It is my pleasure to present for your consideration the report on "Financial Performance Analysis of IFIC Bank Limited," which is a prerequisite of the Department of Business Administration's MBA program. She successfully completed her internship at IFIC Bank Limited, and she prepared this internship under my direct supervision. IFIC Bank Limited is one of the reputed and leading private commercial banks in Bangladesh.
Finally, if IFIC Bank wants to collect more profit, it needs to increase its profit and reduce operating costs and expenses. IFIC Bank Limited commenced operations as a going concern under a Vendor Agreement signed on 15 November 2015 by the Ministry of Finance, the Government of the People's Republic of Bangladesh on behalf of the former IFIC Bank and the Board of Directors of IFIC Bank Limited. retroactive to July 1, 2015. IFIC Bank Limited is governed by a Board of Directors consisting of ten members headed by the Chairman.
IFIC Bank Limited is the first state-owned commercial bank in Bangladesh to establish agent banking. The Islamic Banking System in IFIC Bank Limited has been operating under the 'Islamic Banking Unit' through 5 Islamic Banking Windows since 28 February 2016.
Background of the Study
Objective of the Study
Methodology of the Study
Limitations of the Study
Chapter-02
- Profile of Bangladesh Commerce and Investment Limited
- Mission of Bangladesh Commerce and Investment Limited
- Vision of Bangladesh Commerce and Investment Limited
- Strategic Priorities Bangladesh Commerce and Investment Limited
- Activities of IFIC
- Organization Hierarchy
- ORGANOGRAM
- Product Offered by IFIC .1 Retail Banking
- Corporate Banking
- SME and Agriculture Banking
- NRB Services
- SWOT Analysis
IFIC Bank Limited, a leading state-owned commercial bank with 955 branches, strategically located in almost all commercial areas of Bangladesh, foreign exchange offices and hundreds of foreign correspondents, was incorporated as a public limited company on May 17, 2013 to acquire the bank . The activities, properties, liabilities, rights and obligations of IFIC Bank. A supplier agreement signed on November 15, 2013 between the Ministry of Finance, the Government of the People's Republic of Bangladesh on behalf of the former IFIC Bank and the Board of Directors of IFIC Bank Limited, with retroactive effect from July 1, 2013, allowed IFIC Bank Limited to enter into operate as a business base. Maintaining healthy business growth in all key activities to achieve the intended result.
A SWOT analysis is “a technique for matching the strengths and weaknesses of the organization with opportunities and threats in the environment to determine the organization's appropriate niche.” SWOT analysis helps the organization identify how to evaluate its performance and scan the macro environment, which in turn would help the organization navigate the turbulent ocean of competition. It has a high level of customer commitment and has qualified and experienced staff.
In most of its branches, it has a sophisticated automated banking system that promotes the overall banking activity. The work process can be slowed down by a heavy reliance on head office for decision-making. Instead of achieving a marketing strategy, there is a heavy reliance on word of mouth.
People at all levels of society are well aware of the importance of depositing money in banks.
Chapter-03
Ratio Analysis of IFIC
Ratio Analysis
Assumption of Ratio Analysis
- Ratio analysis of IFIC from 2016 to 2020 years
- Liquidity Ratio
- Profitability Ratio
- Others ratio
Because no other current assets can be used to pay off current liabilities, the cash ratio is much more restrictive than the current ratio or quick ratio. Net working capital is a liquidity calculation that measures a company's ability to pay off its current liabilities with current assets. This measurement is important to management, vendors and general creditors because it demonstrates the firm's short-term liquidity as well as management's ability to use its assets efficiently.
Earnings per share (EPS) is the portion of a company's profits allocated to each outstanding common share. Return on Assets (ROA) is an indicator of how profitable a company is relative to its total assets. ROA gives an idea of how efficiently management is using its assets to generate revenue.
Calculated by dividing a company's annual profit by its total assets, ROA is shown as a percentage. Equity Trading Return The return earned on a common shareholder's investment in a company. The debt-to-equity (D/E) ratio is calculated by dividing a company's total liabilities by its equity to determine its leverage.
It is a measure of how much a corporation relies on debt rather than wholly owned assets to finance its activities. In the event of an economic crisis, it indicates the ability of the equity capital to cover all outstanding debts. The capital-to-assets ratio compares the amount of equity in a business or farm to the total assets owned by the business or farm.
A firm or farm with a debt-to-equity ratio of less than 70% is at risk and its borrowing capacity may be reduced. The debt ratio is a measurement of a company's debt in terms of total debt to total assets. A debt ratio greater than 1.0, or 100 percent, indicates that a company's debt exceeds its assets, while a debt ratio of less than 100 percent implies that the company's assets exceed its debt.
Chapter-04
- Financial Performance of IFIC Bank (2020-2016)
- Table 1 (Income Statement)
- Table 2 (Balance Sheet)
- Performance Analysis
- Current Ratio
- Cash Ratio
- Net working Capital
- Return on Equity
- Debt to Equity Ratio
- Equity to Asset Ratio
- Debt Ratio
- Time Interest Earned Ratio
- Earning Per Share
Financial performance analysis is analyzing and interpreting financial statements in order to make a complete diagnosis of a company's profitability and financial health. Interpretation: This ratio assesses a bank's ability to meet current liabilities relative to current assets. When this ratio exceeds 1, it is considered to have sufficient liquidity to pay existing obligations.
This is not good for the bank, because sometimes they have to pay current liabilities immediately or customers want to return their deposit. Explanation: As IFIC Bank's net working capital is negative in 2020-2018. This means that during these years their current liabilities exceed their current assets. In this case, banks would have to reduce their short-term liabilities so that a positive result could occur.
And at that point, the bank reaches the ability to pay off its short-term liabilities with current assets. Interpretation: In 2017, ROA increased, which was good for the bank, but then it decreased, which is risky for the bank. Here the banks need to increase their ratio so that they can properly use their investments to generate profit growth.
Interpretation: Here the debt to equity ratio in this chart has gradually decreased, indicating lower risk of the bank. This means that the bank has more assets than liabilities and can settle its liabilities by selling assets if necessary. Explanation: The ratio of interest earned over time increased from 2016 to 2020. That's good for the bank.
Interpretation: Higher earnings per stock is always better than a lower ratio because it means the company is more profitable and the company has more profits to distribute to it.
Chapter-05
- Major Findings
- Problem Recognition
- Recommendations
- Conclusion
- References
- Web Site
In 2020, watch for it to gradually decrease, indicating an inability to pay off current liabilities. This means that the bank does not have enough cash on hand to cover its current liabilities and is at risk of bankruptcy. Perhaps in those years they invest in large projects that have given rise to a large amount of current assets.
Recommendations based on three months of work experience are really hard to come by, and I would be remiss to make suggestions to those with more knowledge and competence than I do. The current ratio decreased after 2018, which means that their current assets are not sufficient to cover the current liabilities. A high ratio shows that a company is not making the best use of its cash resources.
Therefore, they should maintain a standard balance of cash balance, which is a good sign for the bank. If you want to create positive net working capital, the bank can do it - Customers need to pay in a shorter time frame. IFIC is the best in liquidity position, which means that IFIC has increased its ability to pay short-term liabilities from its current assets.
In 2016, ROE has increased, which shows that the bank can use its capital properly to earn profit. Their EPS is quite good in 2018 but they can attract more investors by increasing their EPS. The bank's management is constantly eager to approve any initiative or move that will benefit customers and shareholders.
In recent years, the bank has focused on creating competent human resources and increasing low-cost deposits, with a special focus on the SME sector. To suit the requirements and demands of its customers, the bank has offered a variety of goods and services. The only way to make a firm more comprehensive is to enrich and maintain additional consistency, according to an improved phrase.
