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Introduction

The main feature of bank is to conduct banking business with deposits and 
loan. The systems, vision and strategies differ in various types of banks. On the 
basis   of  these  measures  the overall  banking  system  is  classified   in different 
sectors throughout the world. In our country, there are basically two types of 
banking system­commercial banking system and specialized banking system. 
Commercial   sectors   can   be   classified   under   four   categorized   ­Nationalized 
Commercial   Banks,   Local   Commercial   Banks,   and   Foreign   commercial   and 
Islamic Banks.

Though all these types banking system are same in mission of profit making 
but   they   differ   in   their   applying   strategies,   purposes   and   visions.   Here   we 
studied on five banks selected from five types of banking system. We focused 
on the different types of loan they provide and deposits they receive, analyzed 
their performance on the basis of different ratios and statistical trends to make 
comparison among them.      

Objectives of the report

Report   writing   based   on   information   analysis   is   as   a   part   of   our   B.B.A. 


program. Through report writing we are able to know the present situation of 
studied topic. The main objective of this study is to make comparisons among 
five types of banking system existing in our country. Other objectives may be 
identified as following:

To   keep   ourselves   abreast   of   with   current   situations   of   the   different 


banking systems.
To strengthen relation with banking environment.
To increase overall skill so that we can be more modern and challenging 
to manage our future business
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Methodology

Sources of data:

We have collected the data from both primary and secondary sources. 

I. Primary Sources:

We have collected the information by interviewing the employees of our selected 
banks. 

II.Secondary Sources:

We have also collected information from the following secondary sources:

Websites of the studied banks
Annual reports of five banks from the library of “Bangladesh Bank”.

Methods of data analysis:

We   have   analyzed   the   data   in   a   qualitative   and   subjective   way.   The   overall 
process of analyzing data presented below in brief:

At   first   we   identified   the   variation   of   loan   and   deposits   conducted   by 


selected banks.
Then   we   analyzed   various   ratios   to   measure   the   overall   performances 
and quantity of offerings. 
Then we analyzed on the basis of statistical trends.
And  finally   we  made  our   comparison   summarized   by   providing   overall 
findings.

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Rationale of the study

Business world is shrinking in width so is the banking sector, that’s why it is 
necessary to cope up with the rapidly changing environment. In our country 
there are several types of banking systems which differ in many aspects. And it 
is essential for us to measure the performances of these banking systems. This 
report will help us in this regard and make updated information available to 
us. 

Scope of the report

This study covering  in depth analysis performances and offerings of different 
types   of   banks   which   gives   us   the   way   to   be   familiarized   with   the   banking 
environment.   This   report   also   gives   us   an   opportunity   to   gather   practical 
experience   by   working   in   the   practical   arena   with   our   limited   theoretical 
knowledge and expertise. 

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Limitations of the Report

Report writing is a part of B.B.A. program’s number distribution and we have 
to submit report after completing analysis of data. So, within very short time 
and within various limitations we have completed this report. Some limitations 
are:

Limitations in availability of information.
Problem in taking assignment with the employees.
In some cases we analyzed on the basis of ‘trial and error method’, some 
of these are approximate information.

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Banks overview

We studied on following banks:

Name Types
Sonali Bank Ltd Nationalized Commercial Bank
Shahzalal Islami Bank Ltd Islamic Bank
Dutch­Bangla Bank Ltd Local Commercial Bank
Honkong Shanghai Banking Corporation Ltd  Foreign Commercial Bank
BASIC Bank Bangladesh Ltd Specialized Bank

The concise overview of these selected banks is given below:  

Sonali Bank Ltd.

Sonali Bank is a state­owned commercial bank in Bangladesh. It is the largest 
bank   of   the   country.   A   fully   state­owned   enterprise,   the   bank   has   been 
discharging   its   nation­building   responsibilities   by   undertaking   government 
entrusted different socio­economic schemes as well as money market activities 
of its own volition, covering all spheres of the economy. Sonali Bank Limited 
alone enjoys the prestige of being the agent of the Central Bank of Bangladesh 
in such places where the guardian of the money market has chosen not to act 
by itself.

Sonali   Bank   was   established   in   1972   under   the   Bangladesh   Banks 

(Nationalization) Order, through the amalgamation and  nationalization of the 
branches of National Bank of Pakistan, Bank of Bhowalpur and Premier Bank 
branches located in  East Pakistan  until the 1971 Bangladesh Liberation War. 
When it was established, Sonali Bank had a paid up capital of 30 million taka. 
In 2001, it’s authorized and paid up capital were Tk 10 billion and Tk 3.272 
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billion respectively. The bank's reserve funds were Tk 60 million in 1979 and 
Tk 2.050 billion on 30 June 2000.

Sonali   Bank   performs   all   traditional   banking   functions   including   deposit 


mobilization and lending. The bank discharges the treasury functions as the 
agent of the Bangladesh Bank. It collects tax, stamp duty and registration fees, 
operates   special   savings   accounts,   pays   salaries   to   the   teachers   of   schools, 
madrashas,   and   colleges   and   pension   to   retired   government   employees.   The 

bank provides funding to some income generating and economic development 
projects   namely,   Poverty   Alleviation   Credit   Program,   Female   Special   Credit 
Program, and Agro­based Industrial Credit Program in the rural areas. It has a 
large   participation   in   foreign   exchange   business   and   off­balance   sheet 
activities. 

Sonali  Bank has a total of 1297  branches.  Out of them, 488  are located in 


urban areas, 696 in rural areas, and 2 are located overseas. It also operates 
the Sonali Exchange Company Inc. in USA and Sonali Bank (UK) Ltd., United 
Kingdom, to facilitate foreign exchange remittances.

Basic Bank Ltd.

BASIC   Bank   Limited   (Bangladesh Small   Industries   and   Commerce   Bank 


Limited) registered under the Companies Act 1913 on the 2 nd of August, 1988, 
started   its   operations   from   the   21st  of   January,1989.   It   is   governed   by   the 

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Banking Companies Act 1991. The Bank was established as the policy makers 
of the country felt the urgency for a bank in the private sector for financing 
small scale Industries (SSIs). At the outset, the Bank started as a joint venture 
enterprise of the BCC Foundation with 70 percent shares and the Government 

of   Bangladesh   (GOB)   with   the   remaining   30   percent   shares.  The   BCC 


Foundation   being   nonfunctional   following   the   closure   of   the   BCCI,   the 
Government of Bangladesh took over 100 percent ownership of the bank on 4th 
June   1992.   Thus   the   Bank   is   state­owned.   However,   the   Bank   is   not 
nationalized; it operates like a private bank as before.

  BASIC Bank Limited is unique in its objectives. It is a blend of development 
and commercial banks.  The Memorandum  and Articles  of Association of the 
Bank stipulate that 50 percent  of loan  able funds shall be invested in small 

and cottage industries sector.

CAPITAL POSITION

Authorized capital     Tk. 2000 million 

Paid up capital   Tk. 1309.77  million.

Total Reserve and Surplus  Tk. 1681.39 million

The Bank is required to transfer 20 percent of its net profit before Tax to
Capital Fund as per the Banking Companies Act 1991.

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Basic bank offer followings:

Term loans to industries especially to small-scale enterprises.

Full-fledged commercial banking service including collection of


deposit, short term trade finance, working capital finance in
processing and manufacturing units and financing and facilitating
international trade.

Technical support to Small Scale Industries (SSls) in order to enable


them to run their enterprises successfully.

Micro credit to the urban poor through linkage with Non-


Government Organizations (NGOs) with a view to facilitating their
access to the formal financial market for the mobilization of
resources.
In order to perform the above tasks, BASIC Bank works closely with
its clients, the regulatory authorities, the shareholders (GOB),
banks and other financial institutions.

  In  Bangladesh,   the   HSBC   Group’s   history   dates   back   to   1996   when   The 
Hongkong   and   Shanghai   Banking   Corporation   (HSBC)   Ltd   opened   its   first 
branch.   Today,   the   HSBC   Group   offers   a   comprehensive   range   of   financial 
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services   in  Bangladesh  including   commercial   banking,   consumer   banking, 
payments   and   cash   management,   trade   services,   treasury,   and   custody   and 
clearing.
HSBC conducts its business through network of 9 branches, 1 sub branches 
and an offshore banking unit. The number of employees working in this bank 
is 830 as of 31 December 2008.
The   key   business   areas   of   this   bank   are   Personal   Financial   Services, 
Commercial Banking and Corporate and Institutional Banking.
  HSBC offers  a full range of personal banking  and related financial services 
including   current   and   savings   accounts,   personal   loans,   time   deposits, 
travelers cheques and inward and outward remittances 

  Commercial   banking   is   a   traditional   strength   of   the   HSBC   Group   .In 


Bangladesh, HSBC is a popular choice for customers because of the Group’s 
international reach and a wide range of financial services and products HSBC 
has   an   offshore   banking   unit   (OBU)   license   and   can   therefore   also   provide 
foreign currency financing to qualifying customers. In addition, it is the only 
major   financial   institution   with   a   presence   in   5   major   EPZ   areas   including 
Dhaka, Chittagong, Adamjee, Mongla and Comilla. 

  Corporate   and   institutional   banking   provides   dedicated   relationship 


management   services   to   HSBC’s   clients   in   major   corporate   and   financial 
institutions. The Bank’s focus is on fostering long­term relationship based on 
its   international   connections   and   extensive   knowledge   of   Asia   and   Asian 
business. 

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Dutch­Bangla   Bank   Limited   (DBBL)   is  Bangladesh's   most   innovative   and 
technologically advanced bank. DBBL stands to give the most innovative and 
affordable   banking   products   to  Bangladesh.   Amongst   banks,   DBBL   is   the 
largest donor in to social causes in Bangladesh. It stands as one of the largest 
private   donors   involved   in   improving   the   country.   DBBL   is   proud   to   be 
associated with helping  Bangladesh  as well as being a leader in the country's 
banking sector.

Dutch­Bangla   Bank   engineers   enterprise   and   creativity   in   business   and 


industry with a commitment to social responsibility. "Profits alone" do not hold 
a central focus in the Bank's operation; because "man does not live by bread 
and butter alone".

Dutch­Bangla   Bank   dreams   of   better  Bangladesh,   where   arts   and   letters, 


sports and athletics, music and entertainment, science and education, health 
and   hygiene,   clean   and   pollution   free   environment   and   above   all   a   society 
based on morality and ethics make all our lives worth living. DBBL's essence 
and ethos rest on a cosmos of creativity and the marvel­magic of a charmed life 
that   abounds   with   spirit   of   life   and   adventures   that   contributes   towards 

human development.

Dutch­Bangla Bank believes in its uncompromising  commitment to fulfill  its 


customer needs and satisfaction and to become their first choice in banking. 
Taking   cue   from   its   pool   esteemed   clientele,   Dutch­Bangla   Bank   intends   to 
pave the way for a new era in banking that upholds and epitomizes its vaunted 
marques "Your Trusted Partner

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Shahjalal Islami Bank Limited (SJIBL) commenced its commercial operation in 
accordance with principle of Islamic Shariah on the 10th May 2001 under the 
Bank Companies Act, 1991. During last  eight  years SJIBL has diversified its 
service coverage by opening new branches at different strategically important 
locations across the country offering various service products both investment 
& deposit. Islamic Banking, in essence, is not only INTEREST­FREE banking 
business, it carries deal wise business product thereby generating real income 
and   thus   boosting   GDP   of   the   economy.   Board   of   Directors   enjoys   high 
credential in the business arena of the country, Management Team is strong 
and   supportive   equipped   with   excellent   professional   knowledge   under 
leadership of a veteran Banker Mr. Muhammad Ali.

To be the unique modern Islami Bank in Bangladesh and to make significant 
contribution to the national economy and enhance customers' trust & wealth, 
quality investment, employees' value and rapid growth in shareholders' equity.

The banks perform its banking business with a view to accomplishing mission 
of providing quality services to customers. Setting high standards of integrity, 
making quality investment, ensuring sustainable growth in business, ensuring 
maximization   of   Shareholders'   wealth,   extending   our   customers   innovative 
services  acquiring  state­of­the­art technology  blended  with Islamic principles 
ensuring human resource development to meet the challenges of the time.

Shahjalal   Islami   Bank   Ltd   follows   strategies   to   strive   for   customer’s   best 
satisfaction & earn their confidence, to manage & operate the Bank in the most 
effective   manner,   to   identify   customers   needs   &   monitor   their   perception 
towards meeting those requirements, to review & updates policies, procedures 
& practices to enhance the ability to extend better services to the customers.

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Depository and Lending services

Accepting deposit from interested customers and lending money to interested 
public is the main function of a bank. To convince customers various banks 
offer different types of deposits and loans. In this section we have discussed 
different types of deposits and loans.

Sonali bank

The   loans   and   advances   made   by   sonali   bank   ltd  may   be   classified   into 
several classes. These categories are briefly discussed below:

Small loan:

Sonali bank Bangladesh ltd. Provides small loan for various purposes.
On the basis of purpose small loan of SBL can be classified into
following classes:

General small loan


Staff small loan
Special small loan program
Small trading loan
Rural small trading loan scheme

House Building Loan:

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SBL Home Loan facility will assist one in purchasing a new apartment
or renovate the existing home. SBL provides two types of house
building loan. These loans are as follow:

General house building loan:


Stuff house building loan

Working capital loan:


SBL provides loan and advances for financing working capital. These
loans may be following types on the basis of purpose and nature:

Working capital to industries (hypothesis)


Working capital to industries(pledge)
Working capital to agro based industries (hypothesis)
Working capital agro based industries(pledge)

Loan under different scheme:

Loan under SB industrial credit scheme.


Loan under external credit program
Loan under SB agro based industrial credit scheme
Loan under imported merchandise.

Others:
Besides mentioned above, sonali bank ltd provides following loan and
advances:
Demand loan
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Current account barter
Loan against trust receipt
Forced loan against back to back LC
Bridge financing
Term loan to banks and NBFI.

Deposits:

Like other banks sonali bank ltd receives money as following traditional
deposits:
Fixed deposit
Short term deposit
Savings deposit
Current deposit

Along with these reported deposit sonali bank has some new deposit
product which mobilize more savings. These new scemes are as
follows:

SDS:
It stands for Sonali Deposit Scheme. It’s a special deposit scheme
which facilitates the more saving of employees of Sonali Bank.
EDS:
It stands for Education Deposit Scheme. This deposits scheme
facilitates savings for education.

MDS:
It stands for Medicare Deposit Scheme. This scheme collects savings
for using medial purposes.
RDS:
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It stands for Rural Deposit Scheme. This scheme mobilizes savings
from rural people.
MSS:
It’s the short name of Marriage Deposit Scheme. In this scheme,
depositors deposit money for bearing the cost of marriage.

SJIBL

Loans and advances:

Investment made by   Shahjalal Islami Bank Ltd may classified into following 
catagories on the basis of diferent sectors:

Small & Medium Enterprise Investment
Small Business Investment
Housing Investment
Household Durable 
Car Investment 
CNG Conversion Investment
Overseas Employment Investment
Investment Scheme for Doctors 
Investment Scheme for Executives
Investment Scheme for Marriage 
Investment Scheme for Education

Shahjalal Islami Bank Ltd makes investment in above mentioned sectors but in 
islamic mode. In islamic mode the lebell of loan items and features are different 
traditional baking system which are disscussed below:

Bai Mechanism:

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Bai means purchase and sale of goods in cash or on credit or in advance at an 
agreed upon profit, which may or may not be disclosed to the client. Majority of 
investments  of Islamic banks are extended through this mechanism. A good 
number of investment products have been designed to facilitate mainly working 
capital financing which goes as follows:

Bai-Murabaha Murabaha LC (Sight/Deferred):


Through this mode of indirect facility, the bank facilitates import of goods of 
the client at fixed rate of service charge (LC commission) on invoice value. LC 
may be opened at 100% cash or at a different ratio.

Murabaha Post Import TR:


This   is   post   import   finance   under   the   principle   of   “Bai”,   extended   to   retire 
Shipping Documents under LC opened. We buy the imported goods and sell the 
same to the importer at a cost plus an agreed upon profit repayable today or on 
some date in the future in lumpsum or by installments. Usually payment is 
made by lumpsum from the sale proceeds of the consignment. Possession of 
goods remains with the client. Collateral security is usually obtained to secure 
the finance.

Murabaha Post Import Pledge:


As   like   as   Murabaha   Post   Import   TR   with   an   exception   to   security,   Goods 
remain under the control of the Bank. Collateral security may or may not be 
obtained.

Bai-Muajjal Bai-Muajjal Commercial TR:


It is an agreement between bank and client whereby bank delivers goods to the 
client upon deferred payment, i.e. the client shall pay the price at some future 
date at a time, by lump sum or by installment. Under this mode of investment, 
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bank is not supposed to disclose cost price and profit separately. Goods are 
delivered on trust and Trust Receipt is obtained for legal implication.

Bai-Muajjal (Real Estate):


Mode   of   operation   and   principle   of   this   product   are   alike   Bai­Mujjal 
Commercial TR. Difference is with the purpose, i.e. the facility is only extended 
against construction or purchase of building, apartment etc.

Bai-Muajjal (WES Bill):


Investment   facility   under   this   Mode   is  extended   to  liquidate   ABP   liability   at 
maturity,   when   the   client   can   not   liquidate   the   liability   as   a   result   of   non­
repatriation of the related export proceeds.

Bai-Muajjal (Term):
Under   this   mode   of   investment,   term   facility   is   given   to   meet   client’s 
requirement, which is repaid by a specific repayment schedule. Purpose is a bit 
different, such as to meet BG claim, etc.

Bai-Salam Bai-Salam (PC):


This is export finance. Bai­Salam is a term used to define a sale in which the 
buyer makes advance payment, but the delivery is delayed until some time in 
the future. Usually the seller is an individual or business and the buyer is the 
bank.

The Bai­Salam sales serve the interest of both parties:

The seller­ receives advance payment in exchange for the obligation to 
deliver the commodity at some later date. He benefits from the salam sale 
buy locking in a price for his commodity, thereby allowing him to cover 
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his financial needs whether they are personal expenses, family expenses 
or business expenses. 

The   purchaser   benefits   because   he   receives   delivery   of   the   commodity 


when   it   is   needed   to   fulfill   some   other   agreement,   without   incurring 
storage costs. Second, a Bai­Salam sale is usually less expensive than a 
cash sale. Finally a Bai­Salam agreement allows the purchase to lock in 
a price, thus protecting him price fluctuation. 

Depository services:

Shahjalal Islami Bank Ltd receive money as following deposit :

 Mudaraba Monthly Income 
Mudaraba Double Money 
Mudaraba Monthly Deposit 
Mudaraba Millionaire 
Mudaraba Haji Deposit
 Mudaraba Housing Deposit 
Mudaraba Small Business
 Mudaraba Cash Waqf Deposit 
Mudaraba Lakhopoti Deposit 
Mudaraba Bibaho Deposit 
Mudaraba Mohor Deposit 
Mudaraba Shikhkha Deposit 
Mudaraba Special Term Deposit

BASIC Bank Ltd.

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Basic bank is one of the pioneer specialized banks in our country. It  focuses 
mainly   flourishing  small   industry   sector   of   the   country.  Though   it   is   a 
specialized   bank   for   small   industry   and   cottage   its   banking   range   includes 
something   more.   Here   loan   and   deposit   items   of   basic   bank   are   presented 
below along with features of them.

Loan and advances:

Agricultural loan:

The loan provided to the agriculturists. It is mainly provided for the purpose of 
purchasing land, equipment etc. The basic type of agricultural loan is labeled 
as Primary Products. The interest rate of this product is 10.00%.

Industrial term loan:

These   types   of   loan   are   provided   for   development   of   agro   based   industries, 
micro industries, small scale industries medium scale industries, large scale 
industries and small and medium scale industries of NBFI.

Though all types of loans are provided for industrial development but the 
interest rate among them vary which are shown below:

Types of industrial term loan Interest rate

Agro based industries 11.50%

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Micro industries  11.50%

Large scale industries 12.50%

Small scale industries  13.00%

Medium scale industries 13.00%

 Credit to NBFI for  small and medium scale industries  13.00%

Working capital loan (industrial):

Basic bank provides these types of loan to sectors mentioned in previous point. 
But interest rate varies among the sectors as well as compared with Industrial 
term loan. Different interest rates are shown in following table:

Types of industrial term loan Interest rate

Agro based industries 12.00%

Micro industries  13.50%

Large scale industries 13.00%

Small scale industries  13.00%

Medium scale industries 13.00%

 Credit to NBFI for  small and medium scale industries  13.00%

Export loan:

BASIC Bank provides two types of export loans. One is direct export loan and 
other   one   is   advanced   against   inland   documentary   bills   accepted   by   banks. 
Again direct export loan may be classified under two categories. One is PC and 
other one is ECC. Advanced against inland documentary bills are mainly two 
types. One is loan payment in foreign currency an other one is loan payment in 

20
local   currency.   The   interest   rate   among   thee   types   of   loan  varies   which   are 
presented in following table:

Types of export loan Interest rate

Direct export 

1. PC 7.00

2. ECC 7.00%

Advanced against inland documentary bills accepted by banks

1. Payment in foreign currency 12.00%

2. Payment in foreign currency 13.00%

Commercial loan:

The   sectors   provided   commercial   loan   by   BASIC   Bank   can   be   classified   as 
Small Enterprise,  Medium Enterprise, Large Enterprise and Trade Financing 
and   other   short   term   and   demand   loan.   Here   trade   financing   also   includes 
import financing. Interest rate of commercial loan provided to all sector is same 
that is 13.00%

Advance against Work Order:

It is a type of loan provided by basic bank ltd. Includes contractor finance. It 
bears relatively higher interest rate that is 14.75%.

21
Over draft:

Basic bank provides overdraft facilities against banks own fixed deposit, other 
banks fixed deposit, govt. bonds and securities and unit certificate or share. 
The interest rates of them vary which are shown in following table:

Over draft Interest rate

Against  banks own fixed deposit 2.00% above  FDR rate

Against other banks fixed deposit 14.755

Against Govt. bonds and securities 13.00%

Against unit certificate  or share 14.00%

Consumer loans:

As   a   part   of   consumer   financing   basic   bank   provides   house   loan,   transport 


loan   and   others.   The   interest   rates   among   them   vary   which   are   presented 
below:

Consumer loan Interest rate

House loan 13.00%

Transport loan 14.75%

Others 14.75

Wholesale loans:

Basic bank also provides wholesale financing NGO  for micro credit and other 
special programs at a rate of 11.50%.

22
Deposits:

Fixed deposits:

Basic   bank   receive   fixed   deposit   for   four   different   durations.   These   are   3 
months duration, 6 months duration, 12 month duration, and 24 months. The 
interest rates of fixed deposit vary based on the duration which is shown in 
following table:

Fixed deposit Interest rate

3 month duration 7.00%

6 month duration 7.25%

12 month duration 7.50%

24 month duration 7.75%

Saving deposits:

BASIC Bank receives money as saving deposits which provide 6.60% interest to 
the depositors.

Short term deposit:

Depositors can make short term deposits on BASIC Bank which provides 4.5% 
interest to the depositors.

Basic fortune:

The deposit pension scheme of BASIC Bank is known as BASIC FORTUNE.

23
DBBL

Deposits of Dutch-Bangla Bank Ltd.:

DBBL   offers   different   categories   of   deposits   to   cut   the   needs   of   customers. 


There product categories are:

Retail deposits
Corporate deposits.
Retail deposits:

Retail deposits are provided to non corporate customers. Retails Deposits are of 
various types:

Saving deposit:
They provide 4.5% interest on this deposit on minimum balance.

Current deposit:
No interest is provided for current account.

Foreign currency Deposit(current deposit):


This type of deposit depends on currencies like:

USD
URD
Exporter foreign currency deposit:
This type of deposit is offered to those who open letter of credits.

Residual foreign currency deposit(for NRB services)


Non-Resident convertible foreign currency deposit
Pension deposit:

24
It is offered for minimum 3 years and maximum 10 years. Interest rate is 
8.75%.
Deposit plus scheme:
It   is   offered   for   minimum   3   years   and   maximum   10   years.   Interest   rate   is 
8.75%. Minimum amount is 500 and maximum is 5000.

Children education service scheme


Power account:
It is offered to stuff of the bank.

Salary based deposit:


It is offered to employees of another company but collect salary from DBBL.

Corporate Deposits:
These   types   of   deposits   are   actually   offered   to   corporate   customers.   Bank 
actually keeps secrate these types of deposit.

Loans of Dutch-Bangla Bank Ltd.:


DBBL offers different types of retail and corporate loans. These are given below:

Retail loans:
                       Different types of retail loans are given below:

Power account:
Power account is consists of two types of loan account:

Staff loan:
Staff loan is offered to staff only

25
Salary based loan:
                                                   It is offered to staffs against there salary.
Requirements for this type of loan given below:

2 copy photographs

Salary certificate

National ID cards

 TIN certificate

Full secured loan:


                             Borrowers need to keep same amount of money as loan 
security against there loan account. Interest Rate is 9%.

Interest Rate(in
Loans Type
percentage)
Overdraft account (OD-ATM) 18
Cash credit (hypo) 13
Overdraft against financial obligation 14.75
General Clean Line 17.50
General power account 17.50
Power line 15.50
Power plus line 15
General auto line 15
Full secured loan 9

Other types of loans and their interest rate are given below:

26
HSBC Bank

Depository services:

Time Deposit:

                     The monthly interest bearing Time Deposit from Hsbc bank is a 
hub from where customer can earn interest on a monthly basis with the 
security of a fixed deposit account. It provides the account holder with the 
benefits of attractive interest rates, security, convenience and flexibility. 

Benefits:

Monthly interest earned can be transferred to another nominated 
account
Better rates than normal savings account
Higher rate than 1­ month time deposit account's rate
Free ATM Card for new accounts 

Eligibility:

Any individual or joint account holder having or opening a Time 
Deposit account worth BDT 500000(minimum) with HSBC is eligible to apply 
on:
27
Terms and condition:

                               A minimum deposit balance of BDT500000 is needed to 
open the Time Deposit account.

The interest eared will be fortified if the Time Deposit account is prematurely 
encashed or closed before the completion of the month.

Savings plus:

With HSBC,s Savings Plus Account, the account holder can earn 
interest from the account on a monthly basis rather than at the end of six 
months.

Benefits:

Interest will be paid at the end of each month instead of six months.
ATM card with daily withdrawal limit of BDT50,000.
Free phone banking facilities are provided.
Free personalized cheque book will be provided.
Monthly statements will also be provided.

Eligibility:

                Any resident Bangladeshi above 18 years of age is eligible to open a 
Savings plus Account.

Terms and condition:

Minimum opening balance is BDT 500,000.
Interest is payable only for balance of BDT 500,000 or above.

Smart savers plan:

28
In life, one must enjoy today and plan for tomorrow, and be 
prepared for the unforeseen challenges. With this in mind, HSBC has designed 
an easy­to­manage, unique savings plan that enables the account holder to 
grow an initial investment in 3 years, and still draw against the savings in 
times of need.

No sign­up fee
Attractive savings interest rates and competitive rates on Overdraft 
facilities
You can purchase as many units as you desire
The tenure of the plan is 3 years
Ideal units of BDT5, 000; BDT50, 000; BDT100, 000 & BDT500, 000.
Convenient monthly installments of BDT1, 000; BDT2, 400; BDT4, 700.
Overdraft facilities up to 90% against your deposit with a minimum 
amount of BDT90,000

Terms and condition:

To earn the maturity value, all the installments must be paid regularly
Final maturity value is subject to tax and excise duty as per local 
regulations.

Children savings plan:


                                Children are the most important term in parent’s life. 
Many times parent can not fulfill their requirements. Now with HSBC children 
savings plan one can secure their children’s future. Offering exclusive benefits 
catered towards child, this savings plan is a perfect fit to one’s lifestyle.

Benefits:
Attractive interest rates
No sign up fee
No penalty for missed installment.
This savings plan can be purchased in multiple units.
Initial deposit of BDT10000 with monthly deposits of BDT5000
29
Any tenure up to the child being 18 years of age. 

Terms and condition:

Bank reserves the right to close the plan if the customer misses 3 
consecutive installments.
If the plan is closed within one year, customers will get the deposited 
amount only and no interest will be paid for the plan.
If the plan is closed after one year, customers will get the deposited 
amount along with the interest at the prevailing savings rate during the 
time of closure.
Discontinuation fee will be charged if the plan is closed before two years.

Education savings plan:


Benefits:

Attractive interest rates

No sign­up fee

No penalty for missed installment

Can be purchased in multiple units

Initial deposit of BDT10,000 with monthly deposits of BDT5,000 (1 
unit)

Flexible tenure of 1, 2 or 3 years.

Terms and condition:

Bank reserves the right to close the plan if the customer misses
3 consecutive installments.

If the plan is closed within one year, customers will get the
deposited amount only and no interest will be paid for the plan.

30
If the plan is closed after one year, customers will get the
deposited amount along with the interest at the prevailing
savings rate during the time of closure.

Discontinuation fee will be charged if the plan is closed before


end of the tenure.

Lending services:
Home loan:

The decision to buy or renovate a home is one of the most


important investment decisions anyone will ever make. HSBC's Home Loan
facility will assist one in purchasing a new apartment or renovate the
existing home.
Features:

No personal guarantee or cash security


Wide range of loan amounts -
- Minimum: BDT750,000
- Maximum: 80% of the total value of apartment (subject to a cap of
BDT7,500,000)
Financing for the registration cost
Competitive interest rates
Interest is calculated on monthly reducing balance as opposed to
annual reducing balance, giving you a lower monthly installment
amount
Low processing fees
Clubbing of income is allowed for immediate family members’ i.e.
Husband-Wife, Father-Child, mother-Child etc.
31
Repayments by monthly installments of up to 20 years or prior to
borrower's age reaching 60 years or retirement date, whichever is
earlier
Options for partial prepayment and early settlement

Requirements:

Age of the property must not be more than 20 years


Property valuation and vetting cost must be borne by the customer
Registered mortgage in favor of HSBC and original title deed
Irrevocable General Power of Attorney (IGPA) in favor of HSBC
Property insurance covering fire, earthquake, flood, and cyclone
Documents stated in the Application Form

Car loan:
Features:

No personal guarantee or cash security

Wide range of loan amounts -


- Minimum: BDT100,000
- Maximum: 75% of brand new car value or 70% of reconditioned car
value (up to a maximum of BDT2,000,000)

Competitive interest rates

Interest is calculated on monthly reducing balance

Low processing fees

Flexible repayment schedule of 12, 24, 36, 48 or 60 months.

Requirements:
Manufacturing year of the car must be within 5 years of application date
The car must be covered under a comprehensive car insurance policy
32
Documents stated in the Application Form

Travel loan:
Feature:

No personal guarantee or cash security


Wide range of loan amounts -
- Minimum: BDT50,000
- Maximum: (Up to a maximum of BDT 500,000)
Competitive interest rates
Interest is calculated on monthly reducing balance
Low processing fees
Flexible repayment schedule of 12, 24, 36 or 48 months
Loan against partial security is also available

Requirements:

Travel quotation and other documents stated in the


Application Form.

Wedding loan:
Features:

No personal guarantee or cash security.

The loan amount ranges from BDT50,000 to BDT1,000,000 or a


maximum of four times of your monthly income, whichever is
lower.

If you are an Auto Pay customer, you can get six times or if you
are a CEPS customer you can get ten times of your monthly
income.

Competitive interest rates.

Low processing fees.


33
You can repay the loan in 12, 24, 36 or 48 months.

Loan against partial security is also available.

Professional loan:

HSBC, backed by local expertise and global financial


knowledge, offers this low cost solution to their valued customers.

Features:
No personal guarantee or cash security
Wide range of loan amounts -
- Minimum: BDT50,000
- Maximum: (Up to a maximum of BDT 1,000,000)
Competitive interest rates
Interest is calculated on monthly reducing balance
Low processing fees
Flexible repayment schedule of 12, 24, 36 or 48 months
Loan against partial security is also available

Student loan:
Features:

No personal guarantee or cash security.


Loan amount ranging from BDT50, 000 to BDT750, 000 or a
maximum of four times of your monthly income, whichever is
lower.
If you are an Auto Pay customer, you can get six times or if you
are a CEPS customer you can get ten times of your monthly
income up to a maximum of BDT750, 000.
Competitive interest rates. Low processing fees.

34
You can repay the loan in 12, 24, 36 or 48 months.
Loan against partial security is also available.
Facility for opening a student file is also available.
To open a student file, the student has to provide a copy of the
college/university admission paper and proof of formal
acceptance by student along with other documents

General business measures

With   a   view   to   comparing   five   banks   we   will   first   pay   a   deep   look   into   the 
general business of these banks. That is their average and total deposits and 
loans,  growth rate,  fluctuation  from  the average or  expected  deposit  or  loan 
over the five years.

Total Deposit (In Millions)

Banks 2004 2005 2006 2007 2008 Averag


e
SBL 252234 277079 302303 328997 364386 304999.
8
DBBL 21067.5 27241.1 40111.5 42111.4 51575.6 36421.2
6 1 4 5 7 1
HSBC 19917.7 24363.0 32876.7 44500.8 51163.8 34564.4
3 1 3 8 6 4
SIBL 9092 12205 18091 22618 36484 19698
BASIC 15509.1 22325.5 24084.6 31947.9 38368.2 26441.1
Bank 8 8 5 8 3 2

The above table shows the total deposit and average deposit of five banks
over five years. Sonali bank has the highest deposit as it has greatest
number of branches. The deposit other banks also rising. The deposit of
DBBL and HSBC is almost same on an average. The deposit of all banks has
an increasing trend. So, we can expect it will increase in the following years.

35
Growth of Deposit (In percentage)

Banks 2005 2006 2007 2008 Average


SBL 9.85 9.10 8.83 10.76 9.64
DBBL 29.30 47.25 4.99 22.48 26.01
HSBC 22.32 34.95 35.36 14.97 26.9
SIBL 34.24 48.23 25.02 61.31 42.2
BASIC 43.95 7.88 32.65 20.09 26.14
Bank

The above table represents the growth rate of the selected banks in each
year. Though the total deposit of Sonali bank was the highest, their growth
rate is lowest in comparison to other four banks. In the year 2006, the
growth rate of DBBL and SIBL were same and higher than others. But in the
year 2007, growth rate of SIBL went down and again in the year 2008 they
were in the peak. These situation shows high fluctuation of deposit growth
and therefore risk of SIBL. But on an average SIBL has highest growth rate.

Fluctuation of Deposit (Standard deviation)


(In million)

Banks Fluctuat
ion
(STD)
SBL 43799.71
.
DBBL 12202.96
HSBC 13188.23
SIBL 10741.4
BASIC 8863.55
Bank

36
The above table and graph postulates the fluctuation of deposit from the
average or expected deposit. The fluctuation of deposit is calculated by
standard deviation. The more the STD the more risky the deposit is.

From the above chart we can see that the standard deviation of SBL is higher
than the other banks. Which resembles their riskier deposit and over the five
year their deposit fluctuated a lot from the expected deposit. The fluctuation
of basic bank is the lowest, which shows that their low risk. The STD of DBBL
and SIBL is almost same.

Total Loan (In Millions)

Banks 2004 2005 2006 2007 2008 Average


SBL 168283 227010 241029 206348 231166 214767.2
DBBL 14976.04 20349.42 28325.34 28369.58 41016.62 26607.4
HSBC 17301.22 21436.49 26105.28 33807.70 34302.74 26590.69
SIBL 7149 10590 15516 20617 32919 17358.2
BASIC 1200.15 15339.35 19000.00 22263.35 27269.13 19174.4
Bank

The above table and graph shows the total loan of the five banks. Like the
total deposit, the total loan of Sonali bank was the highest among the five
banks. In the loan deposit ration section we have seen that this bank gives
above 90% of its deposit as loan, which is risky. Other banks have a rising
trend of loan throughout the five year. On an average the total loan of DBBL
and HSBC is almost similar.

37
Growth of Loan (In percentage)

Banks 2005 2006 2007 2008 Average


SBL 3.5 6.1 -14.4 12 1.8
DBBL 35.88 39.19 0.15 44.58 29.95
HSBC 23.90 21.78 29.51 1.46 19.16
SIBL 48.13 46.52 32.88 59.67 46.8
BASIC 27.83 23.86 17.18 22.48 22.84
Bank

In the above table we can see the growth rate of loans and advances of the
banks. Over the five year the growth rate of SIBL was highest than others
which resembles their increase in profit margin. The growth rate of Sonali
bank was the lowest and in the year 2007, their total loan declined so the
growth rate becomes negative. The growth rate of DBBL and HSBC remained
stable over five years, while basic bank has a decreasing trend.

Fluctuation of Loans and Advances (In million)

Banks Fluctuat
ion
(STD)
SBL 28897.03
DBBL 9850.54

38
HSBC 7494.28
SIBL 10077.06
BASIC 5942.54
Bank

The above table and graph postulates the fluctuation of loan from the
average or expected loan. The fluctuation of loan is calculated by standard
deviation. The more the STD the more risky the loan is.

In the above table we can see that the STD is highest for SBL. Though their
loan was highest than others, their fluctuation or risk of loan is also higher.
The STD of Basic bank is the lowest, which means that their loan varies little
from the mean of expected Loan. HSBC also has a low fluctuation of loan,
while the STD of HSBC and SIBL is close.

Total Business (In Millions)

Banks 2004 2005 2006 2007 2008 Averag


e
SBL 420517 504089 543332 535345 595552 519767
DBBL 36043.62 47590.53 68436.88 70480.73 92592.29 63028.
81
HSBC 37218.95 45799.50 58982.01 78308.58 85466.60 61155.
13
SIBL 16241 22795 33607 43235 69403 37056.
2
BASIC 27509.33 37664.93 43084.65 54211.33 65637.36 45621.
Bank 52

The above table shows the total business (Deposit + Loan) of the bank. A
bank mainly deals with deposit and loan. It collects deposit and gives the
money to other people on interest as loan. So, the loan and deposit of a bank
together represent a bank’s total business.

39
As the deposit and loan is highest of the five due to greater branch, the total
business of Sonali bank is higher than the other five.other banks has a rising
trend. The value of DBBL and HSBC is much close.

Growth of Total Business (In percentage)

Banks 2005 2006 2007 2008 Average


SBL 19.8 7.7 1.47 11.2 10.04
DBBL 32.03 0.44 2.99 31.37 16.71
HSBC 23.05 28.78 32.77 9.14 23.44
SIBL 40.35 47.43 28.65 60.53 35.39
BASIC 36.92 14.39 25.83 21.08 24.56
Bank

The above table contains the growth rate of total business of the five banks.
The growth rate of SIBL remained at the top on an average for five year and
it has a rising trend. DBBL has a stable growth rate over the years, while rate
of HSBC fluctuates. Sonali bank has the lowest growth rate of total business
on an average. The rate of Basic bank has a decreasing trend.

40
Operating income

Banks 2004 2005 2006 2007 2008 Averag


e

SBL 1619.9 4247.0 3005.8 3963.6 952.5 2757.6

BASIC 951.87 1244.22 1554.45 1612.05 2351.39 1542.8

HSBC 1622.83 2451.53 3275.71 4194.40 5250.63 3359.0


3

DBBL 2367.00 3453.00 5181.00 6367.00 7276.00 4928.8

SIBL 215.744 67.711 1072.27 1628.82 2322.99 1061.0


7

The term operating income refers to the income generated from operating
activities. The above graph shows the operating income of each bank.
According to the graph, DBBL has the highest operating income on an
average of the five banks. The operating income of DBBL is also rising year
to year. But the operating income of Sonali bank has a decreasing trend,
which is the indicator of their less efficiency. The income of Basic bank and
SJIBL is also increasing though it is not that much high as HSBC and DBBL.

Growth rate of operating income

41
Banks 2005 2006 2007 2008 Average

SBL 316.13 -24.16 41.29 61.93 98.8

BASIC 30.7 24.93 4.2 45.05 26.22

HSBC 51.07 33.62 28.04 25.18 34.48

DBBL 45.12 50.83 22.90 14.28 33.28

SIBL -68.62 1497.78 51.90 42.62 380.92

The table and graph on the top shows the growth rate of operating
income of studied five banks over the five years. SBL or sonali bank
had a high growth rate in the year 2005 but the growth rate became
negative in the next year. They recovered the decrease in year 2007
and 2008. SJIBL faced a negative growth rate in the year 2005 but
their operating income jumped in the next year. For this huge
increase in 2006, the average growth rate of operating income of
SJIBL became highest. The growth rate of HSBC has a decreasing
trend.

Performance measures

The performance of a bank can be measured on the basis of its profitability,


liquidity, solvency, debt management, management efficiency and trend of
deposits and loans. In the following section we compared the performance of
our studied banks on the basis of above mentioned criteria.

Profitability:
Profitability ratios are used to evaluate firms profit with respect to a given
level of sales, a certain level of assets, or the owners’ investment. Without
profits, a firm cannot attract outside capital. To compare the performance of
our studied banks, we used some profitability ratios in this section. These are
given below.

42
Return on Asset Ratio (In percentage)

Banks 2004 2005 2006 2007 2008


SBL 0.33 1.15 0.85 0.96 0.33
DBBL 1.06 1.29 0.93 1.01 1.49
HSBC 2.14 2.76 2.92 2.07 3.00
SIBL 2.22 2.60 2.17 1.76 4.85
BASIC 1.30 0.83 1.94 1.23 1.68
Bank

Return on asset is a profitability ratio which measures the amount of profit


earned in terms of assets that they own. The higher the ratio the more
effective the company is in utilizing its assets.

The above chart suggests that Shahjalal Islami Bank has the highest ROA
ratio in 2008 but their ratio fluctuates a lot, as in the year 2007 ROA was
1.76%. Sonali Bank Ltd has the lowest ROA which dictates that they are
inefficient in utilizing their assets. DBBL and basic bank also have the lower
ROA ratio but they have an increasing trend over the years. Among all banks
HSBC has a stable ROA over the five year though it is not the highest.

Return on Investment Ratio (In percentage)

Banks 2004 2005 2006 2007 2008


SBL 4.93 6.76 5.20 5.34 7.03
DBBL 6.22 5.87 7.30 9.48 9.69
HSBC 33.96 35.78 32.17 69.25 18.73
SIBL 12.34 13.21 14.08 14.68 15.10
BASIC 9.81 7.89 5.78 6.59 6.50
Bank

Return on investment ratio is the ratio of money gained or lost on an


investment related to the amount of money invested. It is measured by net
income to total investment.

The above chart shows that HSBC Bank has the higher ROI ratio compared to
other banks throughout the five years. HSBC was in the peak in 2007. Other
43
banks have almost similar ratio in all the five years. But the interesting thing
is that in the year 2008, ROI of all banks went down, global economic crisis
may be the reason. Though the ROI of all other banks is lower than that of
HSBC, they have an increasing trend over the years except basic bank,
which has a decreasing trend.

Return on Equity Ratio (In percentage)

Banks 2004 2005 2006 2007 2008

SBL 2.6 3.3 -12.7 4.48 9.46

DBBL 26.03 31.01 24.07 24.02 29.58

HSBC 27.63 21.12 24.21 25.30 24.46

SIBL -176.07 34.46 38.44 23.21 25.58

BASIC Bank 19.59 16.54 24.74 10.89 18.43

The ratio of net income to stockholder’s equity measures the return on


equity. It shows what percent the bank earns in terms of only on its equity
rather than on asset which also covers total liability. It is the most reliable
measure of performance of a firm.

From the above chart, we can see that in the year 2004, shah jalal Islami
bank has a negative ROE ratio but they recovered it later earning a favorable
ratio. Sonali bank has a very low return on equity and in the year 2006, they
have a negative ROE, which shows they had a net loss in that year. But their
ROE is increasing from the year 2007. The ROE of HSBC and DBBL is almost
same but among the banks, the ratio of HSBC is highest in the year 2004,
which shows that they earn 27% of their net income from their equity
capital. But it decreased in the later years, while ROE of DBBL got the peak
in year 2008 earning 29.58%.

44
Earnings per Share

Banks 2004 2005 2006 2007 2008


SBL 0 0 0 10.82 25.68
DBBL 116.93 181.97 179.18 237.37 82.17
HSBC 0 0 0 0 0
SIBL -204.91 33.63 49.50 28.81 36.41
BASIC 43.18 35.21 58.64 21.60 41.99
Bank

The term earnings per share represents the portion of a company’s earnings,
net of taxes and preferred stocks dividends, that is allocated to each share of
common stock. It often used as the barometer to gauge a company’s
profitability per unit of shareholder ownership. As Sonali Bank Ltd and HSBC
Bank do not operate in the share market, they do not have earning per share
in the above mentioned years. The EPS of DBBL Bank is in an increasing rate
till 2007 but it declined in 2008. Though they have higher rate compared to
other banks. It is mentionable here that in the year 2004 Shahjalal Islami
Bank had the negative value which again represent their loss of that year
though they recovered the position in onwards year. BASIC Bank had almost
the similar rate till 2006 but it fell in 2007 but recovered in 2008.

Solvency:
Solvency ratios measures how solvent the bank is in paying the liabilities or
the capability of a Bank to pay off its liabilities in time. In this section we
measured and compared the solvency of the banks. The following ratios are
used to measure solvency.

Capital Adequacy Ratio (In percentage)

Banks 2004 2005 2006 2007 2008

SBL 1.8 1.8 6 12.4 12.6

DBBL 10.45 10.16 10.05 11.76 10.96

45
HSBC 12 20 21 24 26

SIBL 4.69 8.70 10.39 16.42 13.81

BASIC Bank 12.49 11.77 11.98 12.91 12.02

Capital adequacy ratio is the ratio which determines the capacity of the bank
in terms of meeting the time liabilities and other risks such as credit risk,
operational risk, etc. The required CAR in our country for banks is 10%.

From the above chart it is shown that, HSBC Bank has high CAR compared to
other banks throughout the five years but in the year 2004Basic bank has
little higher CAR than HSBC. So it suggests that they have that much
resources or asset to meet the liabilities in any given time than all other
banks studied. Though Sonali Bank Limited is the largest nationalized
commercial bank in Bangladesh, they couldn’t meet the minimum
requirement till the fiscal year 2006, but they recovered it in year 2007 and
2008 maintaining CAR of 12.4% and 12.6% respectively. CAR of BASIC Bank
and DBBL remained almost table throughout the five years. While DBBL’s
CAR ranges from 10-12% and Basic bank’s CAR ranges from 11-13%. There
is an increasing trend of Shahjalal Islami Bank Ltd till 2007 and it decreases
in 2008.

DEBT RATIOS:
The debt ratio measures the proportion of total assets financed by the firm’s
creditors. The higher this ratio, the greater the amount of other people’s
money being used to generate profits.

Debt to Asset Ratio (In percentage)

Banks 2004 2005 2006 2007 2008

SBL 97.91 98.13 108.06 95.29 95.04


46
DBBL 90 92 98 96 95

HSBC 92.24 86.94 87.96 87.88 87.73

SIBL 97.00 94.02 94.03 90.23 92.05

BASIC Bank 92.32 93.64 92.39 93.30 93.61

Debt ratio is a financial ratio that indicates the percentage of a company’s


assets that are provided via debt. Companies with high debt to asset ratio
could be in high as they may not satisfy the demand of creditors. So, the
lower the debt to asset ratio the better the performance of the firm is.

All the banks are in almost the same position that indicates that none banks
in our country is risk free as they all contain high debt to asset ratio. In the
year 2006 sonali bank has the highest debt to asset ratio, which dictates that
in that year their debt offset their asset. In the year 2008 HSBC has the
lowest debt to asset ratio. Over the five year sonali bank has the highest
debt to asset ratio. It means most of its assets are financed from borrowed
funds.

Loan Deposit Ratio (In percentage)

Banks 2004 2005 2006 2007 2008

SBL 66.72 81.93 79.73 62.72 63.44

DBBL 75.60 82.93 75.93 69.82 80.85

HSBC 86.86 88.00 79.00 75.97 67.04

SIBL 78.63 86.77 85.77 91.15 90.23

BASIC Bank 77.37 69.74 78.89 69.69 71.07

47
The amount of a bank’s loans divided by the amount of its deposit is known
as the loan deposit ratio. The higher the ratio, the more the bank is relying
on borrowed funds, which are generally more costly than other sources of
fund. This ration also shows what percent of deposit is invested to the
market.

The above chart furnishes that the loan deposit ration of all the banks is very
much close throughout the five years. HSBC bank has a decreasing ratio,
which indicates that they are being less dependent on the borrowed funds
for investment. Shahjalal Islami Bank Ltd has an increasing ratio, they gave
90.23% of their deposit as loan which is much risky as they may not meet
the demand of fund by deposit. BASIC Bank has a stable and favorable ratio.
Sonali Bank Ltd had increasing ratio till 2006 and in the year they incurred a
huge net loss, higher loan deposit ratio may be a reason for this. But they
was able to decrease it in the year 2007 and 2008.

48
Market analysis

The performance of a company can also be measured on the basis of the


market the company holds on its target market than its competitors. For
better understanding in this section we will try to find out what portion of
deposit and loan our selected banks hold on its market area.

Market Share of Deposit (In percentage)

Banks 2004 2005 2006 2007 2008


SBL 44.12 44.13 45.85 46.6 47
DBBL 3.61 3.78 4.29 3.76 3.64
HSBC 22.85 22.33 25.74 25.75 25.6
SJIBL 5.76 6.43 7.71 8 10.35
BASIC 20.19 24.16 23.52 27.17 27.96

From the above table we can see that Sonali bank alone holds over 44% of
the total deposit in national commercial bank sector and it has a rising trend
over the five years. In the year 2008 it held 47% market share. Among
private commercial banking sector DBBL holds little of the total market
where HSBC holds a huge share. The market share of SJIBL is increasing, so
does the market share of Basic bank.

Market share of loans & advances (In percentage)

Banks 2004 2005 2006 2007

SBL 44.16 53.59 56.74 49.19

HSBC 25.06 27.21 26.56 25.63

DBBL 3.21 3.45 3.78 3.08

SJIBL 5.2 6.18 7.43 8.15

49
BASIC 11.12 13.89 15.54 17.22

The above table shows the market share of loans and advances of five
banks. Sonali bank again holds the largest market share of loan in NCB’s. In
PCB, HSBC holds the largest market share. The market share of DBBL was
rising till 2006 but it decreased in the year 2007. In specialized banks,
Though Basic bank doesn’t hold a larger share but its market share of loan is
rising rapidly.

Trend analysis

Trends used to show how a company has done in the previous years and to
estimate how it will do in the near future in a particular area on the basis of
an independent variable that has a correlation with it.

In this section tried to show how the loan and deposit changes with the
change in interest income and interest expense respectively and what the
overall trend of studied banks is. We used linear regression to show the
trends.

Sonali bank:
Trend of loan (In million)

Year X (Interest income) Y (loan) Ŷ (Trend of loan)

2004 9285.4 168283 192438.1

2005 11968.45 227010 226271. 6

2006 11962.87 241029 226201.2

50
2007 8962.09 206348 188361.2

2008 13101.86 231166 240563.9

The above graph shows the trend of loans and advances of sonali bank from
2004 to 2008 in relation to interest expense, where interest expense is
independent variable (X). The correlation between the two is 0.80, which
resembles that they have a strong positive correlation. The trend of loan is
rising but the rise is not at good pace in comparison with other banks. Total
amount of loan rises as interest income rises. Through coefficient of
determinants, we also found that 64% of (Y) of loan is accounted for interest
income. The intercept of the line is 75348.57, which means when interest
income (X) is zero the amount of loan will be 75348.57 million. The slope of
the line is 12.61. It indicates that an increase of taka 1 million interest
income will result in an increase of 12.61 million.

Trend of deposit (In million)

Year X (Interest expense) Y (deposit) Ŷ (predicted Y)

2004 1078.81 252234 277979.8

2005 1141.41 277079 278426.8

2006 1503.94 302303 281015.3

2007 6625.39 328997 317582.7

2008 13965.92 364386 369994.4

In the above graph we have shown the trend line of deposits of Sonali bank,
where interest expense is the independent variable and deposit is the
dependent variable. The correlation between the two is 0.91, which
resembles a very strong correlation. Deposit increased as interest expense
increased. It means they increased their interest rate on deposit which

51
resulted in increased deposit. 83% of Deposit (Y) is accounted for interest
expense(X). The intercept of the line is 270277.1, which means when
interest expense (X) is zero the amount of deposit will be 270277.1 million.
The slope of the line is 7.14. It indicates that an increase of taka 1 million
interests will result in an increase of 7.14 million.

DBBL:
Trend of loan (In million)

Year X (Interest income) Y (loan) Ŷ (Predicted Y)

2004 1845 14976.06 14611.19

2005 2684 20349.42 19803.53

2006 4054 28325.34 28282.07

2007 4879 28369.58 33387.77

2008 5455 41016.62 36952.47

The above graph shows the trend line of loans and advances of DBBL in
relation to interest income. The correlation between the interest income and
loan is 0.94, which means there is a very strong correlation between the
interest income and loans and advances. Moreover, 88% of Y is explained by
(x) of interest income. DBBL’s loan has a greater rising trend than that of
sonali bank. The predicted Y has risen from 14611.19 to 36952.47 within four
year. From the following graph we can predict that their loans will also rise in
the future years. The intercept of the line is 3193.002, which means when
interest income (X) is zero the amount of loan will be 3193.002million. The
slope of the line is 6.19. It indicates that an increase of taka 1 million interest
income will result in an increase of 6.19 million.

Trend of deposit (In million)

52
Year X (Interest expenses) Y (deposit) Ŷ (Predicted Y)

2004 3550 21067.56 24794.12

2005 3610 27241.11 32615.03

2006 3710 40111.54 45649.88

2007 3690 42110.15 43042.91

2008 3636 51575.67 36004.09

The reported graph shows the trend of deposit of DBBL in relation to interest
expense. The correlation between interest expense and deposit is 0.68 or a
moderate correlation and 46% of the change of deposit is accounted for
interest expense. Though deposit has a rising trend from 2004 to 2007, in
2008 the predicted y decreased. As the interest rate increased on deposit,
amount of deposit also increased. As the interest expense fall so do the
predicted Y. The intercept of the line is -43794, which means when interest
expense (X) is zero they will incur a loss of 43794 million. The slope of the
line is 130.35. It indicates that an increase of taka 1 million interests will
result in an increase of 130.35 million.

BASIC BANK:
Trend of Loan (In million)

Year X (Interest income) Y (loan) Ŷ (Predicted Y)

2004 1355.59 12000.15 12655.82

2005 1781.04 15339.35 15255.86

2006 2278.55 19000 18296.29

2007 2866.57 22263.35 21889.85

2008 3829.43 27269.13 27774.16

53
The above regression line shows the trend of loan of Basic bank in respect to
interest income. With the rapid rise of interest income amount of loans and
advances also risen rapidly. The correlation between interest income and
loan is 0.99 which means there is a very strong correlation between the two
and 98% of the change of Y is accounted for the change of x according to
coefficient of determinants. The rise in loans of basic bank is much higher
than that of sonali bank but little less than DBBL. But we can predict the
increase will keep its pace in the next year. The intercept of the line is
4371.417, which means when interest income (X) is zero the amount of loan
will be 4371.417 million. The slope of the line is 6.11. It indicates that an
increase of taka 1 million interest income will result in an increase of 6.11
million.

Trend of Deposit (In million)

Year X (Interest Y (deposit) Ŷ (Predicted Y)


expenses)

2004 817 15509.18 18245.53

2005 984 22325.58 20110.57

2006 1315.86 24084.65 23816.77

2007 1928.47 31917.98 30658.36

2008 2708.92 38368.23 39374.39

The above graph shows the trend of deposit of Basic bank in relation to
interest expense. The correlation between interest expense and deposit is
0.98. Which dictates a very strong correlation and 96% of the change of
deposit is accounted for interest expense. The deposit has a rising trend. As
the interest rate increased on deposit, amount of deposit also increased. The
intercept of the line is 9121.32, which means when interest expense (X) is
zero the amount of deposit will be 9121.32 million. The slope of the line is

54
11.17. It indicates that an increase of taka 1 million interests will result in an
increase of 11.17 million.

SJIBL:
Trend of Loan (In million)

Year X (Interest income) Y (loan) Ŷ (Predicted Y)

2004 718.17 7149 6025.048

2005 1350.88 10590 10602.04

2006 2145.5 15516 16350.28

2007 2973.44 20617 22339.55

2008 4236.17 32919 31474.08

The above regression line shows the trend of loan of Shahjalal Islami bank in
respect to interest income. The line is almost vertical which refers a high rise
in loan. The correlation between interest income and loan is 0.99 which
means there is a very strong correlation between the two and 98% of the
change of Y is accounted for the change of x according to coefficient of
determinants. The intercept of the line is 829.84, which means when interest
income (X) is zero the amount of loan will be 829.84 million. The slope of the
line is 7.23. It indicates that an increase of taka 1 million interest income will
result in an increase of 7.234 million.

Trend of Deposit (In million)

Year X (Interest expenses) Y (deposit) Ŷ (Predicted Y)

2004 625.71 9092 8384.974

2005 944.16 12205 12095.12

2006 1491.37 18091 18470.47

2007 1960.02 22618 23930.54

2008 2962.4 36484 35608.9

55
The above graph shows the trend of deposit of SJIBL in relation to interest
expense. The correlation between interest expense and deposit is 0.99.
Which dictates a very strong correlation and 98% of the change of deposit is
accounted for interest expense. The deposit has a rising trend. As the
interest rate increased on deposit, amount of deposit also increased. The
intercept of the line is 1095.053, which means when interest expense (X) is
zero the amount of deposit will be 1095.053 million. The slope of the line is
11.65. It indicates that an increase of taka 1 million interests will result in an
increase of 11.65 million.

HSBC:
Trend of Loan (In million)

Year X (Interest income) Y (loan) Ŷ (Predicted Y)

2004 1511.48 17301.22 17603.69

2005 2206.2 21436.49 21276.01

2006 3405.07 26105.28 27613.29

2007 3994.4 33807.7 30728.52

2008 4940.93 34302.74 35731.92

The graph on top shows the trend of deposit of HSBC in relation to interest
expense. The correlation between interest expense and deposit is 0.97.
Which dictates a very strong correlation and 94% of the change of deposit is
accounted for interest expense. The deposit has a rising trend. As the
interest rate increased on deposit, amount of deposit also increased. The
intercept of the line is 9613.94, which means when interest expense (X) is
zero the amount of deposit will be 9613.94 million. The slope of the line is

56
5.29. It indicates that an increase of taka 1 million interests will result in an
increase of 5.29 million.

Trend of Deposit (In million)

Year X (Interest expenses) Y (deposit) Ŷ (Predicted Y)

2004 770.56 19917.73 34317.77

2005 979.91 24363.01 34335.95

2006 12521.14 32876.73 35338.03

2007 1758.95 44500.88 34403.59

2008 2027.03 51163.86 34426.87

The above graph shows the trend of deposit of HSBC in relation to interest
expense. The correlation between interest expense and deposit is 0.03.
Which dictates a very weak correlation and 0.09% of the change of deposit is
accounted for interest expense. The deposit has a rising trend. As the
interest rate increased on deposit, amount of deposit also increased. The
intercept of the line is 34250.87, which means when interest expense (X) is
zero the amount of deposit will be 34250.87 million. The slope of the line is
0.087. It indicates that an increase of taka 1 million interests will result in an
increase of 0.087 million.

Findings

1. As a foreign bank HSBC conducts its business with limited number of


branches and targets only the sophisticated segment of the country.
As a result most of the people do not get banking services from this
bank. And they get relatively little deposits than bank like SBL but they
recover their profit through higher service charge.
57
2. As a nationalized bank Sonali Bank Ltd conducts their banking business
throughout the country with the largest branch network. The banking
facilities of SBL are available to the all segments of customers. Due to
nationalization the services offered by SBL is very traditional and
charges are relatively smaller but the amount of deposit is highest as
well as loans and advances too.

3. As a Islamic bank Shahjalal Islami Bank conducts their banking


business based on Islamic shariah. This bank provides and receives
profit in stead of interest. In our country. More than 90% people are
muslims so SJIBL collects a huge some of money and make them
available as loan and advances.

4. As a specialized bank BASIC Bank conducts banking business for the


development of small industries and cottage which is a major objective
of this bank along with profit making. As a result the profitability of this
bank is lower than other types of banks.

5. As private local bank DBBL operates its business in the urban area of
the country with the largest ATM network. By offering lucrative time
and interest facilities DBBL collects a huge some of money and makes
them available to the people as multipurpose usable loan and
advances which result larger profitability.

6. Due to largest branch network SBL has the largest amount of deposit.
In our finding we find that a growth rate of deposit of DBBL, SJIBL,
HSBC and BASIC Bank is higher but SBL though it‘s deposit amount is

58
largest. Besides these, the growth rate of deposit of SJIBL is fluctuating
which shows the comparatively higher risk.

7. Based on huge some of deposit the SBL makes the largest amount of
loan and advances. Growth rate of loan of SJIBL is highest and SBL is
lowest because of capturing the maximum range of customers. DBBL
and HSBC has similar growth rate but BASIC Bank has a negative
growth rate because the emphasize both on development of small
industry and making profit. Due to fluctuation in growth of deposit
SJIBL has greater fluctuation in growth rate of advances.

8. We measured profitability on based on ROA, ROI and ROE. We find that


the ratio of reported three differ in different years. SJIBL has highest
ROA ratio but floatable. HSBC has the highest ROI ratio because of
their efficiency in business. In our survey we find that in different years
different banks were the top holder of ROE.

9. We measured the solvency of selected banks based on CAR, Debt to


Asset ratio and LDR. In our findings it is seen that HSBC has highest
CAR throughout the five years which shows the much resources and
assets to meet the liabilities of borrowers. All the banks have almost
the same Debt to Asset ratio that indicates that no bank in our country
is risk free. The LDR of HSBC is lowest which shows the less
dependency of borrowed funds and LDR of SJIBL is highest whish shows
the more dependency on borrowed fund.

10.We presented market share of each bank based on individual sector.


Market share of deposit and loan of SBL is higher because among 3
nationalized banks it maintains the largest banking network in the
59
country and abroad too. The market share of foreign is also
mentionable because there is very few numbers of foreign banks in our
country.

11. From trend analysis, we have found that when interest expense is zero,
all banks have a positive amount of deposit except DBBL. But the slope
of DBBL is highest, which shows the greater sensitivity of Deposit due
to the change in interest. In terms of HSBC, increase or decrease in
interest rate doesn’t change the deposit to a greater extent. In case of
loans and advances, all the banks has a mentionable amount when
rate of interest is zero and increase in interest income increases the
amount of loan of sonali bank mostly.

Conclusion

It can be doubtlessly concluded that all the surveyed banks are efficient in
their own goals with respects to their available resources. SBL makes highest
profit from greater resources and other three commercial banks are efficient
in achieving their main goal profit making. With available resources, basic
bank making profit along with flourishing the small and cottage industries.
Throughout our analysis, we find that the highest total business of Sonali

60
bank, because of largest network of branches. There are significant variation
in profitability of each bank, whereas, Shahjalal Islami bank has greater
fluctuation and on an average HSBC has the highest profitability in respect to
all profitability ratios. HSBC also has the most favorable position in terms of
solvency, which is the result of efficient banking performance. So, very finally
it can be said that all types of banking system in Bangladesh are operating
smoothly in each of its operational domain which is clear from the analysis of
five representative banks, but in comparison of five types of banks the
foreign bank is doing the best.

61
Recommendations

No company or bank in the world is free from weakness and threats. Each
company or bank has to face some sort of limitations. From all over our
study, we have found some limitations of the studied banks in where they
need to pay attention for better performance and profit. Here we put some
recommendation to overcome these limitations.

1. According to our survey we have seen that Sonali bank is the lowest,
where other private commercial banks enjoying high profitability with
their long line of services. Sonali bank should focus on more customer
oriented services with line of depository and lending services.
2. The performance of Shahjalal bank in terms of deposits, loans, ratios
fluctuates most than any other bank, which resembles their instability.
They should pay heed to stabling their financial performance.
3. DBBL holds a very little market share of the total market of private
commercial banks. For greater profitability they should focus on
increasing their market share.
4. HSBC emphasizes mostly on corporate banking rather than retail
banking, they should also emphasize on potential retail banking.
5. Sonali bank has highest debt to asset ratio, which means most of their
assets are acquired from borrowed fund rather than equity. It contains
more risk. So, they should try to lower the debt to asset ratio by
decreasing liability.
6. Basic bank can focus more on commercial banking services with the
available resources.

62
Appendix

Ratio Calculation
Profitability Ratio

Ratio Formula

Return on Asset Ratio Net income after tax/Total asset X 100

Return on Investment Net income after tax/ Total investment X


100

Return on Equity Net income after tax/ Shareholders


equity X 100

Solvency Ratio

Ratio Formula

Capital Adequacy Ratio Core capital/Risk weighted asset X 100

Loan Deposit Ratio Loan/Deposit X 100

Debt Ratio

Ratio Formula

Debt to Asset Ratio Total Debt/ Total asset X 100

Regression Calculation
Loans and advances

1) X= Interest revenue

Y= Loan and advances

63
Deposits

2) X=Interest expense

Y= Deposit

Ŷ= a+bX

References

Annul Reports:
Annul report of DBBL from 2004-2008
Annul report of Sonali bank from 2004-2008
Annul report of SJIBL bank from 2004-2008
Annul report of Basic bank from 2004-2008
Annul report of HSBC bank from 2004-2008

Web sites:
www.dutchbanglabank.com
www.sonalibank.com.bd
www.hsbc.com.bd
www.shahjalalbank.com.bd
www.basicbanklimited.com
www.bangladesh-bank.org

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