CHAPTER 1: INTRODUCTION

1.1 Origin of the Report

Internship Program of Jagannath University is an important requirement for the post-
graduation of MBA students. The main purpose of internship is to get the student exposed to
the job world and this study is a partial requirement of the Internship program of MBA
curriculum at the Jagannath University. Being an intern, the main challenge was to
implement the theoretical concepts into real life experience. The internship program and the
study have following purposes:

 To experience the real Banking world.

 To get and organize detail knowledge on the job responsibility.
 To compare the real scenario with the knowledge gained in Jagannath University.
 To find out the overall features of UCBL.

This report is the result of three months long internship program conducted in United
Commercial Bank Limited and is prepared as a requirement for the completion of the MBA
program of Jagannath University. As a result, this report needed to submit by me based on the
Financial Performance of UCBL.

1.2 Objective of the Report:

The objectives of the report are;

 To focus on the products and services, facilities provided to clients of United

Commercial Bank.
 To know overall financial performance of the UCBL.
 To apply different financial ratios to find out the liquidity, profitability & other factors
of the bank.

1.3 The scope of the study:

As a student of Masters of Business Administration (MBA) every student has to conduct a
practical orientation in any organization for fulfilling the requirements of the 12 weeks
Internship Program. The main purpose of the program is to introduce the students to the real
corporate world. My place of internship was “United Commercial Bank”, one of the leading

11
 2

banks of Bangladesh. During the internship the teachers of the department are attached to
actively and constantly guide the students. Students are required to work on a specific topic
based on their theoretical and practical knowledge acquired during the period of the
internship program and then submit it to the teacher. That is why this report have been
prepared by me. United Commercial Bank Limited is one of the new generation banks in
Bangladesh. The scope of the study is limited to the Kawranbazar Branch only. The report
covers the organizational structure; background, functions and the financial performance of
the bank. I have mainly worked in the General Banking department so that, my report covers
the way of services provided by UCB. Employees of General department as well as the other
departments helped me a lot and I have used secondary data which was available to me.

1.4 Methodology of the study:

*Sources of Data

In order to complete this report, there is need of huge number of data. All of the data used for
this report is collected from secondary source.

The sources are as follows

 Company website
 Company annual report
 Lanka Bangla website
 Course materials provided by our course instructor.
 Dhaka stock exchange website etc.

*Data Analysis Tools/ Techniques

To fulfill internship objectives, different financial ratio have been analyzed by me by

collecting data with different financial ratios. Here I have listed the ratios that were used to
meet my study objectives.

 Activity Ratios
 Liquidity Ratios
 Solvency Ratios
 Profitability Ratios

2
 3

1.5 Limitation of the study:

 Financial year for listed companies in Dhaka Stock Exchange was January -December
in 2014 & 2015. But it was July-June for 2016-18 financial years. So, some values
may be slightly wrong.
 Three months’ time is not enough for such an extensive study to know vastly about an
organization and how it works. It is very difficult to collect all the required
information of the organization in such a short period.
 The main constrain of the study was insufficiency of information and critical works,
which were required for the journals. There is various information the bank employee
cannot provide due to security and other corporate obligations.
 Due to some legal obligation and business secrecy banks reluctant to
provide more analytical/critical works. For this reason, the study limits only on the
available works and certain degree formal and informal and informal conversation.

3
 4

CHAPTER 2: OVERVIEW OF THE BANK

2.1 Historical Background:
With a firm commitment of the economic and social development of Bangladesh, United
Commercial Bank (UCB) started its journey in mid-1983 and has since been able to establish
itself as one of the largest first-generation banks in the country. With a vast network of 195
branches the Bank has already made a distinct mark in the realm of Private Sector Banking
through personalized service, innovative practices, dynamic approach and efficient
Management.

The Bank has expanded its arena in different and diverse segments of banking like Retail
Banking, SME Banking, Corporate Banking, Off-shore Banking, and Remittance etc. Besides
various deposit and loan products of Retail Banking, the Bank caters export and import loan
to deserving candidates which in turn helps the overall economy of the country through
increased earning of foreign exchange. Other consumer products like UCB Cards have been
showing tremendous success and growth since its inception in 2006 and soon became the
leader in local market with around 40000 card holders.

The Bank also provides its clients with both incoming and outgoing remittance services.
Thus, the expatriates find an easy way to send money through proper channel.

With a firm commitment to promote SME sector, the Bank is also assessing and monitoring
business loans, managing business financing risks, pricing products and working for further
development of SME. Its Corporate banking service consists of simple business of issuing
loans to more complex matters, such as helping minimize taxes paid by overseas subsidiaries,
managing changes in foreign exchange rates or working out the details of financing packages
necessary for the construction of a new office, plant or other facility. Its area of expertise is
in-depth knowledge in financial analysis with analytical capability of financing large project
including RMG and infrastructure development projects.

The Bank, aiming to play a leading role in the economic activities of the country, is firmly
engaged in the development of trade, commerce and industry by investing in network
expansion and new technology adoption to have competitive advantage.

4
 5

2.2 Products & Services:

*Consumer Credit (Retail) Banking at United Commercial Bank Ltd.

It is one of the core businesses for United Commercial Bank Limited and has been targeted
for significant further growth. This reflects the potential of consumer credit scheme to
produce high levels of economic profit and perceived demographic trends toward an
expanded middle class and higher income levels. Asset quality is generally expected to be
higher in personal lending than corporate lending due to variety of factors including:

o Diversification of risk.
o Security.
o Cultural values.
o The increasing need for individuals to have access to bank credit for the conduct of
normal daily activities.

United Commercial Bank is a conservative lender in consumer credit as part of its corporate
philosophy. However, conservatism does not mean simply minimizing bad debts, but
incorporates the concept of lending against acceptable risks. The Bank’s overriding goal is
not only to increase total shareholder return but also to contribute to the socio economy by
improving the life style of the limited income segment of the country and that can be
achieved optimizing profits, rather than just minimizing losses, profit optimization will
follow from:
o Good-planning and control of approval process.
o Well-designed products with appropriately focused marketing.
o The use of statistical techniques and decision support system that permit risks to be
managed predictably.
o Gathering high quality management information, this is then read and used.

*Consumer Credit Schemes of United Commercial Bank Ltd.

The United Commercial Bank with their financing items under CCS loan is given below:
Household Durable Loan: Motor Cycle, Personal Computer, Photocopier, Fax machine,
Small PABX system, Television, Mobile Phone set, Refrigerator, Audio-video equipment,
Other home electric appliances, Furniture and any other household items.

5
 6

Household Durable Loan For purchasing household durables.

Car loan Car, Jeep, Station Jeep, Pick up Van,
Cover Van, Bus, Truck, Ambulance
and any other vehicle for own use.
Doctors’ Loan For the Doctors only.
Loan against salary Any qualified person
Any purpose loan For emergency need
Education loan For Study purpose only
Travel Loan For traveling purpose,
Marriage loan For wedding only.
CNG Conversion To convert into CNG
Loan
Hospitalization Loan For treatment in hospital

*Car Loan

Customer Segment

Any Bangladeshi individual who has the means and capacity to repay the loan. In specific
terms the target customers should cover salaried executives of multinational companies,
middle to large size local corporate, Government officials, Officials working in Semi-
government, Autonomous and reputed NonGovernment Organization, International aid
agencies and any tax paying businessmen of repute and selfemployed tax-paying individual
having a reliable source of income.
Purpose: Purchase of non-commercial new and reconditioned vehicles for personal use only
by individual.

*Doctors’ Loan

Customer Segment

Any Bangladeshi citizen who is a graduate in Medical Science/Dentist/Eye/Allopathic as

self-employed or salaried people has the means and capability to repay the loan.

Purpose: Small scale purchase of different medical equipments, machineries, items to

support professional tools or other relevant needs (e.g. run or set up a
clinic/hospital/dispensary).

6
 7

*Household Durable Loan

Customer Segment
Any Bangladeshi individual who has the means and capacity to repay the loan. In specific
terms the target customers should cover salaried executives of multinational companies,
middle to large size local corporate, Government officials, Officials working in Semi-
government, Autonomous and reputed Non-Government Organization, International aid
agencies and any tax paying businessmen of repute and self-employed tax-paying individual
having a reliable source of income.
Purpose: Purchase of household durables like Television, Refrigerator, Air conditioner,
Washing Machine, Computers, other household furniture etc. for personal use only.

*Marriage Loan
Customer Segment
 Employees of reputed multinational companies and large local corporate.
 Employees of medium sized or mid-range local corporate such as reputed
schools and colleges, insurance and leasing companies, Non-Government
Organization, reputed trading firms and all other salaried persons.
 Any tax paying businessmen of repute and self-employed tax-paying
individual having a reliable source of income.
Purpose

To meet the financial need for marriage purpose.

*Any Purpose Loan

Customer Segment
 Employees of reputed multinational companies and large local corporate.
 Employees of medium sized or mid-range local corporate such as reputed schools and
colleges, insurance and leasing companies, Non-Government Organization,
Government officials, reputed trading firms and all other salaried persons.

7
 8

Purpose

Miscellaneous personal financial requirements. The customer has to declare the purpose of
the loan but submission of supporting document is not mandatory. Purpose may be as
follows:
 House renovation
 Marriage in a family
 Advance retail payment
 Hospitalization or other emergency medical needs
 Trips abroad
 Purchase of Miscellaneous household appliances
 Purchase of personal computer
 Purchase of electronic items
 Purchase of furniture

*Education Loan
Customer Segment
 Employees of reputed multinational companies and large local corporate.
 Employees of medium sized or mid-range local corporate such as reputed
schools and colleges, insurance and leasing companies, Non-Government
Organization, reputed trading firms and all other salaried persons.
 Any tax paying businessmen of repute and self-employed tax-paying
individual having a reliable source of income.
Purpose

 For educational purposes like study in abroad or within the country.

*Hospitalization Loan

Customer Segment

 Employees of reputed multinational companies and large local corporate.

 Employees of medium sized or mid-range local corporate such as reputed
schools and colleges, insurance and leasing companies, Non Government

8
 9

Organization, Government officials, reputed trading firms and all other salaried
persons.
 Any tax paying businessmen of repute and self-employed tax-paying
individual having a reliable source of income.

Purpose
To meet the financial need for treatment purposes in the following hospitals/clinics of Dhaka
and Chittagong:

 BIRDEM
 Holy family Hospital
 Central Hospital
 Monwara Hospital
 Samrita Hospital
 Medinova
 Bangladesh Medical
 Metropolitan Hospital
 Sikder Medical
 Islami Bank Hospital
 Dhaka Renal Centre
 IbneSina Hospital
 Lab Aid Cardiac Hospital
 National Heart Foundation
 CMH, Dhaka
 Apollo Hospital
 Health Care, Chittagong
 Health Home, Chittagong
 Poly Clinic, Chittagong
 CMH,Chittagong

*Loan against Salary

9
 10

Customer Segment

 Employees of reputed multinational companies and large local corporate.

 Employees of medium sized or mid-range local corporate such as reputed
schools and colleges, insurance and leasing companies, Non Government
Organization, Government officials, reputed trading firms and all other salaried
persons.
Purpose

 To meet the financial need for any acceptable purpose.

*Travel Loan

Customer Segment

 Employees of reputed multinational companies and large local corporate.

 Employees of medium sized or mid-range local corporate such as reputed
schools and colleges, insurance and leasing companies, Non Government
Organization, reputed trading firms and all other salaried persons.
 Any tax paying businessmen of repute and self-employed tax-paying
individual having a reliable source of income.

Purpose

 To meet the financial need for travel purpose.

*CNG Conversion Loan

Customer Segment

Any Bangladeshi individual who has the means and capacity to repay the loan. In specific
terms the target customers should cover salaried executives of multinational companies,
middle to large size local corporate, Government officials, Officials working in Semi-
government, Autonomous and reputed NonGovernment Organization, International aid
agencies and any tax paying businessmen of repute and selfemployed tax-paying individual
having a reliable source of income.

10
 11

Purpose

 For converting vehicles from carbon based fuel to Compressed Natural Gas
system.

*Objective of the Consumer Credit Scheme

United Commercial Bank Limited started the Consumer Credit Scheme program with a view to fulfill
its benevolent institutional objectives through financing the middle class limited income group.

 To ensure the credit facility to the both middle class Limited income group and upper
class income group.

*Commercial Banking
Commercial Credit services are quite different from consumer credit banking due to its
flexibility of customization and it depends entirely on commercial customer‟s requirements.
Hence, generic offerings for commercial clients are as follows:

One Stop Service

Time Deposit Scheme

Monthly Savings Scheme
Deposit Insurance Scheme
Inward & Outward Remittances
Travelers Cheques
Import Finance
Export Finance
2.3 Corporate Social Responsibility
United Commercial Bank Ltd. has a long history of associating itself in different spectrum of
social responsibility and there are numerous glaring instances in which we can take pride.
Over the past 30 years, UCB has rendered extensive financial assistance for benevolent
purpose. As a responsible corporate body, we have adopted CSR practices in a formal,
structured manner in line with our organizational vision to help the disadvantaged population
of our country by taking socially responsible initiatives.

11
 12

The "social contract" between the corporation and the community is of critical importance for
United Commercial Bank. CSR is ingrained in our corporate culture and it is a part and parcel
of what we do. UCB has incorporated CSR activities into its core strategic business planning
and translated it into action across different areas and community of the country. The Bank
has organized its CSR activities around seven main areas:
*Education:
Expanding literacy and development of education is the fundamental urgency to go for a
prosperous Bangladesh. UCBL always consider education to be the strongest apparatus for
the sustainable development of our country. UCBL also believe that education is to be always
aligned with creative and resourceful activities like debates, art competitions, science fairs
etc.
*Health:
Health hazards are very common in a country like ours; sometimes in contagious, sometimes
in non-contagious and sometimes in epidemic form. We are in high need to develop more
hospitals and medical colleges where destitute will get easy access. Moreover, it’s also
important to patronize non – profit NGOs to work in this sector. Whatever the form is, UCB
is determined to help build up a healthy Bangladesh.
*Disaster Management:
Disaster Management has become one of the most discussed issues in today’s world.
Specially, for a county like Bangladesh it is even more important since our environment is so
prone to disasters. Our geographical location and other factors have made us a country prone
to natural calamity.

*Environment:
Global warming and environmental degradation is now a burning issue all across the world.
Though not responsible that much, yet Bangladesh is a major victim of this environmental
degradation. To fight against this menace, we have to look forward towards a green
atmosphere along with creating mass attention. UCB has always been a strong stakeholder to
participate in activities to protect our environment.

*Sports:
Bangladesh is a sports loving country. Over the last couple of decades our sports sector
specially cricket has improved a lot. UCB has always been a great patron of development of

12
 13

sports. For a past couple of years, UCB has been tremendously supporting the growth of
"Football" and "golf" sector.
Arts & Culture:
Arts & Culture is a strong medium to uphold the rich heritage and tradition of our country.
Regular cultural programs are a must to keep our tradition moving forward. Believing so,
UCB contributes in arts & culture throughout the year. We also support any kind of
endeavors to explore the country’s rich cultural heritage. Our initiatives are taken mostly
from grass-root level so that the talents and skills may come from rural and district level.
*Socio-economic Development:
The status of a country is determined by the strength of entire socio-economic structure of the
country. In that regard, UCB works on different arenas like community development, SME
entrepreneurship, textile sector, women empowerment, tourism etc to construct a happy and
prosperous Bangladesh. Though government is the paramount mechanism for the
development of country, yet sometimes non-government organizations are contributing in
their own limits for the socio-economic development. They are working in many diversified
areas like poverty alleviation, human rights, child rights, women empowerment etc.
2.3 Financial Highlights:
Results of
Operation
2018 2017 2016 2015 2014
(InMillions)
Net Profit after 2,526.58 2,433.91 2,628.63 3,977.34 3,668.73
Tax
Deposits 297,172.82 278,195.49 257,704.30 220,866.48 211,072.06
Loans and 294,671.94 261,002.88 223,697.18 197,413.64 174,146.10
Advances
Total Assets 401,076.14 363,314.80 329,720.78 293,847.23 266,100.74
Total 373,076.37 336,804.54 303,964.46 268,258.41 243,609.20
Liabilities
Market Price 17.60 23.60 21.30 21.30 29.30
Per Share
No. of Shares 1,054.13 1,054.13 1,054.13 1,003.93 836.61
Outstanding
(No. In
Million)
Earnings Per 2.40 2.31 2.49 3.96 4.39
Share (Basic)
Dividend 10.00 10.00 15.00 25.00 30.00
(Percent)
Cash Dividend - 10.00 15.00 20.00 10.00
(Percent)

13
 14

Market 18,552.71 24,877.49 22,452.99 21,383.79 24,512.72

capitalization
(BDT in
million)
Import 248,969.80 217,858.20 194,846.90 169,577.70 155,282.40
Export 232,314.41 199,188.00 170,541.50 148,229.30 130,447.20
Remittance 32,206.00 17,198.30 11,807.10 11,098.50 16,667.90
Current Assets 219,304.65 203,705.05 197,342.86 156,194.81 152,644.65
Current 191,106.98 175,486.35 169,472.24 137,106.88 135,156.26
Liabilities
Long term 181,969.40 161,318.19 134,492.22 131,151.53 108,452.94
Liabilities

CHAPTER 3: PERFORMANCE-RATIO ANALYSIS

Ratio Analysis: Ratio analysis is the comparison of line items in the financial statements
of a business. Ratio analysis is used to evaluate a number of issues with an entity, such as
its liquidity, efficiency of operations, and profitability.
Importance:
1. Interpretation of the financial statements and data is essential for all internal and
external stakeholders of the firm. With the help of ratio analysis, we interpret the
numbers from the balance sheet and income statements.
2. Profitability ratios help to determine how profitable a firm is. Return on Assets and
Return on Equity helps to understand the ability of the firm to generate earnings.
Return on assets is the total net income divided by total assets. It means how many
does a company earn a profit for every dollar of its assets. Return on equity is net
income by shareholders equity. This ratio basically tells us how well a company uses
its investors’ money. Ratios like the Gross profit and Net profit margin. Margins help
to analyze the firm’s ability to translate sales to profit.
3. Certain ratios help us to analyze the degree of efficiency of the firms. Ratios like
account receivables turnover, fixed asset turnover, and inventory turnover ratio. These
ratios can be compared with the other peers of the same industry and will help to
analyze which firms are better managed as compared to the others. It measures a
company’s capability to generate income by using the assets.

14
 15

4. Liquidity determines whether the company can pay its short-term obligations or not.
By short-term obligations, we mean the short-term debts which can be paid off within
12 months or within the operating cycle. For example, the salaries due, sundry
creditors, tax payable, outstanding expenses etc. Current ratio, quick ratio is used to
measure the liquidity of the firms

3.1 Ratio of Interest Income to Total Assets: Taking deposits and lending money is the
most basic function of a bank. Banks usually charge higher interest on the money it lends
than the interest it pays on deposits. The difference between interest earned and paid is
called a bank's net interest income. Banks have general assets and liabilities just like
individuals. There are asset accounts that make money for the bank. For example, cash,
government securities, and interest-earning loan accounts are all a part of a bank's assets.
This ratio refers to the interest earned on the total assets used for this purpose to
determine whether the rate is good, too high, or too low in order for the responsible
management to decide whether to continue leaving these assets as is or use them
differently.
Normally the higher this ratio the better indicating the bank is earning a high interest rate
or the proportion of interest earning assets (loans) to total assets is high or both of these
effects. Too high of interest income to total assets ratio would be attributed to the high
interest income (rate) derived from high risk loans (subject to default). Also, if the high
interest income is being generated by too high a proportion of assets in loans that could
stem from lack of liquidity. That is, the bank should have a reasonable amount of cash
and cash like securities (easily converted to cash such as Treasury bills) as part of their
total assets to meet withdrawal needs. If the interest income to total assets ratio is too low
that usually is from earning low interest income (rate) and/or too little lending.

3.2 Ratio of Securities to Total Assets: Securities are broadly categorized into: debt
securities (e.g., banknotes, bonds and debentures) equity securities (e.g., common stocks)
derivatives (e.g., forwards, futures, options, and swaps). Banks have general assets and
liabilities just like individuals. There are asset accounts that make money for the bank.
For example, cash, government securities, and interest-earning loan accounts are all a part
of a bank's assets.
This ratio can be found by dividing total securities of by total assets of a bank.

15
 16

3.3 Ratio of Earning Assets to Total Assets: Earning assets include stocks, bonds, income
from rental property, certificates of deposit (CDs) and other interest or dividend earning
accounts or instruments. Banks have general assets and liabilities just like individuals.
There are asset accounts that make money for the bank. For example, cash, government
securities, and interest-earning loan accounts are all a part of a bank's assets.
Banks use the Earning Assets to Total Assets Ratio method as a quick way to determine
the percentage of the balance sheet that is working to generate income. To calculate the
earning assets to total assets ratio, you need to use the following formula:
(Beginning Earning Assets for the Year + Ending Earning Assets for the Year) ÷ 2
---------------------------------------------------------------------------------------------------
(Beginning Total Assets for the Year + Ending Total Assets for the Year) ÷ 2

For companies that generate their income from loans and rentals, such as banks, a
high ratio indicates a very efficient use of assets. A low ratio may indicate a poor use
of assets and a need to either decrease their asset costs or improve volume.

3.4 Ratio of Current Deposits to Total Liabilities: Current Deposit refers to a deposit to a
bank account or financial institution without a specified maturity date. These types of
Current Deposit account generally only earn demand deposit interest. Liabilities are what
the bank owes to others. Specifically, the bank owes any deposits made in the bank to
those who have made them.
This ratio can be found by dividing total current deposits by total liabilities of a bank.
A higher ratio means that the bank has other liabilities rather than deposits. A lowest ratio
means that the bank has same amount of liabilities as current deposits.

3.5 Ratio of Bank Capital to Total Assets: Bank capital is the difference between a bank's
assets and its liabilities, and it represents the net worth of the bank or its equity value to
investors. Banks have general assets and liabilities just like individuals. There are asset
accounts that make money for the bank. For example, cash, government securities, and
interest-earning loan accounts are all a part of a bank's assets.

16
 17

This ratio is the percentage of a bank's capital to its risk-weighted assets. Weights are
defined by risk-sensitivity ratios whose calculation is dictated under the relevant Accord.
A bank with a high capital adequacy ratio is considered safe and likely to meet its
financial obligations. During the process of winding-up, funds belonging to depositors are
given a higher priority than the bank’s capital, so depositors can only lose their savings if
a bank registers a loss exceeding the amount of capital it possesses. Thus, the higher the
bank’s capital adequacy ratio, the higher the degree of protection of depositor's assets.

3.6 Per Employee Assets: This ratio can be found by Total Assets divided by Number of.
Employees.

3.7 Salaries & Allowances per Employee: This refers what amount of salaries is given to
the employee of a bank. If we average it then we will have our ratio.

3.8 Ratio of Loans & Advances to Total Assets: The loan-to-assets ratio is another
industry-specific metric that can help investors obtain a complete analysis of a bank's
operations. Banks that have a relatively higher loan-to-assets ratio derive more of their
income from loans and investments, while banks with lower levels of loans-to-assets
ratios derive a relatively larger portion of their total incomes from more-diversified,
noninterest-earning sources, such as asset management or trading. Banks with lower loan-
to-assets ratios may fare better when interest rates are low or credit is tight. They may
also fare better during economic downturns. Typically, the ideal loan-to-deposit ratio is
80% to 90%. A loan-to-deposit ratio of 100% means a bank loaned one dollar to
customers for every dollar received in deposits it received.

3.9 Ratio of Interest Expense to Total Assets: Interest expense is the amount which is given
to a depositor by bank for depositing his or her money in the bank for a period of time.
Banks have general assets and liabilities just like individuals. There are asset accounts
that make money for the bank. For example, cash, government securities, and interest-
earning loan accounts are all a part of a bank's assets.
It will be calculated by dividing interest expense of the bank by its total assets.
This ratio measures how successful an investment manager or company is at making
investment decisions or investing its resources. If this ratio is a negative figure, then it

17
 18

indicates that the firm or company has not been made effective investment decisions. In
other words, the company lost money on its investments and “earned” a negative margin.
A positive figure, on the other hand, means that the investment decisions were successful
and the fund manager or the company was profitable.

3.10 Ratio of Interest Expense to Interest Bearing Liabilities: Interest expense is the
amount which is given to a depositor by bank for depositing his or her money in the bank
for a period of time. Deposits and other borrowed funds at a bank on which interest has to
be paid.
Then we can have the answer to the ratio by interest expense divided by the interest-
bearing liabilities.
A higher ratio means that the bank’s interest rate higher than average banks. A lower ratio
is good for a bank.

3.11 Ratio of Non-Interest Expense to Total Assets: Non-interest expense means

expenses other than interest payments on deposits and bonds. These are generally
operational expenses and are essential to the day-to-day operation of a bank. Banks have
general assets and liabilities just like individuals. There are asset accounts that make
money for the bank. For example, cash, government securities, and interest-earning loan
accounts are all a part of a bank's assets.
It will be calculated by dividing non-interest expense of the bank by its total assets.
A higher ratio is not good for the bank, a lower ratio is good for the bank.

3.12 Ratio of Provision for Loan Loss to Total Assets: A loan loss provision is an
expense set aside as an allowance for uncollected loans and loan payments. Banks have
general assets and liabilities just like individuals. There are asset accounts that make
money for the bank. For example, cash, government securities, and interest-earning loan
accounts are all a part of a bank's assets.
It will be divided by the total assets of the bank.
A lower ratio means that the bank has to keep a less amount of provision for loan loss. So,
a lower ratio is good for the bank.

18
 19

3.13 Ratio of Loan Loss to Total Loans & Advances: Loan loss is the amount of money
which a bank can’t recover. Total loans & advances are the amount which a bank have
given to its customers.
We can find out this ratio by dividing total uncollected loan by total amount of loans and
advances.

3.14 Ratio of Non-Performing Loans & Advances to Total Loans & Advances: A
nonperforming loan (NPL) is a loan in which the borrower is default and hasn't made any
scheduled payments of principal or interest for some time. Total loans & advances are the
amount which a bank have given to its customers.
We can find out this ratio by dividing total non-performing loan by total amount of loans
and advances.
A higher ratio is very bad for the bank. It means that bank can not recover its loan amount
perfectly. A lower ratio is good for the bank.

*Dupont Analysis
The DuPont analysis (also known as the DuPont identity or DuPont model) is a framework
for analyzing fundamental performance popularized by the DuPont Corporation. DuPont
analysis is a useful technique used to decompose the different drivers of return on equity
(ROE). The decomposition of ROE allows investors to focus on the key metrics of financial
performance individually to identify strengths and weaknesses.
Three-step DuPont analysis decomposes ROE, where the formula is net income /
shareholders' equity, into three related components: the product of profit margin, asset
turnover and financial leverage, or three steps. The formulas for those three ratios are as
follows: net profit / net revenue, net revenue / total assets and total assets / shareholders'
equity, respectively. In applying basic algebra, net revenue in the numerator of profit margin
and the denominator of asset turnover cancel each other out. Similarly, total assets in the
formulas for asset turnover and financial leverage cancel each other out. After applying that
logic, all that remains is the numerator of profit margin, which is net income, and the
denominator of financial leverage, which is shareholders' equity, or more simply, ROE.

19
20

CHAPTER 4: ANALYSIS & FINDINGS

4.1 Ratio Analysis: Ratio analysis is the comparison of line items in the financial
statements of a business. Ratio analysis is used to evaluate a number of issues with an
entity, such as its liquidity, efficiency of operations, and profitability.
Particulars 2018 2017 2016 2015 2014
Interest Income to
Total Assets 0.0630 0.0579 0.0632 0.0763 0.0840
Securities to Total
Assets 0.0263 0.0290 0.0320 0.0342 0.0314
Earning Assets to
Total Assets 0.9600 0.9400 0.9800 0.9657 0.9911

Current Deposits
to Total Liabilities 0.7965 0.8260 0.8478 0.8233 0.8664

Bank Capital to
Total Assets 0.1060 0.1016 0.1017 0.1131 0.0965
Per Employee 80,5 81,4 79,4 76,5 72,3
Assets 05,046 78,986 12,519 82,546 29,638
Salaries & 1,3 1,2 1,1 1,0 9
Allowances Per 03,012 86,498 79,905 52,059 75,562
Employees

20
 21

Loans & Advances

to Total Assets 0.7347 0.7184 0.6784 0.6718 0.6544

Interest Expense to
Total Assets 0.0400 0.0333 0.0370 0.0501 0.0542

Interest Expense to
Interest Bearing 0.0469 0.0387 0.0430 0.0635 0.0665
Liabilities
Non-Interest
Expense to Total 0.0272 0.0260 0.0266 0.0243 0.0244
Assets
Provision for Loan
Loss to Total 0.0119 0.0132 0.0140 0.0160 0.0172
Assets
Loan Loss to Total
Loans & Advances 0.0162 0.0184 0.0207 0.0238 0.0262
Non-Performing
Loans & Advances 0.0679 0.0738 0.0801 0.0523 0.0462
to Total Loans &
Advances

4.2 Findings
I. The 1st ratio is interest income to total assets ratio. The standard for this ratio is
8%-10%. According to our result, we can see that, it was 8.40% in 2014 but it
decreased to 6.30% in 2018. So, their total interest income generated from
their total assets has decreased a lot & it is now in a decreased level than
standard ratio.
II. The 2nd ratio is securities to total assets ratio. The standard for this ratio is 5%.
According to our result, we can see that, it was around 2% to 3% from 2014 to
2018. It is now in a decreased level than standard ratio.
III. The 3rd ratio is earning assets to total assets ratio. The standard for this ratio is
80%. According to our result, we can see that, it was 99.11% in 2014 but it
decreased to 96.00% in 2018. Though their earning assets amount has
decreased in last 5 years but they are still in a good position according to our
standards for banks.
IV. The 4th ratio is current deposits to total liabilities ratio. The standard for this
ratio is 80%. According to our result, we can see that, it was 86.64% in 2014
but it decreased to 79.65% in 2018. Though their earning assets amount has

21
22

decreased in last 5 years but they are still in a good position according to our
standards for banks.
V. The 5th ratio is per employee assets ratio. It was around 8 crore takas in these
last 5 years.
VI. The 6th ratio is per employee salaries & allowances ratio. It has increased from
9 lakhs in 2014 to 13 lakhs in 2018.
VII. The 7th ratio is loans & advances to total assets ratio. The standard for this
ratio is 60%. According to our result, we can see that, it was 65.44% in 2014
but it decreased to 73.47% in 2018. So, according to this ratio, UCBL are in a
slightly good position.
VIII. The 8th ratio is interest expense to total assets ratio. The standard for this ratio
is 2%-5%. According to our result, we can see that, it was 5.42% in 2014 but it
decreased to 4% in 2018. So, according to this ratio, UCBL are in a good
position.
IX. The 9th ratio is interest expense to interest bearing liabilities ratio. The
standard for this ratio is 8%. According to our result, we can see that, it was
6.65% in 2014 but it decreased to 4.69% in 2018. So, according to this ratio,
UCBL are in a very good position.
X. The 10th ratio is interest expense to interest bearing liabilities ratio. The
standard for this ratio is 8%. According to our result, we can see that, it was
6.65% in 2014 but it decreased to 4.69% in 2018. So, according to this ratio,
UCBL are in a very good position.
XI. The 11th ratio is non-interest expense to total assets ratio. The standard for this
ratio is 2%-3%. According to our result, we can see that, it was 2.44% in 2014
but it increased to 2.72% in 2018. So, according to this ratio, UCBL are in a
good position.
XII. The 12th ratio is provision for loan loss to total assets ratio. The standard for
this ratio is 2%. According to our result, we can see that, it was 1.72% in 2014
and it decreased to 1.19% in 2018. So, according to this ratio, UCBL are in a
good position.
XIII. The 13th ratio is loan loss to total loans & advances ratio. The standard for this
ratio is 2%. According to our result, we can see that, it was 2.62% in 2014 but

22
23

it decreased to 1.62% in 2018. So, according to this ratio, UCBL are in a good
position.
XIV. The 14th ratio is non-performing loans to total loans & advances ratio. The
standard for this ratio is 2%-3%. According to our result, we can see that, it
was 4.62% in 2014 and it increased to 6.79% in 2018. So, according to this
ratio, UCBL are not in a very good position.

4.3 Dupont Analysis (Three Factor):

Particulars 2018 2017 2016 2015 2014
Net Profit Margin 0.10 0.12 0.13 0.18 0.16
Total Asset Turnover 0.06 0.06 0.06 0.08 0.08
Equity Multiplier 14.32 13.70 12.80 11.48 11.83
Dupont ROE 9.02% 9.18% 10.21% 15.54% 16.31%

4.4 Findings - Dupont Analysis (Three Factor):

According to three factor DuPont analysis which includes Net Profit Margin, Total
Asset Turnover & Equity Multiplier, we can see that ROE was 16.31% in 2014
which is a very good return from total equity of banks. But it has decreased year by
year to 9.02% in 2018. And it is not good. It means that bank is generating profit
from using its total equities just only 9 takas if total equities are 100 takas, which is a
very decreased amount than past years.

23
 24

CHAPTER 5: CONCLUSION
5.1 Recommendation
United Commercial Bank Ltd. is an established privatized bank in our country. This bank
is doing well over years. Based on my three months of internship program,
my recommendations towards the UCBL’s operations are
a. The bank needs to use its assets efficiently.
b. The bank’s earning assets has decreased in last 5 years. Though it is in a good
position but they have to use their earning assets efficiently for generating more
income for the bank.
c. The bank needs more customer. Because its current deposits are decreasing year by
year which is bad for the bank.
d. The space of branch is too short to do its activities properly. So I think it should
enlarge the branch space to accomplish its work effectively.

24
 25

e. UCBL’s most of the works are done with papers where many bank uses computerized
systems. UCBL should use more computerized system to increase the
efficiency in work.
f. From my three months of internship program I came to know that card
division department is not good enough to satisfy the clients properly. It
should give more emphasize on this card division department.
g. This Branch should be more innovative and diversified in its service.
h. UCBL’s information system should be developed to deal with its local
and international clients properly.
i. UCBL should introduce new short term DPS like other banks to increase its deposits.
j. UCBL had less supplementary assets in comparison to the Bangladesh Bank’s
standard. To secure the depositors UCBL should give concern to raise
its supplementary assets.
k. From year 2014 to 2018 there was a lower growth in 2016 compare to 2014 and 2015.
It indicates that UCBL has no consistency in growth over years. UCBL should ensure
a better growth over year to reach a strong position.

5.2 Conclusion
Private commercial banks are playing a vital role in the development of our
economy. Government and Bangladesh Bank also play a crucial role in banking sector by
regulating the overall banking systems and setting rules and regulation in the
activities of commercial banks. In recent years of banking sector, UCBL has
shown better performance comparing with other first generation banking. It was great
pleaser for me to do my internship program in reputed organization like UCBL. The
three months of practical orientation helps me to provide a wide range of scope
to observe the operations of bank. Overall the bank must make appositive attempt
to be more outward looking in their goals and aware of what is happening. I
hope, in spite of all my limitation the experience of sharing works in such
environment will help me a lot in my future professional life. I wish continuous
success and healthy business portfolio of UCBL Dhanmondi Branch, Dhaka.

25
26

26