Professional Documents
Culture Documents
A commercial bank is a retail financial institution that helps community members open
checking and savings accounts and manages money market accounts. It also provides
customers with deposit, withdrawal and transfer services. This is a financial institution
providing services for businesses, organizations and individuals. Services include offering
current,
deposit
and
saving
accounts
as
well
as
giving
out
loans
Bank Asia Limited is a scheduled commercial bank in the private sector established under the
Bank Company Act 1991 and incorporated in Bangladesh as a public limited company under the
Companies Act 1994 to carry out banking business in Bangladesh. Bank Asia was launched by a
group of successful entrepreneurs on November 27th, 1999. The initial paid up capital of the
Bank is over Tk. 210.00 million.
Within a short span of time, Bank Asia Limited has established itself as one of the fast growing
local private banks. The opening of the Principal Office at Motijheel, 29 April 2000 was a big
leap forward. The opening of Gulshan Branch in Dhaka, and the Agrabad Branch in the
commercial hub of Chittagong, further expanded Bank Asias horizon to bring its services to
people. In 2001, the Bank set a milestone by acquiring the business operations of the Bank of
Nova Scotia in Dhaka, first in the banking history of Bangladesh. In the beginning of the year
2002 the Bank also acquired the Bangladesh operations of Muslim Commercial Bank Limited
(MCBL).
Bank Asia started its journey on November 27, 1999 with a view to providing the best quality
technology driven services in banking sector. Since inception it has been able to cover major
parts of the country by extending and expanding its network opening branches, agent banking
and mobile financial services (Hello) outlets. The bank started its Islamic banking operation in
2008. It established the 1st subsidiary company Bank Asia Securities Limited on March 16,
2011, then BA Exchange Company (UK) Limited in London, United Kingdom on May, 2011
and recently BA Express USA Inc. in Jamaica, New York, USA on June 01, 2014. At present
Bank Asia has 91 Branches, 5 Islamic Windows, 6 SME Service Centers, 1 Off-shore Banking
Unit and 3 Subsidiaries. With an aim to serve the unbanked people, Bank Asia is now operating
EBEK (Ektee Bari Ektee Khamar) banking services to 35 districts having 252 upazillas and
1,320,300 beneficiaries. The Bank has implemented 49 agent banking outlets in 17 districts to
provide banking services to geographically disperse rural poor segment of the society. With the
same mission under Hello mobile financial services, the bank has already covered 62 districts
with 80 distributors, 12,677 Agents and 1, 87,621 registered customers.
CREDIT RATING
Credit Rating Agency of Bangladesh Limited (CRAB) awarded Bank Asia Limited AA3 in the
Long Term and ST-2 rating in the Short Term based on the financials of 2013.
GOALS:
Sustainable growth: Synergies between new knowledge and human capital for sustainable
economic growth.
Capital stewardship: Preservation and enlargement of multiple forms of capital; like
intellectual, natural, financial, organizational, social; all of which contribute to long term value
creation.
Accelerating financial inclusion:
technology like ATM, mobile phone, smart card based banking services and renewable energy
generation projects especially in rural areas.
Differentiating value added services: Strong focus on extremely cost-efficient and green
services through Internet banking, electronic fund transfer, automated checks clearing, e-bank
statement, SMS alert etc.
Going green: Quantification of in-house facilities and energy consumption to promote paperless
office and enhance energy efficiency. Greater emphasis on green banking projects.
Leader in business: Create new dimension in the syndication and structured financing. Grow
with export. Well diversified portfolio.
Particulars
2013
2014
Change
Total Asset
Deposit
Loans & Advances
Import
Export
Inward Remittance
Operating Profit
Profit after Tax & Provision
Shareholders Equity
Classified Loans
Earnings Per Share-after split (Taka)
Net Asset Value Per Share-after split (Taka)
Returns on Equity
163778
133489
104911
110738.08
71968.83
34334.40
5,415.76
1,459.82
14,617.70
6,200.55
1.91
21.07
10.55%
182731
140869
116809
110192.54
77646.91
41732.50
5,778.83
2,218.69
16,864.42
5,878.79
2.91
22.10
14.09%
11.57%
5.53%
11.34%
-0.49%
7.89%
21.55%
6.70%
51.98%
15.37%
-5.19%
52.36%
4.89%
33.55%
FINANCIAL ANALYSIS
Sources of Financing
Banks need financing to fund operating constraints, invest in short- and long-run projects,
acquire or merge with other organizations and develop new products. They also raise funds to
meet financial market requirements or regulatory minimum balances. Corporate finance
specialists help banks evaluate and identify adequate capital structure models. Entities may
receive financing from investors or regulators.
In general, a bank may have two major sources of funds which are needed for its business
operations. They are internal sources of funds and external sources of funds.
Sourc
es of
funds
Intern
al
Sourc
es
Capit
al
Reserv
e
Extern
al
Sourc
es
Deposi
t
Borrowin
g
2. Secondary capital
Primary capital
Primary capital results from issuing common or preferred stock as primary or secondary. Banks
may raise funds on securities exchanges by selling shares of equity also called stocks. Buyers of
equity or shareholders receive periodic dividends. They also make profits when share prices
increase. Banks not listed on securities exchanges may acquire funding through private share
sales to investors such as other banks, insurance companies or private equity firms.
Secondary capital
Secondary capital results from issuing subordinated notes and bonds.
Capital can also be categorized by the following:
Paid-up Capital
Paid-up/ share capital indicates the contribution made by the shareholders of the bank. By
definition, it is the part of subscribed capital which has been called-up and paid, while subscribed
capital is the part of the Authorized capital which has been issued and taken up by the public
including shares issued to and paid by sponsor.
Reserve Funds
A commercial bank builds a reserve fund with deposits so it can pay interest on accounts and
complete withdrawals. Ideally, a banks reserve fund should be equal to its capital. A bank
builds its reserve fund by accumulating surplus profits during healthy financial years so that the
funds can be used in leaner times. On average, a bank tries to accumulate a fixed percentage of
its net profit to build and maintain its reserve fund. It actually belongs to the shareholders. The
accumulation of such retained reserves is an essential condition for financial soundness,
stability and growth of the bank to fulfill special roles assigned to them from time to time.
Besides, such reserves provide a cushion for meeting unforeseen contingencies. In the event of
heavy losses the bank can draw upon its Reserve Fund. The reserve fund operates as
an additional security to the banks customers.
Retained Earnings
Banks use retained earningsportions of income not distributed as dividendsto fund shortor
long-run investment needs. They analyze whether internal costs of funds are lower than
external costs. Entities usually dont use all profits retained for financing purposes because they
need to keep minimum cash balances to meet operating or regulatory requirements. A lot of
commercial banks earn retained earnings or fees to help fund their business. A retained earning
can be collected through overdraft fees, loan interest payments, securities and bonds.
Banks also charge fees for providing customers with services such as maintaining an account,
offering overdraft protection and also monitoring customers credit scores.
Deposits
Deposits from public represent by far the most powerful source of fund to a bank, accounting
for over 90% of the total. The largest source by far of funds for banks is deposits; money that
account holder entrust to the bank for safekeeping and use in future transactions, as well as
modest amounts of interest. Generally referred to as Core Deposit, these are typically the
checking and savings accounts that so many people currently have. These deposits are keys to a
banks potential growth. These funds are liabilities of the bank, because these have to return to
the owners on demand. Therefore, keeping the needs and interests of various sections of
society, banks formulate various deposit schemes. Generally, there are three types of deposits
which are as follows:
Current Deposits
The depositors of such deposits can withdraw and deposit money when-ever they desire. Since
banks have to keep the deposited amount of such accounts in cash always, they carry either no
interest or very low rate of interest. These deposits are called as Demand Deposits because these
can be demanded or withdrawn by the depositors at any time they want. Such deposit accounts
are highly useful for traders and big business firms because they have to make payments and
accept payments many times in a day.
Fixed Deposits
These are the deposits which are deposited for a definite period of time. This period is generally
not less than one year and, therefore, these are called as long term deposits. These deposits
cannot be withdrawn before the expiry of the stipulated time and therefore, these are also called
as time deposits. These deposits generally carry a higher rate of interest because banks can use
these deposits for a definite time without having the fear of being withdrawn.
Saving Deposits
In such deposits, money up to a certain limit can be deposited and with-drawn once or twice in a
week. On such deposits, the rate of interest is very less. As is evident from the name of such
deposits their main objective is to mobilize small savings in the form of deposits. These deposits
are generally done by salaried people and the people who have fixed and less income. Apart from
these traditional fixed deposits, saving deposit, and current accounts, banks in modern times take
the form of numerous deposit schemes with a wide range of interest for a variety of maturities to
meet diverse needs of the public and to attract different class of savers. The efficiency of depends
on its ability to attract deposits
Borrowings:
Borrowings from Central Bank and other banks or institutions are also sources of raising funds
of commercial bank. But, by nature, those are emergency sources and are restored to only when
the bank is unable to meet the commitments of its own. Therefore the sources of borrowings areCentral Bank
The Central Bank will provide liquidity to the banks and other institutions when sour aces dry
up. They may grant accommodation to scheduled banks by way of Rediscounting or purchase of
eligible bills and Loans and advances against certain securities.
Borrowing from interbank:
The interbank lending market is a market in which banks extend loans to one another for a
specified. Such loans are made at the interbank rate (also called the overnight rate if the term of
the loan is overnight).These are- 1. Interbank deposit sources 2. Interbank call money 3.
Repurchase agreement.
Borrowing from international financial institution
These are provide by the international institution like, International Monetary Fund (IMF), World
Bank and its affiliated bodies, ADB, IDB and other foreign agencies/development partners.
Deposit Strategy:
Taping different government agencies e.g. Foreign Missions, Roads & Highway, LGED,
Bangladesh Bridge Authority etc, and also other different corporate houses, e.g. Foreign
Air Lines, Telecom companies etc. and maintaining regular intense social interaction.
Cross Selling of different products including retail to corporate customers.
Exploiting the growing rural deposit basket setting- up smaller size low cost rural
branches and most important channels like EBEK (Ektee Bari Ektee Khamar), Agent
Banking etc.
Offering cash management services, i.e. collection of institutional accounts and effective
Total Deposits
2010
86,365.64
2012
110,061.78
2013
133,489.37
2014
140,869.29
160000
140000
120000
100000
Current
80000
Savings
Fixed
60000
Total
40000
20000
0
2010
2011
2012
2013
2014
Current Deposits
(amount in
taka)
2010
8,866,798,221
2011
12,024,446,868
2012
15,063,776,817
2013
17,124,519,794
Fixed Deposits
2014
21,511,648,552
(amount in
taka)
2010
65,887,803,875
2011
72,946,147,792
2012
82,881,733,772
2013
101,869,884,971
Saving Deposits
2014
101,002,401,997
(amount in
taka)
2010
7,947,958,226
2011
9,060,930,520
Deposit Products:
Saving Account
Current Account
Short Notice Deposit
Fixed Term Deposit
2012
10,613,363,599
2013
12,827,249,596
2014
16,547,202,983
i. Identify risks, improve banks understanding of overall risks, set risk tolerance levels,
and assess strategic choices in longer-term planning,
ii. Identify vulnerabilities i.e. concentrations and assess their impact on capital,
iii. Integrate business strategy, risk management, capital and liquidity planning decisions,
iv. Have a forward-looking assessment of the banks capital needs, including capital
needs that may arise from rapid changes in the economic and financial environment.
Banks capital planning considers both short-term and long-term capital needs and is coordinated
with a banks overall strategy and planning cycles, usually with a forecast horizon of at least five
years.
Paid-up Capital
2010
3,002.74
2012
6,305.75
2013
6,936.32
2014
7,629.96
100%
80%
60%
40%
20%
0%
2010
2011
2012
2013
2014
Reserve Funds:
Reserves funds are another important source of financing for commercial banks. Commercial
banks basically build a reserve fund with deposits for paying interest on accounts and complete
withdrawals. A bank builds its reserve fund by accumulating surplus profits during healthy
financial years so that the funds can be used in leaner times.
Bank Asia is maintaining three types of reserve funds: Statutory Reserve, Revaluation Reserve
and General Reserve and maintain a sound Retained Earnings which is very important source
of financing for Bank Asia
Reserve fund
2010
4,057.20
2012
6,739.42
2013
7,681.38
2014
9,234.47
10000
9000
8000
7000
Statutory reserve
6000
Revaluation reserve
5000
General reserve
4000
Retained earnings
3000
Total
2000
1000
0
2010
2011
2012
2013
2014
(amount in
taka)
2010
5,163,774,972
2011
1,226,743,285
2012
3,825,000,476
2013
1,944,757,246
2014
7,846,139,969
100%
80%
60%
40%
20%
0%
2010
2011
2012
2013
2014
(amount in
taka)
2010
-
2011
-
2012
599,998,411
2013
599,998,411
2014
449,036,430
100%
80%
60%
40%
20%
0%
2010
2011
2012
2013
2014
Conclusion
Bank Asia is currently enjoying a very good position in banking sector, but it is very important
for the bank to have up to date information of recent situations and proper planning and
policies so that the bank can always have position in the list of market leaders.
Funds are the life blood for a bank. To provide the best services to its customer a bank must
ensure the adequate level of funds. It also keeps funds available for meeting any liquidity and
solvency risk. Funds are also necessary for meeting capital requirement by the regulators.
Bank Asia as a leading bank maintains a sound track record of funding.