Subject: Submission of the report on the effect of Covid-19 on the financial performance of commercial bank in Bangladesh. With due respect, I would like to inform you that it gives me great pleasure to submit the report on “Effect of Covid-19 on Financial Performance of Commercial Bank in Bangladesh” as a mandatory requirement for the BBA program. I am Samira Akter, hereby declare that this internship report titled “Effect of Covid-19 on Financial Performance of Commercial Bank in Bangladesh” has been submitted by me to Daffodil International University.
I am trying to meet all the conditions to uniquely complete my report that is part of the Bachelor of Business Administration degree. I used several sources to assist in preparing the report, and I pledge to reimburse the department for any loss or damage caused by violations of previous regulations to which it has committed. This is to confirm that the internship report entitled “Effect of Covid-19 on Financial Performance of Commercial Bank in Bangladesh” is an authentic work of Samira Akter, ID Major in Finance, Department of Business Administration, Daffodil International University.
And finally, special thanks to Ms. Tanjila Haque, Assistant Manager, Recruitment and MIS, Human Resources Department and the rest of the Asset Operations staff of City Bank, who spent their valuable time in providing information and resources. The banking sector plays a very important role in the economy of Bangladesh, and measuring its financial performance is one of the most important factors that banks need to consider. The assessment of monetary indicators of the banking sector is a vivid and effective indicator to test the sustainability of a country's economic activities.
Bangladesh's banking sector will be one of the economic sectors most affected by the overall slowdown in macroeconomic growth.
In addition to their role as intermediaries, the financial performance of banks also has an important impact on the economy. Many empirical studies have been conducted on the effectiveness of global commercial banks. The COVID-19 pandemic has led to a historic decline in banks' non-operating income as the number of letters of credit and remittances issued has fallen sharply. I actually suggested this topic: “Effect of Covid-19 on Financial Performance of Commercial Bank in Bangladesh.” My internship supervisor Ms. Rozina Akter, Assistant Professor, Department of Business Administration, Daffodil International University, helped me choose this topic.
Asset industry The department preparing for this study requires global knowledge of the entire banking system, because banking sectors are interconnected. The main part of this report is devoted to the analysis of The City Bank Ltd. financial analysis performance, i.e. the bank's financial performance in the past year. To analyze the effect of Covid-19 on the financial performance of Commercial Bank in Bangladesh.
Most of the relevant literature and study materials for the banking sector were not updated. Lack of intellectual thinking and analytical ability to make it the most perfect in the current times of Covid-19.
There are more than 300 Islamic financial institutions in the world, with an investment of more than 400 billion US dollars. In 1983, with the establishment of the first Islamic bank, Islamic Bank Bangladesh Limited, a new paradigm emerged in the Islamic banking industry. However, due to the COVID-19 pandemic and the ensuing lockdown, the banking industry will face a serious crisis on several fronts, as the quality of bank assets will decline, and interest and fee income will be affected at the same time. time.
In fact, they are forcing commercial banks to block access to the sectors most affected by the crisis. In unprecedented circumstances, the complete shutdown of the economy hit interest rates and non-financial income hard. The pandemic has hit all the main pillars of Bangladesh's economy and boosted its growth in the last decade.
RMG Sectors: The business accounts for more than 80% of Bangladesh's total export earnings and directly employs 4 million workers, but has stalled due to cancellation of orders worth over USD 6 billion. Imports: Last January, the country's import orders fell by more than 12%, or nearly $663 million, due to the disruption of the supply chain caused by the outbreak of the coronavirus in China. According to the latest data from the central bank, the opening amount of letters of credit (L/C), commonly referred to as importers, fell from $5.29 billion a month ago to $4.63 billion in January.
Exports: Due to the economic shock of the pandemic and the drop in demand due to quarantine measures, other key exports (such as seafood, footwear and agricultural products) are also facing order cancellations, which will impact these export-oriented industries. and non-interest income. Remittances: Due to the decline in global demand, the price of oil in the international market has fallen by more than 50%, which has affected the flow of incoming remittances. The Central Bank said Bangladesh received $1.28 billion in remittances last month, up from $1.45 billion in March last year.11 Due to the price war between Russia and Saudi Arabia and the decline in demand in sectors such as aviation and transport during the pandemic Oil prices in the world market have fallen to the lowest level in almost 17 years of around US$20 per barrel, which has meant that the country's economic growth will fall rapidly.
Mobile economic service (MFS) transactions have dropped by 27% in April 2020 compared to the previous year. This trend in consumer behavior is a consequence of banks' lower dependence on the future uncertainty of liquidity conditions. Ultimately, due to the consequences of the global Covid-19 pandemic, the budget deficit may increase from 19.0% of Bangladesh's GDP to 8.15%.
- Return on Assets (ROA)
- Return on Equity (ROE)
- Debt Ratio
- Equity Ratio
- Debt Equity Ratio
- Net Profit Margin
- Equity Multiplier
- Asset Utilization
- Tax Management Efficiency
- Net Interest Margin
Ratio analysis is very important for every company because by calculating ratio analysis we can understand the overall situation of the company. Return on Assets (ROA): Return on Assets (ROA) is primarily a financial ration that primarily shows the percentage of profit from The City Bank Ltd's overall assets. So here we see that five year stock ratio results of The City Bank Ltd.
Here in this chart we see that in this time period 2016-2020, The City Bank Ltd debt capital ratio remains between 7 and 9 percent. Here in this graph we see that the Net Profit Margin increasing from 2016 to 2020 continuously in The City Bank Ltd. In 2020 the ratio increased and became the highest net profit margin according to the net profit margin of The City Bank Limited.
This Bank quickly increased their net profit margin slightly which was really remarkable for the banking industries. Here in this graph we see that the share multiplier ratio in the year 2016 was 17.33, but the following year in 2017 which was highly increased, the ratio was 25. The situation here therefore shows that the City Bank is trying to keep the share multiples low.
Here in this graph and table we see that Bybanken A/S is exceeded every year from 2016 to 2020. So we can see that 2018 and 2019 were declining years for this bank, but previous years were good for Bybanken A/S. Tax Management Efficiency: The key figure for this ratio is to indicate what percentage of the fund's income is used for taxation.
In this graph, we can see that the tax management efficiency ratio of City Bank Ltd has increased rapidly from 2016 to 2020. So here we say that although the tax rate of The City Bank Ltd 2020 years is high taxed years. Net interest margin: Net interest margin is an indicator that you can use to measure the bank's investment funds and compare it to the cost of the same investment of the bank's investment funds and compare it to the cost of the same investment of the bank. .
Formula: Interest income from loans and securities investments-Interest expenses on deposits on other issued debt /Total assets. Here in this graph we see that City Bank Ltd Net Margin Ratio in the year 2016 was 0.18 and in 2017 the ratio of net interest margin was increase and the ratio was 0.20.
ROA on This means that The City Bank Ltd will increase its efficiency from 2016 to 2020. In 2016, The City Bank Ltd tends to be a more stable company with more waiting potential than in previous years. A higher net profit margin means that the company can more effectively convert sales into real profits.
In 2020, The City Bank Ltd. s net profit the most efficient compared to other years. So the City Bank Ltd within the year 2020 was higher tax management efficiency than different years. In this highly competitive market, The City Bank Ltd must be aware of the exclusivity and uniqueness of the banking industry.
In order to deliver this type of customer management, City Bank Ltd needs a legal data framework. City Bank Ltd's return on equity fell in 2020, so City Bank Ltd is trying not to repeat the same mistakes that year. The net profit margin for Bybanken A/S has improved compared to previous years, which is quite satisfactory.
City Bank Ltd should increase their financing on completely different comes to obtain additional customers. Today, the banking industry is very competitive, and banks are more aware of achieving good results. Therefore, Bybanken A/S must now organize activities according to market needs.
The banking industry is becoming more and more active, and to make progress in the market, banks need to work effectively as part of their asset and liability management activities. A year ago, The City Bank Ltd was unable to properly manage its income and reserves and could not obtain sufficient income. In light of the current pandemic, this article analyzes the current situation of the banking industry.
