Commercial Banking In Bangladesh and Prime Bank

Presenters:

Name Kamruzzaman Ahmed Farjana Yesmin !ania Alam !asnia #anajan Ahna% !ahmid unni

ID 1020063030 1010232030 1020"33030 1110$10030 1010000030

Commercial Bank:
Commercial bank is a financial institution.

Collect deposits by offering many types of accounts.

Gives interest on the deposits

Provide loans and other financial facilities.

Charge interest on loans and our services.

Commercial Bank (cont) :

The main duty of commercial bank is taking deposits on interest and providing loans on interest

Commercial banks in Bangladesh:

#&a&e'o(ned commercial Banks )* Banks+

#,ecialized commercial Banks )* Banks+

Con-en&ional ,ri-a&e commercial Banks )31 Banks+

Islami' #hariah .ased commercial Banks )" Banks+

Foreign commercial Banks )/ Banks+

Functions of Commercial Bank:

Recei-ing de,osi&s

Pro-iding loans

Functions of Commercial Bank (Cont..) :

Current Account

Deposits

Fixed Account

Saving Account

Functions of Commercial Bank (Cont..) :

Curren& accoun&0 o Freedom of withdrawal. o No interest. o inimum amount of !"""tk.

#a-ing accoun&0 o A limit of withdrawal in a week. o #ower rate of interest. o ostly used by middle class group.

Functions of Commercial Bank (Cont..) :

Fi1ed accoun&0 o Withdrawal after a fixed time. o $ighest rate of interest rate. o %nterest rate differs due to different period.

Functions of Commercial Bank (Cont..) :

!erm .asis Short&term #oans edium&term #oans #ong&term #oans Loan !2,e .asis Secured loan Unsecured loan Demand Subsidi'e Concessional

Functions of Commercial Bank (Cont..) :

#hor&'&erm Loans0 #oan that is given for less than five years.

edium'&erm Loans0 #oan that is given for ( to !"years.

Long'&erm Loans0 #oan that is given for more than !"years.

Functions of Commercial Bank (Cont..) :

i. Secured loans) a. Collateral b. ortgage loan Unsecured loans) a. b. c. d. Personal loans *ank overdrafts *usiness #oan S + #oan ii.

iii. Demand loans iv. v. Subsidies Concessional

Functions of Commercial Bank (Cont..) :

#ecured Loans

Collateral #oans

ortgage loan

Necessity of Commercial Bank:

Security

Intermediary between lender and borrower

Exchange currency

Help globalization

Easy transaction

Prime Bank Ltd

Prime Bank Ltd

Background0
Prime *ank #td is a fully licensed conventional private owned commercial bank. Created and started its ,ourney on !-th April.!//0. Well reputed and experience personalities in the field of trade and commerce were the sponsor of the organi'ation 1hey have always tried to understand the customers need and serve them according to their needs. 1hey have hired highly professional and dedicated team with long experience for serving the customers more effectively

Prime Bank Ltd

Vision0 1o be the best Private Commercial *ank in *angladesh in terms of efficiency. capital ade2uacy. asset 2uality. sound management and profitability having strong li2uidity.

ission0 1o build Prime *ank #imited into an efficient. market&driven. customer focused institution with good corporate governance structure. Continuous improvement of our business policies. procedure and efficiency through integration of technology at all levels.

Leaders of Prime Bank Ltd

Leaders of Prime Bank Ltd

Leaders of Prime Bank Ltd

Awards and Achievements of Prime Bank Ltd:

!he BI33 2012 %nspirational Company Award In&erna&ional #&ar %or Leadershi, in 4uali&2 )I#L4+ A(ard 2010 *usiness %nitiative Directions 3*.%.D.4 Paris. France IC AB Bes& Cor,ora&e Per%ormance A(ard 200" First Position FN# A(ard'200$ *est Performing #ocal *ank ICAB Na&ional A(ards'2003 For *est Published Accounts and 5eports Second Pri'e Financial Sector 3*anking4

Functions of Prime Bank Ltd:

Prime *ank #td has divided its total functions under five categories.

Re&ail Banking Cor,ora&e Banking Islamic Banking # 56Agri Banking NRB Banking

Functions of Prime Bank Ltd . !etail Banking:

Customers are Prime *ank #td6s !st priority. Prime *ank #td try to provide the broad range of variety and improve services for customers for maximi'ing customer6s benefit. Under this category they cover) De,osi&s Loans Cards In&erne& Banking Locker #er-ices Phone Banking 7&ili&2 ,a2 ser-ices

Functions of Prime Bank Ltd ". Corporate Banking:

Prime *ank #td designed and offered corporate banking service for the corporate sector of *angladesh. 1his offering includes four services)

General credi& uni&

51,or& Finance uni&

Lease Finance uni&

#&ruc&ured Finance uni&

Functions of Prime Bank Ltd #. Islamic Financing:

%slamic *anking is operated based on Shari6ah principles. Prime bank was the !st commercial bank offering both conventional and %slamic banking together. 7nly five branches of Prime *ank #td provide %slamic banking operations to serve the increasing demand of customers for %slamic products and services. Under this process they offer) Hasanah De,osi& Produc&s

Hasanah In-es&men& Produc&s

Hasanah Foreign !rade

Functions of Prime Bank Ltd $. S%E&Agri Banking:

1his service is offered by Prime *ank #td for both S + and agriculture sector of *angladesh. !- branches of Prime *ank #td provide this services to the customers. And this programs offer) Colla&eral Free Loan Ca,i&al Loan 8orking Ca,i&al Loan #easonal Loan Dou.le Loan

Functions of Prime Bank Ltd '. N!B Banking:

5emittance is one of the most effective e2uipment of our economy. Prime *ank #td has provided this offerings for N5* 3Non&5esident *angladeshi4. 1his offer includes) Foreign Remi&&ance #er-ices

Accoun& Facili&ies %or NRBs

8ire !rans%er Facili&ies

51change House

Deposits offered by Prime Bank Ltd (Cont..):

#hor& &erm de,osi&0 Short term deposit option in running account. Amounts being paid into drawn out of the account continuously. 1hese accounts are also called demand deposit. Generally opened by individual person. %nterest bearing deposit. Fi1ed De,osi& recei,&s scheme0 Customer can devote a fixer amount of money. Duration can be one month. three months. six months or twelve months. Accordingly the interest rate is /.08. /.08 or !"8

Deposits offered by Prime Bank Ltd (Cont..):

Curren& Accoun&0 Freedom of deposits and withdrawal Check book facilities #ocker facilities Collecting foreign remittance in both che2ue and draft No interest

#a-ing Accoun&0 Utility payment service Negotiable account withdrawal 08 interest rate

Deposits offered by Prime Bank Ltd (Cont..):

Dou.le .ene%i& de,osi& scheme0 %ssued for ( years ( months term. After ( years ( months. terminal value will stand at 1k. 9 lacs from the initial fixed deposit of 1k. ! lac. %nterest rate is !!.(8

House Building De,osi& #cheme0 1he scheme is offered for 0.- or!" years. inimum e2uity building amount shall be !"lacs and maximum amount shall be 9" lacs.

Deposits offered by Prime Bank Ltd (Cont..):

udara.a Dou.le Bene%i& de,osi& scheme ) DBD#+0 Follow udaraba concept Profit bearing account 7ffers returns on deposit for fixed period of time +stimated duration is 0years. 0month.

udara.a Con&ri.u&or2 #a-ings #cheme ) C##+0 inimum installment is 0""tk aximum installment is 9:"""tk 7ffers two options of getting return.
i. ii. 1otal amount after maturity As pension 0years after maturity 3based on the deposit4

Deposits offered by Prime Bank Ltd:

oney *enefit Deposit Scheme Contributory Saving scheme #akhopati Deposit Scheme +ducation Savings scheme Shukonna onthly *enefit Deposit Scheme Al&Wadeeah Current Account udaraba $a,, Saving Scheme 3 $SS4

Loans offered by Prime Bank Ltd

#(a,na,uran loan0 Fund for fulfilling customer6s dream. At least 90 years professional experience 1wo years loan limit is maximum ;" #ac. Security will be mortgage and original title deed.

Car loan0 Purchase brand new car professional experience 9 years minimum monthly income will be *D1 9""""". $ypothecation over the car.

Loans offered by Prime Bank Ltd (Cont..) :

CNG Con-ersion Loan0 $elp to convert our personal vehicle to CNG criteria. 1o be eligible for this loan is at least 9! years. #oan limit will be maximum ! #ac. Security will be personal guarantee of the borrowers. Household9s dura.le loan0 1o buy furniture. home appliance and household durables. Criteria to eligible for this loan are at least 9! years. inimum monthly income should be *D1 !"""" and self employed 90""" loan limit will be maximum 0 #ac. Security personal guarantee of the borrowers.

Loans offered by Prime Bank Ltd (Cont..) :

arriage loan0 For fulfilling cherished priorities and expenditures of weeding. Criteria to be eligible for this loan are at least 90 years. #oan limit will be maximum ; lac. Security will be personal guarantee of the borrowers.

5duca&ion loan0 For student who wants to fulfill their dreams of higher studies. Student should be at least 90 years. #oan limit will be 0 lac. Security will be personal guarantee of the borrowers.

Loans offered by Prime Bank Ltd (Cont...) :

Any purposes loan #oan against Salary Doctor6s loan 1ravel loans $ospitali'ation #oan Abash $ome #oan Carnival loan $asanah Auto %nvestment 3*urak4 $asanah $ousehold Durable %nvestment 3Asbab4 $asanah edical %nvestment 3Shifa4

Process of collecting repayment:

!. 9. ;. :. 0. (. -. Fulfill legal procedures so that they can take any legal steps if needed. *ank sent reminder letter 1alk to the borrower over phone *ank goes for group visiting Strictly handle this sector *ank inform the person who has given the grantee After all this process if they fail then they go to court and do legal procedures.

Performance evolution of Prime Bank Ltd

Financial institutions like banks have very different ways of reporting financial information. %nvestors have different fundamental factors to consider while evaluating a bank6s performance. 5atios that are used to evaluate the prime banks position are) CA +#S rating #oan Growth Deposit Growth #oan<Deposit 5atio +fficiency ratio Capital 5atio 57+<57A Credit =uality

Performance evolution of Prime Bank Ltd (Cont..):

1wo different domestic bank6s financial highlights were taken to compare the situation prime bank is in. 1hey are) i: ii: Premier Bank AB .ank

Performance evolution of Prime Bank Ltd (Cont..)

CA 5L# ra&ing0 C; Capital Ade2uacy. As ade2uate bank capital is thought to reduce a bank6s risks. A; Asset =uality. $ow deposited funds are allocated. Can determine level of Credit risk. ; anagement Capability. Administrative skills and ability to cope with changing environment. 5; +arning L; #i2uidity. 5egulators prefer that banks not consistently rely on sources like federal funds market to obtain funds and #; Sensitivity. 1o market risk. especially interest rate risk.

Performance evolution of Prime Bank Ltd (Cont..)

Camels rating have ! through 0 rating for each of these components and a composite rating where the rating of ! indicates strong performance or best rating. 9 reflects satisfactory performance. ; represents performance that is flawed to some degree. : refers to marginal performance and is significantly below average and 0 is considered as unsatisfactory or worst rating.

Performance evolution of Prime Bank Ltd (Cont..)

1hese are rated by regulatory bodies such as *angladesh *ank

5atings are not published to prevent possible bank run

*ased on the performance of Dec 9"!9. as suggested in articles of >Dhaka

irror6

and >weekly industry6 Prime *ank is on B'Class which is the list of sa&is%ac&or2 .anks. No banks were labeled as A'Class:

Performance evolution of Prime Bank Ltd (Cont..)

Performance evolution of Prime Bank Ltd (Cont..)

#oan Growth) Assets are what generate sales and the biggest asset for most of the banks is #oans. For many banks. loan growth is as important as revenue growth to most industrial companies. Loans and Ad-ances 200" 200/ 2010 2011 2012 Prime Bank -0!0( ?/909 !!("0!;??:? !("?/" Premier Bank 9;(;;";!/.0; ;;((:.0/ :(:"".0:/--: AB Bank 0(-"/ -"??" ??""9 /:(;? !"("((

Performance evolution of Prime Bank Ltd (Cont..)

Loan Gro(&h0

Loan Gro(&h
:" ;0 ;" 90 9" !0 !" 0 " 9""?&"/ 9""/&!" 9"!"&!! 9"!!&!9 Prime *ank Premier *ank A* *ank

Performance evolution of Prime Bank Ltd (Cont..)

Deposit Growth) Deposit growth states how much lending a bank can do.

De,osi&s 200" 200/ 2010 2011 2012

Prime Bank ??"9! !"(/0( !9:0-: !0/?!( !?9"0;

Premier Bank 9-!!:.:;9"0/.(9 ;-;?!./( 0:(/!.:("(/9./-

AB Bank (?0(" ?;"?/0-"9 !!(!09 !:""9(

Performance evolution of Prime Bank Ltd (Cont..)

Performance evolution of Prime Bank Ltd (Cont..)

Performance evolution of Prime Bank Ltd (Cont..)

Loan6De,osi& ra&io0

1he loan<deposit ratio helps assess a bank@s li2uidity. and by extension. the aggressiveness of the bank@s management. %f the loan<deposit ratio is too high. the bank could be vulnerable to any sudden adverse changes in its deposit base. Conversely. if the loan<deposit ratio is too low. the bank is holding on to unproductive capital and earning less than it should.

Performance evolution of Prime Bank Ltd (Cont..)

Loan6De,osi& Ra&io 200" 200/ 2010 2011 2012 Prime Bank ?0 ?; /; ??? Premier Bank ?-.9 /:.( /"."( ?:.? ?9." AB Bank ?9.-! ?0.;! /!./0 ?!.: -0.-0

Performance evolution of Prime Bank Ltd (Cont..)

Loan6De,osi& Gro(&h0

Performance evolution of Prime Bank Ltd (Cont..)

5%%icienc2 Ra&io0 A *ank6s efficiency ratio is e2uivalent to a company6s operating margin. A bank efficiency ratio is a measure of a bank@s overhead as a percentage of its revenue.
5%%icienc2 Ra&io 200" 200/ 2010 2011 2012 Prime Bank ;;.:9 ;0.:;(./: ;0.-0 ;(.(9 Premier Bank ;!.!9 9/.? ;:.:9 ;(.(: ;0.:: AB Bank ;".!: 9/.?; ;9."! ::.;! :?.9-

Performance evolution of Prime Bank Ltd (Cont..)

5%%icienc2 Ra&io0

Performance evolution of Prime Bank Ltd (Cont..)

Ca,i&al Ra&io0 *anks holding more capital can more easily absorb potential losses and are more likely to survive. 5egulators use the 1ier ! capital ratio. A comparison between a banking firm@s core e2uity capital and total risk&weighted assets. to grade a firm@s capital ade2uacy. A firm must have a 1ier ! capital ratio of (8 or greater to be classified as well&capitali'ed.

Performance evolution of Prime Bank Ltd (Cont..)

Ca,i&al Ra&io 200" 200/ 2010 2011 2012 Prime Bank !".?? !:.-! !!.(/ !9.:( !9.(: Premier Bank !9.(( !9.-! !0.!: !"."! !".00 AB Bank !9.?: !!."/ /./! !!.;!!.-;

Performance evolution of Prime Bank Ltd (Cont..)

!( !: !9 !" ? ( : 9 " 9""? 9""/ 9"!" 9"!! 9"!9 Prime *ank Premier *ank A* *ank

Performance evolution of Prime Bank Ltd (Cont..)

57+<57A) 5eturn on e2uity reveals how much profit a company earned in comparison to the total amount of shareholder e2uity 5eturn on assets indicates how profitable a company@s assets are in generating revenues.

Performance evolution of Prime Bank Ltd (Cont..)

Re&urn on 5<ui&2 )RO5+0
RO5 200" 200/ 2010 2011 2012 Prime Bank 9".0? ;".!/ 9!.(0 9".!/ !;.0; Premier Bank ;.!/ 9".?? 9;.:9?.9; -.(( AB Bank :"./( ;/.?: ;".-/.90 /.;!

Performance evolution of Prime Bank Ltd (Cont..)

Re&urn on 5<ui&2 )RO5+0

Performance evolution of Prime Bank Ltd (Cont..)

Re&urn on Asse& )ROA+0

Performance evolution of Prime Bank Ltd (Cont..)

Credi& 4uali&20 %f a bank@s credit 2uality is in decline because of non&performing loans and assets and<or charge&offs increases. the bank@s earnings and capital may be at risk.

Performance evolution of Prime Bank Ltd (Cont..)

Credi& ra&ing agenc2 )da&a on Prime Bank+

5atings of the debtor6s ability to pay back the debt by making timely interest payments and of the likelihood of default.

C5%S# rated prime bank as high 2uality.

Performance evolution of Prime Bank Ltd (Cont..)

Name of the 7rgani'ation #ong 1erm Short 1erm Aalidity #ong Aalidity Short Published Date Sector 5ating Cear Prime *ank #imited AA S1&9 9/th Bune 9"!: 9/th December 9"!: !0th Buly 9"!; *anking 9"!;

No theories are perfect like ratios i.e. they cannot predict the future accurately at all times 5atios shown for Prime *ank are more or less in the range of standard numbers.