Internship Report on

Foreign Exchange Operation &

Financial Performance Analysis of
Export Import Bank of Bangladesh Ltd.
 Internship Report on
Foreign Exchange Operation & Financial Performance
Analysis of Export Import Bank of Bangladesh Ltd.
(EXIM Bank)

Submitted By
Monjarin Hossain Shawon
Exam ID: 190128
Class ID: 1760
Registration no: 20193250020
Session: 2018-19, BBA Program
Department of Accounting and Information Systems
Faculty of Business Studies
Jahangirnagar University

Supervised By
Md. Sohel Rana
Assistant Professor
Department of Accounting and Information Systems
Faculty of Business Studies
Jahangirnagar University

Date of Submission: 25th August, 2024

 LETTER OF TRANSMITTAL
Date: 25.08.2024
Md. Sohel Rana
Assistant Professor
Department of Accounting and Information Systems
Jahangirnagar University, Savar, Dhaka-1342, Bangladesh.

Subject: Submission of the Internship Report.

Respected Sir,
I hereby submit the Internship report titled “Foreign Exchange Operation and Financial
Performance Analysis of Export Import Bank of Bangladesh Ltd.” which is a part of the
internship program. It was a great achievement on my part to work under your direct guidance.
While preparing this report, I have tried my best to portray the condition of the company and
reflect on my personal experience in the Bank. The opportunity to work at EXIM Bank
Limited, Savar Bazar Branch, has opened a door to the huge possibility of learning about
corporate field operations and growing personally. It was a great experience working there and
preparing this report under your active supervision.
I shall be highly obliged if you are kind enough to accept this report and provide your valuable
judgment. So, this is my humble request to you to accept this report and I will be available to
explain any queries if you feel necessary.

Sincerely,
Monjarin Hossain Shawon
Exam ID: 190128
Session: 2018-19
Department of Accounting and Information Systems
Jahangirnagar University.
 ACKNOWLEDGEMENT
To begin with, I need to pass my most profound appreciation on to Almighty Allah for giving
me the strength and quiet to finish the job in the planned time.
I'm thankful to my decent supervisor, Md. Sohel Rana, Assistant Professor, Department of
Accounting and Information Systems, Jahangirnagar University, for his resolute help,
direction, and guiding in the planning of this report, which has permitted me to make a decent
mix of hypothetical and experimental information.
I express my sincere gratitude to Mr. A.M. Atiqur Rahman, Senior Officer at Exim Bank
Limited, for his cordial attitude and extending help which enabled me to prepare this internship
report properly. I also want to express my sincere gratitude to all of the employees of Export
Import Bank of Bangladesh Limited, Savar Bazar Branch for their cooperation. I thanked
modern technology for making information available for us and make our life so easier as well
as provide as much as information as one need.
My temporary job at EXIM Bank gave me a one of the kind opportunities to find out about
Bangladesh's business banking industry. I've gained tons of useful knowledge about banking
tasks, including the advantages, disadvantages, and future prospects. Moreover, the making of
this report has provoked me to go further and expand my insight in this subject. Besides, on an
individual level, this temporary job has helped me in getting comfortable with and adjusting to
the corporate environment, as well as creating relational abilities and self-assurance. I owe an
obligation of appreciation to the writers and scholars whose books, working papers, diaries,
and different assets have assisted me with delivering this report.
 STUDENT’S DECLARATION
This declaration states:
➢ I wrote the internship report turned in as a requirement for my degree at Jahangirnagar
University.
➢ The report does not include any previously published or written third-party content
unless it is appropriately cited by comprehensive and accurate referencing.
➢ The report contains no content accepted or submitted for another degree or diploma at
a university or other institution.
➢ I have acknowledged all significant sources of help.

Student’s Full Name and Signature:

Monjarin Hossain Shawon

ID: 190128
 LETTER OF ACCEPTENCE

This is to guarantee that Monjarin Hossain Shawon, ID: 1760, is a student of the BBA program,
Department of Accounting and Information Systems, Jahangirnagar University, has provided
details regarding "Foreign Exchange Operation and Financial Performance Analysis of Export
Import Bank of Bangladesh Ltd." under my supervision.
I wish her every success in life.

Md. Sohel Rana

Assistant Professor
Department of Accounting and Information Systems
Jahangirnagar University
 EXECUTIVE SUMMARY
This report aims to present an in-depth analysis of the EXIM Bank’s foreign exchange policies,
with a specific focus on the role of Letter of Credit (LCs), and their impact on financial
performance. EXIM Bank Ltd believes in the vision of to be the best Private Commercial Bank
in Bangladesh. The bank has won the hearts of its customers as well as seized the market and
become the country's leading bank by delivering convenient financial services and customer-
oriented initiatives.
I have included a backdrop in the first section of my report that covers the main topic of the
study. Following that, I will give a brief summary of EXIM Bank Bangladesh Limited. In this
section, I've attempted to cover EXIM Bank's historical background, branch count, vision, and
mission, among other things.
The report outlines the bank’s foreign exchange policies, detailing the strategies and
mechanisms employed to manage foreign exchange transactions, hedge against currency risks,
and comply with regulatory requirements. It also delves into the bank’s policies regarding
Letters of Credit, which are crucial instruments in international trade, ensuring payment
security for exporters and importers.
The report examines various financial performance indicators, such as net profit margin, return
on deposit, etc. correlating these metrics with the bank’s foreign exchange activities and LC
operations. The bank’s prudent risk management practices, including the use of forward
contracts, options, swaps, and well-structured LCs, have been instrumental in mitigating
adverse currency movements and safeguarding profit margins.
Furthermore, the report addresses external factors influencing EXIM Bank’s foreign exchange
and LC operations, such as global economic trends, exchange rate fluctuations, and geopolitical
events. It emphasizes the need for continuous monitoring and adaptation of foreign exchange
and LC policies to effectively navigate these external challenges.
Foreign exchange section needs more manpower and regular and advance training is required
to its employees. In this competitive market, EXIM Bank has performing outstanding and it is
growing continuously to reach its objectives.
I hope this report, despite its many limitations, will be a gateway to have a clear concept about
the foreign exchange activities of EXIM Bank Limited.
 Table of Contents
Chapter 1: Introduction ....................................................................................................... 1

1.1 Background of the Study .............................................................................................. 2

1.2 Origin of the Study ....................................................................................................... 2

1.3 Objectives of the Study ................................................................................................. 3

1.4 Methodology of the Study ............................................................................................ 4

1.4.1 Secondary Data ...................................................................................................... 4

1.5 Scope of the Study ........................................................................................................ 4

1.6 Specific Responsibilities of Internship ......................................................................... 5

1.7 Internship Experience ................................................................................................... 6

1.8 Limitations of the study ................................................................................................ 6

Chapter 2: Company Profile................................................................................................ 7

2.1 History of the Bank ....................................................................................................... 8

2.2 Organizational Analysis ................................................................................................ 9

2.2.1 Current Situation .................................................................................................... 9

2.2.2 Product/Service Offerings ...................................................................................... 9

2.2.3 Board of Directors ................................................................................................ 10

2.3 Vision of EXIM Bank ................................................................................................. 11

2.4 Mission of EXIM Bank .............................................................................................. 11

2.5 Financial Highlights ................................................................................................... 12

2.6 SWOT Analysis .......................................................................................................... 13

Internal Factors: ............................................................................................................ 13

External Factors ............................................................................................................ 14

Chapter 3: Foreign Exchange Operations of EXIM Bank Ltd ......................................... 16

3.1 Description.................................................................................................................. 17

3.2 Foreign Exchange Department of EXIM Bank .......................................................... 17

3.2.1 IMPORT .............................................................................................................. 18

 3.2.2 Remittance ........................................................................................................... 23

Chapter 4: Analysis .......................................................................................................... 26

4.1 Financial Performance Analysis of EXIM Bank ........................................................ 27

4.1.1 Ratio Analysis ...................................................................................................... 27

Profitability Ratios:................................................................................................... 27

Liquidity Ratio:......................................................................................................... 29

Credit Risk Ratio ...................................................................................................... 33

Asset Activity Ratio.................................................................................................. 35

4.2 Foreign Exchange Analysis ........................................................................................ 37

4.2.1 Import and Export: ............................................................................................... 37

4.2.2 Remittance: .......................................................................................................... 38

4.3 Findings ...................................................................................................................... 39

4.3.1 Financial Performance ......................................................................................... 39

4.3.2 Foreign Exchange ................................................................................................ 39

Recommendation .............................................................................................................. 41

Conclusion ........................................................................................................................ 42

Appendix .......................................................................................................................... 43

References ........................................................................................................................ 47
Chapter 1: Introduction

1
1.1 Background of the Study
In a country's monetary framework, the bank resembles the iron cell of the blood. A monetary
framework isn't feasible without banks. Bank has made an extraordinary commitment to human
progress' monetary improvement generally speaking since the earliest reference point. The
primary objective of the banking area all in all is to secure public stores and contribute those
stores by giving credits and other monetary help to organizations. Banks likewise offer the
necessary types of assistance for bringing in products, trading merchandise, giving assurances,
and so on. The Banking Organizations Demonstration of 1991, which was passed in our
country alongside others, is still active to control and supervise how banks work by different
regulations. Foreign exchange is the main department to a bank and the premium of the country.
This report is about the foreign exchange movement of EXIM Bank Bangladesh Limited and
their financial performance. The entire image of foreign exchange activities is attempted to be
introduced in this report.

1.2 Origin of the Study

The three-month entry level position is essential for the Bachelor of Business Administration
(BBA) program and is intended to acquaint students with the real-world dynamics of business
organizations. I decided to finish my internship with Export-Import Bank of Bangladesh Ltd,
which is a notable name in the monetary area. It was a great experience working there, and I
realize that this experience will be valuable to me later on. By the internship course, this
preliminary progress report has been made. The best trouble I looked as an understudy was
changing over hypothetical standards into reasonable practice. The following objectives of the
study and the internship program are:
• To get and organize detailed knowledge of the job responsibilities,
• To experience the real business world,
• To convert academic knowledge into practical knowledge,
• To compare the real scenario with the lessons learned at university,
• To fulfill the requirements of the BBA Program.

2
1.3 Objectives of the Study
The objective of this report was to give a detailed insight into the various foreign exchange
activities that take place in the Savar Bazar Branch of EXIM Bank. The following activities
take place under foreign exchange in the Savar Bazar Branch of EXIM Bank:
1. Import
2. Remittance
Along with the above the report is also intended to provide an analysis of the financial
performance of the bank by calculating and then analyzing the following ratios:
▪ Profitability Ratios
▪ Liquidity Ratios
▪ Credit Risk Ratio
▪ Asset Activity Ratio
Here’s a comprehensive overview of what will be covered in this report:
• To know the modes of foreign trade of the bank and to be familiar with the features,
rules, and regulations associated with individual modes of Foreign Exchange
Management of the bank,
• To know about the foreign trade policies of EXIM Bank Ltd.
• To know the rules and regulations of Bangladesh Bank regarding the sector
investment and modes of foreign trade,
• To know the condition of classified Export & Import,
• To know the disbursement and the recovery process of the Savar Bazar Branch,
• To know the foreign remittance process Of EXIM Bank, Savar Bazar Branch,
• To know about the various kinds of products and services provided by EXIM Bank
Ltd,
• To measure their profit rate on foreign currency accounts,
• To know about the edge facility provided by EXIM Bank on LC Opening,
• To know about foreign exchange service duty fees,
• To Analyze the trend of foreign remittance through formal channels,
• To suggest better ways to increase the foreign exchange performance of EXIM Bank.

3
1.4 Methodology of the Study
I included a ton of optional information and content to make the Report incredibly captivating
and interesting. Any exploration project's most important component is information. The
selection of information design has been impacted by the aspects such as the objectives of the
review, the resources that are available, and the budget for the examination. Despite this, the
report was only partially produced using additional sources of information.

1.4.1 Secondary Data

Different types of secondary data have been used in the completion of this internship report.
These are:
• Annual reports of EXIM Bank
• From different Websites
• Bangladesh Bank Report,
• From Daily Newspaper,
• Different textbooks,
• Different papers from the respective departments,
• Articles regarding foreign exchange,
• Different manuals and publications of EXIM Bank.

1.5 Scope of the Study

This report has been arranged in view of involvement accumulated during the time of
Internship program. This part entails the nature of the job, the various task I performed while
working in EXIM Bank, the lessons I learnt, the limitations I faced, the observations I made
about banking procedures and the recommendation I made to EXIM Bank in order to improve
the internship program. The vast majority of the information utilized in the revealing of the
review are from optional sources. Every one of the information connected with the announcing
prerequisites are not accessible because of secret reservation rehearses to support the
association. This report covers the accompanying extensions:
• To gather and organize particular information on job responsibilities,
• To learn about the true nature of business,
• To translate theoretical knowledge into useful knowledge,
• To contrast the actual event with the university courses,
• must meet the program's requirements for the BBA
4
1.6 Specific Responsibilities of Internship
Working for more than 2 months in the account opening department of Savar Bazar branch of
EXIM Bank, here are the works I have done in this department:
• Accept all letters or documents sent to the branch that are intended for the branch or its
employees, including all incoming foreign L/C documents. A "delivery received" stamp
must be applied to the receipt of the letters or documents, where applicable, and timed
and a signature affixed.
• Upon receipt of letters or documents bearing the name of the branch or branch manager,
open, enter in a register called "entry register", assign a dispatch number to the documents
and deliver the register and letters or documents to the director's office, at predetermined
times.
• Records all documents that leave the office, such as those sent to clients, headquarters,
etc., in an "outbound register" and assigning a shipment number to each document.
• Place all the documents to be sent by the courier service in a book.
• Assist in the opening of savings accounts, current accounts and deposit schemes by
dealing with customers and asking them to provide the necessary documents and
information and obtaining their signature in the relevant areas.
• Filling out SMS Banking, debit card forms for customers.
• Finding out whether any customers' cheque books have arrived, and if so, locating the
cheque book, filling out the cheque book requisition form, and giving it to the customer.
If anyone beside the account holder tries to take the cheque book an authorization letter
from the account holder is required.
• Providing customers with deposit books, forms, etc.
• Calling customers to request for sending of required documents, etc.
• Finding forms from the file cabinets.
Other tasks that I performed in other departments were:
• Filling out FDR forms
• Putting the appropriate seals on cheques received from different banks
• Adding the cheque amount and verifying whether the total amount matches with the
amount in the software.
• Filling the L/C application form for clients.

5
1.7 Internship Experience
The lessons that I have learned working for a short period in EXIM Bank are as follows:
• Being an introvert, this internship has allowed to open up to people, how to get along
with colleagues and how to deal with and talk to unknown strangers like customers.
• I have learned how to follow basic office etiquette
• I have learnt basic banking procedures such as opening different accounts, L/C opening
etc.

1.8 Limitations of the study

Impediments are the drawbacks of any work. There are not really any doings that have no
restrictions. This concentrate likewise had a few impediments. In spite of having an earnest
exertion, there exist a few restrictions, which went about as an obstruction to leading the
program. In setting up this report a few issues and limits I have experienced which has follow:
• The boredom and wavering concentration of the Officer while answering the questions
led to difficulty in finding the demanded information,
• Time variance is the main limitation of this study. As the study was two months, it is a
dumpy time to analyze a huge organization like EXIM Bank Ltd.
• The organization’s secrecy guidelines are also a limitation of the report. Confidential
data of EXIM Bank which would be helpful for this report cannot be accessed,
• The official of EXIM Bank has a busy working schedule. So, the data collection
procedure also got hampered for this,
• Insufficient resources or funding for the study.

6
Chapter 2: Company Profile

7
2.1 History of the Bank
According to eximbankbd.com (n.d) the Export Import Bank of Bangladesh Limited was
established in the year 1999 by Late Mr. Shahjahan Kabir who had the vision to erect a
commercial bank that would contribute to the socio-economic development of the country. Mr.
Kabir was a great banker who with the aid of highly qualified and successful entrepreneurs
turned his dream into reality. One of these entrepreneurs namely Mr. Nazrul Islam Mazumder,
a garments industry tycoon, became the chairman after the demise of the founder and is also
the chairman of the Bangladesh Association of Banks (BAB) through which he tackled many
problems faced by the banking sector of Bangladesh.
The bank became operational on 3rd August 1999 under the name Bengal Export Import Bank
Limited. Later in 16 November 1999 it was renamed to Export Import Bank of Bangladesh
Limited with Mr. Alamgir Kabir as the Advisor and Mr. Mohammad Lakiotullah as the
Managing Director respectively.
Mr. Kabir and Lakiotullah had extensive experience in the financial sector of Bangladesh and
through their pragmatic decision and management directives in the operational activities; this
bank has earned a secured and distinctive position in the banking industry in terms of
performance, growth, and excellent management. Under the leadership of Mr. Lakiotullah this
bank was converted from a conventional banking system to a Shariah Based Islami Banking
System in the year July 2004.
In 2006 the Mr. Kazi Masihur Rahman succeeded Mr. Lakiotullah in the role of an MD. During
his time the world-renowned banking software named TEMENOS T24 with two modern data
centres was launched in the bank along with some alternative delivery channels like ATMs and
SMS banking. Later Mr. Md. Fariuddin Ahmed joined as the MD who facilitated in making
the bank a fully compliant bank through his extensive banking experience.
Finally, Dr. Mohammed Haider Ali Miah succeeded Mr. Fariduddin Ahmed on July 25, 2012
and has created a new dimension in EXIM history becoming the first ever in-house Managing
director and CEO of the Bank. Under his far-sighted leadership, EXIM Bank has not only
achieved uppermost level of performance in almost each arena of its activities but also gained
confidence to place itself as one of the dynamic banks through delivering transparent and
standard banking services to the customers in a compliant manner.

8
2.2 Organizational Analysis
2.2.1 Current Situation
Banking system is playing a crucial role in a nation’s economy in modern society. A nation's
economic progress depends heavily on banking institutions, which are essential in the modern
age. In view of Bangladesh's economic policy liberalization, EXIM Bank Limited was
established as a new commercial bank to offer effective banking services and further the
nation's socioeconomic growth. The Export Import Bank of Bangladesh is a Shariah Based
Islamic Bank. University of North Carolina Wilmington (n.d) explains that the main principle
of Islamic finance and banking is the sharing of profits and the prohibitions of all forms of
interest. Islamic law specifically prohibits usury and the collection and payment of interest
(called riba in Islamic discourse). Generally, Islamic law also prohibits trading in financial risk,
which is seen as a form of gambling. Islamic banking has the same purpose as conventional
banking except that it operates in accordance with the rules of Shariah, known as Fiqh al-
Muamalat (Islamic rules on transactions).
2.2.2 Product/Service Offerings
The products and service offerings provided by EXIM Bank are under the following categories
(eximbankbd.com, n.d):
1. Retail Banking
❖ Deposits
▪ Savings Account
▪ Current Deposit
▪ Term Deposits -
• Mudaraba Term Deposit
• Mudaraba Education Deposit
▪ Deposit Schemes -
• Mudaraba Super Saving Scheme
• Mudaraba Monthly Saving Scheme
• Mudaraba Multiplus Saving Scheme
• Mudaraba Hajj Deposit Scheme
• Other Schemes such as Ruhama, Ziadah, etc.

❖ Investments
❖ Cards-Visa Islamic Cards, Debit Cards, Prepaid Card Gift Card, etc.
9
 ❖ Internet Banking
❖ SMS Banking
❖ Locker Services

2. Corporate Banking
❖ Investments
❖ Foreign Exchange & Trade Finance
❖ Correspondent Banking
❖ Import Finance
❖ Export Finance

3. SME Banking
❖ EXIM Uddyog
❖ EXIM Abalamban

4. Agri Banking - EXIM Kishan

5. Remittance
❖ EXIM Exchange Company (UK) Ltd.
❖ SWIFT
❖ International Operation

2.2.3 Board of Directors

Chairman of the Board of Directors
Mr. Md. Nazrul Islam Mazumder
Directors
• Mr. Md. Nazrul Islam Swapan
• Mr. Mohammad Abdullah
• Mrs. Nasreen Islam
• Al-haj Md. Nurul Amin
• Mr. Anjan Kumar Saha
• Mr. Md. Nazmus Salehin, Independent Director
• Mr. Meah Mohammad Kausar Alam, Independent Director
• Mr. Mohammad Feroz Hossain, Managing Director & CEO

10
2.3 Vision of EXIM Bank
The gist of their vision is "Together Towards Tomorrow". Export Import Bank of Bangladesh
PLC. (Exim Bank) believes in togetherness with its customers, in its march on the road to
growth and progress with service. To achieve the desired goal, there will be constant pursuit of
excellence in compliance with the Islamic Shariah. We believe the advantages of Islamic
economy can best be extended to the people with a technology-driven modern banking system
that upholds the Islamic values, and Exim Bank envisages making itself a perfect instance of
that kind. The Bank’s strategic plans and networking will strengthen its competitive edge over
others in rapidly changing competitive environment. Its personalized quality services to the
customers with trend of constant improvement will be the cornerstone to achieve our
operational success.

2.4 Mission of EXIM Bank

The Bank’s mission gives emphasis to (eximbankbd.com, n.d):
• Provide quality financial services especially in Foreign Trade
• Continue a contemporary technology based professional banking environment
• Maintain corporate & business ethics and transparency at all levels
• Sound Capital Base
• Ensure sustainable growth and establish full value to the honorable stakeholders
• Fulfill its social commitments and
• Above all, to add positive contribution to the national economy.

11
2.5 Financial Highlights

12
2.6 SWOT Analysis
SWOT analysis is an in-depth examination of an organization's opportunities and risks from
the standpoints of its opportunities, threats, weaknesses, and strengths. This makes it easier for
the company to maintain its current level of performance and predict future improvements that
will set it apart from its competitors. As an organization can examine its existing position with
the use of this instrument, it can also be regarded as a crucial tool for altering the strategic
management of the company.

Figure:1 SWOT Analyses

Internal Factors:
Strengths:
➢ EXIM Bank has experience and self-motivated personnel in foreign exchange division.
They are very much efficient and friendly to their customers.
➢ As per bank policy EXIM Bank gives much more facilities to its valuable customers.
➢ EXIM Bank Limited has already achieved a high growth rate. The number of deposits and
the loans and advances are also increasing rapidly.
➢ EXIM Bank has an interactive corporate culture. The working environment is very friendly,
interactive and informal. And, there are no hidden barriers or boundaries while
communicate between the superior and the employees. This corporate culture provides as
a great motivation factor among the employees.
➢ EXIM Bank has the reputation of being the provider of good quality services to its
customers regarding export and import such as local documentary bills for collection
(LDBBC) local documentary bills for purchase (LDBP).

13
➢ EXIM Bank, foreign exchange department has own license for foreign trading. For this
reason, customers get their official formalities so easier. They would not wait for any
longer.
➢ EXIM Bank opens L/C in a lower rate than other bank which has strengthened their foreign
exchange activity.
➢ EXIM Bank foreign exchange communicates with foreign bank rapidly through line.

Weakness:
➢ Though it has one or two expertise in foreign exchange division, it is not sufficient for
doing the
➢ desk work. For this reason, client have to keep patient for official formalities.
➢ EXIM Bank foreign section is too rigid in case of document preparation; lodgment and
retirement capture other bank which sometimes dissatisfied clients.
➢ The service quality of foreign section is poor with regard to Multinational Banks located
here.
➢ Corresponding network which is very essential in foreign trading is not so large.
➢ EXIM Bank that it is having a group of unsatisfied employees foreign exchange section.
➢ In terms of promotional sector, EXIM Bank has to more emphasize on that. They have to
follow aggressive marketing campaign.

External Factors
Opportunity:
➢ Foreign exchange business hugely depends on political stability of a country. After 1/11 in
Bangladesh there is a good existing position of EXIM Bank as compare with other banks.
➢ For getting higher market share in foreign exchange business, EXIM Bank has to be more
efficient and swifter in service.
➢ EXIM Bank has more opportunity to expand foreign exchange activity by spreading more
branches in business area.
➢ EXIM Bank has to take the opportunity of globalization to increase foreign exchange
activity.
➢ EXIM Bank can introduce some facility for foreign investor to invest.
➢ EXIM Bank has opportunity to diversify services for customers and lunch new service in
market.

14
Threats:
All sustain and upcoming multinational, foreign and private banks pose enormous threats to
EXIM Bank Limited.
➢ Foreign exchange performance of EXIM Bank is not outstanding as compared with others
competitors.
➢ EXIM Bank can open an information center for their import and export client.
➢ EXIM Bank has to provide special offer to attract new customers to increase their foreign
activities as compared with other banks.

15
Chapter 3: Foreign Exchange Operations
of EXIM Bank Ltd

16
3.1 Description
In different circumstances, the expression "foreign exchange" has unmistakable implications.
A foreign exchange occurs when companies, governments, or citizens of two separate nations
exchange one currency for another. The process of converting one currency into another or
exchanging one for another is known as foreign exchange. The term "foreign exchange" also
describes the international market where currencies are exchanged almost constantly. The term
foreign exchange is commonly shortened to "forex" or occasionally as "FX." This is how
individuals from many different countries exchange various forms of currency to pay one
another. When settling international transactions, any currency that is not the local currency is
referred to as foreign currency. As per Bangladesh's transformation of Segment 2(d) of the
Foreign Exchange Guideline Act, 1947, "foreign exchange" alludes to foreign money and
incorporates all stores, credits, and balances payable in foreign cash alongside foreign money
instruments like drafts, TCs, and bills of exchange. Letter of Credit and Promissory Note
payable to any Foreign Cash Commodities of items and administrations are Bangladesh's chief
wellspring of foreign exchange income. One more critical wellspring of foreign cash is the
wages procured by Bangladeshis living and working abroad. Late exchange control progression
has allowed organizations an incredible opportunity to venture into new enterprises,
remembering exchanges for the homegrown interbank foreign exchange market, the
arrangement of forward exchange, and exchange tasks that fall inside Bangladesh Bank
limitations.

3.2 Foreign Exchange Department of EXIM Bank

In EXIM Bank, Savar Bazar Branch the roles that the foreign exchange department performs
are given below:
1. Import: People who wish to bring goods from abroad to Bangladesh can do so with the help
of opening a letter of credit at this Branch. No export of any form occurs from this particular
branch of EXIM Bank.
2. Remittance: People staying abroad wanting to send money to people in Bangladesh can do
so by inward remittance. The reverse is prohibited normally by the government of Bangladesh
unless for student through outward remittance.

17
3.2.1 IMPORT
To import products into Bangladesh, one must first open a letter of credit (L/C) with this bank.
Without an L/C, the exporter may not be confident in the credibility of the importer, particularly
if the importer is a new business person. As a result, the exporter may request full payment
before delivery, to which the importer may not consent. Furthermore, even if the importer pays
in full before delivery, there is no guarantee that the exporter will deliver the goods in
accordance with the agreed-upon terms after payment. Thus, the process of establishing a letter
of credit arose to facilitate global trade and reduce all kinds of risks.
The number of letter of credits opened per month varies, sometimes a lot of letter of credits are
opened a month while in other months very few are opened. From January till June around 155
LCs were issued making an approximate average of 25 L/C per month. In the month of June
16 letter of credits were issued.
Basic Process of Opening an L/C
The party who intends to import any goods from abroad using a letter of credit must perform
the following tasks:
1. Obtain an Import Registration Certificate: Import Registration Certificate or IRC is a
mandatory document to start an import business in Bangladesh. The requirements to open
an Import Registration Certificate according to ccie.gov.bd (n.d) are as follows:
a) Trade License;
b) Membership Certificate from recognized Chamber/Trade Association;
c) Tax Identification Number;
d) Bank Certificate;
e) Memorandum and Articles of Association and Certificate of Incorporation (in case
of Limited Company)
2. Open an Al-Wadiah Current Deposit Account: The importer's accounts are used to
directly offset any payments made under the letter of credit, including bank charges and
the amount due to the exporter or supplier. Since the transaction amount involved in an L/C
is usually very large the opening of an Al- Wadiah Current deposit account is mandatory.
According to (eximbankbd.com) Al-Wadiah Current Account follows the Principle of Islami
Shariah wherein the bank is deemed as a keeper and trustee of funds as Al Amana (on Trust).
The depositors would not receive any sort of profit from this deposit, which operates by
obtaining their consent to spend their funds in accordance with Shariah principles. As a result,
the bank is under obligation to return the entire money on demand by the customer. The account

18
holder is able to withdraw money from the account as many times throughout a working day
as they choose because it is not time barred.
The Main features of Al- Wadia Current Deposit (eximbankbd.com):
• Halal way or without Riba (interest or usury) transaction
• Unlimited deposit or withdrawal
• No profit will be given
• Cheque book facilities
• ATM Card
• Free online transaction
• No Over Draft will be allowed in the account
• SMS banking service includes balance inquires/Mini-statement by mobile phone
The documents that are required for opening an Al-Wadiah Current Deposit Account are
as follows (eximbankbd.com):
• An Al-Wadiah account opening form duly filled & signed by the account holder
• Introducer’s Signature
• 2 passport size photographs of every operator duly attested by the introduce
• National ID Card copy, Trade License and TIN Certificate of the operators
• Declaration of Sole proprietorship, partnership whichever is applicable
• Memorandum of association in case of a limited company
• Nominee photograph and national ID card copy.
3. L/C application: After opening the above account, the potential importer must make an
application to open a letter of credit (L/C) addressed to the manager of the particular branch
involved. Following the completion of the application, the importer must fill out an L/C
application form and provide the pro-forma invoice that was supplied by the supplier or
exporter. Details about the goods the importer wishes to import, such as the unit price,
quantity, and total monetary value, are included in the pro-forma invoice. Other details like
the type of L/C, the L/C opening date, the advising bank, the insurance coverage, the
country of origin, etc. are also included in the proforma invoice.
In EXIM Bank only irrevocable L/C is opened. Without the permission of either the buyer or
the exporter, an irreversible letter of credit cannot be modified or amended. An irrevocable
credit arrangement is the issuing bank's firm pledge to pay. As a result, the beneficiary has a
high level of assurance that if he adheres to the credit terms, he will be reimbursed for his
products or services. The application form for such an L/C of the importer includes:

19
 • Name & Address of Applicant
• Name & Address of Beneficiary
• The L/C Number and Date
• The description of goods imported
• The Pro-forma Invoice Number & Date
• The L/C type: Deferred or Sight L/C
• The place of origin and destination
• The way the goods are imported e.g. ship, air etc.
• The way credit will be advised e.g. airmail, courier, tele transmission etc.
• The L/C start date and date of expiry
• The documents required
• Type of Insurance done usually a cover note is attached
• Account number of the applicant
4. L/C payment is done: The importer can open an L/C once the above form has been
completed. If the importer is a new client, the bank initiates an L/C at 100% margin, which
implies that before moving forward with the L/C procedure, the client must provide the full
amount. But if a client has previously opened an L/C with the bank, they can do so at any
margin they choose, for example, A 25% margin indicates that 25% of the L/C amount is
paid in advance and the remaining 75% is delivered after the shipping documents are
negotiated.
The amount to be paid whether full or partially is written in a slip called ‘Challan’ and the
amount is to be deposited in the bank. Once the payment is done the L/C Application form
and application letter is sent to the relationship manager of the branch who if approves an
L/C is made.
5. L/C is opened: The L/C document as I have seen in the files of ‘Habib Trading’ contains
details like below:
• Name of applicant
• Name of beneficiary
• Type of L/C
• L/C Number
• L/C Amount
• Charges
• Country of origin of goods;
20
 • Currency and amount;
• Date and place of the expiry of the Documentary Credits;
• Description of goods and quantity;
• Documents required for negotiation;
• Instruction for negotiating bank;
• Last date of shipment;
• Letter of Credit Authorization (LCA) number, IRC (Import Registration Certificate)
• number and Harmonized System (HS) code;
• Mode of Carrying –Air/Ship/Truck;
• Name and address of beneficiary;
• Name and address of the advising bank;
• Name and address of the applicant;
• Name of the issuing Bank and Branch;
• Negotiating bank preferably freely negotiable in any bank;
• Number of Letter of Credit and date of opening;
• Payment Term-Sight/Usance;
• Period of Negotiation;
• Period of presentation;
• Port of Loading and port of Discharge;
• Reimbursing Bank and payment mode;
• Terms and conditions regarding Transshipment and Partial Shipment;

6. L/C Mechanism: The basic L/C mechanism that takes place in EXIM Bank Savar Bazar
branch is as illustrated by the following diagram:

21
The basic L/C process as illustrated in the above diagram basically consists of the below steps:
1. First the importer sends a purchase order to the exporter following which the exporter
or supplier sends a pro-forma invoice
2. The Importer then using the pro-forma invoice must make an L/C application in EXIM
Bank as mentioned earlier.
3. EXIM Bank then creates the L/C and sends it via swift message to the advising bank or
exporter’s bank.
4. The advising Bank notifies the exporter of the receipt of the L/C.
5. The exporter then ships the goods.
6. The exporter sends the shipping documents through advising bank to the issuing Bank
or EXIM Bank.
7. EXIM Bank then endorses the shipping documents and gives the shipping documents to
the party when the remaining L/C amount has been paid.
8. Using the shipping documents the importer goes to the port and collects the goods from
there.
Components of a shipping document:
The documents sent from the exporter to the importer via the advising and issuing bank entails
the following:
1. Draft/ Bill of exchange
2. Commercial Invoice
3. Bill of Lading
4. Air Waybill
22
 5. Certificate of Origin
6. Packing List
The above is given in several copies, based on the number mentioned in the letter of
credit.

3.2.2 Remittance
The foreign exchange department of EXIM Bank facilitates the remittance inflow, or the
transfer of money from abroad to Bangladesh. According to Bangladeshi government only
inward remittance is permitted and outward remittance for people other than students is strictly
prohibited by law. Outward remittance is only allowed for sending money to people abroad
who have a student profile. EXIM Bank has 151 branches throughout the entire country and
therefore, they serve as best medium for remittance of funds from one place to another. This
service is available to both customers as well as non-customers of the Bank.
According to www.eximbankbd.com, Export Import Bank of Bangladesh PLC. facilitates
Remittance Service to the remitters and the beneficiaries to ensure their contribution to the
national economy of Bangladesh. In this regard, the bank has established 2 (Two) Exchange
Houses in UK & Canada which are fully owned subsidiaries of EXIM Bank. Besides, the bank
has Drawing/Agency arrangements with some other Exchange Houses and Money Transfer
companies around the world. The Bank has also a strong and highly experienced dedicated
team at its Foreign Remittance Department (FRMD), Head office, for ensuring smooth
operation of remittance service.

EXIM Exchange Houses:

• EXIM Exchange Company (UK) Limited.
Drawing/Agency Arrangement:
1. Western Union Money Transfer
2. MoneyGram
3. Xpress Money
4. Aftab Currency Exchange Limited
5. International Money Express (IME)
6. Cash Express
7. Zenj Exchange Co. W.L.L. (Turbo Cash) Bahrain
8. Ria Money Transfer
9. BRAC Saajan (UK)
23
 10. Prabhu Money Transfer
The following are some of the important modes of transferring funds from one to another
through a bank;
Function of the Remittance Section:
• Handling of all incoming and outgoing foreign and local remittance is the major
• Function for this department.
• Handling of incoming and outgoing T.T.
• Outstation Cheque Collection.
• Outstation Cheque Purchase.
• Demand Draft Handling.
• Other assorted work.

Foreign Remittance:
The transfer of foreign currency from one nation to another is known as a foreign remittance.
To put it another way, a foreign remittance is a payment made out of funds received from
sources outside of the country. Foreign remittances are actually the buying and selling of freely
convertible foreign currencies as allowed by exchange control regulations of the country.
Foreign remittance is very important for the country as valuable foreign exchange is involved
in the transfer mechanism. Foreign remittance takes place in two ways-
• Inward
• Outward

Inward Remittance:
Inward remittance is the term for remittances that arrive in our country from foreign countries.
To the bankers or ADs inward remittance means purchase of foreign currency by authorized
dealers. Generally, inward remittances are received by draft, mail transfer, TT, purchase of
foreign bills & travelers Cheque, export bills. These are essentially the formal channels for
getting remittances from abroad. Under the category of inward remittance, a local bank also
receives the indenting commission from a local business.
Outward Remittance:
Outward foreign remittances are remittances made from our country to foreign countries.
Stated differently, outward remittances might refer to the sales of foreign money through
legitimate channels or approved dealers. When releasing or remitting foreign currencies,

24
authorized dealers have to use extreme vigilance to make sure the funds are used exclusively
for that reason. Outward remittance may be made by appropriate method to the country to
which remittance is authorized. Most outward remittance is approved by the authorized dealer
on behalf of Bangladesh Bank. Outward remittance may be made for following purposes -
➢ Travel
➢ Medical treatment
➢ Educational purpose
➢ Attending seminar etc.
➢ Balance amount of F.C account.
➢ Profit of foreign companies.
➢ Technical assistance
➢ New exporters up to USD 6,000/- for business promotion
➢ C. remittance can be made for fare, exhibition from export retention quota.

25
Chapter 4: Analysis

26
4.1 Financial Performance Analysis of EXIM Bank
4.1.1 Ratio Analysis
Profitability Ratios:
Profitability measures that indicate how well a firm is performing in terms of its ability to
generate profit. Under the profitability ratio we will discuss three major ratios.

1. Net Profit Margin: It is the ratio of the net profit to revenue. This shows how much profit
every dollar of sales or revenue is generating. In other words, it shows how much profit,
revenue minus the expenses and tax, is generated as a percentage of the total revenue
earned. The higher this ratio, the higher the profitability because a high net profit margin
indicates that every dollar of revenue is generating high amounts of profit. This means that
a greater amount of money will be left after paying for the expenses for use elsewhere.

Net Profit Margin

0.12

0.1

0.08

0.06
0.1
0.04 0.087
0.076 0.08
0.06
0.02

0
2019 2020 2021 2022 2023

Net Profit Margin

Figure: 2 Net Profit Margin

Interpretation:
Analysis of EXIM Bank's net profit margin experienced notable fluctuations, reflecting both
growth and challenges. In 2019, the net profit margin stood at 0.06, indicating that the bank
earned 6 cents for every dollar of revenue. This relatively modest margin suggests the bank

27
faced significant expenses or lower revenue relative to its costs. In 2020, the net profit margin
increased to 0.08, showing an improvement in profitability. This could have been due to better
cost management, increased revenues, or improved operational efficiencies. However, in 2021,
the margin slightly dipped to 0.07, indicating a minor decline in profitability. This reduction
could have been caused by rising costs, lower revenue, or economic challenges that impacted
the bank's financial performance. In 2022, the net profit margin reached a peak of 0.10, the
highest in the five-year period. This significant increase suggests that the bank's strategies were
highly effective, resulting in better profitability. Factors such as successful strategic initiatives,
cost efficiencies, or favorable market conditions could have contributed to this peak. However,
in 2023, the net profit margin fell back to 0.08. While still higher than the initial years, this
decline from the previous year indicates that the bank faced some challenges, such as increased
operational costs, competitive pressures, or other financial difficulties. Overall, EXIM Bank's
net profit margin from 2019 to 2023 shows an upward trend with some variability. The bank
demonstrated an ability to improve profitability over time, despite facing occasional setbacks.
This pattern reflects the dynamic nature of the banking industry and the various internal and
external factors influencing financial performance.

2. Return on Deposit: It is the ratio of net profit to total deposit. It measures the amount of
profit each dollar of deposit generates. The higher this ratio, the greater the profitability
because a high return on deposits means that each value of the Bangladeshi Taka (BDT)
against a foreign currency (e.g., USD/ BDT exchange rate) of deposit taken generates a
higher amount of profit.

28
 Return on Deposit
0.90%

0.80%

0.70%

0.60%

0.50%

0.40% 0.84%
0.69% 0.71% 0.73%
0.30%
0.46%
0.20%

0.10%

0.00%
2019 2020 2021 2022 2023

Return on Deposit

Figure: 3 Return on Deposit

Interpretation:
From 2019 to 2023, Exim Bank's return on deposit exhibited notable fluctuations. The return
began at 0.0069 in 2019 and saw a slight increase to 0.0071 in 2020, reflecting a modest
improvement. However, in 2021, the return sharply declined to 0.0046, the lowest point in this
period. This was followed by a remarkable recovery in 2022, with the return rising to 0.0084,
the highest value recorded. In 2023, the return decreased slightly to 0.0073, still higher than
the values seen in 2019 and 2020. The trend over these five years shows an initial minor rise,
a significant dip, a robust rebound, and a slight decline, highlighting the bank's varying
performance in returns on deposits. Overall, the graph would show an initial slight increase,
followed by a significant dip, then a sharp rise, and finally a small decline. The trend indicates
variability in the bank’s return on deposits, with a notable recovery after the dip in 2021.

Liquidity Ratio:
Liquidity shows the ability to convert an asset into cash without a significant price concession.
Liquidity ratio shows the liquidity of assets of an organization. Under the liquidity ratio we
will discuss three major ratios.
1. Cash Ratio: The ratio of a company's total cash and cash equivalents to its current
liabilities is known as cash ratio. If the cash ratio is high then it shows that the liquidity of
the organization is good but it must be less than 1. If the ratio is 1 or more than 1 then the

29
 bank has idle cash which is not good for the bank’s profitability.

Cash Ratio
0.25

0.2

0.15

0.22 0.23
0.1 0.19
0.15
0.12
0.05

0
2019 2020 2021 2022 2023

Cash Ratio

Figure: 4 Cash Ratio

Interpretation:
From 2019 to 2023, Exim Bank's cash ratio exhibited a notable pattern of fluctuation and
subsequent growth. In 2019, the cash ratio stood at 0.15. However, in 2020, the bank
experienced a slight decrease to 0.12, marking the lowest point in this five-year span. This
downturn was followed by a significant recovery in 2021, as the cash ratio surged to 0.19. The
upward trend continued in the subsequent years, with the cash ratio rising to 0.22 in 2022 and
slightly increasing further to 0.23 in 2023. The period from 2020 to 2023 was characterized by
a consistent improvement in Exim Bank's cash ratio, indicating a strengthening liquidity
position over these years. Overall the cash ratio of EXIM Bank is increasing which indicates
that the total amount of cash in hand or at other banks is increasing with respect to the total
deposits made which indicates that the bank’s liquidity is gradually increasing over the years.
2. Investment to Total Deposit: It shows the proportion of a bank’s total deposits that are
invested in various securities or assets. This ratio helps assess the liquidity position of a
bank and how effectively it is using its deposit base to generate returns. A higher investment
to total deposit ratio indicates that a larger portion of deposits is invested, which could
potentially lead to higher returns but may also reduce liquidity. A lower ratio suggests that
a smaller portion of deposits is invested, potentially indicating a more conservative
30
 approach to liquidity management.
𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡𝑠
𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑡𝑜 𝑡𝑜𝑡𝑎𝑙 𝑑𝑒𝑝𝑜𝑠𝑖𝑡 =
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑝𝑜𝑠𝑖𝑡𝑠

Investment to total deposit

98.00%

96.00%

94.00%

92.00%

90.00% 95.47% 95.85%

88.00%
91.14%
89.55%
86.00% 88.02%

84.00%
2019 2020 2021 2022 2023

Investment to total deposit

Figure: 5 Investment to Total Deposit

Interpretation:
From 2019 to 2023, EXIM Bank's Investment to Total Deposit Ratios exhibited a dynamic
trend, reflecting the bank's evolving approach to asset allocation and risk management. In 2019,
the bank invested 89.55% of its total deposits, indicating a balanced approach with a reasonable
portion of deposits held back, possibly for liquidity or reserve purposes. In 2020, the ratio
increased to 91.14%, suggesting a slight shift towards more aggressive investment, reflecting
confidence in the available investment opportunities.
However, in 2021, the ratio dipped to 88.02%, showing a more conservative posture compared
to the previous year. This decrease could indicate a strategic decision to increase liquidity or a
response to less favorable market conditions. The trend shifted significantly in 2022, with the
ratio jumping to 95.447%, signaling a strong push towards maximizing the use of deposits for
investments. This aggressive strategy continued in 2023, where the ratio further increased to
95.85%, reflecting the bank’s commitment to leveraging its deposits for potential higher
returns. Overall, EXIM Bank's Investment to Total Deposit Ratios over these five years reveal
a general trend of increasing investment activity, particularly in the latter years. This indicates
growing confidence in the investment landscape, with the bank deploying the vast majority of

31
its deposits towards investments in 2022 and 2023. The fluctuations in the earlier years
demonstrate the bank's responsiveness to changing economic conditions and its strategic
flexibility in managing its deposit base.
3. Loans to Total Assets: It shows the company’s total loans to the total assets. It represents
how much loans the company is giving regarding the total assets. It is good for the bank to
have a low loan to total ratio. But if the decrease is very significant it means compare to
the growth of the bank it is not using its assets to give loan which may have an impact on
its profitability.

Loans to total asset

85.00%
84.00%
83.00%
82.00%
81.00%
80.00% 83.91%
79.00% 82.07%
81.30%
78.00% 79.58% 79.21%
77.00%
76.00%
2019 2020 2021 2022 2023

Loans to total asset

Figure: 6 Loans to Total Asset

Interpretation:
Exim Bank's loans to total assets ratio showed some fluctuation from 2019 to 2023. In 2019,
the ratio was 0.7958, indicating that loans constituted approximately 79.58% of the bank's total
assets. This ratio slightly increased to 0.8130 in 2020, suggesting a rise in the proportion of
assets allocated to loans. In 2021, there was a slight decrease as the ratio dropped to 0.7921,
though it remained relatively stable. The year 2022 saw a notable increase to 0.8391, indicating
a higher allocation of assets towards loans compared to previous years. Finally, in 2023, the
ratio decreased to 0.8207, showing a slight decline but still maintaining a significant portion of
assets dedicated to loans. Overall, Exim Bank's strategy appears to have involved varying levels

32
of asset allocation to loans over these years, possibly influenced by economic conditions and
banking strategies.

Credit Risk Ratio

These are the ratios which calculate the risk of loss of the investor money along with the interest
rates because of the firm’s failure to repay debt. This risk arises when arises whenever a
borrower is expecting to use future cash flows to pay a current debt. Investors are compensated
by getting risk premiums from the firm for taking the risk of investing in the company. Credit
risk is closely related with the expected probability of getting back the investment, the higher
the risks the higher the interest payments.
1. Equity to Asset ratio: The percentage of total assets financed through the owner’s equity
capital. This is the reciprocal of the debt to asset ratio. It is used to help determine how
much shareholders would receive when the company liquidates and it represents the
amount of assets on which shareholders have a residual claim. The greater this ratio the
better as is will imply that greater amounts of assets are being financed through equity.

Equity to Asset Ratio

0.07
0.068
0.066
0.064
0.062
0.06 0.0674
0.058 0.0631
0.056
0.0581 0.059
0.0578
0.054
0.052
2019 2020 2021 2022 2023

Equity to Asset Ratio

Figure: 7 Equity to Asset Ratio

Interpretation:
The equity to asset ratio of Exim Bank from 2019 to 2023 shows a gradual decline over the
period. Starting at 0.0674 in 2019, the ratio decreased to 0.0631 in 2020, indicating a slight
reduction. This decline continued into 2021, where the ratio further decreased to 0.0581.

33
However, there was a slight uptick in 2022, with the ratio edging up to 0.0590, before slightly
dropping again to 0.0578 in 2023. Overall, the trend suggests a general decrease in the
proportion of equity relative to assets held by Exim Bank over the five-year period, reflecting
potential changes in its financial structure or investment strategies during that time.
2. Equity to net loans ratio: This is the ratio of the total equity to the net loan. It shows how
much of net loans are financed by the equity the bank possesses. The higher this ratio, the
lower the credit risk or the less chance the bank will default.

Equity to Net Loans Ratio

0.09

0.08

0.07

0.06

0.05

0.04 0.0848
0.0776 0.0733 0.0703 0.0704
0.03

0.02

0.01

0
2019 2020 2021 2022 2023

Equity to Net Loans Ratio

Figure: 8 Equity to Net Loans Ratio

Interpretation:
The equity to net loans ratio for Exim Bank from 2019 to 2023 shows a gradual decline over
the period. In 2019, the ratio stood at 0.0848, indicating that for every unit of net loans, Exim
Bank held 0.0848 units of equity. By 2020, this ratio decreased slightly to 0.0776, reflecting a
reduction in equity relative to net loans. The trend continued in 2021 and 2022, with ratios of
0.0733 and 0.0703 respectively, suggesting a consistent decrease in the proportion of equity
compared to net loans. Interestingly, in 2023, there was a slight uptick to 0.0704, indicating a
stabilization or a minor increase in the equity position relative to net loans compared to the
previous year. Overall, the trend illustrates a general decline in the equity to net loans ratio for
Exim Bank over the specified period.

34
Asset Activity Ratio
1. Fixed asset turnover ratio: This is a financial ratio that is calculated by the net sales to
fixed assets, which measures the firm's ability to generate net sales from fixed asset
investments net of depreciation. The higher this ratio is the more effective it would be in
using the investment in fixed assets to generate revenues.

Net Fixed Asset Turnover Ratio

8

4
7.1286
6.6238 6.5821
3 5.9348 6.1865

0
2019 2020 2021 2022 2023

Net Fixed Asset Turnover Ratio

Figure: 9 Net Fixed Asset Turnover Ratio

Interpretation:
The above graph shows the net fixed asset turnover ratio for Exim Bank from 2019 to 2023,
varying trends over the years. In 2019, the ratio was 6.6238, indicating that Exim Bank
generated approximately $6.62 in revenue for every dollar invested in fixed assets. The ratio
decreased slightly to 6.5821 in 2020, suggesting a marginal dip in asset efficiency. By 2021,
the ratio further declined to 5.9348, indicating a more pronounced decrease in revenue
generated per dollar of fixed assets. However, in 2022, there was a recovery as the ratio
increased to 6.1865, signaling improved efficiency in asset utilization. The trend continued
positively into 2023 with a ratio of 7.1286, indicating that Exim Bank significantly increased
its revenue generated per dollar of fixed assets, reflecting potentially better operational
efficiency or increased revenue generation capabilities. Overall, the trend shows fluctuations
with periods of decline followed by recovery and growth in asset turnover efficiency over the
years.
35
2. Net asset turnover ratio: Also known as the Asset Turnover Ratio it measures the amount
of sales generated for every dollar's worth of assets. It is calculated by dividing sales in
dollars by assets in dollars. This ratio is more useful for growth companies to check if in
fact they are growing revenue in proportion to assets also known as the Asset Turnover
Ratio. The higher the ratio, the higher will be the asset activity. A high asset turnover
implies that the bank is better able to utilize its net assets to generate revenue so it is best
for the company to have a high fixed asset turnover.

Net Asset Turnover

0.1
0.09
0.08
0.07
0.06
0.05
0.04 0.0865
0.0753 0.0722
0.03 0.0608 0.0671

0.02
0.01
0
2019 2020 2021 2022 2023

Net Asset Turnover

Figure: 10 Net Asset Turnover Ratio

Interpretation:
The net asset turnover ratio of Exim Bank from 2019 to 2023 shows a fluctuating trend. In
2019, the ratio was 0.0865, indicating that for every unit of assets, Exim Bank generated 0.0865
units of revenue. Subsequently, the ratio decreased to 0.0753 in 2020, suggesting a slight
decline in efficiency in asset utilization. This trend continued with a further decrease to 0.0608
in 2021, possibly indicating challenges or adjustments in operational efficiency or revenue
generation relative to its asset base. However, there was a recovery in 2022, where the ratio
improved to 0.0671, indicating a potential rebound in asset productivity. By 2023, the ratio
further increased to 0.0722, indicating a continued upward trend in efficiency in utilizing assets
to generate revenue. Overall, while there were fluctuations, Exim Bank managed to improve
its asset turnover ratio towards the latter years, potentially reflecting strategic adjustments or
improved operational effectiveness.

36
4.2 Foreign Exchange Analysis
4.2.1 Import and Export:
The International Trade constitutes a major business activity conducted by the Bank. The
EXIM Bank's import activities saw a notable decrease between 2022 and 2023. In 2022, the
bank reported imports valued at TK. 250,137.77 million, indicating a robust level of
international trade and economic engagement. However, by 2023, this figure had dropped to
TK. 219,541.39 million. This decline suggests a contraction in import activities, which could
be attributed to various factors such as global economic conditions, changes in trade policies,
supply chain disruptions, or shifts in market demand. The reduction of approximately TK.
30,596.38 million highlights the need to assess the underlying causes and strategize on how to
mitigate such decreases in future trade operations. On the other hand, the EXIM Bank
experienced a notable decline in its export figures. In 2022, the bank's exports amounted to
276,498.19 million. However, this figure dropped significantly to 235,318.11 million in 2023.
This decrease highlights a shift in the bank's international trade activities, potentially
influenced by various economic, geopolitical, or market-specific factors that may have
impacted the global export environment during this period. The reduction in exports
underscores the challenges and changes the EXIM Bank faced over the year.

Import & Export (in million)

Import Export

300,000.00 280,093.00 276,498.19

250,137.77
250,000.00 235,318.11
211,974.50 219,541.39
200,801.50
200,000.00 177,825.26
170,652.60
161,290.17
150,000.00

100,000.00

50,000.00

0.00
2019 2020 2021 2022 2023

Figure: 13 Import and Export

37
4.2.2 Remittance:
Remittance is a large factor in our economy. Private import, Public import are affected by the
amount of remittance. Most of remittances are sent by Bangladeshi labors from Saudi Arabia,
Qatar, Dubai, and other midlist countries. The rate of incoming remittance increases day by
day. It’s an important support for Bangladesh government to make budget. Our export sector
also plays a great role to bring remittance. Maximum remittance is coming from RMG export.
Recently, Shoe export performance improve and work in earn remittance as well as RMG
export. Between 2019 and 2023, the remittance figures of the EXIM bank showed notable
fluctuations, reflecting the dynamic nature of international trade during this period. In 2019,
the remittances were recorded at 6456.60 million. However, in 2020, there was a significant
decline to 5313.56 million, likely influenced by the global economic disruptions caused by the
COVID-19 pandemic. The following year, 2021, witnessed a partial recovery with remittances
rising to 5811.80 million, as global markets began to stabilize and trade activities picked up.
In 2022, the positive trend continued, with remittances increasing to 6270.82 million. This
growth was likely driven by increased export activities and a stronger demand for international
trade financing. The upward trajectory culminated in 2023, with the EXIM bank achieving its
highest remittance figure of 7034.32 million over the five-year period. This peak indicates a
robust recovery and growth phase, suggesting a stronger global trade environment and effective
financial strategies by the bank. Overall, the period from 2019 to 2023 showcases the EXIM
bank's ability to navigate through economic challenges and capitalize on recovery opportunities
in the international trade sector.

Remittance
8,000.00

7,000.00

6,000.00

5,000.00

4,000.00
7,034.32
3,000.00 6,456.60 6,270.82
5,811.80
5,313.56
2,000.00

1,000.00

0.00
2019 2020 2021 2022 2023

Year

Figure: 14 Remittance

38
4.3 Findings
4.3.1 Financial Performance
1. Net profit margin exhibited an overall upward trend from 2019 to 2023, despite
experiencing fluctuations due to various operational and economic challenges.
2. Net interest margin of EXIM Bank is relatively constant at 0.3.
3. Overall the return on deposit experienced a very small downward trend following an initial
upward rise.
4. Cash ratio fluctuated initially but demonstrated consistent growth from 2020 onwards,
rising from 0.12 to 0.23, reflecting an overall strengthening of the bank's liquidity position.
5. Exim Bank's Loans to Total Deposit ratio steadily increased, peaking in 2022 before
slightly declining in 2023.
6. Exim Bank's ratio of loans to total assets showed fluctuations over the period.
7. The equity to asset ratio of Exim Bank showed a gradual decline over the five-year period.
8. Overall the equity to net loans ratio for Exim Bank declined gradually from 2019 to 2023.
9. The net fixed asset turnover ratio for Exim Bank exhibited fluctuations with periods of
decline followed by recovery and growth in asset turnover efficiency from 2019 to 2023.
10. Exim Bank's net asset turnover ratio showed fluctuations but generally improved towards
the latter years of 2019 to 2023, indicating potential strategic adjustments or enhanced
operational effectiveness.
4.3.2 Foreign Exchange
1. Only Import & Remittance occurs at Savar Bazar Branch.
2. Letter of credit is issued to increase the creditability of the importer as the bank is acting as
the guarantor of payment.
3. Varied number of L/C is opened per month in EXIM Bank, Savar Bazar Branch. So far till
June 155 L/C have been opened making an average of 25 L/Cs per month.
4. Every importer needs to have an IRC.
5. For opening an L/C at EXIM Bank one needs to do the following:
6. Open an Al-Wadiah CD account
7. Give an L/C application letter, give a proforma invoice and fill a L/C application form
8. Pay the L/C amount in full or partial, depending on client
9. Open L/C
10. The basic L/C process as illustrated in the above diagram basically consists of the below
steps:

39
11. First the importer sends a purchase order to the exporter following which the exporter or
supplier sends a pro-forma invoice.
12. The Importer then using the pro-forma invoice must make an L/C application in EXIM
Bank as mentioned earlier
13. EXIM Bank then creates the L/C and sends it via swift message to the advising bank or
exporter’s bank
14. The advising Bank notifies the exporter of the receipt of the L/C.
15. The exporter then ships the goods
16. The exporter sends the shipping documents through advising bank to the issuing Bank or
EXIM Bank.
17. EXIM Bank then endorses the shipping documents and gives the shipping documents to
the party when the remaining L/C amount has been paid
18. Using the shipping documents the importer goes to the port and collects the goods from
there
19. Only Inward remittance is permitted in Bangladesh, outward remittance is prohibited unless
for student profile holders.
20. EXIM Bank has EXIM Exchange Company (UK) Limited and many drawing/agencies
arrangements to facilitate remittance transfer.

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 Recommendation
The findings from the internship report on Foreign Exchange Policy & Financial Performance
of EXIM Bank, here are some key recommendations:
1. Advance Procedure for Opening LC: A few customers may be permitted for opening
L/C even with nil margin and fees commission.
2. Advances for Export: EXIM Bank may provide many advances for export to encourage
exporter to increase export amount. It can reduce service charges.
3. Enhancing Limit of Import Financing: Loan or advances is granted for import to
importer. EXIM Bank can enhance the limit of loan to encourage and to help importers.
4. Promotions for Increasing Remittance: EXIM Bank has to enlarge promotions to
inform clients about foreign trade. Continuous promotions are needed to catch the
attention of customers. TV advertising is best for fill the gap in short time.
5. Raising Manpower in Foreign Exchange Operation: Manpower may be increased in
foreign exchange section. It will help to provide prompt services.
6. Specific Desk and Task for Intern: EXIM Bank Limited may arrange specific desk
for intern and give him/her various specific tasks in weekly basis.
7. Inspiring Employees: Regular Performance Appraisal and assuring promotion/reward
will resist the employees switching tendency.
8. Improving profitability: The profitability ratio analysis of EXIM Bank has indicated
that the overall profitability of the bank has decreased so the bank should focus on
improving its profitability. It should more specifically focus on improving its net profit
and interest income in that way causing net profit margin, return on deposit and net
interest margin to increase and hence increase the overall profitability of the bank.
The net asset turnover of EXIM Bank is very low which indicates that the banks efficiency in
utilizing its assets to generate revenue is very low. Therefore, the bank should try and improve
this ratio by putting its assets to more revenue generation.

41
 Conclusion
As an intern at EXIM Bank Ltd, I have found the experience to be incredibly rewarding from
both a learning and experiential standpoint. I am confident that this three-month internship will
be invaluable in shaping my future career in the job market. In today’s competitive landscape,
EXIM Bank not only has to compete with other commercial banks but also with public banks.
However, EXIM Bank is uniquely positioned to contribute more significantly to economic
development than other banks, especially due to its substantial investments in export and
import activities. The bank’s forward-thinking approach, including its efforts to establish a
robust network across the country and enhance its resources, will likely play a pivotal role in
driving development.
As I work on my internship report, I believe I will gain further insights and hands-on experience
in General Banking, the Foreign Exchange department, and the Investment department. I
consider EXIM Bank to be one of the top private banks in the country, regarded as a promising
player among other private banks in Bangladesh. The bank is highly focused on customer
service, ensuring smooth transactions and offering favorable interest rates. In conclusion, I can
confidently state that EXIM Bank Limited is performing exceptionally well. During my
practical training, I have strived to understand the real-world operations of banking and to
connect this experience with the theoretical knowledge I have acquired through my BBA
program.

42
 Appendix
Calculations:
2019 2020 2021 2022 2023
Profitability Ratios
* Net Profit Margin
Net Profit 2382080000 2815320000 2156600000 3721410000 3379960000
Revenue 3742728000 3650619000 3289511000 3622967000 4156758000
NPM= NP/R 0.06 0.087 0.076 0.1 0.08

* Return on Deposit
Net Profit 2382080000 2815320000 2156600000 3721410000 3379960000
Total Deposit 35568916000 39446290000 42067377000 42601524000 44687370000
ROE= NP/TD 0.0069 0.0071 0.0046 0.0084 0.0073

Liquidity Ratio
* Cash Ratio
In hand (including 501,538,364 731,845,420 939,991,945 1,256,309,598 1,563,645,229
foreign currencies)
Balance with 8,714,624,948 9,346,669,826 13,964,278,341 20,542,822,468 24,866,509,519
Bangladesh Bank and
its agent banks
(including foreign
currencies)
Balance with other
banks and financial
institutions:
In Bangladesh 123,249,512 539,356,997 3,882,017,395 6,186,227,238 8,793,193,247
Outside Bangladesh 1,406,619,922 842,791,498 1,400,339,005 2,746,578,779 3,084,739,598
Total Cash in hand 10,746,032,746 11,460,663,741 20,186,626,686 30,731,938,083 38,308,087,593
and at banks
Total Deposits 35568916000 39446290000 42067377000 42601524000 44687370000
Cash Ratio=Cash in 0.15 0.12 0.19 0.22 0.23

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hand and at
banks/Total Deposit

* Investment to
Total Deposit
Total Investments 34455765000 39417448000 42903337000 45344914000 47282560000
Total Deposits 35568916000 39446290000 42067377000 42601524000 44687370000
ITTD= TI/TD 0.9687 0.9993 1.0199 1.0644 1.0581

* Loan to Total
Asset
Loans (Investment) 34455765000 39417448000 42903337000 45344914000 47282560000
Total Asset 43301799000 48485087000 54166525000 54040810000 57613952000
LTTA= L/TA 0.7958 0.813 0.7921 0.8391 0.8207

Credit Risk Ratio

* Equity to Asset
Total Equity 2918794000 3059152000 3144042000 3186808000 3329137000
Total Asset 43301799000 48485087000 54166525000 54040810000 57613952000
Equity to Asset= 0.0674 0.0631 0.0581 0.059 0.0578
TE/TA

* Equity to net loans

ratio
Total Equity 2918794000 3059152000 3144042000 3186808000 3329137000
Net Loan 34455765000 39417448000 42903337000 45344914000 47282560000
ETNL = TE/NL 0.0848 0.0776 0.0733 0.0703 0.0704

Assets Activity Ratio

* Fixed Asset
Turnover
Revenue 3742728000 3650619000 3289511000 3622967000 4156758000

44
Net Fixed Asset 565043000 554633000 554275000 585625000 583115000
FAT=R/NFA 6.6238 6.5821 5.9348 6.1865 7.1286

* Net Asset
Turnover
Revenue 3742728000 3650619000 3289511000 3622967000 4156758000
Net Asset 43301799000 48485087000 54166525000 54040810000 57613952000
NAT=R/NA 0.0865 0.0753 0.0608 0.0671 0.0722

45
46
 References
Export Import Bank of Bangladesh: Home (no date) Export Import Bank of Bangladesh | Home.
Available at: https://www.eximbankbd.com/ (Accessed: 20 July 2024).

Exim Bank: Financial Highlights (2024) EXIM Bank | Financial Highlights. Available at:
https://www.eximbankbd.com/report/Financial_Highlights (Accessed: 19 August 2024).

Exim Bank: Annual reports (no date) EXIM Bank | Annual Reports. Available at:
https://www.eximbankbd.com/report/Annual_Reports (Accessed: 19 July 2024).

Unvan, Y.A. and Moniruzzaman, M. (2023) ‘The Export-Import Bank of China and
Bangladesh: A comparative overview’, Pressacademia [Preprint].
doi:10.17261/pressacademia.2023.1682.

(No date) Foreign Exchange policy of EXIM Bank Bangladesh Ltd. Available at:
https://dspace.bracu.ac.bd/xmlui/bitstream/handle/10361/1055/2010
december.pdf?sequence=1&isAllowed=y (Accessed: 02 August 2024).

(No date) Bangladesh Bank. Available at:

https://www.bb.org.bd/en/index.php/publication/publictn/0/2 (Accessed: 20 August 2024).

‘Foreign Exchange Markets and foreign exchange rates’ (no date) The Economics of Foreign
Exchange and Global Finance, pp. 1–16. doi:10.1007/3-540-28524-5_1.

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