Commercial Banking In

Bangladesh and Prime Bank

Presenters:
Name ID
Kamruzzaman Ahmed 1020063030
Farjana Yesmin unni 1010232030
!ania Alam 1020"33030
!asnia #anajan 1110$10030
Ahna% !ahmid 1010000030
Commercial Bank:
Commercial bank is a financial institution.
Collect deposits by offering many types of
accounts.
Gives interest on the deposits
Provide loans and other financial facilities.
Charge interest on loans and our services.
The main duty of commercial bank is taking deposits on interest and
providing loans on interest
Commercial Bank (cont) :
Commercial banks in
Bangladesh:
#&a&e'o(ned
commercial
Banks )*
Banks+
#,ecialized
commercial
Banks )*
Banks+
Con-en&ional
,ri-a&e
commercial
Banks )31
Banks+
Islami'
#hariah
.ased
commercial
Banks )"
Banks+
Foreign
commercial
Banks )/
Banks+
Functions of Commercial
Bank:
Recei-ing de,osi&s Recei-ing de,osi&s Pro-iding loans Pro-iding loans
Functions of Commercial
Bank (Cont..) :
Deposits
Current
Account
Saving
Account
Fixed
Account
Functions of Commercial
Bank (Cont..) :
Curren& accoun&0
o Freedom of withdrawal.
o No interest.
o inimum amount of !"""tk.
#a-ing accoun&0
o A limit of withdrawal in a week.
o #ower rate of interest.
o ostly used by middle class group.
Functions of Commercial
Bank (Cont..) :
Fi1ed accoun&0
o Withdrawal after a fixed time.
o $ighest rate of interest rate.
o %nterest rate differs due to different period.
Loan
Short&term #oans
edium&term #oans
#ong&term #oans
!erm .asis
Secured loan
Unsecured loan
Demand
Subsidi'e
Concessional
!2,e .asis
Functions of Commercial
Bank (Cont..) :
Functions of Commercial
Bank (Cont..) :
#hor&'&erm Loans0 #oan that is given for less than five years.
edium'&erm Loans0 #oan that is given for ( to !"years.
Long'&erm Loans0 #oan that is given for more than !"years.
Functions of Commercial
Bank (Cont..) :
i. Secured loans)
a. Collateral
b. ortgage loan
ii. Unsecured loans)
a. Personal loans
b. *ank overdrafts
c. *usiness #oan
d. S+ #oan
iii. Demand loans
iv. Subsidies
v. Concessional
Functions of Commercial
Bank (Cont..) :
#ecured Loans
ortgage loan
Collateral #oans
Necessity of Commercial Bank:
Security
Exchange
currency
Easy transaction
Help
globalization
Intermediary
between lender
and borrower
Prime Bank Ltd
Prime Bank Ltd
Background0
Prime *ank #td is a fully licensed conventional private owned commercial bank.
Created and started its ,ourney on !-
th
April.!//0.
Well reputed and experience personalities in the field of trade and commerce
were the sponsor of the organi'ation
1hey have always tried to understand the customers need and serve them
according to their needs.
1hey have hired highly professional and dedicated team with long experience for
serving the customers more effectively
Prime Bank Ltd
Vision0
1o be the best Private Commercial *ank in *angladesh in terms of
efficiency. capital ade2uacy. asset 2uality. sound management and profitability
having strong li2uidity.
ission0
1o build Prime *ank #imited into an efficient. market&driven. customer
focused institution with good corporate governance structure.
Continuous improvement of
our business policies. procedure and efficiency through integration of technology
at all levels.
Leaders of Prime Bank Ltd
Leaders of Prime Bank Ltd
Leaders of Prime Bank Ltd
Awards and Achievements of
Prime Bank Ltd:
!he BI33 2012 %nspirational Company Award
In&erna&ional #&ar %or Leadershi, in 4uali&2 )I#L4+
A(ard 2010
*usiness %nitiative Directions 3*.%.D.4 Paris. France
ICAB Bes& Cor,ora&e Per%ormance A(ard 200" First
Position
FN# A(ard'200$ *est Performing #ocal *ank
ICAB Na&ional A(ards'2003 For *est Published Accounts
and 5eports Second Pri'e Financial Sector 3*anking4
Functions of Prime Bank Ltd:
Prime *ank #td has divided its total functions under five categories.
Re&ail Banking
Cor,ora&e Banking
Islamic Banking
#56Agri Banking
NRB Banking
Functions of Prime Bank Ltd
. !etail Banking:
Customers are Prime *ank #td6s !
st
priority. Prime *ank #td try to provide the
broad range of variety and improve services for customers for maximi'ing
customer6s benefit. Under this category they cover)
De,osi&s
Loans
Cards
In&erne& Banking
Locker #er-ices
Phone Banking
7&ili&2 ,a2 ser-ices
Functions of Prime Bank Ltd
". Corporate Banking:
Prime *ank #td designed and offered corporate banking service for the corporate
sector of *angladesh. 1his offering includes four services)
General credi& uni&
51,or& Finance uni&
Lease Finance uni&
#&ruc&ured Finance uni&
Functions of Prime Bank Ltd
#. Islamic Financing:
%slamic *anking is operated based on Shari6ah principles. Prime bank was the !
st
commercial bank offering both conventional and %slamic banking together. 7nly
five branches of Prime *ank #td provide %slamic banking operations to serve the
increasing demand of customers for %slamic products and services. Under this
process they offer)
Hasanah De,osi& Produc&s
Hasanah In-es&men& Produc&s
Hasanah Foreign !rade
Functions of Prime Bank Ltd
$. S%E&Agri Banking:
1his service is offered by Prime *ank #td for both S+ and agriculture sector
of *angladesh. !- branches of Prime *ank #td provide this services to the
customers. And this programs offer)
Colla&eral Free Loan
Ca,i&al Loan
8orking Ca,i&al Loan
#easonal Loan
Dou.le Loan
Functions of Prime Bank Ltd
'. N!B Banking:
5emittance is one of the most effective e2uipment of our economy. Prime
*ank #td has provided this offerings for N5* 3Non&5esident *angladeshi4.
1his offer includes)
Foreign Remi&&ance #er-ices
Accoun& Facili&ies %or NRBs
8ire !rans%er Facili&ies
51change House
Deposits offered by
Prime Bank Ltd (Cont..):
#hor& &ermde,osi&0
Short termdeposit option in running account.
Amounts being paid into drawn out of the account continuously.
1hese accounts are also called demand deposit.
Generally opened by individual person.
%nterest bearing deposit.
Fi1ed De,osi& recei,&s scheme0
Customer can devote a fixer amount of money.
Duration can be one month. three months. six months or twelve
months.
Accordingly the interest rate is /.08. /.08or !"8
Deposits offered by
Prime Bank Ltd (Cont..):
Curren& Accoun&0
Freedom of deposits and withdrawal
Check book facilities
#ocker facilities
Collecting foreign remittance in both che2ue and draft
No interest
#a-ing Accoun&0
Utility payment service
Negotiable account withdrawal
08 interest rate
Deposits offered by
Prime Bank Ltd (Cont..):
Dou.le .ene%i& de,osi& scheme0
%ssued for ( years ( months term.
After ( years ( months. terminal value will stand at 1k. 9 lacs from
the initial fixed deposit of 1k. ! lac.
%nterest rate is !!.(8
House Building De,osi& #cheme0
1he scheme is offered for 0.- or!" years.
inimum e2uity building amount shall be !"lacs and maximum
amount shall be 9" lacs.
Deposits offered by
Prime Bank Ltd (Cont..):
udara.a Dou.le Bene%i& de,osi& scheme )DBD#+0
Follow udaraba concept
Profit bearing account
7ffers returns on deposit for fixed period of time
+stimated duration is 0years. 0month.
udara.a Con&ri.u&or2 #a-ings #cheme )C##+0
inimum installment is 0""tk
aximum installment is 9:"""tk
7ffers two options of getting return.
i. 1otal amount after maturity
ii. As pension 0years after maturity 3based on the deposit4
Deposits offered by
Prime Bank Ltd:
oney *enefit Deposit Scheme
Contributory Saving scheme
#akhopati Deposit Scheme
+ducation Savings scheme
Shukonna
onthly *enefit Deposit Scheme
Al&Wadeeah Current Account
udaraba $a,, Saving Scheme 3$SS4
Loans offered by
Prime Bank Ltd
#(a,na,uran loan0
Fund for fulfilling customer6s dream.
At least 90 years professional experience
1wo years loan limit is maximum ;" #ac.
Security will be mortgage and original title deed.
Car loan0
Purchase brand new car
professional experience
9 years minimum monthly income will be *D1 9""""".
$ypothecation over the car.
Loans offered by
Prime Bank Ltd (Cont..) :
CNG Con-ersion Loan0
$elp to convert our personal vehicle to CNG criteria.
1o be eligible for this loan is at least 9! years.
#oan limit will be maximum ! #ac.
Security will be personal guarantee of the borrowers.
Household9s dura.le loan0
1o buy furniture. home appliance and household durables.
Criteria to eligible for this loan are at least 9! years.
inimum monthly income should be *D1 !"""" and self employed
90""" loan limit will be maximum 0 #ac.
Security personal guarantee of the borrowers.
arriage loan0
For fulfilling cherished priorities and expenditures of weeding.
Criteria to be eligible for this loan are at least 90 years.
#oan limit will be maximum ; lac.
Security will be personal guarantee of the borrowers.
5duca&ion loan0
For student who wants to fulfill their dreams of higher studies.
Student should be at least 90 years.
#oan limit will be 0 lac.
Security will be personal guarantee of the borrowers.
Loans offered by
Prime Bank Ltd (Cont..) :
Loans offered by
Prime Bank Ltd (Cont...) :
Any purposes loan
#oan against Salary
Doctor6s loan
1ravel loans
$ospitali'ation #oan
Abash $ome #oan
Carnival loan
$asanah Auto %nvestment 3*urak4
$asanah $ousehold Durable %nvestment 3Asbab4
$asanah edical %nvestment 3Shifa4
Process of collecting
repayment:
!. Fulfill legal procedures so that they can take any legal steps if needed.
9. *ank sent reminder letter
;. 1alk to the borrower over phone
:. *ank goes for group visiting
0. Strictly handle this sector
(. *ank inform the person who has given the grantee
-. After all this process if they fail then they go to court and do legal
procedures.
Performance evolution of
Prime Bank Ltd
Financial institutions like banks have very different ways of reporting financial
information. %nvestors have different fundamental factors to consider while
evaluating a bank6s performance. 5atios that are used to evaluate the prime banks
position are)
CA+#S rating
#oan Growth
Deposit Growth
#oan<Deposit 5atio
+fficiency ratio
Capital 5atio
57+<57A
Credit =uality
1wo different domestic bank6s financial highlights were taken to compare the
situation prime bank is in. 1hey are)
i: Premier Bank
ii: AB .ank
Performance evolution of
Prime Bank Ltd (Cont..):
Performance evolution of
Prime Bank Ltd (Cont..)
CA5L# ra&ing0
C; Capital Ade2uacy. As ade2uate bank capital is thought to
reduce a bank6s risks.
A; Asset =uality. $ow deposited funds are allocated. Can
determine level of Credit risk.
; anagement Capability. Administrative skills and ability to
cope with changing environment.
5; +arning
L; #i2uidity. 5egulators prefer that banks not consistently rely
on sources like federal funds market to obtain funds
and #; Sensitivity. 1o market risk. especially interest rate risk.
Performance evolution of
Prime Bank Ltd (Cont..)
Camels rating have ! through 0 rating for each of these components and a
composite rating where the rating of ! indicates strong performance or best rating.
9 reflects satisfactory performance. ; represents performance that is flawed to some
degree. : refers to marginal performance and is significantly below average and 0
is considered as unsatisfactory or worst rating.
Performance evolution of
Prime Bank Ltd (Cont..)
1hese are rated by regulatory bodies such as *angladesh *ank
5atings are not published to prevent possible bank run
*ased on the performance of Dec 9"!9. as suggested in articles of >Dhaka irror6
and >weekly industry6 Prime *ank is on B'Class which is the list of sa&is%ac&or2
.anks. No banks were labeled as A'Class:
Performance evolution of
Prime Bank Ltd (Cont..)
Performance evolution of
Prime Bank Ltd (Cont..)
#oan Growth) Assets are what generate sales and the biggest asset for most
of the banks is #oans. For many banks. loan growth is as important as
revenue growth to most industrial companies.
Loans and
Ad-ances
Prime Bank Premier Bank AB Bank
200" -0!0( 9;(;- 0(-"/
200/ ?/909 ;";!/.0; -"??"
2010 !!("0- ;;((:.0/ ??""9
2011 !;??:? :(:"".0- /:(;?
2012 !("?/" :/--: !"("((
Performance evolution of
Prime Bank Ltd (Cont..)
Loan Gro(&h0
"
0
!"
!0
9"
90
;"
;0
:"
9""?&"/ 9""/&!" 9"!"&!! 9"!!&!9
Loan Gro(&h
Prime *ank
Premier *ank
A* *ank
Performance evolution of
Prime Bank Ltd (Cont..)
Deposit Growth) Deposit growth states how much lending a bank can do.
De,osi&s Prime Bank Premier Bank AB Bank
200" ??"9! 9-!!:.:- (?0("
200/ !"(/0( ;9"0/.(9 ?;"?-
2010 !9:0-: ;-;?!./( /0-"9
2011 !0/?!( 0:(/!.:- !!(!09
2012 !?9"0; ("(/9./- !:""9(
Performance evolution of
Prime Bank Ltd (Cont..)
Performance evolution of
Prime Bank Ltd (Cont..)
Loan6De,osi& ra&io0
1he loan<deposit ratio helps assess a bank@s li2uidity. and by extension.
the aggressiveness of the bank@s management.
%f the loan<deposit ratio is too high. the bank could be vulnerable to any
sudden adverse changes in its deposit base. Conversely. if the
loan<deposit ratio is too low. the bank is holding on to unproductive
capital and earning less than it should.
Performance evolution of
Prime Bank Ltd (Cont..)
Loan6De,osi&
Ra&io
Prime Bank Premier Bank AB Bank
200" ?0 ?-.9 ?9.-!
200/ ?; /:.( ?0.;!
2010 /; /"."( /!./0
2011 ?- ?:.? ?!.:
2012 ?? ?9." -0.-0
Performance evolution of
Prime Bank Ltd (Cont..)
Performance evolution of
Prime Bank Ltd (Cont..)
Loan6De,osi& Gro(&h0
Performance evolution of
Prime Bank Ltd (Cont..)
5%%icienc2 Ra&io0
A *ank6s efficiency ratio is e2uivalent to a company6s operating margin. A
bank efficiency ratio is a measure of a bank@s overhead as a percentage
of its revenue.
5%%icienc2 Ra&io Prime Bank Premier Bank AB Bank
200" ;;.:9 ;!.!9 ;".!:
200/ ;0.:- 9/.? 9/.?;
2010 ;(./: ;:.:9 ;9."!
2011 ;0.-0 ;(.(: ::.;!
2012 ;(.(9 ;0.:: :?.9-
5%%icienc2 Ra&io0
Performance evolution of
Prime Bank Ltd (Cont..)
Performance evolution of
Prime Bank Ltd (Cont..)
Ca,i&al Ra&io0
*anks holding more capital can more easily absorb potential losses and are
more likely to survive.
5egulators use the 1ier ! capital ratio. A comparison between a banking
firm@s core e2uity capital and total risk&weighted assets. to grade a firm@s
capital ade2uacy. A firm must have a 1ier ! capital ratio of (8 or greater to
be classified as well&capitali'ed.
Ca,i&al Ra&io Prime Bank Premier Bank AB Bank
200" !".?? !9.(( !9.?:
200/ !:.-! !9.-! !!."/
2010 !!.(/ !0.!: /./!
2011 !9.:( !"."! !!.;-
2012 !9.(: !".00 !!.-;
Performance evolution of
Prime Bank Ltd (Cont..)
"
9
:
(
?
!"
!9
!:
!(
9""? 9""/ 9"!" 9"!! 9"!9
Prime *ank
Premier *ank
A* *ank
Performance evolution of
Prime Bank Ltd (Cont..)
57+<57A)
5eturn on e2uity reveals how much profit a company earned in comparison
to the total amount of shareholder e2uity
5eturn on assets indicates how profitable a company@s assets are in
generating revenues.
Performance evolution of
Prime Bank Ltd (Cont..)
Performance evolution of
Prime Bank Ltd (Cont..)
Re&urn on 5<ui&2 )RO5+0
RO5 Prime Bank Premier Bank AB Bank
200" 9".0? ;.!/ :"./(
200/ ;".!/ 9".?? ;/.?:
2010 9!.(0 9;.:- ;".--
2011 9".!/ 9?.9; /.90
2012 !;.0; -.(( /.;!
Performance evolution of
Prime Bank Ltd (Cont..)
Re&urn on 5<ui&2 )RO5+0
Performance evolution of
Prime Bank Ltd (Cont..)
Re&urn on Asse& )ROA+0
Credi& 4uali&20
%f a bank@s credit 2uality is in decline because of non&performing loans
and assets and<or charge&offs increases. the bank@s earnings and capital
may be at risk.
Performance evolution of
Prime Bank Ltd (Cont..)
Credi& ra&ing agenc2 )da&a on Prime Bank+
5atings of the debtor6s ability to pay back the debt by making timely
interest payments and of the likelihood of default.
C5%S# rated prime bank as high 2uality.
Performance evolution of
Prime Bank Ltd (Cont..)
Performance evolution of
Prime Bank Ltd (Cont..)
Name of the 7rgani'ation Prime *ank #imited
#ong 1erm AA
Short 1erm S1&9
Aalidity #ong 9/
th
Bune 9"!:
Aalidity Short 9/
th
December 9"!:
Published Date !0
th
Buly 9"!;
Sector *anking
5ating Cear 9"!;
No theories are perfect like ratios i.e. they cannot predict the future accurately at
all times
5atios shown for Prime *ank are more or less in the range of standard numbers.