1.

1 Introduction:
The financial sector of Bangladesh is dominated by the banking sector. The dominance of the
banking sector not only makes the financial sector vulnerable but also highlights the crucial
importance of the sector in resource utilization and economic growth. In Bangladesh, especially
in the recent times, the banking sector has experienced several uncertainties. The Bangladesh
Banks (Nationalization) Order enacted in 1972 nationalized all banks except foreign ones. Six
nationalized banks were formed through merging the existing banks of the period. The rate of
growth and development of banking sector in the country was extremely slow until 1983 when
the government allowed to establish private banks and started denationalization process: initially,
the Uttara Bank in the same year and thereafter, the Pubali Bank, and the Rupali Bank in
1986.There were no domestic private commercial banks in Bangladesh until 1982 when the
Arab-Bangladesh Bank Ltd. commenced private commercial banking in the country. Five more
commercial banks came up in 1983 including United Commercial Bank Limited and initiated a
moderate growth in banking financial institutions.
Credit facilities are one of the main reasons for which the sector is experiencing such
consequences. Credit granting is very important decision of the banks because it determines the
profitability of the banks. At present, banks are so much conscious in the selection of customers
to shun the bad loans or non-performing loans. Non-performing loans have been one of the
concerned issues from the last few decades. The banking sector of Bangladesh is characterized
by low profitability and insufficient capital base because there are scores of banks in Bangladesh.
Banks’ revenues come from spread (Lending rate – borrowing rate). The NPL has always raised
concerns among policymakers and the central bank (Bangladesh Bank) took various measures to
reduce the increasing volume of classified loans. As per the rules of Central Bank the scheduled
banks are bound to keep a certain amount of money from their profits as provision against their
classified loans to avoid risks in doing business and keep maintaining capital base. But a good
number of banks are facing shortfall due to deficit in their financial capital due to high classified
loans and low level of profitability from operation. According to BB Diagnostic Review Report
(DRR). The capital shortfall of the bank in 2018 is Tk. 25,143 crore of the latest report.
On the other hand, according to The Economist, “The overall capital to risk weighted assets ratio
(CRAR), a key measure of bank strength and stability,” too has “been affected.” According to a
study report prepared by Bangladesh Institute of Bank Management (BIBM), Bangladeshi banks
maintained 10.83% capital adequacy ratio by the end of 2018. Although the Bangladeshi banks
were facing excess liquidity, their capital base is lowest in the South Asian region. (Bangladesh
lags behind neighbors in implementing Basel III, 2018). However, deposit and loan amount, a
major indicator for economic growth, showed progress in 2018. According to the central bank,
from November 2017 to November 2018, the deposit and loan amount both witnessed a sharp
rise of 13 percent and 14 percent. During the period, deposit was Taka 8.86 lakh crore and loan
Taka 6.56 lakh crore.
As a student of Finance & Banking, I have got the opportunity to execute my internship in
“United Commercial Bank Limited”- Barishal Branch, Barishal and I have been officially
welcomed for the internship with United Commercial Bank Limited on 26 th August 2019 for 45
days long of internship program in United Commercial Bank for gathering practical knowledge
about banking sectors. During the period I have worked with different department of the bank
and have learnt the activities of the general banking general advance and foreign Exchange
division etc.

1|Page
1.2 Origin of the Report:
This internship report on United Commercial Bank Ltd. is prepared to fulfill the partial
requirement of internship program for BBA honor’s of Barishal University. I have selected “
Financial Performance & Sensitivity Analysis of United Commercial Bank Limited” as the topic
of my internship report. The aim of the report is to apply theoretical knowledge in the practical
field.

1.3 Objective of the Report:

The objectives of the study are as follows:

 To give an overall view of United Commercial Bank Ltd.

 To evaluate the performance of United Commercial Bank Ltd.
 To achieve the information regarding the banking environment and its services.
 To find out the performance of UCBL over years through ratio & Sensitivity analysis.
 To estimate the future position of UCBL.
 To find out the reason behind UCBL’s enhancements or pitfalls of performance over
years.

1.4 Methodology:
Measuring Financial Performance of United Commercial Bank Ltd. through Ratio and
Sensitivity Analysis by using Microsoft Excel and MS Word. Here in this report contains the
most common ratios and analyze to evaluate the performance of UCBL over five years (2018 to
2014). Both primary and secondary data have been used to complete the report.

1.4.1 Primary data sources:

 Some data have been gathered through personal observation.
 Informal discussion with the employees also helped to collect information.

1.4.2 Secondary data sources:

 Official website of United Commercial Bank Limited.
 Annual Reports and other published documents of the banks.
 UCBL’s Annual Report through (2018 to 2014).
 Books, journals, research papers, newspaper articles have been used for the study
purpose.

1.5 Scope of the Report:

I have tried to evaluate the performance of United Commercial Bank Limited. While preparing
the report I had a great opportunity to have real life knowledge about the overall banking
procedure. I had to go to each and every department to collect the necessary data for my report. I
also talked with the employee and clients to know the bank properly. This report contains the
analysis of bank’s Capital adequacy, Asset Quality, Management efficiency, Earnings ability and
Liquidity.

2|Page
1.6 Limitations of the Study:
During preparing my report I have to face some problems regarding collecting proper
information which are.
 As the duration of the internship program is 45 days and the process of this program is
job rotation, so I didn’t get sufficient time in each department to understand their
activities.
 This report contains many confidential information which was difficult to collect and
disclosure of different important information were not possible due to bank’s safety.
 Gathering information about the banking performance was very difficult. That is why I
have to follow more on secondary data like annual report, web sites and some of
banking documents.
 Banking sector is a very vast sector where I have a little knowledge about it which
limits my report.

3|Page
2.1 History:
United Commercial Bank Limited incorporated on 26 June 1983 as a private company with
limited liability under the Companies Act 1993 and has since established itself as one of the
largest first generation banks in the country. Sponsored by some dynamic and reputed
entrepreneurs and eminent industrialists of the country and also participated by the Government,
United Commercial Bank (UCB) is among the first private banks of this country. The bank
obtained authorization to commence business with effect from 27 June 1983 and started banking
operations on 29 June 1983 with an authorized capital of TK 35.50 million in hand with the
object of fineness in customer service and contentment This modern bank has its vast network of
187 branches and is taking part in the strong competition through personalized service,
innovative practices, dynamic approach and efficient Management, that took stage due to the
presence of all other banks in the country.

With a firm commitment of the economic and social development of Bangladesh, United
Commercial Bank (UCB) started its journey in mid 1983 and has since been able to establish
itself as one of the largest first generation banks in the country. With a vast network of 187
branches the Bank has already made a distinct mark in the realm of Private Sector Banking
through personalized service, innovative practices, dynamic approach and efficient Management.
The Bank has expanded its arena in different and diverse segments of banking like Retail
Banking, SME Banking, Corporate Banking, Off-shore Banking, and Remittance etc. Besides
various deposit and loan products of Retail Banking, the Bank caters export and import loan to
deserving candidates which in turn helps the overall economy of the country through increased
earning of foreign exchange. Other consumer products like UCB Cards have been showing
tremendous success and growth since its inception in 2006 and soon became the leader in local
market with around 40000 card holders. The Bank also provides its clients with both incoming
and outgoing remittance services. Thus the expatriates find an easy way to send money through
proper channel.

With a firm commitment to promote SME sector, the Bank is also assessing and monitoring
business loans, managing business financing risks, pricing products and working for further
development of SME. Its Corporate banking service consists of simple business of issuing loans
to more complex matters, such as helping minimize taxes paid by overseas subsidiaries,
managing changes in foreign exchange rates or working out the details of financing packages
necessary for the construction of a new office, plant or other facility. Its area of expertise is in-
depth knowledge in financial analysis with analytical capability of financing large project
including RMG and infrastructure development projects.

The Bank, aiming to play a leading role in the economic activities of the country, is firmly
engaged in the development of trade, commerce and industry by investing in network expansion
and new technology adoption to have competitive advantage.

4|Page
2.2 Corporate Profile of UCBL:

Name of the Compan : United Commercial Bank Ltd.
y
Legal Form : A public limited company incorporated in Bangladesh on
26th June 1983 under the companies   Act 1994 and listed in
Dhaka Stock Exchange Limited on 30th November 1986 and
Chittagong   Stock Exchange Limited on 15th November
1995.
Commencement of : 27 June 1983
Business
Head Office : Bulus Center, Plot - CWS- (A)-1, Road No - 34, Gulshan
avenue, Dhaka-1212.
Telephone No. : +88-02-55668070
  +88-09610999999
Fax No. : +88-02-55668070-6000, +88-09610999911-5200
Website : www.ucb.com.bd
SWIFT : UCBL BDDH
E-mail : [email protected]
Chairman : Mrs. Rukhmila Zaman
Managing Director : Mr. Mohammed Shawkat Jamil
Auditors : Syful Shamsul Alam & Co.
Tax Consultants : Mr. Md. Mosharrof Hossain, Advocate
Legal Consultant : T.I.M Nurun Nabi Chowdhury
No. of Branches : 187
No. of ATMs : 472
No. of SME Centers :2
Off-Shore Banking :1
Unit
No. of Employees : 3,374 (31.12.2012)
Stock Summary
Authorized Capital : Tk. 15,000 million
Paid up Capital : Tk. 10,541.31 million
Face Value per Share : Tk. 10
Registered Office : Bulus Center, Plot - CWS- (A)-1, Road No - 34, Gulshan
avenue, Dhaka-1212
  Phone : +88-02-55668070, +88-09610999999
  E-Mail : [email protected]
  Web site : www.ucb.com.bd
Chairman's Office : Plot - CWS- (A)-1 Road No - 34 , Gulshan avenue, Dhaka-
1212
  E-Mail : [email protected]

5|Page
2.3 Mission of United Commercial Bank Limited:
The mission of United Commercial Bank Limited is- “Present financial solutions which can
create, supervise and amplify their client’s wealth by improving the quality of life in the
communities they serve.”

2.4 Vision of United Commercial Bank Limited:

The vision of United Commercial Bank Limited is- “Be the bank of first preference through
increases the value of their clients, shareholders and employees as well as contributing to the
national economy with social commitments.”

2.5 Core Values of United Commercial Bank Limited:

We put our customers first
 We emphasize on professional ethics
 We maintain quality at all levels
 We believe in being a responsible corporate citizen
 We say what we believe in
 We foster participative management

2.6 Strategies, Goals and Objectives of United Commercial Bank Limited:

2.6.1 Strategies of United Commercial Bank Limited

 Utilize all available resources to develop various plan and polices
 Procedures in each of the objective and goal areas
 Synchronized and steady growth of the bank
 Implement plants, poleis and procedures
 Utilize term of professional employees
 Search for a total customized solution for the purpose of full automation step

2.6.2 Goals of United Commercial Bank Limited

 Develop a plan for offering better customer services
 Develop a realistic deposit mobilization plan
 Develop appropriate ending risk assessment system
 Develop capital plan
 Develop a system to make good advance
 Develop appropriate management structure, system, procedures and approaches
 Develop scientific MIS to monitor bank’s activities

6|Page
2.6.3 Business Objectives of United Commercial Bank Limited
 Ensure 100% recovery of all advances
 Ensure a satisfied work force
 Make sound loan and investment
 Build up a low cost fund base
 Meet capital adequacy recruitment at all the time
 Focus on fee based income
 Install MIS to monitor banks activities
 Adopt an appropriate management technology

2.7 Functions of the UCBL:

The main task of UCBL is to accept deposits from various customers and institutions through
various accounts.

 Provide loans on easy terms and conditions.

 The bank invests its funds into profitable sector.
 It transfers money through Demand Draft (DD), Pay Order (PO), and Telegraphic
Transfer (TT) etc.
 It assists in the foreign exchange by issuing letter of credit.
 UCBL insures the securities of valuable documents of clients
 The main function is taking deposit and provide loan
2.8 Organizational Structure of United Commercial Bank Limited:
The Bank has in its Management with a combination of dedicated highly skilled and eminent
bankers of the country of varied experience and expertise successfully led by Farid Uddin
Ahmed. There are 2508 dedicated employees are working in UCB. Board of Directors of UCBL
includes the high professional and high-qualified business men of Bangladesh. Well-designed
directions of those bodies help the management to achieve the ultimate goal of the bank. The
members of the Board of Directors are the very renowned business Man of Bangladesh.

Mrs. Rukhmila Zaman, a young woman entrepreneur of the Country, is the Chairman of United
Commercial Bank Limited and also the Managing Director of Aramit Group, a leading
manufacturing Conglomerate of the Country. She is the wife of Mr. Saifuzzaman Chowdhury,
MP and Honourable Minister for land, GOB. She is also involved with different Socio-Economic
organizations and contributing for upbringing the young women in the main stream of economy.

The bank is operating its business by divided into three main segments. These are General
Operation Division, Corporate Banking Division, and International Division. There are three
different Deputy Managing Directors (DMD) supervise the work of these departments. The total
work flow of the level of employees of UCB is as shown by an organ gram of UCB is given
bellow.

7|Page
 Managing Director

Deputy Managing Deputy Managing Deputy Managing

Director (Corporate Director (Operation) Director (International
Banking Division) Division)

Senior executive Vice Senior executive Vice Senior executive

President President Vice President

Senior Senior Senior Senior Senior Vice Senior

Vice Vice Vice Vice President Vice
President President President President President

First Vice President

Vice President

First Assistant Vice President

Assistant Vice President

Senior Executive Officer

Executive Officer

Senior Officer

Junior Officer

Figure 01: Organization diagram of UCBL

8|Page
2.9 Products and Services of United Commercial Bank Limited:
UCB is always attentive to give the highest value to their customers. That’s why UCBL is
offering the modern products and Services to their customers. UCBL is offering the segmented
Products & Services to different level of customers along with their general Products and
Services. That is very help-full for UCBL to create value for their customers. The products &
Services offered by UCBL have given billow.

UCB Multi- UCB Money UCB DPS Plus UCB Earning Plus
Millionaire Maximize
Western Union SMS Banking Online Service Credit Card
Money Transfer Service
SME Loans Loan Syndication Working Capital Trade Finance
Finance
Industrial Finance Consumer Credit One Stop Service Locker Service
Scheme
Time Deposit Monthly Savings Inward & Outward Travelers Cheque
Scheme Scheme Remittances
Deposit Insurance Saving Insurance Special Deposit Import Finance
Scheme Scheme Scheme
Export Finance Working Capital Loan Syndication Underwriting and
Finance Bridge Financing

Table 01: Products & Services of UCBL

2.10 Operational Network:
UCBL always places utmost importance on the client service. Keeping the satisfaction of the
customer in view the Bank continued its personalized approach in rendering improved and
modernized services to treat the customer with utmost efficiency and fulfill the customer
satisfaction which it has promised to the customer. Presently the number of branches stands at
187 covering almost all the important places of the country. All the branches are equipped with
computers in addition to modern facilities, logistics and professional competent manpower.
Besides, international correspondent’s network of the bank has also continued to expand keeping
pace with time and requirement covering the important countries in all the continents of the
world. Moreover, the Bank has arrangement with a number of Exchange Houses at Singapore,
U.A.E, Oman, Qatar and Kuwait to facilitate remittance from expatriate Bangladeshi’s.
Division No. of Branches
Dhaka Division 85
Chittagong Division 54
Khulna Division 09
Sylhet Division 15
Barisal Division 08
Rajshahi Division 12
Rangpur Division 04
Total 187

Table 02: Number of Branches

9|Page
2.11 SWOT Analysis of UCBL:
SWOT analysis is a strategic planning method used to evaluate the strengths, weaknesses,
opportunities, and Threats involved in a business venture. In banking sectors it is important to
identify the internal and external factors that are favorable and unfavorable to achieve its
objectives. From the SWOT analysis we can figure out ongoing scenario of the bank. So to have
a better view of the present banking practice of UCBL, the SOWT analysis of UCBL is given
below,

2.11.1 Strength:
Figure 02: SWOT Analysis of UCBL

It is an internal factor. It deals with the organizations own strength. UCBL’s strengths are










Usage of faster pc bank software which is PC BANK 2000
Efficient administration
Corporation with each other
Fewer default loans.
Membership with SWIFT
Good banker-customer relationship
Energetic as well as smart work force
Well-furnished and air-conditioned bank
Not engage in unfair business practice
T
O
S
A
W
i
s
y
l
a
n
10 | P a g e
2.11.2 Weakness:
Weakness is also an internal factor of SWOT analysis. UCBL’s weaknesses are

 Existing manual vouchers

 Limited consumer credit scheme
 Enhance of new private banks
 Lack of training facility
 Lack of promotional activities
 Officers in the junior level are not highly qualified

2.11.3 Opportunities:
Opportunities are external factors which indicate the industry’s advantages available for the
companies.
 Huge business area
 Introducing different debit and credit card
 Industry’s positive growth
 Introducing any branch banking through online
 Flexible credit schemes
 Reliably to local public

2.11.4 Threats:
Threats are external factors of SWOT analysis. The threats for UCBL are

 Different classic services of foreign banks

 Better developed card division of other private banks
 Uses of modern technologies by the rival banks
 Political unrest and government restricted banking strategies
 The number of rivalry is too high into the banking industry.

2.12 Division of UCBL: Division of United Commercial Bank Ltd. are General Banking,
General Advance, Foreign Exchange presented below

1. General Banking
1.1. Cash Management Department
1.2. Account Opening Department
1.3. Account Bills & Remittance department
2. General Advance
3. Foreign Exchange
3.1. Foreign Exchange Export
3.2. Foreign Exchange Import
3.3. Foreign Exchange Remittance

11 | P a g e
 G
S
g
C
M
A
O
B
R
n
th
u
-o
k
a
r
p
ils
m
e
c
&
2.12.1 General Banking:
I started my internship program from the general banking department where I have the
opportunity to observe the cash management procedures, account opening procedures and the
procedures of on-line banking operations and bill and remittance. General banking is a vast
department which includes a large number of operations.

2.12.1 Scroll & Cash Management:

Figure 03: General Banking

Scroll is a process to record the received transactions in daily basis. If any client wants to deposit
money in his or her account, he will have to go to the scroll officer to take a scroll number. At
the beginning period my training my supervisor assigned me here. Here in this desk I came to
know about the types of accounts UCBL offers and the bills and documents UCBL works with.
Cash management is one of the most important parts of general banking because bank’s main
business is to manage the cash by receiving cash form customers and paying cash to customers.
As it is the most sensitive part of bank, here I have got minimum responsibilities to do. In this
department I got a great opportunity to enrich my knowledge.

2.12.2 Account Opening:

Accounting opening is an important part of general banking. As many as accountholder of a bank
indicates how big the organization is. In this desk I learnt the procedure of opening an account,
categories of accounts, issuing cheque books etc.

12 | P a g e
2.12.3 On-Line Banking Operation:
This department joins the overall banking system of UCBL into one network. To do its operation
through on-line UCBL uses PC BANK 2000 operating system. In this department I learn how to
input different bills of other branch of UCBL and other banks. Moreover, the process of clearing
the chaques through Bangladesh Bank’s Clearing House has been experienced here.

2.12.4 Bills and Remittance:

Bills and remittance department is the most busy department where bills and remittances are
issued which the most liquid form after cash. In this department I have learnt how to issue the
payment order, demand draft and the collection of DD, outward bill collection (OBC) and
internal bill collection (IBC) etc.

13 | P a g e
3.1 Financial Performance Analysis:
In this report, the financial performance of United Commercial Bank Limited has been done by
using Ratio analysis and Sensitivity analysis. It is a well-recognized tool that bank supervisory
authorities use this ratio according to measure financial performance.

3.1.1 Analysis of key operating and financial data for last 5 (five) years:
UCB recorded a remarkable growth in last five years in terms of business volume and
profitability. At the end of 2014, total assets of the Bank were BDT 266,100.74 million whereas
at the end of 2018 it stood at BDT 401,076.14 million recording a growth of more than 50
percent. During last five year deposits grew by 41 percent and loans & advances of the Bank
grew by 69 percent.
(Figures in million Taka)
Balance Sheet 2018 2017 2016 2015 2014
Authorized capital 15000.00 15000.00 15000.00 15000.00 15000.00
Paid up capital 10,541.31 10,541.31 10,541.31 10,039.34 8,366.12
Shareholders’ equity 27,999.77 26,510.26 25,756.32 25,588.82 22,491.54
Borrowing 44,694.26 33,846.39 25,565.10 10,705.57 6,024.88
Deposits 297,172.82 278,195.4 257,704.30 220,866.48 211,072.06
Loans and advances 294,671.94 261,002.88 223,697.18 220,866.48 174,146.10
Investments 50,830.84 42,911.75 55,475.64 44,345.73 44,288.60
Fixed assets 9,056.11 8,344.10 8,380.18 8,586.73 8,510.00
Off-balance sheet 182,066.61 197,973.80 171,169.75 150,713.79 144,554.47
exposure
Total assets 401,076.14 363,314.80 329,720.78 293,847.23 266,100.74
Total liabilities 373,076.38 336,804.54 303,964.46 268,258.41 243,609.20

In line with the increased volume of the business, Gross Profit of the Bank has also increased. In
2014, NPAT of the Bank was BDT 3,668.73 million whereas it was BDT 2,526.58 million at the
end of 2018 recording a de-growth of 31 percent whereas Bank’s gross revenue increased by 22
percent during last five years of time.

Results of Operation 2018 2017 2016 2015 2014

Interest income 25,266.93 1,034.16 20,832.15 22,434.57 22,360.83
Interest expense 16,024.50 12,087.39 12,194.04 14,711.18 14,430.24
Net interest income 9,242.44 8,946.77 8,638.11 7,723.38 7,930.59
Non-interest income 9,317.72 8,435.50 7,703.97 7,824.62 7,278.80
Non-interest expense 10,902.27 9,430.86 8,754.70 7,145.66 6,489.93
Gross profit 18,560.16 17,382.27 16,342.08 15,548.00 15,209.39
Operating profit 7,657.89 7,951.41 7,587.38 8,402.34 8,719.46
Earnings before 6,685.52 6,744.42 6,474.45 8,254.73 7,571.27
interest, depreciation
and tax*
Profit before tax 4,907.76 5,461.41 5,189.88 7,252.34 6,835.67
Net profit after tax 2,526.58 2,433.91 2,628.63 3,977.34 3,668.73

14 | P a g e
3.2 Measuring Financial Performance of UCBL through Ratio & Sensitivity
Analysis:
Ratio analysis is a study of the relationships between financial variables. It is very important in
fundamental analysis which investigates the financial health of any financial institution. This
ratio analysis gives frank financial information in this current business world. By giving a glance
anyone will be able to know what the position that institution is now. Therefore managers,
shareholders, creditors etc. all take interest in ratio analysis. For example using liquidity ratios
managers can use the information if the institution's liquidity is struggling and they may have to
take out short term finance. For this reason to evaluate the performance of UCBL the ratio &
Sensitivity Analysis has been selected. Here in this report contains the most common ratios and
analyze to evaluate the performance of UCBL over five years (2018 to 2014).

3.3 Liquidity Ratios:

As UCBL is a financial institution the liquidity ratios are the most important ratios to evaluate its
liquidity to pay its short term debt and deposits. This ratio shows how quick UCBL is able to pay
or convert its assets into cash. To know how liquid the UCBL is current ratio and quick ratio is
analyzed here.
3.3.1 Current Ratio:
This ratio is calculated by dividing the total current assets of an institution by its total current
liabilities. It shows how any institution like UCBL meets its current liabilities through its current
assets.
Particular 2018 2017 2016 2015 2014
Current Ratio 1.15 1.16 1.16 1.14 1.3

Table 03: Current ratio

Current Ratio
1.35
1.3
1.3
1.25
1.2
1.15 1.16 1.16
1.15 1.14

1.1
1.05
2018 2017 2016 2015 2014

Figure 04: Current Ratio

15 | P a g e
According to result the current ratio of UCBL was 1.3 in 2014, 1.14 in 2015, 1.16 in 2016 and
2017, and 1.15 in 2018. In 2014 the current ratio was 1.3 which means UCBL had 1.3 taka of
currents assets against 1 taka of short term debt or liability. It means UCBL had the ability to pay
off its current liabilities with its current assets. In 2015 the current ratio was 1.14 which was a
little than 2014 which means in 2015 UCBL invested less in short term assets. On the other hand,
in 2016 and 2017 the current ratio was 1.16 which mean UCBL investment in current assets was
higher than 2015 also higher than 2018. In fact, the higher the current ratio is better for the
institution because this higher ratio helps to prevent getting default.

3.4 Leverage Ratios:

Leverage ratios are used to calculate the financial leverage of an organization. It helps to get a
specific idea of the institution's methods of financing. There are several types of ratios which
main factors are debt, equity, assets and interest expenses.

3.4.1 Long-Term Debt to Equity Ratio

Long term debt to equity ratio is one of the financial leverage ratios which are used in banking
sectors to know the link between the long term debt and equity. The ratio is calculated by taking the
institution's long-term debt and dividing it by the total value of its equity.

Particular 2018 2017 2016 2015 2014

Long-Term Debt to 6.50 6.09 5.22 5.13 4.82
Equity Ratio (times)

Table 04: long-term debt to equity ratio

Long-Term Debt to Equity Ratio (times)

7 6.5
6.09
6
5.22 5.13
5 4.82

4
3
2
1
0
2018 2017 2016 2015 2014

Figure 05: Long term debt to equity ratio

16 | P a g e
This ratio measures UCBL’s long-term sources of fund. Here from this figures it is noticed that most
of the UCBL’s long term sources of fund come through the long term liability. In 2018 and 2017 this
leverage ratio was 6.5 and 6.09 which mean UCBL long term funds come from depositors’ deposits
rather than the stockholders ‘equity. On the other hand, in 2016, 2015 and 2014 the Long-term Debt
to Equity Ratio was respectively 5.22, 5.13 and 4.82 which was less than 2014.

3.4.2 Total Debt to Equity Ratio

It is one of the banking financial leverage which is calculated by dividing its total liabilities by
stockholders' equity. It mainly indicates the proportion of equity and debt that a bank is using to
finance its assets.

Particular 2018 2017 2016 2015 2014

Total Debt to Equity 13.32 12.70 11.80 10.48 10.83
Ratio (times)

Table 05: Total Debt to Equity ratio

Total Debt to Equity Ratio (times)

14 13.32
12.7
11.8
12 10.83
10.48
10

8
6

4
2

0
2018 2017 2016 2015 2014

Figure 06: Total Debt to Equity Ratio

Like all others bank UCBL’s most of the fund are collected from deposits. In year 2018, 2017,
2016, 2015 and 2014 the ratio was 13.32, 12.7, 11.08, 10.48 and 10.83 consequently. The result
shows that in 2018, 2017 and 2016 UCBL financed most of its assets through the debt which
means through deposits. As a result, the bank is doing well by increasing its deposits over years
like 2018 and 2017. This higher outcome not only has increased the risk but also has increased
the profit of the bank.

17 | P a g e
3.4.3 Total Debt to Total Asset Ratio
Total debt to total asset ratio measures a bank’s financial risk. It determines how much of the
bank’s assets have been financed by the debt. It is calculated by total debt dividing by the bank’s
total assets.

Particular 2018 2017 2016 2015 2014

Total Debt to Total 93.02 92.70 92.19 91.29 91.55
Asset (%)

Table 06: Total debt to total asset ratio

Total Debt to Total Asset (%)

93.5
93.02
93 92.7
92.5 92.19
92
91.55
91.5 91.29
91
90.5
90
2018 2017 2016 2015 2018

Figure 07: Total debt to total asset ratio

Almost all of the UCBL’s assets are financed by its debt. It works by taking the deposits from
the general and invest it in different sectors. From the year 2017 to 2014 the ratios were 92.07%,
92.19%, 91.29% and 91.55% which are almost same but in 2018, 93.02% which is higher than
previous year. The higher ratio may increase more risk because if UCBL defaults in any
investment than the depositors will also default.
3.5 Profitability Ratios:
Profitability Ratios measure the overall earnings performance of an institution and its efficiency
in utilizing assets, liabilities and equity.

3.5.1 Net Profit Margin

Net Profit Margin is a ratio of profitability which is calculated by dividing the net profit after
taxation by revenues or net interest income. It measures how much UCBL’s is actually earning
from its every taka of revenue.

18 | P a g e
 Particular 2018 2017 2016 2015 2014
Net Profit Margin (%) 27.34 27.20 30.43 51.50 46.26

Table 07: Net Profit Margin

Net Profit Margin (%)

60
51.5
50 46.26
40
30.43
30 27.34 27.2
20
10
0
2018 2017 2016 2015 2014

Figure 08: Net Profit Margin

The greater the outcome the better the UCBL’s performance is. In 2015 the result was 51.50%
that means in 100 taka of net interest income UCBL’s net profit was 51.50 taka. On the other
hand, in 2018 and 2017 the net profit was taka 27.34 and 27.20 against 100 taka of net interest.
Between the years in 2015 and 2015 the bank had a handsome profit margin in percentages and
oppositely in 2016 UCBL net profit margin was better than the year 2018 and 2017.

3.5.2 Return on Equity

Return on equity measures a bank’s profitability which calculates how much net profit that bank
may generates with the money that shareholders have invested as equity.

Particular 2018 2017 2016 2015 2014

Return on equity (%) 9.27 9.31 10.24 16.54 17.07

Table 08: Return on equity

19 | P a g e
 Return on equity (%)
18 17.07
16.54
16
14
12
10.24
10 9.27 9.31
8
6
4
2
0
2018 2017 2016 2015 2014

Figure 09: Return on equity

ROE is very popular ratio toward the shareholders of any bank. After doing the analysis from
UCBL’s financial statements its shows those in years 2018, 2017, 2016, 2015 and 2014 the
return from 100 taka invested by the shareholders was respectively 9.27, 9.31, 10.24, 16.54 and
17.07. It is to be remembered that in case of ROE The higher the percentage the higher is the
profit for the bank as well as for shareholders.

3.5.3 Return on Asset:

Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.
ROA gives a manager, investor, or analyst an idea as to how efficient a company's management
is at using its assets to generate earnings. Return on assets is displayed as a percentage. It is an
indicator of how well a company utilizes its assets, by determining how profitable a company is
relative to its total assets. It is best used when comparing similar companies or comparing a
company to its previous performance. It takes into account a company’s debt, unlike other
metrics, such as Return on Equity (ROE).

Particular 2018 2017 2016 2015 2014

Return on Asset (%) 0.66 0.70 0.84 1.42 1.49

Table 09: Return on assets

20 | P a g e
 Return on Asset (%)
1.6 1.49
1.42
1.4

1.2

1
0.84
0.8 0.7
0.66
0.6

0.4

0.2

0
2018 2017 2016 2015 2014

Figure 10: Return on Asset

ROA is very popular ratio toward the shareholders of any bank. After doing the analysis from
UCBL’s financial statements its shows those in years 2014, and 2015 the return from 100 taka
invested by the shareholders was respectively 1.49 and 1.42. It is to be remembered that in case
of ROA The higher the percentage the higher is the profit for the bank as well as for
shareholders.

3.6 Efficiency Ratios:

Efficiency Ratios determine the efficiently of using its assets and managing its operations.

3.6.1 Assets Turnover

Assets turnover ratio measures the turnover of the firm’s total assets. It is calculated by dividing
net interest income by total assets. Assets Turnover = Net interest Income / Total Assets

Particular 2018 2017 2016 2015 2014

Assets turnover ratio 0.023 0.024 0.026 0.026 0.029
(times)

Table 10: Assets turnover

21 | P a g e
 Assets turnover ratio (times)
0.04

0.03 0.03
0.03 0.03
0.03 0.02 0.02

0.02

0.02

0.01

0.01

0
2018 2017 2016 2015 2014

Figure 11: Assets turnover ratio

UCBL’s Asset turnover ratio was same and too low from the year 2018 to 2016. The ratios were
0.023 times from year 2018 to 2016 but higher asset turnover ratio in 2014. These ratios indicate
that UCBL was not generating a sufficient volume of revenue given to its total asset investment.
To increase this ratio UCBL had to utilize its sources of fund on those assets which may bring
more revenue to the bank.

3.6.2 Fixed Asset Turnover

The fixed assets turnover ratio measures how effectively the bank uses its fixed assets or long
term investment. Fixed Asset Turnover = Net interest Income / Fixed Assets.

Particular 2018 2017 2016 2015 2014

Fixed Assets turnover 1.02 1.07 1.03 0.89 0.93
(times)

Table 11: Fixed Assets turnover

The analysis of this ratio shows the upward slope of UCBL. Form the year 2014 to 2017 the
ratios were 0.93, 0.89, 1.03 and 1.07 times consequently which is growing over years. This
higher fixed-asset turnover ratio shows that UCBL had high effectiveness in using the
investment in fixed assets to generate its revenues and it is falling year after year.

22 | P a g e
 Fixed Assets turnover ratio (times)
1.2
1.07 1.03
1.02
1
0.89 0.89
0.8

0.6

0.4

0.2

0
2018 2017 2016 2015 2014

Figure 12: Fixed Assets turnover

3.7 Market Value Ratios:

Market value ratios relate the observable market values like the stock price with the book values
obtained from the firm's financial statements.

3.7.1 Price Earnings Ratio

Price earnings ratio shows how much an investor is willing to pay per taka of reported profit. It is
calculated by dividing the stock price per share by the earnings per share (EPS). Price Earnings
Ratio = Stock Price per Share / Earnings per Share (EPS).

Particular 2018 2017 2016 2015 2014

Price earnings ratio 7.33 10.22 8.55 5.38 6.68
(Times)

Table 12: Price earnings ratio

This ratio outcome shows the UCBL’s higher growth prospects. According to the UCBL’s P/E
ratio in year 2018 and investor wants to invest 7.33 times for 1-taka profit. In the year 2015 the
P/E ratio was lower which was 5.38 times that means it had a poor growth rate. On the other
hand, the year 2017 had a better P/E ratio than the year 2014, 2015 which was 6.68 and 5.38
times. The highest price earnings ratio in 2017 is 10.22 and the lowest price earnings ratio in
2015 is 8.55 in which it present the in year 2017 is high growth rate but in year 2015 is poor
growth rate.

23 | P a g e
 Price earnings ratio (Times)
12
10.22
10
8.55
8 7.33
6.68
6 5.38

0
2018 2017 2016 2015 2014

Figure 13: Price earnings ratio

3.7.2 Earning Per Share
Earnings per share (EPS) are calculated as a company's profit divided by the outstanding shares
of its common stock. The resulting number serves as an indicator of a banks's profitability. It is
common for a bank to report EPS that is adjusted for extraordinary items and potential share
dilution. The higher a bank's EPS, the more profitable it is considered.
Particular 2018 2017 2016 2015 2014
Earnings Per Share (Times) 2.40 2.31 2.49 3.36 4.39

Table 13: Earnings per share

Earnings Per Share (Times)

5
4.5 4.39
4
3.5 3.36
3
2.4 2.31 2.49
2.5
2
1.5
1
0.5
0
2018 2017 2016 2015 2014

Figure 14: Earnings per share

24 | P a g e
This ratio outcome shows the UCBL’s higher growth prospects. According to the UCBL’s in
year 2014 and 2015 is higher EPS 4.39 and 3.36 which indicates more value because investors
will pay more for a company with higher profits. But in the year 2018 and 2017 EPS is lower
which indicates less value because investors will pay more for a company with lower profits.

3.7.3 Non-Performing Loans to Loans Ratio

A non-performing loan is a loan that will not be recovered. Non-performing loans indicates the
percentage of non-performing loans of a bank has. Non-Performing Loans to Loans Ratio = Non-
Performing Loans /Total Loans

Particular 2018 2017 2016 2015 2014

Non-Performing Loans 6.79 7.38 8.01 5.23 4
/Total Loans (%)

Table 14: non-performing loan ratio

Non-Performing Loans /Total Loans (%)

9
8.01
8 7.38
7 6.79

6 5.23
5
4
4
3
2
1
0
2018 2017 2016 2015 2014

Figure 15: Non-Performing Loans to Total Loans

The ratios were 6.79%, 7.38%, 8.01%, 5.23% and 4% in the year of 2018 to 2014. This ratio
should be lower at any cost because the higher outcome indicates that the bank has serious
problems with collecting its debts. The ratio is getting better over years. In 2016 and 2017 the
ratio came to 8.01% and 7.38% than the ratio was in 2015 and 2014.

25 | P a g e
4.1 Sensitivity Analysis:
United Commercial Bank Ltd., the largest SME bank in the country has been operating for 38
years and has been performing moderately. The bank has had suffered through stock market
crash, decreasing interest rates in the market but in a stable economy, it is once again catching
up. In-depth analysis of the bank’s performance and exposure to interest risks over the year
shows there has been inefficiency in cost control and revenue generation on assets as well-which
are indicator as internal management inefficiency. Despite the increase in asset bases, loan
advances and consequent increase in interest income, owing to increasing operating costs and an
expansion in distribution network, the bank’s financials have suffered. 2013 has been a
challenging year for the whole economy because of its non-responsiveness to market
opportunities in a politically unstable country. Despite the challenges, UCBL bank has increased
its non-funded income bases, increased classified loans and implemented new provisioning
policies.
4.2 Profitability ratios and spread:
4.2.1 Return on Equity
ROE is a measure of rate of return flowing to the bank’s shareholders. It indicates the level of
sensitivity bank’s return to its shareholders have over how the assets are being finances. ROE of
UCBL Bank for the last five years have been calculated as follows:

Year ROE
2018 0.0927
2017 0.0931
2016 0.1024
2015 0.1654
2014 0.1707

Table 15: Changes of Return on Equity

As we plot the returns on graph a fluctuation is observed over the years:

Change in ROE
0.2
0.15
0.1
0.05
0
2018 2017 2016 2015 2014

ROE

Figure 16: Change in ROE

26 | P a g e
Though at initial years ROE was on subsequent fall, owing to decreasing assets (equity base
decreased during this period as well, but changes have not been in exact proportion) it
experienced a major fall during 2018. The breakdown of ROE can better explain the facts:

4.2.2 Decreasing Net Profit Margin:

It reflects the effectiveness of expense management or cost control and service pricing policies.
In case of UCBL Bank,
Year NPM
2018 0.2734
2017 0.2720
2016 0.3043
2015 0.5150
2014 0.4626

Table 16: Decreasing Net Profit Margin

Net profit margin has continuously decreased over the years. This could indicate a decreasing
trend in operating revenue. Surprisingly, the Total Operating Revenue shows a growth of 46.26%
% over the TOR of 2014. This implies that operating cost items (or tax items) might have
decreased beyond expectations to higher NIAT to this point. The NPM of 27.34% and 27.20% in
2018 is consequence of the huge decrease in NIAT, in relation to the level of 2014 and 2015
observed previously.

4.2.3 Decreasing Total Asset Turnover (TAT):

It reflects portfolio management policies especially the mix and yield on the bank’s assets. In
case of BRAC Bank,
Year TAT
2018 0.023
2017 0.024
2016 0.026
2015 0.026
2014 0.029

Table 17: Decreasing Total Asset Turnover

The ratio has been more stable throughout the years until in 2016 to 2015 it fell a bit but was
catching up early on 2014 but fall in 2018.Total Asset turnover was estimated at 3%, slightly
below the 6% mean turnover of the previous years.

4.2.4 Increasing Equity Multiplier (EM):

The purpose of equity multiplier is to see how much assets of a company are financed by the
total shareholders’ equity, so that we can find out how much assets of the company are financed
by the external sources of finance. It reflects the leverage or financial policies; the sources
chosen to fund the bank. For UCBL Bank, Equity Multiplier Formula = Total Asset / Total
Equity

Year EM

27 | P a g e
 2018 14.32
2017 13.70
2016 12.80
2015 11.48
2014 11.83

Table 18: Increasing Equity Multiplier

The figure for Total Assets have increased 30% which have contributed to the decline in Asset
Turnover rate and the upsurge in the Equity Multiplier which has risen from around 11.43 to
14.32 in 2015 to 2018, a spectacular 24.73% increase. In brief, the bank has been successful in
managing its cost bases, ensuring higher return from assets and increasing equity holdings while
also increasing its leverage (borrowings from Banks and money market).

4.3 Net Interest Income:

Net Interest Income, also referred as net interest margin is calculated by deducting total interest
expenses from total interest income. For UCBL bank, the net interest incomes for the last 5 years
are as follows:
Year Net Interest Income (in million Taka)
2018 9,242.44
2017 8,946.77
2016 8,638.11
2015 7,723.38
2014 7,930.59

Table 19: Net Interest Income

Net Interest Income

9500
9000
8500
8000
7500
7000
6500
2018 2017 2016 2015 2014

Figure 17: Net Interest Income

The Bank has significantly increased its investments over the years (an astonishing overall 78%
increase in T-bills, Bangladesh bank bills holdings between years 2016 and 2018 followed by the
stock market crash) but investment income declined by 10%. This indicates that overall poor
performance of the securities market affected the bank too. But it still increased its interest

28 | P a g e
margin owing to interest income growth (loans and advances grew within this period by 14.1%.
however, increasing returns of T-bills and continuing growth of loans and advances result in an
increasing interest margin for the Bank.

4.3.1 Net Interest Income Margin:

Net interest margin (NIM) is a measure of the difference between the interest income generated
by banks and the amount of interest paid out to their lenders. It examines how successful a firm's
investment decisions are compared to its debt situations. For a bank if the NPA (non-performing
assets) are high, their NIM will go down. Higher NIM would increase the profitability of the
bank. A negative value denotes that the firm did not make an optimal decision, because interest
expenses were greater than the amount of returns generated by investments. Net Interest Income
Margin calculation for UCBL Bank shows: Net Interest Margin = (Investment Income – Interest
Expenses ) / Average Earning Assets

Year Net Interest Income margin (%)

2018 6.35
2017 5.97
2016 5.97
2015 6.14
2014 6.14

Table 20: Net interest margin

The trend line shows cyclical pattern in growth:

Net Interest Income Margin (%)

6.3

6.1

5.9

5.7
2018 2017 2016 2015 2014

Net Interest Income Margin (%)

Figure 18: Net interest margin

UCBL Bank limited has been persistent in maintaining a steady rate of their net interest margin.
In our study from 2014 till 2018, it is seen to have to have taken a slight dip in 2016 but regained
superbly to haven to the rates of 6.35% in 2018. This drop is seen to have occurred due to a
greater change in the proportionate increase of interest expense compared to those of interest
income and earning assets. The data suggests that the bank has been making, on an average

29 | P a g e
approximately 6% net return on the earning assets. This reflects the efficiency of the yieldable
assets over a period of time.

4.4 Net Non Interest Income Margin:

While NIM measures the net interest return on the yielding assets, it should be noted that bank
has other sources of income and expenses that are not interest based but adds to the list of
consideration. These non-interest bearing items also do play a prime role in accessing the yield
of the financial assets a business holds over a period of time. Any income or expense that banks
earn or incurs from activities other than their core intermediation business (taking deposits and
making loans) or from their investments is classified as noninterest income or expense. The
margin or non NIM is the percentage of the net non-interest income against the earning assets of
the bank. It is highly usual to have this margin as negative due to the fact that the non-interest
expense encompasses almost all of the other expenses while the non-interest income or fee
income contains items like dividends, commissions and gain on REPO. Net Non- Interest
Income Margin calculation for UCBL Bank shows:
Year Net Non Interest Income margin (%)
2018 -2.59
2017 -2.09
2016 -1.79
2015 -2.30
2014 -1.69

Table 21: Net Non Interest Income Margin

Net Non Interest Income margin (%)

0
2018 2017 2016 2015 2014
-0.5
-1
-1.5
-2
-2.5
-3

Net Non Interest Income margin (%)

Figure 19: Net Non Interest Income margin

In the study of UCBL bank, the period of 2018 till 2017 showed greater and greater increase in
the non-interest expenses that accounted for the negative figure in the net balance and
consequently allowing for the under 0 increasing percentage of non NIM.
This indicator saw ups and downs on regular basis from 2014, see-sawing above and below -2%
mark. In 2018 it was -2.59%, which prompts to the facts that there has been a greater

30 | P a g e
proportionate rise in the non-interest expenses compared to the fee incomes. However in
comparison to the NIM and interest incomes, the yield is greater. This infers to the conclusion
that the bank has been to some extent successful with increased expenses to generate greater
revenues. But it should be kept to mind that the non NIM negativity of result needs to be
contained to a manageable level to allow for an overall favorable return on assets not only
financial and yielding in nature but also others that might generate alternative sources of income
of the bank.

4.5 Earning Spread:

The spread measures the effectiveness of the Bank’s intermediation function in borrowing and
lending money and also the intensity of competition in the bank’s market area. Conventionally in
Bangladesh the spread is considered to be low at 2% and high spread means around 5%. The
earning spreads of BRAC Bank for the last 5 years are as follow: Earnings Spread Formula =
(Total Interest Income / Total Earning Assets) - (Total Interest Expense / Total Interest-Bearing
Liabilities).
Year Earning Spread
2018 3.2%
2017 3.9%
2016 2.7%
2017 3.2%
2014 2.2%

Table 22: Earning Spread

Earning Spread (%)

5
4
3
2
1
0
2018 2017 2016 2015 2014

Figure 20: Earning Spread

The data shows that the spread varies greatly year to year. The earning spread of 2014 is
significantly low. This is because in that year UCBL Bank significantly low interest bearing
liabilities in its hand. Compared to other years, it didn’t have any liabilities like Convertible
subordinate bonds, Borrowings from central bank and Money at call and short notice. Rather it

31 | P a g e
had huge amount of call money (asset) given to other banks. The earning spread was highest in
2017 and it was because the bank had significantly small amount of Borrowings from other
banks, financial institutions and agents compared to other years. The spread is low and the
growth is inconsistent which indicates that UCBL Bank is performing average in the highly
competitive market.

4.6 Interest sensitivity:

Given the constant changes in the market indicators, banks (which are inherently more exposed
to money market adjustments) have to remain cautious against interest rate risks. There are
several indicators of a bank’s exposure to interest rate risks and forecasted interest rates help
management make portfolio decisions.

4.6.1 Interest Sensitive Gap

Ideally, a bank should hedge 100% against its interest sensitive liabilities and maintain a zero
gap. Calculations for interest sensitive gap of UCBL bank shows: Interest Sensitive Gap =
Interest Bearing Assets – Interest Bearing Liabilities.

Year Interest Sensitive Gap Type of Gap

2018 5,663,147,623 Positive gap/ Asset sensitive gap
2017 23,061,326 Negative gap/ Liability sensitive gap
2016 -1,388,897,925 Negative gap/ Liability sensitive gap
2015 -1,942,320,718 Positive gap/ Asset sensitive gap
2014 3,198,690,644 Positive gap/ Asset sensitive gap

Table 23: Interest Sensitive Gap

The calculations of interest sensitive gap show that UCBL Bank Ltd. Is efficient in managing
balance its interest sensitive assets and liabilities and controls the volume of asset and liability
holdings as per efficient response to market interest rates. In 2018, the interest sensitive gap was
positive (asset sensitive gap) which then significantly fell to a liability sensitive gap in the
following year 2017. This fall indicates are quick and proactive response to the drastic fall in
market interest rates. The market interest rate fell from about 8.5% to 4.6% between 2018 and
2017. Thus having a negative interest sensitive gap enabled the bank to earn higher from asset
holdings compared to liability obligations. However, the interest rates started recoiling upwards
starting February 2017 but faced another sharp fall in July. Although there were fluctuations
interest rates never reached the height of 2018. This induced the bank to continue having a
negative interest sensitive gap or a liability sensitive gap in 2015 but with a lesser magnitude
compared to that of 2017. However, as the graph below suggests, interest rates started picking up
and continued to increase till February 2016. This was also reflected in the interest sensitive gaps
in 2015 and 2016. Both the years the gaps were asset sensitive, meaning the bank was able to
earn higher from loans than deposits and thus asset volume was kept higher. In 2015, the asset
sensitive gap was comparatively much lower than the gap in 2016. This is due to the trend
prediction that the sharp and consistent growth in market interest rates in 2016 would continue to
rise and reach heights of the previously magnanimous rate in 2018.

4.6.2 Relative IS GAP

32 | P a g e
Relative IS Gap provides a base for comparison between two or more competing firms. GAP
calculations for UCBL Bank show:

Year 2018 2017 2016 2015 2014

Relative IS
GAP 0.20602490 0.00115945 -0.07756053 -0.096135632 0.191581426
Analysis Asset Asset Liability Liability Asset
sensitive, sensitive, sensitive, sensitive, sensitive,
positive gap positive gap negative gap negative gap positive gap

Table 24: Relative IS Gap

Analysis of relative IS Gap shows that, UCBL Bank has been recovering from a higher exposure
to interest risks than before. From an asset sensitive position in 2014, the bank became a liability
sensitive one owing to decreasing interest rates in the market. If we take a closer look at the
breakdown of interest sensitive asset and liability portfolios of the bank, decrease in demand
deposits by the Bank with other banks and financial institutions is observed during this period of
falling market interest (in 2015, demand deposits decreased by 448, 623,650 BDT from 2014 and
it further decreased by 325,720,280 BDT in 2016 from 2015). At a reduced cost of borrowing,
term loans increased during this period. However, savings deposits by bank clients responded
rather inversely to this fall. As interest rates fell sharply in between 2014-15, UCBL Bank
managed to reduce its interest sensitive assets and increase interest sensitive liabilities, thus
enabling an aggressive interest-sensitive GAP management scenario. Again, aggressive
management is observed in the period 2016-17 as well. Interest rate, during this period grew
smoothly and adjustments were made to market changes by increasing demand deposits and term
loans and simultaneously decreasing savings deposits. Also, compared to the changes in interest
rate in 2017-18, the positive gap ratio has increased rather proportionately. This aggressive
adjustment has resulted in a higher interest margin for the Bank (6.35% for the year 2018).

4.6.3 Interest sensitivity ratio

Year 2018 2017 2016 2015 2014

Interest
sensitivity
ratio 1.2595 1.0012 0.9280 0.9123 1.2370
Analysis Asset Asset Liability Liability Asset
sensitive, sensitive, sensitive, sensitive, sensitive,
ISR>1 ISR>1 ISR<1 ISR<1 ISR>1

Table 25: Interest sensitivity ratio

Interest sensitivity calculation of UCBL Bank shows that during the interest fall period in 2015-
2016, the Bank maintained a liability sensitive portfolio. For each unit of interest sensitive
liabilities, 0.9+ unit of interest sensitive asset was being maintained to realize reduced borrowing
costs against interest incomes. As a result, the net interest margin increased for the bank in this
period (6186 million BDT for the year 2015 and 6487 million BDT in 2016). More assets have

33 | P a g e
been included in the portfolio ever since because of the forecasted interest rate rise in the market,
as is evident in a higher than 1 interest sensitivity ratio for the years 2017 and 2018.

4.7 Asset Utilization:

The asset utilization ratio represents the ability of management to employ asset effectively to
generate revenue. The more income generated per Taka of assets, the more profitable is the bank.

Year Operating Revenues Total Assets Asset utilization

2018 7,657.89 401,076.14 1.90%

2017 7,951.41 363,314.80 2.19%

2016 7,587.38 329,720.78 2.30%

2015 8,402.34 293,847.23 2.85%

2014 8,719.46 266,100.74 3.27%

Table 26: Asset Utilization

Asset utilization
3.5
3
2.5
2
1.5
1
0.5
0
2018 2017 2016 2015 2014

Asset utilization

Figure 21: Asset Utilization

34 | P a g e
5.1 Role as an Intern:
Internship is very significant for any graduates as one can gather realistic experience in this
period. I have completed my internship program in United Commercial Bank Limited, Barishal
Branch. I have learnt many things about General Banking in this internship program. I found a
responsive working atmosphere and I felt like I was one of them. Each of my colleagues assisted
me very much to understand the assignment easily.

5.2 Job Descriptions:

I occupied myself in a variety of types of works throughout the time of my internship Period
which is given below-
1. Account opening
2. Preparing pay orders
3. Issuing cheque books
4. Providing client statements
5. Changing Account information
6. Checking cheque whether its fraud or real
7. Calling clients to deliver their cheque book and debit card.
8. Write down deposit slip and cheque.
9. NID card verification
10. Updating Voucher Register

5.3 The Daily Activity as an Internee:

I start my work in the bank in the official time, at 10.00 am and end working at 5.00 pm. I used
to work in different desks from starting the office to till the end of the office. I have learned
different documents throughout my internship program which are given here:

5.3.1 Posting of the Account:

Firstly, I make the KYC number and input the customer name and separate the customer Retailer
or Corporate then I input the client’s personal information such as date & place of birth mobile
number and save the KYC. Secondly, I make the CIF number and input the customer personal
information such as name, father’s name, mother’s name, if spouse has, then his/her name,
address, phone number, etc. then I go to MIS function and input the sector code of the account
holder, i.e. service holder, businessman, student or housewife, etc. is also posted. Finally, I make
account number and input the customer transaction and nominee’s information like name,
address, age, relation with the client, and share of the percentage is also put. Then the amount of
money as well as if it is a savings or current account, the introducer’s information is also
necessary.

5.3.2 Issuing Pay Order Slip:

The pay order form must be filled up at first. The form includes information like, to which
individual it issued, and the sum of money and the name of the client. Then the commission and
vat are included according to the sum of money. The pay order block is prepared in which in the
front of the page, “NOT OVER ……. TK ONLY” is written in block letter after receiving cash
in the cash counter.

35 | P a g e
5.3.3 Issue of the Cheque Book:
Many steps are followed while issuing cheque book. The verification of client’s signature is done
at first. Then the cheque book is given. The books serial number is written down in the
requisition slip and cheque register. After completing all steps, the client’s signature is taken on
the cheque register.

5.3.4 KYC Form Completion:

The abbreviation of KYC is Know Your Customers. Client’s full information is given here.
That includes submitted documents for identification, transaction profile, earning source etc.

5.3.5 Clearing House Register:

A vital part of general banking is Clearing House Register. Received cheques are written in this
book. Client’s name and account number, amount of money, name of the bank, clearing date,
branch of that bank, cheque number and again amount of money are the basic things which are
included in the book.

5.3.6 Deliver of Debit and Credit Card:

To deliver debit card, Firstly, we verified the signature card and see photo to match the person.
Then we take the signature in debit card register. Then finally, we handover the card to the
customer.

5.3.7 Call the Client for collecting the Cheque Book & ATM Card:
We call the client’s for receive the cheque book and debit card. When cheque book and card
come to bank, we receive them and entry the register. Then we call the cline and say for receive
them and also said that if you late to receive the cheque book and debit card, then we send them
to head office. So you should come soon for receive them

5.3.8 Write down the Deposit Slip:

We assist the walk-in customers to write down the deposit slip so that they feel secure about their
deposited money.

5.3.9 Updating Voucher Register:

I was also responsible to update daily voucher. I had to count debit and credit voucher of
different account such as- Current Account, Savings Account, FDR/STD Account, SOD
Account, Income and Expenditure Account, Bills payable, Sundry deposit, Foreign Exchange
Account and others. I had count the debited and credited voucher of these following accounts.

36 | P a g e
6.1 Recommendation:
 The bank should emphasize more on advertising about their services and facility for the
clients. Which will help them to reach more number of customers and give the customer a
wide range of option hence they should promote their services more by advertising.

 The entire department should be well informed regarding their goals and objectives. It is
essential to execute company objectives into individual target. It is so because if the
employees of the Bank have the idea about their main target it becomes easier for them to
reach their target goal.
 The bank should promote them more at TV Channel. So that they the existing as well as
the potential customer get to know about your product offerings. TV commercial is one
of the most effective medium of advertising. It’s an easiest way to promote your brand in
mass population. But regrettably it is observed that UCB does not use that much TV
commercials like other Banks.

 To meet high rising demand of today’s customer; the bank should introduce Mobile
banking system. Technology changing day by day like bKash first lunching mobile
banking system and most of the Bank lunch their own mobile banking system. So to cope
up with the modern trend UCB should lunch their mobile banking system as early as
possible.

 Establish more ATM Booth & maintain the existing ATM booth will help the customer to
get excellent services and retain them. In Bangladesh Dutch Bangla Bank, Standard
Chartered Bank and Brac Bank have more ATM booth in comparison with UCB. So
UCB should establish sufficient booths to maintain their work effectiveness and reach
The customers with excellent services.

 Bank participate some social activities and we hope bank can increase this benefit to its
clients and employee. Recently they sold Asia Cup match tickets but they confined the
selling of tickets only to Mirpur branch. Next time they should sell the tickets from more
branches so it becomes available to the people.

 The retail department of UCB is needed to be effective and well enough to manage actual
and potential customer. In UCB Corporate Branch there are less effective officers in retail
division, Retail division is very essential for pull new customers. So UCB bank should
trail their retail officers properly.

37 | P a g e
6.2 Conclusion:
UCB is today’s one of the leading private banks in our country. After the establishment it
brought lots of new product and services for its clients and progressing with high efficiency.
Providing credit to clients is a core business of UCB. It is also the pioneer in offering world class
credit/loan facilities for the people of Bangladesh. It has 158 branches in urban, suburbs and
rural areas in the country. Now a day’s banking sectors is no more dependent on only on a
traditional method of banking. In this competitive world banking sector has expanded its services
wide enough to cover any kind of financial services. In regard of competition now every bank
face huge completion and they are not only from the local banks but international banks also.
The major tasks of banks for banks to survive in this competitive environment are by managing
its assets and liabilities in an efficient way so that the bank can earn maximum revenue, profit
while minimizing the risk. To earn the assets especially from loan and advances banks must be
very much cautious while dealing with loans and advances otherwise these assets will become a
burden for the bank.

38 | P a g e
6.3 References:
a. Annual Reports of United Commercial Bank Limited (2018-2014) Five years.
b. Web site of Bangladesh Bank. www.bangladesh-bank.org
c. Web site of United commercial bank ltd. www.ucbl.com
d. http://en.wikipedia.org/wiki/United_Commercial_Bank
e. Commercial Bank Management, 5th Edition, Rose and McGrew Hill
f. http://www.ucbl.com/board_directors.htm
g. http://www.ucbl.com/products_services.htm
h. http://www.ucbl.com/fs_report.htm

39 | P a g e