A Report

on
The General Banking Activities of City Bank Ltd.

Submitted to

Department of Finance
Faculty of Business Studies
University of Dhaka

Supervised by:

Dr. A.A. Mahboob Uddin Chowdhury

Professor
Department of Finance
Faculty of Business Studies
University of Dhaka

Submitted by:

Nadira Anjum Moumy

BBA Id: 25-159
Section: A
Department of Finance
Faculty of Business Studies
University of Dhaka

Date of Submission: November 5, 2023

 Letter of Transmittal

November 5, 2023

Dr. A.A. Mahboob Uddin Chowdhury

Professor
Department of Finance
University of Dhaka

Subject: Submission of report on “The General Banking Activities of City Bank Ltd”

Dear Sir,

With great respect, I am honored to submit my report titled “An Insight into the General Banking
Activities of City Bank Ltd”. This task has given me the opportunity to explore one of the most
important aspect of the City Bank Ltd. which is known as general banking. This report contains a
comprehensive study on banking related issues and everything about general banking of City Bank
Ltd. It was an amazing experience for me to work in a principal office, Motijheel branch and had
a great pleasure to prepare this report.

From this bank, I have gained practical knowledge which will help me to make my work easier. I
would like to thank you for the cooperation, supervision that helped me to prepare this report on
time.

Sincerely,

……………………………………….
Nadira Anjum Moumy
BBA Id: 25-159
Section: A
Batch:25th
Department of Finance
Faculty of Business Studies
University of Dhaka

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 Student Declaration

I, Nadira Anjum Moumy, declare that all the information contained in this report are prepared by
me and this report has not been submitted in whole or part for any degree to any other university.
I thereby, declare that I have not misrepresented, falsified any facts or data. Except specific
reference, all the information is prepared by my hard work.

I further affirm that the work reported in this report is original and no misinformation has been
presented in this report.

Sincerely,

…………………………………..

Nadira Anjum Moumy

BBA Id: 25-159
Section: A
Batch: 25th
Department of Finance
Faculty of Business studies
University of Dhaka

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 Acknowledgement

At first, I would like to express my gratitude to Almighty Allah who gives me the strength and
sound health to complete my report on time. I would like to express my appreciation to my
honorable supervisor Dr. A. A. Mahboob Uddin Chowdhury. His continuous guidance and
supervision played a vital role in making the report complete. His direction helped me to make my
report effective.

I am also indebted to Md.Moniruzzaman, Cluster Manager, who is not only supportive but also a
very nice motivator, very understanding and very nice mentor. He taught me how to face
challenges and tackles it smoothly. He made me feel more confident and more responsible in these
3 months. I would like to thank my parents and relatives who always motivate me for this journey.

Lastly, I would like to give special thanks to my fellow BBA students, colleagues for their intense
support and advice. I am truly blessed to have such a nice people in my journey.

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 Executive Summary

In today’s world, banking sector has become competitive to give superior service in Bangladesh.
The purpose of this internship program was to show the real- life situation. This report is basically
An Insight into the General Banking Activities of City Bank Ltd.
In the first part, I give a summary of description about my internship experience and what I have
learned from the City Bank Ltd.
In the first chapter of second part, I give the introduction of this report including the scope,
objectives, methodology and limitation of the study.
In the second chapter, it shows that the theoretical background and previous studies. Here I give
some theories about the bank and also previous studies about the bank.
In the third chapter, I have done the performance analysis of City Bank. Here I have showed the
conditions of City Bank like deposits, loans, non-performing loan. For further analysis, I have
done ratio analysis taking 5 years of data of City Bank.
Lastly, I have concluded this report with the summary of this overall report.

vPage
Table of Contents

Executive Summary....................................................................................................................................... v
List of Tables ............................................................................................................................................. viii
List of Graphs .............................................................................................................................................. ix
Acronyms ...................................................................................................................................................... x
About Internship ......................................................................................................................................... 12
Learning Outcomes from City Bank ....................................................................................................... 12
1.Account Opening ............................................................................................................................. 12
2.Honoring Cash ................................................................................................................................. 14
3.Fund Transfer ................................................................................................................................... 15
4.BEFTN ............................................................................................................................................. 15
5.RTGS ............................................................................................................................................... 15
6.Pay Order ......................................................................................................................................... 15
7.Account Statement ........................................................................................................................... 15
8.Solvency Certificate ......................................................................................................................... 15
9.Cheque Book Issue .......................................................................................................................... 16
10.Cheque book destruction ................................................................................................................ 16
11.Dollar Endorsement ....................................................................................................................... 16
12.Student File .................................................................................................................................... 16
13.Card Issue....................................................................................................................................... 17
14.Loan Section .................................................................................................................................. 17
Chapter- 1.................................................................................................................................................... 20
Introduction ................................................................................................................................................. 20
Scope of the Study .................................................................................................................................. 21
Objectives of the Study ........................................................................................................................... 21
Methodology of the Study ...................................................................................................................... 22
Limitations of the Study.......................................................................................................................... 22
Chapter- 2.................................................................................................................................................... 24
Theoretical Development and Previous Studies ......................................................................................... 24
Theoretical Development ........................................................................................................................ 24
Functions of Commercial Banks ............................................................................................................. 27

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 Previous Studies ...................................................................................................................................... 28
Chapter- 3.................................................................................................................................................... 31
An Overview of Banking System of Bangladesh ....................................................................................... 31
The Financial System of Bangladesh ...................................................................................................... 31
The Banking System of Bangladesh ....................................................................................................... 31
Scheduled Banks ................................................................................................................................. 32
Non-Scheduled Bank .......................................................................................................................... 32
Total Deposits of Banking System in Bangladesh .................................................................................. 33
Total Advances of Banking System in Bangladesh ................................................................................ 35
Amount of NPLs of all Scheduled banks in Bangladesh ........................................................................ 37
Chapter- 4.................................................................................................................................................... 40
Analysis and Findings ................................................................................................................................. 40
Deposit .................................................................................................................................................... 40
Loans and Advances ............................................................................................................................... 42
Non- Performing Loan ............................................................................................................................ 44
Net Interest Margin ................................................................................................................................. 45
Return on Asset ....................................................................................................................................... 47
Return on Equity ..................................................................................................................................... 49
Total Loans to Customer Deposits ratio ................................................................................................. 52
Findings .................................................................................................................................................. 54
Chapter- 5.................................................................................................................................................... 56
Summary and Conclusion ........................................................................................................................... 56
References ................................................................................................................................................... 57

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 List of Tables

Table- 1 : Interest rate of Deposit ................................................................................................. 14

Table- 2: Charges of loan .............................................................................................................. 18
Table- 3: Total Deposit of banking system in Bangladesh ........................................................... 33
Table- 4: Total Advances of banking system in Bangladesh ........................................................ 35
Table- 5: Amount of NPLs of all scheduled banks ....................................................................... 37
Table- 6: Deposit of City Bank Ltd. ............................................................................................. 40
Table- 7: Loans and Advances of City Bank ltd ........................................................................... 42
Table- 8: Non- Performing Loan of City Bank Ltd. ..................................................................... 44
Table- 9: Net Interest Margin of City Bank Ltd. .......................................................................... 45
Table- 10: Return on Asset of City Bank Ltd ............................................................................... 47
Table-11: Net Income, Operating Income & Total Asset of City Bank Ltd................................. 49
Table- 12: Calculation of ROE ..................................................................................................... 50
Table- 13: Total loans to Total deposits of City Bank ltd. ........................................................... 52

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 List of Graphs

Graph- 1: Total Deposit of banks in Bangladesh .......................................................................... 34

Graph- 2: Advances of banking system in Bangladesh ................................................................ 36
Graph- 3: Amount of NPLs of all scheduled banks in Bangladesh .............................................. 38
Graph- 4: Deposit of City Bank Ltd. ............................................................................................ 41
Graph- 5: Loans and Advances over 5 years of City Bank Ltd .................................................... 43
Graph- 6: Non- Performing Loan of City Bank Ltd. .................................................................... 44
Graph- 7: Net Interest Margin of City Bank Ltd. ......................................................................... 46
Graph- 8: Return on Asset of City Bak Ltd. ................................................................................. 48
Graph- 9: Return on Equity of City Bank Ltd. ............................................................................. 51
Graph- 10: Total Loans to total deposit ratio of city bank ltd ...................................................... 53

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 Acronyms

FD Fixed Deposit
KYC Know Your Customer
BEFTN Bangladesh Electronic Fund Transfer
RTGS Real Time Gross Settlement
PO Pay Order
TM Travel & Miscellaneous
DPS Deposit Pension Scheme
CIB Credit Information Bureau
NCBs Nationalized Commercial Banks
SCBs Specialized Commercial Banks
SOCB State Owned Commercial Banks
PCBs Private Commercial Banks
FCBs Foreign Commercial Banks
MFIs Micro Finance Institutions
ROE Return on Equity
ROA Return on Asset
NPL Non- Performing Loan
NIM Net Interest Margin
CBL City Bank Limited

xPage
 Part A
About Internship

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 About Internship

The word Internship refers to a professional learning experience, with pay or without pay, so that
a student can gain a practical knowledge for his/her career exploration and improvement and also
career ability to learn new skills. So, when applying for real job, this internship program can help
a student to take a wise decision in choosing his/her right career path.

I have done my internship in City Bank Principal Office branch, Motijheel. I have joined there on
July 30,2023. I have joined there because City Bank is a renowned private commercial bank in
Bangladesh for providing superior service with quality. In my branch, all the services are given
through token system.

Learning Outcomes from City Bank

During my internship, I have to learn from every desk of retail banking division of City Bank. So,
the learning outcomes are written in a following way:

1.Account Opening:

In the first month of August, I have to learn how to open an account in City Bank. So, I learned it
from my own account opening process and gradually learn it by filling up the form of various
customers. There are three forms of account opening. One is for Personal account opening form
which is for individual or those who want to open a savings account, second is Non-Individual
account opening form which is for businessman meaning those who want to open a current account
and third one is FD/Scheme Opening Form for those who want to open a fixed deposit account.
So, for opening a saving account, an applicant must have to submit the following documents:

✓ 2 copies of passport size photo of applicant.

✓ Applicant’s Original NID Card.
✓ Income proof document like salary certificate or bank statement or pay slip.
✓ 1 copy passport size of photo of nominee
✓ Nominee’s Original NID Card
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Then in a personal account opening form, I have to fill up customer’s name in English and Bangla,
father’s name, mother’s name according to NID, spouse name (if any), present address,
professional address, permanent address should be written according to the NID Verification form,
date of birth, nationality, gender, NID number, occupation, relationship with account, monthly
income, email address, phone number. In this form, I have to written nominee’s information about
his/her name, NID number, relationship with account holder, Date of Birth, address according to
the nominees NID Verification paper. Then the officer checks whether the customer had any
previous account or not and makes an KYC Form. After that the sign has been taken from customer
and immediately an Instapack which means a packet containing 10 leaves of cheque book and also
his/her account number is written on that cheque book. Then the officer takes the customer to
BOM (Branch Operations Manager) for recognition and also is the proof that the customer is here
to open an account. After all things are okay, then customer’s account is opened.

For opening a current account, an applicant must bring:

✓ Applicant’s NID
✓ Applicant 2 copy passport size photo.
✓ Customer’s business Trade License
✓ Customer’s E-TIN.
✓ Tax Return certificate
✓ If there is a partnership business, then all the information of that partner.
✓ Nominee’s document
✓ Deed of that business

The process is same in case of this current account holder.

For fixed account opening, an applicant must have a saving account. Then he/she can open this
account.

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The interest rate given for this kind of accounts are:

Types of Deposit Interest rate

General Savings Account
Below 1 lac 0%
1 lac – below 5 lacs .50%
5 lac-below 30 lacs .75%
30 lac and above 1%
Current Account 1%
Fixed Deposit
For one month (up to 1 crore) 6%
For three months (up to 1 crore) 6.15%
For six months (up to 1 crore) 6.35%
For 1 year 6.35%
For 2 year 7.5%
Table- 1: Interest rate of Deposit
Source: City Bank Ltd.

2.Honoring Cash
In a cash section, I have learned how to honor the cheque. So, in case of bearer cheque and when
the bearer comes on behalf of the customer in a cash counter, the cash officer checks the date, taka
in amount and words, sign verify where both the bearer and customer need to sign in a back of the
cheque, cheque verify in a machine then write a CB number. Then this cheque goes to another
officer who makes call confirmation. Normally that person can call up to 150,000tk- 25,00,000tk
of cheque. If this cheque is beyond 25 lakhs, then the call should be confirmed by the manager.
So, the cash officer always checks the cheque because if the money is transferred to wrong person,
it would be trouble for the customer and thus bank’s reputation will be negatively affected. After
getting call confirmation from customer, a seal is given to the backward of the cheque. Then
officers put records in computer and then the cheque is being honored. But when the customer
himself comes for payment with cheque, then there is no need for call confirmation.

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3.Fund Transfer
This kind of transfer means fund is transferred to one branch to another branch under City Bank
Ltd. In this case a customer or bearer comes with request to the bank that a specified amount should
be transferred to another branch then if all the information is ok, the bank is obligated to transfer
the cheque.

4.BEFTN
BEFTN means Bangladesh Electronic Fund Transfer. It’s not a transfer from individual bank
rather a customer can transfer its fund from one bank from another bank. So, transfer of money
can be initiated of one bank and that fund can be withdrawn from another bank. Normally huge
amount of fund is transferred in this way as this is safer.

5.RTGS
RTGS means Real Time Gross Settlement. It is a process of safer transfer of fund from one bank
to another. When a customer brings a RTGS form where the name of the receiver or beneficiary’s
bank name, branch name receiver’s account number, routing number etc. is specified.

6.Pay Order
When the customer has lost cheque but need to pay his client, PO helps it to transfer fund from his
account. Moreover, when the customer has closed his account but till some of the money has left
over, as customer has not any authorized cheque, for this pay order in the name of bank is issued
for the withdrawal of the leftover money.

7.Account Statement
When customer wants to show his/her list of transaction, he/she need to fill a general request where
it states that from which period, he wants to show his transaction. Then the banker puts the account
number, from date to date, checks the customer’s sign in their system called LWF (Liability Work
Flow), this statements charges 100 +15% VAT or total 115 taka from the customer’s account. Then
the banker signs it and seal it and hand over to the customer.

8.Solvency Certificate
To get a solvency certificate, a customer has to bring a request form or if he doesn’t bring this then
the bank gives him/her a general request form. This certificate contains with balance or without
balance according to customer’s will. Then the certificate and its photocopy are signed and sealed
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by two CSM (Customer Service Manager). Then handed over to the original to the customer. It
charges 230 tk.

9.Cheque Book Issue

At first, customer has to give request for cheque book for how many pages he/she need and it has
to be signed in that request slip. Then after 3 days, customer gets SMS and collect his/her cheque
book. Normally for saving account 10,25 pages of cheque is prepared and for current account
50,100 pages of cheque book are made.

10.Cheque book destruction

After 75 days, a cheque gets ready for destruction. But before gets destroyed, I get a duty to call
each customer and inform them for cheque destruction. If the customer wants, he/she can collect
cheque book on that day.

11.Dollar Endorsement
When a customer wants to purchase dollar in cash, TM form (Travel and miscellaneous) is
prepared for this purpose. In that form, I have to fill dollar amount and in words, country name,
purpose, travel medium (by air or by bus etc.) according to VISA and ticket. Then I have to write
customer’s passport number, date of issue and place of issue. Then the customer has to sign on
that form according to his/her passport. For an accountholder, bank charges 250 taka and other
charges and for non-accountholder, bank charges 750 taka and other charges. The exchange rate
fluctuates by three months. That means in August, the rate was 110, then in September the rate
was 111.50tk and now the rate is 113 takas. A customer can purchase highest of $5000 in cash in
one year. But if he wants to purchase dollars through card, then he doesn’t need to fill up the TM
form, only passport is required. The limit is $12000 in one year for dollar purchase which is for
both for cash and card. There is no endorsement charge in case of card, but when the customer
uses that card in abroad then $3 or 3% of its purchase, whichever is higher is charged by the bank.

12.Student File
This is an exceptional account opened by bank. When a student is going to abroad for study, he/she
has to open a student file account. For opening an account, he/she needs to give offer letter from
university, bank detail, invoice meaning how much money City Bank will have to transfer in that
student account per semester and per year and all academic certificate must be submitted to the

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City Bank. Then a savings account is opened where mandate is must who is going to pay on behalf
of the student.

13.Card Issue
City Bank has issued different kinds of Debit Card are MasterCard, Visa card, City Max, Union
pays. Initially, during account opening a customer can open a debit card. The charge for debit card
is 575 for new issue and 345 takas for reissue.

For credit card issue, an applicant must have an income of 30,000 taka. For unsecured meaning
who does not have DPS or FDR with bank, then he/she has to bring:

✓ 2 copies of Photo
✓ Original NID
✓ E-TIN
✓ Tax Return certificate
✓ Salary statement for 6 months in case of a service holder and 1 year of salary
statement in case of a businessman.

Actually, for an unsecured person, a bank is not going to give him credit card easily. After getting
information about loan payment, loan payment behavior from CIB (Credit Information Bureau),
then bank gives him a credit card. The charges for Credit card are: for American Express card
(local) is 1500+15% VAT, for dual it is 2000tk+15% VAT, CIB fee is 100 TK and SMS
notification fee are 200 tk. Here local card means he can only use this card in his home country
but dual card means he can use this card in both abroad and his home country.

14.Loan Section
In the last month my internship, I have learned loan file. Mainly a customer can get a loan if he/she
has income. If there is no income, then he/she cannot request for loan. The various types of loans
are home loan, auto loan, personal loan. For a personal loan the interest rate is 10%, for home loan,
the interest rate is 8.5% and car loan, the interest rate is 9%. For this loan application a customer
is required to fulfill these following documents:

✓ Loan Application Form

✓ Individual KYC
✓ 3 copies of Photograph
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 ✓ CIB Undertaking
✓ NID/Smart Card
✓ Self- Declaration
✓ E-TIN/TIN Document
✓ Business card/Office ID
✓ Bank Statement
✓ Utility bill copy
✓ Guarantor’s NID
✓ Guarantor’s photo
✓ Their signature

After getting this document, the RM (Relationship Manager) visits the customer’s shop or office
to verify that all documents are valid. I have to write a loan file under the RM’s instructions. The
charges are:

Particulars Charges
Processing Fee .5%
CPV Charge 650 takas
Stamp Charge 115 takas
Supervision Charge 1%
Cheque Book Charge 230 takas
Debit Card Charge 575 takas
SMS service Charge 345 takas
Table- 2: Charges of loan
Source: City Bank

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 Part B: Report Part

Chapter- 1

Introduction

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 Chapter- 1

Introduction

A bank is a financial institution which accepts deposits and create loans and performing other
services as well. It plays an important role for the financial system of the country. Banks are
generating interest by lending money to individuals which creates profit for the bank. This is the
process a commercial bank usually earns profit by doing lending and investing activities.
Moreover, it ensures that the investor’s money is invested in viable projects. Banks ensures that
the individuals and governments and corporations will get enough support from it as it enables
them to borrow funds at a competitive interest rate. It allows lenders to manage their cash flow
and allows them to initiate instant money transfers and make payments easily.

Banks cater to all sorts of small firms, large firms and also individuals. They also provide easy
access to funds through facilities like ATMs, debit cards, credit cards etc. and the customer can
also utilize digital banking offered by bank.

Banking process work by accepting deposits and borrow money to customers and other facilities
they provide. In today’s world, technological and financial advancement influences every human
being. General banking is important one. Because it is the most important of total banking system.
Because it builds the base of the customer- banker relationship and strengthen this relationship.
This is the era of competition among banks in Bangladesh. That’s why, the regular service is given
to customer with short time and very effectively, otherwise banks may lag behind from its
competitive banks. They provide different services like depositing money, providing other
ancillary services so that to remain in this competition.

Today, banks are so important that it can be said as the heart and lifeblood of any functioning
economy. Because banks invest in new firms, banks promote trade and industry of the country,
banks promote capital formation and also help to contribute in the development of agricultural
sector. For these reasons, it is the key to the growth and development of the economy and very
necessary to create opportunities, facilitating commerce and providing jobs etc.

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In this report, I have shown the general banking activities of City Bank Ltd. Not only the theoretical
knowledge but also real-life experience is really important for a student for handling real life
problems and tackles those situations. Real life situations help a student to think logically and
practically and to grow as a professional person. As I experience different things, I get an
opportunity to know myself more about my strength, weakness which will ultimately develop my
skills and abilities to grow further.

For the internship program, I have selected a bank named ‘The City Bank Ltd’. I have decided to
work on the practices of banking activities of that bank. Here, I have used my personal experience
for making this report.

Scope of the Study

This report focuses on the general banking activities of City Bank Ltd. General banking is a main
part of the bank as it has a bigger scope. General banking includes account opening, cash,
remittance, clearing and other works like cheque book issue, balance check, account closing etc.
So, it has a wider scope of the bank and also it is one of the most important section as it collects
new customers and maintains strong relationship with existing customers through this kind of
activities and thus creating revenues for the bank. It is the core activities of the whole bank as it is
the one which generates earning for the bank.

Objectives of the Study

As an intern, doing internship has an amazing experience for me. I chose this topic because most
of my learning from internship focuses on this topic and that’s why I am inspired to work on this
topic to describe every aspect of the general banking activities. The main objective of my
internship is to get practical direction as guidance from the bank and also to learn how it performs.
Besides this, the other objectives are:

i. To describe the introduction of this report.

ii. To describe the scope and limitations of this report
iii. To describe the theoretical development and previous studies of this report.
iv. To describe the overview of banking system of Bangladesh.

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 v. To describe the analysis and findings of this report.
vi. To describe the conclusion and summary of this overall report.

Methodology of the Study

It shows the vital part of the study which ensures reliability, valid results which addresses
objectives and also shows what kind of data is required for collection and analysis. For this study,
formal and oral discussion, direct observation, questioning employees of the bank. Moreover, to
prepare this report, I have gathered the bank’s other information which are as follows:

i. The annual report of the bank

ii. Related materials and text book
iii. Websites of City Bank Ltd.
iv. Articles, citations of different writers.
v. Many valuable information from the internet.

Limitations of the Study

Although many problems had been faced for preparing this report, I tried to complete this report
more accurately and carefully. But still some limitations are:

i. Lack of information contained in the annual report.

ii. Lack of data because of it is confidential according to the bank’s policy.
iii. Facing some work difficult because of technical issue and time-consuming manual work.
iv. Lack of proficiencies which creates constraints in the way of careful evaluation of this
topic.
v. Lack of time provided by bank employees for their busy time schedule.
vi. Lack of experience for preparing this kind of report.

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 Chapter- 2

Theoretical Development and Previous

Studies

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 Chapter- 2

Theoretical Development and Previous Studies

Theoretical Development

Banking: The financial intermediary which accepts loan and granting new loans is known as a
bank which offers a variety of services related to financial.

The Term ’Banking’ is applicable for savings and loans to the large commercial banks in a larger
range. (Shelagh Heffernan, John Wiley and sons,2005)

Services given by banks are checking accounts, savings accounts, current accounts, fixed accounts,
certificate of deposits, loans like home loans, auto loan, personal loans for consumer goods,
providing card services, cheque book services and other services like remittance, dollar
endorsement, internet banking, mobile banking and foreign exchange services.

General Banking: General banking also called retail banking includes main business of bank or
other financial institutions. It shows direct customer service center which is the starting point of
the major banking operations. At first, it opens new account, remit funds, honor cheques, take
deposits, issues bank draft and pay order and transfer other funds through BEFTN, RTGS etc.
Among these the major sections are:

✓ Account Opening Section

✓ Clearing Section
✓ Cash Section
✓ Remittance

Account Opening Section: This section refers to a customer service section. Here the employees
of the bank in a retail banking division are always ready to serve their customers with full attention.
In this section, people come to open an accounts and schemes and are being treated with a very
cordial and friendly behavior by bankers. In this section, employees are also issue cheque books
for customers. This account opening section is very important as it has some safety preservations

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such as for creation of saving attitude, facilities of less risk income for customers, national capital
creation and establishment of social securities and thus for economic development. The various
types of people who can open accounts are individuals, sole proprietorship, partnership firm,
private or public limited companies, societies etc. for these people, the various types of accounts
are savings, current, fixed, short term fixed deposit account etc. There are some limitations of
account opening are:

• Lack of effective deposit scheme.

• Rate of interest is very competitive.
• There are no promotional opportunities about this.
• Customers are not aware about these deposit schemes of the bank.

Clearing Section: Clearing is the process by which financial trade is settled. Clearing is necessary
for the matching of all buy and sell orders in the market.

Cheque clearing also known as bank clearing means the procedure of moving cash from the bank
on which a cheque is drawn to the bank in which it was deposited, usually accompanied by the
movement of the paying bank. This process can say as clearing cycle and then resulting credit to
the account at the bank of deposit and also an equivalent debit to the bank account on which it was
drawn. Also, in this cycle an adjustment of accounts of the banks is needed. If there is not sufficient
fund in the account when cheque is arrives at the counter of the issuing bank, the cheque would be
regarded as dishonored cheque which will be mark as non- sufficient funds.

Cash Section: Cash Section is the most important section any bank and so it is handled with extra
care. Cash amount is the main source of all banking activities and services. It demonstrates the
liquidity strength of a bank. There are various systems maintained by cash officers such as vault,
cash payment, cash receive, transaction reconciliation after banking hour. For that every day bank
has to remain certain amount in cash.

The cash department mainly performs two kinds of activities that are: cash payment and cash
receipt. Banks usually make payment to customers in a cash form and also receive cash as a deposit
from the customers. Besides these two functions, banks also collect utility bills from relevant areas
or surroundings. It also collects the funds of government. This section is the riskiest section of the

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bank. For this reason, a tight security is implemented on this section to remove all sorts of accidents
like robbery, theft.

Remittance Section: Remittances are the transfer of funds between parties as a bill, an invoice or
even a gift. Remittance is used to pay bills or an electronic payment system is used for sending
invoices. And also wire transfer, mail draft has been used. More specifically, it refers to those
funds that migrants who are working at abroad, send money to their relatives who resides in home
country. Remittance helps to ensure the financial security of the family in one country while a
person resides another country. It can be regarded as one of the largest sources of income for
people in low income and thus for developing nations.

The two kinds of remittances are inward remittance and outward remittance. Inward remittance
means someone is receiving money in his/her bank account in home country form foreign
country’s bank account. From -C shall not be required for remittance which is below $20,000 or
its equivalent in order to facilitate inward remittance. Outward is the opposite of inward meaning
the process of transferring money from another foreign country. So, it can be said that Bangladeshi
migrant workers are playing an important role in developing the country’s economy by purchasing
goods and also investing in different small level of income generating opportunities.

26 P a g e
Functions of Commercial Banks

There are some specific functions which is performed by a commercial bank. These are:

1. Receiving Deposits: This function refers to collect money as a deposit for customers who
can be individuals or firms, which is the main function of the bank. For providing facility,
the bank offers different kinds of deposits to the customers. These are as follows:

• Current Account or Demand Deposit: In this type of account, a customer can

withdraw any amount at any time without giving any notice. No interest is given to
customers when opening to this account. It is known a s demand deposit because
the customers can get money on demand.
• Saving Account: Saving account is opened by middle class group. The saving
account provides lower rate of interest.
• Fixed Deposit: In this type of account, money cannot be withdrawn before the
fixed future date. High interest rate is allowed for depositing money in this account.
The deposit rate varies according to the amount of deposit.
2. Advancing Loans: As this is the income source of a bank, so this section is an important
section. Credit is given to the people in different ways:
• Loan Account: A bank can make loans in 3 ways:
(a) Short Term Loan: These types of loans have a maturity of 6 months to 1 year.
(b) Medium Term Loans: These types of loans have a maturity of 1 to 5 years.
(c) Long Term Loans: These types of loans have a longest tenure among other types
of loans. The bank allows for this loan for more than 10 years.
• Bank Overdraft: When banks have a trust on loyal customers then banks allow
them to draw more than the deposit which is known as bank overdraft. Banks also
charges interest on this overdraft.
• Cash Credit: Bank has an option to provide credit against immovable property by
charging interest from the customers.
• Discount of Bills: Discount of Bills is regarded as an income source of bank and
they charge interest and thus discounts only reputed and clear bills of exchange.

27 P a g e
Previous Studies

Commercial banks have played a vital role in the journey of economic development over the recent
years (Devinagee Rasiah, 2010)

The banking industry has a significant role on the economy of Bangladesh as they provide
investible funds to both the private and public level sectors and thus helping the country for the
economic growth. For these reasons, the industrial sector generates 33.32% of the country GDP
approximately while the services sector generates about 51% (S M Parvez Tamal, 2020)

(Md Safiullah, 2020) states that the commercial banking system dominates the limited role of non-
bank financial institutions and capital market of financial sector. Only the banking sector is now
taking a substantial share of financial system’s assets. Through the economic indicators whether
directly or indirectly, commercial banks have significantly contributed to the economy.

(Golam Mowla, 2023) states that in Bangladesh the people who have withdrawn money for the
banks have returned the money in the last 3 months. So, in 2020, deposits in the banking sector
have increased by 153,402 crore takas, having an annual growth of 13.5%. In 2021, deposits rise
by Tk.118,870 crore or growth rate was 9.21% and the recent year of 2022 it also rises by
Tk.79,826 crore or 5.6% is the growth rate of deposit. So, from this data, it showed that last year
there is a lowest increase in deposit.

According to (Devinagee Rasiah, 2010), it is stated that the profitability determinants were divided
into two factors .one in internal and another is external. Loans, non-performing loans, deposits can
be categorized into internal factors and factors which are the beyond the control of management
of these institutions like interest rate, growth rate etc.

Shahid, et al. (2004) stated that banking sector has introduced several products for example
consumer product, debit card, credit card, leasing loans etc. in terms of asset product base. Full
extent of innovation in banking products in Bangladesh is not encouraging because it is observed
that some products like factoring, financial derivatives are yet to be introduced in our country
which have already used in other countries.

28 P a g e
Ahmed, et al. (2004) observed that the performance of bank depends on the levels of customer
satisfaction and so banking activities are aimed at serving the customers in various areas. But some
of the areas of customer services have problems which generate customer dissatisfaction. Some of
the problematic areas like long queue creates delays in getting services from bank. Thus, the
attitude and mood of bank officers for providing information, full services offering, consistency
of the services are important to the customers which need to be improved. The sad part is, none of
the banks like government and private have any system which needs to be established on an urgent
basis to remain the service quality of banking sector.

From the Chowdhury & Islam (2007) point of view. There is a less sensitivity as interest changes
in Nationalized Commercial Banks (NCBs) in comparison to Specialized Commercial Banks
(SCBs). According to them, Return on Equity (ROE) ratio is the primary indicator of bank’s
profitability and financial efficiency.

Pandey (2004) observed that the evaluation of performance of a firm can be done by making
comparison of its present ratio with the past ratio. This ratio provides the direction of change and
reflects whether the firm’s financial performance has improved or constant or fall over time.

Despite many positive sides, there are also some negative sides as well. Bangladeshi banks face
many official default loans among country’s peers with having a low profitability. There are no
necessary safeguards are taken and the regulations are not consistently implemented according to
the International Best Practices. According to Kibria (2023), Bangladesh’s banking sector remains
in a public discussion and debates because of corruption and irregularities despite showed many
developments. Because of its weak corporate governance, weak regulatory enforcement and lack
of transparency expose banks in Bangladesh for risks and abuse.

29 P a g e
 Chapter- 3

An Overview of Banking System of

Bangladesh

30 P a g e
 Chapter- 3

An Overview of Banking System of Bangladesh

The Financial System of Bangladesh

The financial system of Bangladesh can be categorized into 3 broad sections. These are:

1. Formal Sector
2. Semi- formal Sector
3. Informal Sector

The formal sector includes all, regulated institutions for example banks, non-bank financial
institutions, insurance companies, capital market intermediaries like Brokerage houses, Merchant
banks, Micro Finance Institutions (MFIs).

The semi- formal sector includes those institutions which are also regulated but do not fall under
the jurisdiction of central bank for example: insurance Authority, Securities and Exchange
Commission or any other enacted financial regulators. Some specialized financial institutions like
House Building Finance Corporations (HBFC), Palli Karma Sahayak Foundation (PKSF),
Samabay Bank, Grameen Bank etc. Non- governmental organizations (NGOs and discrete
governmental programs) can be semi-formal sector.

A totally unregulated sector is regarded as informal sector, including private intermediaries.

The Banking System of Bangladesh

After the independence, the banking industry in Bangladesh has started its banking journey
consisting banks of 6 nationalized commercialized banks, 3 state owned specialized banks and 9
foreign banks. Gradually, banking industry has achieved significant expansion with the entrance
of private banks. There are two types of banks operating in Bangladesh.one is scheduled bank and
another is non-scheduled bank.

31 P a g e
Scheduled Banks
These types of banks remain under the list of Bangladesh Bank Order, 1972. In Bangladesh, there
are total 61 scheduled banks which are operating. These types of banks have to maintain full
compliance of the Bangladesh Bank as Bangladesh Bank has full control of it. The scheduled banks
are:

1. State Owned Commercial Banks (SOCBs): In Bangladesh, the government controls 6

types of SOCBs including Agrani Bank, Bangladesh Development, BASIC Bank, Janata
Bank, Rupali Bank and Sonali Bank.
2. Specialized Banks (SDBs): This kind of banks are operating because of special purpose
for example agricultural or industrial development and at present 3 banks are operating for
this purpose. The government of Bangladesh has fully or partly controlled this bank. These
types of banks include: Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, Probashi
Kallyan Bank.
3. Private Commercial Banks (PCBs): There are total 43 private commercial banks which
are operating in Bangladesh. These types of bank don’t own by government rather owned
by individuals or the private entities. The PCBs are classified into two groups. First one is
conventional PCBs which includes 33 PCBs operating in this banking industry. Basically,
they operate in an interest-based system which is in a conventional fashion. The second is
Islamic Shariah based PCBs which are 10 PCBs in Bangladesh, so this Islami banks has
continued their operations in a profit-loss sharing mode thus following Islamic shariah
based principles.
4. Foreign Commercial Banks: In Bangladesh, total 9 foreign banks are operating as a
branch of that bank including Bank Al-Falah (Pakistan), Citibank N.A (USA), Commercial
Bank of Ceylon PLC (Sri Lanka), Habib Bank (Pakistan), HSBC (UK) etc.

Non-Scheduled Bank
For some special and specific purposes, the non-scheduled banks are established. As these are
established for specialized purpose, these cannot perform its all functions like scheduled banks.
The 5 non- scheduled banks are: Ansar VDP Unnayan Bank, Karmashangosthan Bank, Grameen
bank, Jubilee bank, Palli Sanchay Bank.

32 P a g e
Total Deposits of Banking System in Bangladesh
The 61 scheduled banks which have 10937 branches in 2021, the total deposits of all banks in
Bangladesh are:

Year Total Deposit (in Bn BDT)

2013 6105.3
2014 6931.1
2015 7939.8
2016 8994.1
2017 9865.7
2018 10366.4
2019 12144.6
2020 13791.5
2021 15124.7
2022 (June) 15738.3
Table- 3: Total Deposit of banking system in Bangladesh
Source: Annual report of Bangladesh Bank (2022)

33 P a g e
 Total Deposit of banks in Bangladesh (in Bn BDT)
18000
15738.3
16000 15124.7
13791.5
14000 12144.6
12000
9865.7 10366.4
Deposit

10000 8994.1
7939.8
8000 6931.1
6105.3
6000
4000
2000
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(june)
Year

Total Deposit
.
Graph- 1: Total Deposit of banks in Bangladesh
Source: Author Creation

From this table and graph, it is seen that total deposit of all scheduled banks have been increased
over the last 10 years. In 2013, total deposit was 6105.3 billion taka and then it increases up to
6931.1 billion taka. Then gradually it increases by 7939.8 billion in 2015, 8994.1 billion in 2016,
again rises to 9865.7 billion takas. Then gradually it increases up to 15738 billion taka in June
2022. So according to Bangladesh Bank the reason behind this increase is for rise in per capita
income and inflows of remittances. Moreover, because demand deposits, time deposits and
government deposits has been increased in this 9.5 year or almost10 years, total deposit also have
been increased.

34 P a g e
Total Advances of Banking System in Bangladesh

From 2013 to 2022, the total advances of banking system of Bangladesh are shown below:

Year Total Advances (in bn BDT)

2013 4438.4
2014 5076.3
2015 5798.6
2016 6686.6
2017 7926.8
2018 8470.2
2019 10035.5
2020 10963.1
2021 12105.9
2022 (June) 12986.6
Table- 4: Total Advances of banking system in Bangladesh
Source: Annual Report of Bangladesh Bank

35 P a g e
 Advances of banking system in Bangladesh(in Bn
BDT)
14000 12986.6
12105.9
12000 10963.1
10035.5
10000
8470.2
7926.8
Advances

8000 6686.6
5798.6
6000 5076.3
4438.4
4000

2000

0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(June)
Year
Advances

Graph- 2: Advances of banking system in Bangladesh

Source: Author Creation

By observing this above table and graph, it is seen that in 2013, the advances were 4438.4 billion
taka, then it rises by 5076.3 in 2014, 5798.6 billion taka in 2015, 6686.6 billion in 2016, in 2020
it was 10963.1 billion taka and it increases up to 12986.6 in June 2022. So, it means that the
country’s loans or advances have been increased over the last 9.5 years or almost 10 years. So, an
increase in loans or advances a good sign for the country as more loan demand can increase
consumer spending on goods and increases more flow of money.

36 P a g e
Amount of NPLs of all Scheduled banks in Bangladesh

The NPLs or Non- Performing loans of all scheduled banks in Bangladesh for almost 10 years
data are given below:

Year SCBs (in Bn SBs (in Bn PCBs (in Bn FCBs (in Bn Total (in Bn
BDT) BDT) BDT) BDT) BDT)
2013 166.1 83.6 143.1 13.0 405.8
2014 227.6 72.6 184.3 17.1 501.6
2015 237.5 49.7 207.6 18.9 513.7
2016 310.3 56.8 230.6 24.1 621.8
2017 373.3 54.3 294.0 21.5 743.1
2018 487.0 47.9 381.4 22.9 939.2
2019 439.9 40.6 441.7 21.0 943.3
2020 422.7 40.6 403.6 20.4 887.3
2021 449.8 39.9 515.2 27.8 1032.7
2022 (June) 554.3 41.9 626.8 29.6 1252.6
Table- 5: Amount of NPLs of all scheduled banks
Source: Annual report of Bangladesh Bank (2022)

37 P a g e
 Amount of NPLs of all banks in Bangladesh (in Bn BDT)
1200

1000

800
NPLs

600

400

200

0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(June)
Year

SCBs SBs PCBs FCBs Total

Graph- 3: Amount of NPLs of all scheduled banks in Bangladesh

Source: Author Creation

From this table and also graph where the dark blue line shows SCBs, Orange line shows the SBs,
Grey line shows PCBs, Yellow line shows FCBs, and light blue line shows total amount, it is
observed that total NPLs of all scheduled banks in Bangladesh have increased from 2013 to June
2022. If it is observed from total data then it is seen that in 2013, it was 405.8 billion taka. Then in
2019, it was risen to 501.6 billion taka. Then it gradually increased from 501.6 to 1252.6 billion
taka which means over the last 10 years, there is a major difference in the amount. If it is observed
from each scheduled bank then it shows that the increase in NPL in total banks rises because the
NPL has increased from 166.1 to 554.3 billion taka in SCBs, rises from 143.1 to 626.8 billion taka
in PCBs. Then rises from 13 to 29.6 billion taka in FCBs. But there is a fall from 83.6 to 41.9
billion taka in SBs. But in total the NPLs have been increased in Bangladesh.

38 P a g e
 Chapter- 4

Analysis and Findings

39 P a g e
 Chapter- 4

Analysis and Findings

For analysis, the data of deposit, loans and advances, non-performing loan of city bank ltd have
used to determine the performance from 2018 to 2022.

Deposit
City Bank has collected money as a deposit by cash or cheque deposit or an electronic transfer. To
know whether its deposits have been increased or not, the 5 years of data has taken. The relevant
information as a table and graph of deposits are:

Year Amount (in Bn BDT)

2018 205.170
2019 246.703
2020 254.781
2021 282.063
2022 331.890
Table- 6: Deposit of City Bank Ltd.
Source: Annual Report of City Bank Ltd.

40 P a g e
 Deposit of City Bank Ltd. (in Bn BDT)
350 331.89

300 282.063
246.703 254.781
250
205.17
Amount

200

150

100

50

0
2018 2019 2020 2021 2022
Year

Deposit Linear (Deposit)

Graph- 4: Deposit of City Bank Ltd.

Source: Author Creation

From this table, it shows that the deposit of city bank ltd over 5 years has increased. In 2018,
deposit was 205.170 billion taka, in 2019 it was 246.703 billion taka that means it has increased,
in 2020 deposit also rises by 254.781, in 2021 the amount was 282.063 billion taka and lastly the
amount was 331.89 in 2022 which was the highest amount. So, it means that there is a significant
growth in a deposit of City Bank Ltd over the last 5 years. Then the graph also describes the rising
level of deposits of City Bank Ltd. All the blue bar shows the deposit of each year and the narrow
line shows the deposits are rising gradually.

41 P a g e
Loans and Advances

City Bank has lent money to customers for a specific period of time. Loans and advances are an
important section for City Bank Ltd as this section provides income for the bank. They provide
loans after doing inspection about that applicant and they grant loans very carefully. They provide
loans which can be used to finance startup capital and larger and long-term expenditures. Its
importance is greater in City Bank because of maintaining continuity of flow of money between
savers and borrowers. The data from 2018 to 2022 are:

Year Amount (in Bn BDT)

2018 231.391
2019 246.943
2020 268.201
2021 286.379
2022 354.773
Table- 7: Loans and Advances of City Bank ltd
Source: Annual Report of City Bank Ltd.

42 P a g e
 Loans and Advances (in Bn BDT)
400
354.77
350
286.38
300 268.2
246.94
250 231.39
Amount

200

150

100

50

0
2018 2019 2020 2021 2022
Year

Loans and Advances Linear (Loans and Advances)

Graph- 5: Loans and Advances over 5 years of City Bank Ltd.

Source: Author Creation

From this table and, it is shown that it increases from 2018 to 2022. In 2018, loans were 231.39
billion taka in 2019 the amount was 246.94 billion taka showing an increase in loans then in 2020
the amount was also rises by 269.2 billion taka and in 2021 and 2022 the amount was 286.38
and354.77 billion taka respectively. So, from this table it describes the rise in loans and advances
of City Bank Ltd which is also shown in a graph, in a graph the upward trend line shows that there
is a growth in a loans and advances of City Bank Ltd.

43 P a g e
Non- Performing Loan

City Bank Ltd has a loan which is categorized as NPL or Non- Performing Loan which represent
a default because the borrower did not make the specified payments for a specific period of time.
NPL can reduce bank’s earnings and causes loss which negatively affects its soundness. So, it can
be an alarming for City Bank Ltd. The data of NPL for 5 years are given below:

Year Amount (in Bn BDT)

2018 12.33
2019 14.24
2020 10.85
2021 13.91
2022 13.67
Table- 8: Non- Performing Loan of City Bank Ltd.
Source: Annual Report of City Bank Ltd.

Non- Performing Loan (in Bn BDT)

16
14.24 13.91 13.67
14
12.33
12 10.85
10
Amount

0
2018 2019 2020 2021 2022
Year

NPL Linear (NPL)

Graph- 6: Non- Performing Loan of City Bank Ltd.

Source: Author Creation

44 P a g e
From this table and graph, it is observed that the NPL of City Bank was 12.33 billion taka in 2018,
then it slightly increased by 14.24 billion taka in 2019, in 2020 NPL was decreased by 10.85 billion
taka. But in 2021, it was again risen by 13.91 billion taka. In 2022, the amount was 13.67 billion
taka which is slightly less than the previous year. In this graph, it also shows the same thing
graphically. Here the line still shows the upward line despite in 2020, the amount was decreasing.

Besides this data, I have also analyzed ratios for showing the performance of The City Bank Ltd.
These are:
Net Interest Margin
Net Interest Margin indicates City Bank’s profit earned from its investments. The more positive
ratio will indicate a high earnings ability of City Bank. The formula is:

Interest Income−Interest Expense

Net Interest Margin= *100
Total Asset

Year Interest Interest Total 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐈𝐧𝐜𝐨𝐦𝐞 − 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐄𝐱𝐩𝐞𝐧𝐬𝐞 NIM

Income Expense Asset 𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭 (%)
(Tk. In (Tk. In (Tk. In
billion) billion) billion)
2018 22.92 13.72 324.78 22.92 − 13.72 2.83%
324.78
2019 26.82 15.99 354.69 26.82 − 15.99 3.05%
354.69
2020 23.13 14.78 382.93 23.13 − 14.78 2.18%
382.93
2021 20.73 8.68 416.90 20.73 − 8.68 2.89%
416.90
2022 25.56 13.20 506.85 25.56 − 13.20 2.44%
506.85
Table- 9: Net Interest Margin of City Bank Ltd.
Source: Annual report of city bank and Author Calculation

45 P a g e
 Net Interest Margin
3.5
3.05 2.89
3 2.44
2.83
2.5
NIM (%)

2
2.18
1.5

0.5

0
2018 2019 2020 2021 2022
Year

NIM

Graph- 7: Net Interest Margin of City Bank Ltd.

Source: Author Creation

From this table, it is observed that the NIM was 2.83% in 2018, then after one year it is found that
the percentage was risen by 3.05% in 2019. But it goes downward in 2020 and that was 2.18%.
but it soon recovered its position and maintain 2.89% in 2021. But after that increase, the NIM
again falls to 2.44% in 2022 of City Bank Ltd. The above graph also shows the fluctuating pattern
of NIM. The blue line shows the upward in first two years but fall in 2020 and again rise and fall
in the following two years.

46 P a g e
Return on Asset

Return on Asset of City Bank is an important ratio for measuring the profitability of this bank.
High ratio indicates high Profitability of the bank. So, the formula is:

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
Return on Asset (ROA) = 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 *100

Year Net Income (in Total Assets (in 𝑵𝒆𝒕 𝑰𝒏𝒄𝒐𝒎𝒆 ROA (%)
*100
𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕
Bn BDT) Bn BDT)
2018 2.02 324.78 2.02 .62%
∗ 100
324.78
2019 2.47 352.69 2.47 .70%
*100
352.69

2020 4.01 382.93 4.01 1.05%

∗ 100
382.93
2021 4.74 416.90 4.74 1.14%
*100
416.90

2022 4.51 506.85 4.51 .89%

*100
506.85

Table- 10: Return on Asset of City Bank Ltd

Source: Annual report and Author Calculation

47 P a g e
 Return on Asset (%)
1.14
1.2
1.05

1 0.89

0.8 0.7
0.62
ROA

0.6

0.4

0.2

0
2018 2019 2020 2021 2022
Year

ROA

Graph- 8: Return on Asset of City Bak Ltd.

Source: Author Creation

From this table, it gives the information that the ROA in 2018 was .62%,.7% in 2019 which is
increased than the previous year, 1.05% in 2020,1.14% in 2021 which shows the increasing pattern
of ROA but in the last year of 2022, the ROA was fallen to .89%. this pattern is also shown
graphically.

48 P a g e
Return on Equity

ROE represents City bank’s profitability. The higher ratio indicates a higher efficiency of a bank
management in generating income. So, it is also important for City Bank Ltd. The 5 years of data
has been taken to the 3 factor Du Pont of ROE. The formula is:

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑎𝑓𝑡𝑒𝑟 𝑇𝑎𝑥𝑒𝑠 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡

ROE= * ∗ 𝐸𝑞𝑢𝑖𝑡𝑦 𝐶𝑎𝑝𝑖𝑡𝑎𝑙
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡

Or

ROE= Net Profit Margin* Asset Utilization Ratio*Equity Multiplier

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝐴𝑓𝑡𝑒𝑟 𝑇𝑎𝑥𝑒𝑠

Here, Net Profit Margin (NPM)= 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒
Asset Utilization Ratio (AU)= 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡

𝑇𝑜𝑡𝑎𝑙𝐴𝑠𝑠𝑒𝑡
Equity Multiplier (EM)= 𝐸𝑞𝑢𝑖𝑡𝑦 𝐶𝑎𝑝𝑖𝑡𝑎𝑙

Year Net Income Operating Total Asset (in Equity Capital

after Taxes (in Income (in bn bn BDT) (in bn BDT)
bn BDT) BDT)
2018 2.02 15.95 324.78 24.43
2019 2.47 18.28 352.69 25.42
2020 4.01 16.74 382.93 28.82
2021 4.74 21.40 416.90 31.22
2022 4.51 24.59 506.85 32.84
Table-11: Net Income, Operating Income & Total Asset of City Bank Ltd.
Source: Annual Report of City Bank Ltd.

49 P a g e
 Year 𝑵𝒆𝒕 𝑰𝒏𝒄𝒐𝒎𝒆 𝑨𝒇𝒕𝒆𝒓 𝑻𝒂𝒙𝒆𝒔𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝑰𝒏𝒄𝒐𝒎𝒆 𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕 ROE (%) =
𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝑰𝒏𝒄𝒐𝒎𝒆 𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕 𝑬𝒒𝒖𝒊𝒕𝒚 𝑪𝒂𝒑𝒊𝒕𝒂𝒍 (a)*(b)*(c)*100
(a) (b) (c)
2018 2.02 15.95 324.78 .1266*.0491
= .1266 = .0491
15.95 324.78 24.43 *13.29*100=
= 13.29
8.26%
2019 2.47 18.28 352.69 .1351*.0518
= .1351 = .0518
18.28 352.69 25.42 *13.87*100=
= 13.87
9.71%
2020 4.01 16.74 382.93 .2395*.0437*13.
= .2395 = .0437
16.74 382.93 28.82 29*100= 13.91%
= 13.29
2021 4.74 21.40 416.90 .2215*.0513*13.
= .2215 = .0513
21.40 416.90 31.22 35*100= 15.17%
= 13.35
2022 4.51 24.59 506.85 .1834*.0485*15.
= .1834 = .0485
24.59 506.85 32.84 43*100= 13.72%
= 15.43
Table- 12: Calculation of ROE
Source: Author Calculation

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 Return on Equity of City Bank Ltd.
16.00% 15.17%
13.91% 13.72%
14.00%

12.00%
9.71%
10.00% 8.26%
ROE

8.00%

6.00%

4.00%

2.00%

0.00%
2018 2019 2020 2021 2022
Year

ROE

Graph- 9: Return on Equity of City Bank Ltd.

Source: Author Creation

By observing this above table, the ROE of City Bank Ltd. has been risen over time. In 2018, the
ratio was 8.26%, then in 2019, it was 9.71% and again risen in 2020 which was 13.91% and in
2021, the ratio was highest among all years that was 15.17% but in 2022 it was fallen up to 13.72%
which is not a good sign for this bank. If each of this ratio observed, the Net profit margin was
increasing from 2018 to 2020 but in 2021 and 2022, it was decreasing. Moreover, in 2018, Asset
Utilization was .0491 then it was increased up to .0518 in 2019 but it was decreased to .0437 in
2020. Later, it again rose by .0513 in 2021 but then it again falls to .0485 in 2022. Then, the Equity
Multiplier shows that the ratio was quite stable over the 5 years. The whole calculation ROE was
shown in graphically indicating an increase in ROE up to 2021 but slightly fall in 2022.

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Total Loans to Customer Deposits ratio

The ratio of City Bank Ltd will better describe the bank’s liquidity position and also reflects the
relationship between the total loans and total deposits. If the ratio seems to be high then it shows
that the bank does not have high liquidity to cover any unexpected fund requirements. The formula
is:

𝑇𝑜𝑡𝑎𝑙 𝑙𝑜𝑎𝑛𝑠
Total loans to total deposit ratio= 𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑝𝑜𝑠𝑖𝑡 *100

Year Total loans (in Total Deposits 𝑇𝑜𝑡𝑎𝑙 𝐿𝑜𝑎𝑛𝑠 Total Deposits to
bn BDT (in bn BDT) 𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑝𝑜𝑠𝑖𝑡 Total Loans
∗ 100 ratio
2018 231.39 205.17 231.39 112.78%
*100
205.17

2019 246.94 246.70 246.94 100.00%

*100
246.70

2020 268.20 254.78 268.20 105.27%

*100
254.78

2021 286.38 282.06 286.38 101.53%

*100
282.06

2022 354.77 331.89 354.77 106.89%

*100
331.89

Table- 13: Total loans to Total deposits of City Bank ltd.

Source: Annual report and Author Calculation

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 Total Loans to Total Deposit ratio (%)
115 112.78

110
106.89
105.27
105
Ratio

101.53
100
100

95

90
2018 2019 2020 2021 2022
Year

Total Loans to Total Deposit ratio

Graph- 10: Total Loans to total deposit ratio of city bank ltd
Source: Author Creation

From this above table and graph, it is observed that the city bank has a fluctuating ratio meaning
in 2018, it was 112.78% then it falls to 100% then again in 2020, it rises to 105.27% but again it
falls and then again it rises. So, this is quite a fluctuating ratio for City Bank Ltd.

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Findings

From the above analysis of The City Bank Ltd, some following findings have been noticed:

➢ By showing the data of 5 years of deposits of this bank, it is noticed that it is increasing
meaning that the new money and new clients have increased in this bank which also
indicates that it has increased its liabilities also. The growth of deposit is very important
for every bank because if there is no deposit there would be no loans. So, banks cannot
grow its business further. Thus, City Bank has attracted its customers through its improving
quality and service.
➢ By looking the loans and advances, it is observed that it is increasing meaning City Bank
has earned more money by lending over 5 years. As the interest and fees from loans are
primary source of bank revenue, City Bank is able to grow its revenues.
➢ In the non- performing loans, it is also rising indicating an alarming sign of City Bank Ltd.
Though it grows loans, it also growing NPLs. If this continues, City Bank will have few
funds available for creating new loans and pay its costs.
➢ The net interest margin is getting low in City Bank Ltd which means that it has a poor
earning ability in recent years.
➢ By looking at the return on asset ratio of city bank ltd, it showed that over the last 4 years,
its profitability was improving in 2022, it loses its profitability though the ratio was higher
than of 2018 & 2019.
➢ The graph and table of ROE showed that City Bank Ltd.’s NPM reflects the cost control
effectiveness. As this ratio was declining in 2022 than the previous two years of 2020,2021,
so it needs to pay close attention for that because of this reason ROE also declines. Then
Asset Utilization ratio also fallen in 2022 so that’s why the overall ROE was fallen in 2022
though the equity multiplier was increased. So, Management should try to find the reason
and solve it. By looking at the graph and table, it is observed that the Roe was increasing
up to 2021, but soon it has declined in 2022 which means City Bank Ltd.’s profitability
has hampered.
➢ For determining the liquidity position of City bank, it is well observed from total loans to
total deposits that the ratio was increasing meaning that an alarming sign for bank fails to
improve its liquidity position.
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 Chapter- 5

Summary and Conclusion

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 Chapter- 5

Summary and Conclusion

This report has mainly focused on the general banking activities of City Bank ltd to show how the
City Bank has provided its services to its customers. this report also shows the theocratical
background and previous studies of banks, an overview of banking system of Bangladesh and
performance analysis of city bank ltd.

For the development of Bangladesh, private banks play a vital role. City bank is one of the them
with its clear mission and vision. Most of the banks have tried their best to provide service to the
people as their demand for service is growing. Nowadays, people are more concerned about their
money in a safest place. As a result, bank’s responsibility has been increased. Among other banks
in Bangladesh, City bank has served people over years. It has continuously improved their
performance and assured its quality on service for the people of Bangladesh. It has developed itself
for vital source for business and many small firms. They have also launched Islamic based banking
for increasing the importance of religious beliefs among people. To improve the service quality,
City Bank has also launched CityTouch which is the most unique online banking service. Thus,
they are focusing only on the quality of the service not on the quantity. For these reason general
banking activities have been emphasized in this report and also for showing the performance,
different variables like deposit, non-performing loans, loans and advances, ratios like ROA, ROE
have been used.

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 References

• Wiley & Sons (2005), Modern Banking

• Rasiah (2010), Journal of performance management 23(1)
• Tamal (2020), The business Standard
• Safiullah (2010), International Journal of Economics and Finance 2(3), 199-207
• Mowla (2023), www.dhakatribune.com
• Kibria (2023), The Financial Express
• Shahid, Banerjee & Mamun (2004), “Innovation in Banking Products in Bangladesh”,
• Ahmed, Rashid & Shahabuddin (2004), “Customer Services Quality: A comparison
between government & private commercial banks of Bangladesh”
• Chowdhury, A.A & Islam M.S. (2007), “Interest Sensitivity of Loan & Advances: A
competitive study between Nationalized Commercial Banks & Specialized Commercial
Banks”.
• Pandey, I.M (2004), “Financial Statement Analysis”, Financial Management (9th edition),
• Rose (2016), “Commercial Bank Management” (5th edition), McGraw- Hill Irwin.
• City Bank (2018), Annual Report
• City Bank (2019), Annual Report
• City Bank (2020), Annual Report
• City Bank (2021), Annual Report
• City Bank (2022), Annual Report
• Bangladesh Bank (2022), Annual Report
• https://www.bb.org.bd
• https://m.economictimes.com
• www.wikipedia.com
• www.investopedia.com
• https://assignmentpoint.com
• www.marketresearch.com

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