital + Tier Two Capital)/Risk Weighted Asset.
5. Income to Expense Ratio (IER) = Total Income/Total Operating Expense.
6. Asset Utilization Ratio = Total Revenue/Total Asset.
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