Summary:

BASIC Bank Limited is a state-owned bank however operates like a private bank. It was established in
order to progress the industrial sector of Bangladesh. This report is focused on trend analysis between
commercial bank in Bangladesh named BASIC Bank Ltd. and the banking industry of Bangladesh. This
report contains the comparison between industry and BASIC bank’s profitability ratios, liquidity ratios
and credit risk ratios which are the major ratios for banking industry.

Conclusion:

In this report we looked through BASIC Bank’s financial statements (year 2014-2018) to do the trend
analysis. We analyzed BASIC Bank’s ROE, ROA, Net Interest Margin (NIM), Asset Utilization (AU), Equity
Multiplier (EM), and cash ratio, loans to their deposits, Provision for Loan Loss (PLL) to do the ratio
analysis.

Firstly ROE, where we saw that in first year the company's ROE was very poor then next year it was
better and again next in 2 years it was poor. And we think that it happened because their managers
initially faced problems to generate return from its shareholders equity but later on, they did very well
and generated huge amount of return from its shareholders equity. Then ROA, here also in first year the
company's ROA was very poor then next year it was better and again next in 2 years it was poor. It
means that their managers failed to utilize its assets efficiently. After this we looked through BASIC
Bank’s Net Interest Margin (NIM). Here we found that in 2015, their performance was too good but then
it felled then next year again it was good then again it felled. And we think ineffective investment is the
reason for this unsettled up and down. Then comes BASIC Bank’s Asset Utilization (AU), where we saw
that bank used their assets effectively in 2014,2016,2017 but in 2015 and in 2018 it declined which
means in 2015 and 2018 they failed to use their asset effectively to generate enough return. Then Equity
Multiplier (EM), where we saw that their asset utilization was quite good in terms of shareholders
equity.

Then comes cash ratio or current ratio, where we found that initially their cash ratio was poor but in
2015 it was quite good but again it gradually felled down which means they after 2015 their liabilities
increased and their asset decreased. After this we looked through their loans for deposits, here we can
see that BASIC bank’s ratio is gradually increasing over the years from 2014 to 2018, and that will occur
liquidity problem in future if it goes like this. Then comes Provision for Loan Loss (PLL), where we found
that their performance was good in 2015 and their ratio went over the industry average but again their
ratio declined in 2017. There were trying hard to improve their performance and it increased again in
2018.

Lastly, to do trend analysis we compared Basic Bank’s financial statement (year2014-2018) with some
other banks (SCBs, PCBs, FCBs, SBs). Where we saw that, Basic bank’s performance was best in year
2016 but in other years it was poor.

Recommendation:

Overall Basic Bank’s performance was very unsettled during year 2014-2018. The problems we found
after analyzing was sometimes their managers faced problems to generate return from its shareholders
equity, sometimes their managers failed to utilize its assets efficiently, sometimes they made ineffective
investment, with time their liabilities increased but according to liabilities they failed to increase their
asset, and this bank is facing liquidity crisis.

To overcome these problems, we recommend Basik Bank should work with their asset. They need to
increase asset and decrease liabilities. Then they need to generate return from their shareholders and
use their asset as effective as possible. And if they able to invest effectively and if they then increase
their profit, they can overcome their unsettled performance and liquidity crisis.