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Performance Analysis of Bangladesh Commerce Ltd.

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    The capital market of Bangladesh has yet to find a solid ground and the investor confidence in the market is not significantly high, especially after the stock market crash in 1996. The bank started its commercial activities on 16 Sep, 1999 with the slogan, “A People’s Bank with a Mission”. BCBL is a third generation bank in Bangladesh.

    It is operating as a commercial bank for the last 15 years. The main objective of this report is analyzing performance of Bangladesh Commerce Bank Ltd based on horizontal financial analysis method. As an internship student it is the writer’s interest that what is the performance of it in various functions as well as in different services. By analyzing performance the periodic and current position of BCBL has already been identified. Here as an internship student I have also tried to identify which poly should be taken that’s why the bank become the profitable bank. Analyzing performance of BCBL based on various types of ratio analysis according to horizontal financial statement. and also Identifying the current services provided by the BCBL.

    I have been assigned to do my Internship program in the Bangladesh Commerce Bank Ltd. Report has been prepared after three months internship program in Bangladesh Commerce Bank Ltd at Bijoynagar Branch. It is a three credit course to complete the BBA program. In this report I have already tried to focus what was the periodic position of BCBL and also focus what was the present situation of BCBL based on ratio analysis.

    I have to submit a report after gaining experience of three months on Bangladesh Commerce Bank Ltd and also I could have to know the real life working situation and non-banking sector of Bangladesh. I hope the report will give a clear idea about the activities and the operational strategies of Bangladesh Commerce Bank Ltd.

    It is very important to know what the performance of performance of BCBL is. It is so much important to know whether the performance good or bad. BCBL is benefited by comparing the required and taken (prevailing) initiative.

    Bangladesh Bank can accelerate/expedite their present initiatives and can modify their existing stated policy for recovering a problem bank into a profitable one. Existing other banks can get Lesson how to keep away their bank form such problem as well as the identified other problem bank can also rethink about their policies and functions. Researcher’s can have the conception/idea/topic for further expansion of their research. 1. 4 Scope of the study Bangladesh Commerce Bank is to become the first choice in commercial banking and to make significant contribution for the society.

    It formally launched business activities on 16-09-1999. The report will concentrate only upon BCBL as a case study. Due to successful completion of essential part of the report have the opportunity to discuss regarding following issues:

    • What is the present situation of Bangladesh Commerce Bank Ltd based on performance analysis
    • To know about the previous situation.
    • What are the problems of overall banking practice in BCBL?

    The research methodology using for find out the solution of the research problem is analytical research methodology and some extend descriptive research methodology. To prepare an authentic and informative report the writer will go through all the company’s information, record, company website and other relevant things. The data required for this study has already been collected from both primary and secondary sources; however, majority of the information has collected from secondary sources. In this regard Last 10 year’s data of BCBL will be collected.

    To analyze and present the data, the statistical techniques like Ms excel will be used. The analysis of the report will be based on horizontal financial analysis method. There are some other methods of performance measurement such as EVA, Stress Testing, sensitivity analysis, and Credit rating will not be adopted in this regard.

    The sources of the report are collected from different desks, various documents of Bangladesh Commerce Bank Limited (BCBL). Though the entire staff member remains busy all the time for their desk work they helped a lot to manage and collect the data & information. But it was very difficult to collect information on the client as it is very sensitive and secret issue for the Bank. Every task has some limitations. So, there have also some limitations of the study. These are as follows:

    • Shortage of time period: This report is written within a shorter period of time since many days have passed during the training session. So the time constraint of the study hindering the course of vast area and time for preparing a report within the mentioned period is really difficult.
    • Busy working environment: The officials had some times been unable to provide information because of their huge routine work. That is why we do not gather vast knowledge about the critical issues.
    • Secrecy of Management: There some information which are confidential for collecting the data. So, some data could not been collected for confidentiality or secrecy of management.
    • Uneven Sample Distribution: The sample distribution may not be even, there may be a majority of people coming from a fixed range of income level.
    • Other Problem: Organization’s does not have an enrich library to study & other things.

    Bangladesh Commerce Bank Limited is one of the potential commercial bank of Bangladesh with Private-Government share. BCBL is consistently supporting the economic activates of the country since its inception in 1998.

    The bank covers all the areas of corporate/commercial, retail/personal and SME banking business. Bangladesh Commerce Bank Limited is undergoing major restructuring to modernize its systems and process for sustainable growth. Bangladesh Commerce Bank Limited (BCBL) was established by the act no. I2 of 1997, passed by the Parliament of the People’s Republic of Bangladesh. Subsequently on February 8, 1998 as per clause 7(7) of act 12 of 1997, the Government constituted an 11 member Board of Directors to organize BCBL and administer the affairs of the Bank in accordance with the Act.

    Having incurred losses in the first two years the bank started earning profit since 2001. Bank earned an extensive net profit Tk. 1. 37 crores and 4. 81 crores in the year of 2002 and 2003 respectively. The profit is increased year per year. But in 2006 and 2007 at that time bank was faced loss. The bank has earned net profit Tk 2. 65 crores, 4. 13 crores 6. 33, crores and 6. 98 crores. In the year of 2008, 2009, 2010 and 2011 respectively. Bangladesh Commerce Bank Limited (BCBL) inherited 38 branches of former Bangladesh Commerce and

    Investment limited. The bank is concentrating the activities the activities in its area of specialization has achieved good market reputation with efficient customer service. Bangladesh Commerce Bank Limited (BCBL) promises to maximize customer satisfaction through services and build a trusting relationship with customers, which has stood the test of time for the last seven years. BCBL came forward to provide training of banking to top bankers and economists to fill up the vacuum of leadership for the future BCBL in Bangladesh.

    They also had seminars, symposiums and workshops on economic and banking throughout the country to mobilize public opinion in favor of banking. Their professional activities were reinforced by a number of Muslim entrepreneurs working under the support of the then Muslim Businessmen society (now reorganized as Industrialist & Businessmen Association). The body concentrated mainly in mobilizing equity capital for the emerging Bangladesh Commerce bank.

    The Authorized and the Paid-up capital of the Bank is Tk. 2000 million and Tk. 920 million respectively. Out of Tk. 20 million, the Government contributed Tk. 300 million and the depositors of former BCI contributed Tk. 520 million as their equity share. The balance Tk. 100 million is subscribed by 3 nationalized Bank. Having been registered with the Registrar of Joint Stock Companies (RJSC) and Firms with the prior approval of Securities and Exchange Commission (SEC) Banglad esh Commerce Bank Limited commenced banking operation with the opening of its Principal Branch at 19, Rajuk Avenue, Motijheel Commercial Area, the financial hub of the capital city Dhaka on September 16, 1999.

    By the end of the accounting year1999, the other branches in Dhaka, Chittagong, Khulna, Sylhet metropolitan area and Bogra, Naogaon, Narayangonj started functioning. At present BCBL is successfully running operation in 38 branches with its last branch opened in Barisal. Export/Import/Foreign Exchange business is being done through our A/D Branches. We are also member of SWIFT. Import-Export, Foreign exchange, remittance related activities are performed with SWIFT.

    Become a bank of first choice by the customers with meaningful contributions to the society. To improve banker customer relationship through improving customer service.  To undertake project promotion to identify the profitable areas.  To develop new and innovate product/service through integration of technology and policy and principle.

    The Objectives of BCBL are not only to earn profit, but also to do good and welfare to the people, the main Objectives of BCBL are given below:

    • To invest through different modes permitted under some systematic rules.
    • Achievement of economic growth through various socio-economic activities.
    • Involve customers with modern banking through proper uses of modern information technology. To establish participatory banking instead of banking on debtor and creditor relationship.
    • To contribute towards balances growth and development of the country through investment operations particularly in the less developed areas.
    • Providing services by diversifications to the doorstep of people in the economic sector.
    • Earning confidence of all concerned by easing foreign trade and international transactions.
    • To extend co-operation to the poor, the helpless and the low income group for their economic up liftmen.

    Management of BCBL: Bangladesh Commerce Bank’s Board of Directors is formed by 11 members, 7 of them are nominated by the Government and the rest 4 members come from private share holders. This bank is a unique example of public-private partnership.

    There is a Managing director who is also The president or CEO mainly controls and supervises the major divisions of the bank. They provide policy guide lines to Bangladesh Commerce Bank limited. The Board of Directors forms an Executive Committee for smooth and efficient operations of the Bank Executive Committee consists the members of the Board. Besides, a Management committee consisting of the senior executives headed by the chief executive looks after the actual operations of the Bank. The Management Committee consists of the Managing Directors and Head Office Executives. They discuss about the progress on portfolio functions.

    Different ideas and decisions, guidelines regarding deposits, lending and management of Human and Material resources are the main concern of this committee The organizational structure of BCBL is quit horizontal where each person reports to only one person, which refers to a very good working environment. For example, each officer reports to the AVP or VP or SVP, AVP or VP or SVP reports to EVP, EVP reports to DMD and DMD reports to MD.

    Management Hierarchy of BCBL: Chairman Managing Director (MD) Deputy Managing Director (DMD) Executive Vice-President (EVP) Senior Vice-President (SVP) Vice-President (VP) Assistant Vice-President (AVP) Senior Principal Officer (SPO) Principal Officer (PO) Senior Officer (SO) Management Trainee Officer Officer Assistant Officer (AO) Figure: Organizational Structure.

    Human Resources Development is focused on recruitment and in-house training for both on the job and off the job Bank staff members through the Bank’s Academy. Bangladesh Commerce Bank Academy – the oldest institution in the private sector – was conceived of as an in-house training center to take care of the training needs of the Bank internally.

    Main training activities consist of in-depth foundation programmes for entry level Management Trainees. Specialized training programmes in the areas like general banking, advance, foreign exchange, marketing and accounts etc. are also organized by the Academy depending on need. Academy not only conducted courses, workshops and seminars as required by the Bank, but it also organized training programmes for the Bank of Maldives, Nepal Bangladesh Bank Limited and Oman International Exchange LLC. In addition, Academy has also the credit of organizing system of Bank of Maldives.

    In addition to conducting courses internally, The Academy also selects candidates for nomination to various courses conducted by distinguished training organizations in the country including Bangladesh Bank Training Academy and Bangladesh Institute of Bank Management. The Academy also re-designs its courses, programmes etc, regularly to med the requirement of new skills arising out of various directives, guidelines of the Central Bank and significant changes in the banking sector from time to time.

    Paid-up capital can be less than a company’s total capital because a company may not issue all of the shares that it has been authorized to sell. Paid-up capital can also reflect how a company depends on equity financing. The amount of money that has been received by shareholders who have completely paid for their purchased shares.

    Graphical presentation of Paid-up capital is follows: Total Asset Total assets are everything that a business or an individual owns. For a company, total assets are listed on a balance sheet. These assets are valued based on their purchase prices, not the current market value of the assets. Assets typically can be converted from a physical item into cash. The ease in which an asset can be turned into money is known as liquidity. Assets can take various forms, ranging from real estate and investment securities to equipment and inventory. Cash also contributes to the sum of assets.

    Total assets are listed on a company’s balance sheet based on their level of liquidity, which is based on the speed in which they can be exchanged for cash. The most liquid of assets can be found toward the top of a financial statement. These assets might include cash or short-term investments such as equities and accounts receivable, which are funds owed to a business.

    Graphical presentation of Total Asset is given bellow: Total Deposit Total Deposits is a term included in the balance sheet of a bank. To a common person, the word deposit most often implies the act of placing our money in the safety of a bank. When calculating the Total Deposits from a bank’s perspective, various kinds of deposits are taken into consideration. These are added together to determine the Total Deposits. Demands Deposits, Term Deposits, and Interest and Non-Interest bearing deposits are the cumulative examples of deposit items that are summed to get the value of Total Deposits.

    Graphical presentation of Total Deposit is given bellow: Total liabilities The aggregate of all debts an individual or company is liable for. Total liabilities can be easily calculated by summing all of one’s short-term and long-term liabilities, along with any off balance sheet liabilities which corporations may incur. On the balance sheet, total liabilities plus equity must equal total assets.

    Total liabilities consist of two types, current liabilities and long term liabilities. Current liabilities are debt that we owed to someone and have to pay within 1 year. Long term liabilities or Non-current liabilities are debt that we owed to someone but we don’t have to pay within 1 year. E. g. 5 year bank loan.

    Equity Capital The value of equity capital is computed by estimating the current market value of everything owned by the company from which the total of all liabilities is subtracted. On the balance sheet of the company, equity capital is listed as stockholders’ equity or owners’ equity. Also called equity financing or share capital. Total Bank Equity Capital consists of retained earnings, common and perpetual preferred stock, and other accumulated income but does not include non-controlling (minority) interest in consolidated subsidiaries A firm’s total assets minus its total liabilities.

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