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Banking Assignment University of Chittagong
Banking Assignment University of Chittagong
On
Of
Executive Summary
In this report, we have tried to show numerous general activities of The City Bank Limited and
tried to find out the lacking among these activities. We have also shown the impact of these
activities on the bank's profitability. A general activity of the bank means day to day activities or
day to day operations of every section which offer integrated banking service. General banking
consists of the management of deposit, cash, clearing house, bills, accounts opening, security
instrument handling, customer service, locker facilities & other services of the bank besides
Advance & Foreign Trade. Now brief history of the City Bank Limited, CBL founded on 1983
by the all rules & regulation of company act 1912 amendment on 1994 along with Bangladesh
Bank BRPD Policies. In the early age CBL was controlled by the Phoenix Group Bangladesh,
later on Partex BD take over the controlling 2007. From that time CBL has changed his own
operations. From 2007 CBL advancement was started with new Managing Director Mr. K. M.
Sattar & his newly created management committee. And then with all others CBL common
service division was upgraded to general admin division for supporting all other divisions &
departments, but in the few years MANCOM have decided to fully furnish the general admin
with global standard security system & advance administration policies. General banking is the
starting point of all the banking operations& so is CBL. It opens new accounts, remit funds,
honor cheque, takes deposits, issues bank draft & pay order etc. City Bank’s SME Banking
Business Processes are going to be driven thru a centralized platform model. It has a dedicated
Treasury team who is capable of providing all treasury solutions. City SMS gives 24-hour access
to the key financial information of a CBL account. In this report, we have discussed company
profile and it’s products& services as well as the Financial Analysis. City Bank is a market
leader across it’s footprint in innovation, landmark deals, multi-jurisdiction solutions &
sophisticated structuring for corporate and institutional clients. City Bank offers an International
& multicultural working climate (A robust and transparent process of assessment, coaching,
training and reward) which is conducive to creativity, innovation and the development of
personality and which gives new employees responsibility at an early stage of their career &
opportunities of fast development of high performers. Recently The City Bank Ltd. has become
an IFC client, the 4thsuch bank in the entire industry in the country as well as one of the best
banks in Bangladesh. CBL brand is already recognized as the “Most reported Transforming
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Institution “in the country & now it is composed to become “Most Reported Financial Institution
Brand “soon.
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Table of content
Horizontal analysis 22
Vertical analysis 24
Conclusion 30
Sources of Information 31
Introduction
Purpose: The purpose of this report is to investigate and learn the financial performance
of The City Bank Ltd. The report will also compare the financial performance and state
Page | 6
of different consecutive years of City Bank. Helping the investors to take decisions about
investing or not investing in this banking company is also a purpose of this report.
Background: The City Bank Limited is one of the few banks in Bangladesh which has a
centralized infrastructure system. It is one of the private banks which are trying to shape
the banking industry of Bangladesh through imitating the banking structure of more
developed countries. A detailed study of its financial performance and state will help to
gain deep knowledge about its profitability, market value and other important aspects
which are necessary to be known by the investors and general people who want to invest
in the company or deal with the bank.
Scope: This report will clarify the profitability, liquidity, efficiency, solvency, capital adequacy,
market value and other aspects of financial situation of The City Bank Limited. It will help the
investors to take decision to invest or not to invest in this banking company. It will also be
helpful to the general public who want to deal with or through the bank.
An overview
Page | 7
The City Bank is a Bangladeshi private commercial bank operating throughout Bangladesh. It is
one of the few banks in Bangladesh with a centralized infrastructure. The bank started its
operation in 28 March, 1983 as “The City Bank limited”. From 1983 till date, City Bank has
been a case study in evolution having transformed over time from a traditional organization to a
critically acclaimed multi faceted institution that embraces global best practices and chooses to
be at the forefront of technological initiatives. Unlike many, the banks criteria for success are not
only the bottom line numbers but also the milestones set towards becoming the most complete
bank in the country. On the 25th anniversary in 2008 The City Bank Limited revamped its image
and services. This includes the launch of a new logo, launched American Express credit cards,
brokerage business and City Wallet (SMS Banking) service. The name of the bank was
simplified to “City Bank” from its earlier “The City Bank Limited”. The new logo, depicting a
red and white checkered box kite, was launched on July, 2008. It has also a dedicated women
banking division named City Alo. Its mission is to create one of its kinds banking service with a
complete banking experience specially designed for Bangladeshi women customers. The City
Bank has been awarded with the National ICT Award by the Ministry of Posts,
Telecommunications and Information Technology for its excellence in ICT achievement for
Bangladesh. It has 132 branches, over 3858 employees, over 1700000 customers, 369 ATM and
CDM, 7 priority centers, 2 airport lounges, over 1068034 cards issued, over 24000 POS
Machines, over 13000 merchants on board throughout the country.
Industry: Banking
Head Office: City Bank Center. 136, Gulshan Avenue, Gulshan-2, Dhaka-1212,
Bangladesh.
Mission:
Offer wide array of products and services that differentiate and excite all customer
segments.
Ensure respect for community, good governance and compliance in everything we do.
Values:
Result Driven
Board of Directors:
Subsidiaries: City Hong Kong Limited, CBL Money Transfer Sdn. Bhd., City Brokerage
limited, City Bank Capital Rsources Limited.
Best for Premium Banking services in 2018 by Asianmoney best bank awards
Global Climate Partnership Award 2018 by The Global Climate Partnership Fund
(GCPF)
The City Bank Limited is a rapid growing commercial bank in the country. It is competing in the
market with wide range of products & services that plays a vital role in it’s attainment. As it is a
bank the products are embedded with all the services,
A. CREDIT CARD
American Express : From 2010 CBL has franchise the AMEX into the Bangladesh
through 3 categories and also available in dual currency mode.
I. Silver
II. Gold
III. Platinum
VISA: An international and it issues in both Local Currency (Taka) & Foreign Currency
(US Dollar) in 2 categories and also available in dual currency mode.
I. Silver
II. Gold
C. SPECIAL CARDS
City Maxx American Express Card: It’s a totally specialized card which can be used as
American Express but as debit card system.
Various type of loans like Consumer Loan, Education Loan, Health Loan etc.
CBL have wide range of SME Banking Service through 3 individual wings.
CBL also offered wide range of services under the wholesale banking service, those are
define as,
I. Long-term Finance
II. Mid-term Finance
III. Structured Finance
IV. Cash Management
V. Project Management
Despite all these services there are lot of services also offered by CBL which can be listed as
below:
25000 10000
9000
20000 8000
7000
15000 6000
Interest Operating
5000
income (BDT Cost (BDT
10000 Million)
4000 Million)
3000
5000 2000
1000
0 0
20142015201620172018 2014 2015 2016 2017 2018
P a g e | 13
14000 8000
12000 7000
10000 6000
5000
8000 Interest Operating
4000
6000 Expenses Profit (BDT
(BDT Million) 3000 Million)
4000 2000
2000 1000
0 0
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
10000 6000
9000
8000 5000
7000 4000
6000
Net Interest Profit Before
5000 3000
Income (BDT Tax (BDT
4000 Million) Million)
3000 2000
2000 1000
1000
0 0
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
5000 4000
4500 3500
4000
3000
3500
3000 2500
Non Funded Profit After
2500 2000
Income (BDT Tax (BDT
2000 Million) 1500 Million)
1500
1000
1000
500 500
0 0
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
P a g e | 14
16000 4.5
14000 4
12000 3.5
3
10000 Total 2.5
8000 Operating Earnings Per
Income (BDT 2 Share (BDT)
6000
Million) 1.5
4000 1
2000 0.5
0 0
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
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Ratio Analysis
Profitability Ratio
Net Income
(1) Return On Asset = ×100
Total Asset
(m¿ million)
2018 m
ROA (2018) = ×100
324780 m
= 0.6%
3628m
ROA (2017) = ×100
275531m
= 1.3%
3956 m
ROA (2016) = ×100
254776 m
= 1.6%
3600m
ROA (2015) = ×100
210221m
= 1.7%
2227 m
ROA (2014) = ×100
172565m
= 1.3%
Net Income
(2) Return On Equity = ×100
Equity
2018 m
ROE (2018) = ×100
24430 m
= 8.3%
P a g e | 16
3628 m
ROE (2017) = ×100
24869 m
= 14.9%
3956 m
ROE (2016) = ×100
20653 m
= 19.2%
3600 m
ROE (2015) = ×100
20890 m
= 17.2%
2227 m
ROE (2014) = ×100
18890 m
= 12.1%
( 22917−13716 ) m
NIM (2018) = ×100 (m¿million)
324780m
= 2.8%
7495 m
NIM (2017) = ×100
275531m
= 2.7%
6477 m
NIM (2016) = ×100
254776 m
= 2.5%
5506 m
NIM (2015) = ×100
172565m
= 2.7%
P a g e | 17
5122m
NIM (2014) = ×100
172565m
= 3%
Comment: The profitability position of the bank is almost good. But Return on Asset (ROA) is
not satisfactory as like as industry average. There Earning per Share (EPS) is good, just like as
other bank which is 2.1, 4.1, 4.5, 4.1, 2.7(last five years).so we can say that they gradually earn
profit and they also provide satisfactory amount of their shareholder.
Liquidity Ratio
Current Assets
(1) Current Ratio = ( m¿million)
Current Liabilities
4,332,782 m
CR (2018) =
1,350,298 m
= 3.2:1
4,767,775 m
CR (2017) =
3,199,559 m
= 1.5:1
2,747,550,027
CR (2016) =
3,171,225,562
= 0.87:1
3,822,439,339
CR (2015) =
2,997,106,834
= 1.3:1
2,930,228,494
CR (2014) =
3,533,508,073
= 0.83:1
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Comment: Current ratio measures the ability of the company or bank to repay the short term
debts which are due within the period of the next one year. The industry average of this ratio is
2:1.So that in 2017, 2018, the ratio is satisfactory .But in 2014, 15, 16 that was not.
4683 m
TIER (2018 ¿
1182 m
¿4
5114 m
TIER (2017) ¿
822
= 6.2
5633m
TIER (2016)¿
792m
¿ 7.1
4561 m
TIER (2015)¿ =7.2
630 m
3596 m
TIER (2014)¿ =10.8
334 m
Comment: The result is a number that shows how many times a company could cover its interest
charges with its pretax earnings.Inthis, its look that it was 4 times in 2018, 6.2 times in 2017, it
was 7.2 in 2015.In 2014,it was high times which is 10.8 times. So, finally the liquidity ratio is
almost good in previous two year, and then it was decreasing. But time interest in not satisfactory
in previous two year, it was good at 2014.
Solvency Ratio
Current Liability + Long term Liability
(1) Debt Equity Ratio(DER) ¿
Equity Capital
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300,350,360,867
DER (2018) ¿
24,429,926,829
= 12.3
250,662,086,487
DER (2017) ¿
24,869,342,148
= 10.1
234,123,271,997
DER (2016) ¿ = 11.3
20,653,085,670
189,331,282,403
DER (2015) ¿
25,509,136,090
= 9.1
154,109,680,841
DER (2014) ¿
23,117,835,102
= 8.4
300,350,360,867
DTR (2018) ¿
324,780,287,696
= 0.92
250,662,086,487
DTR (2017) ¿
275,531,428,634
= 0.91
234,123,271,997
DTR (2016) ¿
254,776,357,668
= 0.92
189,331,282,403
DTR (2015) ¿
214,840,418,493
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= 0.88
154,109,680,841
DTR (2014) ¿
177,227,515,943
= 0.87
Total Liability
(3) Debt to Total Capital Ratio(DTCR) ¿
Equity Capital+Total Liability
300,350,360,867
DTCR (2018) ¿
24,429,926,829+300,350,360,867
= 0.92
250,662,086,487
DTCR (2017) ¿
24,869,342,148+ 250,662,086,487
= 0.91
234,123,271,997
DTCR (2016) ¿
20,653,085,670+ 234,123,271,997
= 0.92
189,331,282,403
DTCR (2015) ¿
25,509,136,090+189,331,282,403
= 0.88
154,109,680,841
DTCR (2014) ¿
23,117,835,102+154,109,680,841
= 0.87
Equity Capital
(4) Net Worth to Total Asset(NWTA) ¿ Total Asset
24,429,926,829
NWTA (2018) ¿
324,780,287,696
= 0.07
P a g e | 21
24,869,342,148
NWTA (2017) ¿
275,531,428,634
= 0.09
20,653,085,670
NWTA (2016) =
259,423,947,774
= 0.08
25,509,136,090
NWTA (2015) ¿
214,840,418,493
= 0.12
23,117,835,102
NWTA (2014) ¿
177,227,515,943
= 0.13
Comment: The solvency ratio indicates whether a company’s cash flow is sufficient to meet its
short-and long-term liabilities. The ideal value of debt-equity ratio is 1:1, debt to total asset is
0.25:1, debt to total capital is as like as debt to total asset and net worth to total asset is
3:4.Therefore, debt to equity, asset, capital is satisfactory amount of cash flow amount to meet
short and long term liability on the basis of ideal value of ratio analysis. But net worth capital is
not good amount to meet the total liability.So; finally we can say that the overall solvency ratio is
good in the particular area of other bank.
Efficiency Ratio
Income Revenue
(1) Asset Turnover Ratio(ATR) ¿
Average Total Asset
15,902,037,484
ATR (2018) ¿
324,780,287,696÷ 2
= 0.098
14,916,112,766
ATR (2017) ¿
275,531,428,634÷ 2
= 0.11
14,395,722,838
ATR (2016) ¿
254,776,357,668
= 0.11
P a g e | 22
12,784,325,437
ATR (2015) ¿
214,840,418,493
= 0.12
10,538,716,523
ATR (2014) ¿
177,227,515,943
= 0.12
Income Revenue
(2) Fixed Asset Turnover Ratio(FATR) ¿
¿ Asset
15,902,037,484
FATR (2018) ¿
3,519,386,471
= 4.50
14,916,112,766
FATR (2017) ¿
3,277,030,329
= 4.55
14,395,722,838
FATR (2016) ¿
3,437,235,921
= 4.20
12,784,325,437
FATR (2015) ¿
8,135,621,490
= 1.57
10,538,716,523
FATR (2014) ¿
8,105,956,571
= 1.30
Comment: Efficiency ratios are used in analyzing a firm’s ability to effectively employ its
resources, such as capital and assets, to produce income. Every BDT of total assets generates
0.098 revenue in 2018, it is 0.11 in 2017, it is .12 in 2015.Except 2018, previous four year each
asset to generate revenue is just like same. Finally, we say that total asset generates to revenue is
good in the city bank, in the last five years. It’s gradually achieving same value in this year.
P a g e | 23
Directors' fees
Auditors' fees
Depreciation and repair of Bank's assets other expenses
Total operating expenses (B)
Operating Profit (C = A-B)
Provision for loans and advances/investments
Provision for o -balance sheet exposures
Other provision
Total provision (D)
Total profit before taxes (E = C-D) Provision for taxation (F) Current tax
expense
Deferred tax income/(expense)
Total provision for tax
Net profit after tax (G = E-F)
VERTICAL ANALYSIS
Solo Balance Sheet as at 31 December (last 3 years)
In Bangladesh
Outside Bangladesh 0% 0% 0%
8% 5% 5%
Money at call and short notice 0% 0% 0%
Investments
Government 7% 8% 9%
Others 1% 1% 1%
9% 9% 10%
Loans and advances/investments
Loans, cash credits, overdrafts,
etc./investments 70% 70% 66%
Bills purchased and discounted 1% 2% 3%
71% 71% 69%
Fixed assets including premises, furniture and
fixtures 1% 1% 1%
Other assets 4% 5% 5%
Non-banking assets 0% 0% 0%
Total assets 100% 100% 100%
LIABILITIES AND
CAPITAL
Liabilities
Tier-II subordinated bond 3% 3% 1%
Borrowings from other banks, financial institutions and
agents 19% 14% 12%
Deposits and other accounts
Current deposits and other accounts 8% 9% 10%
Bills payable 0% 0% 1%
Savings bank deposits 14% 14% 14%
Fixed deposits 41% 43% 45%
Bearer certificate of deposit 0% 0% 0%
63% 67% 69%
Other liabilities 8% 8% 10%
Total liabilities 92% 91% 92%
Capital/shareholders' equity
Paid up capital 3% 3% 3%
Statutory reserve 2% 3% 2%
Share premium 0% 1% 0%
Dividend equalization reserve 0% 0% 0%
Other reserve 1% 1% 0%
Surplus in profit and loss account 1% 1% 2%
Total shareholders' equity 8% 9% 8%
Total liabilities and shareholders' equity 100% 100% 100%
P a g e | 27
→ Analysis of Balance Sheet refers to the components of Balance sheet items as a % of total
assets over the periods which would be termed as common sizing of Balance Sheet.
VERTICAL ANALYSIS
Solo Profit& Loss Accounts (last 3 years)
→ Profit & Loss Account refers to the components of Profit & Loss Account as a % of total
income (Interest Income + Investment Income + Commission, Exchange, Brokerage and others)
over the periods which would be termed as common sizing of Profit & Loss Account.
Comment: Here each line item is listed as a percentage of a base figure within the statement.
There cash is 6% of total asset in 2018; it was decreasing in compare to previous two years.
Balance is increasing in compare to previous two year. There Investment is also increased which
is 71% of total assets, that’s why interest of these investment also increased. Current liability is
gradually decreasing, but total liability is just like same in last three years. On the other hand,
Operating profit is gradually decreased which is 23% in 2018 .Also decreased Net Profit after
Tax of Profit & Loss Account.
2018 BDT m
Particulars Taka
2017 BDT m
Particulars Taka
2016 BDT m
Particulars Taka
2015 BDT m
Particulars Taka
2014 BDT m
Particulars Taka
Comment: The amount of difference between market capitalization and book value of shares
outstanding. The MVA is continuously increasing, which are 9,842 in 2014 and it’s increased in
2017, which is 39,826. And it is also decreased in 2018, which is 19,533.It signifies the
enhancement of financial solvency as perceived by the market.
Add: Provision for Loans and Advances 8,964 6,872 6,948 6,751 5,422
Earnings
Add: Provision for Loans and Others 2,324 1,718 2,071 2,179 1,540
Average cost of equity (based on weighted 12.90% 12,90% 12.90% 12.90% 12.90%
average rate of SanchayPatra issued by the
Bangladesh Government plus 2% risk
premium)
P a g e | 31
Comment: The EVA in 2018 is the lowest among the five years. It has increased from 2014 to
2016 and drastically decreased from 2016 to 2018 which has become the lowest of five years.
Low EVA means low residual capital which is a threat for capital formation. The bank should
take necessary measures to increase its EVA.
Conclusion
From the report we can see that the banks financial performance is quiet good up to 2017. But in
2018 the financial performance is dropped in some aspects in comparison with the previous
years. Such as, the market value of the bank has massively decreased from 2017 to 2018 which is
not a good sign. Also, the EVA has also decreased tremendously in 2018 from 2017. Besides the
ROA is not satisfactory, operating profit and net profit after tax has also decreased in 2018. But
the condition of liquidity and solvency is satisfactory as per the liquidity and solvency ratio
analysis. The banks management should take necessary steps to improve its financial condition
in the sectors mentioned above.
P a g e | 32
Sources of Information
www.wikipedia.org
www.thecitybank.com
www.google.com