Supervised By:
Mr. Iehit Sharma
Senior Lecturer
Department of Business Administration
Leading University, Sylhet
Submitted By:
ID: 1101010183
BBA Program
27th Batch
Submitted To:
Department of Business Administration
at
Leading University
Sylhet, Bangladesh
Letter of Transmittal
Dear Sir,
Thanking you.
Yours Sincerely,
___________________________
Moez Al Azim Ansary
ID No: 1101010183
Major: Accounting & Information Systems
BBA Program (27 th Batch)
Department of Business Administration
Leading University, Sylhet
v
Letter of Acceptance
Supervisor
___________________________________
Senior Lecturer
Declaration
I also declare that this report is prepared after completing my three months
Internship period in First Security Islami Bank Limited, Amborkhana Branch,
Sylhet. This is my original work and not submitted for the award of any other
Degree, Diploma Fellowship or other similar title or prizes. It is prepared under
the extensive supervision and guidance of Mr. Iehit Sharma, Senior Lecturer,
Department of Business Administration, Leading University, Sylhet.
Declared by
___________________________
Moez Al Azim Ansary
ID No: 1101010183
Major: Accounting & Information Systems
BBA Program (27 th Batch)
Department of Business Administration
Leading University, Sylhet
vii
Acknowledgement
I also wish to thank and give the due respect to my family and friends for their
cordial support and help they offered throughout the process of performing the
whole report.
Finally, my heartfelt gratitude goes to Mr. Md. Sohrab Uddin Molla (Branch
Manager and AVP), Mr. Md. Maksud Ibn Mustafa (SPO and Operation Manager),
Mr. Salahuddin Shamim (Probationary Officer), Mr. Md. Ishtiaque Uddin
(Probationary Officer), Mr. Anwar Hossain Misba (Senior Cash Officer), Mr. Ariful
Islam Nayeem (Assistant Officer), Mrs. Rabea Binte Shiraj (Principal Officer) and
all the co-workers of First Security Islami Bank Limited, Amborkhana Branch,
Sylhet for their keenness in giving me training and valuable information, which
was very helpful to complete my internship report.
viii
Executive Summary
Banks are the most important financial institutions in modern economy. They
are an integral part of modern economic activities. In a developing country like
Bangladesh, the Islamic banking system as a whole has a vital role play in the
process of economic development. First Security Islami Bank Limited (FSIBL) has
started its journey on 29th August 1999 with the said principles in mind and
conduct banking system according to Shariah based policy. This report mainly
deals with the financial statements analysis of an Islami bank in Bangladesh: a
study on First Security Islami Bank Limited. The horizontal analysis, vertical
analysis and ratio analysis are essential technique for financial statements
analysis. Different users such as investors, management, bankers and creditors
use the financial statements analysis of a company for their decision making
purpose. In this report, the financial statements of First Security Islami Bank
Limited have been studied for five years from 2009 to 2013 and also different
types of financial ratios of the bank are calculated. The clear concept on bank,
Islamic banking and different types of financial analysis are given in the report.
The liquidity, profitability, financial position and the financial trend of First
Security Islami Bank Limited are the main focus of this report which have been
analyzed and used for comparing different years. By analyzing the financial
statements of the bank, it has been traced the financial strengths and weakness
of the bank. Finally some comments are shown regarding the changes of this
bank’s financial performance for the last five years. By analyzing the horizontal,
vertical and different ratios like liquidity ratios, efficiency ratios, profitability
ratios, solvency ratios and market prospect ratios, and cash flow analysis, it can
be said that FSIBL has been improving and doing well in the last five years except
in few years. So the bank should be concern about the types of financial analysis
especially the types of ratios. However, FSIBL’s overall earnings performance
was satisfactory, but it should be improved.
ix
Table of Contents
References 107
Appendix 109
1
Chapter One
Introduction
Introduction
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business and share profit to its stakeholders and customers. So, to know
about the ability of the bank to take risk and making profits, its financial
strength and performance should be understood. Therefore, the financial
statements of the bank should be analyzed for understanding the financial
strength and performance of the bank.
General Objective:
To analyze the financial statements of First Security Islami Bank Ltd.
with the key focus of its overall financial performance.
Specific Objectives:
To know the current financial position of First Security Islami Bank
Ltd.
To know the five years financial performance of FSIBL by calculating
and analyzing different types of ratio.
To know the financial trend of FSIBL focusing the five years’ financial
performance.
To get the practical experience on banking activities.
To give some recommendation for the development of First Security
Islami Bank Ltd.
want to know about the financial performance of First Security Islami Bank
Limited.
2
Chapter Two
Theoretical Overview
Theoretical Overview
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2.1: Bank
Bank is a financial institution that collects money from peo ple as deposit
committing to pay interest or profit at a fixed or probable percentage rate
to the depositors for their deposited money and lends or invests it to the
businesses requiring interest or profit as return at a fixed or pro bable
percentage rate which is higher than the rate at which it pays interest or
profit to the depositors against the loan or investment and gains profit
from the difference between the interest or profit against loan or
investment and interest or profit against deposits. In broadly, any
financial institution that receives, collects, transfers, pays, exchanges,
lends, invests or safeguards money fo r its customers is called bank.
Generally we indicate the commercial bank when using the term “Bank”.
Commercial banks are those institutions which conduct the business
purely on profit motive. Commercial banks receive surplus money from
the people who are not using it and lend to those who need it for
pro ductive purpose.
Functions of Bank
Exhibit -2.1
Making Advance and Loan: The deposits received by banks are not
allowed to remain idle. So, after keeping certain cash reserves, the
balance is given to needy borrowers and interest is charged from them,
which is the main source of income for the banks. Different types of
loans and advances made by Commercial banks are:
Overdraft: Overdraft is a short-term loan granted by commercial
banks to their account holders. Under this type of loan, the
customers are allowed to draw more than what they have in
their current account up to a certain limit. The excess amount
overdrawn is called overdraft.
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the customers. When any expense is paid by the bank, a debit voucher
is sent to the customer for information.
Dealer in Securities: The banks carry out purchase and sale of
securities on behalf of their customers. Banks do it well because they
are aware of the market conditions.
Acts as Trustee: The banks act as trustee to manage trust property
as per instructio ns of property owners. Banks are required to follow
the terms and conditions of trust deed.
Acts as Agent: Commercial bank sometimes acts as an agent on behalf
of its customers at home or abroad in dealing with other banks or
financial institutions.
Obeys Standing Instructions: Sometimes, customer may order his
bank to do something on his behalf regarding the conduct of his
account. This written order is called standing instruction. The bank
being the agent of its customer obeys the standing instructions.
Acts as Tax Consultant: Commercial bank acts as tax consultant to its
client. The commercial bank prepares general sales tax return, income
tax return, etc. Tiles the same with tax authorities.
Collection of Utility Bills: Commercial banks provide facilities for the
collection of utility bills from general public on behalf of government
bodies. This facilitates the public to pay utility bills in time.
The word used by the Quran concerning 'interest' is Riba. The literal
meanings of Riba are money increase, increase of anything or increment of
anything from its original amount. However, all increases are not
considered as Riba in Islam. Money may increase in business activities as
well. This increase is not at all considered as Riba. Islam prohibits only
those increases that are charged on the loan with a prefixed rate.
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In the Shariah, Riba technically refers to the premium that must be paid by
the borrower to the lender along with the principal amount as a condition
for the loan or for an extension in its maturity. In other words, Riba is the
predetermined return on the use of money.
Riba Profit
1. When money is "charged", its 1. When money is used in trading, its
imposed positive and define result uncertain result is profit.
is Riba
2. By definition, Riba is the premium 2. By definition, profit is the difference
paid by the borrower to the lender between the value of production and
along with principal amount as a the cost of production.
condition for the loan.
3. Riba is prefixed and hence there is 3. Profit is post-determined and hence
no uncertainty on the part of either its amount is not known until the
the givers or the takers of loans. activity is done.
4. Riba cannot be negative, it can at 4. Profit can be positive, zero or even
best be very low or zero. negative.
5. From Islamic Shariah point of view, 5. From Islamic Shariah point of view,
it is Haram. it is Halal.
Exhibit -2.2
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1. The functions and operating modes 1. The functions and operating modes
of conventional banks are based on of Islamic banks are based on the
manmade principles. principles of Islamic Shariah.
2. The investor is assured of a 2. In contrast, it promotes risk sharing
predetermined rate of interest. between provider of capital (investor)
and the user of funds (entrepreneur).
3. It aims at maximizing profit without 3. It also aims at maximizing profit but
any restriction. subject to Shariah restrictions.
4. It does not deal with Zakat. 4. In the modern Islamic banking
system, it has become one of the
service-oriented functions of the
Islamic banks to collect and
distribute Zakat.
5. Leading money and getting it back 5. Participation in partnership
with interest is the fundamental business is the fundamental function
function of the conventional banks. of the Islamic banks.
6. Its sco pe of activities is narrower 6. Its scope of activities is wider when
when compared with an Islamic bank. compared with a conventional bank. It
is, in effect, a multi-purpose
institution.
7. It can charge additional money 7. The Islamic banks have no provision
(compound rate of interest) in case of to charge any extra money from the
defaulters. defaulters.
8. In it very often, bank's own interest 8. It gives due importance to the public
becomes prominent. It makes no effort interest. Its ultimate aim is to ensure
to ensure growth with equity. growth with equity.
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A bank’s financial statements are always different from general companies. So,
banks’ financial statements analysis is critical. Among the stated techniques the
ratio analysis is mostly used for analysis of any organization’s financial
statements.
which contain minor assets that do not naturally fit into any of the
main asset categories. “These assets do not represent any property;
rather they represent certain deferred revenue expenses or losses
which are being written-off over the years” (S. A. Ali & R. A.
Howlader, pp.345). But, some of the writers include the other assets
into fixed assets, some writers include them into current assets and
some of the writers include the other assets into both fixed assets
and current assets according to their duration and type.
It appears from the above definitions that other assets are the
miscellaneous assets that cannot be classified as current assets or
fixed assets. Examples of other assets include deferred tax assets,
bond issue costs, advances to officers, prepaid pension costs, and
long-term prepayments. But, other assets can be included into major
categories, if we have proper information or notes about their time
duration. Most of the case other assets include negligible accounts,
so it can be included in current assets. In the case of FSIBL, the
notes about other assets indicate that it should be included in
current assets when I have prepared the classified balance sheet
according maturity for the purpose of ratio analysis.
Liabilities:
In the Balance sheet the liabilities are broadly divided into two
categories when organizations prepare the balance sheets. These are
as follows:
Current Liabilities
Long-Term Liabilities
Analysis period is the point or period of time for the financial statements
under analysis, and base period is the point or period of time for financial
statements used for comparison purposes. The prior year is commonly
used as a base period. We compute percent change by dividing the dollar
change by the base period amount and then multiplying this quantity by
100 as follows:
(%) = - ×
(%) = ×
It should be noted, that the percent change or index refers the comparison
of the analysis periods to the base period. Trend analysis expresses a
percent of base, not a percent of change.
- (%) = ×
Two of the most common tools of common-size analysis are trend analysis
of common-size statements and graphical analysis. The trend analysis of
common-size statements is similar to that of comparative statements
discussed under horizontal analysis. It is not illustrated here because the
only difference is the substitution of common-size percent for trend percent.
Instead, this section discusses graphical analysis of common-size
statements. Pie charts and bars are commonly sued for common-size
graphics analysis of common-size statement analysis. For common-size
income statement analysis, the revenue is considered as the base of the pie
chart because revenue affects nearby every item of an income statement.
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()
- =
=
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. .
=+
2
Accounts receivable turnover is more precise if net credit sales are used
for the numerator because net sales include cash sales, but external
users generally use net sales (or net revenue) because information about
net credit sales is typically not reported in financial reports. Some users
use net receivable as denominator when use net credit sales as
numerator, but using the average account receivable as denominator is
more perfect for computing accounts receivable turnover. A high
turnover is favorable because it means a company need not commits
large amount of funds to account receivable. A high turnover indicates
that a company is too efficient to collect receivables.
=+
2
If the beginning and ending inventory for the year do not represent the
usual inventory amount, an average of quarterly or monthly inventories
can be used. A generally agreed minimum value for inventory turnover
ratio is about 2:1 (from a secured creditor perspective), but the ratio
needs careful interpretation because it is based on the book value of
pledged assets. Inventory turnover is important for merchandisers, but
not for service providing company because service providing company
have a little or no inventory. So as service company banks and financial
institutions’ do not need analysis of the inventory turnover ratio for
their operations.
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=×
A rough guideline states that days’ sales uncollectable should not exceed
1 times the days in its credit period, if discounts are not offered; or
=×
=
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=+
2
Companies desire higher total asset turnover from their operations.
Interpreting the total asset turnover also requires an understanding of
the company’s operations. Some operations are capital intensive,
meaning that a relatively large amount is invested in assets to generate
sales. This suggests a relatively lower total asset turnover. Other
companies’ having labor intensive operations, meaning that generate
sales more by the efforts of people than using assets.
and often require regular interest payments. The risk that a company
might not be able to meet such required payments is higher if it has more
liabilities. One way to assess the risk associated with a company’s use of
liabilities is to compute the debt ratio. Debt ratio is computed as follows:
=×
=×
A generally agreed minimum value for this ratio is about 2:1 (from a
secured creditor perspective), but the ratio needs careful interpretation
because it is based on the book value of pledged assets. Boo k values are
not necessarily intended to reflect amounts to be received from assets in
event of liquidation. Also, a company’s long-run earning ability is equally
important.
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The larger this ratio, the less risky is the company for creditors. One
guideline says that the creditors are reasonably safe if the company earns
its fixed interest expense two or more times each year.
= ×100
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= × 100
=+
2
Since companies’ assets' sole purpose is to generate revenues and pro duce
profits, this ratio helps both management and investors to see how well
the company can convert its investments in assets into profits. In short,
this ratio measures how profitable a company's assets are. Generally
companies expect higher return on total assets because that indicates a
company’s assets provide more returns.
=-×
Market measures are useful for analyzing corporations with publicly traded
stock. These market measures use stock price, which reflects the market’s
(public’s) expectations for the company. This includes expectations of both
company’s return and risk as market perceives it.
-=()
This ratio is often computed using EPS from the most recent period.
However, many users compute this ratio using expected EPS for next
period. Some analysis view stocks with high PE ratios as more likely to be
overpriced and stocks with low PE ratios as more likely to be
underpriced. These investors prefer to sell or avoid buying stock with
high PE ratios and to buy or hold stocks with low PE ratios. However,
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= ×
Dividend yield can be computed for current and prior periods using
actual dividends and stock prices and for future periods using expected
values.
Ending Inventory
Days’ Sales in = Liquidity of inventory
Cost of Goods Sold × 365
Inventory
Net Sales
Total Asset Turnover = Efficiency of assets in
Average Total Assets producing sales
Exhibit -2.5
First Securit y Islami Bank Limited ...
Solvency
Total Liabilities
Debt Ratio = Creditor financing and
Total Assets × 100 leverage
Total Equity
Equity Ratio = Owner financing
Total Assets × 100
Profitability
Net Income
Profit Margin Ratio = Net income in each sales
Net Sales × 100
dollar
Net Sales - Cost of Goods Sold
Gross margin ratio = Gross margin in each
Net Sales sales dollar
Net Income Overall profitability of
Return on Total Assets =
Average Total Assets × 100 assets
Net Income Overall profitability of
Return on Equity =
Total Shareholders Equity × 100 Equity
Exhibit -2.5
First Securit y Islami Bank Limited ...
Market Prospects
Market Value(price)Per Share
Price-Earnings Ratio = Market value relative to
Earnings Per Share earnings
Exhibit -2.5
Above ratios are used for various purpose of financial analysis. These depend on the need of analyst. All ratios are not use for every type
of business. According to nature of business ratios are varying. For example, a service company generally has not any inventory, so it is
not required for it to co mpute the inventory turnover ratio. When I have analyzed the financial statements of First Security Islami Bank
Exhibit -2.5
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Limited, I only use those ratios which are useful for a banking company. A
banking company’s ratio analysis is different from the ratio analysis of a
merchandising company.
Profit/Loss
Donations
Loan Loss
Depreciation
Profit/Loss
Current Year Current Year
Cash Flow Income
Statement
Non-Cash Items
Exhibit -2.6
From the exhibit -2.6, it is appeared that all financial statements are correlated
and all transactions are directly or indirectly affect the cash flow. Cash flow
represents the actual cash generation by a business over a period. Further, a
business’s main aim is to generate enough cash. So a cash flow statement is
useful to the investors to know the actual cash generating capacity of a
business, trend of cash flow and management’s efficiency to increasing cash. In
my analysis, I analyze the FSIBL’s cash flow statement and try to lay bare the
trend of cash flow of FSIBL, and trace reason of cash increase or decrease.
3
Chapter Three
Organizational Overview
Organizational
Overview
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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 21st century and to fulfill the needs and
wants of its customers.
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3.3.1: Vision
3.3.2: Mission
To be the most caring and customer friendly and service oriented bank.
To create a technology based most efficient banking environment for its
customers.
To contribute to the socio-economic development of the country.
To attain the highest level of satisfaction through the extension of
services by dedicated and motivated professionals.
To maintain continuous growth of market share by 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 contribute effectively to the national economy.
3.3.3: Objective
3.3.4: Strategies
Exhibit -3.3
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Managing Director
Vice President
Executive Officer
Principal Officer
Senior Officer
Officer
Assistant Officer
Junior Officer
Trainee Officer
Exhibit -3.4
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Observers Members
Name Position Address
Alhaj Md. Abdul Maleque Vice Chairman, Board of 8/A, OR Nizam Road
Directors, FSIBL & Panchlaish R/A Chittagong
Observer Member,
Shari’ah Council
Prof. Md. Sharif Hussain Board of Directors, FSIBL 57, East Hajipara (5 th
& Observer Member, Floor) Rampura, Dhaka-
Shari’ah Council 1219
Mr. Shahidul Islam Board of Directors FSIBL House# 7, Road# 1,
& Observer Member, Nasirabad Housing Society,
Shari’ah Council Post: Medical P.S:
Panchlaish, Dist.:
Chittagong
Managing Director
Name Position Address
Mr. Syed Waseque Md. Ali Managing Director House SW(I)1/A(4 th Floor),
(Current Charge), FSIBL & Road – 8, Gulshan -1,
Observer Member, Dhaka-1212
Shari’ah Council
Exhibit -3.5
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. .
02 BANGSHAL 106
03 BHALUKA SME 168
04 BISWAROAD 120
05 CITY UNIVERSITY 178
06 DAMODYA 180
07 DILKUSHA 101
08 FARIDPUR 162
09 BANANI 115
10 BASHUNDHARA 177
11 BHUAPUR BRANCH 202
12 BONOSREE 138
13 COLLEGE GATE 125
14 DHANMONDI 108
15 DONIA 121
16 GAZIPUR CHOWRASTA 214
17 GULSHAN 112
18 KARWAN BAZAR 176
19 KONAPARA 191
20 MALIBAG 174
21 MASTERBARI 183
22 MOHAKHALI 103
23 MOTIJHEEL 129
24 MYMENSINGH 160
25 ISLAMPUR 155
26 KERANIGONJ BRANCH 207
27 MADHABDI SME/KRISHI 154
28 MANIKGANJ BRANCH 203
29 MIRPUR 113
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30 MOHAMMADPUR 186
31 MUKSUDPUR 127
32 NARAYANGANJ 170
33 NORIA 181
34 POSTOGOLA BRANCH 225
35 RING ROAD 133
36 SAVAR 149
37 SHAFIPUR 117
38 TONGI BARI BRANCH 199
39 UTTARA 158
40 PACCHOR BRANCH 210
41 RANABHOLA BRANCH 228
42 RUPNAGAR BRANCH 223
43 SENANIBASH 126
45 SREEPUR 143
46 TOPKHANA 118
47 ZIRABO 148
48 AMBORKHANA 128
49 BISWANATH 105
50 MOULVIBAZAR 122
51 TALTOLA 153
52 SYLHET 111
53 GOBINDA GONJ 132
54 BEANI BAZAR 175
55 AGRABAD 104
56 BAHADDARHAT 123
57 BANSKHALI 187
58 CHAWK BAZAR 166
59 COURT BAZAR 135
60 DOVASHI BAZAR 124
61 FENI 165
62 HATHAZARI 137
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63 ANDERKILLAH 000
64 BANDAR TILA 148
65 CHAKARIA 121
66 COMILLA 150
67 COX’S BAZAR 139
68 EID GAON 151
69 HALISHAHAR 185
70 HNILA 221
71 JUBILEE ROAD 107
72 KATIRHAT 206
73 KHATUNGONJ 102
74 MIRZAKHIL 218
75 MOHRA SME/KRISHI BR. 161
76 NAZU MEAH HAT 112
77 PAHARTOLI RAOZAN BR. 196
78 PATIYA 127
79 KADAMTALI 212
80 KERANIHAT 110
81 KUMIRA 193
82 MOHILA 167
83 NAZIR HAT 138
84 PAHARTOLI 159
85 PATHER HAT 145
86 PATIYA MOHILA 182
87 PEKUA 192
88 RAMGONJ 131
89 RANIR HAT SME/KRISHI BR. 156
90 PROBORTAK MOR 0
91 RAMU 200
92 TANTOR 229
93 BAGACHRA BRANCH 213
94 BARGUNA 0
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95 CHUADANGA 190
96 FAKIRHAT 0
97 FULTOLA 222
98 JESSORE 141
99 KALIGANJ 224
100 KESHABPUR 188
101 BAGERHAT 172
Exhibit -3.6
Ijara (Leasing)
Post Import Investment
Purchase and Negotiation of Export Bills
Inland Bills Purchased
Murabaha Import Bills
Bai-Muajjal Import Bills
Pre-Shipment Investment
Quard-ul-Hasan (Benevolent Investment)
Letter of Guarantee
Tender Guarantee
Performance Guarantee
Guarantee for Sub-Co ntracts
Shipping Guarantee
Advance Payment Guarantee
Guarantee in lieu of Security Deposits
Guarantee for exemption of Customs Duties
Others
Parcel handling
Safe custody of goods and bonds/shares
Lockers available in various sizes. For example: Small, Medium and
Large.
3.8.6: Inland and Online Transaction Services
3.8.7: Foreign Exchange Business Transaction / Service
4
Chapter Four
Core Part
Financial Statements Analysis of First
Security Islami Bank Limited (FSIBL)
Core Part
Financial Statements
Analysis of First Security
Islami Bank Limited (FSIBL)
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4.1: Introduction
A bank is a financial institution whose main job is to collect fund from
surplus units and invest in deficit units and making profits. Owners,
depositors and shareholders of a bank invest to a bank to get profit or
interest as a reward in return. But their profit is depends on the bank’s
financial performance. It depends on how a bank operates itself, how
efficiently management operates the operations of a bank. To understand
the financial performance of a bank, the investor should analyze the
financial statements of that bank. They may use different financial ratios to
analyze the financial performance of a bank. By analyzing the financial
performance of a bank investors and management can know the strengths
and weakness of the bank, and can take proper policy making decisions for
future. To analyze the financial performance of First Security Islami Bank
Limited (FSIBL), different financial ratios are used to determine the
strengths and weakness of FSIBL. Actually, to understand the overall
financial position and performance of FSIBL is the main aim of this chapter.
LI A BI L IT IE S A ND C API TA L
Li a bil i t ie s:
C urre nt L i ab il it i e s 15 2 ,7 0 9,5 8 8 ,4 39 1 2 1 ,6 50 ,1 1 8 ,33 9 86 ,4 3 2, 83 4 ,5 21 5 9,6 9 9 ,7 86 ,3 1 3 4 5 ,1 13 ,1 4 2, 19 7 2 8 ,7 0 0,8 2 0 ,4 12 31 ,0 5 9, 47 0 ,1 00 3 5,2 1 7 ,2 83 ,8 1 8 2 6 ,73 3 ,0 4 8,2 0 8 1 4 ,5 86 ,6 4 4 ,11 6 16 ,4 1 2 ,32 1 ,7 8 5 2 6% 4 1% 4 5% 3 2% 5 7 %
P la cem en t f r om B an ks & Oth er F in anci al I nst it u tio ns 3, 9 5 0, 0 00 , 00 0 4, 4 00 , 00 0 , 00 0 32 00 0 00 00 0 - - 6 30 0 00 00 0 ( 45 0, 0 00 , 0 00 ) 1 , 20 0 , 00 0, 0 00 3 , 2 00 , 00 0, 0 0 0 - ( 63 0, 0 0 0, 0 00 ) -1 0 % 3 8 % - - -
D epo sit s an d Ot h er A ccou n ts 13 9, 5 20 , 9 55 , 78 3 1 0 9, 9 05 , 56 8 , 87 1 7 81 45 0 45 00 8 5 63 4 49 59 1 67 42 42 3 09 27 2 2 2 58 54 54 1 50 0 2 9, 6 1 5, 3 86 , 91 2 31 , 76 0 , 5 2 3, 8 63 21 , 8 00 , 08 5, 8 4 1 1 3, 9 21 , 8 66 , 44 5 1 6 , 56 8, 5 51 , 2 22 2 7 % 4 1 % 39 % 33 % 64 %
O th er Li ab ilit ie s 9, 2 3 8, 6 32 , 65 6 7, 3 44 , 54 9 , 46 8 50 87 7 89 51 3 3 35 48 27 1 46 2 69 0 04 94 7 5 22 16 2 78 91 2 1 , 8 9 4, 0 83 , 1 88 2 , 25 6 , 75 9, 9 55 1 , 7 32 , 96 2, 3 6 7 6 6 4, 7 77 , 67 1 47 3, 7 7 0, 5 63 2 6 % 4 4 % 52 % 25 % 21 %
--
Lo ng - Te rm L ia bi li t i es 2 ,6 7 9,7 8 8 ,8 42 2 ,4 18 ,5 7 4, 96 7 3 1,1 1 4 ,0 00 - - - 2 6 1,2 1 3 ,8 75 2,3 8 7 ,4 60 ,9 6 7 3 1 ,1 1 4,0 0 0 - - 1 1% 7 6 7 3% - - -
P la cem en t f r om B an ks & Oth er F in anci al I nst it u tio ns 1 7 9, 7 88 , 84 2 1 98 , 5 74 , 96 7 31 1 14 00 0 - - - ( 1 8, 7 86 , 1 25 ) 16 7 , 46 0, 9 67 31 , 11 4 , 00 0 - - -9 % 53 8 % - - -
M u da r ab a Su bo r di nat ed B on d 2, 5 0 0, 0 00 , 00 0 2, 2 20 , 00 0 , 00 0 - - - - 28 0, 0 00 , 0 00 2 22 00 00 0 00 - - -- - 13%----
To t al L i abi l it i e s 15 5 ,3 8 9,3 7 7 ,2 81 1 2 4 ,0 68 ,6 9 3 ,30 6 86 ,4 6 3, 94 8 ,5 21 5 9,6 9 9 ,7 86 ,3 1 3 4 5 ,1 13 ,1 4 2, 19 7 2 8 ,7 0 0,8 2 0 ,4 12 31 ,3 2 0, 68 3 ,9 75 3 7,6 0 4 ,7 44 ,7 8 5 2 6 ,76 4 ,1 6 2,2 0 8 1 4 ,5 86 ,6 4 4 ,11 6 16 ,4 1 2 ,32 1 ,7 8 5 2 5% 4 3% 4 5% 3 2% 5 7 % -
C api t a l/ S har e ho lde rs ' E qui t y -
P ai d- up C ap ita l 4, 1 1 4, 3 87 , 20 0 3, 7 40 , 35 2 , 00 0 34 00 3 20 00 0 3 03 60 00 0 00 2 30 0 00 00 0 0 23 00 0 00 00 0 37 4, 0 35 , 2 00 34 0 , 03 2, 0 00 3 64 , 32 0 , 0 0 0 7 3 6, 0 00 , 00 0 - 1 0 % 1 0 % 12 % 32 % 0 %
S ta tu to r y R ese r ve 1, 3 1 0, 3 98 , 87 0 1, 0 04 , 57 4 , 91 4 7 04 2 02 21 4 46 01 6 98 45 26 3 44 96 9 9 1 34 0 82 14 9 30 5, 8 23 , 9 56 30 0 , 37 2, 7 00 2 44 , 03 2 , 3 6 9 1 9 6, 7 20 , 14 6 12 9, 3 6 7, 5 50 3 0 % 4 3 % 53 % 75 % 96 %
O th er R eser v e 1 1 4, 0 61 , 07 4 84 , 0 00 , 00 0 24 0 00 00 0 2 40 0 00 00 24 00 00 0 0 24 0 00 00 0 3 0, 0 61 , 0 74 60 , 00 0, 0 0 0 - - - 3 6 % 25 0 % 0 % 0 % 0 %
A sse ts R ev alu at io n R ese r ves 3 9 2, 3 81 , 87 6 4 02 , 4 42 , 95 0 3 71 5 37 50 9 - - - ( 1 0, 0 61 , 0 74 ) 30 , 90 5, 4 4 1 3 71 , 53 7 , 5 0 9 - - -3 % 8 % - - -
R e ta ine d E ar n in gs 5 0 2, 3 70 , 54 4 4 33 , 1 09 , 91 8 48 8 90 84 5 39 98 4 16 41 27 7 96 10 5 6 80 4 90 85 7 6 9, 2 60 , 6 26 38 4 , 21 9, 0 73 ( 3 50 , 95 0, 7 9 6) 1 2 1, 8 80 , 58 5 19 7, 4 7 0, 1 99 1 6 % 78 6 % -8 8 % 44 % 2 45 %
To t al S ha re ho lde r s' E qui t y 6 ,4 3 3,5 9 9 ,5 64 5 ,6 64 ,4 7 9, 78 2 4 ,5 4 8, 95 0 ,5 68 3,9 2 0 ,0 11 ,4 8 6 2 ,8 65 ,4 1 0, 75 5 2 ,5 3 8,5 7 3 ,0 06 7 6 9,1 1 9 ,7 82 1,1 1 5 ,5 29 ,2 1 4 62 8 ,9 3 9,0 8 2 1 ,0 54 ,6 0 0 ,73 1 3 2 6 ,83 7 ,7 4 9 1 4% 2 5% 1 6% 3 7% 1 3 %
---
To t al L i abi l it i e s a nd E qui t y 16 1 ,8 2 2,9 7 6 ,8 45 1 2 9 ,7 33 ,1 7 3 ,08 8 91 ,0 1 2, 89 9 ,0 89 6 3,6 1 9 ,7 97 ,7 9 9 4 7 ,9 78 ,5 5 2, 95 2 3 1 ,2 3 9,3 9 3 ,4 18 32 ,0 8 9, 80 3 ,7 57 3 8,7 2 0 ,2 73 ,9 9 9 2 7 ,39 3 ,1 0 1,2 9 0 1 5 ,6 41 ,2 4 4 ,84 7 16 ,7 3 9 ,15 9 ,5 3 4 2 5% 4 3% 4 3% 3 3% 5 4 %
E xh ib i t - 4 .1
F IR ST SE C U RI TY IS L AM I BAN K L I MI T E D
CO M P ARAT IV E I NC OM E S T AT E M ENT
FOR T HEY E AR S- 20 1 3, 2 01 2, 2 01 1, 2 01 0 , 20 09 an d 2 00 8
C h an g es i n BDT C h an g es i n P e rce nt a ge
2 0 13 20 1 2 2 0 1 1 2 01 0 2 0 0 9 20 0 8 2 0 13 20 1 2 2 0 11 20 1 0 2 0 0 9 20 1 3 2 0 1 2 2 0 11 2 01 0 2 0 0 9
P art i cu la rs
BDT BD T BD T BDT BDT BDT BDT BD T BDT BD T BDT % % % % %
A p pro p ria ti on s:
St atu to r y R es er ve 30 5, 8 23 , 95 6 3 00 , 37 2, 7 00 24 4, 0 32 , 36 9 1 96 , 72 0, 1 46 12 9, 3 67 , 5 5 0 3 7, 9 20 , 75 1 5 , 45 1, 2 56 5 6, 3 40 , 33 1 47 , 31 2, 2 23 6 7 , 3 52 , 59 6 9 1, 4 46 , 79 9 1 . 81 % 23 . 09 % 2 4. 0 5% 5 2. 06 % 24 1. 2 %
O th er R es er ve 2 0, 0 00 , 00 0 60 , 00 0, 0 00 - - - - ( 40 , 00 0, 0 00 ) 6 0, 0 00 , 00 0 - - - - 66 . 67 % - - - -
B on us Sh ar e I s s ued 37 4, 0 35 , 20 0 3 40 , 03 2, 0 00 36 4, 3 20 , 00 0 2 30 , 00 0, 0 00 - - 34 , 00 3, 2 00 (2 4, 2 88 , 00 0) 1 34 , 32 0, 0 00 23 0 , 0 00 , 00 0 - 10 . 00 % -6 . 6 7 % 5 8. 4 0% - -
T ot al A p pro p ria ti on s 69 9, 8 59 , 15 6 7 00 , 40 4, 7 00 60 8, 3 52 , 36 9 4 26 , 72 0, 1 46 12 9, 3 67 , 5 5 0 3 7, 9 20 , 75 1 ( 54 5, 5 44 ) 9 2, 0 52 , 33 1 1 81 , 63 2, 2 23 29 7 , 3 52 , 59 6 9 1, 4 46 , 79 9 -0 . 08 % 15 . 13 % 4 2. 5 6% 2 29 . 9 % 24 1. 2 %
R eta ine d E ar ni ng s Car r ie d F or wa rd 5 0 2,3 7 0 ,54 4 43 3 ,1 09 ,9 18 3 7 1,6 5 0,1 1 9 39 9 ,84 1 ,6 41 2 77 ,9 6 1,0 5 6 8 0 ,49 0 ,85 7 69 ,2 6 0,6 2 6 6 1, 45 9 ,79 9 (2 8 ,1 91 ,5 22 ) 1 2 1 ,88 0 ,58 5 1 9 7,4 7 0,1 9 9 1 5 .9 9% 1 6. 54 % - 7.0 5 % 43 .8 5% 2 4 5.3 %
Ea rn in gs P e r Sh are ( EP S) 1 .87 1 .8 5 1 .71 2 .3 3 1.4 2 7 .35 0.0 2 0 .15 ( 0 .6 2) 0 .9 0 ( 5.9 3 ) 0 .9 5% 8 .53 % - 26 .6 4 % 63 .6 6% -8 0 .67 %
E xh ib it - 4.2
Fi rst Security Isl ami B ank Limi ted .
Fin a nc ial S ta teme nts Ana lys is | 68
. .
(%) = - ×
40,000,000,000
35,000,000,000
All amount in BDT
30,000,000,000
25,000,000,000
20,000,000,000
15,000,000,000
10,000,000,000
5,000,000,000
-
2009 2010 2011 2012 2013
Current Assets 1,838,355, 1,385,144, 9,563,782, 11,553,408 10,768,118
Fixed Assets 14,900,803 14,256,100 17,829,318 27,166,865 21,321,685
Current Liabilities 16,412,321 14,586,644 26,733,048 35,217,283 31,059,470
Long-Term Liabilities 31,114,000 2,387,460, 261,213,87
Exhibit -4.3: BDT Changes over the Years Percentage Changes over the
Years in Balance Sheet items
Fi rst Security Isl ami B ank Limi ted .
Fin a nc ial S ta teme nts Ana lys is | 69
. .
Exhibit -4.2 shows the comparative income statement of FSIBL and it also
shows the changes in both taka amount and percentage of particulars of the
statement over year 2009-2013. So, one can easily understand the changes
of every element of the statement. Here I have illustrated only the total
operating income and net profit after tax. Identifying the changes in
operating income and net profit is the main objective for a bank’s income
statement analysis. Based on operating income and net profit the
management makes policy and investors make investment decisions .
1,200,000,000
All amount in BDT
998,931,038
1,000,000,000
600,000,000
400,000,000
222,555,685 221,762,982
181,701,652
200,000,000
31,561,116 7,256,283
-
2009 2010 2011 2012 2013
Interpretation: From exhibit -4.5, it is seemed that in years 2009 and 2010
both total operating income and net profit were increased compare to the
previous year’s operating income and net profit, and the trend of these
increments were almost same. But, in 2011 FSIBL couldn’t hold the speed of
increment comparing the previous years. In 2011 increment is poor than
previous year and the different between total operating income and net
profit is high than previous year. The increment of total operating income in
2012 is significant which has broken all the previous years’ records, but the
net profit was not increased by balancing with the operating income. In
Fi rst Security Isl ami B ank Limi ted .
Fin a nc ial S ta teme nts Ana lys is | 71
. .
2013 the increment has become slow again. The high to low increment
indicates FSIBL is going to mature stage from growth stage. This lower
increment in 2012 and 203 not means that the bank’s income and profit is
decreased, because it shows the changes from one year to another year in
operating income and net profit.
Now, I illustrate the percentage changes of total operating income and net
profit over the years.
250.0%
200.0%
150.0%
100.0%
50.0%
0.0%
2009 2010 2011 2012 2013
Total Operating Income 131.8% 57.06% 31.20% 36.51% 18.07%
Net Profit after Tax 213.4% 67.85% 5.75% 31.32% 0.95%
5,000,000,000
All amount in BDT 4,409,596,725
4,500,000,000
4,000,000,000 3,734,683,955
3,500,000,000
3,000,000,000 2,735,752,917
2,500,000,000 2,085,207,938
2,000,000,000
1,500,000,000 1,327,633,708
1,000,000,000
500,000,000 326,837,749 548,600,731 580,161,847 761,863,499 769,119,782
-
2009 2010 2011 2012 2013
Exhibit -4.7: Total Operating Income and Net Profit over the Years
Interpretation: Exhibit -4.7 presents the total operating income and net
profit from FSIBL’s income statements. It does not show the net changes in
operating income and net profit. In the graph is has seemed that both
operating income and net profit are increase year by year. So, it indicates
FSIBL is progressing in its operation and profit generation.
So, we cannot tell FSIBL is doing bad or good in operation by seeing the net
changes of total operating income and net profit over the years. Net changes
may be increased or decreased but it cannot be said that a bank is not in
stable or growing position at any year until a negative figure is arise.
Fi rst Security Isl ami B ank Limi ted .
Fin a nc ial S ta teme nts Ana lys is | 73
. .
(%) = ×
Here I have analyzed the trend of FSIBL’s income and expenses. So I have
used the bank’s income statements. I have used 2008 as base period (year)
for the following five years. Exhibit -4.8 is used for trend analysis.
FIRST SECURITY ISLAMI BANK LIMITED
COMPARATIVE INCOME STATEMENT
F OR TH E YE ARS - 2 0 13 , 2 0 12 , 2 0 11 , 2 01 0 , 2 00 9 a nd 20 0 8
Percentage Changes
2013 2012 2011 2010 2009 2008 2013 2012 2011 2010 2009
Particulars
BDT BDT BDT BDT BDT BDT % % % % %
I nv es tm en ts In c o me 18 ,2 7 7 ,6 86 ,5 3 1 1 3, 33 9 ,6 6 8, 73 0 8 ,7 4 7 ,7 63 ,4 4 3 5 ,5 47 ,0 4 7 ,7 95 4, 34 8 ,6 7 4, 55 3 3 ,1 4 1, 79 9 ,4 7 0 5 8 1. 76 % 4 2 4. 5 9% 2 7 8 .4 3% 1 7 6 .5 6% 1 3 8 .4 1%
P r efi t P ai d on de po s i ts ( 14 , 59 7 ,5 53 , 39 0 ) ( 1 0, 3 09 ,7 5 5, 4 93 ) (6 ,6 7 0 ,9 51 ,2 2 0 ) ( 4 ,1 25 , 82 6 ,5 00 ) ( 3, 33 3 ,8 0 0, 36 7 ) (2 ,9 3 9, 15 5 ,7 7 9) 4 9 6. 66 % 3 5 0. 7 7% 2 2 6 .9 7% 1 4 0 .3 7% 1 1 3 .4 3%
N e t I nve st me nt Inc om e 3 ,6 8 0 , 1 3 3 ,1 4 1 3 , 0 2 9 ,9 1 3 , 2 3 7 2 ,0 7 6 , 8 1 2 ,2 2 3 1 , 4 2 1 ,2 2 1 , 2 9 5 1 , 0 14 , 8 7 4 ,1 8 6 2 0 2 , 6 4 3 ,6 9 1 1 8 1 6 . 0 6% 1 4 9 5 . 1 9 % 1 0 2 4 . 8 6 % 7 0 1 . 3 4 % 5 0 0 . 8 2 %
I nc o me fr om I nv es tm en t in sh ar es an d s ec u r it i es 2 3 5 ,6 70 ,9 6 8 9 8 ,9 9 7, 12 9 8 1, 9 67 ,6 4 6 2 64 ,2 0 8 ,0 27 5 3 ,5 10 , 52 7 2 0 2, 34 5 ,8 3 4 1 1 6. 47 % 4 8. 9 2% 4 0 .5 1% 1 3 0 .5 7% 2 6 .4 5%
C o mm u ss i o n, E xc h an ge an d Br o ke ra ge 3 2 6 ,7 76 ,9 8 7 40 4 ,2 4 0, 24 5 4 0 3, 3 10 ,1 6 0 2 82 ,5 6 1 ,9 56 19 4 ,6 31 , 41 9 1 3 3, 38 4 ,1 8 4 2 4 4. 99 % 3 0 3. 0 6% 3 0 2 .3 7% 2 1 1 .8 4% 1 4 5 .9 2%
O th er O pe ra ti ng In c o me 1 6 7 ,0 15 ,6 2 9 20 1 ,5 3 3, 34 4 1 7 3, 6 62 ,8 8 8 1 17 ,2 1 6 ,6 60 6 4 ,6 17 , 57 6 3 4, 40 9 ,2 5 0 4 8 5. 38 % 5 8 5. 7 0% 5 0 4 .7 0% 3 4 0 .6 5% 1 8 7 .7 9%
7 2 9 , 4 6 3 ,5 8 4 7 0 4 ,7 7 0 , 7 1 8 6 5 8 , 9 4 0 ,6 9 4 6 6 3 ,9 8 6 , 6 4 3 3 12 , 7 5 9 ,5 2 2 3 7 0 , 1 3 9 ,2 6 8 1 9 7 . 08 % 1 9 0 . 4 1 % 1 7 8 . 0 3 % 1 7 9 . 3 9 % 8 4 . 5 0 %
T o ta l O pera ti ng Inco m e 4 ,4 0 9 , 5 9 6 ,7 2 5 3 , 7 3 4 ,6 8 3 , 9 5 5 2 ,7 3 5 , 7 5 2 ,9 1 7 2 , 0 8 5 ,2 0 7 , 9 3 8 1 , 3 27 , 6 3 3 ,7 0 8 5 7 2 , 7 8 2 ,9 5 9 7 6 9 . 85 % 6 5 2 . 0 2 % 4 7 7 . 6 2 % 3 6 4 . 0 5 % 2 3 1 . 7 9 %
L es s : T o tal Op er ati n g Ex pe ns e s (2 , 38 3 ,8 76 , 94 3 ) ( 1, 7 92 ,7 2 5, 3 52 ) (1 ,1 4 6 ,1 91 ,0 7 0 ) ( 8 81 ,6 0 7 ,2 07 ) ( 57 6 ,7 95 , 95 9 ) (3 8 3, 17 9 ,2 0 6) 6 2 2. 13 % 4 6 7. 8 6% 2 9 9 .1 3% 2 3 0 .0 8% 1 5 0 .5 3%
P rof it b efo re Pr ov isio n and Ta x 2 ,0 2 5 , 7 1 9 ,7 8 2 1 , 9 4 1 ,9 5 8 , 6 0 3 1 ,5 8 9 , 5 6 1 ,8 4 7 1 , 2 0 3 ,6 0 0 , 7 3 1 7 50 , 8 3 7 ,7 4 9 1 8 9 , 6 0 3 ,7 5 3 1 0 6 8 . 4 0% 1 0 2 4 . 2 2 % 8 3 8 . 3 6 % 6 3 4 . 8 0 % 3 9 6 . 0 0 %
L es s : T o tal Pr o vi s i on s (4 9 6 ,6 00 ,0 0 0 ) ( 44 0 ,0 9 5, 10 4 ) (3 6 9 ,4 00 ,0 0 0 ) ( 2 20 ,0 0 0 ,0 00 ) ( 10 4 ,0 00 , 00 0 ) - - - - - -
P rof it b efo re T ax 1 ,5 2 9 , 1 1 9 ,7 8 2 1 , 5 0 1 ,8 6 3 , 4 9 9 1 ,2 2 0 , 1 6 1 ,8 4 7 9 8 3 ,6 0 0 , 7 3 1 6 46 , 8 3 7 ,7 4 9 1 8 9 , 6 0 3 ,7 5 3 8 0 6 . 48 % 7 9 2 . 1 1 % 6 4 3 . 5 3 % 5 1 8 . 7 7 % 3 4 1 . 1 5 %
L es s : T o tal T ax (7 6 0 ,0 00 ,0 0 0 ) ( 74 0 ,0 0 0, 00 0 ) (6 4 0 ,0 00 ,0 0 0 ) ( 4 35 ,0 0 0 ,0 00 ) ( 32 0 ,0 00 , 00 0 ) ( 8 5, 32 1 ,6 8 9) 8 9 0. 75 % 8 6 7. 3 1% 7 5 0 .1 0% 5 0 9 .8 4% 3 7 5 .0 5%
N e t P ro fit aft e r Ta x 7 6 9 , 1 1 9 ,7 8 2 7 6 1 ,8 6 3 , 4 9 9 5 8 0 , 1 6 1 ,8 4 7 5 4 8 ,6 0 0 , 7 3 1 3 26 , 8 3 7 ,7 4 9 1 0 4 , 2 8 2 ,0 6 4 7 3 7 . 54 % 7 3 0 . 5 8 % 5 5 6 . 3 4 % 5 2 6 . 0 7 % 3 1 3 . 4 2 %
R etai n ed E ar n i n g Br o u gh t F or wa rd fro m P r evi o us Y ear 4 3 3 ,1 09 ,9 1 8 37 1 ,6 5 1, 11 9 3 9 9, 8 40 ,6 4 1 2 77 ,9 6 1 ,0 56 8 0 ,4 90 , 85 7 1 4, 12 9 ,5 4 4 30 6 5. 28 % 26 3 0. 31 % 28 2 9. 8 2% 19 6 7. 2 3% 5 6 9 .6 6%
1 ,2 0 2 , 2 2 9 ,7 0 0 1 , 1 3 3 ,5 1 4 , 6 1 8 9 8 0 , 0 0 2 ,4 8 8 8 2 6 ,5 6 1 , 7 8 7 4 07 , 3 2 8 ,6 0 6 1 1 8 , 4 1 1 ,6 0 8 1 0 1 5 . 3 0% 9 5 7 . 2 7 % 8 2 7 . 6 2 % 6 9 8 . 0 4 % 3 4 3 . 9 9 %
A ppro pria tio ns:
S tatu to r y Res er ve 3 0 5 ,8 23 ,9 5 6 30 0 ,3 7 2, 70 0 2 4 4, 0 32 ,3 6 9 1 96 ,7 2 0 ,1 46 12 9 ,3 67 , 55 0 3 7, 92 0 ,7 5 1 8 0 6. 48 % 7 9 2. 1 1% 6 4 3 .5 3% 5 1 8 .7 7% 3 4 1 .1 5%
O th er Re s er ve 2 0 ,0 00 ,0 0 0 6 0 ,0 0 0, 00 0 - - - - - - - - -
Bo n us Sh ar e Is s ued 3 7 4 ,0 35 ,2 0 0 34 0 ,0 3 2, 00 0 3 6 4, 3 20 ,0 0 0 2 30 ,0 0 0 ,0 00 - - - - - - -
T o ta l A ppropr iat io ns 6 9 9 ,8 59 ,1 5 6 70 0 ,4 0 4, 70 0 6 0 8, 3 52 ,3 6 9 4 26 ,7 2 0 ,1 46 12 9 ,3 67 , 55 0 3 7, 92 0 ,7 5 1 18 4 5. 58 % 18 4 7. 02 % 16 0 4. 2 7% 11 2 5. 2 9% 3 4 1 .1 5%
R etai n ed E ar n i n gs C ar r i ed F or wa rd 5 0 2 , 3 7 0 ,5 4 4 4 3 3 ,1 0 9 , 9 1 8 3 7 1 , 6 5 0 ,1 1 9 3 9 9 ,8 4 1 , 6 4 1 2 77 , 9 6 1 ,0 5 6 8 0 , 4 9 0 ,8 5 7 6 2 4 . 13 % 5 3 8 . 0 9 % 4 6 1 . 7 3 % 4 9 6 . 7 5 % 3 4 5 . 3 3 %
E a rning s Pe r S h ar e (E PS ) 1 .8 7 1 . 8 5 1 .7 1 1 . 6 1 1 4 .2 1 7 . 3 5 2 5 . 43 % 2 5 . 1 9 % 2 3 . 2 1 % 2 1 . 9 5 % 1 9 3 . 3 4 %
Exhibit -4.8
Fi rst Security Isl ami B ank Limi ted .
Fin a nc ial S ta teme nts Ana lys is | 75
. .
From exhibit -4.8, I have used the data of total operating income, total
operating expenses and net profit. I have took the percent changes from
exhibit -4.8 and put them in a line graph to sho w the trend of total operating
income, total operating expenses and net profit of FSIBL.
900.00%
800.00%
700.00%
600.00%
500.00%
400.00%
300.00%
200.00%
100.00%
0.00%
2009 2010 2011 2012 2013
Total Operating Income 231.79% 364.05% 477.62% 652.02% 769.85%
Total Operating Expenses 150.53% 230.08% 299.13% 467.86% 622.13%
Net Profit 313.42% 526.07% 556.34% 730.58% 737.54%
- (%) = ×
Income from Operation 2,025,719,782 1,941,958,603 1,589,561,847 1,203,600,731 750,837,749 10.66% 13.83% 16.90% 19.38% 16.11%
Exhibit -4.10 shows common-size comparative balance sheets for FSIBL. Some
relations that stand out on both a magnitude and percent are shown in column
graph.
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2009 2010 2011 2012 2013
Investments in Businesses 80.71% 81.93% 76.33% 74.23% 70.82%
Deposits and Other Accounts 88.42% 88.57% 85.86% 84.72% 86.22%
Long-Term Liabilities 0.00% 0.00% 0.03% 1.86% 1.66%
Fixed Assets 0.78% 0.90% 1.08% 1.54% 1.53%
Cash 10.49% 7.64% 7.85% 8.12% 7.14%
Exhibit -4.12: Common-size Comparative Balance Sheets Analysis
and largest portion of its liabilities is covered by deposit from customers which
is the most important source of fund for a bank.
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
2009 2010 2011 2012 2013
Cash 10.49% 7.64% 7.85% 8.12% 7.14%
Balance With Bank and
Financial Institutions 1.52% 1.63% 6.26% 8.31% 8.89%
Investments in Shares &
Securities2 0.50% 0.83% 1.79% 2.46% 1.68%
Other Assets (Current) 2.49% 3.41% 4.04% 4.01% 7.30%
Investments in Shares &
Securities (Fixed) 3.49% 3.67% 2.65% 1.33% 2.64%
Investments in Businesses 80.71% 81.93% 76.33% 74.23% 70.82%
Fixed Assets (Premises,
Furniture & Fixtures) 0.78% 0.90% 1.08% 1.54% 1.53%
investment provides high profit. From this view point FSIBL has well form to
generate profits.
Here, I have discussed about the proportion of particular liabilities and equity
in the perspective of total liabilities and equity. So, by using the percent related
to liabilities and equity from Exhibit -4.10 following column graph is drawn.
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2009 2010 2011 2012 2013
Placement from Banks &
Financial Institutions (Current) 0.00% 0.00% 3.52% 3.39% 2.44%
Deposits and Other Accounts 88.42% 88.57% 85.86% 84.72% 86.22%
Other Liabilities (Current) 5.61% 5.27% 5.59% 5.66% 5.71%
Placement from Banks &
Financial Institutions (Fxied) 0.00% 0.00% 0.03% 0.15% 0.11%
Mudaraba Subordinated Bond 0.00% 0.00% 0.00% 1.71% 1.54%
Shareholders' Equity 5.97% 6.16% 5.00% 4.37% 3.98%
Exhibit -4.14: Portion of Particular Liability and Equity on Total Liabilities and
Equity
Interpretation: Exhibit -4.14 shows that FSIBL’s short-term liabilities are more
than long-term liabilities where the largest portion is covered by deposit
accounts. Deposits accounts fluctuate from 84.72% to 88.57% on total liabilities
and equity across the five years from 2009 to 2013. It indicates FSIBL collets
enough deposits from customers and successfully holds its customers or
depositors. FSIBL maintains a little amount of long-term liabilities. It borrowed
Fi rst Security Isl ami B ank Limi ted .
Fin a nc ial S ta teme nts Ana lys is | 82
. .
from bank and other financial institutions at 0.03% on total liabilities and
equity in 2011, 0.15% in 2012 and 0.11% in 2013 as long-term liabilities, and
borrowed 3.52% in 2011, 3.39% in 2012 and 2.44% in 2013 as short-term
liabilities. FSIBL collects fund by issuing subordinated bond in 2012 at 1.71%
and in 2013 at 1.54%. It refers FSIBL try to maintain low long-term liabilities
and meet the debt from other banks and financial institutions.
In commo n-size income statement, total revenue is usually the based amount
which is assigned a value of 100%. Each common-size income statement item
appears as a percent of total revenue. Exhibit -4.11 shows common-size
comparative income statements for each taka of FSIBL’s revenues. By using the
data from the statement, following column graph is drawn.
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2009 2010 2011 2012 2013
Net Profit 7.01% 8.83% 6.17% 5.42% 4.05%
Tax 6.86% 7.00% 6.80% 5.27% 4.00%
Provisions 2.23% 3.54% 3.93% 3.13% 2.61%
Operating Expenses 83.89% 80.62% 83.10% 86.17% 89.34%
Current Ratio =
0.30
0.24 0.27
0.25 0.21
0.20 0.16 0.14
0.15
0.10
0.05
-
2009 2010 2011 2012 2013
Current Ratio
Interpretation: According to the result, the current ratio of FSIBL was 0.16
in 2009, 0.14 in 2010, 0.21 in 2011, 0.24 in 2012 and 0.27 in 2013. In 2012
current ratio was 0.24 means FSIBL had current assets of 0.24 taka against
short-term debt or liabilities of 1taka. In 2013 current ratio was 0.27 means
FSIBL had current assets of 0.27 taka current liabilities of 1 taka. It indicates
FSIBL has not enough ability to pay o ff its all current liabilities by its current
assets. But, the trend tells that FSIBL will be able to achieve enough current
assets to pay off current liabilities in future. On the other hand, maintaining
low current asset is better for a bank or financial institution to earn
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maximum profit, because current asset earns low profit. In fact, higher
current ratio is better for the institution because its higher ratio helps to
prevent default. This ratio should be at least 1:1.
Acid - T est Ratio = Cash and equivalents + Short - terminvestment + Current receivables (net)
Current Liabilities
0.2
0.15
0
2009 2010 2011 2012 2013
Acid-test Ratio
common guideline for applicable acid-test ratio is 1:1, but FSIBL’s acid-test
ratio is very poor than the guided ratio. So, FSIBL has not enough ability to
meet immediate current obligations by its most liquid assets. But, other factors
should be considered such as FSIBL includes the deposits in current liabilities
and all investment in businesses in long-term assets, that reasons affect the
ratio greatly. An organization’s acid-test ratio depends on the system of its
maintaining assets and liability according to the duration.
25
20
15
21.90 21.67
10
12.57 12.33 14.44
5
0
2009 2010 2011 2012 2013
50 46
40
30
20 20 19
20 18
10
0
Days
Interpretation: Days’ sales uncollected for FSIBL in 2009 were 18 days. This
means that it will take about 18 days to collect cash after creating accounts
receivable. Days’ sales uncollected in 2010 were 46 days which is higher than
2009. The low value of days’ sales uncollected is expected and low value means
a company is strong in receivable collection. In 2011 and 2012 the value has
reduced to 20 days and in 2013 it has come about 19 days. The trend indicates
FSIBL is becoming stronger gradually in collecting receivables.
Total asset turnover reflects a company’s ability to use its assets to generate
sales and is an important indication of operating efficiency. The total asset
turnover ratio of FSIBL is measured to know its operating efficiency.
0.13
0.125
0.12
0.115 0.13 0.13
0.12 0.12
0.11
0.11
0.105
0.1
2009 2010 2011 2012 2013
Interpretation: FSIBL’s total asset turnover express that it turned its assets
over 0.13 times during the year 2013. This means that each Tk. 1.00 of
assets earns Tk. 0.13 of revenues. Is a total asset turnover of 0.13 is good or
bad? It is safe to say that all companies desire a high total asset turnover.
Like many ratio analyses, however a company’s total asset turnover must be
interpreted in comparison with that of prior years. Comparing with prior
years FSIBL’s total asset turnover of 2013 is higher than prior years and
FSIBL’s total asset turnover is increasing year by year. It indicates FSIBL is
being more efficient in operation and earns revenues by using its total asset.
Interpreting the total asset turnover also requires an understanding of
company’s operations. As FSIBL is a banking company its total asset
turnover is depending o n its deposit collection and investment in
businesses, and profit get and paid on them.
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
2009 2010 2011 2012 2013
Equity Ratio 5.97% 6.16% 5.00% 4.37% 3.98%
Debt Ratio 94.03% 93.84% 95.00% 95.63% 96.02%
Interpretation: In exhibit -4.28, the red color area indicates the portion of
total asset contributed by owners and blue color area indicates the portion
of total asset contributed by creditors. From the graph it is appeared that
maximum area is covered by debt ration that means FSIBL’s lion share of
total asset is contributed by creditors. FSIBL’s debt ratio was 94.03% and
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equity ratio was 50.97% in 2009 and 2013 FSIBL’s debt ratio came to
96.02% and equity ratio came to 3.98%. The trend of debt and equity ratios
tells that the debt ratio is in increasing trend and equity ratio is in
decreasing trend which is not a good sign for any general business or
company. But, for a banking company that trend is not a bad sign. Because
as a financial institution a bank collects deposit from customers as debt or
liability and invests or lends that money in businesses as asset. So, as a bank
FSIBL’s investment is largely depended on liability and profit is depended in
investments. Further, a bank’s maximum portion of asset is covered by
financial assets which are created by deposits and investments. So, FSIBL’s
debt ratio’s increasing trend indicates its deposits are increasing as well as
investments are increasing which is a good sign for the bank.
1.3
1.2
1.23 1.29 1.24 1.19 1.14
1.1
1
2009 2010 2011 2012 2013
Profitability ratios are measured to assess the ability of a company to use its
assets efficiently to produce profits. Here, the profitability ratios of FSIBL are
measured to recognize its ability to generate an adequate return on its invested
capital.
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2009 2010 2011 2012 2013
Profit Margin Ratio 7.52% 9.89% 6.63% 5.71% 4.21%
Exhibit -4.32: Profit Margin Ratio
Interpretation: In year 2009 the result was 7.52% that means in Tk. 100 of
net income FSIBL earns net profit of Tk. 7.52. In the year 2010 FSIBL’s profit
margin was increased to 9.89% and from the following year it started to
decline. This profit margin is declined to 4.21% in 2013. It is seem that
FSIBL’s profit margin is in decline trend. So, FSIBL should improve its
operating policy to make the profit margin index upward.
is related to its total assets. This ratio is calculated by dividing net income by
average total assets.
1%
1%
1%
1% 1%
0% 0.75% 0.69%
0.53%
0%
0%
2009 2010 2011 2012 2013
0.53%. It means the management of the bank cannot efficiently used its
assets to generate profit.
14%
12%
10%
8% 14% 13% 13% 12%
6% 11%
4%
2%
0%
2009 2010 2011 2012 2013
Return on Equity
14%, 13%, 13% and 12%. In 2010 the bank’s ROE was high and higher
percentage is better for the bank as well as for shareholders. So, the
management of the bank had the ability to generate adequate returns from
the capital invested by the owners in 2010 than any other years which are
analyzed.
20
15
10 15.38 17.45 15.40
5 9.98 8.08
0
2009 2010 2011 2012 2013
Times
Interpretation: In the years 2009, 2010, 2011, 2012 and 2013 the Price-
Earnings Ratio of FSIBL was respectively 15.38 times, 17.45 times, 15.40
times, 9.98 times and 8.08 times. FSIBL’s price-earnings ratio was very high
in 2010 and also low in 2013. The ratio was decreased from 2011 to 2013.
The high profit-earnings ratio indicates confidence for this bank, because it
suggests that its earnings are expected to grow in the future years. On the
other hand, the low profit-earnings ratio indicates that FSIBL’s future
prospects for EPS growth are expected to be poor, so that investors do not
put a high value on the shares.
2.50
2.00
1.50
2.33
1.00 1.71 1.85 1.87
1.42
0.50
0.00
2009 2010 2011 2012 2013
Taka
30,000,000,000
25,928,833,653
25,000,000,000
21,314,515,328
20,000,000,000
15,000,000,000
12,815,496,581
10,000,000,000 8,499,018,747
7,036,299,306
5,765,356,760 5,894,875,380
4,614,318,325
5,000,000,000
2,267,781,609
129,518,620
-
2009 2010 2011 2012 2013
Interpretation: In Exhibit -4.40, it has been seen that the total cash is
increased over five years but the net cash flow is fluctuating over the five
years. In 2010 and 2013 the net cash flow is dropped. In 2010 the bank has
generated enough cash from the profit and loss account related operating
activities, but in other operating activities related to balance sheet such as
investment to customers, assets, the bank invest more than collection
deposits and liabilities compare to previous year which has decreased the
net cash flow. In this year the bank has spent much cash for investing
activities which were investment in share and securities, purchase of
property, plant and equipment. In year 2011 and 2012 both total cash and
net cash are increased. In year 2013 total cash has increased than previous
year but net cash has slowly increased than previous years.
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5
Chapter Five
Findings, Recommendation
and Conclusion
Findings,
Recommendation
and Conclusion
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the years of 2012 and 2013 than years- 2009, 2010 and 2011. FSIBL
took highest time of 46 days to collect account receivable in year 2010,
but the days’ sales uncollected was decreased to 19 days in year 2013.
From these above information, it is cleared that FSIBL’s liquidity
position is improving, but it was not enough goo d comparing with
industry.
Efficiency ratios determine the efficiency of using the bank’s assets and
managing its o perations. I have discussed about total asset turnover
ratio. FSIBL’s total asset turnover was lowest in year 2010 and high in
year 2012 and year 2013 which was 0.13 times in both years. That
means FSIBL invested more on those assets which bring more revenues.
FSIBL’s times interest earned ratio was high in year 2010 which was
1.29 times and that decreased to 1.14 times in year 2013. This means
FSIBL’s interest expense have increased more than the increment of
revenues.
years 2009 and 2010 which was 1%. The bank’s return on tot al assets
low in year 2013 which was 0.53%. FSIBL’s return on equity was high
in year 2010 and low in year 2013. From the above discussion it is
appeared that FSIBL’s profitability was decreasing because the bank
could not operate properly its activities comparing the previous years.
So, it was failing to increase the profitability.
Market prospects ratios relate the observable market values like the
stock price with the book values obtained from the firm’s financial
statements. The market value ratios that I have used to analyzed are
Price Earnings Ratio (P-E) and Earning per Share (EPS). FSIBL’s P-E
ratio was high in year 2010 comparatively than the last three years. The
ratio was decreased from 2011 to 2013. The P-E ratio was lowest in the
year 2013 which only 8.08 times. The high P-E ratio indicates a sign of
confidence for the bank, because it suggests that its earnings are
expected to grow in the future years. On the other hand, the low P-E
ratio indicates that the bank’s future prospects for EPS growth are
expected to be poor, so that investors do not put a high value on the
share. The EPS of FSIBL was taka 2.33 was high in year 2010 and it
decreased in year 2011 and increased from years 2012 to 2013 which
are taka 1.85 and taka 1.87 accordingly. So, it was a good point for
FSIBL for attracting large investors in the new competitive era by
earning profit on each share of stock.
5.2: Recommendations
FSIBL’s had fair solvency ratios in where it uses the debt most to
increase revenue rather than the equity. It may increase the risk for the
bank. So, it would be better for FSIBL to finance more equity to minimize
the risk.
Though there were higher profitability ratios in year 2010, FSIBL was
not successful in increasing its overall earnings performance because
Profit Margin, Return on Assets and Return on Equity had been
decreasing during the years 2011 to 2013. So for getting more benefit of
earnings, FSIBL should concern about its profitability and improve its
operating polices for minimizing costs and increasing profits.
Though the EPS was increased in years 2012 and 2013 comparing to
year 2011, the overall market prospects ratios of FSIBL was decreasing
during the years 2011 to 2013. If it decreases over the years, investors
will not put high value on the shares issued by the bank. So the bank
should concern about this.
FSIBL should capture and hold those depositors who will agree to
deposit their money for long period of time. Then the bank can make
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long-term investments and earn higher profits. FSIBL also should lend
the money to reliable clients and invest in profitable businesses.
5.3: Conclusion
By analyzing the financial statements as well as the ratios, it can be said that
First Security Islami Bank Limited gas been do ing well in few sectors. If we see
the comparative analysis of balance sheet items, it is seemed that the current
liabilities are higher than assets. And all the assets and liabilities were in
increasing trend from year 2010 to 2012 and decreased from year 2012 to
2013. In the case of comparative income statement, most of time the net profit
was decreased ant it was fluctuating over the period. But, when compare overall
total operating income and net profit they were simply increased over the
years. In case of common-size comparative analysis of balance sheet items, it is
appeared that the investment was in decreasing trend and the liabilities were in
increasing trend. Over the five years period of 2009 to 2013, the investments
were lower than the liabilities created by deposits and other debt accounts. The
most liquid asset cash was decreasing and fixed assets were increasing over the
periods. In common-size income statement, the operating expenses were too
high and they were increasing over the years and net profit was decreasing year
by year. The liquidity ratios of FSIBL were increased most of the times which is
good for the bank. If we see the profitability position of the bank, it can easily
be said the Profit Margin, Return on Assets and Return on Equity were not so
good and its trend was downward. We can see the EPS ratio of FSIBL was
fluctuating and the P-E ratio was decreasing, so it is better to give more
concentration when maintaining these types of ratios and increasing such a
market price of the share. Also when we have a look on the solvency ratios, we
can say that FSIBL should do their best to maintain their leverage ratios as all
these ratios shows that they have very high leverage and thus they also have a
higher risk. Besides this, they need to increase the amount of equity capital as
too much leverage may be associated with more risk and also it indicates the
bank’s financial weakness. Finally, it can be said that FSIBL’s overall
performance was good enough.
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References:
While preparing this report, I had to collect data from the annual reports of
FSIBL, different books related to Accounting and Finance, the website of FSIBL
and other websites and blogs. The references are given below:
Appendix
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Acronyms
List of Exhibits
Thank you…