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Daffodil International

University

A Report on the Fund Management
and Performance Evaluation of
BRAC Bank Limited.

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Course Code: FIN- 435.
Course Title: Bank Fund Management.

Assignment
On:
“The Fund Management and Performance Evaluation of
BRAC Bank Limited”

PREPARED FOR:

Sabrina Akhter
Lecturer
Department of Commerce
Faculty of Business & Economics
Daffodil International University

PREPARED BY:

Batch: 17th
BBA

Date of Submission: March 31, 2010

March 31, 2010

Sabrina Akhter

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and suggestion in every step of our report writing. ------------------------ (On behalf of the group) ACKNOWLDGEMENT 3 . schedule.Course Instructor of Bank Fund Management Department of Commerce. Faculty of Business and Economics Daffodil International University Subject: Regarding the submission of this report on “the Fund Management and Performance Evaluation of BRAC Bank Limited. Its gives us immense pleasure in presently here with the report entitled “the Fund Management and Performance Evaluation of BRAC Bank Limited.” Dear Madam. let me be informed. Sincerely Yours. Please grant my earnest apology for any issue of the report. We tried our best to follow your instruction. In preparing this assignment we had the unique opportunity to expose ourselves.” which was assign to us as a student of FIN-435 course. format.

We would like to thank for entire honorable person whose are cooperating with me. EXECUTIVE SUMMERY 4 . without whose we can not touch our destination. company secretary of BRAC Bank who apart from his very busy office work. We want to convey our special thank to Mr. Then we would like to thank to officials of BRAC Bank limited for their excellent support to produce the data and relevant information. She is so much an inspiration and guidance to us.First of all we would like to thank to our respectable teacher Sabrina Akhter to give us the opportunity to do this assignment under her guidance. We worked there under his direct supervision. has spared time to discuss the ins and outs of the assignment and guide us by giving suggestions. We are short of words in expression our gratitude. Zahirul Islam.

TABLE OF CONTENTS 5 . The report is conducted with the purpose of introduction the financial operation and providing the chance to analyze and make assignment accordingly. This report is partial requirement of BBA program.”. To prepare this report as an apprentice we have taken necessary assistance from Sabrina Akhter during report writing.The topic of this report was “The Fund Management and Performance Evaluation of BRAC Bank Limited. faculty of business & Economics of Daffodil International University.

Acknowledgement Executive summary Table of contents Introduction Motivation of the Report Objective of the report Methodology Limitation of the report Background of the Report Operation of the Bank Business Performance Recommendation Conclusion 6 . Chapters Name Page No.

To acquire practical knowledge about the banking operation our course instructor has motivated us to do this type of assignment. we have to gather huge amount of knowledge about the Bank fund operation. • By interviewing the organization’s officials. which meet their market. • To explain about the sources and uses of BRAC Bank fund. That’s why we have motivated to prepare this report. INTRODUCTION Motivation of the Report: We are the students of BBA program of Daffodil International University. • To give a brief about the history and information of this bank. As we are studying the Bank Fund Management in this semester. • Setting a general idea about operation performance of BRAC Bank Limited. 7 . Objective of the Report: A study in banking operation of AB Bank Limited to find out its activities and performance in terms of anticipated customer’s requirements and provide them with the service. quality and service need. • Observational method will also be used in this study. • To inform about the bank mission and vision market performance of BRAC Bank Limited. Methodology: The study is based on secondary data methodology of this final report is given below: Data regarding the organization profile collected in the following ways: • From the organization’s Annual report. • Online information.

healthy. Growth in Assets through syndications and investment in faster growing sectors.Limitation of the study: Any assignment paper needs high degree of involvement regarding collection of information. 2001. Mission Statement: • Sustained growth in “Small & Medium Enterprise” sector • Continuous low-cost deposit growth with controlled growth in retail assets. 1991 under the companies Act. 1994 in Bangladesh. creation of database. Vision Statement: “Building a profitable and socially responsible financial institution on Market and Business with growth potential. literature review and analysis of data. In this study. Subsequently. The bank could not start its operating till 03 June. democratic and poverty free Bangladesh”. • Continuous endeavor to increase non-funded income • Keep our debt charges at 2% to maintain a steady profitable growth • Achieve efficient synergies between the Bank’s branches. • Corporate Assets to be funded through self-liability mobilization. 1991 and incorporated as a public company limited by shares on 20 May. we have tried our level best to collect the related information within the time constraint. Blackguard of BRAC Bank Limited: BRAC Bank is a scheduled commercial bank established under the Banking companies Act. the judgment of the High court was set aside and dismissed by Bank has started operations from 04 July. The primary objective of the Bank is to carry on all kinds of banking business. 2001 since the activity of the bank was suspended by the High Court of Bangladesh. SME unit offices and BRAC field offices for delivery of remittance and Bank’s other products and services 8 . thereby assisting BRAC and stakeholders to build a “just enlightened.

CORE VALUES: • Value the fact that one is member of the BRAC family. • Strive for profit & sound growth. Work as a team to serve the best interest of our owners 9 . • Creating an honest. open and enabling ENVIRONMENT. superior service and mutual benefit. • Have a strong customer focus and build relationships based on integrity.

64 79.17 Liabilities Shareholders’ 8.64 Equity Portion of each fund sources 2009 9% 3% 9% Borrrowings Deposit and Other A/C Other Liabilities Shareholder 79% s’ Equity 10 .26 9.27 7.62 7.05 4.86 7.62 7.59 3.57 76.44 8.Source of BRAC Bank funds: Year 2009 2008 2007 2006 2005 Borrowings 2450000000 2280000000 2240000000 1332974167 1473391667 Deposit and 75219615155 58006887010 37368407774 23001921689 13409010390 Other A/C Other 8760734892 6717480730 3702158970 3559726180 1210675172 Liabilities Shareholder 8150954413 5437525651 3072028674 2117193037 782931910 s’ Equity Total Funds 94581304460 72441893391 46382595418 30011815073 16876009139 Contributions of each Component in percentage: Year 2009 2008 2007 2006 2005 Borrowings 2.46 Other A/C Other 9.73 Deposit and 79.83 4.53 80.51 6.15 4.98 11.07 80.

Portion of each fund sources 2008 Borrowing 7.98 Deposits and other account Other liabilities 80.62 4.51 3.27 Deposits and other account Other lialilities Shareholers equity 80.07 Portion each fund sources 2007 Borrowings 6.83 7.15 9.57 Shareholders equity 11 .

64 8.9 Other liabilities Shareholder equity 76.6 Portion of each fund source 2005 4.44 Deposit and other account 11.17 Deposit and other account Other liabilities Shareholder equity 79.05 4.Portion of each fund sources 2006 Borrowing 7.73 Borrowing 7.46 12 .

93 Other Asset 4.54 Fixed Asset 1.61 12.05 Balance with the 6.47 on short notice 13 .60 7.08 75.94 Loan & advance 72.43 6.84 6.95 Bank Investment 12.17 1.33 11.46 0.84 3.40 0.84 2.96 74.03 Money at call and 1.Uses of Bank Funds: Year 2009 2008 2007 2006 2005 Cash 6619009730 4315888000 3114571471 2172387439 1011470878 Balance with 5593933873 3194971113 3064562581 2335200830 1162526288 the Bank Investment 10972204419 8245373273 4996856717 3768012071 2163814600 Loan & 64150835159 5267671674 3246112018 1955716538 11791312522 advance 0 0 0 Fixed Asset 1637898063 1472024279 942929286 389375132 156335491 Other Asset 4307431216 2536919986 1702573183 1189674221 1510529360 Money at call 1300000000 100000000 100000000 600000000 80000000 and on short notice Total Fund 88987378587 6934692227 4331805083 2767661424 16713462851 8 7 3 Contributions of each Component in percentage: Year 2009 2008 2007 2006 2005 Cash 7.29 9.43 6.16 0.23 2.28 4.65 3.07 8.12 2.22 7.93 70.53 13.66 70.19 7.93 4.14 0.89 11.

89 Loan & Advance Fixed Asset Other Asset 75.84 4.96 Money at call and on short notice 14 .46 7.28 theBank Investment 12.6 11.14 6.08 Money at call and on short notice Slice 8 Portion of fund Uses 2008 Cash Balance with the Bank 2.22 Investment 4.17 3.33 Loan & Advance Fixed Asset Other Asset 72.84 1.43 6. Portion of fund uses 2009 Cash Balance with 1.930.

17 3.16 Uses 2006 Money Cash at call 1.29 7.930.61 Investment Loan & Advance Fixed Asset 70.66 Other Asset Money at call and on short notice Slice 8 15 .93 advance Fixed Asset Other Asset Portion of fund 2.19 Balance with 7.4 4.84 8.07 11.Portion of fund Uses 2007 Cash 2.43 and on short Balance with the notice Bank 13.53 the Bank Investment Loan & 74.23 7.

476.and it was 3. Incomes on debentures are tax free.05 Cash 0.94 Balance with the Bank Investment Loan & 70. Slice 10 16 .03 0. This is the reason to invest a large amount in T-bill thus it can be converted in cash at any time when required. To avoid this. share.669.in Government bond in2005.240. The BRAC bank authority ahs analyzed that the investment in debentures is less affected by local economic condition rather than national economic condition in Money at call the money market and capital market.822. credit risk is the barrier in maximizing shareholders wealth.000/. Slice 8  The total invests in government securities (5&2 years Treasury bill) are 3.95 12.100/. The Chief notice Investment officer of the investment committee has designed the investment area mainly invest in government sector.93 6. banks make investment by part of their Lon able funds to earn profit and maximize the shareholders wealth without any risk. The BRAC bank’s investment items are T-bill/bond. Slice 9 As we know.000. As we know there is always lies default risk in loan making. 9.54 Advanace I nvestment Sector of BRAC Bank Fixed Asset Like other bank The BRAC Bank’s interest to investment is the use of money for the purpose of making more money to gain income or increase capital or both. and on short and debenture. So. the bank goes through the Other Asset investment because debt instruments can be converted into cash with little risk of loss of principal value.

Deposit Mix: Year 2009 2008 2007 2006 2005 Current Deposit and 24549608278 7652002774 5543600799 3060293660 3288528993 other A/C Bills payable 453829731 424445762 409015536 11744828 122593253 Savings bank 13043725795 4627686658 3985564159 2936582930 1863763753 deposits Fixed Deposit 36731258306 43399790445 27307976283 16742577461 8051558273 Other Deposit 441193045 1902951371 122250997 148722810 82566118 Deposit Mix in 2009 Other Deposit. 24549608278 Fixed Deposit. 44119304 5 Current Deposit and other A/C. 45382973 1 17 . 36731258 306 Savings bank deposits. 13043725 795 Bills payable.

Deposit Mix in 2008 Deposit Mix in 2007 18 .

Deposit Mix in 2006 Deposit Mix in 2005 19 .

placing their funds at risk in the hope of earning a suitable profit).61 by using total capital of tk.e.61% Return on Equity 30 25 24. It approximates the net benefit that the shareholders have received from investing their capital in the bank (i. Here the Bank earns tk. 24.79 and tk.Performance Evaluation: Return of Equity: Year 2009 2008 2007 2006 2005 Income After Tax 1373364872 973450830 618335637 334261127 192680101 Total Equity Capital 8150954413 5437525651 3072028674 2117193037 782931910 ROE 16.90.85% 17.61 Percentage 20 20.79% 24. 100 for the year 2009.85. 16. 15.90% 20. 20 .85 17. tk. 2006 and 2005 respectively. 20. 2008.13 16. tk 17.79 10 5 0 2009 2008 2007 2006 2005 Year Return on Equity: Return on Equity is a measure of the rate of return flowing to the bank’s shareholders.9 15 15.13.13% 15. 2007. tk.

it indicates how capable the converting the institutions Assets into earnings.33.45.Return on Asset: Year 2009 2008 2007 2006 2005 Net Income 1373364872 973450830 618335637 334261127 192680101 After Tax Total Asset 9458130446 7244189339 4638259541 3001181507 16876009139 0 1 8 3 ROA 1. 100 for the year 2009.34% 1.14% Return on Asset 2 1.5 Percentage 1.34. 1.45% 1.34 1.11% 1. 2007. Here the Bank earns tk.14 by using total assets of tk.33% 1. 1.5 0 2009 2008 2007 2006 2005 Year Return on Assets: Return on Assets is an indicator of managerial efficiency.14 1 0. 2008. tk. 21 . 1. 2006 and 2005 respectively.33 1. 1.11 1.45 1. tk 1. tk.11 and tk.

86% 3. tk.36 4. tk 4. tk. 3.31% 4.45% 3. 100 for the year 2009.Net Interest Margin: Year 2009 2008 2007 2006 2005 Net Interest 3129115435 3156009869 2062110340 1157615437 607331119 Income Total Asset 9458130446 7244189339 4638259541 3001181507 16876009139 0 1 8 3 NIM 3.60% Net Interest Margin 5 4.36% 4.36.6 3. 4. This is a measure of efficiency as well as profitability indicating how well management and staff have been able to keep the growth of revenue ahead of rising cost.31 Percentag 3 e 2 NI 1 M 0 2009 2008 2007 2006 2005 Year Net Interest Margin: The net interest margin measures how large a spread between interest revenue and interest cost. 3. Here the Bank’s net interest income tk. 22 .86 3. 2006 and 2005 respectively.31.45 4 3.86 and tk. Management has been able to achieve by close control over the banks earning assets and the pursuit of the cheapest sources of funding.45. 2007.60 by using total assets of tk. 3. 2008.

71% 0. 23 .25 -0.8 0.71 0.Net Non Interest Margin: Year 2009 2008 2007 2006 2005 Non Net 4275511368 2880173968 1481039542 919810085 565986540 Interests Revenue Non Net Interest 3603569530 2862277587 1597657356 1027018495 592999647 Expense Total Asset 9458130446 7244189339 4638259541 3001181507 16876009139 0 1 8 3 NNIM 0.2 0 0.16% Non Net Interest Margin 0.6 0. Salaries repair maintenance cost and loan loss expenses foremost bank.4 -0.2 -0.36% -0.16 NNIM -0.25% -0. the non interest margin is negative that means generally non-interest cost are more than fee income.36 2009 2008 2007 2006 2005 year Net Non Interest margin ratio: Non interest margin measures the amount of non interest revenue stemming from deposit service charges and other service fees the bank has seen able to collect (called fee income) relative to the amount of non interest cost incurred including wages.025 -0.025% -0.4 Percentage 0.

38.39 and tk. of Share 22521700 15840000 120000000 11373300 5000000 EPS Tk. 2008.46.46 Tk.30. -0. 0.30 Tk.3 38. tk 0.36 and tk.54 Earnings Per Share 70 60 60.61. 61. tk. Earnings per Share: Year 2009 2008 2007 2006 2005 Net Income After 1373364872 973450830 618335637 334261127 192680101 Tax No. ] That means here one stock of this bank can earn tk 60.98 Tk. 2006 and 2005 respectively.From the above picture it can be stated that the Bank’s net non interest income tk. -0.60.39 20 EPS 10 0 2009 2008 2007 2006 2005 Year Earnings per share: Earnings per share indicate how much a share on stock of a bank can earn income from investment. 2007. 2006 and 2005 24 .25.98. 2007. 29.39 Tk.54 for the year 2009. 29. 42. tk. -0. 100 for the year 2009.025. tk.71.98 61.46 50 Percentag 40 42.16 by using total assets of tk. tk. 38. 2008.54 e 30 29. tk. 42.

3. 2007.02 4.Degree of Asset Utilization: Year 2009 2008 2007 2006 2005 Total Operating 3801057273 3173906250 1945492529 1050407027 580318012 Revenue Total Asset 9458130446 7244189339 4638259541 3001181507 16876009139 0 1 8 3 Asset Utilization 4.50 and tk.4.440.50% 3. 4.02.44% Degree of Assets Utilization 5 4. tk.38% 4.5 3.16 by using total assets of tk. tk 4.19% 3.19. 100 for the year 2009.38.44 3 Percentage 2 1 0 2009 2008 2007 2006 2005 year Asset Utilization: The bank’s degree of Asset Utilization reflects portfolio management policies.38 4.19 4 3. 2008. 3. 2006 and 2005 respectively.02% 4. 25 . tk. specially the mixed and yields on the bank’s assets Equity Multiplier From the above picture it can be stated that the Bank’s total operating income tk.

From the above picture it can be stated that the Bank’s total assets is 11.10 14. 13. 14.10 times.32 11. 26 .55 times higher than total equity capital for the year 2009.The Bank’s Equity Multiplier: Year 2009 2008 2007 2006 2005 Total Asset 9458130446 7244189339 4638259541 3001181507 16876009139 0 1 8 3 Total Equity 8150954413 5437525651 3072028674 2117193037 782931910 Capital Equity 11.18 times and 21.6 times. Because equity must absorb losses on the banks assets the larger the multiplier the more exposed to failure risk the bank is.60 13. 15.18 13. How many dollar of assets must be supported by each dollar of equity capital and how much of the banks recourses. 2008.55 Multiplier Equity Multiplier 25 21.18 21. 2007.32 15. 2006 and 2005 respectively. therefore must rest on debt.32 times.55 20 15 15.6 10 EM 5 0 2009 2008 2007 2006 2005 Year Bank equity Multiplier: Equity multiplier reflects leverage on financing policies that means the sources chosen to fund the bank (debt/equity) The multiplier is a direct measure of the banks degree of financial leverage. The financial leverage for the bank declines gradually.1 14.

Recommendation The overall scene says that The BRAC bank has the strong efficient management in loan management. Although there a chance to default loan and some non performing loan the bank always prefer to utilize their deposit fund in the loan sector than in investment sector. But the efficiency also affected by economic condition of the country beside the political situation. The Prime bank always takes necessary steps by analyzing the credit approaches thus the bank does not need to face the loan default problem. Conclusion 27 . The BRAC Bank is always promising satisfied its customer.

28 . Trade and foreign exchange business. Every country must given a plan for important role in economic activities Bangladesh is no exception of that. Its various deposit and credit products should have also attracted the clients.Today’s business is very competitive and complex. Also well performance of BRAC Bank. The Bank should have to up a new standard in financing in the industrial. To survive in the related sector the organization need competitive people and has to take some effective policy. The bank should take initiative effort to accelerate the non interest income performance for avoiding negative non net interest income. From the analysis of the BRAC Bank. Commercial Bank’s financial development and economic development are closely related. we got understand about the performance.both corporate and individuals who feel comfort in doing business with the Bank. That’s why the private commercial banks are playing significant role in this regard.