First Security Islami Bank LTD/ Ratio Analysis

1
RATIO ANALYSIS ON FIRST SECURITIY ISLAMI BANK LTD.

Southeast University

Assignment
On
Ratio Analysis On First Security Islami Bank Ltd.
Course Title: Bank Management
Course Code: FIN4142
Submitted By:
Name ID Batch Sec.
Manzurul Karim 2011110000003 28
th
B
Irin Akter 2011110000069 28
th
B
Md. Alamin 2011010000191 27
th
B
Rajib Alam 2011010000195 27
th
B

Submitted To:
Kazi Md. Tarique
Assistant Professor
School of Business Studies
Submission Date:
13-08-14
2
TABLE OF CONTENT

S.L NO Topics Page no
1. INTRODUCTION 03
2. OBJECTIVE & ITS ANALYSIS 04-05
3. RATIO ANALYSIS 06-21

a. Profitability Ratio
b. Breakdown of Return On Equity
c. Credit Risk Ratio
d. Liquidity Risk Ratio
e. Capital Adequacy Ratio
f. Asset Quality
g. Social And Economic Impact
h. Liquidity Indicator Ratio
i. Number of Employee
4. CONCLUSION 22

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1. I NTRODUCTI ON
First Security Islami Bank Limited (FSIBL) was formed in Bangladesh on 29 August 1999 under
Companies Act 1994 to start banking business. It obtained permission from Bangladesh Bank on
22 September 1999 to begin its business. The Bank carries banking activities through its 117
branches in the country. Their commercial banking activities include a wide range of services
including accepting deposits, discounting bills, conducting money transfer and foreign exchange
transactions, and performing other related services such as safe keeping, collections and issuing
guarantees, acceptances and letter of credit. FSIBL started their business with traditional
commercial banking services as First Security Bank Ltd. However, from January01, 2009 they
converted their business to Islamic Banking with Islamic Shariah Act and the bank changed its
name and mode of business and incorporated as First Security Islami Bank Ltd. It started with
14 branches in 1999 but now has 117 branches in Bangladesh which shows the impact they have
had in the economy. The bank maintains a friendly relationship with the top ranking banks. They
have online, SMS and ATM banking facilities for their clients. The company philosophy A step
ahead in time has been exactly the spirit for Asian success; the bank has been operating with
talented and brilliant personnel, equipment with modern technology so as to make it most
efficient to meet the challenges of 21
st
century and to fulfill the needs and wants of its customers.

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2. OBJ ECTI VE ANALYSI S
Vision:
First Security Islami Bank Limited aims to become one of the leading banks in Bangladesh by
excellent quality of operations in their banking sector. The bank has some missions to achieve
to meet the organizational goals.
These are listed below:
The bank believes in strong and well-capitalization.
It maintains high standard of corporate and business ethics in the business field.
First Security Islami Bank Limited extends highest quality of services, which attracts the
customers to choose them first.
First Security Islami Bank Limited provides products and services that encourage
savings.
First Security Islami Bank Limiteds main business mission is to obtain fine position in
the banking sector of Bangladesh as well as globally.
It also emphasizes on a reasonable earnings from its investment to satisfy the
shareholders.
Mission:
To contribute the socio-economical development of the country.
To attain highest level of satisfaction through extension of services by dedicated and
motivated professional.
To maintains continuous growth of market share ensuring quality.
To ensure ethics and transparency in all levels.
To ensure sustainable growth and establish full value of the honorable shareholders and
Above all, to add effective contribution to the national economy.
Objective:
To strive our customers best satisfaction & win their confidence.
To manage & operate the bank in the most effective manner.
To identify customers' needs & monitor their perception towards meeting those
requirements.
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To review & updated policies, procedures & practices to enhance the ability to extend
better customer services.
To train & develop all employees & provide them adequate resources so that the
customers' needs reasonably addressed.
To promote organizational efficiency by communicating company plans policies &
procedures openly to the employees in a timely fashion.
To ensure a congenial working environment.
To diversify portfolio in both retail & wholesale markets.
Objective Analysis:
First Security Islami Bank Ltd. wants to give best customer satisfaction with most effective
manner. They improve their policies, procedures & practices to extend better customer services.
They give training and development employees to provide customers needs. For their customer
ensure a congenial working environment. They give services different cities and villages and
open branches in the city or village.

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3. RATI O ANALYSI S
A. PROFITABILITY RATIO:
i. Return On Equity (ROE) =
14.22% 13.99% 12.75% 13.46% 12.07%

Comment: FSIBL ROE ratio was increased in the year 2009 14.22% where in 2010 ROE
13.99% decreased from the year 2009. In 2011 12.75% ROE decreased from the year 2010 but
increased in the year 2012 again decreased ROE in 2013.
ii. Return On Assets (ROA) =
0.85% 0.86% 0.64% 0.59% 0.48%

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Comment: FSIBL ROA ratio 0.01% was increased from the year 2009 where 2011 0.22% ROA.
2013 ROA 0.11% decreased from the year 2012. ROA 2010 is higher than the other year.
iii. Net Interest Margin (NIM) =
2.12% 2.23% 2.28% 2.35% 2.30%

Comment: FSIBL NIM was increased0.11% in the year 2010 from the year 2009. In 2011 NIM
0.5% increased and 20120.5% increased but again 0.5% decreased in the year 2013.
iv. Net Noninterest Margin (NNM) =
-0.77% -0.69% -1.31% -1.19% -1.34%

Comment: In the graph shows that 2010 -0.08% NNM was decreased from the year 2009 but
2011 highly increased -0.62% from the year 2010.
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v. Net Operating Margin (NOM) =
1.56% 1.89% 1.75% 1.50% 1.26%

Comment: The graph shows that NOM ratio 2010 0.33% increased from the year 2009. Where
NOM ratio 2011 decreased 0.14% from the year 2010. NOM ratio 2010 is higher than the other
year.
vi. Earning Spread =
1.75% 1.89% 2.00% 2.16% 2.11%

Comment: FSIBL ES ratio was increased 0.16% in the 2012 from the year 2011. ES 2012 is
higher than the other year.
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B. BREAKDOWN OF RETURN ON EQUITY:
I. Tax Management Efficiency:
50.53% 55.77% 47.54% 50.74% 50.31%

Comment: In the graph shows that 2010 TME ratio increased 5.24% from the previous year.
Where 2011 decreased TME ratio 8.23% from the year 2010. In the year 2010 is higher than the
other year.
II. Expense Control Efficiency:
48.72% 47.17% 44.55% 39.73% 34.46%

Comment: In the year 2009 ECE ratio was increased from the other four year. But FSIBL could
not control expense in the year 2013 and ECE ratio decreased 5.27% from the year 2012.
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III. Asset Management Efficiency:
2.77% 3.28% 3.01% 2.92% 2.77%

Comment: FSIBL AME ratio was increased 0.51% in the year 2010 from the year 2009. But
AME decreased 2011 0.27% from the year 2010. In the year 2010 AME ratio is higher than the
other year.
IV. Funds Management Efficiency:
16.74404023 16.2294927 20.00744957 22.90292809 25.1527897

Comment: FSIBL FME was increased in 2013 2.24986161 from the year 2012. In the year FME
ratio is higher than the other year.
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C. CREDIT RISK RATIO:
91.28%
92.51% 88.90% 87.62% 82.14%

Comment: FSIBL credit risk increased in 2010 1.23% from the year 2009. Where 2011 credit
risk decreased 3.61% from the year 2010. FSIBL credit risk in 2010 is higher than the other four
year.
D. LIQUIDITY RISK RATIO:
I. Purchase Fund/Total Assets:
6.48% 7.05% 5.51% 0.62% 0.41%

Comment: FSIBL purchase fund increased in year 2010 0.51% from the year 2009. But in 2012
decreased purchase fund 4.89% from the year 2011. 2010 purchase fund is good for the FSIBL.
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II. Cash and due from depository/Total Assets =
10.49% 7.64% 7.85% 8.12% 7.14%

Comment: In the graph shows that cash and due from depository decreased in the year 2010
2.85% from the year 2009. But 2012 increased cash 0.27% from the year 2011. 2009 had enough
cash in the FSIBL.
III. Cash Assets & Govt. Securities/Total Assets =
3.36% 3.66% 3.43% 3.13% 37.27%

Comment: FSIBL cash & Government securities increased in year 2013 34.19% from the year
2012. But other four year Govt. securities almost same ratio. FSIBL had good cash and govt.
securities in the year 2013.
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E. CAPITAL ADEQUACY RATIO:
Tier 1+Tier 2/R.W.A=
7.10%
Undercapitalized
7.27%
Undercapitalized
6.00%
Significant
Capitalized
6.37%
Undercapitalized
5.81%
Significant
Capitalized

Comment: FSBIL Capital adequacy undercapitalized in the year 2009, 2010, and 2012, and
significant capitalized in the year 2011 and 2013. But in the year 2010 was good position.
Tier 1/R.W.A
6.02%
Well Capitalized
6.22%
Well
Capitalized
5.00%
Adequate
Capitalized
4.11%
Adequate
Capitalized
2.08%
Critically
Capitalized

Comment: FSIBL Tier 1/R.W.A was well capitalized in the year 2009 and 2010 and adequate
capitalized in the year 2011 and 2012 but in the year 2013 capital adequacy was critically
capitalized. In the year 2010 capital adequacy was good position.
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F. ASSET QUALITY:
i. Substandard/ Total Investment and Leases =
0.02% 0.94% 0.06% 0.04% 0.08%

Comment: FSIBL substandard is increasing in the year 2010 0.92% from the previous year.
Only 2010 substandard is good position.
ii. Doubtful Investment/ Total Investment and Leases =
2.47896E-06 7.54932E-05 0.000100688 0.000609527 0.00028514

Comment: We calculated doubtful investment five years but 2009 and 2010 did not show
accurate calculation. But in the year 2012 FSIBL increased doubtful investment from the other
year.
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iii. Loss Investment/ Total Investment and Leases =
2.13% 1.67% 0.79% 0.70% 0.71%

Comment: FSIBL loss investment decreased in the year 0.46% from the year 2009. In the year
2009 FSIBL loss investment is higher than the other four year.
G. SOCIAL AND ECONOMIC IMPACT:
i. CSR Exp./Total Expense =
0.09% 0.08% 0.08% 0.07% 0.05%

Comment: CSR expense decreased 0.01% in the year 2010 from the year 2009. But gradually
decreasing CSR expense.
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ii. Zakat Distribution/ Total Expense =
2.62% 0.56% 1.09% 1.03% 1.18%

Comment: FSIBL Zakat distribution decreased in the year 2010 2.06% from the year 2009. But
in the year 2009 FSIBL Zakat distribution was higher than the other four year.
iii. Investment in Technology/Total Assets =
0.01% 0.02% 0.02% 0.02% 0.03%

Comment: FSIBL investment in technology is increased 0.01% in the year 2013 from the year
2012. In the year 2013 FSIBL investment in technology higher than the other year.

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iv. Investment In Real Economic Sector =
13.94% 21.92% 4.69% 27.67% 2.37%

Comment: The graph shows that FSIBL investment in economic sector increased 22.94% in the
year 2012 from the year 2011. In 2010 investment in economic sector also increased from the
previous year.
v. Agricultural Investment/Total Investment =
0.61% 0.55% 0.56% 1.15% 1.48%

Comment: FSIBL agricultural investment increased in the year 2013 0.33% from the year 2012.

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vi. SME Investment/ Total Investment =
0.06% 0.23% 1.10% 0.91% 0.71%

Comment: In the year 2011 SME investment increased by 0.87% from the year 2010. Where
SME investment decreased in the year 0.19% from the year 2011.
vii. Training & Development Exp./Total Exp. =
0.79% 0.60% 0.41% 0.19% 0.24%

Comment: FSIBL training & development expense decreased 0.17% in the year 2010 from the
year 2009. But year 2009 training & development higher from the other four year.

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viii. Tax Paid/ Before Tax Income =
5.19% 19.93% 37.15% 36.41% 27.70%

Comment: FSIBL tax increased in the year 2011 17.22% from the year 2010. But FSIBL low
tax paid in the year 2009, it is good the bank.
H. LIQUIDITY INDICATOR RATIO:
i. Cash Position Indicator =
10.49% 7.64% 7.85% 8.10% 7.13%

Comment: The graph shows that FSIBL cash position decreased in the year 2.84% from the year
2009. FSIBL best cash position in the year 2009.

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ii. Liquid Securities Indicator =
3.36%
3.66% 3.43% 3.13% 3.72%

Comment: FSIBL liquid securities increased 0.30% in the year 2010 from the year 2009. In the
year 2013 also increased liquid securities from the previous year. The year 2013 have enough
liquid securities in the FSIBL.
iii. Net Federal Funds and repurchase agreements position =
Comment: Islami Bank does not purchase or sold federal fund. So, we could not calculate.
iv. Capacity Ratio =
80.50%
86.08% 75.92% 73.77% 70.42%

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Comment: FSIBL have enough capacity to investment and capacity ratio increased 5.58% in the
year 2010 from the year 2009. Capacity ratio in the year 2010 is higher than the other four years.
It is good for the FSIBL.

I. NUMBER OF EMPLOYEES:
775
929 1,342 2,090 2,367

Comment: FSIBL employee gradually increasing but in the year 2012 increased very high.

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4. CONCLUSI ON
First Security Islami Bank Ltd. ROE on an average is good and ROA is not enough good for
the bank. FSIBL NIM is high in the year 2012 it is good for the Bank. NNM day by day
increased. Net Operating Margin in the year 2010 was enough good for FSIBL. FSIBL
Breakdown on Equity on an average 2009 is good. Credit risk is very high in the year 2010.
Liquidity risk on an average 2010 was good. FSIBL capital adequacy is undercapitalized and
significant capitalized. Asset quality is good for the bank and they social and economic
impact very good such as they give Zakat, tree plantation, tax paid to the government. They
also invest in the industrial, agricultural and SME investment to the household or business
sector. FSIBL cash position is good and liquid securities also good Islami bank does not buy
or purchase federal fund because it give interest payment and Banks investment capacity also
good. FSIBL increase branches and employee increases. We can said that FSIBL overall
performance is better.

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RATIO ANALYSIS ON FIRST SECURITIY ISLAMI BANK LTD.

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