An assignment On City Bank Limited
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Course Title: Money & Bank Course code: FIN 318 Batch: 38
Prepared for:
Mehjabeen Ferdous Lecturer (Finance), Dept. of Business Administration
Prepare by: Name S.M. Monjurul Islam Ovee Habibur Rahman Tuhin Md. Iftekhar Hossain Jahidul Haque Rumel Hossain Jakir
ID No. BBA 038 12483 BBA 038 12499 BBA 038 12506 BBA 038 12488 BBA 038 12508
STAMFORD UNIVERSITY BANGLADESH
Submission Date: November 17, 2011
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Executive Executiv e Summary Summ ary This report based on foreign exchange & foreign trade, a case study on City Bank Limited. This bank is one of the leading private commercial Bank in Bangladesh. Bank is the licensed intermediary in financial system. Banks collect money from surplus unit and lend it to deficit unit and the interest rates calculated as the profit of the bank. The bank has some major responsibilities to maintain the country's economy. That's why Bank can play a vital role in economic development of the country, As we know the current situation of the economy of Bangladesh) It's really in a gray zone no development will be proposed in this situation The government trying hard by corresponds with Government and non-government commercial Bank Authority to cope up with this situation. The banks pay some incentives for its customers. As a prospect Bank proving loan with low rate of return, credit to small business and collecting debt with social motives. In this circumstance a dust brick can damage the whole wall and it may be crash on day. But if there was a use of quality brick to build the wall then it must be longer year after year. If the whole economy considered as a wall and the Banks are the bricks then Banks must provide a quality service to its customers and develop the economy of the country as well. Here in report an example of the city Bank's performance or contribution in the foreign exchange. The report formatted with limited collected information. At Last I want to be grateful to all the institutes and sources those helped me to identify the problems of the report and thank them all
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EXECUTIVE SUMMARY ..................................................................................................................................... 3 CHAPTER 1 INTRODUCTION ............................................................................................................................. 6
METHODOLOGY OF THE STUDY: ................................................................................................................................. 7 BANK .................................................................................................................................................................... 8 Central bank ........................................................... ................................................................. ....................... 8 Commercial bank ........................................................................................................................................... 8
BANGLADESH BANK ................................................................................................................................................. 9 CHAPTER 2 ..................................................................................................................................................... 10 ABOUT CITY BANK ......................................................................................................................................... 10
PROFILE OF CITY BANK LIMITED ............................................................................................................................... 11 Vision............................................................................................................................................................ 12 Mission ........................................................ ................................................................. ................................ 12 Values.......................................................... ................................................................. ................................ 12
CHAPTER 3 FOREIGN EXC HANGE .................................................................................................................... 14
BANGLADESH FINANCIAL REGULATIONS OF FOREIGN TRADE OPERATIONS .............................................................. .......... 15 15 FOREIGN EXCHANGE FUNCTIONS .............................................................................................................................. 16 FOREIGN TRADE AND FOREIGN EXCHANGE ................................................................................................................. 18 INTERNATIONAL FOREIGN TRADING ........................................................................................................... 18
FOREIGN REMITTANCE ........................................................................................................................................... 21 Private FC Account ....................................................................................................................................... 21 RFCD ............................................................ ................................................................. ................................ 23 NFCD ............................................................................................................................................................ 23 Wage Earners Bond ..................................................................................................................................... 24 NITA ............................................................................................................................................................. 24
INTERNATIONAL TRADE FINANCE ............................................................................................................................. 25 CHAPTER 4 RATIO ANALYSIS .......................................................................................................................... 27 FINANCIAL HIGHLIGHTS OF LOANS AND ADVANCES ..................................................................................................... 28
OVERALL FINANCIAL HIGHLIGHTS ............................................................................................................................. 28 PRODUCTIVITY ANALYSIS ........................................................................................................................................ 30 PROFITABILITY ANALYSIS ......................................................................................................................................... 34 CHAPTER 5 SWOT ANALYSIS OF CITY BANK .................................................................................................... 38
SWOT ANALYSIS .................................................................................................................................................. 39 Strength ....................................................................................................................................................... 39 Weakness ..................................................................................................................................................... 40 Opportunity ............................................................ ................................................................. ..................... 40 Threat .......................................................... ................................................................. ................................ 41
POLICY IMPLEMENTATION & CONCLUSION ................................................................................................... 42
POLICY IMPLEMENTATION ....................................................................................................................................... 43 CONCLUSION ........................................................................................................................................................ 44
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BIBLIOGRAPHY ............................................................................................................................................... 45
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Chapter 1 Introduction
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Mainly I have collected data from two sources. These two sources are as following: 1. Primary sources & 2. Secondary sources
The Primary sources of my information are as below: Direct observation Expert opinion & Questioning the concerned persons
The secondary sources of my information are as below: Annual report of City Bank Limited Desk report of the related department. Other manual information Different reference books of the library
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A bank is a financial institution that serves as a financial intermediary. In the other hand way we can say, An organization, usually a corporation, chartered by a state or federal government, which does most or all of the following: receives demand deposits and time deposits, honors instruments drawn on them, and pays interest on them; discounts notes, makes loans, and invests in securities; collects checks, drafts, and notes; certifies depositor's checks; and issues drafts and cashier's checks. The Jews in Jerusalem introduced a kind of banking in the form of money lending before the birth of Christ. The word “Bank’ was probably derived from the word ‘Bench’ a like the
ancient time Jews used to do money-lending money -lending business on long benched. First modern banking was introduced in 1668 in Stockholm as “Savings Pis Bank”, which
opened up a new era e ra of banking activities throughout the European Mainland. In the north Asian region, the Afghan traders popularly known as Kabuliwallas introduced early banking system. Muslim businessman from Kabul, Afghanistan came to India and started money lending business in exchange of interest sometime in 1312 A.D. they were known as “Kabuliwallas”.
A bank that is constituted by a government or international organization to issue and regulate currency, regulate banks under its jurisdiction, act as a lender of last resort, and generally ensure a sustainable monetary policy. Oftentimes, central banks are charged with one or more specific duties such as attempting full employment or a certain exchange rate for the currency. Most commonly, however, central banks are charged with finding the balance between maintaining low inflation and high economic growth. They do this primarily by setting interest rates at which they lend to banks under its jurisdiction which, in turn, highly influences interest rates throughout the country or region.
A commercial bank accepts deposits and pools those funds to provide credit, either directly by lending, or indirectly by investing through the capital markets. Within the global financial markets, these institutions connect market participants with capital deficits (borrowers) to market participants with capital surpluses (investors and lenders) by transferring funds from those parties who have surplus funds to invest (financial assets) to those parties who borrow funds to invest in real assets.
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Bangladesh Bank (BB) has been working as the central bank since the country's independence. Its prime jobs include issuing of currency, maintaining foreign exchange reserve and providing transaction facilities of all public monetary matters. BB is also responsible for planning the government's monetary policy and implementing it thereby. Bangladesh Bank has been entrusted with all the traditional central banking functions including the sole responsibilities of issuing currency, keeping the reserves, formulating and managing the monetary policy and regulating the credit system of Bangladesh with a view to stabilizing domestic and external monetary value and promoting and maintaining a high level of production, employment and real income in the country. The bank acts as the lender of last resort for the government as well as for the country's scheduled banks. All scheduled banks are required to maintain a minimum reserve with the Bangladesh Bank. The present statutory liquidity reserve (SLR) requirement is 20% of total demand and time liabilities, 4% of which is to be maintained as cash reserve ratio (CRR), and the rest 16% as approved securities. The SLR requirement for Islamic banks is 10% and they are to keep 4% of this reserve as CRR and the rest 6% in approved securities. Bangladesh Bank is empowered to act as the watchdog of the country's banking system, and all scheduled banks are accountable to Bangladesh Bank, which has extensive powers to ensure soundness of the banking system. No bank can commence banking business in Bangladesh and no existing bank can open a new branch in or outside the country or shift any branch from one place to another without obtaining a license/permission from the Bangladesh Bank. The paid up capital of Bangladesh Bank is BDT 30 million divided into 300,000 shares of BDT 100 each that are fully paid up by the government. A nine-member board of directors comprising the governor as chairman, one deputy governor and seven members oversees the affairs of the bank. Bangladesh Bank has 9 branch offices, two in Dhaka city (Sadarghat and Motijheel), and one each in Chittagong, Khulna, Rajshahi, Sylhet, Bogra, Rangpur And Barisal. The head office discharges its duties with 28 departments.
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Chapter 2 About City Bank
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City Bank Ltd. bears a unique history of its own. It is a top bank among the oldest five Commercial Banks in the country which started their operations in 1983. The aim of the company was to mobilize resources from within and invest them in such way so as to develop country's Industrial and Trade Sector and playing a catalyst role in the formation of capital market as well. The Bank started its journey on 27th March 1983 through opening its first branch at B. B. Avenue Branch in the capital, Dhaka city. It was the visionary entrepreneurship of around 13 local businessmen who braved the immense uncertainties and risks with courage and zeal that made the establishment & forward march of the bank possible. Those T hose sponsor directors commenced the journey with only BDT 3.4 crore worth of Capital, which now is a respectable BDT 330.77 crore as capital & reserve. City Bank is among the very few local banks which do not follow the traditional, decentralized, geographically managed, branch based business or profit model. Instead the bank manages its business and operation vertically from the head office through 4 distinct business divisions namely Corporate & Investment Banking; Retail Banking (including Cards); SME Banking; & Treasury & Market Risks. Since its inception City Bank Ltd. has acquired commendable reputation by providing sincere personalized service to its customers in a technology based environment. The Bank has set up a new standard in financing in the Industrial, Trade and Foreign exchange business. Its various deposit & credit products have also attracted the clients-both corporate and individuals who feel comfort in doing business with the Bank. The bank currently has 89 online branches and 10 SME service centers and 1 SME Agro center spread across the length & breadth of the country that include a full-fledged Islami Banking branch. Besides these traditional delivery points, the bank is also very active in the alternative delivery area. It currently has 99 ATMs AT Ms of its own; and ATM sharing arrangement with a partner bank that has more than 550 ATMs in place; SMS Banking; Interest Banking and so on. It already started its Customer Call Center operation. The bank has a plan to end the current year with 100 own ATMs.
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The Financial Supermarket with a Winning Culture Offering Enjoyable Experiences.
Offer wide array of products and services that differentiate and excite all customer segments. Be the “Employer of choice” by offering an environment where people excel and
leaders are created. Continuously challenge processes and platforms to enhance effectiveness and efficiency. Promote innovation and automation with a view to guaranteeing and enhancing excellence in service. Ensure respect for community, good governance and compliance in everything they do.
Result Driven, Accountable & Transparent, Courageous & Respectful, Engaged & Inspired, Focused on Customer Delight,
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Due to the predecessor Company’s involvement investment financing sector of the country
the bank inherited its top corporate customers. Moreover the bank is involved in import trade financing. Bulk importers of consumer durable, food gains industrial raw materials are its customers. The bank has financed in textile and apparels sectors. The bank has a tread of choosing customer from diversified groups. The bank has first class customers in the construction sectors involved in high-rise building, heavy construction and roads and high way construction.
Make sound investments. Meet capital adequacy requirement at all the time. Ensure 95% recovery of all advances. Ensure a satisfied work force. Focus on fee-based income. Adopt an appropriate management technology. Install a scientific MIS to monitor Bank’s activities.
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Chapter 3 Foreign Exchange
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1. Banking system: The banking system in Bangladesh may be divided into the following fo llowing categories: The Central Bank (Bangladesh Bank); Nationalized Commercial Banks (NCB); Private Commercial Banks and Foreign Banks; Development Finance Institutions (DFI) and Specialized Banks; Non-banking Financial Institutions; and Insurance. * Nationalized Commercial Banks is composed of four banks like Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank. * Private and Foreign Banks are six: American Express Bank LTD, Bank indo-Suez, ANZ Grindlays Bank PLC, The Standard Chartered Bank, Habib Bank LTD and State Bank of India. * DFI and Specialized Banks: They are five: Bangladesh Shilpa Bank (BSB), Bangladesh Shilpa Rin Sangstha (BSRS) and Bank of Small Industries and Commerce Bangladesh LTD (BASIC) were set up to provide industrial credit. Bangladesh Krishi Bank and Rajshahi Krishi Unnayan (RAKUB) promote agriculture and rural sector. * Non-Banking Financial Institutions are generally promoting investment companies like house building finance corporation and leasing.
2. Exchange system: Exchange control is administered by the Bangladesh Bank in accordance with the general policy formulated in consultation with the Ministry of Finance. Bangladesh maintains a rather liberal foreign exchange system. There are two exchange rates: the official rate and the secondary exchange market rate. The difference between these rates is generally ten per cent. The official rate includes imports of foods grains, fertilizers and crude petroleum and petroleum products but the second rate includes others import products. Foreign exchange for authorized imports is provided automatically by authorized dealers when payments are due. Advance payments for imports require approval by the Bangladesh
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Bank, and this approval normally is given only for specialized or capital goods.
3. Methods and means for international settlement: Bangladesh is a member of Asian Clearing Union. The central banks members do these payments for current international transactions on a multilateral basis. b asis. Imports are financed either from Bangladesh own resources or with foreign aid, loans, and barter arrangements. Letter of credit authorization forms are required from all registered importers, including most government departments but excluding the Ministry of Defense, for all imports. Registered commercial importers are allowed to import against letter of credit authorization forms issued by authorized dealer banks. A separate import license is not required. Payment against imports is generally permissible only under cover of irrevocable letters of credit. The following payments exist in Bangladesh: Payments for current international transactions as defined by the Articles of Agreement of the International Monetary Fund; Payments permitted by the country in which the payer resides. Commercial banks of customer countries must maintain accounts with their correspondents in the other member countries for the purpose of setting the transactions. Payment for goods exported from Bangladesh should be received through an authorized dealer (bank) in freely convertible foreign currency or in Bangladesh taka from a nonresident bank account. The period within which exporters must receive full foreign exchange proceeds of exports is within four months from the date of shipment. Exporters may, as against the confirmed irrevocable Export L/C, open back-to-back L/C for import on usance basis covering up to 75 percent the value of Export L/C for the purpose of raw materials and accessories import required for the manufacture of the goods intended for exports.
The FEPD is responsible for formulating and implementing policies related to foreign exchange and makes institutional arrangements for receipts and payments and settlements
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with the external world in terms of the authority vested in Bangladesh Bank by the Foreign Exchange Regulation (FER) Act. 1947 as adapted in Bangladesh specifically, 1. It sets the criteria and conditions for holding and dealing in foreign exchange by resident entities and issues licenses to Authorized Dealers and Money Changers. 2. It sets supervisory and monitoring guidelines for offsite and onsite supervision of foreign exchange transactions and formulates & implements instructions regulating inflows and outflows on external settlements in both the current and capital accounts, including external borrowings and amortization payments. 3. It formulates policies and makes institutional arrangements in regards to exchange rates. 4. It
maintains
liaison
between
the
Bangladesh
Government
and
foreign
bilateral/multilateral agencies on the issues of i. External trade ii.
Receipt and utilization of official grants/Loans
iii. Private inflows of remittances, etc. 5. It initiates legal proceedings to address violations of Foreign Exchange Regulation Act-1947 as adapted in Bangladesh. 6. It monitors reporting of foreign exchange receipts against exported goods and receipt of goods against payment from Bangladesh. 7. It supervises and monitors Authorized Dealers (AD) and ensures compliance of ADs with the prudential supervisory limits on their open exchange positions.
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Foreign trade refers to trade between the residents of two different countries. Each country functions as a sovereign state with its set of regulations and currency. Foreign Exchange means the currency of other county. Firms and organization requires foreign exchange to purchase goods and services from abroad or for purposes of investment or speculation. Bank is the only concern which has the legal right to handle foreign trade and foreign exchange. Foreign Exchange is a process, which is converted one national currency into another and transferred from one country to the other countries. Foreign Exchange is the rate of exchange in both countries currency. Foreign Exchange is that section of economic science, which deals with the means and method by which right to wealth in one countries currency are converted into rights to wealth in terms of another country's currency. It involved the investigation of the method, which exchanges the currency of one country for that of another, the causes which rented such exchange necessary the forms which exchange may take and the ratio or equivalent values at which such exchanges are effected. The difference in the national of the exporter and importer presents certain peculiar problems in the conduct of International trade and settlement of the transaction arising here form, such important problems are: Different countries have different monetary units. Restrictions imposed by countries on import and export of goods. Restrictions imposed by nations on payment from and into their countries Difference in legal practice in different countries Foreign Exchange means foreign currency
For opening a LC for import the following documents are needed by National Credit and Commerce Bank
1) LC application form 2) Credit Risk Grading (C.R.G): For these 3 years balance sheet has to be submitted by the importer. In case of new set up company projected balance sheet of 1 year has to be submitted. 3) Letter of Credit authorization form (2 copies) 4) Net worth certificate/paper: It can be two types
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5) Individual net worth (for proprietorship and partnership business) 6) Business net worth 7) Insurance Cover Note (2 copies) 8) Testimonial of insurance company 9) Performa invoice (2 copies) 10) Import registration certificate 11) IMP (4 copies) For opening a LC for export the following documents are needed by National Credit and Commerce Bank
1) Bill of exchange (2 copies) 2) Bill of lading (2 copies) 3) Certificate of origin (2 copies) 4) Pre-shipment inspection certificate (PSI)/ CRF certificate 5) Shipment advice (3 copies) 6) Packing list (7 copies) 7) Fright charge certificate given by the advising bank
For realizing goods following documents d ocuments are necessary a. Bill of entry (3 copies) b. CRF certificate The following things needs to be noted for import i mport or export
1) Goods will not transmit through Israel. 2) At least 2% packing, TIN and date are needed 3) For importing machinery Import registration certificate is not required. 4) For importing food items 2 additional certificates have to be submitted by the exporter a) Phytosanitary Certificate: This certificate contains about the th e contents and acceptable range of good/foods. b) Fumigation Certificate: Fumigation certificate is required as proof that the packing materials e.g. wooden crates, wood, wool etc.), have been fumigated or sterilized.
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Certificates contain details such as purpose of treatment, articles concerned, temperature range used, chemicals and concentration used etc. 5) If the advising bank and the negotiation bank are same then bill of exchange is not required. There are 3 types of LC offered by City Bank
1) Sight/cash LC: Payment must be made within 5 working days. 2) Differed LC: Payment will be done at negotiable future date. 3) Stand by LC Procedures of Opening Back to Back LC
Submission of LC original copy and local seller Pro-forma invoice Formal application from the exporting company Advising bank need to send proposal to head office along with export company liability position report. Approval certificate from head office. Application of LC along with PI(Pro-forma invoice) Opening of LC Give a testimonial of opening BTB LC to the exporting company.
Require documents for Opening Back to Back LC
List Pro-forma Invoice Bill of Exchange (2 Copies) Commercial Invoice (6 Copies) Packing List (5 Copies) Certificate of Origin (3 Copies) Delivery Chain/ Track List Beneficiary Certificate. (3 Copies)
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National Credit and Commerce Bank Limited is a member of MoneyGram and SWIFT networks. Using the services of these global network, nonresident Bangladesh nationals can send money from abroad to their home country within a few minutes without any risk, Besides Money Gram, City Bank has also arrangement with foreign money exchange companies like U.S.E. Exchange Co. Redha-al-Ansari Co. etc. through which Bangladeshi expatriates can remit these money to their relatives in home country very easily and safely using SWIFT network. MoneyGram and SWIFT mechanism ensure 100% secured and quickest possible mode of money transfers from abroad tour country and Bangladeshi money receivers are enjoying these facilities through City Bank. City Bank Ltd. is rendering exceptional services to its clients by arranging such private remittance of money from foreign countries to Bangladesh. It is mentionable that City Bank Ltd. is the only Bangladeshi Bank, which has a membership of MoneyGram network. Correspondence arrangement with more than 330 Financial Institutions all over the World For Wage Earners Remittance we have Agency arrangement with 12 reputed Exchange Houses covering major Locations of our Expatriates.
1) Without prior approved of the Bangladesh Bank foreign currency accounts may be opened with City Bank in the names of: Bangladesh Nationals residing abroad Foreign nationals residing abroad or in Bangladesh or in Bangladesh and also foreign firms registered abroad and operating in Bangladesh or aboard Foreign missions and their expatriate employees Foreign exchange earned through business done or services rendered in Bangladesh cannot be put into these accounts. On the above foreign currency accounts maintained with us under this authority we can pay interest or such accounts provided the accounts are maintained in the form of term deposits
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for a minimum period of 90 days. Rates of interest payable on such accounts should normally be comparable with the rates available on similar accounts maintained abroad. 2) Bangladesh nationals working and earning abroad intending self-employed Bangladeshi migrants proceeding abroad on employment may open foreign currency accounts even without initial deposits. They may open foreign currency accounts with us even without initial deposits. They may operate the accounts themselves or nominate other persons in Bangladesh for this purpose. The account can be opened either in Pound Starling US Dollar, Deutsche Mark or Japanese Yen or the option of the prospective account holder and maintained as long as the account holder desires. Funds lying to the credit of FC accounts of Bangladesh nationals can be utilized for import of goods and commodities as per instructions issued by the CCI & E and Bangladesh Bank 3) Foreign currency accounts in the names of the Diplomatic Bonded Warehouse (duty free shops) licensed by the Custom Authorities may be opened by us without prior approval of the Bangladesh Bank or following conditions: a) Convertible foreign currency (traveler’s Cheques, Drafts, Cheques or credit card settlements) received only on account of sale of merchandise may be credited to these accounts. b) Foreign exchange may be remitted abroad only for the purpose of import of merchandise by bonded warehouses c)
Monthly statement of purchase, sale and foreign exchange transaction related thereto along with Bank certificate concerning encashment in Taka shall be submitted to the Bangladesh Bank in prescribed form
4) Foreign currency accounts in the name of local and joint venture contracting firms employed to execute projects by foreign donor/international donor agencies may also be opened by us as per terms of the approved contract without prior permission of the Bangladesh Bank. Only foreign exchange received from the donors/donor agencies to meet expenses in foreign of the project can be credited to these accounts. All expenses in foreign exchange as per relevant contract may be met from these accounts. These accounts should be closed as soon as the transactions relating to the project are concluded. 5) Foreign currency accounts may be opened in the names of resident Bangladesh nationals working with the foreign/international organizations operating in Bangladesh provided salary is paid in foreign currency.
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1) Persons ordinarily resident in Bangladesh may open and maintain with us Resident Forcing Currency Deposit (RFCD) accounts with forcing exchange brought in at the time of their return from travel abroad. Any amount brought in with declaration to Custom authorities in form FMJ and up to us $ 5000 brought in without any declaration, can be credited to such accounts. However, proceeds of export of goods or services in Bangladesh or commission arising from business deals in Bangladesh shall not be credited to such accounts. 2) NFCD account can be operated or renewal basis up to an unlimited period. The account holder can operate such account as long as he /she desires after the final return from abroad. A non-resident Bangladesh national can also open an NFCD account by deposit of foreign currency earned in foreign country within 6 months from the date of his/her final return from abroad. 3) NFCD account can be operated or renewal basis up to an unlimited period. The account holder can operate such account as long as he /she desires after the final return from abroad. A non-resident Bangladesh national can also open an NFCD account by deposit of foreign currency earned in foreign country within 6 months from the date of his/her final return from abroad. 4) NFCD account can be operated or renewal basis up to an unlimited period. The account holder can operate such account as long as he /she desires after the final return from abroad. A non-resident Bangladesh national can also open an NFCD account by deposit of foreign currency earned in foreign country within 6 months from the date of his/her final return from abroad.
1) NFCD account can be opened for a term of 1 month, 3 months, 6 months and 12 months in USD, GBP, German Mark, Japanese Yen or EURO Currency with any of our AD branches. The minimum amount of deposit should be USD 1000.00 or GBP 500.00 or equivalent amount in other currency. 2) NFCD account can be operated or renewal basis up to an unlimited period. The account holder can operate such account as long as he /she desires after the final return from abroad. A non-resident Bangladesh national can also open an NFCD account by deposit of foreign currency earned in foreign country within 6 months from the date of his/her final return from abroad.
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3) NFCD account can be operated or renewal basis up to an unlimited period. The account holder can operate such account as long as he /she desires after the final return from abroad. A non-resident Bangladesh national can also open an NFCD account by deposit of foreign currency earned in foreign country within 6 months from the date of his/her final return from abroad. 4) NFCD account can be operated or renewal basis up to an unlimited period. The account
holder can operate such account as long as he /she desires after the final return from abroad. A non-resident Bangladesh national can also open an NFCD account by deposit of foreign currency earned in foreign country within 6 months from the date of his/her final return from abroad.
Non-resident Bangladesh nationals can remit their surplus earnings in foreign currency to their home country for investment in the 5 years term Wage Earners Development Bond in BD Taka. Such Bonds can be purchased in denomination of Tk.1, 000/=, Tk. 5,000/=, Tk10, 000/=, Tk.25, 000/=, Tk.50, 000/=, and Tk.1, 00,000/=. These Bonds are renewable and attractive rate of interest is allowed on this investment in BD Taka, present rate of interest is 12% p.a. (w.e.f. 28-11-2000) and rate of interest to be utilized in Bangladesh. For premature encashment of the Bonds reduced rate of interest is applied. Death risk insurance benefit is allowed on the Bonds of value Tk.25.000/= and above. Principal amount of the investment under this scheme can be frilly repatriated in FC in foreign country. Interest earned on the Wage Earners Development Bond is Tax Free in Bangladesh.
Non-resident Bangladesh Nationals can open NITA account with any of our AD branches for investment of their surplus earnings in foreign currency in the capital market of Bangladesh by purchasing shares and securities. Shares and securities form Bangladesh market can be purchase through stock Exchange by using the balances of NITA accounts. Dividend earner on the shares & securities and its sale proceeds can be deposited to NITA account. Entire balance of the NITA account can be freely repatriated at any time in FC to foreign countries at the existing exchange rates.
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International Trade forms the major business activity undertaken by City Bank Ltd. The Bank with its worldwide correspondent network and close relationships with key financial institutions provides an extensive trade services network to handle your transactions efficiently. Personnel experienced in International Trade Finance staff our key branches in Dhaka, Chittagong, Sylhet and Naogaon. These offices are the focal Point for processing import and Export transactions for both small and large corporate customers. We offer a complete range of Trade Finance services. Our professionals will work with you to develop solutions tailored to meet your requirements, through mobilizing our full range of trade services locally, and drawing on our global resources.
We can offer you professional advice on all aspects of International Trade requirements, namely: Issuing, advising and confirming of Documentary Credits. Pre-shipment and post-shipment finance. Negotiation and purchase of Export Bills. Discounting of Bills of Exchange. Collection of Bills. Assist customers to insure all risks. Foreign Currency Dealing etc.
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Problems Regarding Foreign Trade Following various problems is including in the City. Political disturbances: it is not favorable for Bank Business in Bangladesh. It is the main problem of City. It is also a problem of all Banking system in Bangladesh. Decrease the import Business: It is directly related in the Banking system. Due to heavy production of rice in 1999. Therefore, it is a critical problem of City, which was vital income source of City. Competitive Banking Market: Different kinds of commercial Bank are serving in our commercial Banking Market. Therefore, no single Bank is allowed or capable to establish personal interest especially due to heavy competitive market. Company representative effect: There are so many representatives working in the market to collect the sales price directly from the customer of each product daily. So merchant group, Businessman, Traders, Agency, Wholesalers and high Depositor are not capable to Deposit the money in the Bank. Due to this Deposit system, they hamper it. High rate of Government security: Practically, the Government security likes Bond, Security, Debenture; Savings certificate etc. gives high rate of interest than commercial Bank. So all the investors are invested to utilize their idle fund to purchase the Government security due to higher rate of interest. Credit Sales: Now a day, Businessperson is bound for credit sales to increase their sales in the competitive market. For this reason Business organization need less working capital and Banking companies are losing their opportunities to invest in Business organization. Lack of modern tools and techniques: City performing activities by using backdated tools and techniques. It is fully far from information technology. Though City has enough strength to play proactive role in every aspect, it play reactive role. Lack of proper training: City should be arranging adequate training. Though City has its own training center, it is not adequate for its employees. Because, it is not well furnished to with this modern world. Lack of Marketing Activities: City does not promote itself for catering its services to the public or the Business organization
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Chapter 4 Ratio Analysis
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60000 50000
46333
40000 30000
50388
32688
2007
24678
2008 2009
20000
2010 10000 0
Loans and Advances
Particulars
2007
2008
2009
2010
Authorized Capital
2,500.00
2,500.00
2,500.00
5,000.00
Paid up Capital
1,201.79
1,352.01
1,757.62
2,284.90
Reserve fund and other Reserve
1,215.58
1,995.36
2,863.63
4,371.62
Equity fund
2,417.37
3,326.52
4,621.25
6,656.52
Deposits
28,147.34 34,901.77 46,904.66 53,900.15
Loans and Advances
24,678.36 32,687.75 46,332.69 50,387.68
Investment
3,552.08
Import Business
17,646.80 28,779.21 38,796.88 33,078.44
Export Business
8,557.00
9,577.92
12,522.04 11,903.72
Operating Income
3,913.19
5,269.03
7,417.64
6,266.62
6,526.82
9,671.53
9,333.03
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Operating Expenses
2,645.62
3,488.78
5,054.15
6,195.33
Operating Profit
1,267.57
1,780.25
2,363.49
3,137.70
Profit before Tax
1,056.51
1,356.32
1,788.96
2,686.49
Profit after Tax
479.22
677.18
882.28
1,719.50
Retained Profit
7.83
8.13
5.34
46.47
Total Assets (excluding contra)
32,615.01 42,522.85 57,365.52 65,937.49
Fixed Assets
353.71
522
775.31
849.1
Number of Branches
48
53
57
65
Number of Employees
1,118
1,230
1,400
1,496
Earnings per Share
39.88
50.09
50.2
75.26
Dividend: Cash (%)
10
-
-
-
Bonus (%)
12.5
30
30
47
Return on Equity (ROE) (%)
19.82
20.23
21.76
28.49
Return on Investment (ROI) (%)
13.49
10.81
13.52
17.28
Return on Assets (ROA) (%)
1.47
1.59
1.54
2.61
Capital Adequacy Ratio
9.78
10.61
10.61
13.55
Non-performing Loans as % of Total Advances
4.95
4.17
4.14
2.84
Volume of Non-performing Loans
1,212.26
1,353.31
1,902.58
1,420.57
523.58
644.11
912.9
720.22
282.09
388.78
456.07
509.67
-
51.69
109.41
111.93
87.68%
93.66%
98.78%
93.48%
Amount of provision against Classified Loans Amount of provision against Unclassified Loans Amount of provision against Off-balance sheet exposures Advance/Deposit Ratio (%)
29
Productivity is the name of efficiency. It is an independent variable. It has impact on profitability, though increase increase in profitability profitability doesn’t imply that increase increase
in productivity. productivity.
Price increase or low cost has no impact on productivity. Productivity only relates to the value of input or output. If input = output, there is no efficiency e fficiency in productivity. If input > output, there is in efficiency in productivity. If input < output there is efficiency in productivity.
Measurement of productivity:
Some productivity ratio is calculated as follows: (figure in million BDT)
particulars
2007
Deposits
2008
2009
2010
28,147.34
34,901.77
46,904.66
53,900.15
Number of Employees
1,118
1,230
1,400
1,496
Deposit per employee
25.18
28.38
33.50
36.03
Deposit per employee 40 33.5 30
25.18
36.03
28.38
20 10 0 2007
2008
2009
2010
30
Analysis of the ratio: From the above ratios it is clear that deposit is not increasing accordance with the increases of employees.
particulars
2007
2008
2009
Operating profit
1,267.57
1,780.25
2,363.49
3,137.70
1,118
1,230
1,400
1,496
1.13
1.45
1.69
2.10
Number of Employees Operating profit/employee
2010
Operating profit per employee 2.5 2.1
2 1.5
1.13
1.45
1.69
1 0.5 0 2007
2008
2009
2010
Analysis of the ratio From the above ratios it is clear that operating profit per employee is increasing. However, it is still satisfactory.
particulars Advance Number of Employees Advance/employee
2007
2008
2009
2010
24,678.36
32,687.75
46,332.69
50,387.68
1,118
1,230
1,400
1,496
22.07
26.58
33.09
33.68
31
Advance per employee 35
33.09
30
33.68
26.58 22.07
25 20 15 10 5 0
2007
2008
2009
2010
Analysis of the ratio: From the above ratios it is clear that, the advance is not increasing accordance with the increasing of employees.
The ratios are shown in the following table: particulars
2007
Total deposit
2008
2009
2010
28,147.34
34,901.77
46,904.66
53,900.15
48
53
57
65
586.40
658.52
822.89
829.23
Number of branch deposit/branch
1000 822.52
800 586.4
829.23
658.52
600 400 200 0 2007
2008
2009
2010
32
Analysis of the ratio: Form the above ratios it is clear that, the deposit per branch is not increasing satisfactorily. satisfactorily.
The ratios are shown in the following table: particulars
2007
Net profit after tax Number of branch Net profit after tax/branch
2008
2009
2010
479.22
677.18
882.28
1,719.50
48
53
57
65
9.98
12.78
15.48
26.45
30 26.45
25 20 15
9.98
12.78
15.48
10 5 0 2007
2008
2009
2010
Analysis of the ratio: From the above ratios it is clear that the net profit after tax per branch is increased very sharply that is satisfactory. satisfactory.
33
Profitability is the operating result of an organization. It is dependent variable. It may depend on the productivity of the concern. Profitability may increase due to increase in the price, low cost or both at the same time.
particulars
2007
2008
2009
2010
Net profit after tax
479.22
677.18
882.28
1,719.50
Total Asset
32,615
42,523
57,366
65,937
RO A
1.47%
1.59%
1.54%
2.61%
(ROA) 3% 3%
3% 2%
1%
2%
2%
2% 1% 1% 0% 2007
2008
2009
2010
Interpretation:
From the above ratios it is clear that, the Return on Asset is fluctuated but in 2010 increasing level satisfactorily.
34
particulars
2007
Net profit after tax
2008
2009
2010
479.22
677.18
882.28
1,719.50
Total Investment
3,552
6,267
6,527
9,672
Return on Investment
13.49%
10.81%
13.52%
17.78%
Return on Investment 20% 18% 13%
15%
14% 11%
10% 5% 0% 2007
2008
2009
2010
Interpretation: From the above ratios it is clear that, the Return on investment is increasing after fall on 2008.
particulars
2007
2008
2009
2010
Net profit after tax
479.22
677.18
882.28
1,719.50
Fixed asset
353.71
522.00
775.31
849.10
Return on asset
135.48%
129.73%
113.80%
202.51%
35
Return o 250.00% 202.51%
200.00% 150.00%
135.48%
129.73% 113.80%
100.00% 50.00% 0.00% 2007
2008
2009
2010
Interpretation:
From the above ratios it is clear that, the Return on Fixed assets is more than 100% all the time.
particulars Earning/share
2007 39.88%
2008 50.09%
2009 50.20%
2010 75.26%
36
Earning per share 80.00%
75.26%
60.00% 39.88%
50.09%
50.20%
40.00% 20.00% 0.00% 2007
2008
2009
2010
Interpretation:
From the above ratios it is clear that, earning per share is steadily increasing that is Satisfactorily but in 2009 percentage is little bit down then 2008.
60000
53900 50387 46905
50000 40000
46333
34902
32688
2007 2008
28147 30000
24678
2009 2010
20000 10000 0 Deposit
Advance
37
Chapter 5 SWOT Analysis of City Bank
38
The swot analysis provides an opportunities to examine the internal strengths and weaknesses of the organization. Both manufacturing and service oriented business organizations start to possess some weakness as time elapse. The weaknesses of an organization can be turned into opportunities if recognized on time. Moreover, overlooking any threat may result in loosing valuable business opportunities. It also allows examining the opportunities as well as potentail threats. The SWOT analysis for City Bank is as follows:
The Bank provides quality service to the clients compared to its other contemporary competitors. Experienced bankers and corporate personal have formed the management of the bank which formulates the core business strategies. Some services of the bank are automated which attracts large number of clients. For instance, the bank provides Automated Teller Machine (ATM) services in several locations. The bank will very recently introduce on line banking which will enable it to automate all of its operations. At present, several banking functions are performed by computers. The bank is also a member of SWIFT (Society for Worldwide Interbank Financial Telecommunication) Alliance Access which enables the bank to exchange critical financial messages swiftly and cost effectively. The bank has earned customer loyalty as organizational loyalty. City Bank has already achieved a goodwill among the clients that helps it to retain valuable clients
39
Delegation of authority is centralized which makes the employee to realize less responsibility. Thus, the employee morale is deteriorated. The credit proposal evaluation process is lengthy. Therefore, sometimes valuable clients are lost and the bank becomes unable to meet targets. No substantive use of Annual Confidential Report (performance evaluation form of the employee) to reward or to punish the employee. Hence the employee becomes ineffective. The bank lacks aggressive advertising and promotional activities to get a broad geographical coverage. The bank has only a few ATM booths and not in proper places. So, the scope of using ATM card is limited. Computer facility for all the officers is not available. Moreover, all the officers have no computer knowledge. The bank has no any research and development division.
The bank can introduce more innovative and modern customer services to better survive in the competition. For example, the bank can introduce credit cards and go for merchant banking. The bank can offer micro credit business for individual and small business. The bank can diversify its portfolio by introducing new sector. Many branches can be opened to reach the Bank’s services in remote locations. The bank can recruit experienced, efficient and knowledgeable workforce as it offers attractive compensation package and good working environment.
40
Increasing competition from other banks ( Government owned, Local & Foreign banks) City Bank might face the challenges of local currency devaluation and inflationary pressure of the economy. Inadequate political situation Increased competition for market share in the industry Frequent changes of banking rules by the Central Bank Market pressure for lowering of lending rate
41
Policy Implementation & Conclusion
42
For the probable solutions of the identified problems ensure better progress to City Bank in future, some necessary steps are recommended bellow on the basis of collected data, observation, expert staffs opinion and my knowledge and judgment.
If the entire banking system is fully online on computerized system then they satisfy the customer by providing fast service with minimum service charge.
City Bank should give more attention to advertisement for creating more attraction among its customers, which is helpful to collect more deposits and increase investments scope. That's why bank should give emphasis on advertisement in various media like TV, News Paper, Internet and Billboard.
The entire department should be well informed regarding their goals and objectives. It is essential to execute company objective into individual target.
A philosophy of working for the customer instead of working for boss must be introduced.
Job description should be clarified and proper training facilities should ensure to improve the performance of bottom line management.
Credit Card and Automated Teller Machine (ATM) should be increased as soon as possible because of present market demand of the customer and the educated customer now wants technology based banking.
Attractive incentives packages for the exporters will help to increase the export and accordingly it will diminish the balance of payment gap of City bank.
City Bank is to be concentrating in always monitoring the performances of its competitors in the field of foreign trade.
City Bank will have to encourage entrepreneurs, businessmen, rich people and government to come forward to established ancillary organizations.
City Bank should focuses on their promotional activities on its marketable products.
43
There are a number of private commercial banks, Nationalized Commercial Banks and foreign banks operating their activities in Bangladesh. Bangladesh. The City Bank is one of them. For the future planning and the successful operation for achieving its prime goal in this current competitive environment this report can be a helpful guideline.
Banks always contribute towards the economic development of a country. Compared with other banks City Bank is contributing more by investing most its funds in fruitful projects lending to increase in production of the country. It is obvious that right channel of banking establish a successful network over the country and increase resources; will be able to play a considerable role in the portfolio of development in the developing country like ours.
City Bank is playing its lending role in socio economic development of the country. Since Inception City bank has been rendering its banking service with the needs of the nation to cope with the demands of people in the country. By doing many other works for state & society, City Bank has emerged as the pioneer of playing key role in our country.
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Bibliography a. City Bank Ltd. annual report from (2007-2010) b. Foreign Exchange Employee Training Manual c. bangladesh-bank.org d. thecitybank.com e. en.wikipedia.org f.
banglapedia.org
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