Bank Asia Report (Ijaz)

7/31/2019 Bank Asia Report (Ijaz)

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EVALUATING BANK ASIA IN

TODAYS BANKING WORLD

Prepared For: Managing Director, Bank AsiaLimited

Prepared By:Anirban Das (12-95671-2)Md. Imtiaz Uddin Khan (12-95684-2)Rokun Uddin Ahmed Shawan (12-95660-2)

Arifur Rashid (12-95670-2)Shuvo Taufiq Ahmed (12-95656-2)Md. Mehedi Hasan (12-95685-2)

Date of Submission: 7/25/2012


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Bank Asia Limited

Noor Tower (1st Floor)

73, Sonargaon Road (1/F Free School Street)

Dhaka-1205

Phone: 9674501-02

Date: July 25, 2012

LETTEROF AUTHORIZATION

TO WHOM IT MAY CONCERN

I, the undersigned Managing Director of Bank Asia, hereby authorize six MBA students from

AIUB undersigned bellow to act on our behalf in all manners relating to The Evaluation of Bank

Asia Limited, including signing of all documents relating to this matter. Any and all acts carried

out by your group on our behalf shall have the same effect as acts of our own.

This authorization is valid until further written notice from Bank Asia Limited.

Sincerely, Anirban Das

Md. Imtiaz Uddin Khan

(Managing Director, Bank Asia) Rokun Uddin Ahmed Shawan

Arifur Rashid

Shuvo Taufiq Ahmed

Md. Mehedi Hasan


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Letter of Transmittal

Managing Director

Bank Asia Limited

Noor Tower (1st Floor)

73, Sonargaon Road (1/F Free School Street)

Dhaka-1205

Dear faculty Members,

The attached report requested by our honorable faculty Azad Amin Ruhul describes the Industrial

analysis of commercial Banks in our country. We believe you will find the results of this study

useful evaluating the current situation of Bank Asia and the overall banking system on Bangladesh.

The objective of this report was to gather practical knowledge about the corporate working

environment with the business firm and the experts who are leading and making strategic decisions

to enhance the growth of a financial institution. Its an analysis of Banking Industry and the

competitive position of Bank Asia in the banking industry.

This report was designed to fulfill the following objectives:

1. Vision and mission of Bank Asia

2. Services and organogram of Bank Asia

3. Finding the competitive position of Bank Asia

4. Compare Bank Asia with other 3rd

generation banks5. Analysis of current situation of Bank Asia

6. Finding the limitations of Bank Asia

Primary research consisted of discussions with several experienced bank employees, secondary

research sources included the banks annual reports, information and literature regarding the

banking sector, different books and periodicals and we also gathered information from various


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websites using the internet with the help of search tools. Results of this research discussed more

elaborately in this report, indicate that Bank Asia has established itself as a leading corporate

institution in our country through their high standard of service and commitment to their

customers.

There are few limitations to our final report as its very hard to collect and organize vast amount of

data from a lot of annual reports of different banks in a very short period of time. Still, we tried our

best to utilize the time we had to make this report as complete as possible.

We would be pleased to discuss this report and its conclusions with you at your request. We are

also thankful to Faculty of Business Administration and Library facility of our esteemed American

International University of Bangladesh for providing us encouragement and resources to

successfully carry out our report. We would also like to take this opportunity to thank our fellow

classmates for their interest in our report.

Sincerely,

Anirban Das

Md. Imtiaz Uddin Khan

Rokun Uddin Ahmed Shawan

Arifur Rashid

Shuvo Taufiq Ahmed

Md. Mehedi Hasan

Table of Contents

Executive Summary.................................................................................................1


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Introduction..............................................................................................................2

Overview of Bank Asia............................................................................................3

Mission & Vision.......................................................................................................4

Products & Services.................................................................................................4

Organogram of Bank Asia.........................................................................................6

At A Glance..............................................................................................................7

Branches..................................................................................................................8

Analyzing Bank Asia................................................................................................9

External Analysis......................................................................................................9

Societal Analysis...............................................................................................9

Political Environment..............................................................................9

Economical Environment......................................................................10

Industry Analysis by Porters Five Forces Model..............................................12

Rival Firms............................................................................................12

Substitute Products...............................................................................12

Potential New Entrants.........................................................................12

Suppliers..............................................................................................12

Buyers..................................................................................................12

Internal Analysis.....................................................................................................12

Resource and Competitive Position.................................................................12Finance.................................................................................................12

Return on Equity.........................................................................13

Return on Asset (ROA)................................................................13

DuPont Analysis..........................................................................14

DuPont Chart..............................................................................15

Comparison with other commercial Banks..................................16

Marketing.............................................................................................17

Business Development...............................................................17

Customer relations.....................................................................17

Sales..........................................................................................17

Recovery....................................................................................17

Strength.....................................................................................17

Weaknesses...............................................................................18


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Opportunity................................................................................18

Threats.......................................................................................18

CAMEL Rating.............................................................................18

Capital Adequacy.......................................................................19

Asset Quality..............................................................................19

Earnings Records........................................................................20

Liquidity Position........................................................................20

Management Quality..................................................................21

Composite Rating.......................................................................22

Findings..................................................................................................................23

Recommendations.................................................................................................24

Conclusion..............................................................................................................25

References..............................................................................................................26

List of Tables and FiguresServices.....................................................................................................................5

Organogram of Bank Asia.......................................................................................6

Branches of Bank Asia............................................................................................8

Fig 1: ROE (in %) Net Income/Shareholders Equity...........................................12

Fig 2: ROA(in %) Net Income/Total Asset...........................................................13

Fig 3: EPS=Net Income/Number of ordinary shares outstanding....................14

DuPont Chart..........................................................................................................15

Table 1: Important Financial Indicators..............................................................16

Executive Summary


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In this competitive world, it is essential to know how market players of financial markets are

actually performing. The international or domestic financial market players, whether in capital or

money market, these are very important considerable thing in financial world. What kind of

financial instruments are being offered, is another big issue. Depository institutions, in particular,

are one of the key market players assuring flow of resources among participants whether

individuals, households, public or private businesses.

Banks are the leaders of all financial services industry, where the proper functioning of the

economy depends on the banking industries. Banks propel all the financial activities of certain

economy. Commercial banking industry is one of the most important financial intermediaries in

Bangladesh. It is playing great role to generate savings and it makes sure the proper investment of

this savings in different sectors of our economy. Commercial banks are cooperating different types

of business in various ways which is ensuring prosperity of business. By now, it has been proved

that literally bank is the heart of all commercial activities in Bangladesh.

Bank Asia is one of the third generation banks which are performing really well in the industry

over the years. Most of the financial indicators are carrying positive message to the share holders.

There are so many risks which Bank Asia is coming across and all of them are properly taken care

by the authority. A lot of banks are creating value to customers. They are trying gradual shrink of

Net Interest Income (NII) which magnifies their income in recent years. During the year 2006

Bank Asia has not only made good profit but also enhanced its image further. Bank Asia is now

regarded as a local brand having regional and global potential. All these have been possible with

the efficiency of the authority and the loyalty of their customers.

INTRODUCTION


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Financial development is essential for economic growth and development, and weak financial

systems make countries vulnerable to crises. A growing body of empirical literature shows these

relationships. This means that to enhance economic growth, developing countries must take

initiative to increase both the financial depth and diversity of their financial sectors. Banking sector

is one of the most important sectors for the economy of a country. Sometimes it is called heart of

the economy.

Bangladesh has bank based financial system. It means core financial services are provided by

banks. From 1971 to till today the total number of bank in Bangladesh is 49 (matrix online

limited); which include four nationalized banks, five governments owned specialized banks, thirty

domestic private banks and ten foreign banks. Besides that, there are twenty-eight non-banking

financial institutions also conducting their operation in this country.

The number of banks in all now stands at 49 in Bangladesh. Out of the 49 banks, four are

Nationalized Commercial Banks (NCBs), 28 local private commercial banks, 12 foreign banks and

the rest five are Development Financial Institutions (DFIs). History of banking sector is quite

recent; the development of banking sector is so great. The number of private banks increasing

rapidly and it becomes a profitable sector. The banks with modernized banking facilities, termed as

third generation banks are providing improved services both to the investor and to the customers.

Bank Asia Limited is one of the most renowned 3rd generation banks which are really contributing

to the financial system of Bangladesh.

Bank Asia Limited is one of the private commercial banks (PCBs), incorporated in Bangladesh on

28 September 1999 as a public limited company under the Companies Act 1994, and governed by

the Banking Companies Act 1991. The Bank went for public issue of its shares on 23 September

2003 and its shares are listed with Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange

Ltd.

In this report, firstly, we will evaluate the banking industry then we will try to find out Bank Asias

competitive market position in that industry.

Overview of Bank Asia


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Bank Asia Limited is a third generation commercial bank with 29 online branches across major

cities in Bangladesh and 1240 full time employees on year end 2011. It offers full range of

commercial banking products and services to the corporate, mid-market and retail segment. Bank

Asia is a new entrant in the private banking scenario of Bangladesh with a pledge to fulfill every

possible customer need with high efficiency and satisfaction. The Bank is led by experienced

bankers and providing high quality banking services to the investors and consumers.

In 1999, after starting the operations, Bank Asia acquired the business operation of the Bank of

Nova Scotia in Dhaka at the beginning where it again acquired the Bangladesh operations of a

Pakistani Bank, Muslim Commercial Bank Ltd. (MCB).

In the year 2003 the Bank again came to the limelight with oversubscription of the Initial Public

Offering of the shares of the Bank, which was a record (55 times) in Bangladesh capital markets

history and its shares commands respectable premium.

Bank Asia is maintaining a highly developed technical framework. It ensures the quality service by

using its Online Banking Software and modern IT infrastructure. Under its ATM Network the

Stellar Online Banking software enables direct linking of a clients account, without the

requirement for a separate account. SMS Banking is the innovative idea that Bank Asia has

introduced in the market.


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Mission & Vision

Bank Asias vision is to have a poverty free Bangladesh in course of generation in the new

millennium, reflecting the national dream. Our vision is to build a society where human dignity

and human rights receive the highest consideration along with reduction of poverty. With this

vision in mind Bank Asia has set themselves the following missions:

To assist in bringing high quality services to our customers and to participate in the growth

and expansion of our national economy.

To set high standards of integrity and bring total satisfaction to our clients, shareholders

and employees.

To become the most sought after bank in the county, rendering technology driven

innovative services by our dedicated team of professionals.

Products & Services

Bank Asia gradually increased its product list. Every year they launched 2 products. Since its

establishment the product and services list added more and more innovative features. Whenever,

they launched a product, they looked deeply in its technical issues. It means how the product will

be based on modern technology and support online features. Considering the criteria, they have

produced six products. Each product contains its specific link. The full list of products and services

are displayed here.

PRODUCTS

SMS Banking

Mobile Banking

Internet Banking

Real-Time Online Banking

Any Branch Banking

Customized Loan

Loan Syndication

Bonus Savings Schemes


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Poverty Alleviation

ATM Service

Credit Card

Locker facilities

SERVICES

There are mainly three departments in Bank Asia Ltd for providing service to the clients.

Service of Bank Asia

General Banking Credit/LoanForeign Exchange

Cash

Personnel Loan

Term Loan

Housing Loan

Auto Loan

Overdraft

Accounts

Remittance

Clearing

Customer

service

Import

Export

Remittance


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Organogram of Bank Asia

SOD

Consumer

Durable

President & Managing Director

Deputy Managing Director

Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President


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First Vice President

Assistant Vice President

First Assistant Vice President

Senior Executive Officer

Executive Officer

Senior Officer

Officer

AssistantOfficer

BankingOfficer

Tellerofficer

ProbationaryOfficer/MtOfficer


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At A Glance

BranchesBank Asia has spread its network over the country through twenty eight branches including all the

privileges like ATM, Locker & Foreign Exchange services. It has six rural branches as well.

BANK ASIA - AT A GLANCE

Letter of intent received February, 24, 1999

First meeting held April 15, 1999

Certificate of Incorporation rec. September 28, 1999

Certificate of commencement rec. September 27, 19999

Banking License rec. October 06, 1999

Branch License rec. October 31, 1999

Inauguration of first branch November 27, 1999

Authorized Capital Tk. 4450 million (as on June 30, 07)Paid up capital Tk. 1,116 million (as on June 30, 07)

Number of Branches 28

Number of Directors 13

Number of Employees 557 ( As on October 2007)

Deposit Tk. 25289 million (as on Dec 31, 06)

Investment Tk. 249 million (as on Dec 31, 06)

EPS Tk. 42.63

Auditor S. F. Ahmed & CO

Registered Office 113-116, Old Airport Road,

Tejgaon, Dhaka, Bangladesh.


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Analyzing Bank Asia

In this report well analyze Bank Asias current situation in two aspects, Internal and External

analysis.


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EXTERNAL ANALYSIS

In external analysis we consider Industry and Competitive Environment. For better understanding

of the external environment we also went through Societal Analysis and Industry

Analysis.

Societal Analysis

Societal analysis consists of two sections: Political Environment and Economic Environment.

POLITICALENVIRONMENT:

Each and every business entity in a particular country must follow the rules and

regulations set up by the government of that particular country. These rules and

regulations depend on the type of business and vary business to business. Banking

businesses are not exception to this and so is to Bank Asia Limited. Bank Asia

complies with all the laws and regulations required. Political instability is pretty

common in Bangladesh. Bank Asia has to overcome all those political problems.

Though, our country is experiencing little bit stable position.

ECONOMICENVIRONMENT:


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Economic condition of a particular country plays an important role in conducting

any sort of business. Due to economic changes (both positive and negative), a

business might be benefited or interrupted. Economic factors such as inflation, bank

interest rate could control the business to an extent. When the bank interest rate

goes up the purchasing power of buyers who take loans from bank to buy flats, goes

down. Similarly the companys investment on the business goes down as they also

take loan from the bank. Bangladesh Bank (central bank) is the major player in this

regard. Bangladesh Banks decision has direct influence on banking industry so is to

Bank Asia Limited.

Industry Analysis by Porters Five Forces Model

Banks are not the most efficient institutions for providing all types of financial services. They are

good at mobilizing savings and providing payment services and liquidity, which happens

to be their main functions. The Porters five forces model of competition is an excellent

tool for understanding the main forces that drive competition in an industry. Eventually, it

gives us a better understanding of the existing competition in the Banking industry.

1. RIVALFIRMS

In the commercial banking industry, there are currently more than 30 commercial

banks and thus it is quite impossible for one firm or a group of firms to actually

dominate the market. Therefore there is no competition in terms of trying to capture

the overall market, even though there is slight competition in the case of trying to

capture the market of a specific location. The slight competition that we find in this

industry of trying to attract depositors is either in terms of facilities or in terms ofinterest rate. It is totally up to the firms as to what they want to offer in an attempt

to attract more depositors. Bank Asia attracts depositors very quickly by providing

moderate facilities and interest rate.

2. SUBSTITUTE PRODUCTS


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In case of the banking industry, the only substitute option is non banking financial

institution which is very small number in Bangladesh. Though the number of non

banking financial institution is increasing and Bangladesh bank is giving motivation

regarding this.

3. NEW ENTRANTS

The potential new entrants to the banking industry are quite a problem for the

already existing firms, especially for those that are still trying to make a mark. New

bank needs huge capital to offer extra facilities to make the existing customers

switch from existing bank. As it is very difficult to do therefore potential new

entrance threat is low for Bank Asia.

4. SUPPLIERS

Suppliers are depositors who deposit their savings to commercial banks. These

depositors have real control over commercial banks as well as on Bank Asia.

5. BUYERS

Here buyers mean loan taker. The bargaining power of buyers in this industry is

very low. In spite of the ever-increasing interest rate buyers have no other options

but to buy loan.

INTERNAL ANALYSIS

Resources and Competitive Position

The business functioning of Bank Asia has been consists two departments. For internal analysis we

are following functional approach.

FINANCE

In this section we will analyze the financial condition of Bank Asia. Major and

main source of Bank Asias capital is from deposited money.


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Ratio analysis is an analytical tool that can be applied to a banks financial

statements so that management and the public can identify the most critical

problems inside each bank and develop ways to deal with those problems. Some

selected ratios are analyzed here to give an insight about Bank Asia. For limited

information some are analyzed very briefly.

RETURNONEQUITY

ROE is the measure for the stockholders benefit from their investments. This ratio

indicates the degree to which the firm able to convert operating income and after

tax income that eventually can be claimed by the shareholders. ROE is the measure

for the stockholders benefit from their investments.

Fig 1: ROE (in %) = Net income / Shareholders equity

The ratios of year 2006 and 2008 demonstrate instability towards the Return on

Equity (ROE) of the bank from year 2009 and 2010; there are no significant

changes in return on equity (ROE) and reflecting consistency in managing the

return on shareholders equity. This stability of return on equity (ROE) will help toattract their investor but the stable ROE of Bank Asia reflects the returning

capability to their shareholders has not increasing much from last three years which

wont be acceptable for the shareholders cause they shareholders prefer to have ahigh return from their investment every year. So, the management should take

action to increase the return on equity (ROE). For increasing the return,

management should call attention to manage their expenses adequately and need toincrease their net income.


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The ratio of year 2009 and 2010 was above Peer Group Average, which is really a

good sign. It tells Bank Asia is doing well comparing to its competitors.

RETURNONASSET (ROA)

Return on Asset (ROA) is particularly an indicator of management efficiency. Itindicates how capably the management of the bank has been converting its assets

into net income.

Fig 2: ROA (in %) = Net income / Total Asset

Return on Asset (ROA) was lower in 2006 and 2008 compare with rest of the years.

This low returns resulting from the lower operating income and above average useof debt. As their income rises and the usages of their own fund increases from year

to year consequently the ratio also rises. From the Financial Statement it is evident

that there Total Assets & Revenue rises from year to year as well as they able to

decrease their operating expenses comparing to previous years. But the totalamount of provision for loans increased every year which lessen their net income.

So, the ROA of 2006 and 2008 is lower than year 2009 and 2010.

The Return on Asset (ROA) ratio of Bank Asia is higher than the Peer GroupAverage which proves that Bank Asias performance was better than its competitor

banks at year 2009 and 2010. So, we can say that the management is utilizing theirassets in an efficient way to generate more income.Earnings per Share (EPS) measure the returns to the banks to the stockholders.

Earnings per Share is calculated by the following equation


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Generally we use the formula (ROE= Net income/ Total equity) to calculate the

ROE. For DuPont Analysis we need to breaking down ROE into following parts-

Net profit margin= net income after taxes/ Total operating revenue

Assets utilization= Total operating revenue/ Total assets

Equity multiplier= Total assets/ Total equity

After that we get ROE by multiplying the above parts. So, here ROE= Net profit

margin Assets utilization Equity multiplier. Now, management needs to trace

out the reason behind the declining trend of the banks ROE. From management

view point it is now easy to find out the specific reason behind the declining trend

DuPont Chart showing the ROE

ROE=Net Income/Total

Equity

15.48%

Asset Utilization=Total

Operating Revenue/Total

Assets

ROA=Net

Income/Total Assets

1.42%

Equity

Multiplier=Total

Assets/Equity

Capital

Net Profit Margin=Net

Income/Total Operating

Revenue X

X


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of ROE by using this DuPont analysis. This analysis shows that the equity

multiplier which will give hints why ROE is declining where the net profit margin

increased to raise the ROE, emphasize should be given on increasing Equity

Multiplier ratio as well as to asset utilization ratio. Utilizing the assets more

efficiently and effectively would help to increase the ROE.

Comparison with other commercialBanks

In this section we will compare Bank Asias financial competitive position through some financial

indicators.

Important

indicators

Bank Asia Eastern Bank

Limited

Jamuna Bank

Limited

Shahjalal Bank Dhaka Bank

Limited

ROE 24.71% 15.48% 16.21% 38.4% 22.75%

Debt Ratio .90 .90 .92 .94 .94

Total Asset

Turnover

.058 .058 .056 .050 .043

Net profit margin 30.34% 24.30% 22.16% 43.19% 27.94%

Return on asset 1.58% 1.42% 1.25% 2.17% 1.20%

Equity multiplier(

T. asset/Equity)

30,478.437/1,

949.741=

15.63

35,934.833/

3,314.723

=10.84

20,157.016/

1,562.471

=12.90

21,342.554/

1,204.913

=17.71

48,141.688/

2,550.856

=18.87

Table 1: Some important financial indicators

Source: Calculated from Annual Report (2010)

Here, Shahjalal Bank has the highest ROE 24.71% where as Bank Asia has 38.4%. Net

profit margin is the main reason of this differentiation. Shahjalal Bank has 43.19% but Bank Asia

has only 30.34%. so Bank Asia has to increase its operating efficiency to have more profit margin.

Moreover Shahjalal Bank has bigger equity multiplier than Bank Asia. It means Shahjalal Bank is

using more debt than Bank Asia. Bank Asia has got second highest ROE among all other three


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commercial banks. This is because; Bank Asia has more net profit margin and bigger equity

multiplier.

MARKETING

The Marketing department of Bank Asia is divided into four categories:

BUSINESSDEVELOPMENT

The Business Development sector is concerned with actually marketing the

product. They try to build an image for the company.

CUSTOMERRELATIONS

The Customer relations department deals personally with the customers. This

department handles any queries or complaints from the customers part about Bank

Asia or any of its products.

SALES

The sales department is directly related to selling different banking products. They

play a very important part because they are the ones who are ultimately responsible

for selling the products.

RECOVERY

The recovery department is responsible for the timely collection of money after the

disbursement of loan and some other debt.

STRENGTHS

Bank Asia has considerable financial resources to grow the business

Bank Asia is a widely recognized company with attractive customer base

Bank Asia has an efficient, capable and honest workforce

Goodwill of the company

Variety of financial products


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WEAKNESSES

Bank Asia has small number of branches relative to key competitors

Bank Asia has not enough ATM booths across the country

Bank Asia doesnt consider rural commercial activities

Not that much marketing campaign

OPPORTUNITIES

Development of more branches in suburban areas

More advancement in technology

THREATS

Increasing threats from local competitors

Shortage of depositors in Bank Asia

Competition from non-banking financial institution

CAMEL RATING

CAMEL rating is a system that assigns a numerical rating to a bank or thrift based

on examiner judgment regarding its capital adequacy, asset condition, management

quality, earnings record and liquidity position. Actually, CAMEL rating is a

combination of all five dimensions of performance into one overall numerical

rating.

The letters in CAMEL derived from:

C - Capital adequacy

A - Asset quality

M - Management quality

E - Earnings record

L - Liquidity position


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CAPITAL ADEQUACY

A bank capital adequacy ratio determined by the K/A ratio.

Here,

K = Capital

A = Assets

9% and above Strong 1

8% to 8.99% Satisfactory 2

7% to 7.99% Fair 3

6% to 6.99% Marginal 4

5.99% and lower Unsatisfactory 5

Capital Adequacy

According to annual report BANK ASIAs capital adequacy ratio is 9.54%, which

indicates the bank is staying at strong position with the ranking of 1. Therefore,

banks has more chance to survive in the market because their loss absorb power is

very high.

ASSETSQUALITY

It is determined by the ratio of total classified loans to total capital & reserve.

Total Classified Loan / Total Capital & Reserve

Total Classified Loan / Total Capital & Reserve=2200%. This measure reminds that

the bank is in unsatisfactory level with a ranking of 5.

EARNINGS RECORDS

1% to 5% and above Strong 1

5.01% to 10.00% Satisfactory 2

10.01% to 15.01% Fair 3

15.01% to 20.00% Marginal 4

Above 20% Unsatisfactory 5


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Earning is assessed by ROA of a bank:

Net income at the previous calendar year / Total asset (as per the same calendar

year)

.85% Strong 1

.65% Satisfactory 2

.45% Fair 3

.35% Marginal 4

Net Loss Unsatisfactory 5

Earnings Record

The calculation shows the result is 1.57% which proves that Bank Asia is in strong

position by holding rank 1.

LIQUIDITYPOSITION

The banks whose are dependent on more outside source, such banks are more likely

to experience a liquidity crisis because they are forced to borrow excessive amounts

of funds from outside sources. We can measures the liquidity position by the

following two ratios:

1. Liquid assets/ total demand and time liabilities

2. Total loans/Total deposits

1) In case of first one

Showing Liquidity position (1)

In case of first one, the ratio is 12.6%percent, which indicates the BANK ASIA is

staying at marginal position with a rating of 2.

2) In case of second ratio

30% Strong 1

20% Satisfactory 2

19% Fair 3

15% Marginal 4


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60% Strong 1

80% Satisfactory 2

85% Fair 3

90% Marginal 4

91% Unsatisfactory 5

Showing Liquidity position (2)

In case of second ratio, the BANK ASIA ratio is 20% percent, which reveals that it

is in position one.

For next analysis, we can add the above two ratio and take the average.

That means, Unsatisfactory =5

Satisfactory =1

Liquidity position = (5+1)/2 =3

Finally, we can conclude that the bank liquidity position is in fair level. It means

Bank Asia depends more on internal funds. So, there is no chance of facing

liquidity crisis by Bank Asia.

MANAGEMENT QUALITY

Management quality can be determined by the average of the ratings of above four

ratios. Here the regulators verify whether the management is efficient enough to

handle any unfavorable situations or economic inflation or deflation. We can

calculate the management ratio by the following formula

(C+A+E+L)/ 4.

Management Quality = (1+5+1+3)/4

= 2.5

Here we consider the total rating of these four sub-factors. The ranking of

management are as follows

1 to 1.49 Strong 1

1.5 to 2.49 Satisfactory 2

2.5 to 3.49 Fair 3

3.5 to 4.49 Marginal 4

4.5 to 5 Unsatisfactory 5

Showing Management Quality


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Management administrative skill and ability is average or we can say well but

improvement is required since the relation falls under the category of fair and can

be ranked 3.

COMPOSITERATING

It is determined by the average of rating of all five components of CAMEL as

follows:

Composite rating = (C+A+M+E+L)/5

= (1+5+1+3+3)/5

= 2.6

Composite rating is classified as bellow:

1 to 1.4 Strong 1

1.5 to 2.4 Satisfactory 2

2.5 to 3.4 Fair 3

3.5 to 4.4 Marginal 4

4.5 to 5 Unsatisfactory 5

Showing the Composite Rating

Thus, Bank Asia falls under the category of 3 with a fair financial position and management quality.

Findings

1. CENTRALIZEDDECISIONMAKINGFORLOANGRANTING:

In Bank Asia Limited, to sanction every loan decision is made by Area office or Head

Office. The branch manager has to take permission before granting any amount of loan or

advances from Head Office. It takes a lot of time to sanction. Even Zonal Head has no

authority to permit any loan.

2. SHORTAGEOF RURAL BRANCHES & ATM BOOTHINCITY:

Bank Asia has a very little number of branches in Rural Areas. But our economy is mainly

depends upon the Villages.


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During our observation we observed that many clients complain about ATM booth. In city

area, they have very small number of ATM booths which cause a bit of difficulty for

clients to withdraw the money with ATM card. In commercial capital city (Chittagong),

they have only two ATM Booths in Agrabad & EPZ.

3. LESS MOTIVATION:

We didnt find any motivational activities for employees in Bank Asia. Its a weakness of

the top level management. But in some other banks like EBL, their employees receive

awards every year based on their performance.

4. NOSALESEXECUTIVEINBRANCHOFFICE:

We observed that Bank Asia has no sales executive in their branch office. Sales executiveplays a significant role of collecting deposits as well as lending money. We found number

of sales executives in Dhaka Bank (Besides Bank Asia in GEC).

Recommendations

1. DECENTRALIZATIONOFDECISIONMAKINGTOLOANSANCTION:

Bank Asia should give the authority to sanction the loan to the branch office. Right now the

Head Office sanctions the loan. To make loan sanction faster, branch offices should be

authorized to sanction loan otherwise zonal head office (Agrabad Branch knows as Zonal Head

Office) should be authorized to sanction a specific amount of loan.

2. ESTABLISHMORERURALBRANCHES & INCREASE ATM BOOTHS:

Nowadays bank is a trusted financial institution. Even people from the rural areas are realizing

the importance of bank. So Bank Asia can spread their branches to rural areas more

extensively. It will definitely increase the market share of Bank Asia.


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Besides opening branches in rural areas, Bank Asia needs to increase its ATM facility,

especially in the major cities. Its major competitors have large number of ATM booths in

major areas.

3. ARRANGEAWARDCEREMONY:

To motivate the employees, Bank Asia should arrange an award ceremony for the employees.

Awards can be given to the employee of the year as well as manager of the year and so on.

This will motivate the employees and thus affect the whole performance of the bank in

appositive way.

4. APPOINTSALESEXECUTIVE:

Bank Asia should appoint sales executives in their branch offices and they should be well

trained and aware of the facilities provided by Bank Asia Limited.

CONCLUSION

A countrys future economic prosperity depends on the success of banking industry as it is the

most important financial intermediary. As long as the banking sector remains weak, the economy

won't achieve the growth necessary to eradicate poverty. Our country is realizing the importance of

commercial banking industry as we are moving forward day by day. Technological development in

the commercial banking industry is the most important achievement in the last decade for

Bangladesh in that industry. Governments support is needed to for more advancement of that

industry.


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We can conclude that Bank has been found consistent with their operations in this competitive

banking industry. This bank has positioned them as a leading depository institution. Moreover the

company profile tells us that Bank Asia is offering lucrative instrument for their existing and

potential customers. Their image to the market can help them to achieve more financial growth in

that industry. During the year 2006 the Bank has not only made good profit but also enhanced its

image further. Bank Asia Limited has now established itself as a local financial institution with

international corporate culture, flawless processes, superior business ethics, strong control &

compliance, good governance, visionary & dynamic leadership, commendable market & product

depth and strong financials. This would not have been possible without the strong commitment of

their people who have set a very high standard of service, which goes to promote their image with

their customers as well as the entire business community.

References

[1] Annual Report, (2011) Bank Asia Ltd.

[2] Annual Report, (2011) Dhaka Bank Ltd.

[3] Annual Report, (2011) Eastern Bank Ltd.

[4] Annual Report, (2011) Jamuna Bank Ltd.

[5] Annual Report, (2011) Shahjalal Bank Ltd.

[6] Bangladesh bank annual publishment (2011)

[7] Besley. Scott., Brigham. F. Eugene, (2002). Essentials of Managerial Finance, Twelfth Edition.

[8] Brighan. F. E., Houston. J. F., (2001). Fundamentals of Financial Management, Ninth Edition.

[9] Chittagong Stock Exchange.


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Documents

Bank Asia Report (Ijaz)