F 310 report on performance evaluation of banking sector of bangladesh

Report on
Performance Evaluation of
Banking sector of Bangladesh
A study on BDBL, Uttara Bank, AB Bank & Standard Bank
Date of Submission: 03 March 2019
Submitted to:
Papi Halder
Lecturer
Department of Finance & Banking
University of Barishal
Submitted by:
Group No. 05
3rd
Year 2nd
Semester
Department of Finance & Banking
Course Title: Managerial Accounting
Course code: F – 310

i
We are group
No. 05
Group list
Sl.
Number
Name ID Number
01 Rahul Deb Karmakar 16 FIN 017
02 Md. Jalal Uddin 16 FIN 026
03 Tamanna Afrin 16 FIN 027
04 Md. Ibrahim 16 FIN 032
05 Tania Akter 16 FIN 037
06 Md. Mohiuddin 16 FIN 043
07 Mahmudur Rahaman 16 FIN 067

ii
Letter of Transmittal
3rd
March, 2019
Papi Halder
Lecturer,
Department of Finance and Banking
Subject: Letter of Transmittal for the report “Performance evaluation of banking sector in
Bangladesh.”
Dear Madam,
With due respect we, the undersigned students of Group-5, 3rd
year 2nd
semester, Department
of Finance & Banking have reported on “Performance evaluation of banking sector in
Bangladesh”
Though we are learning curve, this report has enabled us to gain insight into performance
evaluation of banking sectors. So, it becomes as an extremely challenging and interesting
experience. Thank you for supportive consideration for formulating this report. Without your
inspiration this report would have been an incomplete one.
Lastly, I would thankful once again if you please give your valuable consideration on our effort.
Yours’ sincerely,
Rahul Deb Karmakar
On behalf of group no: 05
Department of Finance and Banking

iii
Acknowledgement
In performing our report, we had to take the help and guideline from some articles on web,
thanks to the author of those article who deserve our greatest gratitude. We also want to thank
related bank for availing their information on web. The completion of this report gives us much
pleasure. We would like to show our gratitude Papi Halder, Course Teacher, University of
Barisal for giving us a good guideline for report throughout several consultations. We would
also like to expand our deepest gratitude to all those who have directly and indirectly guided
us in writing this report.
In addition, a thank you to Lecturer Papi Halder, who introduced us to the Methodology of
work, and whose passion for the “underlying structures” had lasting effect. We also thank the
University of Barisal for giving us platform by which we are able to conduct such types of
experiencing work.
Many people, especially our classmates and group members itself, have made valuable
comment suggestions on this proposal which gave us an inspiration to improve our report. We
thank all the people for their help directly and indirectly to complete our report.

iv
Executive Summary
This study attempts primarily to measure the financial performance of banking industry of
Bangladesh for the periods 2011–2017 and to rate them according to the composite rating
system. For this purpose, 4 commercial banks have been selected. CAMEL is used as an
evaluation tool in this paper. Several ratios are calculated and there is comment about the result.
The performance of most banks is dependent more on the managerial ability in formulating
strategic plans and the efficient implementation of its strategies. Maintenance of asset quality
is the major challenge in this year and is feared to remain so in 2017. The banking sector in
Bangladesh has passed somewhat an average year regarding governance, profitability and
soundness in 2016. Finally, it is recommended that the banks should be more careful to ensure
the quality of assets and its uses, and increased their efficiency in managerial grids. Some
recommendation is adopted after the CAMELs evaluation.

v
Table of Content
01 Introduction 1
1.1 Origin of the study…………………………………………………….1
1.2 Objectives of the study ……………………………………………….1
1.3 Methodology …………………………………………………………2
1.4 Scope of the study ……………………………………………………3
1.5 Limitations of the study ………………………………………………3
02 Profile of Assigned Bank 4
2.1 Bangladesh Development Bank Limited ………………………...…...4
2.2 Uttara Bank Limited ………………………………………………….6
2.3 AB Bank Limited …………………………………………………….8
2.4 Standard Bank Limited ……………………………………………….9
03 Performance Evaluation of Respective Bank 10
3.1 Total deposits ……………………………………………………….10
3.2 Growth of deposits ………………………………………………….11
3.3 CAMEL Ratings …………………………………………………….12
3.3.1 Capital Adequacy …………………………………………..12
3.3.2 Assets quality ………………………………………………13
3.3.3 Management soundness ……………………………………14
3.3.4 Earning performance ……………………………………….15
3.3.5 Liquidity …………………………………………………...18
04 Findings & Recommendation 19
05 Conclusion 20
Appendix 21

Performance Evaluation of
Banking Sector of Bangladesh
A study on:
 Bangladesh Development Bank Limited
 Uttara Bank Limited
 AB Bank Limited &
 Standard Bank Limited

Performance evaluation of BDBL, Uttara Bank, AB Bank & Standard Bank
1
Chapter – 1
Introduction
For Bangladesh, a sound and efficient banking system is one of the most important preconditions to
achieve economic development. At present, a total of 57 banks (6 SCBs, 2 Specializes Banks, 40 PCBs
and 9 FCBs). The performance of 4 banks needs to be compared with each other as well as the overall
performance of banking sector needs to be compared with other countries. Quantitative comparison can
be done on the basis of CAMEL ratio. CAMEL ratios mainly indicate the adequacy of the risk-based
capital, non-performing loan position, expenditure-income ratio, return on assets (ROA), return on
equity (ROE), net interest margin (NIM), management efficiency, Assets quality, liquidity etc. The
study compares the 4 banks time series performance on the basis of selected CAMEL ratios. We find
out the ratio of last 7 years (2011-2017) and will give relative explanation and we also give some
findings and recommendation based on our analysis.
1.1 Origin of the study
The banking industry of Bangladesh is a mixed one comprising nationalized, private and foreign
commercial banks. Many efforts have been made to explain the performance of these banks.
Understanding the performance of bank requires knowledge about the profitability and the relationships
between variables like market size, bank’s risk and bank’s market size with profitability. Indeed, the
performance evaluation of commercial banks is especially important today because of the fierce
competition. The banking industry is experiencing major transition for the last two decades. It is
becoming an imperative for banks to endure the pressure coming from both domestic and external
factors and prove to be profitable. Until the early 1985, Bangladesh had a highly repressed financial
sector. Banks and other financial institutions were fully owned by the government. In the early of 1980,
Bangladesh entered into the IMF/ World Bank adjustment programs and the process of privatization
and liberalization gained momentum under the influence of the World Bank and the IMF. Since then
the banking industry of Bangladesh has become an attractive ground for both domestic and foreign
investors to take part in the game. It is of the utmost important of these players to prove themselves
profitable and work on those pillars of the same.
1.2 Objectives of the study
The broader objectives of the study are as under:
 To know the banking sector and its current trends.
 To study the category wise performance of banks operating in Bangladesh on the basis of
selected CAMEL ratio.
 To examine the profitability of banks.
 To analyze how the correlation of different ratios affects the net interest income of banks.

2
1.3 Methodology
1.3.1 The Period of the Study
The study is covered for eight years from the year 2011 to 2017.
1.3.2 Data collection
This study is based on secondary data. For this purpose, the researcher has used the data published in
Annual reports of Bangladesh Bank and other related websites. Moreover, the journals, articles, reports
and surveys have been referred.
1.3.3 Data analysis tool
For the comparison we will use “Microsoft Excel 2016” & for graphical representation we will use
“Microsoft Excel 2016”
1.3.4 Variables
To analyze the financial performance of banking sector different variables are included in this study,
they are as follow:
Deposits
Deposits are considered as banks’ main source of funding and are the lowest cost of funds. The more
deposits are transformed into loans, the higher the interest margin and profit. Hence, deposits generally
have positive impact on profitability of the banks. But if a bank can’t transform its deposits into loans
efficiently it may bring negative impact on profitability also.
Capital Adequacy (C)
Capital adequacy is a measure of the financial strength of a bank, usually express as a ratio of its
shareholders’ fund to total assets. The ratio reflects the ability of a bank to withstand the unanticipated
losses. This ratio has a positive relationship with the financial soundness of the bank.
Asset Quality (A)
Asset quality is an important measure of the strength of banks. The ratio of non-performing loans and
advances as a share of total and advances is considered for the purpose of analysis. In addition, the ratio
of total loans and advances to total assets is utilized to measure the extent of deployment of assets in
earning assets.
Management Quality (M)
The capacity/efficiency of the management of a bank can be measured with the help of certain ratios.
To capture the possible dynamics of management efficiency, the following ratios are considered: total
loans and advances to total deposits, interest expenses to total deposits, and operating expenses to total
assets.
Earnings Ability (E)
Two ratios are used to assess the earnings ability of the banks under study. The first ratio is the net
income to total assets or “ROA”. The second ratio used is interest income to total assets. The two ratios
have positive relationship with the financial performance of the bank and negative relationship the risk
of bank failure.
Liquidity (L)
Two ratios are employed in this study to assess the liquidity level of the banks. The first one is total
liquid assets to total assets. The second ratio is liquid assets to customers‟ deposits.

3
1.4 Scope of the study
We’ve got enough time to complete this task. Our course teacher is very much supportive and gave his
valuable advice to complete this report effectively. Besides as it’s a group report, team work is very
much important for completing this task and each group member is very hard worker and gave their
level best to complete this report paper.
1.5 Limitations of the study
The study of this kind is generally encountered with some limitations. Unavailability of data is a major
problem. Data accuracy cannot be ensured as mainly secondary data collected from Annual Report,
Various Financial Stability reports, Economic trends is used in this study. However, repeated and
sincere efforts have been given to ensure the accuracy of the data used in this study.

5
Vision:
To emerge as the country’s prime
financial institution for supporting private
sector industrial and other projects of
great significance to the country’s
economic development. Also be active
participant in commercial banking by
introducing new lines of products and
providing excellent services to the
customers.
Mission:
• To be competitive with other banks and
financial institutions in rendering services;
• To contribute to the country’s socio-
economic development;
• To mobilize deposit for productive
investment;
• To expand branch network in
commercially and geographically important
places;
• To employ quality human resources and
enhance their capability through motivation
and right type of training at home and abroad;
• To delegate maximum authority ensuring
proper accountability;
• To maintain contentious improvement
and upgradation in business policies and
procedures;
• To adopt and adapt to new technology;
• To maximize profit by strong, efficient
and prudent financial performance; and
• To introduce new product lines according
to market needs.

6
2.2
Uttara Bank Limited celebrated 50th anniversary of its Banking Service in 2015. This well
established and ancient bank has a rich history. With the initiation of some renown Bengali
businessmen it was established to facilitate the disadvantaged people of the then East Pakistan
and started its banking operation officially on 28th January of 1965 in name of “Eastern
Banking Corporation” with four branches which soon reached 60 just before the independence.
During Non-cooperation movement in 1971, this bank performed the treasury function of East
Bengal.
After independence, Eastern Banking Corporation was nationalized and renamed as “Uttara
Bank” and resumed its banking operation from 26th March 1972. Embarking on a progressive
journey, Uttara Bank continued to grow and expand in the successive years. It took the name
“Uttara Bank Ltd.” after privatization from June,1983 and became one of the largest private
sector banks of Bangladesh. In the later years, Uttara Bank became the trend setter in the
banking industry, acquiring lion's share in inward foreign remittances and a major market share
in loans to large, medium and small industries, traders and farmers. Based on the bank’s
consistent strong financial performance and its expanding presence, Uttara Bank Ltd. is
currently ranked as the most trusted bank in Bangladesh.
At present the bank has 235 branches and all are under online network. In addition, its effective
and diversified approach to seize the market opportunities is going on as continuous process to
accommodate new customers by developing and expanding rural, SME financing and offshore
banking facilities. Besides these traditional delivery points, the bank is also very active in the
alternative delivery area. It currently has the facilities of SMS Banking, Internet Banking and
a large number of ATMs of its own with ATM sharing arrangement with other partner banks.

7
Vision:
Uttara Bank will be a unique organization in
Bangladesh. It will be a knowledge-based
organization where the UBL professionals will
learn continuously from their customers and
colleagues worldwide to add value. They will
work as a team, stretch themselves, innovate and
break barriers to serve customers and create
customer loyalty through a value chain of
responsive and professional service delivery.
Continuous improvement, problem solution,
excellence in service, business prudence,
efficiency and adding value will be the operative
words of the organization. UBL will serve its
customers with respect and will work very hard
to instill a strong customer service culture
throughout the bank. It will treat its employees
with dignity and will build a company of highly
qualified professionals who have integrity and
believe in the Bank’s vision and who are
committed to its success. UBL will be a socially
responsible institution that will not lend to
businesses that have a detrimental impact on the
environment and people.
Mission:
To provide high quality financial service
To provide excellent quality customer service
To maintain corporate and business ethics.
To become a trusted repository of customers
money and their financial advisor.
To make their stop superior and rewarding to
the customers.
To display team sprite and professionalism.
To have a sound capital base.

8
2.3
Introducing Bangladesh to its very first private sector bank; AB Bank Limited was incorporated on 31st
December, 1981. Arab Bangladesh Bank as formerly known started its effective operation from 12th
April, 1982 with the mission to be the best performing bank of the country.
With an ambition to secure its place as the leading service provider, creating lasting value for
its clientele, shareholder, and employees and particularly for the community it operates in, AB
has formulated a golden heritage and an envious legacy that may not be imitated by many.
Achieving plenty of milestones and incorporating numerous changes over the last 36 years, AB
has always been authentic to its desire of being the technology driven innovative bank of
Bangladesh. To excel this new era of technological triumph, AB has successfully introduced
internet banking, SMS banking, cutting edge ICT, state-of-art network solution, 24/7 ATM
service and many other e-products.
AB has extensively widened its services over the last three decades in both home and abroad.
The bank opened its very first branch at Karwan Bazar on 12th April 1982 and now has a
successful footprint of 105 branches including one overseas branch in Mumbai, India and 270
plus ATMs spread across the country. it has associated 5 subsidiary companies including one
Off-shore Banking Unit and Custodial services with its core banking activities. The Bank
opened its Representative Office at Yangon, Myanmar for extending its foreign operations.
Vision:
To be the trendsetter for innovative banking with
excellence and perfection.
Mission:
To be the best performing bank in the
country.

9
2.4
Standard Bank Foundation started its journey from 2010, to contribute charitable activities.
From beginning, it has been working to promote medical, social, charitable and religious
activities as non-profit and non-political manners. Foundation also busy with following major
activities –
» To set up and establish the Educational, Medical, Social and Charitable Institution in order
to provide free education, medical and relief services.
» To establish and to take over the maintenance and the expansion of Hospitals, Charitable
dispensaries, Maternity Homes, Homes for Orphans, Children and Old peoples in order to
promote welfare of poor, distressed and affected people in Bangladesh.
» To spend moneys for advancement of Education and Moral condition of boys and girls, to
help poor Widows, Orphans and Indigent persons, help impart education and training in
agricultural and various kind of primary education.
» Giving gifts, Scholarships, grants, advances and other assistance to any persons, company,
corporate body or any charitable or benevolent institution.
» To start and establish Outdoor or Indoor Medical treatment, Dispensaries, Clinics, Nursing
Centre, Diagnostic Centre, establish Modern Medical Laboratory for benefit of public health.
» To erect and maintain Mosques and Religious institutions, if and when thought necessary or
expedient for promotion of religious amity etc.
Vision:
To be a modern bank having the object of building
a sound national economy and to contribute
significantly to the public exchanger.
Mission:
To be the best commercial bank in Bangladesh in
terms of efficiency, capital adequacy, asset
quality, sound management and profitability.

10
Chapter – 3
Performance Evaluation of Respective Bank
3.1 Total Deposits
Table – 1: Total deposits of BDBL, Uttara Bank, AB Bank & Standard bank:
(In billion TK.)
Name of bank 2011 2012 2013 2014 2015 2016 2017
BDBL 4.71 7.95 19.99 23.35 23.37 26.37 28.58
Uttara Bank 72.15 93.65 11.30 113.97 122.40 134.95 148.51
AB Bank 116.15 140.03 161.85 198.19 213.82 245.64 235.95
Standard Bank 63.76 73.88 87.96 97.30 106.93 122.53 134.73
Source: Bangladesh Bank Annual Reports (2011-2017)
Table – 1 shows the amount of deposit for BDBL, Uttara Bank, AB Bank & Standard bank in last 7
years. The amount is showed in billion Tk. The trend of deposit of last 7 years shows in figure 3.1.
Source: Respective Bank’s Annual Reports (2011-2017)
2011 2012 2013 2014 2015 2016 2017
BDBL 4.71 7.95 19.99 23.35 23.37 26.37 28.58
Uttara Bank 72.15 93.65 11.3 113.97 122.4 134.95 148.51
AB Bank 116.15 140.03 161.85 198.19 213.82 245.64 235.95
Standard Bank 63.76 73.88 87.96 97.3 106.93 122.53 134.73
0
50
100
150
200
250
300
Taka
Figure - 3.1
Total Deposits of BDBL, Uttara Bank, AB Bank & Standard Bank
(Taka in Billion)

11
3.2 Growth of deposit
Table – 2: Growth of deposit of BDBL, Uttara Bank, AB Bank & Standard Bank
(Amount in percentage)
Name of
bank
2011 2012 2013 2014 2015 2016 2017 Average
Growth
Rate
BDBL 52.46 68.80 152 17 1 13 8.36 44.66
Uttara Bank 9.54 29.81 18.85 2.41 7.40 10.25 10.05 12.62
AB Bank 21.37 20.56 15.58 22.45 7.88 14.88 (3.94) 14.11
Standard Bank 9.29 15.87 19.06 10.62 9.90 14.59 9.96 12.76
Table – 2 Shows the deposit of BDBL, Uttara Bank, AB Bank & Standard Bank for last 7 years. BDBL
holds the highest average growth in last 7 years. Though they had the minimum growth of deposit in
2015, the growth of 2013 keeps them 1st
. Besides all other bank had a consistent growth in last 7 years.
AB Bank had a negative growth in 2017. Still they are in the 2nd
place in average deposit growth as they
did good in previous 6 years. The trend of average deposit growth shows in figure 3.2.
0
5
10
15
20
25
30
35
40
45
BDBL Uttara Bank AB Bank Standard Bank
44.66
12.62
14.11 12.76
Figure 3.2
Average rate of deposit growth (percent)

12
3.3 CAMEL RATINGS
3.3.1 Capital adequacy
Capital adequacy focuses on the total position of banks' capital and the protection of depositors and
other creditors from the potential shocks of losses that a bank might incur. It helps absorbing all possible
financial risks like credit risk, market risk, operational risk, residual risk, core risks, credit concentration
risk, interest rate risk, liquidity risk, reputation risk, settlement risk, strategic risk, environmental &
climate change risk etc. Under Basel-II, banks in Bangladesh were instructed to maintain the Minimum
Capital Requirement (MCR) at 10.0 percent of the Risk Weighted Assets (RWA) or Taka 4.0 billion as
capital. Under the Supervisory Review Process (SRP), banks are directed to maintain a level of
"adequate" capital which is higher than the minimum required capital and sufficient to cover for all
possible risks in their business.
• Total capital to total assets ratio
Table – 3: Total capital to total assets ratio of BDBL, Uttara Bank, AB Bank & Standard Bank.
Name of Bank 2011 2012 2013 2014 2015 2016 2017
BDBL 24.78 27.26 28.90 24.58 25.77 25.76 26.61
Uttara Bank 9.36 7.51 7.71 8.16 7.96 7.43 6.98
AB Bank 11.37 11.73 10.80 10.00 11.09 16.79 10.80
Standard Bank 11.39 11.28 10.67 10.28 12.53 11.38 13.96
Table – 3 shows the Total capital to total assets (capital adequacy) ratio of respective bank for last 7
years. This is used to protect depositors and promote the stability and efficiency of financial systems
around the world. BDBL has the highest CAR ratio than other 3 banks. It indicates that BDBL has the
better capability to protect their depositors. All other three PCB also in good position & Uttara Bank
0
5
10
15
20
25
30
2011 2012 2013 2014 2015 2016 2017
Figure 3.3
Total capital to total assets ratio (percent)

13
has a great scope of improvements. They need to increase this ratio because it’s a security purpose &
this also helps to keep banking performance stable in crisis situation. Figure 3.3 shows the trend of CAR
for the last 7 years.
3.3.2 Asset quality
The most important indicator of bank asset quality in the loan portfolio is the ratio of gross non-
performing loans (NPLs) to total loans and the ratio of net NPLs to net total loans.
• NPL to total loan ratio
Table – 4: NPL to total loans ratio of BDBL, Uttara Bank, AB Bank & Standard bank.
Name of Bank 2011 2012 2013 2014 2015 2016 2017
BDBL 38.28 42.99 40.00 38.32 45.18 49.58 58.86
Uttara Bank 5.22 8.39 8.04 7.29 8.27 7.75 6.75
AB Bank 2.82 3.32 3.37 3.86 3.16 5.19 7.15
Standard Bank 2.19 2.50 3.50 3.55 3.23 3.62 7.42
Table – 4 shows the NPL to total loans ratio of respective banks. Here BDBL is in the weak position.
When NPL is larger that means the probability of loan default is high. So as much low this ratio will
be, the better for the bank. Here all other bank is in the better condition than BDBL. BDBL’s
Management needs a proper monitoring to identify the investment segment. Standard bank holds the
best position in this category with minimum NPL percentage. Figure 3.4 shows the trends of NPL to
total loans ratio for previous 7 years.
0 10 20 30 40 50 60 70
2011
2012
2013
2014
2015
2016
2017
Figure - 3.4
NPL to total loan ratio (percent)
Standard Bank AB Bank Uttara Bank BDBL

16
• Return on equity (ROE)
Table – 7: Return on equity of BDBL, Uttara Bank, AB Bank & Standard Bank.
Name of Bank 2011 2012 2013 2014 2015 2016 2017
BDBL 4.61 5.33 5.36 6.44 2.88 2.10 3.04
Uttara Bank 17.13 12.62 12.27 11.41 11.42 11.47 11.2
AB Bank 9.25 9.31 6.31 6.95 6.03 5.68 0.13
Standard Bank 20.75 17.65 12.51 12.66 14.95 8.66 9.24
Table – 7 shows the return of equity percentage of respective bank for last 7 years. Return on Equity
(ROE) is another important measure of earning and profitability determination which indicates net
income after tax to total equity. The amount of profit generation for the equity shareholders is found
from the ratio. Higher value of ROE is an indication of high productivity of equity. So, here Uttara bank
is the strongest among 4 banks. Performance of AB Bank is worst in 2017 in all of the segment. The
need a lot of improvement. BDBL is also in bad position just after AB Bank. BDBL also needs little bit
improvement in this segment. The trend of ROE decreasing in all bank. Management should consider
about the consistency & more improvements. Figure 3.7 shows the trend of ROE for each of the banks
for last 7 years.
0
5
10
15
20
25
2011 2012 2013 2014 2015 2016 2017
FIGURE 3.7
RETURN ON EQUITY (PERCENT)

17
• Net interest margin (NIM)
Table – 8: Net interest margin (NIM) of BDBL, Uttara Bank, AB Bank & Standard Bank.
Name of bank 2011 2012 2013 2014 2015 2016 2017
BDBL 3.00 3.13 4.80 1.26 1.42 1.52 2.71
Uttara Bank 2.73 2.10 1.04 2.28 3.06 3.71 4.18
AB Bank 2.40 3.12 3.78 6.08 4.28 2.84 2.67
Standard Bank 3.68 3.14 2.54 3.27 2.63 2.78 2.22
Table – 8 shows the net interest margin of respective banks for 7 years. Net interest margin or NIM
denotes the difference between the interest income earned and the interest paid by a bank or financial
institution relative to its interest-earning assets like cash. Thanks to its frequent usage, it’s become a
part of the banking and financial institution. Figure 3.8 shows the NIM trends of respective banks
comparatively.
0
1
2
3
4
5
6
7
2011 2012 2013 2014 2015 2016 2017
Figure 3.8
Net interest margin (percent)

18
3.3.5 Liquidity
Statutory liquidity reserve (SLR) varies according to the circular issued by the Bangladesh Bank but in
an average SLR is 19.5% of total deposits including cash reserve requirement at least 5% in Bangladesh
Bank account. Three DFIs are exempted from the requirement of SLR and 7 Islami banks have to keep
10% SLR. Rest of all banks has to maintain the required SLR.
• Total loans to total customer deposit
Table – 9: Total loans to total customer deposit of BDBL, Uttara Bank, AB Bank & Standard Bank.
Name of Bank 2011 2012 2013 2014 2015 2016 2017
BDBL 148.48 155.12 86 64 77.60 68.54 62.79
Uttara Bank 74.86 65.48 58.25 65.10 61.93 61.70 70.88
AB Bank 81.48 75.75 86.58 89.60 96.80 83.67 86.24
Standard Bank 87 81 84.33 82.68 85.56 82.09 83.89
Table – 9 shows the total loans to total customer deposit in percentage. Banks need to keep a minimum
amount of deposit for liquidity purpose. So before proving credit the must consider about this fact.
Providing more loan is riskier as bank’s main sources of loanable fund is customer deposit. If banks
provide more loans than their deposit it’s not good for the bank. All bank’s Loan to deposit ratio is good
but in 2011 & 2012 BDBL provides more loan than their deposit. NPL of BDBL also very high. So,
management of BDBL should consider about this fact with due importance. Figure 3.9 shows the trend
of total loans to customer deposit ratio.
148.48
155.12
86
64
77.6
68.54
62.79
74.86
65.48
58.25
65.1
61.93
61.7
70.88
81.48
75.75
86.58
89.6
96.8
83.67
86.24
87
81
84.33
82.68
85.56
82.09
83.89
2011 2012 2013 2014 2015 2016 2017
FIGURE 3.9
TOTAL LOANS TO CUSTOMER DEPOSIT
(PERCENT)

19
Chapter – 4
Findings & recommendation
After evaluating performance of four banks, some findings & recommendation for the banking industry
are mentioned below:
(1) Since corporate governance has a significant improvement on the prevention of bank distress; banks
should be able to demonstrate that rigorous internal policies were in place and that procedures exist for
identifying and managing conflicts of interest to avoid its adverse consequences on their customers and
other stakeholders. Insider abuse, conflict of interest and widespread manipulations are at the heart of
a nation’s financial sector crisis. Such crisis connived at or orchestrated by management and board,
should be captured by internal and external auditors and regulators so as not to reach serious
proportions.
(2) Corporate governance has the capacity to significantly improve the performance of the Bangladesh
banking sector. Therefore, in addressing the role of corporate governance in curbing distress, the central
bank should review the fit and proper person’s regime in order to ensure that only credible persons of
impeccable financial, personal and professional character are allowed as major shareholders, directors
and managers of banks. The central bank should also strengthen its on-site and off- site supervision
functions in recognition of the need for an effective supervision of the banking sector.
(3) All four bank should implement a mandatory code of corporate governance for all banks and NBFIs.
For example, to ensure that there is a clear division between the chief executive officer and the
managing directors. These should ensure that the term for the CEOs or MDs does not exceed 10 years.
The tenure of non-executive directors should be set for initial 4 years with the upper limit of 8 years.
The term independent directors should be properly defined to avoid any ambiguities.
(4) These four banks must also ensure that banks should establish committees within their banks so as
to oversee the management of risk, audit and credit. This is also to forestall any potential risk and
prevent the bank from any imminent or future distress. The board should appoint members to these
committees with the goal of achieving an optimal mix of skills, competencies and experience that, in
combination, allow the committees to fully understand the factors and causes of distress and objectively
evaluate the strategies to address issues and bring fresh thinking into all the relevant issues concerning
bank distresses.
(5) State owned bank’s management is less conscious in banking operation. That’s because of low
monitoring by the government. After issuing a loan, bank need to monitor the borrower and also need
to consider borrowers overall condition before issuing credit to them.
(6) Private commercial bank doing well because of their good service. They trained their employee in
a proper manner that’s why they work efficiently in every sector. They also have a good and consistent
operating performance.

20
Chapter – 5
Conclusion
An efficient operation of banking sector enables the smooth financial resources intermediation of an
economy. Economic growth is contributed greatly by the efficiency of banking sector in resources
generation and its proper allocation. The smooth and efficient operation of banking sector also helps to
reduce risk of failure of an economy. Therefore, the performance of banking sector is always been a
source of interest for researchers to judge the economic condition of a country. Regulators of the
banking sector always monitors the performance of the banks to ensure efficient financial system based
on CAMEL ratio.
Among the entire CAMEL ratio, some important ratios which are most significant are analyzed to judge
the performance of BDBL, Uttara Bank, AB Bank & Standard Bank. Among the four banks, operating
in Bangladesh, BDBL has been found more vulnerable compared to the rest of three categories. CAR,
NPL to total loan, all are too high and provision maintenance ratio, ROA, ROE, liquidity ratio is too
low in BDBL and this scenario also reflects negatively in overall banking industry performance of
Bangladesh. Uttara Bank, AB Bank & Standard Bank shows all the positive signal of well-functioning
and improving performance.

21
Appendix
Reference:
I. http://www.bdbl.com.bd/
II. https://www.uttarabank-bd.com/
III. http://abbl.com/
IV. https://www.standardbankbd.com/
V. https://www.bb.org.bd/

F 310 report on performance evaluation of banking sector of bangladesh

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to F 310 report on performance evaluation of banking sector of bangladesh

Similar to F 310 report on performance evaluation of banking sector of bangladesh (20)

Recently uploaded

Recently uploaded (20)

F 310 report on performance evaluation of banking sector of bangladesh