Ab Bank Performance Evaluation

Chapter-1: Introductory
1.0 Introduction:
In general sense we mean “Bank” as a financial institution that deals with money. There are
different types of banks like Central bank, State- owned Commercial bank, Private Commercial
bank or Merchant bank, Foreign Commercial bank, Specialized Development bank, etc. But
when we use the term bank it generally means „commercial bank‟ that collects the deposit from
surplus unit of the society and then lends the deposits to the deficit units of the society. But the
new thing is that how it operates and presenting its activities for the purpose of serving customer
requirements to increase their well-being in the sense of wealth. Banks also provide many
services for clients to make their life easy in this busy environment. In this competitive
environment in today‟s world, the entire bank increases their facilities in favor of their customers
to retain them and capture more share of the market to be leader. Interest is one of the main
factors in attracting customers. So, it can be said that conventional banking systems are interestbased system. This report is an attempt to gain the knowledge of Overall Banking Activities of
ARAB BANGLADESH BANK Ltd. in terms of productivity and effectiveness. Also, analyze
and discuss the five years performance from fiscal year 2008- 2012 to evaluate the position of
ARAB BANGLADESH (AB) BANK Ltd.

1.1 Origin of the report:

As a requirement for my Bachelor of Business Administration program I have prepared this
report on „„Performance evaluation of an commercial bank –A Study on Arab Bangladesh
Bank Limited”. During the project period, I am required to prepare a report on the organization
in my project period. My supervisor Professor Dr.Tanbir Ahmed Chowdhury, Dean and
Chairperson & Professor, Department of Business Administration, east west university- assigned
me this topic. It is a 03 (Three) credit hours program with duration of 12 weeks.

1

1.2 Objective of the report:
Behind this report, obviously there have some objectives which must have to be fulfilled. The
objectives of the report is
1. To present and overview and function of AB bank limited.
2. To appraise the financial performance of AB bank limited.
3. To identify the problems of AB bank limited.
4. To recommend remedial measure for the development of AB bank limited.

1.3 Scope of the study:
The scope of the organizational part covers the organizational structure, background, vision,
mission, objective, functions and rules, restrictions, procedures of foreign exchange transactions
of the organization.

1.4 Methodology of the study:
Relevant data for this report has been collected based on secondary data by direct investigation
of different records, Documents, operational process and personnel. Information regarding office
activities of the Bank has been collected though consulting and discussion with bank personnel.
The overall data is from 2008-2012.
1.4.1 Study Design:
The study is design by using Microsoft word and excel and using various types of ratio formula.
1.4.2 Source of information:
Primary sources of data:


Different manuals of AB Bank Limited.



Different circulars of AB Bank Limited.



Personal Observation.
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Secondary sources of data


Annual report of AB Bank Limited



Different papers of AB Bank Limited



Unpublished data



Different text books



Various files, balance sheet and various documents.

1.4.3 Data analysis and interpretation:
Collected information was processed by the use of computer system, research techniques etc. and
this detail analysis work is embodied in the report.

1.5 Limitations:
There are some problem regarding preparing this project.
Those problems are as follows:


Lack of availability of information and data, some time there are some back dated
information.



The record system of the annual report of some of the banks is not efficient.



Lack of access in many section of the bank financial Information.



Banking sector is a very vast sector where I have a little knowledge about it which
limits my report.

1.6 Structural Design:
This report structure design is based on Microsoft excel, Microsoft word, using graphs, charts
etcetera. The report structure is structuring by using the information from Annual report and
company website.

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Chapter-2: Background of AB Bank Limited
2.0 An overview of AB Bank:
AB Bank is the First private bank in Bangladesh. Government permitted private banks to enter in
to banking because of sustained poor performance by the banks of nationalized sector. AB Bank
limited (ABBL) is sailed as the leading private commercial bank in the baking suture from its
journey on April 12, 1982 with opening of its first branch at Karwan Bazar in Dhaka. It was the
brainchild of group dynamic entrepreneurs of Bangladesh.

2.1 Historical Background of AB Bank:
AB Bank believes in modernization. The bank took a conscious decision to rejuvenate its past
identity – an identity that the bank carried as Arab Bangladesh Bank Limited for twenty five long
years. As a result of this decision, the bank chose to rename itself as AB Bank Limited and the
Bangladesh Bank put its affirmative stamp on November 14, 2007 vide Bangladesh Bank BPRD
circular letter no.-10 dated 22 November 2007. Prior to that shareholders of the bank approved
the change of name in the Extra-Ordinary General Meeting held on 4 September 2007.

2.2 Vision of AB Bank:
Vision statement “To be the trendsetter for innovative banking with excellence & perfection”

2.3 Mission of AB Bank:
Mission statement “To be the best performing bank in the country”

2.4 Core Values of AB Bank:
Their Compliances:
they consider adherence to national policies and objectives a priority for giving their customers
the best financial support with corporate integrity, meaning a fully compliant bank along with
involvement in social development.
Their Customers:
they give the best priority on their customer demand and through their endless effort they assure
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the best satisfaction to their customers.
Their Shareholders:
they assure the best return to their shareholders' by commenced performance over a rolling year.
Their Team Members:
they provide secure, satisfying employment, ensuring the contribution of each individual to the
success of ABBL.

2.5 Organogram of AB Bank:
Every bank follow organogram of their own and they set up position into the organization based
on their organogram.
AB Bank also follow a organogram, AB Bank organogram is:

AB Bank follow and maintain the organogram between the Bank.
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Chapter-3: Products and Services of AB Bank Limited
3.0 Product of a bank:
Every Bank offer some product to their customer and they try to offer various types of product
with various features so that they can attract the customer because a bank is always depend and
run on customer, if a bank can attract more customer by their product they can gain the better
position.

3.1 Product of AB Bank:
AB Bank also offer various product to do this thing, they offer product as Retail Banking, Max
saver, Deposit double scheme, Monthly saving deposit scheme, Millionaire scheme account,
Personal loan, Auto loan , Educational loan, Home loan and some other corporate banking which
are describe bellow.

3.2 Retail Banking:
Retail banking is one of the main product of AB Bank under retail banking they provide
3.2.0 Max Saver:

It is one of the retail banking product its type is Savings account with maximum returns.
Features is -







Account will be limited for only individual.
Initial deposit of minimum Tk. 50,000.00.
No restriction on the number of transaction.
No interest forfeiting rules.
Free SMS banking & internet banking.
Interest will be calculated on daily balance and will be applied quarterly.
ATM transaction limit max Tk. 80,000.00 per day

Its rate of return is 0% to 9% if the deposit amount is less than Tk 50000 interest rate is 0%,
if the deposit amount is 5000000 or above they will pay the highest interest rate 9% and
between 50000 and 5000000 interest rate is varied 5% to 8% depends on the deposit amount.
In additional facility Customer will be privileged by following facilities upon maintaining
average balance of 50,000.00 and above (Free cheque book, Free Debit card, No ledger fee.)

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3.2.1 Deposit Double Scheme (DDS):
Features is -





Special type of fixed deposit account.
Interest rate : 12.25%
Make money double within 6 years.
Minimum deposit amount is Tk.50,000 to maximum deposit of Tk.50,00,000.
Loan/overdraft facility can be availed up to 90% of the deposited amount.

3.2.2 Monthly Savings Deposit Scheme (MSDS):
Features is -





Monthly installment based savings scheme.
A person can contribute monthly installments Tk.500 or it‟s multiple(Tk.100* for
branches outside municipal area)
Account can be opened for 3, 5, 7 or 10 years.
Rate of interest : 12.00%
Loan/overdraft facility may be allowed up to 90% of the deposited amount subject to
minimum BDT.15,000.

3.2.3 Monthly Income Deposit (MIDS):
Features is -




Fixed deposit scheme with monthly returns.
Minimum deposit is Tk. 1,00,000.00 with the maximum amount being Tk 50,00,000
either in a single/joint name.
Account can be opened for 1, 3 or 5 years.
Rate of interest : 12.00%

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3.2.4 Millionaire Scheme Account (MSA):
Features is -






Monthly installment based savings scheme with fixed maturity value of BDT. One
million (10,00,000).
Scope of initial investment to reduce monthly installment.
Installment size varies with tenor and initial investment.
Account can be opened for 3, 4, 5 or 6 years.
Rate of interest : 12.00%
Loan/overdraft facility may be allowed up to 90% of the deposited amount subject to
minimum BDT.15, 000.

3.2.5 Personal Loan:
purpose to serve Personal Loan may be availed for purchase of household items, marriage,
House/Office Renovation etc. Loan limit is minimum 50,000 and maximum 10,00,000( without
collateral). Charge for the lone is application fee tk 500 and Processing fee 1.5% on the approved
loan amount. Tenor of the loan is minimum 12 months and maximum 60 months. Rate of interest
charge for the loan is 18.00% p.a-21.00% p.a (to be determined by ALCO from time to time).
Guarantee of the loan is Spouse/parent guarantee, one personal guarantee.
3.2.6 Auto Loan:
Purpose is to serve to the customer to purchase of brand new car or purchase of reconditioned
car. The lone limit is 30% of the value for brand new car or reconditioned car but not exceeding
BDT 20,00,000.charge for the loan is Application fee Tk. 500 and Processing fee 1.5% on the
approved loan amount. Tenor is Brand New: 12-72 Months, Reconditioned car: 12-60 Months.
Interest have to pay 16.00%-19.00% p.a (to be determined by ALCO from time to time).
Guarantee of the loan is Personal guarantee of spouse/parents only.
3.2.7 Education Loan (disbursed to parents/guardian):
Purpose of the loan is To assist parents/guardians for Admission/Education fees, semester fees,
study abroad for their children/wards. Loan limit is Minimum Tk. 50,000,MaximumTk10,00,000
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(without collateral),30% of the value of the total cost. Charge for the loan is Application fee Tk.
500,Processing fee 1.5% on the approved loan amount. Tenor is Min 12 Months, Max 60
Months. Rate of interest is 18.00% p.a - 21.00% p.a (to be determined by ALCO from time to
time). Guarantee is Personal guarantee of spouse/parents only.
3.2.8 Education Loan (for executive):
Purpose of the loan is To assist executives pursue Higher studies/professional qualification at
local/overseas institutions.. Loan limit is Minimum Tk. 50,000,MaximumTk10,00,000 (without
collateral),30% of the value of the total cost. Charge for the loan is Application fee Tk. 500,
Processing fee 1.5% on the approved loan amount. Tenor is Min 12 Months, Max 60 Months.
Rate of interest is 18.00% p.a - 21.00% p.a (to be determined by ALCO from time to time).
Guarantee is Personal guarantee of spouse/parents only.
( N.B: in the education loan(disbursed to parents/guardian) and (for executive) everything is
same accept the purpose of the loan. )
3.2.9 Home Loan:
This Loan is providing for multiple purposes, the purpose of the Loan is to 1. Purchase of
apartment/house within the Municipal areas of town/cities in Bangladesh. 2. Purchase of
Flat/Apartment/independent house not more than 15 years old. 3. Completion of construction of
a new house. 4. Loan takeover facility of Home Loan from other banks at a preferential rate.
Limit of the Loan is Min BDT 500,000 and Max70% of the value of the flat or construction cost
for completion but not more than Tk. 1,00,00,000. Charge for the loan is Application fee: Tk.
500 and Processing fee: 1.5% on the approved loan amount. Lone tenor is Min: 3 Years
Max: 15 Years. Insurance coverage under Property insurance for Earthquake and Fire. Rate of
interest is 15.00% - 18.00% p.a (to be determined by ALCO from time to time). The purpose of
security is to Registered mortgage of property along with registered IGPA to sell the property.
Guarantee for the loan is Personal guarantee of spouse/parents / legal heir only.

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3.2.10 Personal Overdraft-Secured:
This lone purpose To meet personal requirement of fund. Loan amount is Maximum 80% of the
security. This loan charge is Processing fee: 0.5% subject to Min Tk. 2,000 and Max Tk. 10,000.
Tenor of this loan is Revolving with annual review. Interest have to pay for this loan is For
ABBL FDR: 15.00% p.a-18.00% p.a, Other Bank‟s FDR, WDB: 15.25% p.a – 18.25% p.a (To
be determined by ALCO from time to time.). security is Lien over FDR, ICB Unit certificate,
RFCD, NFCD, CD account(s) etc.One personal guarantee in case of third party cash collateral.
3.2.11 Personal Loan:
This loan purpose To meet personal requirement of fund. Amount of the loan is Maximum 80%
of the security. Loan charge is Processing fee: 0.5% subject to Min Tk. 2,000 and Max Tk.
10,000. Tenor is Min 12 months and Max 36 months. This lone rate of interest is ABBL FDR:
15.00% p.a-18.00% p.a, Other Bank‟s FDR, WDB: 15.25% p.a – 18.25% p.a (To be determined
by ALCO from time to time.). Security is Lien over FDR, ICB Unit certificate, RFCD, NFCD,
CD account(s) etc. One personal guarantee in case of third party cash collateral.

3.3 Corporate banking:
At AB Bank they provide complete range of solutions to meet Corporate Customers'requirement.
Their Corporate Banking solutions include a broad spectrum of products and services backed by
proven, modern technologies.
Corporate Lending
AB Bank specialist teams offer a comprehensive service providing finance to large and mediumsized businesses based in Bangladesh. For more information as to how Bank might best meet
your corporate debt needs, please contact with bank at their Corporate Head Office.
Structured Finance
They have a specialist Structured Finance Team who arrange and underwrite finance solutions
including Debt and Equity Syndication for financial sponsors, management teams and
corporates. Also they provide corporate advisory services.

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Bank aim to provide tailored financing solutions with a dedicated team who can rapidly respond
to client needs.
Following are some of the products and financial tools of Corporate Banking:


Project Finance



Working Capital Finance



Trade Finance



Cash Management



Syndicated Finance, both onshore & off-shore



Equity Finance, both onshore & off-shore



Corporate Advisory Services

3.4 SME Banking (SME DEPOSIT/LOAN PRODUCTS):
Considering the volume, role and contribution of the SMEs, in the last three decades AB Bank
has been patronizing this sector by extending credit facilities of different types and tenor. As of
now around 30% of the bank‟s total loan portfolio is segmented to the SMEs which deserve all
out attention in our plans, projections and forecasting.

As such the bank has emphasized on the following issues:


To provide the best services to the SME sector



To increase the SME portfolio of ABBL significantly



To improve the quality of ABBL‟s portfolio

SME Sectors in which AB Bank has participated so far:





Agro machinery
Poultry
Animal Feed
Dairy Product
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














Fruit Preservation
Hotel & Restaurants
Garments Accessories
Leather products
Plastic product
Furniture : Wooden & Metal
Ink
Paint
Printing & Packaging
Wire & Cable
Aluminum
Cement and Lime Plaster
Clinics and Hospitals
Engineering & Scientific Instruments

3.5 Project finance (Large lone & project finance):


In order to cater the demand of client AB Bank has segmented its portfolio in terms of
loan size. As per this segmentation any loan over Tk. 10.00 Crore falls under the purview
of Large Loan Unit.



In AB Bank, there is also a separate Project Finance unit who evaluate the business. The
unit is entrusted to handle the portfolio in a focused manner. AB Bank is always in fore
front to support establishment of new projects of diverse nature which will help to
broaden the manufacturing arena vis-à-vis to generate to employment.



At the moment AB Bank „s exposure in Large Loan & Project Finance portfolio is
distributed in the following sectors:

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SL Sector

ABBL Exposure
(Limit)
(Fig. in Lac Tk.)

1

Agro- Business

12,717.56

2

Cement Power, Glass

38,691.92

3

Consumer Products

21,855.00

4

Edible Oil

36,057.53

5

Engineering & Construction

18,106.42

6

Financial Institution

7

Food & Beverage

8

Hotel

2,505.26

9

Health Care

3,928.62

1,414.70
27,044.24

10 Printing & Packaging

11,867.61

11 Real Estate

10,451.49

12 Micro-finance

5,763.15

13 Export

9,441.63

14 RMG & Backward Linkage

94,826.13

15 Ship Breaking

18,029.20

16 Steel

42,824.97

17 Telecom & Computer Accessories

11,479.89

18 Trading

77,579.89

Total ( including syndicated exposure)
Less Syndicated Exposure
Total Large Loan & Project Finance portfolio without
syndicated exposure

444,585.21
51,560.29
3930,24.92

3.6 Loan syndication:


Syndication or club financing is a growing concept in Banking Arena of Bangladesh.
Syndicated finance diversifies the risk of one bank on a single borrower and increases the
quality of loan through consensus or cumulative judgment and monitoring of different
banks / financial institutions.
13



AB Bank, the first bank in the private sector also took initiative to adapt to this growing
concept.



In 1997, AB Bank for the first time arranged a club financing with Dhaka Bank Ltd to
raise Tk. 6700 lac - out of which ABBL financed Tk. 5700 Lac and Dhaka bank financed
Tk. 1000 Lac.



In 1999, AB Bank arranged its second syndicated credit facility with IPDC to raise Tk
3563 Lac.



Since then AB Bank did not look back.



Since 1997 to 2007 (till date), AB Bank has raised total Tk. 25989.56 Lac as Lead
Arranger. The following banks from time to time have been our partners in these
syndications : Dhaka Bank, IPDC, EXIM Bank, Bank Asia, Oriental Bank, NCC Bank,
The City Bank, Trust Bank, Bank Asia.



AB Bank has also participated in different syndications arranged by other Banks, out of
which till date 6 (six) syndication has successfully been completed. AB Bank exposure in
these completed syndications was Tk. 4700 Lac.



At the moment AB has participation in 19 (nineteen) syndicated facilities. AB Bank‟s
exposure in the ongoing syndication is Tk. 51560.29 Lac which is diversified in the
following ten sectors:
SL Sector

ABBL Participation
(Fig. in Lac Tk.)

1

Textile

9,533.57

2

Micro-finance

3,000.00

3

Cement

7,990.00

4

Energy & Power

11,997.00

5

Telephone (PSTN) 5,500.00

6

Glass

900.00

7

Sugar

900.00
14

8

Steel Mills

9081.72

9

Paper

1158.00

10 Chemical

1,500.00

Total

51,560.29

3.7 landing Rate:

Products

Mid Rate
(Previous)

Mid Rate

Interest rate
w.e.f January
01, 2013

1) Agriculture (As per Bangladesh Bank
Directives)

13.00%

13.00%

13.00%

2) Export (As per Bangladesh Bank
Directives)

7.00%

7.00%

7.00%

3) Large and medium scale industries
(Term)

14.00%

14.00%

12.50%-15.50%

4) Small Industries (Term Loan)

16.50%

15.50%

14.00%-17.00%

a) Large and medium scale industries

14.00%

14.00%

12.50%-15.50%

b) Small Industries

16.50%

16.50%

14.00%-17.00%

a) Large and medium scale industries

15.50%

15.50%

14.00%-17.00%

b) Small Industries

16.50%

16.00%

14.50%-17.50%

7) Housing Loans

16.50%

16.00%

14.50%-17.50%

8) Consumer Credit

19.50%

19.50%

18.00%-21.00%

5) Working Capital

6) Commercial Lending

9) Credit Card

2.00% per month 2.00% per month 2.00% per month
16.50%

16.50%

15.00%-18.00%

i) Cash collateral-ABBL FDR (Maximum
80.00%)

16.50%

16.50%

15.00%-18.00%

ii) Cash Collateral - Other Banks FDR or
WDB

16.75%

16.75%

15.25%-18.25%

iii) Women Enterpreneur upto Tk 50.00

10.00%

10.00%

10.00%

10) Finance to NBFI's
11) Others

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lac (As per Bangladesh Bank Directives)
iv) Special Scheme Loans - SME

16.50%

16.50%

15.00%-18.00%

v) Import Finance (Rice, Wheet, Edible
Oil, Lentils, Peas, Onion, Dates, Suger
and Chemical Fertilizer)

14.00%

14.00%

12.50%-15.50%

vi) Auto Loan

17.50%

17.50%

16.00%-19.00%

Notes:
1. For lending against ABBL FDR, the rate is minimum 3.00% above the rate of the
instrument.
2. Exposure under cash collateral of other banks requires clearance from FI & Treasury.
3. For taking exposure on "Digun Loan" under Special Scheme, the rate will be 8% above
the instruments' rate; subject to maximum 20% p.a.
4. For Women Entrepreneur (above Tk. 50.00 lac), the rate will be 15.00%-18.00%.

3.8 Deposit Rate:
Interest Rate on Deposit w.e.f. Close of Business March 4, 2014

Products

Interest Rate

Savings Deposits

6.00%

FSP (Family Savings Plan)

8.00%

SND (Special Notice Deposit)
Upto 1,00,00,000

4.00%

1,00,00,001 to 25,00,00,000

5.00%

25,00,00,001 to 50,00,00,000

6.00%

50,00,00,001 to 100,00,00,000

7.00%

Above 100,00,00,000

8.00%

Security Deposit Receipts(SDR)/Call Deposit 3.00%
NFCD

Rate as per Daily FX rate
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FC & RFCD (Minimum balance USD 1000 or Rate as per Daily FX rate
GBP 500 or its equivalent for other currency &
minimum tenor one month)
Fixed Deposit (Time Deposits)
1 (One) Month

7.00%

3 (Three) Months
Below 10 Crore

10.25%

10 Crore & Above

10.50%

6 (Six) Months
Below 10 Crore

11.00%

10 Crore & Above

11.25%

1 (One) Year
Below 10 Crore

11.25%

10 Crore & Above

11.50%

2 (Two) Years

11.50%

3.9 Non-Resident Bangladeshi (NRB) Banking:
Facilities offered to NRBs
Opening of Foreign Currency A/C: We open Foreign Currency Account in USD/GBP/EUR for
NRBs. Foreign Currency can be remitted by the Nationals of Bangladesh living Abroad earned
by them as wage earners or from other sources. The deposit amount can also be used for
remittance to other countries as per their requirement. Nominee of Account holder can also able
to operate this Account.

NFCD: We issued Foreign Currency Fixed Term Deposit in USD/GBP/EUR with different
tenure. Interest is paid in respective Foreign Currency. Rates of Interest are published in our
daily Exchange Rate.

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Wage Earners Development Bond: These Bonds can be issued from the balance of the FC
account with tenure for five years. Rate of interest is 11.80% p.a. in BDT.

USD Premium Bond: These Bonds can be issued from the balance of the FC account with a
tenure for Three years. Rate of interest is 7.5% p.a. in BDT.

USD Investment Bond: These Bonds can be issued from the balance of the FC account with a
tenure for Three years. Rate of interest is 6.5% p.a. in USD.
In addition to the above, we also have Drawing Arrangements with 20 (Twenty)
Exchange/Money Transfer Remittance Houses all over the globe to facilitate fast, reliable and
hassle-free inward remittance to the expatriate Bangladeshis around the world.

List of Exchange / Money Transfer Remittance Houses are as follows:
1.Zenj Exchange Co. P.O. Box 236,Manama,Kingdom of Bahrain. 2. Oman Exchange Company
Ltd. W.L.L, Post Box # 26057, 13211 Safat, Kuwait. 3. Security Exchange Co. WLL, Post Box #
29760, Safat, Kuwait. 4. International Financial Line, P.O Box 2171, Safat, Kuwait. 5. Bank Al
Bilad, PO Box 140, Riyadh, KSA, Tel: +966-011-4798888. 6. Modern Exchange Co. LLC, Post
Box # 3401 PC 112, Ruwi, Sultanate of Oman. 7. Oman United Exchange Co. L.L.C , Near
Ruwi Police Station, P.O. Box 889, Muscat, Postal Code 100, Sultanate of Oman. 8. Majan
Exchange L. L.c, C R. NO. 104446, P.O. BOX No. 583 , Postal Code 117, Sultanate of Oman. 9.
Habib Exchange Co. LLC, Central Office, Sheikh hamdan street, P.O Box-2370, Abu Dhabi,
U.A.E. 10. Al-Fardan Exchange Co. LLC, Post Pox # 339, Mushrib Street, Doha, Qatar. 11. Gulf
Overseas Exchange Co. L.L.C, P.O. Box No. 3931, Ruwi 112, Sultanate of Oman. 12. U.A.E.
Exchange Centre LLC, Post Box # 170, Sh. Hamdan Street, Abu Dhabi United Arab Emirates.
13. Al-Ansari Exchange Co, Head Office , Amin Tower , Liwa Street, Post box-325, Abu Dhabi,
U.A.E. 14. Habib Qatar International Finance & Investment Ltd, Post Box # 1188, Mushirib
Street, Doha, Qatar. 15. MoneyGram Payment Systems Inc, 1550 Utica Avenue South,
Minneapolish, MN 55416, USA. 16. Emirates India International Exchange, P. O Box 7190,
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Dubai, United Arab Emirates. 17. Wall Street Exchange Centre LLC, 1103,1104-Twin Towers,
Baniyans Road, P.O. Box 3014, Dubai, U.A.E. 18. Continental Exchange Solutions, (Ria
Financial Services), 13825 Cerritos Corporate Drive Suite “C'' Cerritos, California, USA. 19. Al
Zaman Exchange WLL, P O Box: 23497, Souq Najada Doha, Qatar. 20. Brac Saajan Exchange
ltd, 147 Lozells Road, Birmingham, West Midlands, B19 2TP, United Kingdom, Tel: +44
(121)515 4008.

3.10 Money Transfer:
Foreign Remittance through Exchange House For Inward Remittance, AB Bank established
extensive drawing arrangement network with Banks and Exchange Companies located in the
important countries of the world. AB have Drawing Arrangements with 20 (Twenty)
Exchange/Money Transfer Remittance Houses all over the global.

3.11 Islami Banking:
To provide the Islamic banking services in accordance with the principles of Islamic Shariah, AB
Bank has established Islamic Banking Wing and started its functioning by opening full-fledged
Islamic banking branch on 23.12.2004. The branch is known as AB Bank Islami Banking
Branch, Kakrail, and is situated at 82, Kakrail, Ramna, Dhaka.
The goals and objectives of Islamic banking Wing are as under:


To facilitate the Islamic banking system in the country



To create new entrepreneurs and to arrange required finance for them



To play effective role for socio economic development of the country



To give assistance in launching welfare oriented economic system under Islamic values

Under this wing AB Bank extends the following Islamic banking services:


Deposit services



Investment services
19

3.12 AB Securities Limited (ABSL):
AB Securities Limited (ABSL), a wholly owned subsidiary of AB Bank Limited, provides
stock broking services to its clients. ABSL originally incorporated in December 2009 as a private
limited company, commenced operations in August, 2010, following the transfer of the
brokerage business of Arab Bangladesh Bank Foundation (ABBF) to ABSL in August, 2010, in
according with the instruction of Bangladesh Bank. ABSL is a corporate member of both Dhaka
Stock Exchange Limited (Member # 201) and Chittagong Stock Exchange Limited (Member #
101).

3.13 AB Investment Limited (ABIL):
AB Investment Limited, a subsidiary of AB Bank Limited incorporated under the Companies
Act 1994 and running its Merchant Banking operations being licensed by the Securities and
Exchange Commission.
ABIL provides diversified services for the investors and sponsors group of the Capital Market.
The offered services are:
1. Portfolio Management Services.
2. Investors' Discretionary Account (IDA) for Local Individual and Corporate Investors.
3. Managements' Discretionary Account (MDA) for Non-Resident Bangladeshi, Foreign, local
persons and Corporate Investors.
4. Investors' Discretionary Account (NRB-IDA) for Non-Resident Bangladeshi, Foreign
Individual and Corporate Investors.
5. Opening and Maintaining of FC Account with AD Branches of AB Bank Limited (for NonResident Bangladeshi and Corporate Investors).
6. Issue Management Services.
7. Private Placement.
8. Corporate Advisory.
9. Underwriting.

20

3.14 Cards:
AB Bank Ltd. introduces VISA debit card facility. Under this System card holder can reload and
refunded money from Bank‟s designated Branches Card holder also can pay utility Bills and
purchase goods from different POS (point of sale).Bank has also joined Electro ways
Transactions Network (ETN) commonly known as E-cash, recently. This new platform will
enable the Card Division to go for mass-based card programs in the future.

3.15 Services of AB Bank:
AB Bank provide various services to their customer, they try to satisfy their customer by the
services so that customer becomes loyal to Bank. The bank provide individual and joint service,
bank also provide some extra beneficial service like mobile banking.

3.16 Self Deposit Locker:
This services provide for those customer who Looking for a safe storage place for their
valuables. A Safe Deposit Locker with AB Bank is the solution to customer concern. Located at
select branches in cities all over the country, Banks lockers ensure the safe keeping of customers
valuables. Advantage of the locker is wide availability with various size(small, medium & large)
with varying rents and minimum rent period is one year, rent must pay in advanced from account
eligibility for the service is An individual (not minor), firms, limited company, associations,
clubs, trusts, societies, etc. for getting the locker services customer have to maintain and fulfill
some terms and conditions. Only some specific branches provide the facility.

3.17 Mobile Banking/SMS Banking:
For getting the service customer have to register their mobile number and follow the bank
procedure, first of all bank register the number after that customer getting the services. By using
the service customer can facilitate themselves by inquiring their balance, fund transfer, mini
statement, mobile top UP, mobile bill payment etc. if any customer taking any facilities from
these bank ensure there transaction by giving feedback sms.

21

3.18 New MICR Cheque Book:
AB Bank has started Issuance of new cheque book from June 01, 2009 as per Bangladesh Bank
guideline. Customer can conveniently collect new cheque book from their Account Opening
Officer of the branch. As per Bangladesh Bank instruction bank have implemented MICR coded
cheque book from June 6, 2009, which will be customized by the Bank. MICR is a process of
printing cheques using magnetic ink and special fonts to create machine-readable information.It
is the first step towards electronic cheque clearing process. the MICR coded cheque book will
facilitate to 1. Quick processing and faster cheque clearing time 2. Prevent cheque related
fraudulent activities.

3.19 Lost Cheque Book:
Service provide for lost cheque book is in case of issuance of duplicate cheque book in lieu of
lost cheque book the Account Holder will have to submit the Bank an Application in the
prescribed preform with a copy of GD entry from local police station regarding the loss of his
cheque book. If account holder provide those valid information bank will provide new cheque
book immediately.

3.20 Lost Credit/Debit card:
To recover the lost credit/debit card customer simply call AB Bank Ltd, Card Division. Then
report the loss in writing to AB Bank Card Division or his/her Branch where he/she opened
his/her account within 24 hours and a replacement will be ready for the customer within 7
working days.

3.21 Fund Transfer:
AB Bank provide the service of fund transfer any customer can transfer his fund to another
account through his request letter or his use AB cheque with cash deposit slip wherein he clearly
mentioned beneficiary Account Number & Name of the customer.

22

3.22 Account Opening:
Anyone can open account in AB Bank but he/she has to maintain the bank procedures and
provide some information to the bank,for open a account customer have to fill up the account
opening form and provide two copies attested passport size photograph and a valid identification
card ( it might be photocopy of passport/national ID card/Driving license etc.).

3.23 Address Change:
Customer can change the address if they want customer can fill up bank‟s prescribed address
change form (available any of our branches) or he/she can send to bank in writing change of
address with a copy of utility bill documents showing his/her new address. instruction should be
submitted to the Branch of AB Bank Limited where he/she opened your account.

23

Chapter-4: Performance Evaluation of AB Bank Limited
4.1 Deposit Growth Rate:
Money placed into a banking institution for safekeeping. Bank deposits are made to deposit
accounts at a banking institution, such as savings accounts. The account holder has the right to
withdraw any deposited funds, as set forth in the terms and conditions of the account. The
"deposit" itself is a liability owed by the bank to the depositor and refers to this liability rather
than to the actual funds that are deposited.
Table 1: Deposit Growth Rate
Year
2007
2008
2009
2010
2011
2012

Amount
53375000000
68560000000
83087000000
95702000000
116152000000
140026000000

Growth Rate
28%
21%
15%
21%
21%

Source : Annual Report of AB Bank (2008-2012)
Graph 1: Deposit Growth Rate

Deposit Growth Rate
30%
20%
10%
0%
Deposit Growth Rate

2008

2009

2010

2011

2012

28%

21%

15%

21%

21%

When someone opens a bank account and makes a deposit to the bank, the cash becomes an asset
of the bank; the account becomes a liability. AB Bank has the highest deposit growth rate in
2008 which is 28% in that year.

24

4.2 Loan To Deposit:
The formula for the loan to deposit ratio is exactly as its name implies, loans divided by deposits.
The loan to deposit ratio is used to calculate a lending institution's ability to cover withdrawals
made by its customers.
Table 2: Loan to Deposit
Year

Deposit

Loan (loan & advance)

Ratio

2008

68560000000

56709000000

83%

2009

83087000000

70880000000

85%

2010

95702000000

88002000000

92%

2011

116152000000

94638000000

81%

2012

140026000000

106066000000

76%

Source : Annual Report of AB Bank (2008-2012)

Graph 2: Loan to Deposit Ratio

Loan to Deposit Ratio
100%
50%
0%
2008

Loan to Deposit

2009

2008
83%

2010
2009
85%

2011

2012
2010
92%

2011
81%

2012
76%

Loans in the numerator of the formula are investments or assets for a bank. Deposits in the
denominator of the formula can be considered the same as debt as the individual depositors are
essentially granting monies to the bank with a return equal to the deposit rates and that can be
called upon at any time. In these respects, the loan to deposit ratio is similar to a liquidity ratio
and debt ratio. Here we have seen in year 2010 AB Bank has a height Deposit ratio that is 92%.

25

4.3 Return on Asset:
A profitability measure that indicates how well a Bank uses its capital resources to generate
income. To calculate return on assets, divide the Bank‟s total income by the value of its total
assets. The resulting figure, multiplied by 100, will be a percentage; the higher the percentage,
the more efficiently the Bank uses its assets.

Table 3: Return on asset
Year

Net Income

Average Total Assets

Ratio

2008

2301000000

73802000000

3.12%

2009

3363000000

95483000000

3.52%

2010

3696000000

119801500000

3.08%

2011

1328000000

142827000000

0.93%

2012

1439000000

163402500000

0.88%

Source : Annual Report of AB Bank (2008-2012)
Graph 3: Return on Asset Ratio

4.0000%
2008
3.0000%

2009
2010

2.0000%

2011

1.0000%

2012

0.0000%
2008

2009

2010

2011

2012

In 2009, this bank has a highest Return on Asset that is 3.52%. The return on assets ratio can be
helpful in comparing the profitability of different-sized Bank‟s because it allows investors to see
how efficiently a Bank works with what it has, regardless of how big the Bank is. If a Bank has
30 million in net income and 100 million in total assets, its return on assets would be 30%.
Return on assets is calculated by dividing a company's net income usually annual income by its
total assets, and is displayed as a percentage.
26

4.4 Return on Equity Ratio:
The amount of net income returned as a percentage of shareholders equity. Return on equity
measures a corporation's profitability by revealing how much profit a Bank generates with the
money shareholders have invested.
Table 4: Return on Equity Ratio
Year

Net Income

Average Stock holders’ Equity

Ratio

2008

2301000000

5617500000

40.96%

2009

3363000000

8440500000

39.84%

2010

3696000000

12012500000

30.77%

2011

1328000000

14360000000

9.25%

2012

1439000000

20443500000

7.03%

Source : Annual Report of AB Bank (2008-2012)
Graph 4: Return on Equity Ratio

Return on Equity Ratio
50.0000%

2008

40.0000%

2009

30.0000%

2010

20.0000%

2011

10.0000%

2012

0.0000%
2008

2009

2010

2011

2012

This ratio indicates how profitable a Bank is by comparing its net income to its average
shareholders' equity. The return on equity ratio (ROE) measures how much the shareholders
earned for their investment in the Bank. The higher the ratio percentage, the more efficient
management is in utilizing its equity base and the better return is to investors. In 2008, AB Bank
has a highest Return on Equity that is 40.96%.

27

4.5 Earning Per Share:
Earning per share is generally considered to be the single most important variable in determining
a share's price. It is also a major component used to calculate the price-to-earnings valuation
ratio.
Table 5: Earning Per Share
Year

Net Income

2008

2301000000

Number of Common Stock
Outstanding
442500000

EPS

2009

3363000000

442500000

7.6

2010

3696000000

442105263

8.36

2011

1328000000

442666667

3

2012

1439000000

442769231

3.25

5.2

Source : Annual Report of AB Bank (2008-2012)

Graph 5: Earning Per Share

Earning Per Share
10

2008

8

2009

6

2010

4

2011

2

2012

0
2008

2009

2010

2011

2012

Here we seen that the height EPS of AB Bank is in 2010 and the amount is 8.36. The portion of a
Bank's profit allocated to each outstanding share of common stock. Earnings per share serves as
an indicator of a Bank's profitability. When calculating, it is more accurate to use a weighted
average number of shares outstanding over the reporting term, because the number of shares
outstanding can change over time.

28

4.6 Growth of Investment:
Investment has been initially recognized at cost, including acquisition charges associated with
the investment. Premiums have been amortized and discount accredited, using the effective or
historical yield method.

Table 6: Growth of Investment
Year
2008
2009
2010
2011
2012

Loan
56709000000
70880000000
88002000000
94638000000
106066000000

Growth Rate
24.98%
24.15%
7.54%
12.07%

Source: Annual Report of AB Bank (2008-2012)

Graph 6: Growth of Investment

Growth of Investment
30.0000%
2009

20.0000%

2010
2011

10.0000%

2012
0.0000%
2009

2010

2011

2012

We see in the invest growth ratio AB Bank investment was reducing year to year, in 2009 we see
they had the highest investment which is 24.98%, bank also invest similar amount in 2010 but in
2011 they invest very small amount 7.54% which is so much narrow investment between 20092012.

29

4.7 Equity Multiplier:
The equity multiplier is a way of examining how a Bank uses debt to finance its assets. Also
known as the financial leverage ratio or leverage ratio.

Table 7: Equity Multiplier
Year

Total Asset

Stock holders Equity

Times

2008

84054000000.00

6723000000.00

12.50

2009

106912000000.00

10158000000.00

10.52

2010

132691000000.00

13867000000.00

9.56

2011

152963000000.00

14853000000.00

10.29

2012

173842000000.00

26034000000.00

6.67

Source : Annual Report of AB Bank (2008-2012)

Graph 7: Equity Multiplier

Equity Multiplier
2008

15

2009

10

2010

5

2011

0
2008

2009

2010

2011

2012

2012

This ratio shows a Bank's total assets per Taka of stockholders' equity. A higher equity multiplier
indicates higher financial leverage, which means the Bank is relying more on debt to finance its
assets. The height multiplier is 12.50 times in 2009 of AB Bank which means higher financial
leverage in that year. This Bank equity multiplier of 2009 and 2011 are quit equal to 2008.

30

4.8 Price Earnings Ratio:
Price Earnings Ratio compares with current share price and its per-share earnings. In general, a
high Price earning suggests that investors are expecting higher earnings growth in the future
compared to Banks with a lower Price earning. However, the Price earnings ratio doesn't tell us
the whole story by itself. It's usually more useful to compare the Price earnings ratios of one
Bank to other Banks in the same industry, to the market in general or against the Bank 's own
historical Price earning.
Table 8: Price Earnings Ratio
Year

Earnings Per Share

2008

Market Price of Common Stock Per
Share
82

5.2

Price Earnings
Ratio
15.76

2009

118

7.6

15.52

2010

158

8.36

18.89

2011

68

3

22.66

2012

34

3.25

10.46

Source : Annual Report of AB Bank (2008-2012)
Graph 8: Price Earnings Ratio

Price Earning Ratio
2008

25
20
15
10
5
0

2009
2010
2011
2012
2008

2009

2010

2011

2012

The Price earnings is sometimes referred to as the "multiple", because it shows how much
investors are willing to pay per Taka of earnings. If a Banks were currently trading at a multiple
(Price earnings) of 20, the interpretation is that an investor is willing to pay Taka 20 for Taka 1
of current earnings. It is important that investors note an important problem that arises with the
Price earnings measure, and to avoid basing a decision on this measure alone. The earningss is
based on an accounting measure of earnings that is susceptible to forms of manipulation, making
31

the quality of the Price earnings only as good as the quality of the underlying earnings number.
AB Bank height price earnings ratio is 22.66 in 2011 among last 5 years.

4.9 Net Income Growth Rate:
Net income is calculated by taking revenues and adjusting for the cost of doing business,
depreciation, interest, taxes and other expenses. This number is found on a Bank's income
statement and is an important measure of how profitable the Bank is over a period of time.
Table 9: Net Income Growth Rate
Year

Amount

Growth Rate

2008

2301000000

2009

3363000000

0.461538462

2010

3696000000

0.099018733

2011

1328000000

-0.640692641

2012

1439000000

0.083584337

Source : Annual Report of AB Bank (2008-2012)
Graph 9: Net Income Growth Rate

Net Income Growth Rate
0.5

2008
2009

0
2008
-0.5

2009

2010

2011

2012

2010
2011
2012

-1

Net income is calculated by starting with a Bank's total revenue. From this, the cost of sales,
along with any other expenses that the Bank incurred during the period, is removed to reach
earnings before tax. Tax is deducted from this amount to reach the net income number. Net
income is susceptible to manipulation through such things as aggressive revenue recognition or
by hiding expenses. When basing an investment decision on net income numbers, it is important
to review the quality of the numbers that were used to arrive at this value. Here we have seen that
the height growth of net income of the AB Bank in 2009 that was .46 and in 2011 it was
negative.
32

4.10 Interest Coverage Ratio:
A ratio used to determine how easily a Bank can pay interest on outstanding debt. The interest
coverage ratio is calculated by dividing a Bank‟s earnings before interest and taxes (EBIT) of
one period by the Bank‟s interest expenses of the same period.
Table 10: Interest Coverage Ratio
Year

EBIT

Interest Expense

Ratio

2008

4298000000

697000000

6.16

2009

5802000000

597000000

9.71

2010

7409000000

1052000000

7.04

2011

4312000000

1355000000

3.18

2012

4363000000

1173000000

3.72

Source : Annual Report of AB Bank (2008-2012)
Graph 10: Interest Coverage Ratio

Interest Coverage Ratio
10

2008

8

2009

6

2010

4

2011

2

2012

0
2008

2009

2010

2011

2012

The lower the ratio, the more the Bank is burdened by debt expense. When a Bank‟s interest
coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable. An
interest coverage ratio below 1 indicates the Bank is not generating sufficient revenues to satisfy
interest expenses but between 2008-2012 AB Bank interest coverage ratio never been comes
below 3.5.

33

4.11 Net Interest Margin:
A performance metric examines how successful a Bank's investment decisions are compared to
its debt situations. A negative value denotes that the Bank did not make an optimal decision,
because interest expenses were greater than the amount of returns generated by investments.
Table 11: Net Interest Margin
Year

Net Interest Margin

Average Earning Assets

Ratio

2008

2034000000

58894000000

3.45%

2009

2908000000

77674000000

3.74%

2010

3481000000

98610500000

3.53%

2011

2394000000

117751000000

2.03%

2012

3123000000

134608000000

2.32%

Source : Annual Report of AB Bank (2008-2012)

Graph 11: Net Interest Margin

Net Interest Margin
4.0000%
2008
3.0000%

2009
2010

2.0000%

2011

1.0000%

2012
0.0000%
2008

2009

2010

2011

2012

For example, AB Bank has a return on investment of Taka 10,00,000, an interest expense of
Taka 20,00,000 and average earning assets of Taka 1,0000,000. AB Bank net interest margin
would be -10%. This would mean that AB Bank has lost more money due to interest expenses
than was earned from investments. In this case, AB Bank would have been better off if it had
used the investment funds to pay off debts instead to making an investment, but AB Bank
interest margin is always positive in 5 years.
34

4.12 Growth in Assets:
Asset is that which has economic value, it can be individual or organization. It can be liquidated
easily in terms of money and asset indicate the strength of an organization.
Table 12: Growth in Assets
Year
2007
2008
2009
2010
2011
2012

Assets

growth rate
63550000000
84054000000
106912000000
132691000000
152963000000
173842000000

32.26%
27.19%
24.11%
15.27%
13.64%

Source : Annual Report of AB Bank (2008-2012)

Graph 12: Growth in Assets

Growth in Assets
40.0000%

2008

30.0000%

2009

20.0000%

2010

10.0000%

2011

0.0000%
2008

2009

2010

2011

2012

2012

AB bank has highest asset in 2008, after that the asset of the bank decrease at a increasing rate
even it becomes half in 2012 compare to 2008. In 2008 asset growth rate is 32.26% which is
highest between five years. With the reducing rate of asset bank strength also reducing, now in
2012 asset growth becomes 13.64% if this scenario continue growth rate might be in single digit.
AB bank not only face the reduction rate of asset bank also face the reduction rate of asset
utilization, if bank has bank can be utilize so here the only solution is to make more asset.

35

4.13 Authorized Capital Growth Rate:
The bank authorized capital in 2003 is Tk.800 million and as on 31st December 2008 authorized
capital stood at Tk. 3000 million. At the end of 2012 authorized capital stood at 6000 million, I
believe this bank has ability to increase it further.
Table 13: Authorized Capital Growth Rate
year

Authorized capital

growth rate

2007

2000000000

2008

3000000000

50.00%

2009

6000000000

100.00%

2010

6000000000

0.00%

2011

6000000000

0.00%

2012

6000000000

0.00%

Source : Annual Report of AB Bank (2008-2012)
Graph 13: Authorized Capital Growth Rate

Authorized Capital Growth Rate
150.00%
100.00%
Authorized capital

50.00%
0.00%
2008

2009

2010

2011

2012

According to the scenario we have seen AB Bank Limited has a height growth in 2009, which is
100%. It showed this Bank has moved with our economic growth. If we look back to 2009-2010
and 2010- 2011 fiscal years, where our economy had experienced pace in its all indicators. That
was good news for our economy. Another thing is investors invest in a Bank that time, when
they saw Bank is well managed by the board.

36

4.14 Paid up Capital Growth Rate:
The bank Paid up capital in 2003 is Tk.472 million and as on 31st December 2008 Paid up capital
stood at Tk.2230 million. At the end of 2012 Paid up capital stood at 4423 million. Every year
AB Bank increase their paid up capital amount consecutively.
Table 14: Paid up Capital Growth Rate
year

Paid up capital

growth rate

2007

743000000

2008

2230000000

200.13%

2009

2564000000

14.98%

2010

3205000000

25.00%

2011

3686000000

15.01%

2012

4423000000

19.99%

Source : Annual Report of AB Bank (2008-2012)

Graph 14: Paid up Capital Growth Rate

Paid up Capital Growth Rate
250.00%
200.00%
150.00%
Paid up capital growth rate

100.00%
50.00%
0.00%
2008

2009

2010

2011

2012

Paid up capital shows the total price of the share outstanding in the market. Here we have seen
this Bank has the height growth in 2008 which is 200.13%. A growth in paid up capital is
happened by two events. First one is trust among the individual investors and second one is a
better situation in stock market. If we looked bank to the stock market situation in 2008-2009
fiscal year, almost all Bank stocks gained near about four times in price that means individual
investors had 200% capital gain in all stocks.

37

4.15 Employment Generation:
Each year AB Bank has gradually increased their number of employee, here the scenario given.
Table 15: Employment Generation
Number of Employees

year

employment generation

2007

1725

2008

1804

79

2009

1952

148

2010

2008

56

2011

2096

88

2012

2070

-26

Source : Annual Report of AB Bank (2008-2012)

Graph 15: Employment Generation

Employment Generation
200
150
100

employment generation

50
0
-50

2008

2009

2010

2011

2012

A good economic situation, where nominal inflation rate ensure investors not to lose their
investments, which ensures better employment generation. In 2009 AB Bank generate 148
vacancy for their vacant position. According to managerial body, employment generation is fully
dependent with economical growth and there has some rules to increase number of branches too.
In 2012 the Bank sac 26 employees also.

38

4.16 New Branch Opened:
For business growth, each bank needs to setup new branches and upgrading their existing
branches by adding different customized product and services. Given data show the number
branches increased by AB Bank each year.

Table 16: New Branch Opened
Number of Branches

year

New Branch opened

2007

72

2008

73

1

2009

78

5

2010

82

4

2011

86

4

2012

87

1

Source : Annual Report of AB Bank (2008-2012)

Graph 16: New Branch Opened

New Branch Opened
6
4
New Branch opened

2
0
2008

2009

2010

2011

2012

This scenario is also depending on economic growth and policies of Bangladesh Bank. When a
Bank has a growth in investment deposit and customer satisfaction. A growth in market economy
that means growth in socio economy encouraged, a Bank to open new branches in remote areas.
Here we have found in 2009 they opened height 5 branches in different areas and in 2010 and
2011 Bank opened 4 branches in every year.

39

4.17 Investment (General):
Amount of invest of a financial institution reflects how efficiently they can handle their deposits,
here data are given and these shows each year investment of AB Bank.
Table 17: Investment ( general )
Investment in share &
Year

Growth Rate

securities
2007
2008
2009
2010
2011
2012

8885000000
11396000000
16369000000
14563000000
21556000000
26115000000

28.26%
43.64%
-11.03%
48.02%
21.15%

Source : Annual Report of AB Bank (2008-2012)

Graph 17: Investment In Shares & Securities Growth Rate

Investment in Share & Securities Growth
Rate
60.00%
40.00%
Investment in share &
securities Growth Rate

20.00%
0.00%
-20.00%

2008

2009

2010

2011

2012

When a Bank sells or provide loan upon their collected deposits in more widely known as
investment in banking. Invest is the major area of earnings for a Bank. All other factors of a
annual financial report are depend on their specific term. Find out investors and provide lone
those activities are not the end of the task it is actually the beginning of their task. Here Bank
need advice, look after and manage the fund they had provided. Otherwise there have good
chance to lose their investment as bad debt. Here we have seen in 2011, this bank has a highest
investment growth of 48.02%. in 2010 their investment goes in negative which is -11.03.
Investment data are also reflecting some external factors like stable economical environment,
economical growth, political situations etc.

40

4.18 Investment (Shares & Securities Exclude Subsidiaries):
Investment in securities shows the portfolio process of a company. A diversified portfolio
ensures safe investment. Here data are given for investment in securities and shares for AB
Bank.
Table 18: Investment ( Shares & Securities Exclude Subsidiaries)
Year

Investment ( Shares &
Growth Rate
Securities Exclude Subsidiaries)
2008
289.4
2009

218.95

-24.34%

2010

452.2

106.53%

2011

673.4

48.92%

2012

1034.54

53.63%

Source : Annual Report of AB Bank (2008-2012)

Graph 18: Investment (Shares & Securities Exclude Subsidiaries)

150.00%

Investment ( Shares & Securities Exclude
Subsidiaries)

100.00%
50.00%
0.00%
-50.00%

2009

2010

2011

Investment ( Shares & Securities Exclu.
Subsidiaries)
2012

Investment in share and securities is a part of portfolio management of a Bank. Bank would like
to invest in different types stokes and bonds for risk minimization. Here we have seen in 2010
AB Bank has a height growth that is 106.53% and 2009 the bank was in negative investment that
is -23.34% in investment in share and securities.

41

4.19 Import Business:
Extensive global network and bunch of trade specialists of AB Bank offers a wide range of
import services and ensure that business is handled efficiently and without delay. Letter of credit
is an inseparable thing in both export and import, AB Bank ensure the customer to do it well.
Table 19: Import Business
Import Business

Year

Growth Rate

2007

48441000000

2008

70041000000

44.59%

2009

65956000000

-5.83%

2010

9751000000

-85.22%

2011

79463000000

714.92%

2012

100373000000

26.31%

Source : Annual Report of AB Bank (2008-2012)

Graph 19: Import Business

Import Business
1000.00%
500.00%
Import Business
0.00%
2008

2009

2010

2011

2012

-500.00%

Import business or business of opening LC is a type of business which is mainly depends on
domestic demands of foreign goods and commodities. At the beginning of foreign business we
have seen in 2011, AB bank made highest growth in remittance but this bank paid highest in
same year for import. That means in that specific year our macro economy was in the best
condition. It also means all other economic indicators were good position among last five years.
If we keep close eyes on our economy which is mainly depends on agriculture and garments
(RMG). In these two types of production commodities are also depends on import. For example
if we choose agriculture fertilizer fuel and all other factors we need to import from outside of our
country. Here we can see Bank has negative import growth rate in 2009 and 2010 in this period
our economy face trouble.
42

4.20 Export Business:
AB Bank helps to reduce the risks of delay or non-payment when customers undertake
international trade so they can focus on expanding their export business. Letter of credit is an
inseparable thing in both export and import, AB Bank ensure the customer to do it well.

Table 20: Export Business
Export Business

Year

Growth Rate

2007

20677000000

2008

28937000000

39.95%

2009

30640000000

5.89%

2010

41686000000

36.05%

2011

57592000000

38.16%

2012

65782000000

14.22%

Source : Annual Report of AB Bank (2008-2012)

Graph 20: Export Business

Export Business
50.00%
40.00%
30.00%
Export Business

20.00%
10.00%
0.00%
2008

2009

2010

2011

2012

When production exceeds domestic demands the surplus product could be sold out the some
other countries where demands for those products have. In 2008, this bank produces highest
number of foreign currency earnings from export. 39.95% growth in single indicator is a brilliant
achievement for a bank where external factors are highly correlated. In Bangladesh RMG is the
main export item, along with this we export jute items, leather items and so on.

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4.21 Remittance Growth Rate:
Remittance is the source of money for a country comes from foreign. It is the lifeline of
Bangladesh economy, have been buoyed large number of Bangladeshi workers who moving
abroad over the past year and our remittance significantly growth over the time.

Table 21: Remittance Growth Rate
Remittance

year

Growth Rate

2007

156000000

2008

164000000

5.13%

2009

182000000

10.98%

2010

210000000

15.38%

2011

250000000

19.05%

2012

217000000

-13.20%

Source : Annual Report of AB Bank (2008-2012)
Graph 21: Remittance Growth Rate

Remittance Growth Rate
30.00%
20.00%
10.00%

Remittance Growth Rate

0.00%
-10.00%

2008

2009

2010

2011

2012

-20.00%

Remittance word reflects the foreign currency earnings by Bangladeshi people in outside of our
territory. Here main source of foreign currency is Middle East. According to the data AB Bank
has a height growth of 19.05% in remittance in 2011. This statistics make as a bit confused
because as we know in 2010-2011 Bangladesh experienced a massive slowdown in their
economy and for that Bank remittances growth is negative in 2012 is -13.20% after that there is a
statistics shown here is a reflection of increases of number of branches in remote area and open
up more new account by the nonresident Bangladeshi.

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4.22 Operating Profit Growth Rate:
The profit earned from a Bank's normal core business operations. This value does not include
any profit earned from the Bank‟s investments, such as earnings from Bank‟s in which the Bank
has partial interest) and the effects of interest and taxes.

Table 22: Operating Profit Growth Rate
Operating Profit

Year

Growth Rate

2007

3325000000

2008

4298000000

29.26%

2009

5802000000

34.99%

2010

7409000000

27.70%

2011

4312000000

-41.80%

2012

4363000000

1.18%

Source : Annual Report of AB Bank (2008-2012)

Graph 22: Operating Profit Growth Rate

Operating Profit Growth Rate
40.00%
20.00%
0.00%
-20.00%

2008

2009

2010

2011

2012

29.26% 34.99% 27.70% -41.80%
1.18%

-40.00%
-60.00%

Operating profit is a calculation that shows amount of profits that were not deducted by interest,
tax and retain earning. This is a connection and reflector of company‟s earnings before interest
and tax payment. In 2009 AB Bank has a height growth that is 34.99% and in 2011 Bank has
negative growth that is -41.80%.

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4.23 Asset Utilization Ratio:
Asset utilization ratios measure how efficient Bank using its assets to make money. A Bank's
receivables turnover, which is defined as its credit sales divided by the value of its accounts
receivable from customers, indicates whether a Bank is able to turn the goods and services it
sells into money that is available for other purposes.

Table 23: Asset Utilization Ratio
Year

Revenue

Average Total Assets

Ratio

2008

2301000000

73802000000

3.11%

2009

3363000000

95483000000

3.52%

2010

3696000000

119801500000

3.08%

2011

1328000000

142827000000

0.92%

2012

1439000000

163402500000

0.88%

Source : Annual Report of AB Bank (2008-2012)

Graph 23: Asset Utilization Ratio

Asset Utilization Ratio
4.0000%

2008

3.0000%

2009

2.0000%

2010
2011

1.0000%

2012

0.0000%
2008

2009

2010

2011

2012

In 2009 AB Bank has the height asset utilization ratio that is 3.52%. With an asset utilization
ratio of 3.52%, that means Bank earned 0.0352 for each Taka of assets held by the Bank.
Increasing asset utilization means the Bank is being more efficient with each Taka of assets it
has.

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Chapter-5: Problems and Suggestion
5.1 Problems:
According to my observation, I have find out some problems in AB Bank Limited. Bank need to
solve those problems, if they want to grow their banking business.


The AB Bank has the limited number of branch over the country as a result every people
cannot able to take the banking facilities of AB Bank.



ATM booth is limited compare to the other Banks that is why their ATM service is
limited.



In 2011 AB Bank faced net loss as a result customer can come back from the bank for
their own safety.



Recently they reduce interest rate on the customer deposit as a result customer can leave
the bank and deposit their money to the other bank. Because of this bank can face the
liquidity crisis.



Small number of promotional activities compare to the other Banks.



Although the foreign exchange business loading day by day there are also some obstacles
around the bank.



The invest little amount in the agricultural sector, but it is not the better decision for our
country.



AB Bank takes 100% margin for the new importer to avoid the risk. Lack of enthusiastic
scheme for exporter & importer.

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5.2 Suggestion:
There have some suggestions for the AB Bank to develop their banking activities and customer
satisfaction. These are following:



The entire department should be well informed regarding their goal and objectives. It is
essential to execute company objective into individual target.



There must be clear allocation of responsibilities, authority and accountability.



The bank should introduce more promotional activities.



The bank should take initiative to develop an effective research and development. Centre
to get innovative ideas to capture the competitive market.



Diversified schemes for export and import with fewer margins for L/C should introduce
by the bank for small entrepreneur to target a different segment to increase volume of
export and import.



Efficient and attractive marketing strategy and appearance of the bank in the printing
media and electronic media would also increase knowledge of people about foreign trade.
This is very much useful for increase transactions in foreign exchange department of this
bank.



Tight rules and requirements for opening foreign currency account should be relaxed and
make it easy and simple.



ATM service should be available in every corner of the country for the customer that will
help the customer withdraw the money any time anywhere.

48

5.3 Conclusion:
The commercial banking system dominates Bangladesh's financial sector. There is huge number
of nationalized and foreign bank operating their banking in Bangladesh, The Arab Bangladesh
Bank Limited is promising one among these banks. The growing competition bound AB Bank
not only to compete with the other commercial bank but also with the public banks. For the
future planning and the successful operation in achieving its prime goal in this current
competitive market, this can be helpful in international trade financing that suggested mostly for
the betterment of country. Foreign Exchange Business is the main source of the expansion of our
economy. This is why, the importance of the effective involvement of Bank in our economy in
financing Import, Export & Remittance business is enormous.
After analysis the whole performance and Bank activities, we can see that Banks import and
export volume and the amounts of remittance are increasing year by year. And through this, the
Comparative profit volume of the bank is also increasing. The increasing demand of the
imported and exported goods and friendly relation with customer by the bank are the main
reasons of this growth.

49

5.3 References:
To prepare this report I have collected data mainly from annual reports of AB Bank, different
books regarding ratio analysis, the websites of Bangladesh Bank and DSE and others websites
about ratio analysis. The references are given below:

Source:






Annual Report of AB Bank 2012
Annual Report of AB Bank 2011
Annual Report of AB Bank 2010
Annual Report of AB Bank 2009
Annual Report of AB Bank 2008

Books and Documents:
 Peter S. Rose, 2010, Bank Management and Financial Services, McGraw-hill higher,
education, USA
 Stanley, B. b., & Geoffrey, A. H. (2008 - 2009). Foundation of Financial Management.
International: McGraw-Hill.
 Brigham, E. F., &Gapenski, L. C. (1995). Intermediate Financial Management (Fifth ed.).
International: The Dryden Press.
 Madura, J. (2008). Finencial Market and Institution. USA: Thomson South- Western.
 MAZER, M., ISLAN (2003), “Development and Performance of Domestic and Foreign
Banks in
 GCC Countries”, Managerial Finance, Vol. 29(2), pp. 42-71.
 Financial Sector Review, Volume- III, Number I, December 2007; Published by Bangladesh
Bank
 Bangladesh bank,‟ Banking Sector Performance, Regulation and Bank Supervision‟
 B. Nimalathasan 2008, A comparative study of financial performance of banking sector in
Economic and Administrative Series, Nr. 2 146-148
 Ahmed Sharmin, and Islam, Md. Ezazul (2006), Interest Rate Spread in Bangladesh; An
Analytical Review.
 Banking Performance Indicator of Bangladesh; Published by Bangladesh Bank.
50

Websites:

 http://www.abbl.com
 http://www.investinganswers.com/financial-dictionary/businesses-corporations/returnassets-roa-1627

 http://www.investopedia.com/terms/p/profitabilityratios.asp#axzz2Bji4kVcT
 http://en.wikipedia.org/wiki/Net_interest_margin
 http://www.bangladesh-bank.org/
 http://www.bangladesh-bank.org/pub/publictn.php?cat_id=0&pub_id=2
 http://www.bangladesh-bank.org/econdata/index.php

51