Chapter 03: Internship

Outcome/Issue
Analysis/Empirical Analysis

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3.1 Analysis of the industry/markets
An analysis of the industry is a method that can assist a company or organisation in determining
its position in relation to other players in the industry. It enables them to identify prospective
opportunities and challenges, and it also gives them a thorough view of the industry's current
status and its expected position in the future. Finding the gaps that exist between yourself and
your competitors in the industry and working to narrow them is essential if you wish to thrive in
this ever-changing market climate. My internship is with a company that operates in the
financial industry, and it is in that sector that I work. In this section, I will discuss the banking
regulations of Bangladesh, as well as current trends and an overall industry perspective. An
Overview of the Banking Industry in Bangladesh The Financial Services Sector in Bangladesh
Soon after the country attained its independence in 1971, the government nationalised all
commercial banks (with the exception of a few international banks) and merged them into a total
of six distinct banks on the directive of the Bangladesh Bank, which serves as the country's
central bank. At the time, the Bangladesh Bank, which is the country's central bank, was in
charge of supervising the banking system and had a direct impact on interest rates (both lending
and deposit rates). Over the course of that time period, the number of bank branches,
particularly in more rural areas, has dramatically expanded. Customers are able to save more,
spend more, and establish additional deposit accounts as a direct result of the decrease in costs
related with the mobilisation and transfer of funds that are brought about by the expansion of
bank branches.

A great number of commercial bank branches are unable to function properly as a result of
meddling from the government, corruption, and ineffective management. Because of the
significant losses that a number of these locations have incurred, a number of these locations
have been forced to close their doors. The country's central bank has finally granted licences to
nine additional commercial banks, bringing the total number of commercial banks in
Bangladesh up to 47. Six private commercial banks (PCBs) and three new non-resident
Bangladeshi commercial banks (NRBs) have received licences, respectively, to expand present
financial inclusion measures and maximise foreign exchange inflows through the inclusion of
unbanked populations. This was done by the government of Bangladesh.

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Between the years 2000 and 2001, Bangladesh's economy reportedly underwent a number of
significant shifts, as stated by the country's central bank. In addition to this, the bank provided
an explanation about the economic setting and the justification for granting licences to new
banks. In spite of the expanding economy and the increased level of competition in the banking
sector, a sizeable section of Bangladesh's population still does not have an account at a bank.
The banking business has a reputation for being monotonous and out of date; yet, a global wave
of deregulation has provided banks access to a wide range of new possibilities, despite this
reputation. When you factor in technological advancements like internet banking and ATMs, it is
clear that the financial services industry is exerting significant effort to dispel the terrible
reputation that it has garnered over the years. (Bangladesh Bank Industry Analysis, 2020)

Banking Industry Trends in Bangladesh

The largest banks in the developed world have matured into sophisticated financial institutions
at the start of the twenty-first century, in charge of trillions of dollars’ worth of assets and cash
and providing a wide range of services to international markets. Banks are making use of
cutting-edge technology to find new market opportunities, offer specialized solutions, start
creative projects, and fill brand-new market gaps. Even though the banking industry doesn't
work in the same manner everywhere in the world, many bankers in Bangladesh categorize
corporate clients in the following ways.

Commercial Banking:

54 commercial banks, comprising 9 international banks and 45 local commercial banks in

Bangladesh, are active in our country. You may find information about every commercial bank
in Bangladesh, including information on the bank, its locations (including ATM booths and
branches), a position map, and information on banking professions. This financial company
provides a range of services, including loans, deposits, foreign exchange, and cash management.
The Commercial Banks of Bangladesh, n.d.

Investment Banking:

Investment banking is the term used to describe merchant banking in the US. This type of
financial institution underwrites securities or serves as its clients' agents when they issue
securities to assist individuals, businesses, and governments in raising capital. Investments in

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Bangladesh, which also provide additional services including market-making, derivatives
trading, trading in fixed income instruments, foreign exchange trading, investment banking, and
securities trading, make mergers and acquisitions simpler. Additionally, it offers corporate
advising services to the companies it finances. 2015: Banking for investments.

Mobile Banking: Simply said, banking is the process of keeping records, loan money out,
exchanging it, and releasing it. A new era in banking and commerce was ushered in by the
invention of the mobile phone. This process is known as the Mobile Banking System in
Bangladesh. A variety of banking tasks may be carried out on mobile devices thanks to mobile
banking. Only 13% of Bangladesh's 151.82 million inhabitants have bank accounts, even though
more than 95% of them have cell phones. Banks may now use mobile phones to offer financial
services to the general public and rural areas without engaging in any banking transactions.
(Mobile Banking Information, n.d.)

Online Banking:

Online banking, the most recent generation of electronic banking transactions, has expanded the
alternatives available to traditional banks and financial organizations. Even though the majority
of banks have their websites, not all of them have internet access. The main reason for this is
that banks lack the required IT infrastructure and security safeguards. Many individuals in
Bangladesh are wary of technology and have computer phobias. As a result, these people are
unable to rely on Internet banking services. Despite bank clients becoming more used to the
digital lifestyle, the concept of Internet banking is still unknown to the Bangladeshi public.
(Mohammad Azizul Baten, 2013)

Banking Regulations of Bangladesh

Asian nation Bangladeshi East Pakistan Asian Country The financial and system management of
the Asian nation strives to uphold internal costs and a competitive external value of the
Bangladeshi rial to encourage economic capital growth and development for the benefit of the
nation. Therefore, by Bangladesh's proclamation of independence, as amended by the Proposed
Constitution of Asian Nation Order, 1972, and in the exercise of all facultative authorities in this
respect, the following orders shall be issued:

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The Asian Nation Bank Order, 1972 is the name of the current decree. It encompasses the
entirety of Asia. It will be deemed to have done so on December 16th, 1971, and will go into
effect right away. (Bangladesh Bank Order, 1972, 2003)

When conducting an analysis of the banking sector and markets, one must take into account a
wide range of elements, all of which have an impact on the performance, trends, and prospects
of financial institutions and banks. An overview of the banking industry and its associated
markets can be found as follows:

1. Market Overview:

 Financial intermediation, credit allocation, and payment services are all vital parts of the
banking industry's contributions to the global economy.
 There are many different types of financial institutions, such as traditional brick-and-mortar
banks, online-only banks, investment banks, and retail banks.

2. Trends and Drivers:

 Online banking, mobile banking apps, fintech collaborations, and blockchain-based

applications are all results of the digital transformation that is altering banking operations.
 Compliance expenses have risen, and risk management strategies have shifted as a result of
the regulatory climate that has emerged in the wake of the 2008 financial crisis.
 Consumers now expect businesses to meet their high standards for responsiveness and
customization, as well as constant availability of data about their finances.
 Analytics and Data Banks use data analytics to better serve their customers, prevent fraud,
and streamline their internal processes.

3. Challenges:

 Extended periods of low-interest rates hurt the net interest margins of banks, reducing their
profitability.
 Increased reliance on digital services raises banks' susceptibility to cybersecurity threats,
calling for more stringent safeguards.
 Costly resources are needed to stay in line with constantly changing rules, and failure to do
so can result in heavy penalties.

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 Traditional banks face competition from both new entrants in the fintech space and
established tech companies.

4. Opportunities:

 Working together with fintech companies, banks may expand their service offerings, provide
better support for their customers, and cut down on redundant tasks.
 Monetizing Data: Banks can use data analytics to learn more about their customers' habits
and interests, paving the way for more precise advertising campaigns.
 expansion opportunities abound in emerging markets, such as those in developing economies
where banking services are becoming more widely available.
 Sustainable finance allows banks to address growing environmental and social issues
through sustainable and socially responsible investment.

5. Performance Metrics:

 The profitability of a lender can be gauged by looking at their "net interest margin," or NIM,
which is the interest they make less the interest they pay out.
 The profitability of a financial institution is measured by its Return on Assets (ROA).
 The Capital Adequacy Ratio (CAR) measures a bank's financial strength by comparing its
capital to its risk-weighted assets.
 The Non-Performing Loan (NPL) Ratio is a measure of the percentage of a bank's loan
portfolio that is not generating income.

6. Global and Regional Variations:

 There is a wide range of banking environments because of regional disparities in economic

growth, regulatory structures, and cultural norms.
 Traditional banks in rich economies are being threatened by fintech upstarts, while in
developing countries the focus is on increasing the population's access to banking services.

7. Future Outlook:

 As new technologies emerge, regulations vary, and customer tastes shift, so too will the
banking business.

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 To stay ahead of the competition and satisfy customers' needs, banks will prioritize
digitalization, cybersecurity, client-centricity, and sustainable finance.

3.3 Ratios Analysis of five 4th Generation Bank

From the year 2001 till the year 2012, Bangladesh witnessed the proliferation of Third
Generation Banks (TGBs). One of the distinguishing characteristics of these banks was their
forward-thinking approach to providing financial services, with a special emphasis on the
incorporation of technical technology. TGBs had the intention of revolutionising the
conventional banking industry by bringing electronic services such as mobile banking, online
banking, and other similar services. They made a customer-centric approach their top priority,
tailoring their services to meet the specific requirements of each individual consumer. This
commitment to providing individualised banking services was bolstered by the rapid expansion
of branch networks, which was made feasible by the skilled utilisation of technology by the
organisations. TGBs did more than just upgrade infrastructure; they also introduced innovative
goods and services including as automated teller machines, debit and credit cards, and online
banking platforms, which made banking more accessible and easier for the general public.
Additionally, as they expanded, TGBs maintained a strong focus on risk management, putting in
place extensive frameworks to protect their operations from potential dangers. This was done at
the same time that they were expanding. The expansion and innovation of TGBs were the
driving forces behind this transformative period in Bangladesh's banking sector, which was
essential in driving economic growth, promoting financial inclusion, and enhancing overall
banking efficiency and access.

Here I select bank with latest 5 years Performance analysis which was.

 BRAC Bank Limited

 Dutch-Bangla Bank PLC
 Jamuna Bank Limited
 Shahjalal Islami Bank PLC
 Commercial Bank of Ceylon Limited
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 Ratios Formula
Profit Margin Net Income/Sales*100
Return on Assets Net Income/Total Assets*100
Return on Equity Net Income/Stockholder Equity*100
Fixed Assets Turnover Sales/Fixed Assets
Total Assets Turnover Sales/Total Assets
Current Ratio Current Assets/Current Liabilities
Debt to Total Assets Debt/Total Assets

3.3.1 Profit Margin:

A profitability ratio is a measure of profitability, which is a way to measure a company's
performance. Profitability is simply the capacity to make a profit, and a profit is what is left over
from income earned after you have deducted all costs and expenses related to earning the
Income.

Profit Margin
Bank Names 2018 2019 2020 2021` 2022
BRAC Bank Limited 20.63 14.05 14.92 19.21 19.52
% % % % %
Dutch-Bangla Bank PLC 19.56 17.00 24.77 25.03 22.98
% % % % %
Jamuna Bank Limited 15.29 14.19 18.64 22.62 12.88
% % % % %
Shahjalal Islami Bank PLC 7.24% 8.17% 11.27 18.94 22.46
% % %
Commercial Bank 40.01 36.80 41.71 44.54 56.82
of Ceylon Limited % % % % %

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 Profi t Margin

0.5682
BRAC Bank Limited Dutch-Bangla Bank PLC

0.4454
Jamuna Bank Limited Shahjalal Islami Bank PLC

0.4171
0.4001
Commercial Bank of Ceylon Limited

0.368

0.2503
0.2477

0.2298
0.2262

0.2246
0.2063
0.1956

0.1952
0.1921

0.1894
0.1864
0.1529

0.1492
0.1419
0.1405

0.1288
0.1127
0.17

0.0817
0.0724

2018 2019 2020 2021` 2022

Profit margins of five major Bangladeshi banks from 2018 to 2022. BRAC Bank Limited,
Dutch-Bangla Bank PLC, Jamuna Bank Limited, Shahjalal Islami Bank PLC, and Commercial
Bank of Ceylon Limited are notable banks. Profit margin analysis reveals financial performance
and strategic posture. BRAC Bank Limited maintained strong profit margins of 14.05% to
20.63% throughout the assessment period. This shows the bank's capacity to manage operations
and make money, boosting its business plans and market position. BRAC Bank is profitable
despite volatility, indicating stability and resilience.

Dutch-Bangla Bank PLC has also had significant profitability, with profit margins of 17.00% to
25.03%. Similar to BRAC Bank, Dutch-Bangla Bank has excellent profit margins, indicating
good management and strategy. The bank's profitability shows its market strength and
competitiveness.

Jamuna Bank Limited's profit margins fluctuated from 12.88% to 22.62%. In 2021, the bank had
good profitability, although its performance was less steady than BRAC Bank and Dutch-Bangla
Bank. Variability may indicate operational efficiency or market factors affecting the bank's
profitability. Shahjalal Islami Bank PLC has changing profit margins like BRAC Bank and
Dutch-Bangla Bank, but smaller values. Despite years of advances, the bank's profitability
remains low, suggesting operational efficiency or strategic focus improvements. Profit margins
for Commercial Bank of Ceylon Limited peaked at 56.82% in 2022, far above the competition.

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Successful risk management, intelligent investments, and favourable market conditions
contributed to this high profitability. To maintain sustainability and long-term viability, such
high profit margins require close analysis.

all five banks differ in profitability, although BRAC Bank and Dutch-Bangla Bank have
consistently high profit margins. Jamuna Bank and Shahjalal Islami Bank have larger
profitability fluctuations, suggesting operational efficiency or strategy focus improvements.
Commercial Bank of Ceylon's strong profit margins raise questions regarding sustainability and
causes. A thorough investigation of these profit margins reveals the financial performance and
strategic stance of Bangladesh's major banks.

3.3.2 Return on asset:

The Return on Assets (ROA) ratio shows the relationship between earnings and asset base of the
company.

Return on Assets
Bank Names 2018 2019 2020 2021` 2022
BRAC Bank Limited 1.58% 1.10% 0.89% 0.88% 0.93%
Dutch-Bangla Bank PLC 1.21% 1.11% 1.16% 1.08% 1.02%
Jamuna Bank Limited 1.02% 1.04% 1.10% 0.95% 0.56%
Shahjalal Islami Bank PLC 0.51% 0.62% 0.65% 0.83% 1.05%
Commercial Bank of Ceylon Limited 2.14% 2.08% 1.83% 1.67% 2.59%

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 Ret u rn on Asset s

2.59%
2.14%

2.08%

1.83%

1.67%
1.58%

1.21%

1.16%
1.11%
1.10%

1.10%
1.08%

1.05%
1.04%
1.02%

1.02%
Return on Assets 2018 Return on Assets 2019 Return on Assets 2020

0.95%
0.93%
0.89%

0.88%

0.83%
0.65%
0.62%
0.56%

0.51%
Return on Assets 2021` Return on Assets 2022

Bank efficiency in generating profits from assets is measured by return on assets (ROA). The
ROA of five third-generation Bangladeshi banks—BRAC Bank Limited, Dutch-Bangla Bank
PLC, Jamuna Bank Limited, Shahjalal Islami Bank PLC, and Commercial Bank of Ceylon
Limited—from 2018 to 2022 provides valuable insights into their financial performance and
operational efficiency.

Through the period, BRAC Bank Limited had a moderate ROA of 0.88% to 1.58%. BRAC
Bank's ROA was constant despite modest swings, suggesting a consistent ability to make profits
relative to its asset base. This stability reflects good asset and operation management, improving
the bank's finances. Dutch-Bangla Bank PLC had a comparable ROA of 1.02%–1.21%. Dutch-
Bangla Bank had good profitability relative to its asset base despite a lower ROA than BRAC
Bank. The bank's consistency may indicate good asset allocation and resource use. Jamuna Bank
Limited's ROA ranged from 0.56% to 1.10%. The bank experienced phases of progress, but its
variable trajectory shows asset utilisation and operational efficiency issues. Asset productivity
and profitability methods may assist Jamuna Bank. Shahjalal Islami Bank PLC had mixed ROA
of 0.51% to 1.05%. The bank's ROA was worse than its peers notwithstanding recent
improvements. This suggests asset management and operational efficiency improvements to
promote profitability. Commercial Bank of Ceylon Limited often had a ROA between 1.67% to
2.59%. The bank's outstanding performance shows efficient operations and strong asset
management, resulting in higher profitability than its peers.

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while each third-generation bank in Bangladesh had variable ROA, BRAC Bank Limited and
Dutch-Bangla Bank PLC performed well over time. However, Jamuna Bank Limited, Shahjalal
Islami Bank PLC, and Commercial Bank of Ceylon Limited may benefit from asset productivity
and operational efficiency methods to boost profitability.

3.3.3 Return on Equity:

The Return on equity (ROE) is a profitability ratio that measures the rate of return of resources
provided by a company’s stockholder’s equity. A higher ROE is usually better while a falling
ROE may indicate a less efficient usage of equity capital.

Return on Equity
Bank Names 2018 2019 2020 2021 2022
BRAC Bank Limited 13.60% 9.82% 7.52% 6.05% 7.56%
Dutch-Bangla Bank PLC 18.20% 15.82% 17.05% 15.04% 13.60%
Jamuna Bank Limited 12.73% 14.85% 11.05% 11.80% 8.08%
Shahjalal Islami Bank PLC 8.27% 9.90% 10.52% 13.02% 16.16%
Commercial Bank of Ceylon Limited 13.29% 13.55% 12.53% 11.87% 15.81%

From 2018 to 2021, BRAC Bank Limited's Return on Equity (ROE) was steady but going down.
In 2022, it started to rise a little. This could mean that it's hard to stay profitable when the
market or internal operating factors are changing. But its return on equity (ROE) stays pretty
stable, which suggests a strong base. Over the years, Dutch-Bangla Bank PLC has had a strong
return on equity (ROE), with only a small drop from 2019 to 2022. Even though this is a drop, it
still has a high level of income compared to its competitors. This steadiness points to good
management and a strong presence in the market. Over the years, Jamuna Bank Limited's ROE
has gone up and down. It reached its highest point in 2019 and then went down again, before
going up again in 2021. However, its return on equity (ROE) is still smaller than that of other
banks in the group, which suggests that it might have trouble staying profitable or improving
operational efficiency. Shahjalal Islami Bank PLC's return on equity (ROE) goes up steadily
from 2018 to 2022, showing that the bank has been making more money over the years. This
upward trend shows that the company's financial performance is being helped by effective

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strategic initiatives or operational improvements. When it comes to return on equity (ROE),
Commercial Bank of Ceylon Limited has had a mixed record over the years. However, there is a
noticeable rise in ROE from 2020 to 2022, which suggests that the bank may have made
changes to its strategy or taken advantage of market possibilities.

Compared to the others, Dutch-Bangla Bank PLC stands out because its ROE numbers are
always higher, which shows that it is very profitable and has good management. Shahjalal Islami
Bank PLC also shows a good trend, as its return on equity (ROE) has been steadily rising over
the years. The levels of success at BRAC Bank Limited, Jamuna Bank Limited, and Commercial
Bank of Ceylon Limited are not all the same. Changes in ROE show possible problems or
opportunities in their operations. Overall, each bank has its own traits and performance
measures, but the trends in their return on equity (ROE) show how profitable they are, how
efficiently they run their business, and where they stand in the Bangladeshi banking sector's
competitive scene.

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3.3.4 Fixed Asset Turnover
Fixed asset turnover is the ratio of sales to fixed assets. This ratio indicates the ability of the
company’s management to put the fixed assets to work to generate sales. When this turnover is
high It is favorable because it indicates that a company has effectively used investments in fixed
assets to generate sales.

Fixed Assets Turnover

Bank Names 2018 2019 2020 2021` 2022
BRAC Bank Limited 2.84 2.72 1.95 1.49 1.51
Dutch-Bangla Bank PLC 3.74 4.75 2.82 2.85 2.62
Jamuna Bank Limited 5.19 5.1 4.02 3.12 2.86
Shahjalal Islami Bank PLC 4.25 4.45 3.49 2.64 2.95
Commercial Bank of Ceylon Limited 26.58 5.25 4.08 4.49 6.29

Fixed A ssets Turnov er

BRAC Bank Limited Dutch-Bangla Bank PLC

30
26.58Bank Limited
Jamuna Shahjalal Islami Bank PLC
25 Commercial Bank of Ceylon Limited

20

15

10
6.29
5.19 5.25
4.755.14.45 4.49
3.74 4.25
5 2.84 2.72
4.02 4.08
2.82 3.49 3.12
2.85 2.95
2.86
1.95 2.64 2.62
1.49 1.51
0
2018 2019 2020 2021` 2022

According to 2018 to 2020, BRAC Bank Limited's FAT demonstrates a declining trend,
signifying a reduction in revenue generated per unit of fixed assets. This decline may be
attributable to factors including sluggish business expansion or insufficient utilisation of fixed
assets. Nevertheless, a marginal surge in FAT is observed in 2022, indicating possible
endeavours to enhance asset utilisation.

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In comparison to its competitors, Dutch-Bangla Bank PLC exhibits variable but consistently
elevated FAT ratios, suggesting a comparatively effective allocation of fixed assets towards
revenue generation. Notwithstanding variations, the bank sustains a positive stance with regard
to asset turnover, which is indicative of proficient administration of fixed assets and endeavours
to generate revenue. Over the years, Jamuna Bank Limited has demonstrated a persistent
decrease in FAT ratios, which indicates difficulties in effectively deploying fixed assets for
revenue generation. This pattern may give rise to apprehensions concerning the operational
efficacy or strategic asset management practices of the bank, necessitating a more thorough
analysis to rectify the fundamental problems. The FAT ratios of Shahjalal Islami Bank PLC
exhibit a volatile pattern, commencing with an all-time high in 2019, followed by a subsequent
decline, and concluding with an increase in 2022. Although the bank exhibits fluctuations in
asset turnover, it generally sustains a moderate standing in comparison to its industry
counterparts, suggesting a combination of efficient and less efficient utilisation of fixed assets.
The FAT ratio of Commercial Bank of Ceylon Limited exhibits a significant increase in 2018,
followed by a progressive decrease in the subsequent years. Notwithstanding the decrease, the
bank sustains comparatively elevated FAT ratios in contrast to its group counterparts, indicating
a judicious application of fixed assets. The substantial variation in FAT ratios over time,
nevertheless, may necessitate additional examination in order to ascertain the fundamental
causes of these fluctuations.

When contrasting this with Dutch-Bangla Bank PLC, which exhibits consistently higher FAT
ratios that demonstrate more effective utilisation of fixed assets to generate revenue, the latter
stands out. On the other hand, Jamuna Bank Limited grapples with a decrease in FAT ratios,
which suggests possible obstacles in the pursuit of asset turnover optimisation. The asset
utilisation performance of BRAC Bank Limited, Shahjalal Islami Bank PLC, and Commercial
Bank of Ceylon Limited differs significantly, as evidenced by the volatility of FAT ratios. These
discrepancies underscore the importance of ongoing surveillance and strategic modifications to
enhance operational effectiveness. In general, a more comprehensive examination of operational
procedures and strategic endeavours may yield valuable insights regarding the enhancement of
asset turnover and the overall financial performance of these Bangladeshi third-generation
banks.

Page 15 of 23
3.3.5 Total asset Turnover
Total asset turnover is the ratio of sales to total assets. This ratio indicates the extent that the
investment in total assets results in sales.

Total Assets Turnover

Bank Names 2018 2019 2020 2021` 2022
BRAC Bank Limited 0.08 0.08 0.06 0.05 0.05
Dutch-Bangla Bank PLC 0.06 0.07 0.05 0.04 0.04
Jamuna Bank Limited 0.07 0.07 0.06 0.04 0.04
Shahjalal Islami Bank PLC 0.07 0.08 0.06 0.04 0.05
Commercial Bank of Ceylon Limited 0.05 0.06 0.04 0.04 0.05

Total Assets Turnover

0.09
0.08 0.08 0.08
0.08
0.07
0.07 0.07
0.07
0.07
0.06 0.06 0.06 0.06
0.06
0.06
0.05 0.05 0.05 0.05 0.05
0.05
0.05
0.04 0.04
0.04
0.04
0.04 0.04
0.04
0.04
0.03
0.02
0.01
0
2018 2019 2020 2021` 2022

BRAC Bank Limited Dutch-Bangla Bank PLC

Jamuna Bank Limited Shahjalal Islami Bank PLC
Commercial Bank of Ceylon Limited

BRAC Bank Limited continuously maintains a low TAT ratio across time, showing that it
produces less income per unit of total assets. This tendency may indicate difficulties in
maximizing revenue production from its asset base, which might be caused by a variety of

Page 16 of 23
issues such as asset underutilization or slower company development in comparison to its asset
base. TAT ratios at Dutch-Bangla Bank PLC have been slightly higher but have reduced over
time. Despite the reduction, the bank's position remains reasonably constant, indicating
reasonable efficiency in using its total assets to produce income. However, there may be room
for improvement in asset utilization to increase income-generating efficiency even more.
Jamuna Bank Limited follows a similar pattern as BRAC Bank Limited, with continuously low
TAT ratios across the period. This pattern suggests possible hurdles in efficiently exploiting its
whole asset base to produce income, needing a closer look at operational efficiency and strategic
asset management techniques to solve underlying concerns. TAT ratios at Shahjalal Islami Bank
PLC fluctuate but have largely remained reasonable throughout the years. While the bank is
more efficient in utilising its total assets than other competitors, there may be potential for
improvement in optimising asset turnover to raise revenue generating capabilities even further.
Commercial Bank of Ceylon Limited's TAT ratio has been relatively steady over time,
demonstrating continuous efficiency in generating income from its total assets. Despite its
stability, the bank has a somewhat lower TAT ratio than other rivals, indicating significant
chances to increase asset turnover to generate revenue growth.

Dutch-Bangla Bank PLC and Shahjalal Islami Bank PLC are comparatively more efficient in
asset utilisation than the other banks in the group, but with decreasing tendencies. BRAC Bank
Limited, Jamuna Bank Limited, and Commercial Bank of Ceylon Limited are facing issues in
maximising income production from their asset base, necessitating a deeper examination of
operating processes and strategic measures to increase efficiency. Overall, a concentrated effort
to optimise asset turnover can significantly improve revenue generation capacities and financial
performance for Bangladesh's third-generation banks.

Page 17 of 23
3.3.6 Current Ratio:
The current ratio is a popular metric used across the industry to assess a company's short-term
liquidity concerning its available assets and pending liabilities. In other words, it reflects a
company's ability to generate enough cash to pay off all its debts once they become due. It's
used globally to measure the overall financial health of a company.

Current Ratio
Bank Names 2018 2019 2020 2021` 2022
BRAC Bank Limited 0.92 0.89 0.82 0.88 0.92
Dutch-Bangla Bank PLC 0.07 0.07 0.07 0.05 0.05
Jamuna Bank Limited 0.89 0.88 0.86 0.83 0.81
Shahjalal Islami Bank PLC 1.08 0.99 0.91 1.01 1.05
Commercial Bank of Ceylon Limited 0.14 0.09 0.09 0.08 0.08

Cu rren t Ra tio 1.08

1.05
Current Ratio 2018 Current Ratio 2019 Current Ratio 2020 Current Ratio 2021` Current Ratio 2022

1.01
0.99
0.92

0.92

0.91
0.89

0.89
0.88

0.88
0.86
0.83
0.82

0.81

0.14
0.09
0.09
0.08
0.08
0.07
0.07
0.07
0.05
0.05

Throughout the time, BRAC Bank Limited's Current Ratio remains reasonably steady, ranging
from 0.8 to 0.9. While this shows that the bank has sufficient current assets to meet its short-
term obligations, the relatively low ratios raise worries about its liquidity. Nevertheless, a
balanced approach to addressing short-term liquidity demands is shown by the stability of the
Current Ratio.

Throughout the period, Dutch-Bangla Bank PLC's Current Ratios stayed below 0.1, which is far
lower than its competitors. This points to possible liquidity issues that need swift action and

Page 18 of 23
smart interventions, as the bank would have trouble satisfying its short-term commitments with
its present assets. Current Ratios have been trending downward for Jamuna Bank Limited for
some time now, suggesting that the bank may have difficulty keeping its liquidity levels stable.
The bank has to take aggressive steps to enhance liquidity management and strengthen short-
term financial stability since, although the ratios are still lower than Dutch-Bangla Bank PLC,
they are still on the decline.

Shahjalal Islami Bank PLC has a superior capacity to meet its short-term commitments with its
current assets, as indicated by its comparatively high and steady Current Ratios compared to its
competitors. All of the ratios are higher than1.0, which means that the company is in a strong
financial position and can easily pay its short-term bills. Over the course of the reporting period,
Commercial Bank of Ceylon Limited maintained a current ratio below 0.1. The situation is
reminiscent of Dutch-Bangla Bank PLC in that it hints to possible liquidity issues and calls for
strategic actions to strengthen short-term financial stability and enhance liquidity management.

A stronger liquidity position and superior short-term financial stability are shown in Shahjalal
Islami Bank PLC's continuously higher and stable Current Ratios, which stand out in
comparison. When it comes to handling their short-term liquidity demands, BRAC Bank
Limited shows consistency in Current Ratios, but on the lower end. In contrast, there is an
urgent need to address the liquidity concerns and enhance the short-term financial stability of
Dutch-Bangla Bank PLC and Commercial Bank of Ceylon Limited by implementing strategic
actions in response to their substantial issues in maintaining sufficient liquidity levels. In order
to maintain long-term financial stability, these third-generation banks in Bangladesh must
prioritise liquidity management and strategic planning.

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3.3.7 Debt to Total Assets
The Total Debt to Assets Ratio indicates the proportion of assets that are financed with total
debt. In general, higher debt-to-asset ratio suggests higher risk.

Debt to Total Assets

Bank Names 2018 2019 2020 2021` 2022
BRAC Bank Limited 88.35% 88.75% 88.21% 85.42% 87.65%
Dutch-Bangla Bank PLC 93.30% 93.00% 93.20% 92.80% 92.50%
Jamuna Bank Limited 91.99% 92.99% 90.07% 91.96% 93.05%
Shahjalal Islami Bank PLC 93.88% 93.76% 93.85% 93.66% 93.53%
Commercial Bank of Ceylon Limited 83.88% 84.63% 85.37% 85.96% 83.61%

Debt to Total Assets

96.00%
93.30%
93.20% 93.88%
93.85%
93.76%
93.66%
93.53%
94.00% 93.00%
92.80% 92.99% 93.05%
92.50%91.99% 91.96%
92.00% 90.07%
88.75%
90.00% 88.35%
88.21%87.65%
88.00%
85.42% 85.96%
85.37%
86.00% 84.63%
83.88% 83.61%
84.00%
82.00%
80.00%
78.00%
BRAC Bank Lim- Dutch-Bangla Jamuna Bank Shahjalal Islami Commercial
ited Bank PLC Limited Bank PLC Bank
of Ceylon Limited

Debt to Total Assets 2018 Debt to Total Assets 2019 Debt to Total Assets 2020
Debt to Total Assets 2021` Debt to Total Assets 2022

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An important statistic to look at is the debt to total assets ratio, which shows how much debt a
firm has in relation to its total assets. From 2018–2022, let's look at the five third-generation
banks in Bangladesh and how they fared using their debt-to-asset ratios.

Debt to total assets ratios of BRAC Bank Limited have been quite stable throughout the years,
hovering around 85% to 88%. So, it looks like the bank is using debt to fund a large chunk of its
assets. The ratios show a constant strategy of using debt to acquire or expand assets, even when
they are high and have been for some time. The debt-to-assets ratio for Dutch-Bangla Bank PLC
has been very stable during the period, staying within the range of 92% to 93%. This indicates
that the bank's asset base is supported by debt financing to a large extent. The consistency of the
ratios, however, points to a method for controlling the ratio of debt to total assets. Debt to total
assets ratios of Jamuna Bank Limited have varied from 90% to 93% over the years. A heavy
dependence on debt finance for asset purchase or business operations is indicated by the
relatively high ratios, which stay relatively constant throughout the swings. Variations in debt
management and asset acquisition tactics throughout time might explain the variances. Over the
course of the reporting period, the debt-to-assets ratio for Shahjalal Islami Bank PLC remained
relatively constant, hovering between 93% and 94%. The bank's asset base is supported by debt
financing, much as its peers. Maintaining such constant ratios throughout time is indicative of
methodical debt management about total assets.

Throughout the time, Commercial Bank of Ceylon Limited's debt-to-asset ratios ranged from
84% to 86%, which is lower than the group average. These ratios show a somewhat reduced
dependence on debt financing relative to its equivalents, which is nonetheless considerable. A
consistent strategy for controlling debt levels relative to total assets is shown by the stability of
ratios.

When looking at their asset bases, it is clear that all five banks rely on debt financing to different
extents. The relatively high debt-to-total-assets ratios displayed by BRAC Bank Limited,
Jamuna Bank Limited, Dutch-Bangla Bank PLC, and Shahjalal Islami Bank PLC suggest a
heavy dependence on debt. Conversely, Commercial Bank of Ceylon Limited has lower ratios,
indicating a little less aggressive strategy for debt borrowing. For these third-generation banks in
Bangladesh to maintain long-term financial stability, they must strike a balance between
managing debt and acquiring assets.

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3.4 Recommendation based on the outcome of the analysis
Here are some specific suggestions based on an in-depth look at the five fourth-generation banks
in Bangladesh's key financial ratios:

 Focus on Operational Efficiency: The profitability ratios and operational efficiency of a

number of banks, including Jamuna Bank Limited and Shahjalal Islami Bank PLC, are
subject to swings. It is strongly suggested that these financial institutions carry out a
comprehensive study of their operational procedures and strategic efforts in order to discover
areas in which they may make improvements. It is possible to achieve more consistent and
sustainable financial performance by putting into action strategies that will improve the
efficiency with which assets are utilised and income is generated.
 Strategic Asset Management: A number of financial institutions, like BRAC Bank Limited
and Commercial Bank of Ceylon Limited, have seen a downward trend in their fixed asset
turnover ratio percentages. In order to guarantee the most efficient utilisation of fixed assets
for the purpose of generating income, these institutions have to conduct an evaluation of
their asset management techniques. Increases in profitability and overall financial
performance can be achieved via the use of strategies to improve asset turnover
management.
 Liquidity Management: Institutions that have current ratios that are regularly low, such as
Dutch-Bangla Bank PLC and Commercial Bank of Ceylon Limited, have a responsibility to
make liquidity management a top priority. For the purpose of efficiently meeting their short-
term obligations, they should devise measures to increase the short-term financial stability
and raise the levels of liquidity already there. It is possible that this will require optimising
the management of cash flow and assessing the composition of current assets.
 Debt Management: Financial institutions that have high debt-to-total-assets ratios, such as
BRAC Bank Limited, Dutch-Bangla Bank PLC, Jamuna Bank Limited, and Shahjalal Islami
Bank PLC, should exercise caution in managing their debt levels in order to reduce the

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 likelihood of experiencing adverse financial outcomes. For the purpose of preserving a
healthy equilibrium between total assets and debt, it is important to evaluate various ways
for financing debt and to take into consideration alternative sources of funding.

 Continuous Monitoring and Adaptation: In order to discover developing trends or areas

that require action, financial institutions should build comprehensive monitoring procedures.
These mechanisms should make it possible to check critical financial statistics on a regular
basis. To ensure their continued financial sustainability over the long term, financial
institutions should maintain their flexibility and adaptability in the face of shifting market
conditions, regulatory regimes, and client preferences.

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