I would like to submit my report entitled “The Role of Investment in Financial Assets: A Case Study of The City Bank Limited” prepared as part of the requirements for the BBA program of the School of Business & Economics, United International University. First of all, I would like to thank my internship supervisor Muhammad Enamul Haque for his continuous guidance and assistance in preparing Role of Investment in Financial Assets: A Case Study of The City Bank Limited”.
Introduction
- Introduction
- Objective of the Study
- Scope of the Study
- Methodology of the Study
- Secondary Source
- Limitations of the Study
This report will cover the scope of The City Bank Ltd.'s financial asset investment activities. The main part covers the analysis of investment in financial assets of The City Bank Ltd.
Organizational Overview
- Introduction
- History
- Current Situation
- CBL at a Glance
- Objectives and Goals of CBL
- Vision
- Mission& Values
- Logo
- Services of CBL
- Product of CBL
City Bank won the "Strongest Bank in Bangladesh" award from Asian Banker in 2010 and won the "American Express Marketing Award" from American Express for outstanding new card launch in 2010. City Bank is one of the largest corporate banks in Bangladesh with a current business model that supports the bank's growth in retail and SME banking.
Internship Experience
Introduction
In January 2018, I was assigned by the HR staff of The City Bank as an intern in the foreign exchange branch. I was then given a schedule of the internship program consisting of the work schedule along with the job responsibilities.
Job Description
Initially, the account holder has to come to the parent branch and then fill a form called dormant account reactivation. The account holder must sign, complete and submit the form to Customer Service. It then takes 2 to 3 days for the account to be reactivated, after which the account holder can transact with this account.
Nominee is the person who is the authorized representative on behalf of the account holder. To change the signature, the account holder must complete the signature change form and then submit it to Customer Service. The customer service representative will verify the signature and information when changing the photo. In some cases, the account holder must provide their own photo if the previous photo does not match the current photo.
To change the address, the account holder must provide the NID which must match his current address, then the account holder can change the address. If the account holder requests to close their account, it can be closed.
Learning Outcome from this Internship Experience
Customer service officer will verify the signature and send the request through a centralized system to the head office to reactivate the account. To change the nominee, the customer has to come to the parent branch of the account and then fill a form with the name of the nominee change form. In the nominated form, one copy of the nominated photograph is required and the account holder must sign the form that he or she wishes to change his or her account nominee.
The files must then be submitted to the responsible official and the responsible person will verify and sign the information. Again, for name change, address change, and many other factors, it works pretty much the same process, except for the address change process. The remaining process is the same as others, such as filling a form and then submitting it to customer service. Then the responsible officer will verify the account and signature submitted to the head office.
After receiving an application from the customer to close an account, some procedures are followed by a banker. The customer shall be asked to draw the final check for the amount to the credit of his account less the amount of closing and other incidental charges and submit the unused check leaves.
Analysis and Compliance
Analysis as per Classification
- Investment Classified as per Bangladesh Bank Circular
- Investment in Held for Trading (HFT)
- Investment in Held to Maturity (HTM)
- Investment in Reverse Repo
- Investment in Other Securities
- Investments Classified Generally
- Investment in Government Securities
- Investment in Other
- Maturity grouping of Investments
- On Demand
- Over 1 Month but Not More Than 3 Months
- Over 3 Months but Not More Than 1 Year
- Over 1 Year but Not More Than 5 Years
- Over 5 Years
- Investment in Subsidiary
- City Brokerage Limited
- City Bank Capital Resources Limited
The investment percentage is calculated by dividing the total amount of other investments by the total amount of investments in financial assets. The percentage rate of CBL's investment in prize bonds is calculated by dividing the total amount of investment in prize bonds by the total number of investments in financial assets. The percentage of CBL's investment in government bonds is calculated by dividing the total amount of investment in government bonds by the total number of investments in financial assets.
Here, the percentage of CBL's investment in 2-year Treasury bond is calculated by dividing the total amount of investment in 2-year Treasury bond by the total number of investments in financial assets. Here, the percentage of CBL's investment in the 5-year Treasury bond is calculated by dividing the total amount invested in the 5-year Treasury bond by the total number of investments in financial assets. The percentage of CBL's investment in others is calculated by dividing the total amount of investments in other by the total number of investments in financial assets.
The percentage investment rate for CBL in mutual funds is calculated by dividing the total investment amount in mutual funds by the total investment amount in financial assets. The investment percentage for CBL over 5 years is calculated by dividing the total investment amount over 5 years by the total investment amount in the financial assets. The investment percentage for CBL in the subsidiary is calculated by dividing the total investment amount in subsidiaries by the total investment amount in financial assets.
The percentage investment rate of CBL in CBCRL is calculated by dividing the total investment amount in CBCRL by the total investment amount in financial assets.
Comparisons among Investments as per Classification
- Investment Classified as per Bangladesh Bank Circular
- General Investment Classification
- Classification as Maturity Grouping Investment
In 2015, the highest positive growth rate is shown in held-to-maturity, indicating that CBL invests more in held-to-maturity than other investment sectors. Through the whole discussion, it is found that CBL invested more in investment in trading property than investment in other sectors except in 2015 and 2017, which is the reason for the positive growth rate of investment in trading property. It can be seen from the chart that there is a positive growth rate of CBL investment in government securities, except in the years 2014 and 2015. In the same year, there is a negative growth rate of investment in the other sector, but it has a positive growth rate in the years 2014 and 2015, that is, from the explanation explains that in 2012, 2013 and 2016, CBL invested more in government securities than investments in others because government securities are low-risk investments and are backed by the fiscal power of the government.
Here it should be noted that the highest positive growth rate in 2013 is also seen for investments of more than 1 month, but not more than 3 months. There is a weak positive growth rate for investments on demand and over 5-year maturities, but there is a negative growth rate for other maturities. In 2014, the highest positive growth rate is shown by investing for more than 1 year, but not more than 5 years, but in 2015, the highest positive growth rate is shown by investing for more than 3 months, but not more than 1 year.
The significant increase in investments in 2016 is appearing in investments over 1 month but not more than 3 months. For this reason, from year to year there are many negative growth rates of investments in various sectors.
Proportion of Investment and Investment Income
- Proportion of Financial Assets in Terms of Total Assets
- Proportion of Financial Assets In Terms Of Total Liabilities
- Investment Income on Treasury Bills/Reverse Repo/Bonds
- Interest on Debentures
- Dividend Income on Shares
- Gain on Government Securities
- Gain on Sales of Shares and Debentures
- Gain on Repo
- Proportion of Investment Income among total Interest Income
Among the total assets, the highest percentage of investments in financial assets is in 2013. The growth rate shows that the highest positive growth rate is in 2015, but there is another positive growth rate in 2014. There is also a positive growth rate from 2013 to 2016 but negative income growth in 2017. Here, investment income is not very important for BKL. Bond interest income percentage rates are calculated here by dividing bond interest income by total investment income.
The growth rate of interest income on BQL bonds is showing a negative growth rate from 2013 to 2016. Here the percentage rates of return on government securities are calculated by dividing the return on government securities by total investment income. Here, the percentage rates of profit on the sale of stocks and bonds are calculated by dividing the profit on the sale of stocks and bonds by the total income of the investment.
Here, the percentage profit on repo is calculated by dividing the profit on repo by the total investment income. The significant growth rate is shown in 2013. But the percentage rates of investment income and its year-on-year growth rate are not very significant for CBL against the total interest/investment income.
Findings & Conclusion
Findings & Recommendation
From the overall discussions and calculations, it has tried to show the total investment of CBL in financial assets of different classification and the percentage of investments earning from these investments with the annual growth rate. From this it appears that there is not a particularly large investment for financial assets, in which CBL has invested more in financial assets than the total investment amount. Growth rate for CBL's total amount of financial assets has grown negatively from year to year among CBL's total assets.
Thus, we can say that investment rates in financial assets among all assets are decreasing from year to year. Compared to total liabilities, the growth rates of CBL's financial assets also decrease from year to year. There is a big difference between the share of financial assets in total assets and the share of investment income in total interest/investment income.
The above findings have shown that investment growth in financial assets and income from them has been growing negatively year-on-year, which is not a good sign of profit for CBL. To increase the liquidity of the investments, CBL should invest more in financial assets out of the total assets.
Conclusion
CBL should invest positively in other securities as well as government bonds. Because if there is no big risk, there is no big profit in the investment industry.
