With due respect, I submit report on "Financial Performance Analysis in Bangladesh: A Case Study on Agrani Bank Limited." It is a great pleasure that you have given me this opportunity. I will be happy to provide any kind of further clarification on this report if needed. With due respect, I declare that I am Maksuda Khatun Jui, a student of Bachelor of Business Administration, ID: BBA1703012005 from Sonargaon University hereby solemnly declare that this report on “Financial Performance Analysis in Bangladesh: A Case Study on Agrani Bank Limited” was prepared by me.
I further declare that; I have not submitted this report anywhere with the forwarding of any degree, diploma or certificate. Certified that this report entitled "Financial Performance Analysis in Bangladesh: A Case Study On Agrani Bank Limited" is a bona fide work by the name of the student who has conducted the research under my supervision. He had been very helpful throughout the internship program and suggests all the sources of information needed to make this report.
This report "Financial Performance Analysis in Bangladesh: A Case study On Agrani Bank Limited " is a result of BBA internship program. This report encourages us to apply our understanding of the hypothetical information in the viable field.
Introduction
Objective of the study
Methodology of the study
Limitations of the study
Chapter-02
Profile of the organization
- History
- Vision, Mission, Qualities, Motto of Agrani Bank Limited
- Vision
- Mission
- Qualities
- Strategic Objectives of Agrani Bank Limited
- SWOT Analysis of Agrani Bank Limited
Agrani Bank Limited, a state-owned leading commercial bank with 953 branches strategically located in almost all commercial areas throughout Bangladesh, overseas Exchange Houses and hundreds of overseas correspondents, was incorporated as a public limited company on 17 May 2007 to take over the business of Agrani Bank , assets, liabilities, rights and liabilities, which came into existence as a nationalized commercial bank in 1972 immediately after the emergence of Bangladesh as an independent state. Agrani Bank Limited commenced operations as a going concern basis through a supply agreement signed between the Ministry of Finance, the Government of the People's Republic of Bangladesh on behalf of the former Agrani Bank and the Board of Directors of Agrani Bank Limited on 15 November 2007 with retroactive effect from 1 July 2007 .Agrani Bank Limited is governed by a Board consisting of 10 members headed by a Chairman.
Agrani Bank Limited is the first state-owned commercial bank in Bangladesh to introduce Agent Banking. Currently, ABL has 200 agencies conducting Agent Banking activities in the rural areas of Bangladesh. At Agrani Bank Limited, the Islamic Banking system has been managed since February 28, 2010 under the 'Islamic Banking Unit' through 5 Islamic Banking windows.
Follows at least 6.50 percent share of the stores and 5.50 percent share of progress and promotion of Bangladesh advertise. We consider Agrani Bank as a business company and analyze its strength, weakness, opportunity and threat, the scenario will be as follows:.
Strength
Opportunity
Motto of Agrani Bank Limited
Products & Services of Agrani Bank Limited
- Products of Agrani Bank Limited
Deposit Scheme
1. (FC)Foreign Currency Account
Import Finance
Export Finance
Loans & Advances
- Services of Agrani Bank Limited
Value Service
Cash Service
Islamic Banking Service
Deposit
Investments
- Other Foreign Exchange Service
- Chain of command of Agrani Bank
Chapter -03
Literature Review
- Theory of Ratio
- Financial Ratio’s users
- Types of Financial Ratios
- Liquidity Ratio
- Leverage Ratio
- Asset Activity
- Credit Risk Ratio
- Profitability Ratio
- Common size Analysis
- Common Size of Income Statement
- Trend Analysis
- Trend Analysis of Income Statement
- DuPont Analysis
- Sensitivity Analysis
A liquidity ratio is a financial ratio that shows whether an organization's current resources will be sufficient to meet the organization's commitments when they become liabilities. As the vast majority of the organization takes a lot of loans from lenders to grow its generation or business, so they need to understand the cost of capital versus advance. The credit risk ratio shows the financial specialist's risk of losing cash in addition to credit costs due to the company's failure to repay the debt.
This ratio is one of the most important ratios as financial professionals make contribution decisions by evaluating this ratio. Total size analysis is also known as vertical analysis which is used by financial manager to analyze financial statements. It encourages the organization to decide how the organization is performing over the year and compared to the candidates.
It also allows the organization to see the effect of every detail on the organization's revenue, cash flow or asset figures. Trend analysis is also called level research, a scientific system that uses verifiable results to anticipate future results. The moment an organization uses trend analysis, they may discover that the money related position increases or decreases depending on the length and things stated on the announcements.
In income statement trending, revenue and cost information from an organization's income statement can be orchestrated on a trend line for different detail periods and inspected for trend and consistency. The first period is generally used as the base time frame and the things on the announcements for every single later period are contrasted and things on the announcements of the base time frame. Net Profit Margin (NPM) = Net Profit / Net Interest Income Total Asset Turnover (TAT) = Net Interest Income / Total Asset.
Sensitivity analysis is considered by transforming each factor in turn and examining the resulting effects.
Chapter-04
Analysis of the Study
Ratio Analysis of Agrani Bank Limited
- Liquidity Ratio
Current Ratio: Current ratio shows the capacity of a company to pay its current liabilities with its current assets.
Current Ratio: Current ratio shows the capacity of a firm to pay its present liabilities by its current asset. This ratio tells financial specialists and examiners how an organization can augment
Current Ratio of Agrani Bank Ltd
30 The bank is doing acceptably because most of the bank maintains a current ratio of 1:1. The bank successfully utilizes their current assets because they have sufficient current assets to pay its short-term liabilities.
II Cash Ratio
CASH RATIO
So that an organization finances many of its benefits with debt, debt ratio will be higher at that point. Tenants see organizations with a high debt ratio as less safe borrowers in view of the fact that the organization must offer a greater amount of its benefits to pay its liquidity in liquidations.
Debt Ratio
Asset Activity Ratio
On the other hand, if an organization has a low total asset turnover ratio, it shows. If the bank wants to increase the asset turnover ratio, it must forecast properly to produce sales. A higher turnover of fixed assets also indicates that the administration is utilizing fixed assets more and more consistently.
Banks then use this report to find out that the organization can generate enough revenue from another piece of equipment to pay off the loan they used to purchase it. Although in 2017 and 2018 the fixed asset ratio increased but in 2019 it decreased by 0.4343 and it was bad for the bank as a low fixed asset shows that the fixed asset is not being used effectively and large amount of sales are not are produced using fixed assets. If the bank wants to increase the ratio, then the management should focus on the use of fixed assets.
Credit Risk Ratio
Fixed Asset Turnover
EQUITY TO ASSET RATIO
Profitability Ratio
Net Profit Margin: Net profit margin alludes the level of income staying in the wake of giving all costs, for example, interest, taxes and favour stock profit to the investors from organizations
Net profit margin alludes to the level of income that remains in the aftermath of giving all costs, for example interest, taxes and favor shares profit to the investors of organizations. 37 The net profit margin was low, even in 2016 it turned negative, which is not helpful for the bank. Since this ratio is not acceptable, it means that the bank cannot have the option to reduce its costs.
Return on Asset (ROA): Return on asset quantifies how proficiently an organization can deal with its asset to create profits. The higher ratio is increasingly positive for financial specialists on
Net Profit Margin
Return on Equity (ROE): Return on Equity measures the ability of a company to generate profits from its shareholders investments in the company
As an investor, you need to use this return on equity to determine whether the bank is using their investment properly or not.
Return on Equity (ROE)
Common Size Analysis of Agrani Bank Limited
Common Size of Balance Sheet
Common Size Analysis of Income statement Or Profit & Loss Account Statement
Chapter -05 Findings
Findings of the Report
Agrani Bank Limited's liquidity ratio was decreasing from 2015 to 2019, which suggests that the bank is facing an emergency situation in 2019. As the debt ratio is in an expanded situation, it means that the bank's dependence on creditors is expanded. As of 2019, the ratio was 19.125, which is higher than various years, implying that the bank is using more debt to back its exercises as opposed to using equity.
It is not an acceptable sign for the bank as investors use this ratio to see whether the bank is using their venture properly or not. In the event that the bank neglects to use their ventures appropriately, at that point they will no longer contribute. The ratio of capital to assets was on the decline which means that the bank uses more debt to buy assets than equity.
Chapter-06
Recommendations, Conclusion &
Recommendations for Agrani Bank Limited
Banks must adopt a rigorous advertising policy to make their cash advance products more attractive and popular. For cash credit (cc), their loan disbursements are relatively low in August compared to July. They should continue to try to boost this as it is considered credit risk, an essential factor that needs to be managed.
In Kundekredit, their loan payment suddenly drops in the middle by a certain amount, which is very unpredictable because this is related to the customer's lifestyle. In FDR loan disbursement is little bit low but they should keep it stable because customers have option to reinvest their funds both principal and interest amount on maturity or principal and interest amount deposited into their accounts. They basically give great deals to their special customer and they should keep it this way.
My recommendation is that they should keep pace with the other loan disbursement sector. Although the total asset turnover in 2019 was 0.0074, which is higher than previous years, they are still not using their assets enough to generate salary. They need to increase total asset turnover from 4 to 6 several times as this is a standard range, but it varies from organization to organization.
47 Since the debt ratio grew year on year, it implies that the bank's dependence on creditors is increasing, which is not helpful for the bank. They need to reduce dependence on creditors because their liquidity is insufficient. They may then face problems as loan costs may increase. As the debt-to-equity ratio increased, it means that the bank is using more debt to finance its operations, rather than using equity.
The bank must keep track of debt and equity to finance its exercises, in any case the bank will be faced with many problems in paying its obligations. Net Profit Margin (NPM) of Agrani Bank Limited was extremely low even it turned negative which is not helpful for the bank. On the off chance that the bank has to expand NPM, at that point it has to reduce its cost, otherwise it is not ready to gain profit and cannot offer profit to the investors.
Conclusion
