Term Paper on “Financial Performance Evaluation of Prime Bank Limited”

Supervised By:
Mr. Mohammed Sohail Mustafa CFA
Associate Professor & Director (Training & Certification Programs)
Bangladesh Institute of Bank Management (BIBM)
Email: sohail.mustafa@ewubd.edu

Prepared by:

Name ID
A.B.M. Tarikul Islam 2019-295-026
Shaoli Mofazzal 2019-2-95-030

Course Information:
FIN 523 (Financial Institutions & Market)
Section: 01
MBA/EMBA Programs
Department of Business Administration

Organization
 

Department of Business administration

Address: Plot No-A/2, Main Road, Jahurul Islam City, Aftabnagar, Dhaka-1212

Phone: 09666775577 Mobile: 01755587224

  www.ewubd.edu

Date of Submission: May 24 , 2021

 Executive Summary

Prime Bank Limited is a second generation bank, established in April 1995 by a group of
committed and visionary entrepreneurs who conceived an idea of floating a commercial bank
with a difference. Since its inception, the Bank built a credible brand impression with the trust
and loyalty of its customers by maintaining superior service quality, strong corporate
governance, and corporate culture
In this report, we will be exploring the financials and reporting systems of this thriving company.
At first, we started with the Strength and soundness through Ratio Analysis. Then we find out the
Size and Growth . Then we find the Profitability and Efficiency. Then we analyze asset quality
indicators and will discuss about CSR, NPL etc.

Page 2 of 50
Page 3 of 50
List of Figures

Page 4 of 50
List of Tables

Page 5 of 50
List of Acronyms

Page 6 of 50
CHAPTER 01: BODY OF THE REPORT
1.1. Introduction

Prime Bank, is a top-tier second generation local commercial bank in Bangladesh established in
1995. Headquartered in the heart of Dhaka's bustling financial hub Motijheel, the Bank's
operational footprint is spread all over the country with 146 branches and 170 ATM locations. It
was incorporated under the Companies Act of 1994.

Prime Bank is best known for its expertise in Corporate and Institutional Banking and its
innovative Digital Banking services. Global Finance, a North America based leading financial
publication has recognized Prime Bank as the Best Bank in Bangladesh in 2020. Prime Bank has
also been awarded as the Best Digital Bank in Bangladesh in 2020 by Asiamoney, another global
financial publication.

In 2014, Prime Bank initiated a 'Business Model Restructuring and Centralization' project to
bring more coherence in its banking practices while re-engineering its business processes to
enhance resource efficiency.

1.2. Background of the study

Performance evaluation gives a fair image of the strength of the monetary establishments. Banks
in many nations resemble private organizations that must pull in capital from people in general
to finance their activities. On the off chance that benefits are lacking or in the event that the
danger is inordinate, they will have more noteworthy trouble in acquiring capital, and their
financing costs will develop, dissolving benefit. Bank investors, contributors, and bank analysts
addressing the administrative local area are completely keen on the nature of bank execution.
The purpose for that is a monetary organization like bank manages public cash which requires
appropriate observation from power and the overall population too. In this examination, we have
done execution assessment of One Bank Limited from the year 2013 to 2018. One Bank is the
generally perceived and grounded brand in Bangladesh. Consistently the bank distributes its
monetary report where it unveils all the vital data and dependent on that data, we have done an
extensive investigation in regards to the bank's solidarity, size, development, productivity,
quality.

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1.3. Objective of the Report

In this report the following objectives will be persuades:

Understanding the strength and soundness of a bank reflects the ability of a bank to
absorb different shocks and survive in an economic downturn
How Bank size affects profits of banks and ensures greater financial access
Profitability and Efficiency analysis
Source of Earning

1.4. Methodology

This report will be made on the basis of different kinds of information and practical activities.
Information will be collected from different type of sources. Those sources are the following-

 The primary information was collected from company’s records

 Company Annual Reports
 Banking Regulation & Policy Department (BRPD), Bangladesh Bank
 Department of Off-Site Supervision (DOS), Bangladesh Bank
 Statistics Department, Bangladesh Bank
 Publications of Ministry of Finance (MoF)

1.5. Scope

We have gathered experience and knowledge about the activities of a large Bank. The area of
concentration of this report is confined in analysis different aspects of the financial data, annual
report, Ratio analysis, Profitability, size and growth.

1.6. Limitations

Throughout our course period we got know a lot about financial management activities. But still
that was not enough. There are some limitations that we can’t ignore. The main limitations were:

 Three months are not enough to know all about all Financial Management and as well as
a company.
 Lack of physical presence of all types of Financial activities of Prime Banl Limited was a
major limitation.
Page 8 of 50
CHAPTER 02: PERFORMANCE EVALUATION CRITERIA
To hold and draw in new clients to a specific bank, the bank the board needs to have reasonable
operational effectiveness and should altogether examine the extensions for an additional turn of
events. ONE Bank Limited is a business bank in the private area. The portions of the Bank have
recorded with both Dhaka Stock Exchange Ltd. also, Chittagong Stock Exchange Ltd. The name
'Prime Ban' is gotten from the understanding and since a long time ago sustained sensations of
the advertisers to contact individuals of varying backgrounds and progress together towards
flourishing in a feeling of unity. We have assessed the exhibition assessment of Prime Bank
Limited for the year 2016 to 2020 has been done dependent on the accompanying five indicators

 Strength and Soundness

 Size and Growth
 Profitability and Efficiency
 Asset Quality
 Inclusive and Online Banking

2.1. PEC-1: Strength and Soundness

The strength and soundness of a bank are one of the major criteria that reflects the financial
ability of that bank to captivate different shocks and survive when there is an economic
recession. Customer can easily put their money or confidence in a financially sound bank than
any other banks under that. Financial Soundness and strength indicators are considered and
distributed to be used in the macro-prudential analysis, which includes assessment and control
over strengths and vulnerabilities of financial systems to increase financial soundness as well as
reduce the probability of financial system bankruptcy. strength and soundness of banks can be
assessed by the five indicators described below:

PEC 1- Indicator 1: Capital Adequacy Ratio:

Capital Adequacy Ratio (CAR) is a ratio of banks Capital to Risk Weighted Assets. It is a ratio
that regulators in the banking system use to watch bank's health, specifically bank's capital to its
risk. The calculation is given below:

Capital to Risk Weighted Assets = [Total Eligible Capital ÷ Risk Weighted Assets] ×100

Page 9 of 50
 Capital Adequacy Ratio
Total eligible Risk Weighted Capital to Risk Weighted Assets (in
Year capital (in crore) Assets (in crore) crore)
2016 3,163.21 25,400.15 12.45%
S 2017 3,225.09 23,021.14 14.01%
O 2018 3,825.90 22,451.65 17.04%
L 2019 4,028.92 23,129.97 17.42%
O 2020 4,081.24 23,621.98 17.28%

Capital Adequacy Ratio [SOLO]

20.00%

18.00% 17.04% 17.42% 17.28%

16.00%
14.01%
14.00%
12.45%
12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2016 2017 2018 2019 2020

Page 10 of 50
 Capital Adequacy Ratio [SOLO]
20.00%

18.00%
17.04% 17.42% 17.28%
16.00%

14.00% 14.01%
12.00% 12.45%
10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5 2019 2019.5 2020 2020.5

Capital Adequacy Ratio [solo]

Capital Adequacy Ratio [solo]

By the calculation, we can clear that the Capital Adequacy Ratio (CAR) solo is increasing from
FY2016 till FY2019 from 12.45% to 17.42%. We know a higher percentage indicates better
performance. But in 2020 this percentage is a bit lower. It can happen because of COVID 19
pandemic

Capital Adequacy Ratio

C Total eligible Risk Weighted Capital to Risk Weighted

O Year capital (in crore) Assets (in crore) Assets (in crore)

Page 11 of 50
 N 2016 3,156.60 25,659.54 12.30%
S
O 2017 3,231.71 23,511.94 13.74%
L
I 2018 3,830.20 23,107.71 16.58%
D 2019 3,992.21 23,215.17 17.20%
A
T
E
D 2020 4,020.19 23,680.75 16.98%

Capital Adequacy Ratio [CONSOLIDATE]

20.00%

18.00%
16.58% 17.20% 16.98%
16.00%

14.00%
13.74%
12.30%
12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2016 2017 2018 2019 2020

Capital Adequacy Ratio

Page 12 of 50
Capital Adequacy Ratio [CONSOLIDATE]

Capital Adequacy Ratio [CONSOLIDATE]

20.00%

18.00%
16.58% 17.20% 16.98%
16.00%

14.00% 13.74%
12.00% 12.30%
10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5 2019 2019.5 2020 2020.5

Page 13 of 50
Capital Adequacy Ratio [CONSOLIDATE]
By the calculation, we can clear that the Capital Adequacy Ratio (CAR) consolidate is increasing
from FY2016 till FY2019 from 12.30% to 17.20%. We know a higher percentage indicates
better performance. But in 2020 this percentage is a bit lower. It can happen because of COVID
19 pandemic.

PEC 1- Indicator 2: NPL to Equity Ratio:

Higher NPL is a recognized indicator of lack of strength and soundness. The complete title of the
ratio should be NPL net of provisions to total equity. Like CAR, the ratio indicates a bank’s
capacity to absorb credit risk. Lower ratio indicates better performance. The indicator is
computed as:
NPL to Equity Ratio = [(Classified Loan – Provision against Classified Loan) ÷Total
Equity] ×100

NPL to Equity Ratio

Classified [(Classified
Loan- Loan – [(Classified Loan
Provision Provision Provision – Provision
against against against against
Classified Classified Classified Total Classified Classified Loan)
Loan (in Loan (in Loan (in Equity (in Loan) ÷Total ÷Total Equity]
Year million) million) million) million) Equity] *100

2020 8,034.00 3,677.00 4,357.00 2,808.54 1.55 155.13

2019 9,966.00 3,656.00 6,310.00 2,810.72 2.24 224.50

2018 12,686.00 4,567.00 8,119.00 3,199.98 2.54 253.72

2017

Page 14 of 50
 NPL
NPLtotoEquity
EquityRatio
Ratio
300.00%
300.00%
250.00% 253.72%
253.72%
10,799.05 4,269.94 6,529.11 3,094.65 2.11 210.98
250.00% 224.50%
210.12% 224.50%
210.98%
200.00%
2016 10,139.48 3,824.06 6,315.42 3,005.70 210.98%2.10 210.12%210.12
200.00%
150.00% 155.13%
155.13%
150.00%
100.00%

50.00%
100.00%
0.00%
50.00%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5 2019 2019.5 2020 2020.5

0.00%
2020 2019 2018 2017 2016

NPL to Equity Ratio

NPL to Equity Ratio

Page 15 of 50
NPL to Equity Ratio
Here shows that the performance is decreasing over time. By seeing the percentage that is higher
so we can state that the NPL to Equity ratio is not very good for Prime Bank Ltd.

PEC 1- Indicator 3: Liquid Assets to Short term Liabilities:

To banks, liquidity is the ability to meet obligations when they become due without incurring
unacceptable losses. Here the Liquid Assets are the sum of Cash, Balance with other banks and
Financial Institutions, Money at call and Short Notice and Investment. Short-term Liabilities are
the sum of Borrowed Liabilities and Total Deposits less Fixed Deposits. The ratio measures a
bank’s ability to meet its short-term obligations with its most liquid assets. Higher ratio indicates
better performance. The indicator is computed as:
Liquid Assets to ST Liabilities = [Liquid Asset ÷ Short Term Liabilities] ×100

Liquid Assets to ST Liabilities

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 Total Liquid [Liquid
Deposits Short Asset ÷ Asset ÷
Borrowed Total -Fixed Term Short Short
Liquid Liability Deposits Fixed Deposits Liabilitie Term Term
Yea Asset (in (in (in Deposits (in s (in Liabilitie Liabilities
r crore) crore) crore) (in crore) crore) crore) s ] ×100

21,738.4
2020 7,012.82 2,294.96 23,302.80 1,564.40 0 24,033.36 0.29 29.18

20,187.9
2019 6,548.19 2,090.81 21,644.40 1,456.46 4 22,278.75 0.29 29.39

2018 4,236.46 2,421.85 19,752 12,024.90 7,726.90 10,148.75 0.42 41.74

2017 4,173.56 2,271.96 19,901.40 12,320.73 7,580.67 9,852.63 0.42 42.36

2016 6,505.48 1,659.67 19,793.40 12,516.96 7,276.44 8,936.11 0.73 72.80

Liquid Asset to ST Liabilities

Liquid Assets to ST Liabilities

80.00%
72.80%
70.00%

60.00%

50.00%
42.61%
40.00% 38.09%
29.18% 29.39%
30.00%

20.00%

10.00%

0.00%
2020 2019 2018 2017 2016

Page 17 of 50
Liquid Asset to ST Liabilities

Liquid Assets to ST Liabilities

80.00%

70.00%
72.80%

60.00%

50.00%
42.61%
40.00%
38.09%
30.00% 29.39% 29.18%
20.00%

10.00%

0.00%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5 2019 2019.5 2020 2020.5

Page 18 of 50
Here we can see the huge drop of Liquid Assets to ST Liabilities from 2016 to 2017 near 30%.
Then it decreasing by passing years. So, analyzing this the performance of this bank is not very
well.

PEC 1- Indicator 4: Borrowing liability to Total Liability:

Banks should mainly rely on deposit liabilities as a source of fund to create their assets. Higher
borrowing liabilities indicate greater dependency on money market and lack of strength and
soundness required to attract adequate deposits. The indicator shows the proportion of borrowing
liability of the total liabilities of a bank. Lower ratio indicates better performance. The indicator
is computed as:
Borrowing Liability to Total Liability = [Borrowed Liability ÷Total Liability] × 100

Borrowing Liability to Total Liability

[Borrowed Liability
Year Borrowed Liability Total Liability ÷Total Liability] × 100
2020 2,294.96 2,379.33 96.45%
2019 2,090.81 2,185.74 95.66%
2018 2,421.85 2,498.75 96.92%
2017 2,271.96 2,336.50 97.24%
2016 1,659.67 1,864.24 89.03%

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 Borrowing Liability to Total Liability
98.00% 96.92% 97.24%
96.45%
96.00% 95.66%

94.00%

92.00%

90.00% 89.03%
88.00%

86.00%

84.00%
2020 2019 2018 2017 2016

Borrowing Liability to Total Liability

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 Borrowing Liability to Total Liability
98.00%
97.24% 96.92%
96.45%
96.00% 95.66%
94.00%

92.00%

90.00%
89.03%
88.00%

86.00%

84.00%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5 2019 2019.5 2020 2020.5

Borrowing Liability to Total Liability

Page 21 of 50
PEC 1- Indicator 5: Advance Deposit Ratio:
Banks should maintain a balance between the volume of advances and deposit. Advance deposit
ratio is used to measure the degree of balance between advance and deposit. High value of this
ratio may increase bank income but may increase liquidity risk and vice-versa.
Advance Deposit Ratio = [Total Advances ÷ Total Deposit] ×100

Advance Deposit Ratio

Year Total Advances Total Deposit [Total Advances ÷ Total Deposit] ×100
2020 2,315.21 23,302.80 9.94%
2019 1,979.12 21,644.40 9.14%
2018 2,383.22 19,752 12.07%
2017 2,281.64 19,901.40 11.46%
2016 1,786.04 19,793.40 9.02%

Advance Deposit Ratio

14.00%

12.07%
12.00% 11.46%
9.94%
10.00% 9.14% 9.02%
8.00%

6.00%

4.00%

2.00%

0.00%
2020 2019 2018 2017 2016

Page 22 of 50
 Advance Deposit Ratio
14.00%

12.00% 12.07%
11.46%
10.00% 9.94%
9.02% 9.14%
8.00%

6.00%

4.00%

2.00%

0.00%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5 2019 2019.5 2020 2020.5

Page 23 of 50
Within these 5 years, the timespan bank's advance deposit ratio was high in 2018 that is 12.07%.
and a high ratio indicates high income. So, in 2018 their income was high. The in 2017 their
income was a little less than in 2018. But in today’s scenario, the ratio is 9.94%. which is not
higher than 2018. So, the bank needs to improve in this sector as well. As higher the ratio higher
the income

2.2. PEC-2: Size and Growth

Bank size influences the benefits of banks and guarantees more prominent monetary access.
Generally, huge banks have a more noteworthy chance to limit chances and may appreciate
economies of scale. Development is perceived as one of the great pointers of the presentation of
any establishment. Under this head, four markers identified with size and four-pointers identified
with development are considered to survey the exhibitions of banks.

PEC 2 -Indicator 1: Number of Deposit Account

Higher number of deposit account indicates greater market share and bigger size of the bank.
Absolute number of deposit accounts has been used to assess the banks in terms of size. Larger
the number of deposit accounts, better the performance.

Year 2016 2017 2018 2019 2020

Number of Deposit
Account 197934 199014 197518 216444 233028

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 Number of Deposit Account
240000
233028
230000

220000 216444

210000

197934 199014 197518

200000

190000

180000

170000
2016 2017 2018 2019 2020

Number of Deposit Account

The graph represents in 2020, there was over Two hundred thousand as deposit holder. It was
gradually increasing over the 5 years. It is positive side that larger the number of deposit
accounts, better the performance for this bank.

PEC 2 -Indicator 2: Number of Branch:

Higher number of branches indicates greater market share and bigger size of the bank. Absolute
number of branches has been used to assess the banks in terms of size. Larger the number of
branches, better the performance.

Year 2016 2017 2018 2019 2020

Number of Branch 146 146 146 146 146

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 Number of Branch
146.2

146

145.8

145.6

145.4

145.2

145

144.8

144.6

144.4
2016 2017 2018 2019 2020

Number of Branch
The graph represents in 2020, Number of Branch is 146. It was increasing over the 5 years.
According to this scenario, Prime Bank Limited will try to get one of the largest banks in
Bangladesh day by day having large market share and performing reliably for the customers.

PEC 2 -Indicator 3: Total Revenue:

Higher volume of total revenue indicates greater volume of activities and bigger size. Absolute
volume of total revenue has been used to evaluate the banks in terms of size. Higher the volume
of total revenue, better the performance.

Year 2016 2017 2018 2019 2020

Total Revenue (Taka in Million) 12023 12148 12898 14131 12653

Total Revenue (Taka in Million)

14500
14131
14000

13500

13000 12898
12653
12500
12148
12023
12000

11500

11000

10500
2016 2017 2018 2019 2020

Page 26 of 50
The net profit of Prime Bank Limited has decreased in 2020 for adverse business conditions
throughout the year. For which they have made strategic investments in IT infrastructure, branch,
ATM network, mobile banking services and human capital continued to provide much better
customer service with a wide range of products that will definitely bring long-term stable growth
and a more inclusive banking for all. From 2016 to 2019, total revenue growth was in increasing
trend and decreasing in 2020.

PEC 2 -Indicator 4: Total Asset:

Higher volume of total assets indicates greater market share. Absolute volume of total assets has
been used to assess the banks in terms of size. Higher the volume of total assets, better the
performance.

Year 2016 2017 2018 2019 2020

Total Asset (Taka in Million) 271439 281467 295613 323788 347502

Total Asset (Taka in Million)

400000

347502
350000
323788
295613
300000 281467
271439
250000

200000

150000

100000

50000

0
2016 2017 2018 2019 2020

In the graph of Prime Bank Limited the total asset value is increasing consistently over the
5years presented above. In 2020 it has reached to 347,502 million. This gives a progressive sign
in terms of size, market share and overall performance of Prime Bank Limited

PEC 2 -Indicator 5: Total Deposit Growth:

Deposit growth indicates increase in sources of funds by banks. Higher the growth rate of
deposits, better the performance. The indicator is computed as:

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Deposit Growth = [(Current Year Deposit –Previous Year Deposit) ÷ Previous Year
Deposit] ×100

Total Deposit
240000 20.00%
233028
17.09%
230000
15.00%
220000

10.00%
210000

197934 199014 197518 199014

200000
5.00%

190000
0.55% 0.76%
0.00%
-0.75%
180000

170000 -5.00%
2016 2017 2018 2019 2020

Total Deposit (Taka in Million) Growth

In case of total deposit amount, the amount is increasing all over the 5 years. The highest growth
was in 2020 & it was 17.09%. It was a great indication of deposit growth. Then in 2018 the
growth falls to 0.75% but against increased to 17.09% in 2017. So, the deposit growth is
fluctuating over the year.

PEC-2: Indicator 6-Total Advance growth:

This indicator is a specified sum of money to an individual or business (the borrower) by a

commercial bank; savings bank etc (the lender). A bank loan is a form of credit which is
extended for a specified period of time, usually on fixed-interest terms related to the base rate of
interest, with the principal being repaid either on a regular installment basis or in full on the
appointed redemption date. depending upon the nature of the loan and the degree of risk
involved, a bank loan may be unsecured or secured, the latter requiring the borrower to deposit
with the bank an approved form of collateral security (for example the property deeds to his
house). In the case of businesses, bank loans are usually renegotiated shortly before expiring,
thus providing the borrower with a ‘revolving’ line of credit used mainly to finance working
capital requirements. Advance growth indicates increase in uses of funds by banks. Higher the
growth rate of advances, better the performance.

Page 28 of 50
 Year 2016 2017 2018 2019 2020
Total Advance (Taka in Million) 170212 198323 205810 213955 232400
Growth   16.52% 3.78% 3.96% 8.62%

Total Advance and Growth (Taka in Million)

250000 18.00%
232400
213955 16.00%
205810
198323
200000 14.00%
170212
12.00%
150000
10.00%

8.00%
100000
6.00%

50000 4.00%

2.00%

0 0.00%
2016 2017 2018 2019 2020

Total Advance (Taka in Million) Growth

Though there is an increasing trend in the amount of total advances can be observed over the 5
years data of Prime Bank Limited the growth rate is in increasing trend over these years. The
increasing which indicate Prime Bank Limited focused and analyzed the better opportunities to
use its available funds and ensure their effectiveness thereby.

PEC 2 -Indicator 7: Net Profit Growth:

Growth in Net Profit is the most crucial indicator to evaluate growth performance of any
commercial institution. Higher the growth rate of net profits, better the performance.

Year 2016 2017 2018 2019 2020

Net Profit (Taka in Million) 1410 1252 2193 1662 1797
Growth   -11.21% 75.16% -24.21% 8.12%

Page 29 of 50
 Net Profit (taka in Million)
2500 100.00%
2193
80.00%
2000 75.16%
1797
1662 60.00%

1500 1410
40.00%
1252

20.00%
1000
8.12%
0.00%
500 -11.21%
-20.00%
-24.21%

0 -40.00%
2016 2017 2018 2019 2020

Net Profit (Taka in Million) Growth

This graph indicates that, Prime Bank is in fluctuating position. The net profit of OBL has
decreased in 2018 for adverse business conditions throughout the year. For which they have
made strategic investments in IT infrastructure, branch, ATM network, mobile banking services
and human capital continued to provide much better customer service with a wide range of
products that will definitely bring long-term growth and a more inclusive banking for all. So they
covered up the situation in 2018 when the net profit growth was 75.16%. Then again it started
decreasing. Thus in 2019 OBL has made net profits which decreased the growth rate to 24.21%.
This is a significant change for Prime Bank Limited. So Prime Bank Limited must focus on their
business profit or they will lose the impression in the share market.

PEC-2: Indicator 8-Net Interest Income Growth :

Net interest income (NII) for each segment is determined based on interest income on average
earning assets related to each segment net off cost of deposits including deposits transferred to
and from other business segments. Net Interest Income is generally the major income of banks.
Higher the growth rate of net interest income, better the performance.

Year 2016 2017 2018 2019 2020

Net Interest Income (Taka in Million) 6203 4246 2154 2865 4581
Growth   -31.55% -49.27% 33.01% 59.90%

Page 30 of 50
 Net Interest Income
7000 80.00%
6203
6000 59.90% 60.00%

5000 4581 40.00%

4246 33.01%
4000 20.00%

3000 2865 0.00%

2154
2000 -20.00%
-31.55%
1000 -40.00%
-49.27%
0 -60.00%
2016 2017 2018 2019 2020

Net Interest Income (Taka in Million) Growth

The net interest income of prime bank has decreased in 2018 for adverse business conditions
throughout the year. By making some effective strategic investments in 2019 PBL has made
2865 million net interest income which increased the growth rate to 33.01% that of the previous
year. This is a significant change for Prime Bank Limited as well as attractive information for all
of its stake holders. The number of deposit accounts, number of branches, total revenue and total
asset has reflected a positive indication for Prime Bank Limited in terms of size, market share
and overall performance. The strategic investments in IT infrastructure, branch, ATM network,
mobile banking services and human capital continued to provide much better customer service
will drive the performance of PBL sophisticated. After 2018, PBL Net interest income is in
increasing trend.

2.3. PEC-3: Profitability and Efficiency

Profitability and Efficiency examinations are fundamental for the assessment of exhibitions of
any monetarily run association. Productivity is an idea partner with the goal of surveying a
bank's outcomes from an effectiveness perspective for whole exercises. It addresses the
methodology to accomplish the significant objective of the bank's movement. The profitability
and proficiency analysis depend on the accompanying four indicators to rank the financial
exhibitions.

Page 31 of 50
PEC 3-Indicator 1: Return on Asset:

Return on total asset shows the capacity of a bank to utilize its total asset to earn profit. ROA
identifies the percentage of net income earned on total asset including both financial and real
assets

Year 2016 2017 2018 2019 2020

Net income after Tax( In Million) 1,410 1,252 1,662 1,662 1,797
Total Asset ( In Million) 271,439 281,467 295,613 323,788 347,502
Return on Asset (ROA) 0.52% 0.44% 0.56% 0.51% 0.52%

Return on Asset (ROA)

0.60%
0.56%
0.52% 0.51% 0.52%
0.50%
0.44%

0.40%

0.30%

0.20%

0.10%

0.00%
2016 2017 2018 2019 2020

The Return on Asset of Prime Bank Limited from the year of 2016 to 2020 shapes a fluctuating
trend. Although, the ROA was higher at the year of 2018 which was 0.56% but afterwards, the
ROA has been declining. That indicates, the performance of total asset in terms of earning profit
has been declined throughout those years.

PEC 3-Indicator 2: Return on Equity:

Return on Equity provides an overall picture of efficiency to earn profit in all dimensions of the
bank. It is the combination of Net Profit Margin, Total Asset Turnover and Financial Leverage.

Year 2016 2017 2018 2019 2020

Net income after Tax( In Million) 1,410 1,252 1,662 1,662 1,797

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 Total Equity ( In Million) 2,809 2,811 3,200 3,095 3,006
Return on Asset (ROA) 50.20% 44.54% 51.94% 53.71% 59.79%

Return on Asset (ROE)

70.00%

59.79%
60.00%
53.71%
51.94%
50.20%
50.00%
44.54%

40.00%

30.00%

20.00%

10.00%

0.00%
2016 2017 2018 2019 2020

The Return on Equity of Prime Bank Limited has experienced increasing trend from the year of
2016 to 2020. The ROE was lower at the year of 2016 which was 50.20%. Afterward, the return
on equity is decrease to 44.54% at 2017 and after that, it was in increasing tred. But there was
increase of ROE at year of 2019 and 2020. At 2018, the ROE was 51.94%. This indicates the
bank’s overall efficiency in terms of operations management or asset utilization or leverage
utilization.

PEC 3-Indicator 3: Total Expense to Total Revenue:

This ratio indicates what percentage of total expense is incurred to earn the total revenue.

Total Expense to Total Revenue = [Total Expenses ÷ Total Revenue] × 100

Year 2016 2017 2018 2019 2020

Total Expense (In Million ) 6,266 6,775 7,180 7,181 6,944
Total Revenue (In Million) 12,023 12,148 12,899 14,131 12,653
Total Expense to Total Revenue 52.12% 55.77% 55.66% 50.82% 54.88%

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 Total Expense to Total Revenue
57.00%

56.00% 55.77% 55.66%

54.88%
55.00%

54.00%

53.00%
52.12%
52.00%

51.00% 50.82%

50.00%

49.00%

48.00%
2016 2017 2018 2019 2020

This ratio indicates that each year, total expense is associated with more than 50% of the total
revenue. The ratio had been increased after 2016, and was almost stable for the following 2
years. In 2019, the expense to total ratio decreased by 50.82%. This is because of the lower
interest expense in the year of 2019, then ratio is increasing y 54.88% in 2020.

PEC 3-Indicator 4: Profit per Employee:

This ratio indicates employee productivity of the bank.

Profit per Employee = [Net Income after Tax ÷ Total Employees]

Year 2016 2017 2018 2019 2020

Net income after tax 1,410 1,252 1,662 1,662 1,797
Total Employees 3499 2961 3212 3212 3090
Profit Per Employee 0.40 0.42 0.52 0.52 0.58

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 Profit Per Employee
0.70

0.60 0.58
0.52 0.52
0.50
0.42
0.40
0.40

0.30

0.20

0.10

0.00
2016 2017 2018 2019 2020

We see that, Profit per employee is in an increasing trend from the year of 2016 to 2020. In 2020,
Profit per employee ration is highest which is 0.58.

2.4. PEC-4: Asset Quality

Asset Quality of Prime Bank Ltd. Assets are the sources of earning for any organization. If the
quality of assets deteriorates, it adversely affects the earning potentials which eventually reduce
the value of the firm. The largest category of earning assets of a bank is loans and advances. So,
the consideration of the quality of loans is necessary while performing the ranking. Four
indicators related to asset qualities are considered to rank performances of banks.

Considering the earning assets of Prime Bank Ltd., the size of Total Loan & Advance has an up
and down over the year starting from 2016 to 2020.

Year 2016 2017 2018 2019 2020

Total Loan and advance 170212 198323 205810 213955 232400

But what matters most is the quality of these assets and to measure the quality of loan or earning
assets the following four indicators give an idea whether the Bank is actually making a good
move or not. The 1st indicator gives a red signal that the bank is not able to control its NPL
efficiently that reflects in the 2nd indicator as well. In the 3rd indicator the concentration of large
loan over the total loan of Prime Bank Ltd. shows a downfall in the recent year though it had
fluctuating trend in the previous years. Finally, the credit concentration based on division gives a
view regarding the diversification of its loan portfolio.

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PEC 4- Indicator 1- Growth in Gross NPL:

Growth in gross NPL indicates the change in the performance of a bank in terms of asset quality.
So, if the growth rate of gross NPL ratio of bank is lower, then the performance of bank will be
better in terms of asset quality.

Year 2016 2017 2018 2019 2020

CL 140,721 163,140 160,134 142,964 158234
Growth in Gross NPL   13.7% -1.9% -12.0% 9.7%

Growth in Gross NPL

170,000 20.0%

165,000 163,140
15.0%
13.7% 160,134
160,000 158,234
9.7% 10.0%
155,000

150,000 5.0%

145,000 142,964 0.0%

140,721 -1.9%
140,000
-5.0%
135,000
-10.0%
130,000
-12.0%
125,000 -15.0%
2016 2017 2018 2019 2020

CL Growth in Gross NPL

As per graph and data, we can see that, Prime Bank is in fluctuating position from the year 2016
to 2020
PEC 4- Indicator 2- Gross NPL to Total Advances :

Credit concentration has been measured in terms of large loans. A loan has been considered as
large loan if the outstanding loan amount is more than 10% of its capital. Lower the Large Loan
to Total Loans and Advances, better the performance. The indicator is computed as:

Credit Concentration = [Total Large Loan ÷ Total Loan and Advances] ×100

Year 2016 2017 2018 2019 2020

Classified Loans 10,139.48 10799 12,686 9,966 8,034
Total Loan and advances 170,211.83 198,323 205,810 213,955 232,400
Gross NPL to Total 5.957 5.445 6.164 4.658 3.457

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 Advances

Gross NPL to Total Advances

7.000
6.164
5.957
6.000
5.445

5.000 4.658

4.000
3.457

3.000

2.000

1.000

0.000
2016 2017 2018 2019 2020

We can see that, highest gross NPL to Total Advances in 2018. From 2018, it is in decreasing
trend.

PEC 4- Indicator 3- Credit Concentration by loan size:

Credit concentration has been measured in terms of large loans. A loan has been considered as
large loan if the outstanding loan amount is more than 10% of its capital. Lower the Large Loan
to Total Loans and Advances, better the performance. The indicator is computed as:

Credit Concentration = [Total Large Loan ÷ Total Loan and Advances] ×100

Year 2016 2017 2018 2019 2020

Total large loan 168,131.22 195,471.49 203,342 211,073 228,937
Total Loan and advances 170,211.83 198,323 205,810 213,955 232,400
Credit Concentration 98.7776 98.5622 98.8008 98.6532 98.5100

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 Credit Concentration
98.8500
98.8008
98.8000 98.7776
98.7500

98.7000
98.6532
98.6500

98.6000
98.5622
98.5500
98.5100
98.5000

98.4500

98.4000

98.3500
2016 2017 2018 2019 2020

This graph is in decreasing trend, PBL doing better.

PEC 4- Indicator 4- Credit Concentration by division:

A good credit portfolio is one that is well diversified in terms of allocation of advances or credit.
High credit concentration increases credit portfolio risk and vice versa. High concentration of
bank advances to a particular division or region may endanger a bank if that division or region is
affected by natural calamity or other external event.

Credit Concentration = [Total Loans to a Division ÷ Total Loan and advances] ×100

Year 2016 2017 2018 2019 2020

A particular Division (Dhaka) 64,351.00 89,850.00 118,330 133,633 156,850
Total Loan and advances 170,211.83 198,323 205,810 213,955 232,400
Credit Concentration 37.8064 45.3049 57.4948 62.4585 67.4914

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 Credit Concentration
80.0000

70.0000 67.4914
62.4585
60.0000 57.4948

50.0000 45.3049

40.0000 37.8064

30.0000

20.0000

10.0000

0.0000
2016 2017 2018 2019 2020

This graph show, credit concertation is in increasing trend. It means that there was rapidly an
infrastructure development in Dhaka Division and High credit concentration increases credit
portfolio risk in that division.

PEC-5: Inclusive and online Banking

Inclusive banking is concerned with sustainable or ethical banking and is part of a larger societal
movement toward more social responsibility. This movement should include ethical investment
and distribution of resources and corporate social responsibility. In Bangladesh, inclusive
operation of Prime Bank Ltd should be connected with the distribution of banks resources to
rural economy, the agricultural sector, and micro and small enterprise sector. Online banking
operation is another sustainable way of offering quality banking services. It is said that online
banking is the starting point of green or environmental banking. Under this head, six indicators
related to inclusive and online banking are considered to rank performances of PBL.

PEC 5 - Indicator 1: Rural Bank Branch to Total Branch:

A branch banking center is a retail location where a bank or other financial institution offers a
wide array of face-to-face and automated services to its customers. PBL had 145 branches in
2020 spread in both urban and rural area. Thus two indicators have been used which are rural
bank branches to total branches. The higher the number of branches is better the performance
and higher ratio of rural branches for better performances. The number of branches indicates
customer access to finance of a particular bank Number of PBL branches with rural branches are
given below:
Page 39 of 50
 Year Number of Branch Number of Rural Number of Rural
Branch Branch Ratio
2020 146 72 0.49
2019 146 65 0.44
2018 146 42 0.28
2017 146 32 0.21
2016 146 25 0.17

Number of Rural Branch Ratio

0.6

0.5 0.49
0.44

0.4

0.3 0.28

0.21
0.2 0.17

0.1

0
2020 2019 2018 2017 2016

PEC 5 - Indicator 2: Micro and Small Credit to Total Loans:

Higher volume of Micro and Small Credit to Total Credit indicates greater access to finance by
the under-served enterprises of Bangladesh. Larger the volume of Micro and Small Credit to
Total Loans and Advances, better the performance.

Micro and Small Credit to Total Loans = [Micro and small credit ÷ Total Loan and advances]
×100

Micro and Small Credit to Total Loans

Small & Medium Agriculture Total Loan and Micro and

Enterprises (SME) Loan (Taka Micro and small advances (BDT Small Credit to
Year (Taka in Crore) in Crore) credit in Crore) Total Loans

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 2016 1,819.05 261.56 2,080.61 17,021.19 12.22%
2017 2,223.16 628.35 2,851.51 19,832 14.38%
2018 2,112.04 356.05 2,468.09 20,581 11.99%
2019 2,586.69 294.89 2,881.58 21,396 13.47%
2020 2,911.80 551.02 3,462.82 23,240 14.90%

Micro and Small Credit to Total Loans

16.00%
14.90%
14.38%
14.00% 13.47%
12.22% 11.99%
12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2016 2017 2018 2019 2020

Prime Bank also donated BDT 100

million to Prime Minister’s Relief and
Welfare Fund to assist the community
affected by flood, a double blow
following COVID-19 shock.
2016

CSR BDT 156.81 million

Page 41 of 50
Micro and Small Credit to Total Loans

Micro and Small Credit to Total Loans

16.00%
14.90%
14.00% 14.38%
13.47%
12.00% 12.22% 11.99%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5 2019 2019.5 2020 2020.5

Micro and Small Credit to Total Loans

Here in 2020 performance is high compare to the last 5 years. In 2017 Micro and Small Credit to
Total Loans ratio were the lowest. So, there were ups and down in 2017 the ratio was 14.38%
and then it drops in 2018 to the lowest. So, no it's increasing as shown in the graph.

Page 42 of 50
PEC 5 - Indicator 3: Agricultural Credit to Total Loans:

Higher volume of Agricultural Credit to Total Loans and Advances indicates greater access to
finance by the under privileged farmers or small rural investors of Bangladesh. Larger the
volume of Agricultural Credit to Total Loans, better the performance.
Agricultural Credit to Total Loans = [Agricultural Credit ÷ Total Loan and advances] ×100

Agricultural Credit to Total Loans

Total Loan and

Agricultural Credit (Taka advances (Taka in Agricultural Credit to
Year in Crore) Crore) Total Loans %
2016 261.56 17,021.19 1.54%
2017 628.35 19,832 3.17%
2018 356.05 20,581 1.73%
2019 294.89 21,396 1.38%
2020 551.02 23,240 2.37%

Agricultural Credit to Total Loans %

3.50%
3.17%
3.00%

2.50% 2.37%

2.00%
1.73%
1.54%
1.50% 1.38%

1.00%

0.50%

0.00%
2016 2017 2018 2019 2020

Agricultural Credit to Total Loan

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 Agricultural Credit to Total Loans %
3.50%
3.17%
3.00%

2.50%
2.37%
2.00%
1.73%
1.50% 1.54%
1.38%
1.00%

0.50%

0.00%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5 2019 2019.5 2020 2020.5

A higher volume of Agricultural Credit to Total Loans and Advances indicates greater access to
finance by the underprivileged farmers or small rural investors of Bangladesh. Here PBL
provides the highest loan in 2017 that was 3.17% then it began to do down. Now at 2020, it
increased by 2.37%. Seeing the graph, we can say their performance is increasing.

Page 44 of 50
PEC 5 - Indicator 4: CSR Expense to Total Asset:

Higher volume of CSR Expenditure to Total Assets indicates greater contribution of a bank to
community development and environmental activities. Larger ratio indicates better performance.

Prime Bank Foundation (PBF), a dedicated CSR concern of the Bank. PBF was established in
2002 to implement social programs designed to reach out to the underserved and marginalized
sections of the society, and address the national development agenda.

In 2016 PBF CSR BDT 156.81 million for Carbon-neutral operations. Provided significant
amount of loan in renewable-energy projects during the year. Almost 100% local procurement.
CSR Expenditure Directly Conducted by PBL in 2017 are given below:
CSR Expenditure Directly Conducted by PBL (2017)
Particulars Amount of Expenditure (in BDT)
Education 25,935,000
Health 7,030,000
Disaster Management 30,050,000
Environment 30,000
Environment 2,830,000
Art & Culture 1,427,778
Others 82,497,000
Total 149,799,778

CSR Expenditure Directly Conducted by PBL in 2018 are given below:

CSR contribution Conducted Directly by PBL (2018)

Amount of Expenditure
Particulars (in BDT)

1) Donation to Society for the Welfare of Autistic Children

(SWAC) for continuing yearly salary of Occupational Therapist. 500000

2) Donation to Bangladesh Thalassemia Hospital. 100000

Page 45 of 50
 3) Donation to BAPLC in connection with owning an office space. 1000000

4) Donation to Prime Minister’s Relief & Welfare Fund. 50000000

5) Donation to SWAC for the 11th World Autism Awareness Day
Celebration Program-2018. 100000
Total 51700000

CSR Expenditure Directly Conducted by PBL in 2019 are given below:

CSR expenditure Directly Conducted by Prime Bank (2019)

Amount of
Expenditure (in
Particulars BDT)
Donation to Mr. Mohammad Belal Hossain, GM Bangladesh Bank, Statistic Division, 500,
Purpose: Cancer Treatment 000.00
Donation to 100,000pcs (One Lac) of Blankets to Honorable Prime Minister’s Relief & 37,200,0
Welfare Fund for cold stricken people 00.00
Donation to Mr. Mohammad Shamsuzzaman (Assistant Director, Bangladesh Bank) for 100,
participating Iron Man Malaysia-2019. 000.00
Financial Support to Mr. Ishtiak Parvez, Sports reporter of the Daily Manabzamin
approached us to give him financial support regarding cover Bangladesh-India Cricket 100,
Match which will be held from November 2019. 000.00
Donation to Shahid Muktijodha Momtaz Uddin Autistic School, Bagatipara, Natore for 500,
erecting boundary wall of the school. 000.00
Total 3,84,00,000.00

CSR Expenditure Directly Conducted by PBL in 2019 are given below:

 As early as March 2020, Prime Bank joined the government’s large scale COVID-19
relief effort contributing more than BDT 50 million to Prime Minister’s Relief and
Welfare Fund. The fund was utilized to procure Personal Protective Equipment, Testing
Kit, Respiratory Equipment and also to stand beside the less fortunate people of the
society whose livelihood was severely affected by COVID-19.
 Prime Bank also donated BDT 100 million to Prime Minister’s Relief and Welfare Fund
to assist the community affected by flood, a double blow following COVID-19 shock.
 The bank joined forces with five domestic NGOs, including JAAGO and Bidyanondo
foundation to raise much needed funds for the underprivileged communities.

Here accumulate last five years CSR Expenditure than we get:

Page 46 of 50
 CSR Expense to Total Asset
CSR
Expens
e to
Total Assets (in Total
Year Amount of CSR Expenditure (in million) million) Asset
2016 156.81 256,599 0.061%
2017 149.80 281,275 0.053%
2018 51.70 293,901 0.018%
2019 38.40 322,417 0.012%
2020 150.00 347500 0.043%
CSR Expense to Total Asset
CSR Expense to Total Asset
0.070%
0.061%
0.060%
0.053%
0.050%
0.043%
0.040%

0.030%

0.020% 0.018%
0.012%
0.010%

0.000%
2016 2017 2018 2019 2020

CSR Expense to Total Asset

CSR Expense to Total Asset
0.070%

0.060% 0.061%
0.053%
0.050%
0.043%
0.040%

0.030%

0.020%
0.018%
0.010% 0.012%

0.000%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5 2019 2019.5 2020 2020.5

Page 47 of 50
CSR Expense to Total Asset

At 2016 PBF contributed highest to the society. But after that it started to drop till 2019, then
now in 2020 it started to grow.
PEC 5 - Indicator 5 :Number of ATM Booth :
Greater number of ATM booths indicates greater and easier access of banking activities by the
clients. Larger the number of ATM booth, better the performance.

Number of
Year ATM Booths
2016 168
2017 168
2018 170
2019 146
2020 146

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 Number of ATM Booths
175
170
170 168 168

165

160

155

150
146 146
145

140

135

130
2016 2017 2018 2019 2020

PEC 5 - Indicator 6 :Number of ATM Booth :

Greater number of branches under Any Branch Banking indicates better status and networking of
banks. Larger the number of branches under Any Branch Banking, better the performance.

Year Number of any Number of Branch Total Banks

Branch

Bank to total Bank

2020 2.39 146 61
2019 2.39 146 61
2018 2.47 146 59
2017 2.56 146 57
2016 2.56 146 57

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 Number of any Branch
2.6

2.56 2.56
2.55

2.5
2.47

2.45

2.4 2.39 2.39

2.35

2.3
2020 2019 2018 2017 2016

CHAPTER 3: FINDINGS

Recommendation

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