An Internship Report On

Financial Performance Evaluation of National Bank Limited

Department of Finance Bangladesh University of Business & Technology (BUBT), Bangladesh

An Internship Report
On

Financial Performance Evaluation of National Bank Limited

Supervised by Md. Amdadul Hoque Assistant Professor Department of Finance Bangladesh University of Business & Technology (BUBT) Submitted by Md. Humayun Kabir ID NO: 07081101033 BBA 14th Intake Major in Finance

Bangladesh University of Business & Technology (BUBT) Submission Date: August 14, 2011
ii

Letter of Transmittal
Date: August 14, 2011 Md. Amdadul Hoque Assistant Professor Department of Finance Bangladesh University of Business & Technology (BUBT)

Subject: Submission of Internship Report on Financial Performance Evaluation of National Bank Limited Dear Sir, In connection of my practical orientation in National Bank Ltd., I would like to submit my report to you for your perusal. I have prepared this report on the basis of my practical exposure at Mirpur Branch of National Bank Ltd. It is a great pleasure for me to present you this report under the head of Financial Performance Evaluation of National Bank Limited I enjoy preparing this report, which enriched my partial knowledge of the theoretical concept. I tried to reflect the operational aspects of the Bank, Which is complementary to the theoretical and practical knowledge. I will be very glad if the report can serve its actual purpose and I am ready to explain anything to you if you feel necessary. Yours Sincerely, .. Md. Humayun Kabir BBA 14th Intake, ID NO: 07081101033 Major in Finance Bangladesh University of Business & Technology (BUBT)

iii

Declaration

I, Md. Humayun Kabir, hereby declare that the report of internship Program titled Financial Performance Evaluation of National Bank Ltd. is uniquely prepared by me after the completion of three months work at Mirpur Branch of National Bank Ltd. I confirm that, the report is only prepared for my academic requirement not for other purpose. It might be with the interest of opposite party of the corporation. I also assure that this report is not submitted anywhere of Bangladesh before me.

Md. Humayun Kabir ID: 07081101033 14th Intake Major in Finance BBA Program Bangladesh University of Business & Technology (BUBT)

iv

Certificate of Supervisor

This is to certify that Md. Humayun Kabir is a student of BBA, ID No. 07081101033 successfully completed his Internship Program entitled Financial Performance Evaluation of National Bank Limited-A study on National Bank under my supervision as the partial fulfillment for the award of BBA degree.

He has done his job according to my supervision and guidance. He has tried his best to do this successfully. I think this program will help his in the future to build up his career. I wish his success and prosperity.

.... MD. Amdadul Hoque Assistant Professor Department of Business Administration Bangladesh University of Business & Technology (BUBT)

Acknowledgement
At first I want to express my gratitude to Almighty Allah for giving me the strength and the composure to finish the task within the scheduled time. Then I am very grateful to the National Bank Ltd. for providing me the opportunity to complete my internship program. I received cordial cooperation from the officers and members of staffs of National Bank Ltd., Mirpur Branch. I want to express my cordial gratitude to them for their cooperation without which it would not be possible to complete the report. I would like to express my deep sense of gratitude & sincere appreciation to my internship supervisor Mr. Md. Amdadul Hoque, Assistant Professor, Department of Finance, Bangladesh University of Business & Technology (BUBT) for her continuous support & guidance during the practical orientation period. His suggestions and comments were really a great source of spirit to make the report a good one. I also express my heartiest gratitude to honorable Internship Co-ordinator and Dean, School of Business, Professor Md. Mohiuddin to give me permission for Internship.

I am really thankful to Mr. Md. Akmal Hossain Asst. Vice President & Manager of the National Bank Ltd, Mirpur Branch for giving me the excellent opportunity to do my practical orientation in his branch. Finally I would also like to thank all of the officials of National Bank Limited, Mirpur Branch due to their kind and helpful cooperation with me.

Thanks all from core of my heart.

vi

Table of Content
Subject Executive Summery Page No. XIII

Subject
Chapter -01: Introduction
1.0. Introduction of the Report 1.1 Background of the Report 1.2 Significance of the Report 1.3 Scope of the Report 1.4 Objective of the Report 1.4.1 General Objectives 1.4.2 Specific Objectives 1.5 Methodology 1.5.1. Research Design

Page No.

1 1 2 2 2 2 2 3 3 3 3 3 3 3 4 4 4

1.5.2. Sources of Data Secondary Data

1.5.3. Data Collection Procedure and Instruments Secondary Data

1.5.4. Instruments Used for Analysis 1.6.Limitations Ratio Analysis Trend Analysis

Chapter-2: Overview of NBL

vii

2.0 Background 2.1 History & Heritage Of National Bank Limited 2.2 Vision 2.3 Mission 2.4 Brand Image 2.5 Goal of the Bank 2.6 Objective of the Bank Limited

5 5 7 7 7 7 8 8 9 10 11 12 13 16 16 17

2.7 NBLs Core Value 2.8 Business Principals of National Bank 2.9 Branches of National Bank Limited 2.10 Organogram 2.11 Financial Highlights of National Bank Limited 2.12 Business Performance over the last few Decades 2.13 Credit Rating 2.14 Rate Basel-II 2.15 Deferent Types of Service

Chapter-3: Theoretical Background

3.1 Ratio analysis 3.2 Types of Ratio Time-Series Analysis 21 21 21 21 21 22 22-28

Cross-Sectional Analysis Trend Analysis 3.3 Some Words of Caution 3.4 Group of financial ratios

Chapter-4: Financial Analysis of National bank Limited

viii

4.0 Quantitative Analysis of National Bank Limited 4.1. Analyzing liquidity ratio

29 29 32 34 36

4.2. Analyzing Activity ratio 4.3. Analyzing Debt ratio 4.4. Analyzing profitability ratio

Chapter-5:Comparative Analysis
5.0. Comparative Analysis with UBL & MBL 5.1. Analyzing liquidity ratio 41 41 43 45 46

5.2. Analyzing Activity ratio 5.3. Analyzing Debt ratio 5.4. Analyzing profitability ratio

Chapter-6: Findings, Conclusion, Recommendation

6.1. Findings 51 52 53 54 Bibliography

6.2. Conclusion 6.3. Recommendation

Table of Figures

ix

Serial

Particulars

Page No

Chapter-2: Company Profile

Figure 2.1 Figure 2.2 Figure 2.3 Figure 2.4 Figure 2.5 Figure 2.6 Figure 2.7 Figure 2.8 Branches of NBL Organogram of NBL Capital Structure Deposit performance over the last five decade Foreign Trade over the last 5 years Net Profit after Tax over the last few decades Loans & Advance over the five years Remittance over the five years 10 11 13 13 14 14 15 25

Chapter-3: Theoretical Background

Figure 3.1 Groups of Financial Ratios 23

Chapter-4: Financial Analysis of National bank Limited

Figure 4.1 Figure 4.2 Figure 4.3 Figure 4.4 Figure 4.5 Figure 4.6 Figure 4.7 Figure 4.8 Figure 4.9 Figure 4.10 Figure 4.11 Figure 4.12 Current Ratio Net Working capital Cost Income ratio Total Asset Turnover Investment to Deposit ratio Debt ratio Time Interest earned Ratio Net profit margin Return on Asset (ROA) Return on equity (ROE) Earing per share (EPS) Price earning ratio 29 30 31 32 33 34 35 36 37 38 39 48

Chapter-5: Comparative Analysis with Uttara Bank & Mercantile Bank Ltd
Figure 5.1 Current Ratio 50

Figure5.2 Figure 5.3 Figure 5.4 Figure 5.5 Figure 5.6 Figure 5.7 Figure 5.8 Figure 5.9 Figure 5.10

Cost Income ratio Total Asset Turnover Investment to Deposit ratio Debt Ratio Net Profit Margin Return on Asset Return on Equity Earning Per Share Price Earning Ratio

5 53 54 55 56 57 58 59 60

xi

List of Abbreviation

AD: CD: SB: STD: PO: TT: MT: DD: IBC: OBC: SOD: CC (H): CC (P): PAD: LIM: LTR: NBL: FDR: UBL: MBL: CAR:

Authorized Dealer Current Deposit. Savings Bank. Short Term Deposit. Pay-Order. Telegraphic Transfer. Mail Transfer. Demand Draft. Inward Bills for Collection. Outward Bills for Collection. Secured Overdraft. Cash Credit (Hypo). Cash Credit (Pledge). Payment against Document. Loan against Imported Merchandise. Loan against Trust Receipts. National Bank Limited Fixed Deposit Receipt Uttara Bank Limited Mercantile Bank Limited Capital Adequacy ratio

xii

Executive Summary
The National Bank Limited is one of the fast growing commercial banks. Bank not only ranked as the top performer of the 3rd generation private banks but also surpassed almost all banks in terms of overall growth & profit. Stability of the financial institute in terms of growth, profitability and management is desirable for up-gradation of banks image in the market. Security of the deposit maintained i.e. the level of efficiency and effectiveness of the investment portfolio of the bank, as the deposit maintained is used for investment portfolio of the bank, direct relationship over the customer loyalty and this is the prime factor affecting the image of any financial sector in the market. The Bank should have automated operations in the service windows to. New Products and Services add value to the brand image of the Bank. Insurance on deposit and loan products protect not only the banks interest but also the interest of the public. Limitations of operations are to be minimized to have superior customer satisfaction. Liquidity of deposits has direct impact on the public sentiment and hence has ample effect on the customer loyalty. The report on Financial Performance Evaluation of National Bank Limited. This report gives an idea about the activities of Financial Performance of National Bank Limited .The objective of this report is to analyze & focus on the over-all financial operation. This report aims to providing financial performance evaluation of National Bank Limited. Here, all sorts of ratio analysis have been executed, in order to analyze how efficient, liquid and desirables the bank is in terms of its finance. To start with, the liquidity ratio of the bank reveals that National Bank Limited has proven to be quite liquid and financial strength over the past four years. In the First Two Parts a brief overview of background, significance, methodology, instruments used for analysis of making report is discussed. The Companies history, its vision, mission, objective, goal, brand image, core values, business principles etc are discussed. The function of its different consistent departments (General Banking) and products presented to its clients are also given to find out its normal functionality. To understand how National Bank Ltd is performing in the macro environment, financial highlights are also provided to evolutes the financial condition of NBL.

xiii

In the Third Part named Theoretical Background show brief description about ratio analysis. In the Fourth Part or Analysis Part I have discussed Quantitative Analysis like different ratios of four years to understand the financial condition for analyze properly. In Next part Comparative Analysis is discussed where I try to show comparison with other private commercial bank & specially focus on Uttara Bank & Mercantile Bank Ltd. This report also deals with some Findings, recommendations which are draw by analysis of whole report. As an essential bank of Bangladesh, NBL contributes in the business with hopeful future. I can hope that National Bank Limited can spread their business with increasing various scheme & other utility services. Finally, I have shown some findings from the quantitative analysis of Uttara Bank Limited and Mercantile Bank Limited. Then I concluded my report saying some recommendations and justifications which may help National Bank Limited to improve its current position.

xiv