EVALUATING BANK ASIA IN TODAYS BANKING WORLD

Prepared For: Managing Director, Bank Asia Limited

Prepared By: Anirban Das (12-95671-2) Md. Imtiaz Uddin Khan (12-95684-2) Rokun Uddin Ahmed Shawan (12-95660-2) Arifur Rashid (12-95670-2) Shuvo Taufiq Ahmed (12-95656-2) Md. Mehedi Hasan (12-95685-2) Date of Submission: 7/25/2012

Bank Asia Limited

Noor Tower (1st Floor) 73, Sonargaon Road (1/F Free School Street) Dhaka-1205 Phone: 9674501-02 Date: July 25, 2012

LETTER

OF

AUTHORIZATION

TO WHOM IT MAY CONCERN

I, the undersigned Managing Director of Bank Asia, hereby authorize six MBA students from AIUB undersigned bellow to act on our behalf in all manners relating to The Evaluation of Bank Asia Limited, including signing of all documents relating to this matter. Any and all acts carried out by your group on our behalf shall have the same effect as acts of our own. This authorization is valid until further written notice from Bank Asia Limited.

Sincerely,

Anirban Das Md. Imtiaz Uddin Khan

(Managing Director, Bank Asia)

Rokun Uddin Ahmed Shawan Arifur Rashid Shuvo Taufiq Ahmed Md. Mehedi Hasan

Letter of Transmittal
Managing Director Bank Asia Limited Noor Tower (1st Floor) 73, Sonargaon Road (1/F Free School Street) Dhaka-1205

Dear faculty Members, The attached report requested by our honorable faculty Azad Amin Ruhul describes the Industrial analysis of commercial Banks in our country. We believe you will find the results of this study useful evaluating the current situation of Bank Asia and the overall banking system on Bangladesh. The objective of this report was to gather practical knowledge about the corporate working environment with the business firm and the experts who are leading and making strategic decisions to enhance the growth of a financial institution. Its an analysis of Banking Industry and the competitive position of Bank Asia in the banking industry.

This report was designed to fulfill the following objectives: 1. Vision and mission of Bank Asia 2. Services and organogram of Bank Asia 3. Finding the competitive position of Bank Asia
4. Compare Bank Asia with other 3rd generation banks

5. Analysis of current situation of Bank Asia 6. Finding the limitations of Bank Asia Primary research consisted of discussions with several experienced bank employees, secondary research sources included the banks annual reports, information and literature regarding the banking sector, different books and periodicals and we also gathered information from various

websites using the internet with the help of search tools. Results of this research discussed more elaborately in this report, indicate that Bank Asia has established itself as a leading corporate institution in our country through their high standard of service and commitment to their customers. There are few limitations to our final report as its very hard to collect and organize vast amount of data from a lot of annual reports of different banks in a very short period of time. Still, we tried our best to utilize the time we had to make this report as complete as possible. We would be pleased to discuss this report and its conclusions with you at your request. We are also thankful to Faculty of Business Administration and Library facility of our esteemed American International University of Bangladesh for providing us encouragement and resources to successfully carry out our report. We would also like to take this opportunity to thank our fellow classmates for their interest in our report.

Sincerely, Anirban Das Md. Imtiaz Uddin Khan Rokun Uddin Ahmed Shawan Arifur Rashid Shuvo Taufiq Ahmed Md. Mehedi Hasan

Table of Contents
Executive Summary.................................................................................................1

Introduction..............................................................................................................2 Overview of Bank Asia............................................................................................3 Mission & Vision.......................................................................................................4 Products & Services.................................................................................................4 Organogram of Bank Asia.........................................................................................6 At A Glance..............................................................................................................7 Branches..................................................................................................................8 Analyzing Bank Asia................................................................................................9 External Analysis......................................................................................................9 Societal Analysis...............................................................................................9 Political Environment..............................................................................9 Economical Environment......................................................................10 Industry Analysis by Porters Five Forces Model..............................................12 Rival Firms............................................................................................12 Substitute Products...............................................................................12 Potential New Entrants.........................................................................12 Suppliers..............................................................................................12 Buyers..................................................................................................12 Internal Analysis.....................................................................................................12 Resource and Competitive Position.................................................................12 Finance.................................................................................................12 Return on Equity.........................................................................13 Return on Asset (ROA)................................................................13 DuPont Analysis..........................................................................14 DuPont Chart..............................................................................15 Comparison with other commercial Banks..................................16 Marketing.............................................................................................17 Business Development...............................................................17 Customer relations.....................................................................17 Sales..........................................................................................17 Recovery....................................................................................17 Strength.....................................................................................17 Weaknesses...............................................................................18

Opportunity................................................................................18 Threats.......................................................................................18 CAMEL Rating.............................................................................18 Capital Adequacy.......................................................................19 Asset Quality..............................................................................19 Earnings Records........................................................................20 Liquidity Position........................................................................20 Management Quality..................................................................21 Composite Rating.......................................................................22 Findings..................................................................................................................23 Recommendations.................................................................................................24 Conclusion..............................................................................................................25 References..............................................................................................................26

List of Tables and Figures

Services.....................................................................................................................5 Organogram of Bank Asia.......................................................................................6 Branches of Bank Asia............................................................................................8 Fig 1: ROE (in %) Net Income/Shareholders Equity...........................................12 Fig 2: ROA(in %) Net Income/Total Asset...........................................................13 Fig 3: EPS=Net Income/Number of ordinary shares outstanding....................14 DuPont Chart..........................................................................................................15 Table 1: Important Financial Indicators..............................................................16

Executive Summary

In this competitive world, it is essential to know how market players of financial markets are actually performing. The international or domestic financial market players, whether in capital or money market, these are very important considerable thing in financial world. What kind of financial instruments are being offered, is another big issue. Depository institutions, in particular, are one of the key market players assuring flow of resources among participants whether individuals, households, public or private businesses. Banks are the leaders of all financial services industry, where the proper functioning of the economy depends on the banking industries. Banks propel all the financial activities of certain economy. Commercial banking industry is one of the most important financial intermediaries in Bangladesh. It is playing great role to generate savings and it makes sure the proper investment of this savings in different sectors of our economy. Commercial banks are cooperating different types of business in various ways which is ensuring prosperity of business. By now, it has been proved that literally bank is the heart of all commercial activities in Bangladesh. Bank Asia is one of the third generation banks which are performing really well in the industry over the years. Most of the financial indicators are carrying positive message to the share holders. There are so many risks which Bank Asia is coming across and all of them are properly taken care by the authority. A lot of banks are creating value to customers. They are trying gradual shrink of Net Interest Income (NII) which magnifies their income in recent years. During the year 2006 Bank Asia has not only made good profit but also enhanced its image further. Bank Asia is now regarded as a local brand having regional and global potential. All these have been possible with the efficiency of the authority and the loyalty of their customers.

INTRODUCTION

Financial development is essential for economic growth and development, and weak financial systems make countries vulnerable to crises. A growing body of empirical literature shows these relationships. This means that to enhance economic growth, developing countries must take initiative to increase both the financial depth and diversity of their financial sectors. Banking sector is one of the most important sectors for the economy of a country. Sometimes it is called heart of the economy. Bangladesh has bank based financial system. It means core financial services are provided by banks. From 1971 to till today the total number of bank in Bangladesh is 49 (matrix online limited); which include four nationalized banks, five governments owned specialized banks, thirty domestic private banks and ten foreign banks. Besides that, there are twenty-eight non-banking financial institutions also conducting their operation in this country. The number of banks in all now stands at 49 in Bangladesh. Out of the 49 banks, four are Nationalized Commercial Banks (NCBs), 28 local private commercial banks, 12 foreign banks and the rest five are Development Financial Institutions (DFIs). History of banking sector is quite recent; the development of banking sector is so great. The number of private banks increasing rapidly and it becomes a profitable sector. The banks with modernized banking facilities, termed as third generation banks are providing improved services both to the investor and to the customers. Bank Asia Limited is one of the most renowned 3rd generation banks which are really contributing to the financial system of Bangladesh. Bank Asia Limited is one of the private commercial banks (PCBs), incorporated in Bangladesh on 28 September 1999 as a public limited company under the Companies Act 1994, and governed by the Banking Companies Act 1991. The Bank went for public issue of its shares on 23 September 2003 and its shares are listed with Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. In this report, firstly, we will evaluate the banking industry then we will try to find out Bank Asias competitive market position in that industry.

Overview of Bank Asia

Bank Asia Limited is a third generation commercial bank with 29 online branches across major cities in Bangladesh and 1240 full time employees on year end 2011. It offers full range of commercial banking products and services to the corporate, mid-market and retail segment. Bank Asia is a new entrant in the private banking scenario of Bangladesh with a pledge to fulfill every possible customer need with high efficiency and satisfaction. The Bank is led by experienced bankers and providing high quality banking services to the investors and consumers.

In 1999, after starting the operations, Bank Asia acquired the business operation of the Bank of Nova Scotia in Dhaka at the beginning where it again acquired the Bangladesh operations of a Pakistani Bank, Muslim Commercial Bank Ltd. (MCB).

In the year 2003 the Bank again came to the limelight with oversubscription of the Initial Public Offering of the shares of the Bank, which was a record (55 times) in Bangladesh capital markets history and its shares commands respectable premium.

Bank Asia is maintaining a highly developed technical framework. It ensures the quality service by using its Online Banking Software and modern IT infrastructure. Under its ATM Network the Stellar Online Banking software enables direct linking of a clients account, without the requirement for a separate account. SMS Banking is the innovative idea that Bank Asia has introduced in the market.

Mission & Vision

Bank Asias vision is to have a poverty free Bangladesh in course of generation in the new millennium, reflecting the national dream. Our vision is to build a society where human dignity and human rights receive the highest consideration along with reduction of poverty. With this vision in mind Bank Asia has set themselves the following missions: To assist in bringing high quality services to our customers and to participate in the growth and expansion of our national economy. To set high standards of integrity and bring total satisfaction to our clients, shareholders and employees. To become the most sought after bank in the county, rendering technology driven innovative services by our dedicated team of professionals.

Products & Services

Bank Asia gradually increased its product list. Every year they launched 2 products. Since its establishment the product and services list added more and more innovative features. Whenever, they launched a product, they looked deeply in its technical issues. It means how the product will be based on modern technology and support online features. Considering the criteria, they have produced six products. Each product contains its specific link. The full list of products and services are displayed here.
PRODUCTS

SMS Banking Mobile Banking Internet Banking Real-Time Online Banking Any Branch Banking Customized Loan Loan Syndication Bonus Savings Schemes

Poverty Alleviation ATM Service Credit Card Locker facilities

SERVICES

There are mainly three departments in Bank Asia Ltd for providing service to the clients.
Service of Bank Asia

General Banking

Credit/Loan

Foreign Exchange

Cash

Overdraft Import

Accounts

Term Loan

Remittance

Personnel Loan Export

Clearing Customer service

Remittance

Auto Loan

Housing Loan

SOD

Consumer Durable

Organogram of Bank Asia

President & Managing Director

Deputy Managing Director

Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President

First Vice President

Assistant Vice President

First Assistant Vice President

Senior Executive Officer

Executive Officer

Senior Officer

Officer

Probationary Officer /Mt Officer Assistant Officer

Banking Officer

Teller officer

At A Glance
BANK ASIA - AT A GLANCE
Letter of intent received First meeting held Certificate of Incorporation rec. Certificate of commencement rec. Banking License rec. Branch License rec. Inauguration of first branch Authorized Capital Paid up capital Number of Branches Number of Directors Number of Employees Deposit Investment EPS Auditor Registered Office February, 24, 1999 April 15, 1999 September 28, 1999 September 27, 19999 October 06, 1999 October 31, 1999 November 27, 1999 Tk. 4450 million (as on June 30, 07) Tk. 1,116 million (as on June 30, 07) 28 13 557 ( As on October 2007) Tk. 25289 million (as on Dec 31, 06) Tk. 249 million (as on Dec 31, 06) Tk. 42.63 S. F. Ahmed & CO 113-116, Old Airport Road, Tejgaon, Dhaka, Bangladesh.

Branches
Bank Asia has spread its network over the country through twenty eight branches including all the privileges like ATM, Locker & Foreign Exchange services. It has six rural branches as well.

Analyzing Bank Asia

In this report well analyze Bank Asias current situation in two aspects, Internal and External analysis.

 EXTERNAL ANALYSIS
In external analysis we consider Industry and Competitive Environment. For better understanding of the external environment we also went through Societal Analysis and Industry Analysis.

Societal Analysis

Societal analysis consists of two sections: Political Environment and Economic Environment.
POLITICAL
ENVIRONMENT:

Each and every business entity in a particular country must follow the rules and regulations set up by the government of that particular country. These rules and regulations depend on the type of business and vary business to business. Banking businesses are not exception to this and so is to Bank Asia Limited. Bank Asia complies with all the laws and regulations required. Political instability is pretty common in Bangladesh. Bank Asia has to overcome all those political problems. Though, our country is experiencing little bit stable position.
ECONOMIC
ENVIRONMENT:

Economic condition of a particular country plays an important role in conducting any sort of business. Due to economic changes (both positive and negative), a business might be benefited or interrupted. Economic factors such as inflation, bank interest rate could control the business to an extent. When the bank interest rate goes up the purchasing power of buyers who take loans from bank to buy flats, goes down. Similarly the companys investment on the business goes down as they also take loan from the bank. Bangladesh Bank (central bank) is the major player in this regard. Bangladesh Banks decision has direct influence on banking industry so is to Bank Asia Limited.

Industry Analysis by Porters Five Forces Model

Banks are not the most efficient institutions for providing all types of financial services. They are good at mobilizing savings and providing payment services and liquidity, which happens to be their main functions. The Porters five forces model of competition is an excellent tool for understanding the main forces that drive competition in an industry. Eventually, it gives us a better understanding of the existing competition in the Banking industry.

1. RIVAL

FIRMS

In the commercial banking industry, there are currently more than 30 commercial banks and thus it is quite impossible for one firm or a group of firms to actually dominate the market. Therefore there is no competition in terms of trying to capture the overall market, even though there is slight competition in the case of trying to capture the market of a specific location. The slight competition that we find in this industry of trying to attract depositors is either in terms of facilities or in terms of interest rate. It is totally up to the firms as to what they want to offer in an attempt to attract more depositors. Bank Asia attracts depositors very quickly by providing moderate facilities and interest rate.
2. SUBSTITUTE PRODUCTS

In case of the banking industry, the only substitute option is non banking financial institution which is very small number in Bangladesh. Though the number of non banking financial institution is increasing and Bangladesh bank is giving motivation regarding this.
3. NEW ENTRANTS

The potential new entrants to the banking industry are quite a problem for the already existing firms, especially for those that are still trying to make a mark. New bank needs huge capital to offer extra facilities to make the existing customers switch from existing bank. As it is very difficult to do therefore potential new entrance threat is low for Bank Asia.
4. SUPPLIERS

Suppliers are depositors who deposit their savings to commercial banks. These depositors have real control over commercial banks as well as on Bank Asia.
5. BUYERS

Here buyers mean loan taker. The bargaining power of buyers in this industry is very low. In spite of the ever-increasing interest rate buyers have no other options but to buy loan.

INTERNAL ANALYSIS
Resources and Competitive Position

The business functioning of Bank Asia has been consists two departments. For internal analysis we are following functional approach.
FINANCE

In this section we will analyze the financial condition of Bank Asia. Major and main source of Bank Asias capital is from deposited money.

Ratio analysis is an analytical tool that can be applied to a banks financial statements so that management and the public can identify the most critical problems inside each bank and develop ways to deal with those problems. Some selected ratios are analyzed here to give an insight about Bank Asia. For limited information some are analyzed very briefly.
RETURN
ON EQUITY

ROE is the measure for the stockholders benefit from their investments. This ratio indicates the degree to which the firm able to convert operating income and after tax income that eventually can be claimed by the shareholders. ROE is the measure for the stockholders benefit from their investments.

Fig 1: ROE (in %) = Net income / Shareholders equity The ratios of year 2006 and 2008 demonstrate instability towards the Return on Equity (ROE) of the bank from year 2009 and 2010; there are no significant changes in return on equity (ROE) and reflecting consistency in managing the return on shareholders equity. This stability of return on equity (ROE) will help to attract their investor but the stable ROE of Bank Asia reflects the returning capability to their shareholders has not increasing much from last three years which wont be acceptable for the shareholders cause they shareholders prefer to have a high return from their investment every year. So, the management should take action to increase the return on equity (ROE). For increasing the return, management should call attention to manage their expenses adequately and need to increase their net income.

The ratio of year 2009 and 2010 was above Peer Group Average, which is really a good sign. It tells Bank Asia is doing well comparing to its competitors. RETURN
ON ASSET

(ROA)

Return on Asset (ROA) is particularly an indicator of management efficiency. It indicates how capably the management of the bank has been converting its assets into net income.

Fig 2: ROA (in %) = Net income / Total Asset Return on Asset (ROA) was lower in 2006 and 2008 compare with rest of the years. This low returns resulting from the lower operating income and above average use of debt. As their income rises and the usages of their own fund increases from year to year consequently the ratio also rises. From the Financial Statement it is evident that there Total Assets & Revenue rises from year to year as well as they able to decrease their operating expenses comparing to previous years. But the total amount of provision for loans increased every year which lessen their net income. So, the ROA of 2006 and 2008 is lower than year 2009 and 2010. The Return on Asset (ROA) ratio of Bank Asia is higher than the Peer Group Average which proves that Bank Asias performance was better than its competitor banks at year 2009 and 2010. So, we can say that the management is utilizing their assets in an efficient way to generate more income. Earnings per Share (EPS) measure the returns to the banks to the stockholders. Earnings per Share is calculated by the following equation

Fig 3: EPS=Net income/ Number of Ordinary shares outstanding The table shows that the performance of Bank Asia from the viewpoint of profitability increases hugely over the years. Therefore the performance of the bank is very much satisfactory. Nevertheless, there performance level decline after 2007 because of the slower growth rate of net income due to increase in the provision against loans and advances every years. But, still there EPS would able to attract their investor. Earnings per Share (EPS) of Peer Group Average are lower than Bank Asias earning per Share (EPS) ratio. So, the investors choice will be positive towards investing at Bank Asia rather than others. DUPONT ANALYSIS DuPont analysis breaks down the ROE into several different parts. Actually the companys managers developed this approach for evaluating performance of the company as well as to find out the reason behind the increase/decrease of a firms ROE. I can divide DuPont Analysis by two parts- DuPont Equation and DuPont Chart.
DuPont Chart: A chart designed to show the relationships

among return

on investment, asset turnover, the profit margin, and leverage.

DuPont Equation: A formula that gives the rate of return on assets by

multiplying the profit margin by the total assets turnover.

DUPONT CHART

The following chart is an example of DuPont chat. That chart shows the ROE of year 2005 and all other components of ROE.

Generally we use the formula (ROE= Net income/ Total equity) to calculate the ROE. For DuPont Analysis we need to breaking down ROE into following parts Net profit margin= net income after taxes/ Total operating Assets utilization= Total operating revenue/ Total assets Equity multiplier= Total assets/ Total equity revenue

ROE=Net Income/Total Equity

15.48%

ROA=Net Income/Total Assets 1.42%

Equity Multiplier=Total Assets/Equity Capital

Net Profit Margin=Net Income/Total Operating Revenue 30.34%

Asset Utilization=Total Operating Revenue/Total Assets 0.0052

DuPont Chart showing the ROE

After that we get ROE by multiplying the above parts. So, here ROE= Net profit margin Assets utilization Equity multiplier. Now, management needs to trace out the reason behind the declining trend of the banks ROE. From management view point it is now easy to find out the specific reason behind the declining trend

of ROE by using this DuPont analysis. This analysis shows that the equity multiplier which will give hints why ROE is declining where the net profit margin increased to raise the ROE, emphasize should be given on increasing Equity Multiplier ratio as well as to asset utilization ratio. Utilizing the assets more efficiently and effectively would help to increase the ROE.

Comparison with other commercial Banks

In this section we will compare Bank Asias financial competitive position through some financial indicators.
Important indicators Bank Asia Eastern Bank Limited Jamuna Bank Limited Shahjalal Bank Dhaka Bank Limited

ROE Debt Ratio Total Asset Turnover Net profit margin Return on asset

24.71% .90 .058 30.34% 1.58%

15.48% .90 .058 24.30% 1.42%

16.21% .92 .056 22.16% 1.25%

38.4% .94 .050 43.19% 2.17%

22.75% .94 .043 27.94% 1.20%

Equity multiplier( T. asset/Equity)

30,478.437/1, 949.741= 15.63

35,934.833/ 3,314.723 =10.84

20,157.016/ 1,562.471 =12.90

21,342.554/ 1,204.913 =17.71

48,141.688/ 2,550.856 =18.87

Table 1: Some important financial indicators Source: Calculated from Annual Report (2010) Here, Shahjalal Bank has the highest ROE 24.71% where as Bank Asia has 38.4%. Net profit margin is the main reason of this differentiation. Shahjalal Bank has 43.19% but Bank Asia has only 30.34%. so Bank Asia has to increase its operating efficiency to have more profit margin. Moreover Shahjalal Bank has bigger equity multiplier than Bank Asia. It means Shahjalal Bank is using more debt than Bank Asia. Bank Asia has got second highest ROE among all other three

commercial banks. This is because; Bank Asia has more net profit margin and bigger equity multiplier.
MARKETING

The Marketing department of Bank Asia is divided into four categories:

BUSINESS
DEVELOPMENT

The Business Development sector is concerned with actually marketing the product. They try to build an image for the company.
CUSTOMER
RELATIONS

The Customer relations department deals personally with the customers. This department handles any queries or complaints from the customers part about Bank Asia or any of its products.
SALES

The sales department is directly related to selling different banking products. They play a very important part because they are the ones who are ultimately responsible for selling the products.
RECOVERY

The recovery department is responsible for the timely collection of money after the disbursement of loan and some other debt.
STRENGTHS

Bank Asia has considerable financial resources to grow the business Bank Asia is a widely recognized company with attractive customer base Bank Asia has an efficient, capable and honest workforce Goodwill of the company Variety of financial products

WEAKNESSES
Bank Asia has small number of branches relative to key competitors Bank Asia has not enough ATM booths across the country Bank Asia doesnt consider rural commercial activities Not that much marketing campaign OPPORTUNITIES Development of more branches in suburban areas

More advancement in technology

THREATS Increasing threats from local competitors Shortage of depositors in Bank Asia Competition from non-banking financial institution

CAMEL RATING

CAMEL rating is a system that assigns a numerical rating to a bank or thrift based on examiner judgment regarding its capital adequacy, asset condition, management quality, earnings record and liquidity position. Actually, CAMEL rating is a combination of all five dimensions of performance into one overall numerical rating. The letters in CAMEL derived from: C - Capital adequacy A - Asset quality M - Management quality E - Earnings record L - Liquidity position

CAPITAL ADEQUACY A bank capital adequacy ratio determined by the K/A ratio. Here, K = Capital A = Assets 9% and above 8% to 8.99% 7% to 7.99% 6% to 6.99% 5.99% and lower Strong Satisfactory Fair Marginal Unsatisfactory Capital Adequacy 1 2 3 4 5

According to annual report BANK ASIAs capital adequacy ratio is 9.54%, which indicates the bank is staying at strong position with the ranking of 1. Therefore, banks has more chance to survive in the market because their loss absorb power is very high. ASSETS QUALITY It is determined by the ratio of total classified loans to total capital & reserve. Total Classified Loan / Total Capital & Reserve 1% to 5% and above 5.01% to 10.00% 10.01% to 15.01% 15.01% to 20.00% Above 20% Strong Satisfactory Fair Marginal Unsatisfactory 1 2 3 4 5

Total Classified Loan / Total Capital & Reserve=2200%. This measure reminds that the bank is in unsatisfactory level with a ranking of 5. EARNINGS RECORDS

Earning is assessed by ROA of a bank: Net income at the previous calendar year / Total asset (as per the same calendar year) .85% .65% .45% .35% Net Loss Strong Satisfactory Fair Marginal Unsatisfactory Earnings Record 1 2 3 4 5

The calculation shows the result is 1.57% which proves that Bank Asia is in strong position by holding rank 1. LIQUIDITY
POSITION

The banks whose are dependent on more outside source, such banks are more likely to experience a liquidity crisis because they are forced to borrow excessive amounts of funds from outside sources. We can measures the liquidity position by the following two ratios: 1. Liquid assets/ total demand and time liabilities 2. Total loans/Total deposits 1) In case of first one 30% 20% 19% 15% Strong Satisfactory Fair Marginal 1 2 3 4

Showing Liquidity position (1) In case of first one, the ratio is 12.6%percent, which indicates the BANK ASIA is staying at marginal position with a rating of 2. 2) In case of second ratio

60% 80% 85% 90% 91%

Strong Satisfactory Fair Marginal Unsatisfactory Showing Liquidity position (2)

1 2 3 4 5

In case of second ratio, the BANK ASIA ratio is 20% percent, which reveals that it is in position one. For next analysis, we can add the above two ratio and take the average. That means, Unsatisfactory =5 Satisfactory =1 Liquidity position = (5+1)/2 =3 Finally, we can conclude that the bank liquidity position is in fair level. It means Bank Asia depends more on internal funds. So, there is no chance of facing liquidity crisis by Bank Asia. MANAGEMENT QUALITY Management quality can be determined by the average of the ratings of above four ratios. Here the regulators verify whether the management is efficient enough to handle any unfavorable situations or economic inflation or deflation. We can calculate the management ratio by the following formula (C+A+E+L)/ 4. Management Quality = (1+5+1+3)/4 = 2.5 Here we consider the total rating of these four sub-factors. The ranking of management are as follows 1 to 1.49 1.5 to 2.49 2.5 to 3.49 3.5 to 4.49 4.5 to 5 Strong Satisfactory Fair Marginal Unsatisfactory Showing Management Quality 1 2 3 4 5

Management administrative skill and ability is average or we can say well but improvement is required since the relation falls under the category of fair and can be ranked 3.

COMPOSITE RATING
It is determined by the average of rating of all five components of CAMEL as follows: Composite rating = (C+A+M+E+L)/5 = (1+5+1+3+3)/5 = 2.6 Composite rating is classified as bellow: 1 to 1.4 1.5 to 2.4 2.5 to 3.4 3.5 to 4.4 4.5 to 5 Strong 1 Satisfactory 2 Fair 3 Marginal 4 Unsatisfactory 5 Showing the Composite Rating

Thus, Bank Asia falls under the category of 3 with a fair financial position and management quality.

Findings
1. CENTRALIZED
DECISION MAKING FOR LOAN GRANTING:

In Bank Asia Limited, to sanction every loan decision is made by Area office or Head Office. The branch manager has to take permission before granting any amount of loan or advances from Head Office. It takes a lot of time to sanction. Even Zonal Head has no authority to permit any loan.
2. SHORTAGE
OF

RURAL BRANCHES & ATM

BOOTH IN CITY:

Bank Asia has a very little number of branches in Rural Areas. But our economy is mainly depends upon the Villages.

During our observation we observed that many clients complain about ATM booth. In city area, they have very small number of ATM booths which cause a bit of difficulty for clients to withdraw the money with ATM card. In commercial capital city (Chittagong), they have only two ATM Booths in Agrabad & EPZ.
3. LESS MOTIVATION:

We didnt find any motivational activities for employees in Bank Asia. Its a weakness of the top level management. But in some other banks like EBL, their employees receive awards every year based on their performance.
4. NO
SALES EXECUTIVE IN BRANCH OFFICE:

We observed that Bank Asia has no sales executive in their branch office. Sales executive plays a significant role of collecting deposits as well as lending money. We found number of sales executives in Dhaka Bank (Besides Bank Asia in GEC).

Recommendations
1. DECENTRALIZATION
OF DECISION MAKING TO LOAN SANCTION:

Bank Asia should give the authority to sanction the loan to the branch office. Right now the Head Office sanctions the loan. To make loan sanction faster, branch offices should be authorized to sanction loan otherwise zonal head office (Agrabad Branch knows as Zonal Head Office) should be authorized to sanction a specific amount of loan.
2. ESTABLISH
MORE RURAL BRANCHES

& INCREASE ATM

BOOTHS:

Nowadays bank is a trusted financial institution. Even people from the rural areas are realizing the importance of bank. So Bank Asia can spread their branches to rural areas more extensively. It will definitely increase the market share of Bank Asia.

Besides opening branches in rural areas, Bank Asia needs to increase its ATM facility, especially in the major cities. Its major competitors have large number of ATM booths in major areas.
3. ARRANGE
AWARD CEREMONY:

To motivate the employees, Bank Asia should arrange an award ceremony for the employees. Awards can be given to the employee of the year as well as manager of the year and so on. This will motivate the employees and thus affect the whole performance of the bank in appositive way.
4. APPOINT
SALES EXECUTIVE:

Bank Asia should appoint sales executives in their branch offices and they should be well trained and aware of the facilities provided by Bank Asia Limited.

CONCLUSION
A countrys future economic prosperity depends on the success of banking industry as it is the most important financial intermediary. As long as the banking sector remains weak, the economy won't achieve the growth necessary to eradicate poverty. Our country is realizing the importance of commercial banking industry as we are moving forward day by day. Technological development in the commercial banking industry is the most important achievement in the last decade for Bangladesh in that industry. Governments support is needed to for more advancement of that industry.

We can conclude that Bank has been found consistent with their operations in this competitive banking industry. This bank has positioned them as a leading depository institution. Moreover the company profile tells us that Bank Asia is offering lucrative instrument for their existing and potential customers. Their image to the market can help them to achieve more financial growth in that industry. During the year 2006 the Bank has not only made good profit but also enhanced its image further. Bank Asia Limited has now established itself as a local financial institution with international corporate culture, flawless processes, superior business ethics, strong control & compliance, good governance, visionary & dynamic leadership, commendable market & product depth and strong financials. This would not have been possible without the strong commitment of their people who have set a very high standard of service, which goes to promote their image with their customers as well as the entire business community.

References
[1] Annual Report, (2011) Bank Asia Ltd. [2] Annual Report, (2011) Dhaka Bank Ltd. [3] Annual Report, (2011) Eastern Bank Ltd. [4] Annual Report, (2011) Jamuna Bank Ltd. [5] Annual Report, (2011) Shahjalal Bank Ltd. [6] Bangladesh bank annual publishment (2011) [7] Besley. Scott., Brigham. F. Eugene, (2002). Essentials of Managerial Finance, Twelfth Edition. [8] Brighan. F. E., Houston. J. F., (2001). Fundamentals of Financial Management, Ninth Edition. [9] Chittagong Stock Exchange.

[10] Jones. P. Charels, (2005-2006), Investments, Analysis and Management, Ninth Edition. [11] Kieso, D. E., Weygant, J. J., & Warfield, T. D. (2002). Intermediate Accounting, Tenth Edition. [12] R.Fraser, D., Gup, B. E., & Kolari, J. W. (2001). Commercial Banking the Management of risk, Second edition. [13] Rose, P. S. (1999). Measuring and Evaluating Bank Performance. Commercial Bank Management, Fourth Edition.