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Ismail Bank
Ismail Bank
Internship Report
on
Financial Statements Analysis of an Islami Bank in Bangladesh:
A Study on First Security Islami Bank Limited, Bangladesh
Supervised By:
Mr. Iehit Sharma
Senior Lecturer
Department of Business Administration
Leading University, Sylhet
Submitted By:
Moez Al Azim Ansary
ID: 1101010183
Major in Accounting & Information Systems
BBA Program
27th Batch
Department of Business Administration
Leading University, Sylhet
Submitted To:
Department of Business Administration
For the partial fulfillment of the requirements for the
Degree of Bachelor of Business Administration (BBA)
Major in Accounting & Information Systems (AIS)
at
Leading University
Sylhet, Bangladesh
Date of Submission: February 28, 2015
:v.r6FrRgRFffi<rt<eft:
ritd
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s.)t-l
FSIBL/AMBI2O|5I25
Date 05.01 .2015
This is to certify that Mr. Moez Al Azim Ansary S/o Abdul Hannan Ansary of 68 Payra
Jhamarpar, Dargah Moholla, Sylhet, an intern from Leading University, Sylhet has
completed his internship program at our Branch with adequate dedication sincerity &
responsibility. During the three months period Mr. Moez Al Azim Ansary rotated
himself to various working desk at the branch and has learned many primary level and
useful practical banking functions.
2-al{
Md. Sohrab Uddin Molla
Asstt Vice President & Manager
AMBARKHANABRANCH:
MWenCornplex,Holding#&f0,641,WalrebsBSS,WestAmbarkhana,Sylhet-3100
www.fsiblbd.com
iv
Letter of Transmittal
February 28, 2015
Mr. Iehit Sharma
Senior Lecturer
Department of Business Administration
Leading University, Sylhet
Subject: Submission of Internship Report
Dear Sir,
With the passage of time, I am now standing on the verge of Bachelors of
Business Administration program, hence am finalized with my Internship Report
named Financial Statements Analysis of an Islami Bank in Bangladesh: A
Study on First Security Islami Bank Limited, Bangladesh. Vividly enough, my
research comprises adequate endeavors. But no doubt, my contribution will be
best evaluated on your sharp scale of acceptance and remarks.
Consequently, I am transmitting my Internship Report to your very concern.
Hopefully you will discover my well-researched, informative and innovative
approach as a hallmark of exploration. Rather, in case of any further clarification
or elaboration as to my research work, I would welcome the opportunity to
consult with you to explore how my findings could best meet your needs.
Thanking you.
Yours Sincerely,
___________________________
Moez Al Azim Ansary
ID No: 1101010183
Major: Accounting & Information Systems
BBA Program (27th Batch)
Department of Business Administration
Leading University, Sylhet
Letter of Acceptance
Supervisor
___________________________________
Mr. Iehit Sharma
Senior Lecturer
Department of Business Administration
Leading University, Sylhet
vi
Declaration
Declared by
___________________________
Moez Al Azim Ansary
ID No: 1101010183
Major: Accounting & Information Systems
BBA Program (27th Batch)
Department of Business Administration
Leading University, Sylhet
vii
Acknowledgement
First, I would like to express my gratitude to almighty ALLAH to give me the
strength to complete the study within the stipulated time.
I deeply thank to my honorable internship supervisor Mr. Iehit Sharma, Senior
Lecturer, Department of Business Administration, Leading University for
assigning me the project and for all his kind support to accomplish it. His
valuable suggestions and guidance helped me a lot to prepare the report in a
well-organized manner. I would like to thank our whole Department of Business
Administration specially Head of the Department Dr. Tofayel Ahmed, for
facilitating me to do internship and preparing this report.
I also wish to thank and give the due respect to my family and friends for their
cordial support and help they offered throughout the process of performing the
whole report.
Finally, my heartfelt gratitude goes to Mr. Md. Sohrab Uddin Molla (Branch
Manager and AVP), Mr. Md. Maksud Ibn Mustafa (SPO and Operation Manager),
Mr. Salahuddin Shamim (Probationary Officer), Mr. Md. Ishtiaque Uddin
(Probationary Officer), Mr. Anwar Hossain Misba (Senior Cash Officer), Mr. Ariful
Islam Nayeem (Assistant Officer), Mrs. Rabea Binte Shiraj (Principal Officer) and
all the co-workers of First Security Islami Bank Limited, Amborkhana Branch,
Sylhet for their keenness in giving me training and valuable information, which
was very helpful to complete my internship report.
viii
Executive Summary
Banks are the most important financial institutions in modern economy. They
are an integral part of modern economic activities. In a developing country like
Bangladesh, the Islamic banking system as a whole has a vital role play in the
process of economic development. First Security Islami Bank Limited (FSIBL) has
started its journey on 29th August 1999 with the said principles in mind and
conduct banking system according to Shariah based policy. This report mainly
deals with the financial statements analysis of an Islami bank in Bangladesh: a
study on First Security Islami Bank Limited. The horizontal analysis, vertical
analysis and ratio analysis are essential technique for financial statements
analysis. Different users such as investors, management, bankers and creditors
use the financial statements analysis of a company for their decision making
purpose. In this report, the financial statements of First Security Islami Bank
Limited have been studied for five years from 2009 to 2013 and also different
types of financial ratios of the bank are calculated. The clear concept on bank,
Islamic banking and different types of financial analysis are given in the report.
The liquidity, profitability, financial position and the financial trend of First
Security Islami Bank Limited are the main focus of this report which have been
analyzed and used for comparing different years. By analyzing the financial
statements of the bank, it has been traced the financial strengths and weakness
of the bank. Finally some comments are shown regarding the changes of this
banks financial performance for the last five years. By analyzing the horizontal,
vertical and different ratios like liquidity ratios, efficiency ratios, profitability
ratios, solvency ratios and market prospect ratios, and cash flow analysis, it can
be said that FSIBL has been improving and doing well in the last five years except
in few years. So the bank should be concern about the types of financial analysis
especially the types of ratios. However, FSIBLs overall earnings performance
was satisfactory, but it should be improved.
ix
Table of Contents
Chapter
Title
One
Introduction
Page No.
1-6
Two
Theoretical Overview
7-45
2.1 Bank
14
15
15
16
17
18
19
19
20
20
21
22
24
25
25
28
Four
Organizational Overview
44
46-63
47
49
50
52
55
59
60
61
63
64-100
4.1 Introduction
65
65
68
68
70
73
76
79
82
83
83
89
93
96
30
98
101-106
5.1 Findings
102
5.2 Recommendations
105
5.3 Conclusion
106
xi
References
107
Appendix
109
1
Chapter One
Introduction
Introduction
this report was supervised by Mr. Iehit Sharma, Senior Lecturer, Leading
University, Sylhet.
attain the goal of Islamic Economy through setting well designed Islamic
Monitory System. Islam has clear-cut guidelines to avoid interest (Riba)
regarding use of money. So, Islamic Banking System strongly follows the
Islamic Shariah in its business. Islamic Shariah appreciates risk and profit
sharing. As an Islami bank FSIBL has to take risk when doing banking
business and share profit to its stakeholders and customers. So, to know
about the ability of the bank to take risk and making profits, its financial
strength and performance should be understood. Therefore, the financial
statements of the bank should be analyzed for understanding the financial
strength and performance of the bank.
Specific Objectives:
To know the financial trend of FSIBL focusing the five years financial
performance.
Limited for giving some concepts about the financial position and financial
performance of the bank over at least five years. The scope of my study is
limited to the First Security Islami Bank Limited. During the three months
viewpoint including ratio analysis. This repost may help those people who
want to know about the financial performance of First Security Islami Bank
Limited.
possible to prepare the final outcome of the report. There are four types of
research methods were used to complete this report. These methods are -
Descriptive Method: Descriptive research includes surveys and factfinding enquiries of different kinds. The major purpose of descriptive
four types of research methods to get proper and successful outcome from
my research.
secondary sources of data are those sources which provide data that are
already collected by another researcher. From this point of view data are
two types among them one is primary data and another is secondary data.
The data directly collected by the researchers are called primary data. The
data that has been already collected by another researcher or person for
his/her work purpose are called secondary data. I have collected the both
types of data from primary and secondary sources.
report. But there are some limitations which I have faced while reaching the
The time limit of the internship is only 3 months which is very short
period of time to learn about whole banking activities.
the statement, because the duration of all items are not properly
mentioned.
As the bank officials are so much busy that it was difficult for them
to co-operate with me, which is also a constraint for this report.
2
Chapter Two
Theoretical Overview
Theoretical Overview
2.1: Bank
Bank is a financial institution that collects money from people as deposit
committing to pay interest or profit at a fixed or probable percentage rate
to the depositors for their deposited money and lends or invests it to the
businesses requiring interest or profit as return at a fixed or probable
percentage rate which is higher than the rate at which it pays interest or
profit to the depositors against the loan or investment and gains profit
Generally we indicate the commercial bank when using the term Bank.
Commercial banks are those institutions which conduct the business
lends to the other group of people at some higher rate of interest. The
difference between the two rates of interest is the profit of the bank.
Functions of Bank
Primary Functions
Accepting Deposits
Current Account
Saving Account
Secondary Functions
Agency Functions
Exhibit -2.1
These functions provide the base of the whole operation of the bank. The basic
functions of a commercial bank are as follows:
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 10
low income people. The commercial banks pay interest on this type
of deposits. But, the interest rate is very poor.
expiry of this fixed period. The longer the period of deposits, the
higher is the rate of profit or interest.
Making Advance and Loan: The deposits received by banks are not
allowed to remain idle. So, after keeping certain cash reserves, the
which is the main source of income for the banks. Different types of
loans and advances made by Commercial banks are:
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 11
Loans: Commercial banks grant loans for short and mediumterm to individuals and traders against the security of movable
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 12
the customers. When any expense is paid by the bank, a debit voucher
is sent to the customer for information.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 13
nowadays provide ATM facilities through issuing debit card and credit
card. The customers can withdraw money easily and quickly 24 hours
a day.
Hajj Services: The commercial banks provide free Hajj sendees to the
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 14
studies within the country and abroad. The Qarz-e-Hasna is refund Ale
in easy installments.
transactions and conducts its operations in a way that helps achieve the
objectives of an Islamic economy. Alternatively, this is a banking system
whose operation is based on Islamic principles of transactions of which
profit and loss sharing (PLS) is a major feature, ensuring justice and equity
in the economy. That is why Islamic banks are often known as PLS-banks.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 15
organization as partner and they look after business for ensuring the
proper use of fund.
Shariah Board. This board ensures that the investment is made to the
Halal business and activities are conducted according to Islamic Shariah.
anything from its original amount. However, all increases are not
considered as Riba in Islam. Money may increase in business activities as
well. This increase is not at all considered as Riba. Islam prohibits only
those increases that are charged on the loan with a prefixed rate.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 16
In the Shariah, Riba technically refers to the premium that must be paid by
the borrower to the lender along with the principal amount as a condition
for the loan or for an extension in its maturity. In other words, Riba is the
predetermined return on the use of money.
Profit
is Riba
activity is done.
negative.
Exhibit -2.2
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 17
Islamic Banks
manmade principles.
distribute Zakat.
5. Participation in partnership
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 18
evaluations.
Exhibit -2.3
It appears from the above definitions that financial statements are the
any other entity. Financial statements are intended to present the financial
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 19
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 20
2.8.6: Notes: Notes are not core financial statement, but they are
are commonly used as part of financial statement analysis. Widely used are
sated below.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 21
A banks financial statements are always different from general companies. So,
banks financial statements analysis is critical. Among the stated techniques the
ratio analysis is mostly used for analysis of any organizations financial
statements.
accounting for businesses and individuals alike. So, some basic requirement
must be fulfilled by a person when he/she prepares financial statements.
Balance sheet, income statement, statement of cash flow, statement of
equity and liquidity statement are the core financial statements of a banking
company. When one goes to analysis the financial statements he/she first
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 22
depicts the assets and the liabilities at a stated point of time, for example
31st December. The figures of the assets and liabilities are given in the
balance sheet from the basis of financial appraisal and duration. In fact,
there are two stages in the evaluation of balance sheet:
categories, and
examination of different items of assets and liabilities and they are classified
into various categories.
Assets:
In the Balance sheet the assets are divided into three major
categories in general when organizations prepare the balance sheets.
These are as follows:
Current Assets
Fixed/Long-Term Assets
Other Assets
their form in a short period and are exchanged for cash. In other
words, current assets are meant to be liquidated for cash in the near
future. Generally the duration of these assets is within one year.
sold during the normal course of business and they are used for
carrying on the business, such as land, building, machinery,
furniture and fixtures etc. are fixed assets.
Other Assets: Other assets are a grouping of accounts that are listed
as a separate line item in the assets section of the balance sheet and
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 23
which contain minor assets that do not naturally fit into any of the
which are being written-off over the years (S. A. Ali & R. A.
Howlader, pp.345). But, some of the writers include the other assets
into fixed assets, some writers include them into current assets and
some of the writers include the other assets into both fixed assets
and current assets according to their duration and type.
It appears from the above definitions that other assets are the
miscellaneous assets that cannot be classified as current assets or
fixed assets. Examples of other assets include deferred tax assets,
bond issue costs, advances to officers, prepaid pension costs, and
Current Liabilities
Long-Term Liabilities
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 24
amounts from two or more balance sheet dates arranged side by side. Its
usefulness is often improved by showing each items money amount
change and percentage change to highlight large changes.
that shows large dollar and percent changes. We then try to identify the
reason for these changes and, if possible, determine whether they are
favorable or unfavorable. We also follow up on items with small changes
when we expected the changes to be large.
important sources for the analysis, the financial data contained therein have
certain limitations. The financial data depict the state of affairs or the
factors that are not evident from the financial statements. For example, the
production of a manufacturing company may fall due to labor strike or nonavailability of raw materials due to transport bottlenecks, but it should not
be interpreted as decline in the efficiency or profitability of the concern. It is,
therefore, essential that the investor should look beyond the financial data
and make future enquiries regarding the causes for any variation or
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 25
described and illustrated in this chapter and considered the building blocks
of financial statements analysis:
time. The term horizontal analyses arises from the left-to-right movement
of our eyes as we review comparative statements across time.
2.11.4.1: Comparative Statements
Comparing amounts for two of more successive periods often helps in
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 26
Analysis period is the point or period of time for the financial statements
under analysis, and base period is the point or period of time for financial
statements used for comparison purposes. The prior year is commonly
used as a base period. We compute percent change by dividing the dollar
change by the base period amount and then multiplying this quantity by
100 as follows:
(%) =
When an item has a value in the base period and zero in the
analysis period, the decrease is 100 percent.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 27
side by side. Its usefulness is often improved by showing each items dollar
change and percent change to highlight large changes.
Company Name
Comparative Balance sheet
Ending date of Analysis year and Base/previous year
1
2
3
4=(2-3)
5=(4/3)
Particulars
Analysis
Base/previous
Dollar
Percent
Year
Year
Change
Change (%)
Assets
Current Assets
$0.00
$0.00
$0.00
0.00%
Fixed Assets
$0.00
$0.00
$0.00
0.00%
0.00%
$0.00
$0.00
$0.00
Liabilities
Current Liabilities
$0.00
$0.00
$0.00
0.00%
Long-term Liabilities
$0.00
$0.00
$0.00
0.00%
$0.00
$0.00
$0.00
0.00%
Shareholders
Equity
$0.00
$0.00
$0.00
0.00%
0.00%
$0.00
$0.00
$0.00
Exhibit -2.4
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 28
Select a base period and assign each item in the base period a weight of
100%.
(%) =
It should be noted, that the percent change or index refers the comparison
revenue and for a balance sheet is usually total assets. The term vertical
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 29
(%) =
that the total amount of liabilities plus equity equals 100% since this
amount equals total asset. We compute a common-size percent for each
asset, liability and equity items using total asset as base amount. When
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 30
analysis tools, are usually future oriented. They are often adjusted for their
probable future trend and magnitude, and their usefulness depends on the
In this section an important set of financial ratios and its applications are
described. The selected ratios are organized into the four building blocks of
financial statement analysis. These are as follows:
Liquidity refers to the availability of resources of a company to meet shortterm cash requirements. It is affected by the timing of cash inflows and
companys continued existence, our analysis must always assess the validity
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 31
assets can cause liquidity problems. A lack of liquidity often precedes lower
profitability and fewer opportunities. A companys customers and suppliers
company to meet its current liabilities with its current assets. This ratio
ratio means that a company has invested too much in current assets
compared to its current liabilities. An excessive investment in current
current assets and current liabilities of 2:1, which means the result of
current ratio is 2. But, such a guideline or any analysis of the current
ratio must recognize at some additional factors such as, type of business,
composition of current assets, and Turnover of current assets. A service
company like bank that having no inventory can probably operate on a
current ratio of 1:1 or less than 1:1. The composition of a companys
liquid then account and notes receivable. Cash, of course, can be used to
immediately pay current liabilities. But, for a banking company,
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 32
excluding less liquid assets is acid-test ratio. It is also called quick ratio.
Quick assets are cash, short-term investments and current receivables.
These are the most liquid types of assets. Acid-test ratio is differs from
cash. The acid-test test or quick ratio is defined as quick assets (cash,
short-term investment and current receivable) divided by current
liabilities. Its formula is given below:
-
cash affects its working capital requirements. Acid-test ratio is the most
important measurement for banking companies as financial institutions.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 33
Accounts receivable turnover is more precise if net credit sales are used
for the numerator because net sales include cash sales, but external
users generally use net sales (or net revenue) because information about
net credit sales is typically not reported in financial reports. Some users
use net receivable as denominator when use net credit sales as
numerator, but using the average account receivable as denominator is
more perfect for computing accounts receivable turnover.
A high
If the beginning and ending inventory for the year do not represent the
usual inventory amount, an average of quarterly or monthly inventories
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 34
A rough guideline states that days sales uncollectable should not exceed
1
times the days in its credit period, if discounts are not offered; or
of days one can sell from inventory if no new items are purchased. This
ratio is often viewed as a measure of the buffer against out-of-stock
inventory and is useful in evaluating liquidity of inventory.
computed as follows:
It is
how many days it will take to convert at the end of a period into
its ability to generate sales and earn income. Total asset turnover is
computed as follows:
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 35
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 36
and often require regular interest payments. The risk that a company
might not be able to meet such required payments is higher if it has more
liabilities. One way to assess the risk associated with a companys use of
liabilities is to compute the debt ratio. Debt ratio is computed as follows:
=
A generally agreed minimum value for this ratio is about 2:1 (from a
because it is based on the book value of pledged assets. Book values are
not necessarily intended to reflect amounts to be received from assets in
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 37
expense. A company incurs expenses on many of its current and longterm liabilities. Interest expense is often viewed as a fixed expense
growing, they create risk. This risk stems from the possibility that a
company might be unable to pay fixed expenses if sales decline. One
method that measures a companys ability to pay interest expenses is
times interest earned ratio. This ratio is computed as follows:
=
The larger this ratio, the less risky is the company for creditors. One
guideline says that the creditors are reasonably safe if the company earns
its fixed interest expense two or more times each year.
2.11.6.3: Profitability Ratios
We are especially interested in a companys ability to use its assets
efficiently to produce profits and positive cash flows. Profitability refers to a
companys ability to generate an adequate return on invested capital. Return
is judged by assessing earnings relative to the level and source of financing.
ratio of its net income to net sales. This ratio is called profit margin. It
reflects a companys ability to earn net income from sales. Profit margin is
computed as follows:
100
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 38
comparing net income to the average total assets. In other words, the
return on assets ratio or ROA measures how efficiently a company can
100
profits, this ratio helps both management and investors to see how well
the company can convert its investments in assets into profits. In short,
goal in operating a company is to earn net income for its owner(s). The
return on common stockholders equity measures a companys success in
reaching this goal and is defined as follows:
=
Beginning shareholders
+
2
shareholders
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 39
stock. These market measures use stock price, which reflects the markets
(publics) expectations for the company. This includes expectations of both
companys return and risk as market perceives it.
This comparison is traditionally made using a price-earnings ratio. Priceearnings ratio can be viewed as an indicator of the markets expected
growth and risk for a stock. Some analysts interpret this ratio as what
This ratio is often computed using EPS from the most recent period.
However, many users compute this ratio using expected EPS for next
period. Some analysis view stocks with high PE ratios as more likely to be
overpriced and stocks with low PE ratios as more likely to be
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 40
called income stock are attractive to investors who want recurring cash
flows from their investments. In contrast, some stocks pay little or no
cash but use their cash to finance expansion are called growth stocks. One
way to help identify whether a stock is an income stock or a growth stock
Dividend yield can be computed for current and prior periods using
actual dividends and stock prices and for future periods using expected
values.
. .
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 41
Accounts Receivable
Turnover
Inventory Turnover
=
=
Short-term
ability
debt-paying
Net Sales
Average Accounts Receivable
Efficiency of collection
Account Receivable
365
Net Sales
Liquidity of receivables
Ending Inventory
365
Cost of Goods Sold
Measure of
=
=
Formula
Efficiency of inventory
management
Liquidity of inventory
Net Sales
Average Total Assets
Efficiency of assets in
producing sales
Exhibit -2.5
. .
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 42
Solvency
Total Liabilities
100
Total Assets
Debt Ratio
Equity Ratio
Pledged Assets to
Secured Liabilities
Net Income
100
Net Sales
Profitability
=
=
Total Equity
100
Total Assets
Owner financing
Protection to secured
creditors
Protection in meeting
interest payments
Net income in each sales
dollar
Net Income
100
Total Shareholders Equity
Exhibit -2.5
Overall profitability of
Equity
. .
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 43
Return on Common
Stockholders Equity
Price-Earnings Ratio
Dividend Yield
Market Prospects
Profitability of owner
investment
Net income per common
share
Net income per common
share
Market value relative to
earnings
Above ratios are used for various purpose of financial analysis. These depend on the need of analyst. All ratios are not use for every type
of business. According to nature of business ratios are varying. For example, a service company generally has not any inventory, so it is
not required for it to compute the inventory turnover ratio. When I have analyzed the financial statements of First Security Islami Bank
Exhibit -2.5
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 44
Limited, I only use those ratios which are useful for a banking company. A
banking companys ratio analysis is different from the ratio analysis of a
merchandising company.
Previous Year
Balance Sheet
Changes
Current Year
Balance Sheet
Profit/Loss
Donations
Loan Loss
Depreciation
Current Year
Cash Flow
Profit/Loss
Non-Cash Items
Current Year
Income
Statement
Exhibit -2.6
From the exhibit -2.6, it is appeared that all financial statements are correlated
and all transactions are directly or indirectly affect the cash flow. Cash flow
represents the actual cash generation by a business over a period. Further, a
my analysis, I analyze the FSIBLs cash flow statement and try to lay bare the
trend of cash flow of FSIBL, and trace reason of cash increase or decrease.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 45
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 46
3
Chapter Three
Organizational Overview
Organizational
Overview
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 47
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 48
Particulars
Authorized Capital
Paid-up Capital
Shareholders' Equity
Total Capital (Tier-1+Tire-2)
Statutory Reserve
Total Assets
Total Liabilities
Deposits
Total Investment and Advances
Total Contingent Liabilities
Total Risk Weight Asset
Total Fixed Assets
Operating Income
Operating Expenditure
Profit before Provision & Tax
Profit before Tax
Net Profit after Provision & Tax
Foreign Exchange Business:
a) Import Business
b) Export Business
c) Remittance
No. of Foreign Correspondent
Profit Earning Assets
Non Prifit Earning Assets
Investment as a % of Total Deposit
Capital Adequacy Ration
Divident
a) Cash
b) Bonus
c) Right Share
Cost of Fund
Net Asset Value Per Share
Earning Per Share (EPS)
Price Earning Ration (times)
Return on Assets (ROA)
No. of Shareholders
Number of Employees
Number of Branches
2009
4,600.00
2,300.00
2,865.41
3,379.03
263.44
47,978.55
45,113.14
42,423.09
38,725.87
5,971.67
31,113.43
376.47
1,327.63
576.79
750.83
646.83
326.83
20,208.92
16,101.17
3,549.00
558.75
240.00
41,371.52
6,607.02
91.28%
10.91%
Nil
10%
Nil
9.28%
12.45
1.42
15.39
1.56%
54,400
775
52
2010
4,600.00
2,036.00
3,920.01
4,582.21
460.16
63,619.79
59,699.78
56,344.95
52,123.90
8,859.66
50,423.90
573.61
2,085.20
881.60
1,203.60
983.60
548.60
35,103.57
28,391.20
5,868.90
843.47
240.00
56,040.95
7,578.84
92.51%
9.09%
Nil
12%
20%
8.90%
12.81
1.61
25.21
1.89%
82,230
929
66
Exhibit -3.2
2011
4,600.00
3,400.00
4,548.95
5,449.44
704.20
91,012.89
86,463.94
78,145.04
69,467.32
11,363.57
60,010.80
979.35
2,738.25
1,148.66
1,589.58
1,219.95
579.93
40,807.30
29,534.90
10,260.60
1,011.80
1,400.00
79,211.72
11,801.17
88.90%
9.07%
Nil
10%
Nil
10.01%
13.38
1.71
15.37
1.75%
90,954
1,342
84
10%
Nil
Nil
11.64%
15.64
1.87
8.08
0.53%
90,985
2,367
117
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 49
its business. The Bank carries banking activities through its 136 branches in
the country. Their commercial banking activities include a wide range of
services including accepting deposits, discounting bills, conducting money
However, from January 01, 2009 they converted their business to Islamic
Banking with Islamic Shariah Act and the bank changed its name and mode
of business and incorporated as First Security Islami Bank Ltd. It started
with 14 branches in 1999 but now has 134 branches in Bangladesh which
shows the impact they have had in the economy. The bank maintains a
friendly relationship with the top ranking banks. They have online, SMS and
ATM banking facilities for their clients.
The company philosophy A step ahead in time has been exactly the spirit
for Asian success; the bank has been operating with talented and brilliant
personnel, equipment with modern technology so as to make it most
efficient to meet the challenges of 21st century and to fulfill the needs and
wants of its customers.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 50
3.3.2: Mission
To be the most caring and customer friendly and service oriented bank.
3.3.3: Objective
To conduct banking service according to Islamic Shariah
To provide efficient computerized banking system.
To ensure foreign exchange operations.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 51
3.3.4: Strategies
To achieve our customers best satisfaction & win their confidence.
To manage & operate the bank in the most effective manner.
To train & develop all employees & provide them adequate resources so
that customers needs can reasonably addressed.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 52
Ms. Farzana
Parveen
Director
Shahidul Islam
Director
Mohammad Kutub
Uddowllah
Independent Director
Ms. Rahima
Khatun
Director
Mohammad
Oheidul Alam
Director
Mohammad Ishaque
Independent Director
Ahsanul Alam
Director
Khurshid Jahan
Depositor Director
Exhibit -3.3
Md. Wahidul
Alam Seth
Director
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 53
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 54
Name
Alhaj Md. Abdul Maleque
Prof. Md. Sharif Hussain
Mr. Shahidul Islam
Position
Chairman
Vice Chairman
Member
Secretary
Member
Member
Address
Baitush Sharaf Complex, Shah
Abdul
Jabbar
(R)
Road
Dhanialapara, Chittagong-4100.
Markaz-e- Eshaete Islam 2/2 Darus
Salam, Mirpur, Dhaka
491, Wireless Railgate, Bara
Moghbazar, Dhaka-1217
Observers Members
Position
Vice Chairman, Board of
Directors, FSIBL &
Observer Member,
Shariah Council
Board of Directors, FSIBL
&
Observer
Member,
Shariah Council
Board of Directors FSIBL
&
Observer
Member,
Shariah Council
Managing Director
Name
Position
Mr. Syed Waseque Md. Ali Managing Director
(Current Charge), FSIBL &
Observer Member,
Shariah Council
Exhibit -3.5
Address
8/A, OR Nizam Road
Panchlaish R/A Chittagong
57, East Hajipara (5 th
Floor) Rampura, Dhaka1219
House# 7, Road# 1,
Nasirabad Housing Society,
Post: Medical P.S:
Panchlaish, Dist.:
Chittagong
Address
House SW(I)1/A(4th Floor),
Road 8, Gulshan -1,
Dhaka-1212
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 55
Serial No.
Branch Name
Branch Code
01
AZAMPUR
140
BISWAROAD
120
02
03
BANGSHAL
BHALUKA SME
05
CITY UNIVERSITY
07
DILKUSHA
04
06
08
09
DHAKA DIVISION
10
DAMODYA
FARIDPUR
BANANI
BASHUNDHARA
11
BHUAPUR BRANCH
13
COLLEGE GATE
15
DONIA
12
14
BONOSREE
DHANMONDI
16
GAZIPUR CHOWRASTA
18
KARWAN BAZAR
17
19
20
GULSHAN
KONAPARA
MALIBAG
21
MASTERBARI
23
MOTIJHEEL
22
MOHAKHALI
24
MYMENSINGH
26
KERANIGONJ BRANCH
25
ISLAMPUR
27
MADHABDI SME/KRISHI
29
MIRPUR
28
MANIKGANJ BRANCH
106
168
178
180
101
162
115
177
202
138
125
108
121
214
112
176
191
174
183
103
129
160
155
207
154
203
113
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 56
30
MOHAMMADPUR
186
32
NARAYANGANJ
170
34
POSTOGOLA BRANCH
36
SAVAR
31
DHAKA DIVISION
33
35
37
RING ROAD
SHAFIPUR
40
PACCHOR BRANCH
39
UTTARA
41
RANABHOLA BRANCH
43
SENANIBASH
45
SYLHET DIVISION
NORIA
38
42
CHITTAGONG
MUKSUDPUR
RUPNAGAR BRANCH
SREEPUR
46
TOPKHANA
48
AMBORKHANA
50
MOULVIBAZAR
52
SYLHET
47
49
51
ZIRABO
BISWANATH
TALTOLA
53
GOBINDA GONJ
55
AGRABAD
54
BEANI BAZAR
56
BAHADDARHAT
58
CHAWK BAZAR
60
DOVASHI BAZAR
62
HATHAZARI
57
59
61
BANSKHALI
COURT BAZAR
FENI
127
181
225
133
149
117
199
158
210
228
223
126
143
118
148
128
105
122
153
111
132
175
104
123
187
166
135
124
165
137
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 57
63
ANDERKILLAH
000
65
CHAKARIA
121
64
66
COMILLA
67
COXS BAZAR
69
HALISHAHAR
71
JUBILEE ROAD
73
KHATUNGONJ
75
77
79
KADAMTALI
81
KUMIRA
68
70
72
CHITTAGONG DIVISION
BANDAR TILA
74
76
78
80
82
83
84
85
EID GAON
HNILA
KATIRHAT
MIRZAKHIL
KERANIHAT
MOHILA
NAZIR HAT
PAHARTOLI
PATHER HAT
86
PATIYA MOHILA
88
RAMGONJ
87
PEKUA
148
150
139
151
185
221
107
206
102
218
161
112
196
127
212
110
193
167
138
159
145
182
192
131
89
91
RAMU
200
BAGACHRA BRANCH
213
90
92
93
94
PROBORTAK MOR
TANTOR
BARGUNA
156
0
229
0
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 58
95
CHUADANGA
190
97
FULTOLA
222
KALIGANJ
224
96
98
99
KHULNA DIVISION
JESSORE
100
KESHABPUR
102
BAROBAZAR
104
FAKIRHAT
101
103
105
BAGERHAT
DINAJPUR
GALACHIPA
106
JHENAIDAHA
108
KHAJURA BAZAR
110
MAGURA
107
109
KAPILMUNI
KHULNA
111
MORRELGANJ
113
NARIA
112
NARAIL
141
188
172
211
171
215
194
197
208
220
116
173
216
204
0
114
SATKHIRA
146
116
MEHERPUR
219
118
157
120
SHYAMNAGAR
205
115
117
119
RAJSHAHI
FAKIRHAT
121
KUSHTIA
NAOGAON
NAVARON BRANCH
BOGRA BRANCH
179
0
198
0
122
KANSAT BRANCH
227
124
217
126
RAJSHAHI BRANCH
123
125
PABNA
NATORE BRANCH
169
231
136
RANGPUR
BARISAL DIVISION
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 59
127
BARGUNA BRANCH
201
129
GALACHIPA BRANCH
128
BAUFOL BRANCH
230
130
SWARUPKATI BRANCH
195
132
BHOLA BRANCH
226
131
133
134
135
136
BARISAL BRANCH
PATUAKHALI
UZIRPUR BRANCH
DINAJPUR BRANCH
RANGPUR BRANCH
Exhibit -3.6
163
144
202
171
109
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 60
debtor-creditor relationship.
deposits.
whole the Bank invests money to different Halal business. The bank
participates in different activities aiming at creating jobs,
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 61
Three Months
Six Months
Twelve Months
Direct Investments
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 62
Ijara (Leasing)
Pre-Shipment Investment
Letter of Guarantee
Tender Guarantee
Performance Guarantee
Tender Guarantee
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 63
Personalized service
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 64
4
Chapter Four
Core Part
Financial Statements Analysis of First
Security Islami Bank Limited (FSIBL)
Core Part
Financial Statements
Analysis of First Security
Islami Bank Limited (FSIBL)
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 65
4.1: Introduction
A bank is a financial institution whose main job is to collect fund from
surplus units and invest in deficit units and making profits. Owners,
depositors and shareholders of a bank invest to a bank to get profit or
and weakness of the bank, and can take proper policy making decisions for
The all core financial statements of FSIBL are obtained. These statements
include Balance Sheet, Income Statement, Statement of Cash Flows,
Statement of Equity, Statement of Liquidity and their notes for five years.
But, these are not in the format which is required for different financial ratio
format for the interest of the analysis. The renovated statements are mainly
concerned based on the duration of the accounts which is very important for
ratio analysis. For preparing these financial statements no fictional data are
used, only the real financial data from notes of statements are used
according their duration and types.
FOR THE YEARS- 2013, 2012, 2011, 2010, 2009 and 2008
Particulars
PROPERTY AND ASSETS
Current Assets
Cash
Balance With Bank and Financial Institutions
Investments in Shares & Securities
Other Assets
Fixed Assets
2013
BDT
40,473,177,156
11,549,381,969
14,379,093,084
2,723,632,786
11,821,069,317
2012
BDT
2011
BDT
29,705,058,836
10,528,144,967
10,785,716,061
3,187,223,270
5,203,974,538
18,151,650,528
7145564652
5699804595
1630019092
3676262189
121,349,799,689
4,271,569,450
114,601,798,177
2,476,432,062
161,822,976,845
100,028,114,252
1,726,169,450
96,304,228,588
1,997,716,214
2010
BDT
2009
BDT
8,587,867,603
4857542203
1036199077
524937861
2169188462
2008
BDT
7,202,722,793
5033532439
731150321
241026032
1197014001
2013
BDT
5,364,366,909
1394671407
2101436244
736969100
1131290158
10,768,118,320
1,021,237,002
3,593,377,023
(463,590,484)
6,617,094,779
-
11,553,408,308
3,382,580,315
5,085,911,466
1,557,204,178
1,527,712,349
38,720,273,999
129,733,173,088
72,861,248,561
2414569450
69467328284
979350827
91,012,899,089
55,031,930,196
2334416700
52123903164
573610332
63,619,797,799
40,775,830,159
1673477998
38725874774
376477387
47,978,552,952
25,875,026,509
596000000
25094658077
184368432
31,239,393,418
21,321,685,437
2,545,400,000
18,297,569,589
478,715,848
Long-Term Liabilities
152,709,588,439
3,950,000,000
139,520,955,783
9,238,632,656
121,650,118,339
4,400,000,000
109,905,568,871
7,344,549,468
86,432,834,521
3200000000
78145045008
5087789513
59,699,786,313
56344959167
3354827146
45,113,142,197
42423092722
2690049475
Total Liabilities
155,389,377,281
124,068,693,306
86,463,948,521
59,699,786,313
45,113,142,197
4,114,387,200
1,310,398,870
114,061,074
392,381,876
502,370,544
6,433,599,564
3,740,352,000
1,004,574,914
84,000,000
402,442,950
433,109,918
5,664,479,782
3400320000
704202214
24000000
371537509
48890845
4,548,950,568
3036000000
460169845
24000000
399841641
3,920,011,486
2300000000
263449699
24000000
277961056
2,865,410,755
Total Assets
Paid-up Capital
Statutory Reserve
Other Reserve
Assets Revaluation Reserves
Retained Earnings
2,679,788,842
179,788,842
2,500,000,000
161,822,976,845
2,418,574,967
198,574,967
2,220,000,000
129,733,173,088
31,114,000
31114000
-
91,012,899,089
63,619,797,799
Exhibit -4.1
47,978,552,952
2012
BDT
Changes in BDT
2011
BDT
9,563,782,925
2,288,022,449
4,663,605,518
1,105,081,231
1,507,073,727
-
2010
BDT
2009
BDT
1,385,144,810
(175,990,236)
305,048,756
283,911,829
972,174,461
2013
%
1,838,355,884
3,638,861,032
(1,370,285,923)
(495,943,068)
65,723,843
36%
10%
33%
-15%
127%
32,089,803,757
27,166,865,691
(688,400,000)
26,836,900,304
1,018,365,387
17,829,318,365
80,152,750
17,343,425,120
405,740,495
27,393,101,290
14,256,100,037
660,938,702
13,398,028,390
197,132,945
15,641,244,847
14,900,803,650
1,077,477,998
13,631,216,697
192,108,955
28,700,820,412
630000000
25854541500
2216278912
31,059,470,100
(450,000,000)
29,615,386,912
1,894,083,188
-
35,217,283,818
1,200,000,000
31,760,523,863
2,256,759,955
26,733,048,208
3,200,000,000
21,800,085,841
1,732,962,367
-
28,700,820,412
31,320,683,975
37,604,744,785
374,035,200
305,823,956
30,061,074
(10,061,074)
69,260,626
769,119,782
-
340,032,000
300,372,700
60,000,000
30,905,441
384,219,073
1,115,529,214
26,764,162,208
364,320,000
244,032,369
371,537,509
(350,950,796)
628,939,082
-
2300000000
134082149
24000000
80490857
2,538,573,006
31,239,393,418
261,213,875
(18,786,125)
280,000,000
-
32,089,803,757
2,387,460,967
167,460,967
2220000000
38,720,273,999
31,114,000
31,114,000
- -
27,393,101,290
Changes in Percentage
2012
%
2011
%
2010
%
2009
%
64%
47%
89%
96%
42%
111%
47%
450%
211%
69%
19%
-3%
42%
118%
81%
34%
261%
-65%
-67%
6%
54%
16,739,159,534
21%
147%
19%
24%
25%
37%
-29%
39%
104%
43%
32%
3%
33%
71%
43%
35%
39%
35%
52%
33%
58%
181%
54%
104%
14,586,644,116
13,921,866,445
664,777,671
16,412,321,785
(630,000,000)
16,568,551,222
473,770,563
26%
-10%
27%
26%
41%
38%
41%
44%
45%
39%
52%
32%
33%
25%
57%
64%
21%
14,586,644,116
16,412,321,785
736,000,000
196,720,146
121,880,585
1,054,600,731
129,367,550
197,470,199
326,837,749
-
15,641,244,847
16,739,159,534
11%
-9%
13%
25%
7673%
538%
43%
45%
32%
57%
10%
30%
36%
-3%
16%
14%
10%
43%
250%
8%
786%
25%
12%
53%
0%
-88%
16%
32%
75%
0%
44%
37%
0%
96%
0%
245%
13%
25%
43%
43%
33%
54%
FOR THE YEARS- 2013, 2012, 2011, 2010, 2009 and 2008
Particulars
Investments Income
Prefit Paid on deposits
Net Investment Income
Income from Investment in shares and securities
Commussion, Exchange and Brokerage
Other Operating Income
2013
BDT
2012
BDT
18,277,686,531
(14,597,553,390)
3,680,133,141
235,670,968
326,776,987
167,015,629
729,463,584
4,409,596,725
(2,383,876,943)
2,025,719,782
(496,600,000)
1,529,119,782
(760,000,000)
769,119,782
433,109,918
1,202,229,700
2011
BDT
13,339,668,730
(10,309,755,493)
3,029,913,237
98,997,129
404,240,245
201,533,344
704,770,718
3,734,683,955
(1,792,725,352)
1,941,958,603
(440,095,104)
1,501,863,499
(740,000,000)
761,863,499
371,651,119
1,133,514,618
305,823,956
20,000,000
374,035,200
699,859,156
502,370,544
300,372,700
60,000,000
340,032,000
700,404,700
433,109,918
1.87
1.85
2010
BDT
2009
BDT
2008
BDT
2013
BDT
8,747,763,443
(6,670,951,220)
2,076,812,223
81,967,646
403,310,160
173,662,888
658,940,694
2,735,752,917
(1,146,191,070)
1,589,561,847
(369,400,000)
1,220,161,847
(640,000,000)
580,161,847
399,840,641
980,002,488
5,547,047,795
(4,125,826,500)
1,421,221,295
264,208,027
282,561,956
117,216,660
663,986,643
2,085,207,938
(881,607,207)
1,203,600,731
(220,000,000)
983,600,731
(435,000,000)
548,600,731
277,961,056
826,561,787
4,348,674,553
(3,333,800,367)
1,014,874,186
53,510,527
194,631,419
64,617,576
312,759,522
1,327,633,708
(576,795,959)
750,837,749
(104,000,000)
646,837,749
(320,000,000)
326,837,749
80,490,857
407,328,606
244,032,369
364,320,000
608,352,369
371,650,119
196,720,146
230,000,000
426,720,146
399,841,641
129,367,550
129,367,550
277,961,056
37,920,751
37,920,751
80,490,857
1.42
7.35
1.71
Exhibit -4.2
2.33
3,141,799,470
(2,939,155,779)
202,643,691
202,345,834
133,384,184
34,409,250
370,139,268
572,782,959
(383,179,206)
189,603,753
189,603,753
(85,321,689)
104,282,064
14,129,544
118,411,608
Changes in BDT
2011
BDT
2012
BDT
4,938,017,801
(4,287,797,897)
650,219,904
136,673,839
(77,463,258)
(34,517,715)
24,692,866
674,912,770
(591,151,591)
83,761,179
(56,504,896)
27,256,283
(20,000,000)
7,256,283
61,458,799
68,715,082
4,591,905,287
(3,638,804,273)
953,101,014
17,029,483
930,085
27,870,456
45,830,024
998,931,038
(646,534,282)
352,396,756
(70,695,104)
281,701,652
(100,000,000)
181,701,652
(28,189,522)
153,512,130
3,200,715,648
(2,545,124,720)
655,590,928
(182,240,381)
120,748,204
56,446,228
(5,045,949)
650,544,979
(264,583,863)
385,961,116
(149,400,000)
236,561,116
(205,000,000)
31,561,116
121,879,585
153,440,701
5,451,256
(40,000,000)
34,003,200
(545,544)
69,260,626
56,340,331
60,000,000
(24,288,000)
92,052,331
61,459,799
0.02
0.15
2010
BDT
2009
BDT
2013
%
Changes in Percentage
2012
2011
2010
%
%
%
2009
%
1,198,373,242
(792,026,133)
406,347,109
210,697,500
87,930,537
52,599,084
351,227,121
757,574,230
(304,811,248)
452,762,982
(116,000,000)
336,762,982
(115,000,000)
221,762,982
197,470,199
419,233,181
1,206,875,083
(394,644,588)
812,230,495
(148,835,307)
61,247,235
30,208,326
(57,379,746)
754,850,749
(193,616,753)
561,233,996
(104,000,000)
457,233,996
(234,678,311)
222,555,685
66,361,313
288,916,998
37.02%
41.59%
21.46%
138.06%
-19.16%
-17.13%
3.50%
18.07%
32.98%
4.31%
12.84%
1.81%
2.70%
0.95%
16.54%
6.06%
52.49%
54.55%
45.89%
20.78%
0.23%
16.05%
6.96%
36.51%
56.41%
22.17%
19.14%
23.09%
15.63%
31.32%
-7.05%
15.66%
57.70%
61.69%
46.13%
-68.98%
42.73%
48.16%
-0.76%
31.20%
30.01%
32.07%
67.91%
24.05%
47.13%
5.75%
43.85%
18.56%
27.56%
23.76%
40.04%
393.75%
45.18%
81.40%
112.30%
57.06%
52.85%
60.30%
111.54%
52.06%
35.94%
67.85%
245.3%
102.9%
38.41%
13.43%
400.8%
-73.55%
45.92%
87.79%
-15.50%
131.8%
50.53%
296.0%
241.2%
275.05%
213.4%
469.7%
244.0%
47,312,223
134,320,000
181,632,223
(28,191,522)
67,352,596
230,000,000
297,352,596
121,880,585
91,446,799
91,446,799
197,470,199
1.81%
-66.67%
10.00%
-0.08%
15.99%
23.09%
-6.67%
15.13%
16.54%
24.05%
58.40%
42.56%
-7.05%
52.06%
229.9%
43.85%
241.2%
241.2%
245.3%
(0.62)
0.90
0.95%
8.53%
-26.64%
63.66%
-80.67%
(5.93)
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 68
changes in both money amount and percentage of data across the years.
Following two formulas are used in comparative financial statements
analysis:
(%) =
amount refers the previous periods amount. For example year 2012 is the
base period for year 2013 and 2011 is for 2012.
statement over year 2009-2013. I have just used the major lines or bold
lines of the comparative balance sheet of FSIBL for analysis.
40,000,000,000
35,000,000,000
30,000,000,000
25,000,000,000
20,000,000,000
15,000,000,000
10,000,000,000
5,000,000,000
Current Assets
Fixed Assets
Current Liabilities
Long-Term Liabilities
2009
2010
2011
2012
2013
Exhibit -4.3: BDT Changes over the Years Percentage Changes over the
Years in Balance Sheet items
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 69
liabilities were decreased from year 2009 to 2010, because at that period
great economic recession were arrived in the world. For that reason the
investments and deposits of FSIBL were decreased. But in 2011 both assets
and liabilities were increasing and that trend was stable to 2012 and in
2013 the indexes were dropped again. That refers the bank is being matured
from growing position. On the other hand, current liability is higher than
current asset which refers FSIBLs deposit collection is increasing
significantly than loan sanctioning. Fixed asset is higher than a current asset
which means the bank has invested for its expansion and invested more for
long term loans. From 2011 the bank starts to take long-term liabilities.
First Security Islami Bank Limited
Percentage Changes in Comparative Balance Sheet
2013 2012 2011 2010 2009
Particulars
%
%
%
%
%
Current Assets
36%
64% 111% 19% 34%
Fixed Assets
21%
37%
32% 35% 58%
Total Assets
25%
43%
43% 33% 54%
Current Liabilities
26%
41%
45% 32% 57%
Long-Term Liabilities
11% 7673%
Total Liabilities
25%
43%
45% 32% 57%
Total Shareholders' Equity
14%
25%
16% 37% 13%
Total Liabilities and Equity
25%
43%
43% 33% 54%
Exhibit -4.4: Percentage Changes over the Years of Balance Sheet items
Interpretation: Both assets and liabilities were higher at percentage of
54% in 2009 but it dropped to 33% in 2010. From year 2011 the percentage
was increased to 43% than previous year and in 2011 current asset is
significantly increased to 111%. It indicates FSIBL has efficiently recovered
the losses of the year 2010 and made a sustainable and positive flow in asset
2013 FSIBL could not grip its sustainability and the percentage was fell
down to 25% in total asset and liability.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 70
shows the changes in both taka amount and percentage of particulars of the
statement over year 2009-2013. So, one can easily understand the changes
of every element of the statement. Here I have illustrated only the total
operating income and net profit after tax. Identifying the changes in
operating income and net profit is the main objective for a banks income
998,931,038
222,555,685 221,762,982
2009
2010
674,912,770
650,544,979
31,561,116
2011
181,701,652
2012
7,256,283
2013
Interpretation: From exhibit -4.5, it is seemed that in years 2009 and 2010
both total operating income and net profit were increased compare to the
previous years operating income and net profit, and the trend of these
increments were almost same. But, in 2011 FSIBL couldnt hold the speed of
profit is high than previous year. The increment of total operating income in
2012 is significant which has broken all the previous years records, but the
net profit was not increased by balancing with the operating income. In
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 71
2013 the increment has become slow again. The high to low increment
indicates FSIBL is going to mature stage from growth stage. This lower
increment in 2012 and 203 not means that the banks income and profit is
decreased, because it shows the changes from one year to another year in
operating income and net profit.
Now, I illustrate the percentage changes of total operating income and net
profit over the years.
Percentage changes
250.0%
200.0%
150.0%
100.0%
50.0%
0.0%
2009
131.8%
213.4%
2010
57.06%
67.85%
2011
31.20%
5.75%
2012
36.51%
31.32%
2013
18.07%
0.95%
downward from 2009 to 2011. It refers the net increment from one year to
another year is reducing but not in total. Net increment or changes in total
operating income from 2008 to 2009 is 131.8%, from 2009 to 2010 is
57.06%, from 2010 to 2011 is 31.20%, from 2011 to 2012 is 36.51% and
from 2012 to 2013 is 18.07%. On the other hand, the net profit changes
from 2008 to 2009 is 213.4%, from 2009 to 2010 is 67.85%, from 2010 to
2011 is 5.75%, from 2011 to 2012 is 31.32% and 2012 to 2013 is 0.95%. In
2010 net profit was increased 67.85% on total operating income of 57.06%;
it indicates FSIBLs non-operating expenses were less at that period but in
2011 net profit was increased only 5.75% on total operating income of
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 72
year, the index dropped again in 2013. The fluctuation of the growth of net
increment is was high from 2009 to 2011 and the fluctuation rate was slow
from 2011 to 203, it means the bank is going to a mature stage.
To make clearer about total operating income and net profit of FSIBL I have
used actual data from the income statement, and illustrate them again.
5,000,000,000
4,500,000,000
4,000,000,000
3,500,000,000
2,500,000,000
2,085,207,938
2,000,000,000
1,500,000,000 1,327,633,708
500,000,000
-
3,734,683,955
2,735,752,917
3,000,000,000
1,000,000,000
4,409,596,725
326,837,749
2009
548,600,731 580,161,847
2010
2011
761,863,499 769,119,782
2012
2013
Exhibit -4.7: Total Operating Income and Net Profit over the Years
Interpretation: Exhibit -4.7 presents the total operating income and net
profit from FSIBLs income statements. It does not show the net changes in
operating income and net profit. In the graph is has seemed that both
operating income and net profit are increase year by year. So, it indicates
FSIBL is progressing in its operation and profit generation.
So, we cannot tell FSIBL is doing bad or good in operation by seeing the net
changes of total operating income and net profit over the years. Net changes
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 73
successive period, not the previous period of analysis period. Trend analysis
is generally used for income statements analysis. Following formula is used
for trend analysis:
(%) =
Here I have analyzed the trend of FSIBLs income and expenses. So I have
used the banks income statements. I have used 2008 as base period (year)
for the following five years. Exhibit -4.8 is used for trend analysis.
FOR THE YEARS- 2013, 2012, 2011, 2010, 2009 and 2008
Particulars
Investments Income
Prefit Paid on deposits
Net Investment Income
Income from Investment in shares and securities
Commussion, Exchange and Brokerage
Other Operating Income
2013
BDT
2012
BDT
18,277,686,531
(14,597,553,390)
3,680,133,141
235,670,968
326,776,987
167,015,629
729,463,584
4,409,596,725
(2,383,876,943)
2,025,719,782
(496,600,000)
1,529,119,782
(760,000,000)
769,119,782
433,109,918
1,202,229,700
2011
BDT
13,339,668,730
(10,309,755,493)
3,029,913,237
98,997,129
404,240,245
201,533,344
704,770,718
3,734,683,955
(1,792,725,352)
1,941,958,603
(440,095,104)
1,501,863,499
(740,000,000)
761,863,499
371,651,119
1,133,514,618
305,823,956
20,000,000
374,035,200
699,859,156
502,370,544
300,372,700
60,000,000
340,032,000
700,404,700
433,109,918
1.87
1.85
2010
BDT
2009
BDT
2008
BDT
2013
%
8,747,763,443
(6,670,951,220)
2,076,812,223
81,967,646
403,310,160
173,662,888
658,940,694
2,735,752,917
(1,146,191,070)
1,589,561,847
(369,400,000)
1,220,161,847
(640,000,000)
580,161,847
399,840,641
980,002,488
5,547,047,795
(4,125,826,500)
1,421,221,295
264,208,027
282,561,956
117,216,660
663,986,643
2,085,207,938
(881,607,207)
1,203,600,731
(220,000,000)
983,600,731
(435,000,000)
548,600,731
277,961,056
826,561,787
4,348,674,553
(3,333,800,367)
1,014,874,186
53,510,527
194,631,419
64,617,576
312,759,522
1,327,633,708
(576,795,959)
750,837,749
(104,000,000)
646,837,749
(320,000,000)
326,837,749
80,490,857
407,328,606
244,032,369
364,320,000
608,352,369
371,650,119
196,720,146
230,000,000
426,720,146
399,841,641
129,367,550
129,367,550
277,961,056
37,920,751
37,920,751
80,490,857
806.48%
1845.58%
624.13%
792.11%
1847.02%
538.09%
1.71
1.61
14.21
7.35
25.43%
25.19%
Exhibit -4.8
3,141,799,470
(2,939,155,779)
202,643,691
202,345,834
133,384,184
34,409,250
370,139,268
572,782,959
(383,179,206)
189,603,753
189,603,753
(85,321,689)
104,282,064
14,129,544
118,411,608
Percentage Changes
2012
2011
2010
%
%
%
581.76%
424.59%
278.43%
176.56%
496.66%
350.77%
226.97%
140.37%
1816.06% 1495.19% 1024.86% 701.34%
116.47%
48.92%
40.51%
130.57%
244.99%
303.06%
302.37%
211.84%
485.38%
585.70%
504.70%
340.65%
197.08% 190.41% 178.03% 179.39%
769.85% 652.02% 477.62% 364.05%
622.13%
467.86%
299.13%
230.08%
1068.40% 1024.22% 838.36% 634.80%
806.48% 792.11% 643.53% 518.77%
890.75%
867.31%
750.10%
509.84%
737.54% 730.58% 556.34% 526.07%
3065.28% 2630.31% 2829.82% 1967.23%
1015.30% 957.27% 827.62% 698.04%
643.53%
518.77%
1604.27% 1125.29%
461.73% 496.75%
23.21%
21.95%
2009
%
138.41%
113.43%
500.82%
26.45%
145.92%
187.79%
84.50%
231.79%
150.53%
396.00%
341.15%
375.05%
313.42%
569.66%
343.99%
341.15%
341.15%
345.33%
193.34%
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 75
From exhibit -4.8, I have used the data of total operating income, total
operating expenses and net profit. I have took the percent changes from
exhibit -4.8 and put them in a line graph to show the trend of total operating
income, total operating expenses and net profit of FSIBL.
900.00%
800.00%
700.00%
600.00%
500.00%
400.00%
300.00%
200.00%
100.00%
0.00%
2009
Total Operating Income
231.79%
Total Operating Expenses 150.53%
Net Profit
313.42%
2010
364.05%
230.08%
526.07%
2011
477.62%
299.13%
556.34%
2012
652.02%
467.86%
730.58%
2013
769.85%
622.13%
737.54%
income, total expenses and net profit from exhibit -4.8 in line graph. It
reveals that the trend line for total operating income consistently exceeds
the total operating expenses. Moreover that magnitude of the difference has
consistently grown. This result bodes well for FSIBL because its operating
expenses are not much increased than its operating income. The bank shows
an ability to control its expenses as expands. On the other hand, the trend
line for net profit exceeds the total operating income in all years except
2013 because net profit is increased more rapidly than total operating
expenses and increased the revenues. The line graph also reveals a
consistent increase in each of these accounts over the years, which is a
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 76
income statements and common-size balance sheets for five years. The
common-size statements of FSIBL are prepared by using the following
formula.
(%) =
shown comparatively from 2009 to 2013 in exhibit -4.10 and exhibit -4.11
accordingly.
Particulars
PROPERTY AND ASSETS
Current Assets
Cash
Balance With Bank and Financial Institutions
Investments in Shares & Securities
Other Assets
Fixed Assets
2013
BDT
40,473,177,156
11,549,381,969
14,379,093,084
2,723,632,786
11,821,069,317
2012
BDT
29,705,058,836
10,528,144,967
10,785,716,061
3,187,223,270
5,203,974,538
18,151,650,528
7145564652
5699804595
1630019092
3676262189
121,349,799,689
4,271,569,450
114,601,798,177
2,476,432,062
161,822,976,845
100,028,114,252
1,726,169,450
96,304,228,588
1,997,716,214
Total Assets
LIABILITIES AND CAPITAL
Liabilities:
Current Liabilities
Long-Term Liabilities
Total Liabilities
Capital/ Shareholders' Equity
Paid-up Capital
Statutory Reserve
Other Reserve
Assets Revaluation Reserves
Retained Earnings
2011
BDT
2010
BDT
2009
BDT
8,587,867,603
4857542203
1036199077
524937861
2169188462
2013
%
7,202,722,793
5033532439
731150321
241026032
1197014001
Common-size Percent
2012
%
2011
%
2010
%
2009
%
25.01%
7.14%
8.89%
1.68%
7.30%
22.90%
8.12%
8.31%
2.46%
4.01%
19.94%
7.85%
6.26%
1.79%
4.04%
13.50%
7.64%
1.63%
0.83%
3.41%
15.01%
10.49%
1.52%
0.50%
2.49%
129,733,173,088
72,861,248,561
2414569450
69467328284
979350827
91,012,899,089
55,031,930,196
2334416700
52123903164
573610332
63,619,797,799
40,775,830,159
1673477998
38725874774
376477387
47,978,552,952
74.99%
2.64%
70.82%
1.53%
100.00%
77.10%
1.33%
74.23%
1.54%
100.00%
80.06%
2.65%
76.33%
1.08%
100.00%
86.50%
3.67%
81.93%
0.90%
100.00%
100.00%
152,709,588,439
3,950,000,000
139,520,955,783
9,238,632,656
121,650,118,339
4,400,000,000
109,905,568,871
7,344,549,468
86,432,834,521
3200000000
78145045008
5087789513
59,699,786,313
56344959167
3354827146
45,113,142,197
42423092722
2690049475
94.37%
2.44%
86.22%
5.71%
93.77%
3.39%
84.72%
5.66%
94.97%
3.52%
85.86%
5.59%
93.84%
0.00%
88.57%
5.27%
94.03%
0.00%
88.42%
5.61%
155,389,377,281
124,068,693,306
86,463,948,521
59,699,786,313
45,113,142,197
96.02%
95.63%
95.00%
93.84%
94.03%
4,114,387,200
1,310,398,870
114,061,074
392,381,876
502,370,544
6,433,599,564
3,740,352,000
1,004,574,914
84,000,000
402,442,950
433,109,918
5,664,479,782
2.54%
0.81%
0.07%
0.24%
0.31%
3.98%
2.88%
0.77%
0.06%
0.31%
0.33%
4.37%
3.74%
0.77%
0.03%
0.41%
0.05%
5.00%
4.77%
0.72%
0.04%
0.00%
0.63%
6.16%
4.79%
0.55%
0.05%
0.00%
0.58%
5.97%
2,679,788,842
179,788,842
2,500,000,000
161,822,976,845
2,418,574,967
198,574,967
2,220,000,000
129,733,173,088
31,114,000
31114000
-
3400320000
704202214
24000000
371537509
48890845
4,548,950,568
3036000000
460169845
24000000
399841641
3,920,011,486
91,012,899,089
63,619,797,799
Exhibit -4.10
2300000000
263449699
24000000
277961056
2,865,410,755
47,978,552,952
1.66%
0.11%
1.54%
100.00%
1.86%
0.15%
1.71%
100.00%
0.03%
0.03%
0.00%
100.00%
0.00%
0.00%
0.00%
100.00%
84.99%
3.49%
80.71%
0.78%
0.00%
0.00%
0.00%
100.00%
Common-size Percent
Particulars
Revenues
2013
BDT
2012
BDT
2011
BDT
2010
BDT
2009
BDT
2013
%
2012
%
2011
%
2010
%
2009
%
Investments Income
Income from Investment in shares and securities
Commussion, Exchange and Brokerage
Other Operating Income
18,277,686,531
235,670,968
326,776,987
167,015,629
19,007,150,115
13,339,668,730
98,997,129
404,240,245
201,533,344
14,044,439,448
8,747,763,443
81,967,646
403,310,160
173,662,888
9,406,704,137
5,547,047,795
264,208,027
282,561,956
117,216,660
6,211,034,438
4,348,674,553
53,510,527
194,631,419
64,617,576
4,661,434,075
96.16%
1.24%
1.72%
0.88%
100.00%
94.98%
0.70%
2.88%
1.43%
100.00%
92.99%
0.87%
4.29%
1.85%
100.00%
89.31%
4.25%
4.55%
1.89%
100.00%
93.29%
1.15%
4.18%
1.39%
100.00%
14,597,553,390
2,383,876,943
16,981,430,333
10,309,755,493
1,792,725,352
12,102,480,845
6,670,951,220
1,146,191,070
7,817,142,290
4,125,826,500
881,607,207
5,007,433,707
3,333,800,367
576,795,959
3,910,596,326
76.80%
12.54%
89.34%
73.41%
12.76%
86.17%
70.92%
12.18%
83.10%
66.43%
14.19%
80.62%
71.52%
12.37%
83.89%
2,025,719,782
1,941,958,603
1,589,561,847
1,203,600,731
750,837,749
10.66%
13.83%
16.90%
19.38%
16.11%
496,600,000
760,000,000
1,256,600,000
440,095,104
740,000,000
1,180,095,104
369,400,000
640,000,000
1,009,400,000
220,000,000
435,000,000
655,000,000
104,000,000
320,000,000
424,000,000
2.61%
4.00%
6.61%
3.13%
5.27%
8.40%
3.93%
6.80%
10.73%
3.54%
7.00%
10.55%
2.23%
6.86%
9.10%
Total Revenue
Net Profit
769,119,782
761,863,499
580,161,847
Exhibit -4.11
548,600,731
326,837,749
4.05%
5.42%
6.17%
8.83%
7.01%
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 79
relations that stand out on both a magnitude and percent are shown in column
graph.
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Investments in Businesses
Deposits and Other Accounts
Long-Term Liabilities
Fixed Assets
Cash
2009
80.71%
88.42%
0.00%
0.78%
10.49%
2010
81.93%
88.57%
0.00%
0.90%
7.64%
2011
76.33%
85.86%
0.03%
1.08%
7.85%
2012
74.23%
84.72%
1.86%
1.54%
8.12%
2013
70.82%
86.22%
1.66%
1.53%
7.14%
2012 and decreased from 74.23% to 70.82% in the period of 2012-2013. This
trend indicates the bank efficiently recovering its invested money. Deposits are
fluctuating from 84.72% to 88.57%, it refers the bank is able to collect enough
deposit from customers and more than 84% of its investment are financed by
deposit accounts. The banks fixed assets and long-term liabilities are remained
less than 2% across 2009-2013 that means the FSIBL does not keep idle asset.
Cash is decreased from 10.49% to 7.64%, increased from 7.64% to 7.85%,
increased from 7.85% to 8.12% and decreased from 8.12% to 7.14% across the
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 80
and largest portion of its liabilities is covered by deposit from customers which
is the most important source of fund for a bank.
Cash
Balance With Bank and
Financial Institutions
Investments in Shares &
Securities2
Other Assets (Current)
Investments in Shares &
Securities (Fixed)
Investments in Businesses
Fixed Assets (Premises,
Furniture & Fixtures)
2009
10.49%
2010
7.64%
2011
7.85%
2012
8.12%
2013
7.14%
0.50%
0.83%
1.79%
2.46%
1.68%
1.52%
2.49%
3.49%
80.71%
0.78%
1.63%
3.41%
3.67%
81.93%
0.90%
6.26%
4.04%
2.65%
76.33%
1.08%
8.31%
4.01%
1.33%
74.23%
1.54%
8.89%
7.30%
2.64%
70.82%
1.53%
income for a bank. Second large area is covered by cash from 7.14% to 10.49%
for maintaining adequate liquidity to meet instant needs and to operate regular
activities. Fixed assets including premises, furniture and Fixtures are covering
the smallest portion covering 0.78% to 1.54% of total assets.
Long-term
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 81
investment provides high profit. From this view point FSIBL has well form to
generate profits.
Here, I have discussed about the proportion of particular liabilities and equity
in the perspective of total liabilities and equity. So, by using the percent related
to liabilities and equity from Exhibit -4.10 following column graph is drawn.
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2009
Placement from Banks &
0.00%
Financial Institutions (Current)
Deposits and Other Accounts
88.42%
Other Liabilities (Current)
5.61%
Placement from Banks &
0.00%
Financial Institutions (Fxied)
Mudaraba Subordinated Bond
0.00%
Shareholders' Equity
5.97%
2010
0.00%
2011
3.52%
2012
3.39%
2013
2.44%
88.57%
5.27%
85.86%
5.59%
84.72%
5.66%
86.22%
5.71%
0.00%
6.16%
0.00%
5.00%
1.71%
4.37%
1.54%
3.98%
0.00%
0.03%
0.15%
0.11%
Exhibit -4.14: Portion of Particular Liability and Equity on Total Liabilities and
Equity
Interpretation: Exhibit -4.14 shows that FSIBLs short-term liabilities are more
than long-term liabilities where the largest portion is covered by deposit
and equity across the five years from 2009 to 2013. It indicates FSIBL collets
enough deposits from customers and successfully holds its customers or
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 82
from bank and other financial institutions at 0.03% on total liabilities and
equity in 2011, 0.15% in 2012 and 0.11% in 2013 as long-term liabilities, and
borrowed 3.52% in 2011, 3.39% in 2012 and 2.44% in 2013 as short-term
liabilities. FSIBL collects fund by issuing subordinated bond in 2012 at 1.71%
and in 2013 at 1.54%. It refers FSIBL try to maintain low long-term liabilities
and meet the debt from other banks and financial institutions.
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Net Profit
Tax
Provisions
Operating Expenses
2009
7.01%
6.86%
2.23%
83.89%
2010
8.83%
7.00%
3.54%
80.62%
2011
6.17%
6.80%
3.93%
83.10%
2012
5.42%
5.27%
3.13%
86.17%
2013
4.05%
4.00%
2.61%
89.34%
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 83
profit starts to decrease from 2010. So, FSIBL should control the operating
costs excluding the depositors profits. Thus, the bank should properly apply
the green banking and make maximum utilization of technology and
resources to control the operating cost and for increase the net profit.
ratio to analyze the financial situation of a company for their decision making
purpose. Here, this report contains the most common ratios and analyze to
evaluate the operating and financial performance of First Security Islami Bank
Limited (FSIBL) over the years 2009, 2010, 2011, 2012 and 2013.
use its assets and manage its operations to quickly convert its assets into cash.
These ratios show how quick FSIBL is able to convert its assets into cash.
Here, the current ratio, acid-test ratio, accounts receivable turnover ratio and
days sales uncollectable ratio are shown below respectively for knowing the
liquidity and efficiency of First Security Islami Bank Limited.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 84
Current ratio is measure here to know how FSIBL meets its current liabilities
through its current assets.
Current Ratio =
Years
2009
2010
2011
2012
2013
Current
7,202,722,793
8,587,867,603 18,151,650,528
29,705,058,836
40,473,177,156
Assets
Current
45,113,142,197 59,699,786,313 86,432,834,521 121,650,118,339 152,709,588,439
Liabilities
Results
0.16
0.14
0.21
0.24
0.27
0.30
0.25
0.20
0.15
0.16
0.10
0.05
-
2009
0.14
2010
0.21
2011
Current Ratio
0.24
2012
0.27
2013
FSIBL had current assets of 0.27 taka current liabilities of 1 taka. It indicates
FSIBL has not enough ability to pay off its all current liabilities by its current
assets. But, the trend tells that FSIBL will be able to achieve enough current
assets to pay off current liabilities in future. On the other hand, maintaining
low current asset is better for a bank or financial institution to earn
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 85
maximum profit, because current asset earns low profit. In fact, higher
current ratio is better for the institution because its higher ratio helps to
prevent default. This ratio should be at least 1:1.
4.5.1.2: Acid-test (Quick) Ratio
The acid-test ratio measures a companys ability to meet its short-term
obligations with its most liquid assets. This ratio is computed by dividing
the sum of cash, short-term investment and net receivables by current
liabilities.
Years
Cash and
equivalents +
Short-term
investment +
Current
receivables
(net)
Current
Liabilities
Results
2009
6,005,708,792
45,113,142,197
0.13
2010
2011
2012
2013
6,418,679,141
14,475,388,339
24,501,084,298
28,652,107,839
0.11
0.17
59,699,786,313
86,432,834,521
121,650,118,339
0.20
152,709,588,439
0.2
0.15
0.1
0.05
0.13
2009
0.11
2010
0.20
0.17
2011
2012
Acid-test Ratio
0.19
2013
the trend of acid-test ratio of FSIBL was fluctuating over the years. The
0.19
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 86
common guideline for applicable acid-test ratio is 1:1, but FSIBLs acid-test
ratio is very poor than the guided ratio. So, FSIBL has not enough ability to
meet immediate current obligations by its most liquid assets. But, other factors
should be considered such as FSIBL includes the deposits in current liabilities
and all investment in businesses in long-term assets, that reasons affect the
ratio greatly. An organizations acid-test ratio depends on the system of its
maintaining assets and liability according to the duration.
4.5.1.3: Accounts Receivable Turnover
It indicates how frequently a company collects its receivable during an
2009
2010
2011
2012
2013
4,661,434,075 6,211,034,438 9,406,704,137 14,044,439,448 19,007,150,115
370,873,467
12.57 times
503,660,842
12.33 times
651,235,583
14.44 times
641,202,006
21.90 times
25
20
15
10
5
0
12.57
2009
12.33
2010
14.44
2011
21.90
2012
21.67
2013
876,957,172
21.67 times
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 87
365
Years
2009
2010
2011
2012
2013
Account
225,150,258
782,171,425
520,299,740
762,104,271
991,810,073
Receivables
4,661,434,075 6,211,034,438 9,406,704,137 14,044,439,448 19,007,150,115
Net Sales
365
365
365
365
365
() Days
Results
18 days
46 days
20 days
20 days
46
50
40
30
20
10
20
18
2009
2010
Days
2011
20
2012
19
2013
19 days
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 88
Interpretation: Days sales uncollected for FSIBL in 2009 were 18 days. This
means that it will take about 18 days to collect cash after creating accounts
receivable. Days sales uncollected in 2010 were 46 days which is higher than
2009. The low value of days sales uncollected is expected and low value means
a company is strong in receivable collection. In 2011 and 2012 the value has
reduced to 20 days and in 2013 it has come about 19 days. The trend indicates
FSIBL is becoming stronger gradually in collecting receivables.
4.5.1.5: Total Asset Turnover
Total asset turnover reflects a companys ability to use its assets to generate
Years
Net Sales
Average
Total Assets
Results
2009
4,661,434,075
2010
6,211,034,438
2011
9,406,704,137
2012
14,044,439,448
2013
19,007,150,115
0.12 times
0.11 times
0.12 times
0.13 times
0.13 times
0.13
0.125
0.12
0.115
0.11
0.105
0.1
0.12
2009
0.11
2010
0.12
2011
0.13
2012
0.13
2013
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 89
Interpretation: FSIBLs total asset turnover express that it turned its assets
over 0.13 times during the year 2013. This means that each Tk. 1.00 of
assets earns Tk. 0.13 of revenues. Is a total asset turnover of 0.13 is good or
bad? It is safe to say that all companies desire a high total asset turnover.
Like many ratio analyses, however a companys total asset turnover must be
being more efficient in operation and earns revenues by using its total asset.
Interpreting the total asset turnover also requires an understanding of
This relation is reflected in debt and equity ratios. Here FSIBLs debt ratio is
measured to assess its total liability as a percent of total assets, and equity
ratio is measured to assess its total equity as a percent of total assets. These
ratios are calculated by using two different formulas.
Debt Ratio =
100
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 90
Years
Total
Liabilities
Total
Assets
Results
2009
45,113,142,197
2010
2011
2013
Equity Ratio =
Years
Total
Equity
Total
Assets
Results
2012
2009
2,865,410,755
47,978,552,952
5.97%
2010
2011
3,920,011,486
63,619,797,799
6.16%
100
4,548,950,568
2012
5,664,479,782
2013
6,433,599,564
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
Equity Ratio
Debt Ratio
2009
5.97%
94.03%
2010
6.16%
93.84%
2011
5.00%
95.00%
2012
4.37%
95.63%
2013
3.98%
96.02%
Interpretation: In exhibit -4.28, the red color area indicates the portion of
total asset contributed by owners and blue color area indicates the portion
maximum area is covered by debt ration that means FSIBLs lion share of
total asset is contributed by creditors. FSIBLs debt ratio was 94.03% and
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 91
equity ratio was 50.97% in 2009 and 2013 FSIBLs debt ratio came to
96.02% and equity ratio came to 3.98%. The trend of debt and equity ratios
tells that the debt ratio is in increasing trend and equity ratio is in
decreasing trend which is not a good sign for any general business or
company. But, for a banking company that trend is not a bad sign. Because
as a financial institution a bank collects deposit from customers as debt or
liability and invests or lends that money in businesses as asset. So, as a bank
FSIBLs investment is largely depended on liability and profit is depended in
Years
Income before
Interest
Expense and
Income Taxes
Interest
Expense
Results
2009
2010
2011
2012
2013
4,084,638,116
5,329,427,231
8,260,513,067
12,251,714,096
16,623,273,172
3,333,800,367
1.23 times
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 92
1.3
1.2
1.1
1
1.29
1.23
2009
2010
1.24
2011
1.19
2012
1.14
2013
times, FSIBL earns 1.23 times in 2009, 1.29 times in 2010, 1.24 times in
2011, 1.19 times in 2012 and 1.14 times in 2013. But, these ratios are not
too bad, because is always earns more than 1 times each year which is
necessary for safety. The trend time interest earned of FSIBL has started
downward from the year 2010. It indicates FSIBL is in danger line to pay
interest expenses.
assets efficiently to produce profits. Here, the profitability ratios of FSIBL are
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 93
Net Sales
Results
2009
2010
326,837,749
4,348,674,553
7.52%
2011
548,600,731
5,547,047,795
9.89%
100
580,161,847
8,747,763,443
6.63%
2012
761,863,499
13,339,668,730
5.71%
2013
769,119,782
18,277,686,531
4.21%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2009
Profit Margin Ratio 7.52%
2010
9.89%
2011
6.63%
2012
5.71%
2013
4.21%
Interpretation: In year 2009 the result was 7.52% that means in Tk. 100 of
net income FSIBL earns net profit of Tk. 7.52. In the year 2010 FSIBLs profit
margin was increased to 9.89% and from the following year it started to
a percentage of the value of its total assets. It shows how profitable the bank
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 94
is related to its total assets. This ratio is calculated by dividing net income by
average total assets.
100
Years
2009
Net Income
Average Total
Assets
Results
2010
326,837,749
2011
548,600,731
2012
580,161,847
761,863,499
2013
769,119,782
1%
1%
1%
0%
1%
1%
0%
0%
2009
2010
0.75%
2011
0.69%
2012
0.53%
2013
from the debt which was the reasons for its low net profit as well as poor
Return on Assets (ROA). As per result, exhibit 4.34 shows that FSIBL had
ROA of 1% in the years 2009 and 2010 which was a low ROA. From 2011
ROA of FSIBL started decreasing gradually and in 2013 it came down to
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 95
0.53%. It means the management of the bank cannot efficiently used its
assets to generate profit.
100
Return on Equity =
Years
2009
Net Income
Total Shareholders'
Equity
Results
2010
326,837,749
2,865,410,755
11%
2011
548,600,731
580,161,847
2012
761,863,499
2013
769,119,782
14%
12%
10%
8%
6%
4%
2%
0%
11%
2009
14%
2010
13%
2011
13%
2012
Return on Equity
12%
2013
appeared that FSIBL earns in the years 2009, 2010, 2011, 2012 and 2013
returns from Tk. 100 invested by the shareholders was respectively 11%,
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 96
14%, 13%, 13% and 12%. In 2010 the banks ROE was high and higher
percentage is better for the bank as well as for shareholders. So, the
management of the bank had the ability to generate adequate returns from
the capital invested by the owners in 2010 than any other years which are
analyzed.
stock. This market measures use stock price, which reflects the markets or
publics expectations toward the company. This includes expectations of
both company return and risk as the market perceives it. Market prospects
ratios relate the market price of the companys common stock and the
financial statement figures.
value per share and reveals information about market expectations. The
price-earnings ratio is computed by dividing marked value (price) per share
by earning per share (EPS).
Price-Earnings Ratio =
Years
Market Value(price)Per
Share
Earnings Per Share
Results
2009
2010
2011
2012
2013
21.85
1.42
15.38 times
40.59
2.33
17.45 times
26.28
1.71
15.40 times
18.48
1.85
9.98 times
15.11
1.87
8.08 times
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 97
20
15
10
5
0
17.45
15.38
2009
2010
15.40
2011
Times
9.98
2012
8.08
2013
times, 9.98 times and 8.08 times. FSIBLs price-earnings ratio was very high
in 2010 and also low in 2013. The ratio was decreased from 2011 to 2013.
The high profit-earnings ratio indicates confidence for this bank, because it
suggests that its earnings are expected to grow in the future years. On the
other hand, the low profit-earnings ratio indicates that FSIBLs future
prospects for EPS growth are expected to be poor, so that investors do not
put a high value on the shares.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 98
2.50
2.00
1.50
1.00
0.50
0.00
1.42
2009
2.33
2010
2011
Taka
1.87
1.85
1.71
2012
2013
was lowest in the year 2009 which was Tk. 1.42 and highest in the year
2010 which was Tk. 2.33. In year 2011 EPS was decreased to Tk. 1.71. But,
from the year 2012 EPS was started to increase and that was Tk. 1.85, and in
year 2013 EPS was Tk. 1.87. The trend indicates EPS of FSIBL has started
increasing. So, it is a good point for FSIBL for attracting large investors in
this competitive era by earning profit on each share of stock.
analysis. From cash flow statement we can easily trace the real cash
generating capacity of a business. To understand the trend of FSIBLs cash
flow I have analyzed the five years cash flow statements of the bank. First I
have scratched the net and total cash flows generated by FSIBL over five
years.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 99
30,000,000,000
25,928,833,653
25,000,000,000
21,314,515,328
20,000,000,000
15,000,000,000
10,000,000,000
5,000,000,000
-
12,815,496,581
8,499,018,747
7,036,299,306
5,765,356,760 5,894,875,380
4,614,318,325
2,267,781,609
2009
129,518,620
2010
2011
2012
2013
Interpretation: In Exhibit -4.40, it has been seen that the total cash is
increased over five years but the net cash flow is fluctuating over the five
years. In 2010 and 2013 the net cash flow is dropped. In 2010 the bank has
generated enough cash from the profit and loss account related operating
deposits and liabilities compare to previous year which has decreased the
net cash flow. In this year the bank has spent much cash for investing
activities which were investment in share and securities, purchase of
property, plant and equipment. In year 2011 and 2012 both total cash and
net cash are increased. In year 2013 total cash has increased than previous
year but net cash has slowly increased than previous years.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 100
2009
2010
3,709,020,558
659,907,586
2011
2012
5,401,509,804
2013
6,798,328,792
7,575,992,726
(811,238,949)
(1,266,388,966)
(1,596,324,498)
(1,886,771,012)
(2,772,888,276)
2,267,781,609
129,518,620
7,036,299,306
8,499,018,747
4,614,318,325
(630,000,000)
736,000,000
3,231,114,000
3,587,460,967
(188,786,125)
From exhibit -4.41, it is appeared that FSIBL has generated enough cash
from operating activities over five years, but the trend of cash inflow was
fluctuating. Net cash inflow was high in year 2013 which is higher than
previous year. Investing activities cannot provide cash at any year; this head
had only used cash over the years. Financing activities provides cash in the
years 2010, 2011 and 2012.
Results
2009
100
2010
3,709,020,558
39,608,973,185
9%
2011
659,907,586
55,799,175,376
1%
2012
5,401,509,804
77,316,348,444
7%
2013
6,798,328,792
110,373,036,089
6%
7,575,992,726
145,778,074,967
FSIBLs cash flow on total assets ratio for several prior years in exhibit -4.42.
Results show that its 5% return is lowest in year 2013 than all but one of the
prior years returns. Its cash flow on total assets was highest of 9% in 2009.
FSIBLs cash flow on total assets has started to decrease from the year 2011.
5%
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 101
Chapter Five
Findings, Recommendation
and Conclusion
Findings,
Recommendation
and Conclusion
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 102
liabilities and equity, the banks liability was very high comparing with
2009, 2010, 2011, 2012 and 2013 consequently. This indicates the bank
was fail to control the cost in its operation or could not make adequate
investment of its liabilities, thus the liability was expertly higher than
the investment in years 2012 and 2013 where the most liquid assetcash was lower than previous years.
liquidity to pay its short-term debt and deposits. These ratios show
how quick First Security Islami Bank Ltd. is able to pay debt or convert
its assets into cash. I have discussed about current ratio, acid-test ratio,
accounts receivable turnover ratio and days sales uncollected ratio.
From the analysis of liquidity ratios I have found that the current ratio
of FSIBL was 0.16 in year 2009 but it was slightly decreased to 0.14 in
the year 2010. This ratio again increased in years of 2011, 2012 and
2013. The higher current ratio is better for the institution because the
higher ratio helps to prevent getting default. On the other hand FSIBL
was highly liquid in the year 2012 because its acid-test ratio or quick
ratio was 0.20 which was higher than the years of 2009, 2010, 2011 and
2013. FSIBLs acid-test ratio was higher in 2012 and 2013. It means
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 103
the years of 2012 and 2013 than years- 2009, 2010 and 2011. FSIBL
took highest time of 46 days to collect account receivable in year 2010,
but the days sales uncollected was decreased to 19 days in year 2013.
From these above information, it is cleared that FSIBLs liquidity
position is improving, but it was not enough good comparing with
industry.
Efficiency ratios determine the efficiency of using the banks assets and
year 2012 and year 2013 which was 0.13 times in both years. That
means FSIBL invested more on those assets which bring more revenues.
discussed about debt and equity ratio, and times interest earned ratio.
From the years 2009 to 2013 the debt to total assets ratio was high and
the equity to total assets was low. The higher debt to total assets bears
high risk for the company. So, FSIBL bears high risk to survive over a
long period of time and to meet its financial obligations. On the other
hand, the higher debt to total assets not only creates higher risk but also
increase profitability.
FSIBLs times interest earned ratio was high in year 2010 which was
1.29 times and that decreased to 1.14 times in year 2013. This means
revenues.
discussed are profit margin ratio, return on total assets and return on
equity. The profit margin ratio of FSIBL was high in year 2010 and it
was started to decrease from year 2011. FSIBLs lowest profit margin
was 4.21% in year 2013. FSIBLs return on total assets was high in the
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 104
years 2009 and 2010 which was 1%. The banks return on total assets
low in year 2013 which was 0.53%. FSIBLs return on equity was high
in year 2010 and low in year 2013. From the above discussion it is
could not operate properly its activities comparing the previous years.
So, it was failing to increase the profitability.
Market prospects ratios relate the observable market values like the
stock price with the book values obtained from the firms financial
statements. The market value ratios that I have used to analyzed are
Price Earnings Ratio
ratio was high in year 2010 comparatively than the last three years. The
ratio was decreased from 2011 to 2013. The P-E ratio was lowest in the
year 2013 which only 8.08 times. The high P-E ratio indicates a sign of
confidence for the bank, because it suggests that its earnings are
expected to grow in the future years. On the other hand, the low P-E
ratio indicates that the banks future prospects for EPS growth are
expected to be poor, so that investors do not put a high value on the
share. The EPS of FSIBL was taka 2.33 was high in year 2010 and it
decreased in year 2011 and increased from years 2012 to 2013 which
are taka 1.85 and taka 1.87 accordingly. So, it was a good point for
FSIBL for attracting large investors in the new competitive era by
earning profit on each share of stock.
Limited, Amborkhana Branch, Sylhet, I have found the borrowers were not
paying the installment timely, even the bank could not recover its money yet
from some powerful clients. These make losses for the bank and decrease the
profit. On the other hand, some depositors deposit their money for very short
period of time; even some of the depositors withdraw their money before the
maturity date. Thus, the bank cannot use the money for long-term investment
projects which earn high profits. For these reasons, the banks profitability is
decreasing.
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 105
5.2: Recommendations
First Security Islami Bank Limited has to concentrate to adequate
FSIBLs had fair solvency ratios in where it uses the debt most to
increase revenue rather than the equity. It may increase the risk for the
bank. So, it would be better for FSIBL to finance more equity to minimize
the risk.
Though there were higher profitability ratios in year 2010, FSIBL was
not successful in increasing its overall earnings performance because
earnings, FSIBL should concern about its profitability and improve its
operating polices for minimizing costs and increasing profits.
Though the EPS was increased in years 2012 and 2013 comparing to
year 2011, the overall market prospects ratios of FSIBL was decreasing
during the years 2011 to 2013. If it decreases over the years, investors
will not put high value on the shares issued by the bank. So the bank
should concern about this.
FSIBL should capture and hold those depositors who will agree to
deposit their money for long period of time. Then the bank can make
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 106
long-term investments and earn higher profits. FSIBL also should lend
the money to reliable clients and invest in profitable businesses.
5.3: Conclusion
By analyzing the financial statements as well as the ratios, it can be said that
First Security Islami Bank Limited gas been doing well in few sectors. If we see
the comparative analysis of balance sheet items, it is seemed that the current
liabilities are higher than assets. And all the assets and liabilities were in
increasing trend from year 2010 to 2012 and decreased from year 2012 to
2013. In the case of comparative income statement, most of time the net profit
was decreased ant it was fluctuating over the period. But, when compare overall
total operating income and net profit they were simply increased over the
increasing trend. Over the five years period of 2009 to 2013, the investments
were lower than the liabilities created by deposits and other debt accounts. The
most liquid asset cash was decreasing and fixed assets were increasing over the
by year. The liquidity ratios of FSIBL were increased most of the times which is
good for the bank. If we see the profitability position of the bank, it can easily
be said the Profit Margin, Return on Assets and Return on Equity were not so
good and its trend was downward. We can see the EPS ratio of FSIBL was
fluctuating and the P-E ratio was decreasing, so it is better to give more
market price of the share. Also when we have a look on the solvency ratios, we
can say that FSIBL should do their best to maintain their leverage ratios as all
these ratios shows that they have very high leverage and thus they also have a
higher risk. Besides this, they need to increase the amount of equity capital as
too much leverage may be associated with more risk and also it indicates the
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 107
References:
While preparing this report, I had to collect data from the annual reports of
FSIBL, different books related to Accounting and Finance, the website of FSIBL
and other websites and blogs. The references are given below:
[Internet
blog].
Available
<http://accountinginfo.com/financial-accounting-standards/asc-
from:
Annual report of First Security Islami Bank Limited -2009, 2010, 2011,
2012 and 2013.
Available
from:
<http://www.business-science-
First Security Islami Bank Limited (n. d.) Home Page [Internet], Home,
Products & Services, Smart Banking, Financial Information, Meet Us, CSR
[Internet
blog].
Available
from:
<http://www.duluth.umn.edu/~hrallis/guides/researching/litreview.ht
ml> [Accessed 13th November 2014].
<http://www.investopedia.com/terms/i/islamicbanking.asp>
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 108
Smriti Chand (n. d.) Commercial Banks [Internet Blog]. Available from:
<http://www.yourarticlelibrary.com/banking/commercial-banks/
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 109
Appendix
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 110
Acronyms
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 111
List of Exhibits
Exhibit No.
2.1
2.2
2.3
2.4
2.5
2.6
3.1
3.2
3.3
3.4
3.5
3.6
Particulars
Functions of Bank
Page No.
9
16
27
Shariah Board
17
41
44
47
48
52
53
54
3.7
Branches of FSIBL
4.1
(SWIFT)
63
4.3
67
4.4
68
70
4.2
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
BDT Changes over the Years Percentage Changes over the Years
Percentage Changes over the Years of Balance Sheet items
Percentage Changes over the Years of CIS Items
55
66
69
71
72
74
75
77
78
79
80
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 112
4.14
4.15
and Equity
4.16
Statements
4.17
4.18
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
Vertical
Analysis
of Common-size
Comparative
Income
81
82
Current Ratio
84
Acid-test Ratio
85
Current Ratio
Acid-test Ratio
Price-Earnings Ratio
Price-Earnings Ratio
84
85
86
86
87
87
88
88
90
90
90
91
91
93
93
94
94
95
95
96
97
98
99
100
100
F i n a n c i a l S t a t e m e n t s A n a l y s i s | 113
MAY
W
T
1
F
2
S
3
2015
SEPTEMBER
F
1
S
2
T
1
W
2
T
3
F
4
S
5
10
10
11
12
11
12
13
14
15
16
17
10
11
12
13
14
15
16
13
14
15
16
17
18
19
18
19
20
21
22
23
24
17
18
19
20
21
22
23
20
21
22
23
24
25
26
25
26
27
28
29
30
31
24
25
26
27
28
29
30
27
28
29
30
T
2
W
3
T
4
F
5
S
6
T
1
F
2
S
3
31
FEBRUARY
S
1
JUNE
M
2
T
3
W
4
T
5
F
6
S
7
OCTOBER
M
1
10
11
12
13
14
10
11
12
13
10
15
16
17
18
19
20
21
14
15
16
17
18
19
20
11
12
13
14
15
16
17
22
23
24
25
26
27
28
21
22
23
24
25
26
27
18
19
20
21
22
23
24
28
29
30
25
26
27
28
29
30
31
MARCH
S
1
JULY
M
2
T
3
W
4
T
5
F
6
S
7
NOVEMBER
W
1
T
2
F
3
S
4
S
1
M
2
T
3
W
4
T
5
F
6
S
7
10
11
12
13
14
10
11
10
11
12
13
14
15
16
17
18
19
20
21
12
13
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18
15
16
17
18
19
20
21
22
23
24
25
26
27
28
19
20
21
22
23
24
25
22
23
24
25
26
27
28
29
30
31
26
27
28
29
30
31
29
30
W
2
T
3
F
4
S
5
APRIL
S
AUGUST
T
W
1
T
2
F
3
S
4
DECEMBER
T
S
1
T
1
10
11
10
11
12
12
13
14
15
16
17
18
10
11
12
13
14
15
13
14
15
16
17
18
19
19
20
21
22
23
24
25
16
17
18
19
20
21
22
20
21
22
23
24
25
26
26
27
28
29
30
23
24
25
26
27
28
29
27
28
29
30
31
30
31
Thank you