ANWER KHAN MODERN UNIVERSITY

New Horizons of Modern Education

Internship Report On
“Financial Performance Analysis of Agrani Bank PLC - Uttara Model
Town Corporate Branch, Uttara, Dhaka.”

An internship report presented to the Business Administration Department of Anwer Khan

Modern University. In partial fulfillment of the requirement for the Degree of Masters of
Business Administration.

Supervised By:

Mst. Jaba chakraborty

Assistant Professor
Department of Business Administration
Anwer Khan Modern University

Submitted By:

Md. Anoarul Haque Hera

ID: 21-222-0002
Department of Business Administration
Anwer Khan Modern University
Cell: +880 1948 70 01 63
E-Mail: [email protected]

Submission: 15th November, 2024

i
 Letter of Transmittal

15/11/2024
To
Mst. Jaba chakraborty
Assistant Professor
Department of Business Administration
Anwer Khan Modern University
H- 6, Gareeb E Nawaz Road, Sec-11,
Uttara, Dhaka-1230, Bangladesh.

Subject: Submission of internship report

Dear Madam,
Assalamualaikum…It is indeed a great honor to be able to hand over my internship report on
"Financial Performance Analysis of Agrani Bank PLC” (An overview of Agrani Bank
PLC)". I have successfully completed my internship program in Agrani Bank PLC at Uttara
Model Town Corporate Branch, Uttara, Dhaka - 1230. I worked there as an intern for three
months. Working on this report was a great learning experience for me as I got to learn the
differences between practical and theoretical work. I have attempted my best to finish the
report with the essential data and recommended proposition in a significant compact and
comprehensive manner as possible. The information and data used in this report are mainly
based on secondary resources like annual reports and some research reports previously done
by various authors.

While working on this report, I have gained much knowledge about the bank's current state as
well as the importance of Financial Performance in a firm. I trust that this report will meet the
desires.

I would like to take this opportunity to thank you for all the support and guidelines that you
have provided, which I hope to continue getting in the future.

Thank You Ma’am

Sincerely yours,

______________________
Md. Anoarul Haque Hera
ID: 21-222-0002
Department of Business Administration
Anwer Khan Modern University
Dhaka, Bangladesh.

ii
 ANWER KHAN MODERN UNIVERSITY
New Horizons of Modern Education

Letter of Endorsements by the Supervisor

This is to certify that the internship report on "Financial Performance Analysis of Agrani Bank
PLC” in Bangladesh.” as a requirement of Masters of Business Administration (MBA
Program) major in Finance, from Anwer Khan Modern University carried out by Md. Anoarul
Haque Hera, student ID: 21-222-0002. I have studied the report and believe that it meets the
standard of MBA internship report. He has completed the report as per instructions under my
supervision. I wish his all the best in his future endeavors.

___________________________
Mst. Jaba Chakraborty
Assistant Professor
Department of Business
Administration
Anwer Khan Modern
University
Dhaka, Bangladesh

iii
 Student Declaration

I, Md. Anoarul Haque Hera. My student ID: 21-222-0002 hereby declare that the work
presented report of internship titled "Financial Performance Analysis of Agrani Bank PLC”
work in Agrani Bank PLC, at Uttara Model Town Corporate Branch, Uttara, Dhaka - 1230.
under the supervision of Mst. Jaba Chakraborty, Assistant Professor, Department of
Business Administration, Anwer Khan Modern University, H- 6, Gareeb E Nawaz Road, Sec-
11, Uttara, Dhaka-1230, Bangladesh.

I also confirm that is my original work and due acknowledgements have been made to materials
used in the report.

_____________________________
Md. Anoarul Haque Hera
ID: 21-222-0002
Department of Business
Administration
Anwer Khan Modern University
Dhaka, Bangladesh

iv
 Acknowledgement

It is a great opportunity for me to write about the “Financial Performance Analysis of Agrani
Bank PLC”. At the time of preparing this report, I have gone through different research papers
and books which helped me understand the topic more effectively.

Firstly, this is an exclusive instance of professional life I passed and enjoyed in the time of my
internship, which helped me to prepare this report. At first, I would like to unlimited thanks to
the Almighty Allah. And my parents and others members of my family who helped me to reach
at this stage of life. Then I would like to express my sincere gratitude and cordial thanks to
some specific persons who helped me to organize this report and for their kind opinion,
suggestions, instructions, support and appropriate guidelines for this.

Then, I acknowledge with gratitude to my respectable supervisor Mst. Jaba Chakraborty,

Assistant Professor, Department of Business Administration, Anwer Khan Modern University,
who has always been sincere and helpful towards me achieving the completion of this report.
She also helped me to understand the need a “Financial Performance Analysis” in a firm in
Bangladesh and where it lacks. Without her immense knowledge and advice, it would not have
been possible for me to complete this report. I am thankful to her for her continuous support
throughout this internship period.

I would also like to express my heartfelt gratitude to Md. Sabir Ahmed, VP & Manager, for his
advice and knowledgeable thoughts. Under the supervision of Md. Golam Sarwar Qureshi,
Senior Assistant Vice President (Second Manager) of Uttara Model Town Corporate Branch,
Agrani Bank PLC. Who provided me the supreme support for preparing the report as my
supervisor at host organization. I would also like to take this opportunity to thanks Mr. Subal
Chandro Roy, Senior Assistant Vice President & all officers and stuffs of Uttara Model Town
Corporate Branch, Agrani Bank PLC for lending their helping hands whenever necessary.
Without their valuable advice and guidance my internship program would not be so propitious.
I could learn how they manage and deal with 977 branches of Agrani Bank PLC throughout
the country. I am extremely thankful to them for their immense support and guidance.

I would also like to express my heartiest thanks to my uncle Md. Rabiul Hoque, Officer General
of Uttara Model Town Corporate Branch, Agrani Bank PLC. Without his valuable advice and
guidance my internship program would not be so propitious.

Finally, I would also like to thanks to the authority of Department of Business Administration,
Anwer Khan Modern University for their kind co-operation. Thank you all from the core of
my heart. And again, I’m so much appreciative to almighty Allah.

v
 Executive Summary
The Internship report is prepared as requirement of MBA program of Anwer Khan Modern
University. This report is on “Financial Performance Analysis of Agrani Bank PLC”. This
report is intended to assist the reader in detailed understanding the financial performance of a
Bank in the Bangladesh. The purpose of this report is to have an idea about the “Financial
Performance of Bank in the Bangladesh.

This internship report was prepared on the basis of financial performance from 2014 to 2018
of Agrani Bank PLC. Agrani Bank, established under the 1972 Bangladesh Banks
(Nationalization) Order, became a State-owned Commercial Bank on May 17, 2007, and
transitioned to Agrani Bank PLC on July 1, 2007.

Governed by a Board of Directors, the bank operates 977 branches and leads in technology
with real-time online banking. It has five subsidiaries in merchant banking, SME financing,
and remittance services in Singapore, Malaysia, and Canada.

Agrani Bank was the first state-owned bank in Bangladesh to introduce Agent Banking, with
567 agent booths in rural areas. It also offers Islamic Banking through 60 windows since 2010,
demonstrating its commitment to serving the nation.

First Chapter introduces the report. It discusses the background of the study, the statement of
the problems, the scope, objectives, research questions, hypotheses, and the significance of the
study. The primary objective of the report is to analyze the financial performance of Agrani
Bank PLC.

In Chapter Two provides a comprehensive profile of Agrani Bank PLC, including its mission,
vision, culture, core values, and activities. It delves into the organization's history, governance,
branch network, subsidiaries, innovations, services, historical milestones, challenges,
controversies, recent developments, and commitment. The chapter also presents the bank's
current status, technological advancements, Islamic banking, recent financial performance,
strategic initiatives, CSR activities, and outlook.

In Chapter Three covers the theoretical aspects of financial performance analysis. It defines
financial statements, discusses the various types of financial statements, and explores different
tools for statement analysis, including financial ratio analysis, common size analysis,
comparative analysis, trend analysis, and financial distress. This chapter also emphasizes the
importance of these analyses.

In Chapter Four focuses on the financial statement analysis of Agrani Bank PLC. It includes
trend analysis of the balance sheet and profit and loss account, vertical and horizontal analysis
of these statements, ratio analysis, asset portfolio, future plans for increasing remittance
business, and appropriation of profit. The data analysis and evaluation are presented through
detailed charts and graphs.

In Chapter Five presents the findings of the study, including both positive and negative aspects.
It offers recommendations based on these findings and concludes the report. The chapter also
highlights the contributions and limitations of the study.

vi
Finaly, Chapter Six lists the references used in the report, including reports, books, and
websites, and provides an appendix with examples, calculations, and tables for detailed data
analysis and evaluation.

vii
 Table of Content

Page No.
Particular
Letter Of Transmittal ii
Letter of Acceptance iii
Declaration iv
Acknowledgement v
Executive Summary vi-vii
Table of Content viii-x
Chapter – 1
Introduction to the Report
1.1 Background of the study 2
1.2 Statement of the problems 2
1.3 Scope of the study 2
1.4 Objectives of the study 3
1.5 Research questions of the study 3-4
1.6 Hypothesis of the study 4
1.7 Significance of the study 4
1.8 Methodology 5
1.9 Constraints of the Study 5
Chapter - 2
Profile of the organization
2.1 Organization overview Of Agrani Bank PLC 7
2.2 History of Agrani Bank PLC 7-9
2.3 Profile of Agrani Bank PLC 9
2.4 Vision 10
2.5 Mission 10
2.6 Qualities 10
2.7 Motto of the bank 10
2.8 Corporate Information of Agrani Bank PLC 10
2.8.1 Governance: 10
2.8.2 Branch Network: 11

viii
 2.8.3 Subsidiaries: 11
2.8.4 Innovations and Services: 11
2.8.5 Historical Milestones: 11
2.8.6 Challenges and Controversies: 11
2.8.7 Recent Developments: 12
2.8.8 Commitment: 12
2.9 Status of Agrani Bank PLC 12
2.9.1 Current Overview: 12
2.9.2 Network and Reach: 12
2.9.3 Technological Advancements: 12
2.9.4 Islamic Banking: 13
2.9.5 Subsidiaries: 13
2.9.6 Recent Financial Performance: 13
2.9.7 Challenges and Regulatory Scrutiny: 13
2.9.8 Strategic Initiatives: 13
2.9.9 Recent Appointments and Developments: 13
2.9.10 Corporate Social Responsibility (CSR): 14
2.9.11 Outlook: 14
2.10 Principal Activities of Agrani Bank PLC 14-16
2.11 SWOT Analysis of Agrani Bank PLC 16
2.11.1 Strengths: 16-17
2.11.2 Weaknesses: 17
2.11.3 Opportunities: 17
2.11.4 Threats: 17-18
2.11.5 Products of Agrani Bank PLC: 18-21
Chapter - 3
Theoretical Aspect Of Financial Performance Analysis
3.1 Definition of Financial Statement 23
3.2 Types of Financial Statements 23
3.3 Discuss different tools for measuring statement analysis 23
3.4 Financial Ratio analysis 24
3.5 Common Size Analysis OR vertical analysis 24
3.6 Comparative analysis or Horizontal analysis 25
3.7 Importance of Common Size Analysis 25
3.8 Trend Analysis 26
3.9 Importance of Trend Analysis 26

ix
3.10 Financial Distress 26
3.11 Formula of Financial Distress 26-27

Chapter – 4
Financial Statement Analysis
4.1 Trend Analysis (Balance Sheet) Agrani Bank PLC 29-31
4.2 Trend Analysis (Profit And Loss Account) Agrani Bank PLC 32-34
4.3 Vertical Analysis (Balance Sheet) Agrani Bank PLC 34
4.4 Vertical Analysis (Profit And Loss Account) Agrani Bank PLC 37-40
4.5 Horizontal Analysis (Balance Sheet) Agrani Bank PLC 40-43
4.6 Horizontal Analysis (Profit And Loss Account) Agrani Bank PLC 43-46
4.7 Ratio Analysis (Agrani Bank PLC) 46-56
4.8 Asset Portfolio 56-57
4.9 Future plan for increasing remittance business: 57
4.10 Appropriation of profit 57-58

Chapter – 5
Findings, Recommendations And Conclusion
5.1 Findings 60
5.1.1 Positive Findings: 60
5.1.2 Negative Findings: 60
5.2 Recommendations 61
5.3 Conclusion 61-62

Chapter – 6
Reference
1. Report,
2. Books,
64
3. Websites.

x
 CHAPTER – 1

Introduction to the Report

1
Introduction
So as to support the homeroom information it is important to go into the corporate world. This
is where an understudy can pick up hands-on information, experience of the down to earth and
expert world. In this manner we are required to attempt an entry level position program in any
working association.
For the fruition of this internship program, I have picked a bank named “Agrani Bank PLC”
which allowed me the chance to increase knowledge on how a bank works in all actuality.

1.1 Background of the study

The internship program is an essential part of to obtain a Masters of Business Administration
(MBA) from Anwer Khan Modern University. Each student must meet the required credit
hours, then they are placed for observing a specific situation in a real workplace and to guide
him to prepare their internship report, an honorable supervisor always guides the students to
prepare their report well. I feel myself lucky that I got an opportunity to work in a renowned
firm, Agrani Bank PLC as an intern. While working inside the bank, I decided to prepare my
internship report on the “Financial Performance Analysis of Agrani Bank PLC”.

Banking scheme has transformed and nowadays banks are obligated to contest in the market
with native associations as well as overseas ones. Surviving in such a competitive banking
atmosphere, two vital necessities are enhancement of suitable monetary infrastructure by the
Central bank and Enhancement of proficiency such that of emerging a proper workforce
construction and its proficiency and experience. The fact that it is vital for the bank to have
Enhanced management and a well-trained workforce in the vigorous international market is
inevitable. Bangladesh is not an exception of this trend. Banking in Bangladesh is meeting
complications from many ways via its prospect is upbeat in the long run.

1.2 Statement of the problems

Analyzing financial performance is the process of evaluating the common parts of financial
statements to obtain a better understanding of firm’s position and performance. Financial
performance analysis enables the investors and creditors evaluate past and current performance
and financial position, and to predict future performance.

Financial statement is used to judge the profitability and financial soundness of a firm. In this
study, an attempt is made to identify the financial strength and weakness of the firm by properly
establishing relationship between the items in the balance sheet and profit and loss account of
Agrani Bank PLC.

1.3 Scope of the study

I have tried to evaluate the financial performance of Agrani Bank PLC. The evaluation is based
on last five years (2014-2018) financial performance of the bank. The report contains the
analysis of bank’s Capital adequacy, Asset quality, Management efficiency, Earnings ability
and Liquidity. I have also compared its performance on last five years from 2014 to 2018.

 Information availability.
 Good communication system.
 Have a wide area of gaining knowledge.
 Good working environment.

2
1.4 Objectives of the study
This paper has been arranged via broad conversations with personnel of the bank and with the
clienteles.

 The objectives of the study are as follows:

 To classify the pattern of the several categories of loan schemes.
 Loan features and Advance systems of some loan schemes with introduction of some
new schemes with special elements.
 To appraise the contribution of Scheme deposits in overall collection of loan.
 Critically examine the utilities & the processes of each level of the organization of the
 Agrani Bank PLC.

1.5 Research questions of the study

Financial performance refers to the achievement of financial objectives and is an important
aspect of financial performance. It is the process of monetary measurement of the results of a
company’s policies and operations. It is used to measure the overall financial health of the
business over a given period and can also be used to compare similar businesses in the same
sector or to compare industries or sectors.

Try to answer important questions such as:

 What is the financial position of the Agrani Bank PLC?
 What is the financial performance of the Agrani Bank PLC over a given period?
 What is the financial performance of last five years of the Agrani Bank PLC?
 Compare of financial performance on last five years (2014-2018) of the Agrani Bank
PLC?

These queries can be solved using a financial analysis of a company. Financial analysis
involves the use of financial statements. A financial statement is a collection of data organized
according to logical and consistent accounting procedures. Its purpose is to understand certain
financial aspects of a commercial enterprise. It is possible to visualize a position during a given
period, as in the case of a balance sheet, or to reveal a series of activities for a certain period,
as in the case of an income statement. As a result, the term "balance sheet" generally refers to
two fundamentals: the balance sheet and the income statement.

The financial balance sheet indicates the financial condition (condition) of the company at a
given time. Provides a snapshot that can be considered a static image. "The financial statements
are a summary of a company's financial position at a given date, showing total assets = total
liabilities + owner's capital". The income reflects the performance of the company over a given
period. "The income statement is a summary of the income and expenses of the business in a

3
given period, which ends with the net profit or loss of the period." Anyways, financial
statements do not reveal all the information about a company's financial transactions, but they
provide extremely useful information that highlights two important factors: profitability and
financial strength.

1.6 Hypothesis of the study

Bangladesh is one of the underdeveloped country in the world. Her socio-economic
development hinges upon rural development, 85% of its total population being dispersed in
88,000 villages and about 50% living below the poverty line. The literacy rate in the republic
is very minimal; thereby the expertise of the workforce is also near to the ground. So,
entrepreneurship is vital for Bangladesh and also important for productive investment, which
in return contributes to capital formation. It is a strategy element between productive
investment and capital formation. Government of Bangladesh the Central Bank have
commenced several loan agendas for the progress of small-scale industries. Agrani Bank PLC
provides loan to those countryside folks who are socially, economically and governmentally
diffident and in desperate need of having credit and who normally linger outside the circle of
the customary Banking systems. The current analysis has been undertaken with a scenario to
general events of Agrani Bank PLC particularly in “General Banking Events and loan and
advance of Agrani Bank PLC.”

1.7 Significance of the study

The significance of this report is so much because it’s a first real world experience of a student
for future reference. It will include the analysis of Bangladesh Banking Industry, Financial
performance analysis of Agrani Bank PLC and my personal internship experience. It will also
include some recommendations for Agrani Bank PLC and some for my self-improvement.
Again, through this report I want to see my own performance what I have knowledgeable and
to present that in my report. This report has another significance that to have a great knowledge
through study during preparation of the report. As a whole, this report is very important.
Another thing is by the help of this report the author will get an chance to bring his opinion in
front of the reader and also get a feedback whether the presentation of the information was
good or not. There is also another significance of the report which is to give a sound knowledge
about the banking industry, Agrani Bank PLC and internship experience of the author to the
reader. The main thing is when the reader would see the topic he can meet some sound
knowledge of that particular topic from the beginning of the report till the end. This report will
present the entire situation from the view point of the author. So, this report is also significant
because of the readers.

1.8 Methodology:
To conduct this report, collected from two types of sources. Data has been collected through
different sources like face-to-face interviews, phone recording and other different circular
published by the Agrani Bank PLC.

4
 1. Primary sources.
2. Secondary sources.

1. Primary sources:
 Information gathered by working with banking group.
 Information gathered by Senior Assistant Vice President, Senior Manager & all officers
and stuffs of Uttara Model Town Corporate Branch.
 Information gathered by talking clients.
 Information gathered by seeing during working period.

2. Secondary Sources:
 Annual report of Agrani Bank PLC
 Different composed record of Agrani Bank PLC.
 Information gathered from web.
1.9 Constraints of the Study:

 Limited of time, the information may not have been completely perfect.
 The source of data and information was not sufficient to fulfil all the requirement
of the project.
 Constrained obligation because of absence of my handy information, which
restricted the extent of knowing and understanding the entire procedure of bank.

5
 CHAPTER - 2

Profile of the organization

6
2.1 Organization overview Of Agrani Bank PLC
Agrani Bank emerged as a Nationalized Commercial Bank following the Bangladesh Banks
(Nationalization) Order 1972 vide President’s Order No. 26 of 1972 under which former Habib
Bank Limited and Commerce Bank Limited and renamed as Agrani Bank. The Bank was
incorporated as a State-owned Commercial Bank on 17 May 2007 under the Companies Act
1994. On a going concern basis, Agrani Bank PLC took over the business, assets, liabilities,
rights and obligations of Agrani Bank through a vendor’s agreement signed on 15 November
2007 between the Ministry of Finance of the People’s Republic of Bangladesh and the Board
of Directors of AGRANI BANK PLC with retrospective effect from 01 July, 2007.

Agrani Bank PLC is governed by the Board of Directors consisting of chairman, 5 Directors
and MD & CEO at present. The Bank is headed by the Managing Director & Chief Executive
Officer; Managing Director is assisted by Deputy Managing Directors and General Managers.
The bank has 11 Circle offices, 53 zonal offices and 37 Divisions in head office. AGRANI
BANK PLC has been able to create 977 branches including 36 corporate, 43 AD (authorized
dealer) branches widely distributed and is a technology pioneer, with all branches providing
real time online banking. We also have five subsidiaries: a merchant bank, a small and medium
sized enterprises (SMEs) financing company and remittance house in Singapore, Malaysia and
Canada.

Agrani Bank PLC is the First state-owned Commercial Bank in Bangladesh to introduce Agent
Banking. Currently AGRANI BANK PLC has 567 agent booths who are operating Agent
Banking activities around the rural areas of Bangladesh. In Agrani Bank PLC, Islamic Banking
system is operated under 'Islamic Banking Unit' since February 28, 2010. Currently Islamic
banking system is being operated through 60 windows. Agrani Bank PLC Committed to
serving the nation.

2.2 History of Agrani Bank PLC

Agrani Bank PLC was established on 26 March 1972 by combining two abandoned Pakistani
banks, Commerce Bank and Habib Bank. The bank is fully owned by the Government of
Bangladesh. M. Fazlur Rahman was the first managing director of the bank. Agrani Bank is
governed by a board of directors consisting of 12 members headed by a chairman.
In 1995, Agrani Bank installed the first Automated teller machine in Bangladesh at the Jatiya
Press Club.

In 2006, Purbo Banglar Communist Party, demanded toll from six branches of Agrani Bank. In
2007, Agrani Bank, led by chairperson Siddiqur Rahman Choudhury, along with two other
state owned banks, Sonali Bank Limited and Janata Bank Limited, were made into public
limited companies.

As of 2009, the bank has 11 Circle offices, 34 Divisions in head office, 62 zonal offices and
941 branches including 27 corporate and 40 AD (authorized dealer) branches. Agrani Bank
also has
remittance houses in Singapore, Malaysia and Canada. It has been corporatized on 15
November 2007 and emerged as Agrani Bank PLC (AGRANI BANK PLC) taking over assets,

7
liability and goodwill of Agrani Bank. The authorized capital of the bank was Tk 8 billion. It
is also the owner of the Agrani Bank PLC football club and Agrani Bank Cricket Club.

Khandaker Bazlul Haque, president of Dhaka University Teachers' Association, was appointed
chairman of Agrani Bank in September 2009. Syed Abdul Hamid was appointed managing
director of Agrani Bank in July 2010.

An audit in 2013 by Office of Comptroller and Auditor General found that Agrani Bank had
28.85 billion taka in loses due to improper lending.

In November 2014, Zaid Bakht, research director of Bangladesh Institute of Development

Studies, was appointed chairman of Agrani Bank.

In 2015, Agrani Bank re-appointed Syed Abdul Hamid managing director; a post he held since
2014. Agrani Bank branch in Jessore District was robbed of 2.1 million armed robbers.

In June 2016, Syed Abdul Hamid, the managing director of Agrani Bank was removed by
Bangladesh Bank for providing 7.92 billion taka worth of loans against rules. Deputy
Managing Director Mizanur Rahman Khan was arrested by Anti-Corruption Commission of
Bangladesh. Khan was arrested hours after the Ministry of Finance appointed him acting
managing director of the bank along with two other officials.

Following these removals, Mohammad Shams-Ul Islam was appointed the new managing
director in August 2016. Upon his appointment, Islam immediately set in place a 100 Day
Roadmap to recalibrate bank objectives, emphasizing growth and innovation in product
offerings. By December 2016, the bank reported a 300% growth in operating profit, to Tk. 5.5
billion. The parliamentary standing committee on Estimate formed an investigation committee
led by Yusuf Abdullah Harun to look into the loans following a report by Bangladesh Bank
which found widespread irregularities at the bank. The other two members of the investigation
committee were Sheikh Fazle Noor Taposh and Waseqa Ayesha Khan. Bangladesh Securities
and Exchange Commission approved Agrani Banks request to form a billion-taka mutual fund.

Anti Corruption Commission of Bangladesh filled charges against Mizanur Rahman Shaheen
and his brother, Mujibur Rahman Milon, for embezzling more than 1.4 billion taka from the
bank in

March 2018. They are believed to have fled Bangladesh for Canada and Singapore. Former
manager of the bank, Nibaran Chandra Tanchangya, was arrested for embezzling money from
the Bandarban District branch. It has a branch in Canada which is loss making concern for the
bank.

In December 2020, Zaid Bakht was re-appointed chairman of Agrani Bank for a third time in
a row. In November 2021, Agrani Bank was identified as a weak bank due to 24.63-billion-
taka shortfall. Haji Selim, member of parliament from Awami League, had grabbed land
belonging to Agrani Bank in Moulvibazar, Old Dhaka which he had claimed since 2003. The
8
bank was able to recover the land in 2020 but the building was demolished by Haji
Selim. Bangladesh
bank had discovered an irregular loan by Agrani Bank for 350 million taka to Style craft
Limited. Bangladesh Bank also fined Agrani Bank for proving loan to a known defaulter, Swiss
Quality Paper, subsidiary of the Tanaka Group, with "undue privilege".

Agrani Bank was the lone supplier of foreign exchange to the Padma Bridge construction
project and had paid more than 1.2 billion USD to suppliers and contractors. Anti-Corruption
Commission began an investigation against the managing director of the bank, Mohammad
Shams-Ul Islam, in February 2022. In August 2022, Md Murshedul Kabir, was appointed
Managing Director of Agrani Bank replacing Mohammad Shams-Ul Islam. SWIFT asked
Agrani Bank to suspend all transaction with Russia following the Russian invasion of Ukraine.
Bangladesh Bank fined Agrani bank for failure to recover loan from Dolly Construction
Limited.

2.3 Profile of Agrani Bank PLC

Name Agrani Bank PLC

Logo

Established 26 March 1972

Address 9/D Dilkusha Commercial Area,

Dhaka - 1000, Bangladesh.
PBX Range: 880-2) 9566153-54,
9566160-69,9566074-75
Fax: (+8802) 956 2346, 956 3662
Chairmen Dr. Zaid Bakht

CEO Md. Murshedul Kabir

Number of the branch 977

Capital Structure Authorized Capital: 2500 core

Paid up Capital: 2072 core

9
2.4 Vision
To work morally and decently inside the stringent structure set by our controllers and to
acclimatize thoughts and exercises from best practices to improve our business strategies and
methodology to the advantage of our clients and representatives.

2.5 Mission
To turn into the best driving state claimed business bank of Bangladesh working at global
degree of proficiency, quality, sound administration, astounding client support and solid
liquidity.

2.6 Qualities
We esteem in uprightness, straightforwardness, responsibility, respect, assorted variety,
development and polished skill to give significant level of administration to every one of our
clients and partners inside and outside the nation.

2.7 Motto of the bank

“COMMITTED TO SERVE THE NATION.”

2.8 Corporate Information of Agrani Bank PLC

Legal Status and Formation: Agrani Bank PLC was established as a Nationalized Commercial
Bank following the Bangladesh Banks (Nationalization) Order 1972 (President’s Order No. 26
of 1972), merging former Habib Bank Limited and Commerce Bank Limited under the name
Agrani Bank. The bank was incorporated as a State-owned Commercial Bank on May 17, 2007,
under the Companies Act 1994. Subsequently, on November 15, 2007, through a vendor’s
agreement between the Ministry of Finance of the People's Republic of Bangladesh and the
Board of Directors of Agrani Bank, the business, assets, liabilities, rights, and obligations were
transferred to Agrani Bank PLC retroactively effective from July 1, 2007.

2.8.1 Governance:
Agrani Bank PLC is governed by a Board of Directors, which includes a Chairman, five
Directors, and the Managing Director & CEO. The operational management of the bank
is headed by the Managing Director & CEO, supported by Deputy Managing Directors
and General Managers. The bank's administrative structure includes 11 Circle offices, 53
Zonal offices, and 37 Divisions at the head office.

10
2.8.2 Branch Network:
Agrani Bank PLC has a vast network of 977 branches, including 36 corporate branches
and 43 Authorized Dealer (AD) branches, all of which provide real-time online banking
services.

2.8.3 Subsidiaries:
The bank has five subsidiaries focusing on various financial services, including a
merchant bank, a small and medium-sized enterprises (SMEs) financing company, and
remittance houses in Singapore, Malaysia, and Canada.

2.8.4 Innovations and Services:

Agrani Bank PLC is a pioneer in technology among state-owned commercial banks in
Bangladesh. It was the first to introduce Agent Banking, currently operating 567 agent
booths to provide banking services in rural areas. The bank also operates an Islamic
Banking Unit, which has been functional since February 28, 2010, and currently manages
Islamic banking services through 60 windows.

2.8.5 Historical Milestones:

 1972: Agrani Bank was formed by merging Commerce Bank and Habib Bank.
 1995: Installed the first Automated Teller Machine (ATM) in Bangladesh at the
Jatiya Press Club.
 2007: Transformed into Agrani Bank PLC and corporatized.
 2016: Achieved a significant turnaround under the leadership of Mohammad
Shams-Ul Islam, with a 300% growth in operating profit by the end of the year.

2.8.6 Challenges and Controversies:

 The bank has faced issues with improper lending and loan recovery, highlighted by
various audits and investigations.
 There have been notable incidents involving demands from extremist groups,
fraudulent activities by bank officials, and significant loan defaults.
 Despite these challenges, Agrani Bank PLC continues to play a vital role in
Bangladesh's financial sector, notably as the sole foreign exchange supplier for the
Padma Bridge construction project.

11
 2.8.7 Recent Developments:
 2020: Zaid Bakht was reappointed as Chairman for the third consecutive term.
 2022: Md Murshedul Kabir was appointed as the new Managing Director.
 The bank remains under scrutiny by regulatory bodies such as the Anti-Corruption
Commission for its lending practices and management decisions.

2.8.8 Commitment:
Agrani Bank PLC remains committed to serving the nation with a focus on innovation,
transparency, and customer-centric services, aiming to strengthen its position as a
leading state-owned commercial bank in Bangladesh.

2.9 Status of Agrani Bank PLC

2.9.1 Current Overview:
Agrani Bank PLC stands as one of the leading state-owned commercial banks in
Bangladesh, continuing its legacy since its inception in 1972. The bank operates under the
governance of a Board of Directors and is helmed by the Managing Director & CEO,
supported by a strong team of Deputy Managing Directors and General Managers.

2.9.2 Network and Reach:

The bank boasts an extensive network with:

 977 branches: Including 36 corporate branches and 43 Authorized Dealer (AD)

branches.
 11 Circle offices
 53 Zonal offices
 37 Divisions at the head office

2.9.3 Technological Advancements:

Agrani Bank PLC is a pioneer in technological integration among state-owned banks in
Bangladesh. All its branches provide real-time online banking services. The bank has also
been a forerunner in introducing Agent Banking, with 567 agent booths operating in rural
areas to ensure financial inclusion.

12
2.9.4 Islamic Banking:
The bank operates an Islamic Banking Unit since February 28, 2010, which currently
functions through 60 dedicated windows, catering to customers seeking Sharia-compliant
banking services.

2.9.5 Subsidiaries:
Agrani Bank PLC has diversified its services through five subsidiaries:
 A merchant bank
 A small and medium-sized enterprises (SMEs) financing company
 Remittance houses in Singapore, Malaysia, and Canada

2.9.6 Recent Financial Performance:

Despite facing significant challenges, the bank has shown resilience and a capacity for
turnaround. In 2016, under the leadership of the then Managing Director Mohammad
Shams-Ul Islam, the bank reported a 300% growth in operating profit, reaching Tk. 5.5
billion by year-end.

2.9.7 Challenges and Regulatory Scrutiny:

The bank has encountered several issues over the years, including improper lending
practices and difficulties in loan recovery, which have attracted regulatory scrutiny and
interventions from bodies like the Anti-Corruption Commission and Bangladesh Bank.
Notable incidents include:
 2013: An audit revealed Tk. 28.85 billion in losses due to improper lending.
 2016: The removal of the Managing Director and arrests of senior officials for irregular
loan disbursements.

2.9.8 Strategic Initiatives:

Agrani Bank PLC has been involved in significant national projects, such as being the sole
supplier of foreign exchange for the Padma Bridge construction project, disbursing over
1.2 billion USD to suppliers and contractors
.
2.9.9 Recent Appointments and Developments:
 2020: Zaid Bakht was reappointed as Chairman.

13
 2022: Md Murshedul Kabir became the Managing Director, succeeding Mohammad
Shams-Ul Islam.
2.9.10 Corporate Social Responsibility (CSR):
Agrani Bank PLC is committed to various CSR initiatives, focusing on education,
healthcare, and disaster relief, contributing to the socio-economic development of
Bangladesh.

2.9.11 Outlook:
Agrani Bank PLC aims to maintain its leadership in the banking sector through continuous
innovation, expanding its reach, improving service quality, and ensuring financial stability
and compliance with regulatory standards. Despite past challenges, the bank is poised for
growth, leveraging its vast network and technological advancements to serve the diverse
needs of its customers.

2.10 Principal Activities of Agrani Bank PLC

Agrani Bank PLC engages in a broad range of banking and financial services aimed at
meeting the diverse needs of its customers, contributing to national economic growth, and
fostering financial inclusion. The principal activities of the bank include:

1. Retail Banking:
 Deposits: Offering various deposit products such as savings accounts, current accounts,
fixed deposits, and recurring deposits.
 Loans and Advances: Providing personal loans, home loans, car loans, education
loans, and other consumer credit facilities.

2. Corporate Banking:
 Corporate Loans: Extending credit facilities to large corporate clients, including
working capital loans, term loans, project finance, and trade finance.
 Cash Management Services: Offering solutions for efficient cash flow management
and liquidity optimization for corporate clients.

3. Small and Medium Enterprises (SME) Banking:

 SME Loans: Providing tailored financial solutions to small and medium-sized
enterprises, including term loans, working capital finance, and trade finance.
 Advisory Services: Offering business advisory services to support SME growth and
development.

14
4. International Banking:
 Foreign Exchange Services: Facilitating currency exchange, remittances, and trade
finance solutions such as letters of credit and bank guarantees.
 Remittance Services: Operating remittance houses in Singapore, Malaysia, and
Canada to facilitate the transfer of funds for expatriates.

5. Agent Banking:
 Financial Inclusion: Operating 567 agent booths to extend banking services to rural
and underserved areas, providing deposit and withdrawal services, remittances, and
other basic banking facilities.

6. Islamic Banking:
 Sharia-compliant Services: Offering a range of Islamic banking products through 60
dedicated windows, including Mudarabah savings accounts, Ijarah financing, and other
Sharia-compliant investment opportunities.

7. Digital Banking:
 Online Banking: Providing internet banking services for convenient access to account
information, fund transfers, bill payments, and other banking transactions.
 Mobile Banking: Offering mobile banking solutions for banking on-the-go, including
balance inquiries, fund transfers, and mobile top-up services.

8. Treasury and Investment Banking:

 Treasury Operations: Managing the bank’s liquidity, interest rate, and foreign
exchange risks, including investment in government securities, bonds, and other
financial instruments.
 Investment Services: Providing investment advisory services and managing portfolios
for individual and institutional clients.

9. Agricultural Banking:
 Agricultural Loans: Offering specialized loan products to support the agricultural
sector, including crop loans, equipment financing, and agro-based industry financing.

15
10. Subsidiaries and Specialized Services:
 Merchant Banking: Through its subsidiary, Agrani Bank provides merchant banking
services including portfolio management, underwriting, and advisory services.
 SME Financing Company: Dedicated to providing financial services tailored to the
needs of small and medium-sized enterprises.
 International Remittance Services: Facilitating remittance services through its
branches and subsidiaries abroad.

11. Corporate Social Responsibility (CSR):

 Community Development: Engaging in various CSR activities focused on education,
healthcare, disaster relief, and environmental sustainability to contribute to the socio-
economic development of the country.

Agrani Bank PLC is committed to delivering comprehensive banking solutions, leveraging

its extensive network, technological advancements, and diversified services to meet the
evolving needs of its customers and support the economic development of Bangladesh.

2.11 SWOT Analysis of Agrani Bank PLC

2.11.1 Strengths:
1. Good Management: The bank is governed by a competent and experienced Board of
Directors and a strong executive team, ensuring effective oversight and strategic
direction.
2. Moderately Competitive Lending Rate: The bank offers competitive lending rates,
making its loan products attractive to borrowers.
3. Cooperation and Teamwork: There is a strong culture of cooperation and teamwork
among employees, which enhances productivity and service delivery.
4. Good Financier-Client Relationship: The bank maintains strong and positive
relationships with its clients, fostering loyalty and repeat business.
5. Strong Financial Position: Agrani Bank has a robust financial standing, which
provides stability and confidence to stakeholders.
6. Reasonable Service Charges: The bank's service charges are competitive, making it a
cost-effective option for customers.
7. Strong Corporate Identity: Agrani Bank has a well-established brand and corporate
identity, which enhances its reputation and market presence.

16
8. Young and Eager Workforce: The bank benefits from a young, dynamic, and
enthusiastic workforce, which drives innovation and customer service.
9. Empowered Workforce: Employees are empowered to make decisions, which
improves efficiency and responsiveness to customer needs.
2.11.2 Weaknesses:
1. Lack of Proper Motivation, Training, and Work Ethic: There is a need for better
employee motivation, training programs, and a stronger work ethic.
2. Lack of Experienced Representatives in Junior Management: The bank faces a
shortage of experienced personnel in junior management roles, impacting operational
effectiveness.
3. Lack of Proprietary ATM Services: Agrani Bank does not have its own ATM
network, limiting convenience for its customers.
4. Employee Attrition: There is a tendency for employees to leave the bank in search of
more flexible working conditions.
5. Limited Product and Service Range: The bank's range of products and services is
limited compared to competitors, affecting its market competitiveness.
6. Weak Marketing Activities: There is an absence of strong marketing efforts, which
hampers the bank's ability to attract new customers and retain existing ones.
7. Subpar Office Environment: The physical office conditions are not on par with those
of private banks, potentially affecting employee morale and customer perceptions.
8. High L/C Charges: The bank charges high fees for letters of credit, which could deter
potential clients.
2.11.3 Opportunities:
1. Growth of Sales Volume: There is potential to increase the volume of sales through
targeted marketing and improved product offerings.
2. Political Stability: Positive changes in the political landscape can create a more
favorable business environment, benefiting the bank.
3. Launching Own ATM Card Services: Introducing proprietary ATM card services
can enhance customer convenience and reduce reliance on third-party ATMs.
4. Expansion of Banking Services: There is an opportunity to diversify and expand
banking services into new areas, such as digital banking, wealth management, and
insurance.
2.11.4 Threats:
1. Competition from New Banks/Branches: The emergence of new banks and branches
increases competition, potentially eroding Agrani Bank's market share.

17
 2. Innovative Services from Foreign and Private Banks: Services such as phone
banking and home banking offered by foreign and private banks pose a competitive
threat.
3. Similar Products Offered by Competitors: The availability of similar banking
products from other banks can lead to increased competition and price wars.
4. Default Loans: The risk of loan defaults remains a significant threat, impacting the
bank's financial health and profitability.
5. Financial Crises: Economic downturns and financial crises can adversely affect the
bank's operations and customer base.
6. Existing Card Services from Competitors: The established card services of
competitors like Standard Chartered Bank and other private banks present a challenge
to Agrani Bank's card offerings.

2.11.5 Products of Agrani Bank PLC:

I. Deposit Product:

1. Deposit Accounts
 Current Deposit (CD)
 Savings Deposit
 Special Noticed Time Deposit (SNTD)
 Non-Resident Special Taka Account (NRTA)
 Non-Resident Investors Taka Account (NRIT)
 Students Savings A/C (School Banking)
 Small Life Insurance Policy Holders A/C
 Ten Taka Farmers A/C
 Freedom Fighters A/C
 Fixed Deposit (FDR)

1. Deposit Scheme:
 Agrani Bank Pension Scheme (APS)
 Agrani Bank Bishesh Shanchay Scheme (ABS)
 Agrani Bank Quarterly Income Scheme
 Agrani Bank Double Benefit Scheme
 Agrani Bank Millionaire Deposit Scheme
 Agrani Bank Lakhpoti Deposit Scheme
 Agrani Bank Prabash Deposit Scheme
 Agrani Bank Deposit Scheme for Women

1. (FC)Foreign Currency Account:

 Foreign Currency A/C (FC)
 Non-Resident Foreign Currency Deposit A/C (NFCD)

18
  Resident Foreign Currency Deposit A/C (RFCD)
 Exporters Retention Quota A/C

1. Import Finance:
 Loan Against Imported Merchandise
 Loan Against Trust Receipt
 Payment Against Document

2. Export Finance:
 Export Cash Credit
 Packing Credit
 Local/ Foreign Bills Purchased
 Loan Against Export Development Fund

1. Loans & Advances:

1. Continuous Loan:
 Cash Credit
 Secured Overdraft

1. Term Loan:
 Industrial Credit (IC)
 Housing Loan (General & Commercial)
 Consumer Credit
 Loan for Overseas Employment
 Weavers’ Credit

1. Agriculture Credit:
 Crop Loan
 Fishery Loan
 Animal Husbandry Loan
 Agri Machinery Loan
 Rural Transport Loan

2. Enterprise Loan:
 Service Sector Loan
 Trading Sector Loan
 Manufacturing Sector Loan
 Women Entrepreneurs Loan

3. Treasury:

I. Money Market:
 Maintaining CRR & SLR

19
  Treasury Bills
 Treasury Bonds
 Secondary Trading of Govt. Securities
 Repo
 Reverse Repo
 Other Investments

II. Foreign Exchange Market:

 Selling Foreign Currency for Import Payment
 Buying Foreign Currency against Export Proceeds
 Fixation of Exchange Rate
 Foreign Currency Buying and Selling
 SWAP Transactions
 Forward Transaction
 Term Placement

III. Letter of Credit:

 Letter of Credit- Sight
 Back-to-Back L/C

2.6.2 Services of Agrani Bank PLC:

1. Value Service:
 Locker Service
 Utility Bill Collection
 Arm Forces Pension Payment

2. Cash Service:
 ATM Service
 Cheque Encashment
 Foreign Currency

3. Islamic Banking Service:

I. Deposit
 Mudaraba Savings A/C
 Mudaraba Hajj Savings Scheme
 Mudaraba Term Deposit
 Mudaraba Mohor Savings Scheme

i. Investments:
 Bai Murabaha
 Bai Muazzal
 Bai Sal

20
4. Other Foreign Exchange Service:
 Documentary Bill Collection
 Advanced Payment for Import & Export
 Foreign Remittance (incoming & Outgoing)
 Issuance of Draft, TT

21
CHAPTER - 3

Theoretical Aspect Of
Financial Performance
Analysis

22
3.1 Definition of Financial Statement
Financial statements (or Financial Reports) are formal records of the financial activities and
position of a business, person, or other entity.

3.2 Types of Financial Statements

Relevant financial information is presented in a structured manner and in a form which is easy
to understand. They typically include four basic financial statements accompanied by a
management discussion and analysis:

1. A balance sheet or statement of financial position, reports on a company's assets,

liabilities, and owners’ equity at a given point of time.
2. An statement or profit and loss report (P&L report), or statement of comprehensive
income, or statement of revenue & expense reports on a company's income, expenses,
and profits over a stated period of time. A profit and loss statement provides information
on the operation of the enterprise. These include sales and the various expenses incurred
during the stated period.
3. A statement of changes in equity or equity statement, or statement of retained earnings,
reports on the changes in equity of the company over a stated period of time.
4. A cash flow statement reports on a company's cash flow activities, particularly its
operating, investing and financing activities over a stated period of time.

An income statement or profit and loss account is one of the financial statements of a company
and shows the company’s revenues and expenses during a particular period.

It indicates how the revenues are transformed into the net income or net profit the result after
all revenues and expenses have been accounted for. The purpose of the income statement is to
show managers and investors whether the company made or lost money during the period being
reported.

A cash flow statement is known as statement of cash flows, that shows how changes in balance
sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to
operating, investing, and financing activities. Essentially, the cash flow statement is concerned
with the flow of cash in and out of the business. The statement captures both the current
operating results and the accompanying changes in the balance sheet. As an analytical tool, the
statement of cash flows is useful in determining the short-term viability of a company,
particularly its ability to pay bills. International Accounting Standard 7 (IAS 7), is the
International Accounting Standard that deals with cash flow statements.

3.3 Discuss different tools for measuring statement analysis

Financial statement analysis is the process of reviewing and analyzing a company's financial
statements to make better economic decisions. These statements include the income statement,
balance sheet, statement of cash flows, and a statement of changes in equity. Financial

23
statement analysis is a method or process involving specific techniques for evaluating risks,
performance, financial health, and future prospects of an organization.

3.4 Financial Ratio analysis

Financial ratios are dominant tools to perform some quick analysis of financial statements.
There are four main categories of ratios: liquidity ratios, profitability ratios, activity ratios and
leverage ratios. These are typically analyzed over time and across competitors in an industry.

Liquidity ratios are used to determine how rapidly a company can turn its assets into cash if it
understandings financial complications or bankruptcy. It essentially is a measure of a
company's competence to remain in business. A few common liquidity ratios are the current
ratio and the liquidity index. The current ratio is current assets/current liabilities and measures
how much liquidity is available to pay for liabilities.

Profitability ratios are ratios that demonstrate how profitable a company is. A few popular
profitability ratios are the breakeven point and gross profit ratio. The breakeven point calculates
how much cash a company must generate to break even with their startup costs. The gross
profit ratio is equal to gross profit/revenue. This ratio shows a quick portrait of expected
income.

Activity ratios are intended to show how well management is managing the company's
resources. Two common activity ratios are accounts payable turnover and accounts receivable
turnover. These ratios determine how long it takes for a company to pay off its accounts
payable and how long it takes for a company to receive payments, separately

Leverage ratios represent how much a company relies upon its debt to fund operations. A very
common leverage ratio used for financial statement analysis is the debt-to-equity ratio. This
ratio shows the extent to which management is willing to use debt in order to fund operations.

3.5 Common Size Analysis OR vertical analysis

Common size analysis, also referred as vertical analysis, is a tool that financial managers use
to analyze financial statements. It evaluates financial statements by expressing each line item
as a percentage of the base amount for that period. The analysis helps to understand the impact
of each item in the financial statement and its contribution to the resulting figure.

The technique can be used to analyze the three primary financial statements, i.e., balance sheet,
income statement and cash flow statement. In the balance sheet, the common base item to
which other line items are expressed is total assets, while in the income statement, it is total
revenues.

Vertical analysis refers to the analysis of specific line items in relation to a base item within
the same financial period. For example, in the balance sheet, we can measure the proportion of
record by dividing record line using total assets as the base item.

24
3.6 Comparative analysis or Horizontal analysis
Horizontal analysis refers to the analysis of specific line items and comparing it to a comparable
line item in the previous or subsequent financial period. Although common size analysis is not
as detailed as trend analysis using ratios, it does provide a simple way for financial managers
to analyze financial statements.

➢ Balance Sheet Common Size Analysis

The balance sheet common size analysis mostly uses the total assets value as the base value.
On the balance sheet, the total assets value equals the value of total liabilities and shareholders’
equity. A financial manager or investor uses the common size analysis to see how a firm’s
capital structure compares to rivals. They can make important observations by analyzing
specific line items in relation to the total assets.

For example, if the value of long-term debts in relation to the total assets value is too high, it
shows that the company’s debt levels are too high. Similarly, looking at the retained earnings
in relation to the total assets as the base value can reveal how much of the annual profits are
retained on the balance sheet.

➢ Income Statement Common Size Analysis

The base item in the income statement is usually the total sales or total revenues. Common size
analysis is used to calculate net profit margin, as well as gross and operating margins. The
ratios tell investors and finance managers how the company is doing in terms of revenues, and
they can make predictions of the future revenues. Companies can also use this tool to analyze
competitors to know the proportion of revenues that goes to advertising, research and
development and other essential expenses.

3.7 Importance of Common Size Analysis

One of the benefits of using common size analysis is that it permits investors to identify extreme
changes in a company’s financial statement. It mainly applies when the financials are compared
over a period of two or three years. Any significant arrangements in the financials across
several years can help investors decide whether to invest in the company. For example, large
drops in the company’s profits in two or more successive years may indicate that the company
is going through financial distress. Similarly, considerable increases in the value of assets may
mean that the company is implementing an expansion or acquisition strategy, making the
company attractive to investors.

Common size analysis is also an excellent tool to compare companies of different sizes but in
the same industry. Looking at their financial data can reveal their strategy and their largest
expenses that give them a competitive edge over other comparable companies. For example,
some companies may sacrifice margins to gain a large market share, which increases revenues
at the expense of profit margins. Such a strategy allows the company to grow faster than
comparable companies because they are more desired by investors.

25
3.8 Trend Analysis
Trend analysis is a financial statement analysis technique that displays changes in the amounts
of corresponding financial statement items over a period of time. It is a valuable tool to evaluate
the trend circumstances.

The statements for two or more periods are used in horizontal analysis. The earliest period is
usually used as the base period and the items on the statements for all advanced periods are
compared with items on the statements of the base period. The changes are generally shown
both in taka and percentage.

3.9 Importance of Trend Analysis

Trend analysis is required for companies to make financial forecasts.

Trend analysis is significant in the business and financial sectors. Trend analysis is often used
to make projections and assessments of financial health. Financial analysts examine the past
performance of their company, along with current financial circumstances, to determine how
their company will perform in the future. Common trend analysis for most companies is based
on the total dollar basis that most use for financial reporting

3.10 Financial Distress

Financial distress is surprisingly hardtop define precisely. This is true partly because of the
variety of events befalling firms under financial distress. The list of events is almost endless,
but here are some examples:

 Dividend reductions
 Plant closings
 Losses
 Layoffs
 CEO resignations
 Plummeting stock prices

Financial distress is a situation where a firms operating cash flow are not sufficient to satisfy
current obligations (such as trade credits or interest expenses) and the firm forced to take
corrective action.
3.11 Formula of Financial Distress
We know financial distress have two formulas. One formula is for public company or
manufacturing company and another formula is for private or non-manufacturing.
First of all, public or manufacturing company uses formula:

26
Z=3.3(EBIT/TA) +1.2(net working capital/TA) +1(Sales/TA) +.6(MVE/BVA)
+1.4(Accumulate RE/TA)

Abbreviations:

EBIT=earnings before interest tax

TA=total assets

MVE=market value of equity

BVA=book value of equity

RE=retain earnings

NWC=net working capital

Z< 2.675=95 Possibility of bankrupt within one year

Z< 1.81=bankrupt

Z≥ 2.99=non bankrupt

Another formula for private firms and nonmanufacturing company uses:

Z=6.56(NWC/TA) +3.26(Accumulated RE/TA) +1.05 (EBIT/TA) +6.72(BVA/TL)

Abbreviations:

EBIT=earnings before interest tax

TA=total assets

MVE=market value of equity

BVA=book value of equity

RE=retain earnings

NWC=net working capital

TA=total liabilities

Z< 1.23=Bankrupt

Z<2.90=NON bankrupt

1.23≥Z≥2.90=gray area
27
CHAPTER – 4

Financial Statement
Analysis

28
 4.1 Trend Analysis (Balance Sheet) Agrani Bank PLC

Agrani Bank PLC

Balance sheet (Trend Analysis)
Performance of last 5 years
items 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
(base taka taka taka taka (base (%) (%) (%) (%)
year) year)
(
%)
Authorized 2500 2500 2500 2500 2500 100% 100% 100% 100% 100%
capital
Paid-up capital 2072 2072 2072 2072 2072 100% 100% 100% 100% 100%
Reserve fund 1693 1747 1744 1938 2009 100% 103.19% 103.01% 114.47 118.67
% %
Total 3957 4468 3658 4073 4159 100% 112.91% 92.44% 102.93 105.10
shareholder % %
equity
deposits 38392 43998 49405 53035 62193 100% 114.60% 128.69% 138.14 162%
%
Loans and 23509 24480 26587 31912 39575 100% 104.13% 113.09% 135.74 168.34
advances % %
investments 15228 20570 22754 17088 15923 100% 135.08% 149.42% 112.21 104.56
% %
Fixed assets 1545 1595 1578 1556 1478 100% 103.24% 102.13% 100.71 95.66%
%
Total assets 49487 56535 62357 67392 78915 100% 114.24% 126% 136.18 159.47
% %
Total off 8398 9007 8390 12334 16245 100% 107.25% 99.90% 146.87 193.44
balance sheet % %
items
Interest 25031 26265 29115 39708 52014 100% 104.93% 116.32% 158.64 207.80
earning assets % %
Non-interest 24456 30270 33242 27684 26901 100% 123.77% 135.53% 113.20 110%
earning %

29
Trend Analysis (Balance Sheet)

Trend Analysis (Balance sheet)

180.00 168.34%
% 162%
160.00 149.42%
% 1385.174% 135.08%
140.00 128.69%
%
120.00 112.21% 113.09% 1142.901%
% 1054.1506% 1020.9731% 102.13% 1043.234%
100%
95.66%
100.00 92.44%
%

80.00
%

60.00
%

40.00
2018 2017 2016 2015
2014
Investments Loans and advances
Fixed assets Deposits
Total shareholder equity

Interpretations:
1. The above line chart shows that authorized capital and paid-up capital was same every
year, it has not changed. Reserve fund has improved in 2015 to 2018 [103.19%,
103.01%, 114.47%, and 118.67%].
2. Total shareholder equity position in 2015 was very good at 112.91% but it decreases
significantly in 2016 and 2017. Last year, 2018 total shareholders’ equity of bank has
started to increase again. From 2017 to 2018 it has increased by 3.07%.
3. Deposits are increasing at a percentage rate every year. From 2017 to 2018 it has
increased by 23.86%.
4. Loans and advances are increasing in 2014 to 2018 gradually. From 2017 to 2018 it has
increased by 32.6%.
5. The current state of investment is not much better. Investment growth increased in 2015
and 2016. But in 2017 and 2018, the growth level decreased significantly.
6. Fixed assets are decreasing slightly every year. From 2015 to 2018, it has decreased by
6.58%.

30
 Working:

2014(%) 2015 (%) 2016 (%) 2017 (%) 2018 (%) items
100% 2500/2500*100 2500/2500*100 2500/2500*100 2500/2500*100 Authorized
=100% =100% =100% =100% capital
100% 2072/2072*100 2072/2072*100 2072/2072*100 2072/2072*100 Paid-up
=100% =100% =100% =100% capital
100% 1747/1693*100 1744/1693*100 1938/1693*100 2009/1693*100 Reserve
=103.19% =103.01% =114.47% =118.67% fund
100% 4468/3957*100 3658/3957*100 4073/3957*100 4159/3957*100 Total
=112.91% =92.44% =102.93% =105.10% shareholder
equity
100% 43998/38392*100 49405/38392*100 53035/38392*100 62193/38392*100 deposits
=114.60% =128.69% =138.14% =162%
100% 24480/23509*100 26587/23509*100 31912/23509*100 39575/23509*100 Loans and
=104.13% =113.09% =135.74% =168.34% advances
100% 20570/15228*100 22754/15228*100 17088/15228*100 15923/15228*100 investments
=135.08% =149.42% =112.21% =104.56%
100% 1595/ 1545*100 1578/ 1545*100 1556/ 1545*100 1478/ 1545*100 Fixed
=103.24% =102.13% =100.71% =95.66% assets
100% 56535/49487*100 62357/49487*100 67392/49487*100 78915/49487*100 Total assets
=114.24% =126% =136.18% =159.47%
100% 9007/8398*100 8390/8398*100 12334/8398*100 16245/8398*100 Total off
=107.25% =99.90% =146.87% =193.44% balance
sheet items
100% 26265/25031*100 29115/25031*100 39708/25031*100 52014/25031*100 Interest
=104.93% =116.32% =158.64% =207.80% earning
assets
100% 30270/24456*100 33242/24456*100 27684/24456*100 26901/24456*100 Non-
=123.77% =135.53% =113.20% =110% interest
earning

31
 4.2 Trend Analysis (Profit And Loss Account) Agrani
Bank PLC
Agrani Bank PLC
Profit and loss account (Trend Analysis)
Performance of last 5 years

items 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

Interest 2339 2364 2145 2253 3231 100% 101.07% 91.71% 96.32% 138.14%
income
Interest 2221 2294 2062 1818 2339 100% 103.29% 92.84% 81.86% 105.31%
expense
Investment 1301 1495 1561 1469 1203 100% 114.9% 119.98% 112.9% 92.47%
income
Non- 530 428 436 449 388 100% 80.75% 82.26% 84.72% 73.21%
interest
income
Non- 876 1114 1525 1540 1651 100% 127.17% 174.09% 175.80% 188.47%
interest
expense
Total 4170 4286 4142 4171 4822 100% 102.78% 99.33% 100.02% 115.63%
income
Total 3096 3408 3587 3358 3990 100% 110.06% 115.86% 108.46% 128.88%
expenditure

Operating 1074 878 555 813 832 100% 81.75% 51.68% 75.70% 77.47%
profit
Profit 170 (60) (751) 968 350 100% -35.29% - 569.41% 205.88%
before taxes 441.76%

Net profit 199 65 (697) 676 104 100% 32.66% - 339.70% 52.26%
after taxes 350.25%

32
Trend Analysis (Profit And Loss Account)

Trend Analysis (profit and loss account)

400.00
%
339.70%
300.00
%

200.00
% 138.14%
96.32% 91.71%
119.98% 101.07% 100%
112.90% 114.90%
100.00 105.31%
92.47% 92.84%
103.29% 100%
77.47% 81.86%
75.70% 81.75%
%
52.26% 51.68%
32.66%
0.00
% 201 201 201 201 201
8 7 6 5 4
-
100.00%

-
200.00%

-
300.00%
-350.25%

-
400.00%
Interest income Interest expense Investment income
Operating profit Net profit after tax

Interpretations:
1. The current net profit after tax is decreased 287.44% percent over the previous year. In
2016, the bank bared a huge loss of -350.25% but in 2017 it made a huge gain of
339.70%.
2. Operating profit in 2018 is 78.47%, which is 2.27 higher than 2017. But in 2016 the
bank’s operating profit was much lower
3. Investment income has decreased -20.43% last year compared to 2017.
4. Interest income has increased by 41.82% in 2018 compared to 2017.
5. Interest expense has increased by 23.45% in 2018 compared to 2017.

33
Working:
items 2014 2015 2016 2017 2018

Interest 100% 2364/2339*100 2145/2339*100 2253/2339*100 3231/2339*100

income =101.07% =91.71% =96.32% =138.14%
Interest 100% 2294/2221*100 2062/2221*100 1818/2221*100 2339/2221*100
expense =103.29% =92.84% =81.86% =105.31%
Investment 100% 1495/1301*100 1561/1301*100 1469/1301*100 1203/1301*100
income =114.9% =119.98% =112.91% =92.47%
Non-interest 100% 428/530*100 436/530*100 449/530*100 388/530*100
income =80.75% =82.26% =84.72% =73.21%

Non-interest 100% 1114/876*100 1525/876*100 1540/876*100 1651/876*100

expense =127.78% =174.09% =175.80% =188.47%

Total income 100% 4286/4170*100 4142/4170*100 4171/4170*100 4822/4170*100

=102.78% =99.38% =100.02% =115.63%
Total 100% 3408/3096*100 3587/3096*100 3358/3096*100 3990/3096*100
expenditure =110.06% =115.86% =108.46% =128.88%
Operating 100% 878/1074*100 555/1074*100 813/1074*100 832/1074*100
profit =81.75% =51.68% =75.70% =77.47%
Profit before 100% (60)/170*100 (751)/ 170*100 968/170*100 350/170*100
taxes =-35.29% = -S441.76% =569.41% =205.88%

Net profit after 100% 65/199*100 (697) /199*100 676/199*100 104/199*100

taxes =32.66% = -350.25 =339.70% =52.26%

4.3 Vertical Analysis (Balance Sheet) Agrani Bank PLC

Agrani Bank PLC

Balance sheet (Vertical Analysis)
Performance of last 5 years
Items 2018 2017 2016 2015 2014
Property and 4.70% 5.70% 5.74% 5.97% 6.10%
assets
Cash
Cash in hand 0.49% 0.56% 0.62% 0.72% 0.86%

34
Balance with 4.21% 5.14% 5.13% 5.25% 5.25%
BB and agent
bank
Balance with 15.92% 11.54% 4.45% 3.70% 3.11%
other bank
In Bangladesh 15.09% 10.85% 4.14% 3.18% 2.64%
Outside 0.83% 0.69% 0.31% 0.52% 0.47%
Bangladesh
Money at call 0.09% 0.40% 0.14% 0.28% 1.02%
and short notice
Investments 20.18% 25.36% 36.49% 36.38% 30.77%
Government 12.51% 21.61% 32.47% 31.01% 26.20%
Others 7.66% 3.75% 4.02% 4.37% 4.57%
Loans and 50.15% 47.35% 42.64% 43.30% 47.50%
advances
Loans, cash 49.83% 46.96% 42.05% 43.30% 47.50%
credit and
overdraft
Bills discounted 0.32% 0.40% 0.59% 0.83% 1.10%
Fixed assets 1.93% 2.31% 2.53% 2.82% 3.12%
Other assets 7.04% 7.33% 8.01% 7.54% 8.38%
Total assets 100% 100% 100% 100% 100%
Liabilities and 2.98% 2.06% 0.71% 1.56% 1.80%
capital
Liabilities
Borrowing
Deposits and 78.81% 78.70% 79.23% 77.82% 77.58%
others
account

Current 19.90% 17.82% 17.28% 7.42% 7.74%

deposit
and other
accounts
Bills payable 1.12% 0.83% 1.02% 0.86% 1.02%

Savings bank 22.47% 23.90% 22.94% 20.72% 21.23%

deposits

35
Fixed deposit 35.31% 36.15% 37.99% 48.83% 47.58%

Other 12.94% 13.20% 14.19% 12.71% 12.63%

liabilities

Total 94.73% 93.96% 94.13% 92.10% 92%

liabilities

Total 5.27% 6.04% 5.87% 7.90% 8%

shareholders’
equity

Paid up 2.63% 3.07% 3.32% 3.67% 4.19%

capital

Statutory 1.08% 1.16% 0.94% 1.04% 1.18%

reserve

General 0.08% 0.09% 0.09% 0.09% 0%

reserve

Asset 1.39% 1.63% 1.77% 1.96% 2.24%

revaluation

Revaluation 0.18% 0.25% 0.69% 0.98% 0.41%

and
amortization

Retained -0.09% -0.15% -0.94% 0.17% -0.02%

surplus/deficit

Total 100% 100% 100% 100% 100%

liabilities and
shareholders’
equity

36
 Vertical Analysis (Balance Sheet)
100.00%
94.73 93.96% 94.13% 92.10 92%
%
80.00% 78.81 78.70% 79.23% 77.58
% 77.82%
%
60.00% 77.82%
50.15 47.35 47.50
40.00% % 42.64 43.30
% 36.49 36.38%
% 30.77%
25.36 %
20.00% 20.18 %
%
0.00%

Investments Loans and advances

Total liabilities deposits and accounts
Total shareholder equity

Interpretations:
1. Investment was increasing in 2016 and 2017. But in last year, investment decreased by
5.61% compared to 2017.
2. Total liabilities have slowly started to decline from 2014 to 2018. But in last year, total
liabilities increased 0.77% compared to 2017.
3. Total shareholders’ equity has started to increase slowly. From 2014 to 2018, the
percentage has increased by 2.73%.
4. Loans and advances have declined from 2015 to 2017. But in 2018, it has increased
somehow. Loans and advances increased 4.20% compared to 2017.
5. From 2015 to 2016, deposits and accounts have increased gradually. But in 2018 it
started to decline again. Deposits and accounts have decreased by 0.24% compared to
2017.

4.4 Vertical Analysis (Profit And Loss Account) Agrani

Bank PLC

Agrani Bank PLC

Profit and loss account (Vertical Analysis)
Performance of last 5 years
item 2018 2017 2016 2015 2014
Operating revenue

37
Interest and 67.01% 54.01% 51.78% 55.15% 56.09%
revenue income
Interest paid 48.51% 43.59% 49.79% 53.53% 53.25%
Net interest 18.50% 10.42% 2% 1.62% 2.84%
income
Investment income 24.95% 35.21% 37.70% 34.89% 31.20%
Commission, 5.25% 8.14% 7.46% 7.6% 10.4%
exchange and
brokerage
Other operating 2.79% 2.63% 3.06% 2.37% 2.31%
income
Total operating 51.49% 56.41% 50.21% 46.47% 46.75%
income
Salaries and 23.06% 25.75% 24.30% 16.22% 14.78%
allowance
Rent, taxes, 2.31% 2.15% 2.56% 1.99% 1.82%
insurance, light
etc.
Law charge 0.06% 0.06% 0.09% 0.06% 0.05%
Postage, telegram, 0.54% 1.01% 0.84% 0.58% .38%
telecommunication
Chief executive 0.01% 0,01% 0.01% 0.01% 0.01%
salary and fees
Directors’ fees and 0.01% 0.01% 0.01% 0.01% 0.01%
allowance
Auditors’ fees 0.01% 0.01% 0.01% 0.01% 0.01%

Deprecation and 3.06% 3.17% 2.22% 2.26% 1.72%

repairs of banks
assets
Other expenditure 4.78% 4.34% 6.27% 4.20% 1.62%

Total operating 34.23% 36.92% 36.81% 25.99% 21%

expenses
Profit before 17.26% 19.49% 13.40% 20.47% 25.75%
amortization,
provision and tax
Amortization 0% 6.94% 6.66% 6.92% 7.26%

Profit before 17.26% 19.49% 13.40% 20.47% 25.75%

provision and tax
Provision for loans 2.67% -12.09% 19.72% 12.97% 9.81%
and advances

38
Provision for off 0.00% 0.95% 0% 0.14% -0.72%
balance sheet
Provision for 0% -1.71% 2.25% 2.62% 4.06%
diminution
Provision for 2.20% 3.26% 2.58% 1.87% 1.80%
employees’ benefits
Other provision 5.12% 2.68% 3.78% 1.17% 3.52%

Total provision 9.99% -6.91% 28.33% 18.77% 18.47%

Total profit before, 7.26% 23.21% -18.13% -1.40% 4.09%

tax
Provision for
taxation
Current tax 6.76% 6.43% 5.61% 0.31% 0.30%,

Deferred tax -1.64% 0.57% -6.91% -3.23% -0.98%

Net profit after tax 2.15% 16.20% -16.83% 1.52% 4.76%

Vertical analysis (profit and loss account)

39
Interpretations:
This graph shows the result of vertical analysis. Items are selected from profit loss account in
vertical analysis (profit and loss account) all the items are divided by interest income. Here
interest income is 100%.
1. From 2014 to 2016, the volume of investment income was increasing gradually but in
2017, it has decreased. In 2018, the amount of investment income has dropped by
10.26% compared to 2017.
2. Total operating income has decreased from 2014 to 2016. But in 2017, it has increased
in 56.41%, at last year 2018 it has decreased by somewhat 4.92%.
3. Total operating expenses has increased from 2014 to 2017, but in 2018 operating
expense is reduced by 2.69% compared to 2017.
4. In 2015 and 2016, the bank has lost a lot of profit before tax. In 2017, the bank made
profit before tax of 23.21%. But in 2018, profit before tax has reduced again.
5. From 2015 and 2016, the bank reduced a lot of profit after tax. In 2017, bank made
profit after tax of 16.20%. But in 2018, it has reduced again.
From the overall vertical analysis (profit and loss account) graph shows that among 5 years in
2017 company is in a good position. In last year 2018, bank cannot achieve respectable
performance.

4.5 Horizontal Analysis (Balance Sheet) Agrani Bank PLC

Agrani Bank PLC

Balance sheet (Horizontal analysis)
Performance of last 5 years
Items 2018 2017 2016 2015 2014
Property and 123% 127% 119% 112% 100%
assets
Cash
Cash in hand 92% 89% 91% 96% 100%
Balance with 128% 133% 123% 114% 100%
BB and agent
bank
Balance with 817% 506% 180% 136% 100%
other bank
In Bangladesh 913% 561% 198% 138% 100%
Outside 280% 199% 82% 126% 100%
Bangladesh
Money at call 14% 54% 18% 32% 100%
and short notice
Investments 105% 112% 249% 135% 100%

40
Government 76% 112% 111% 109% 100%
Others 168% 136% 113% 104% 100%
Loans and 171% 138% 114% 105% 100%
advances
Loans, cash 46% 49% 67% 86% 100%
credit and
overdraft
Bills discounted 98% 101% 102% 103% 100%
Fixed assets 134% 119% 120% 103% 100%
Other assets 171% 111% 114% 135% 100%
Total assets 159% 136% 126% 114% 100%
Liabilities and 264% 156% 50% 99% 100%
capital
Liabilities
Borrowing
Deposits and 162% 138% 129% 115% 100%
others account
Current deposit 410% 313% 281% 109% 100%
and other
accounts
Bills payable 176% 111% 126% 96% 100%
Savings bank 169% 153% 136% 111% 100%
deposits
Fixed deposit 118% 103% 101% 117% 100%
Other liabilities 163% 142% 142% 115% 100%
Total liabilities 164% 139% 129% 114% 100%
Total 105% 103% 92% 113% 100%
shareholders’
equity
Paid up capital 100% 100% 100% 100% 100%
Statutory 145% 133 129% 114% 100%
reserve
General reserve 12341% 11941% 11540% 10730% 100%
Asset 99% 99% 99% 100% 100%
revaluation
Revaluation and 72% 82% 211% 274% 100%
amortization
Retained 582% 879% 5002% (796) % 100%
surplus/deficit
Total liabilities 159% 136% 126% 114% 100%
and
shareholders’
equity

41
Horizontal analysis (Balance sheet)

Horizontal Analysis (Balance sheet)

250%
159%
162% 136%
200%
171% 159% 126%
138% 114%
10153%
6% 103%129% 113%
129%92% 115%
150% 138%
114%
114% 135%
105% 105%
100% 100%

Total shareholder equity

50%

Total assets
0%
2018
2017 Investment
2016
2015
2014

Investment Loans and Advances Total assets

Deposits and account Total shareholder equity Total liabilities and shareholder equity

Interpretations:

This graph shows us the percentage of increase and decrease of 5 years’ performance. These
items of the graph take from Balance sheet. First of all, horizontal analysis of all the items of
balance sheet. In horizontal analysis, we need a base year for comparing other years. Here,
2014 is the base year by comparing with other year.
1. The graph shows that, net investment of the bank in the year of 2014, 2015 and 2016
has respectively increasing 100%, 135% and 149%. But in 2018, it has declined by
105%.
2. Loans and advances of the bank in 2014, 2015, 2016, 2017 and 2018 has increased year
to year 100%, 104%, 113%, 136% and 168% respectively. So bank loans and advances
have increased capability for customer’s loan.

42
 3. Total assets have increased in the every year. In 2014 to 2018 assets has increased
respectively 100%, 114%, 126%, 136%. In 2018, total assets growth has increased by
23% over the previous year.
4. Deposits and other accounts showed in the graph that it was increasing every year. In
2014 to 2018, deposits and other accounts has increased respectively 100%, 115%,
129%, 138% and 162%. The deposits and other accounts in 2018 are in good condition
from previous years.
5. Total shareholders’ equity shows in the graph that it has increased in the 2015 by 113%,
but in 2016 it has decreased by 92%. In 2017 and 2018, it has increased slowly from
103% to 105%.
6. Total liabilities and shareholders’ equity shows in the graph that it has increased in the
every year. In 2014 to 2018; it has increased respectively 100%, 126%, 136%, 159%.
But increasing of liabilities is not good for bank and company

4.6 Horizontal Analysis (Profit And Loss Account) Agrani

Bank PLC

Agrani Bank PLC

Profit and loss account (Horizontal Analysis)
Performance of last 5 years

item 2018 2017 2016 2015 2014

Operating revenue
Interest and 138% 96% 92% 101% 100%
revenue income
Interest paid 105% 82% 93% 103% 100%
Net interest income 752% 367% 70% 58% 100%
Investment income 92% 113% 120% 115% 100%
Commission, 58% 78% 71% 75% 100%
exchange and
brokerage
Other operating 140% 114% 132% 105% 100%
income
Total operating
127% 121% 107% 102% 100%
income
Salaries and 180% 174% 163% 113% 100%
allowance

43
Rent, taxes, 147% 118% 139% 112% 100%
insurance, light etc.
Law charge 140% 126% 175% 116% 100%
Postage, telegram, 165% 266% 220% 158% 100%
telecommunication
Chief executive 111% 99% 93% 100% 100%
salary and fees
Directors’ fees and 215% 188% 120% 116% 100%
allowance
Auditors’ fees 111% 100% 127% 100% 100%
Depreciation and 206% 185% 129% 136% 100%
repairs of banks
assets
Other expenditure 340% 267% 383% 265% 100%
Total operating 188% 176% 174% 127% 100%
expenses
Profit before 77% 76% 52% 82% 100%
amortization,
provision and tax
Amortization 0% 100% 100% 100% 100%
Profit before 88% 72% 45% 79% 100%
provision and tax
Provision for loans 31% -123% 200% 136% 100%
and advances
Provision for off 0% 394% 0% -20% 100%
balance sheet
Provision for 0% -42% 55% 66% 100%
diminution
Provision for 141% 181% 143% 107% 100%
employees’ benefits
Other provision 168% 76% 107% 34% 100%
Total provision 63% -37% 152% 104% 100%
Total profit before, 205% 568% -441% -35% 100%
tax
Provision for 100%
taxation
Current tax 2588% 2129% 1844% 104% 100%
Deferred tax 195% -59% 703% 340% 100%
Net profit after tax 52% 340% -351% 33% 100%

44
 Horizontal analysis (profit and loss account)

Horizontal Analysis (profit and loss account)

1000
%

800 752%
%

568%
600
%

367%
400 340%
%
210858%
176% 174%
200 140% 132% 12 7 %
114% 05 100%
% 70%
52% 58%
33%
-35%
0%
2018 2017 2016 2015 2014

-200%
-351%

-400% -441%

-600%
Net interest income Total operating income Total operating expense
Profit before tax Profit after tax

Interpretations:

This graph shows the percentage of increase and decrease of 5 years performance. The items
of the graph take from profit and loss account. First of all, horizontal analysis of all the items
in income statement. In horizontal analysis, we need a base year for comparing other year. So
here, 2014 is the base year by comparing with the other years.
1. The graph shows that net interest income is increasing every year. In 2018; interest
income has increased 385 percent compared to 2017. But if it goes down in any year, it
will have a bad effect on the bank.

45
 2. Total operating income of the bank in 2015 was 102%; but in 2016 it has increased
107%, in 2017 it has increased at 121%. In 2018, total operating income has increased
by 127% which really made the company earn better than other years.
3. Total operating expense of the bank in 2015 was 127%, in 2016 it has increased by
174%, and in 2017 it has increased at 176%. In 2018, operating expenses have increased
by 188% which is actually higher than the previous year.
4. Profit before tax shows that in 2015 it have decreased by -35%, which indicates that
they face losses. In 2016 company faces higher losses of -441%, but in 2017 bank has
increased profit before tax. In 2018, profit before tax has declined by 383% compared
to 2017.
5. In 2016 net profit after tax has decreased higher amount of -351 %, but next year 2017
bank has achieved higher income compared to 2016. In 2018 net profit after tax has
decreased by 288% compared to 2017.

4.7 Ratio Analysis (Agrani Bank PLC)

Ratio Analysis (Liquidity Ratio, Profitability Ratio, Solvency Ratio, Financial Ratio and
Activity Ratio)

Year (2018) Year (2017) Comment

Name 0f ratio Formula
(A) Liquidity The Liquidity
Ratio position is
1. Current Ratio Current 774,369,693,306/747,567,15 658.361,382,403/633,187,5 slowly
assets/current 8,581*100 38,735 increasing.
liabilities =1.03:1 =1.04:1 However, the
proportion of
fast decline in
2018 is slightly
higher than
2017.

2. Quick Ratio Current 774,369,693,306/747,567,15 658.361,382,403/633,187,5 The current and

assets- 8,581*100 38,735 quick ratio was
inventory/cur =1.03:1 =1.04:1 better in 2017
rent than 2018.
liabilities However, in
2018, the bank
has the ability
to pay liabilities
easily.

46
(B) Profitability
Ratio
1. Gross Margin Gross 1,035,546,785/8,92,168,481* 6,759,290,210/4,347,325,40 Gross profit
Ratio profit/revenu 100 1*100 ratio are
e (sales)*100 =1.1607 or 116.07% =1.55481 or 155.48% declining. So
probability is
gradually
decreasing.
2. Net Profit Earning after 1,035,546,785/8,92,168,481* 6,759,290,210/4,347,325,40 In 2018, Net
Margin Ratio tax/net 100 1*100 profit margin
interest =1.1607 or 116.07% =1.55481 or 155.48% has decreased
income*100 by 39.41%

compared to
2017.

In 2018,
3. Operating EBIT/interest 8,321,738,470/32,315,200,80 8,130,084,510/22,530,542,3 Operating profit
Profit Margin revenue*100 2*100 43*100 margin has
=0.2575 or 25.75% =0.3608 or 36.08% decreased by
10.33%
compared to
2017.
Net interest
4. Net Interest income/ total 8,921,168,481/789,153,272,7 4,347,325,401/673,922,118, In 2018, net
Income Ratio assets*100 86*100 848*100 interest income
=0.01130 or1.13% =0.00645 or 0.64% ratio is
increasing
respectively
0.49%.

47
1. Time Interest EBIT/interest 8,321,738,470/23,394,032,32 6,799,702,871/18,183,216,9 In 2018, Time
Earned Ratio expense*100 1*100 42*100 interest earned
=35.56 times =37.40 times has decreased
by 1.84 times
compared to
2017.
Net interest
2. Fixed Asset income/total 8,921,168,481/14,783,579,48 4,347,325,401/15,560,736,4 In 2018, Fixed
Turnover fixed 0*100 45*100 assets turnover
assets*100 =0.6035 or 60.35 times =0.2794 or 27.94 times has increased
by 32.41 times
compared to
2017.

Net interest In 2018, Equity

3. Equity income/total 8,921,168,481/41,586,114,20 4,347,325,401/40,734,580,1 turnover has
Turnover equity*100 5*100 13*100 increased by
=0.2145 or 21.45 times =0.1067 or 10.67 times 10.78 times
compared to
2017.

4. Return on EAT+ 1,035,546,786+32,315,200,8 6,759,290,210+22,530,542, In 2018, Return

Capital interest/total 02/789,153,272,786*100 343/673,922,118,848*100 on capital

Employed capital*100 =0.04226 or 4.23% =0.04346 or 4.35% employed has

decreased by
0.12%
compared to
2017.
5. Rate of Net interest 8,921,168,481/395,753,029,4 4,347,325,401/319,118,598, In 2018, Rate of
Return on income/ total 91*100 413*100 return on loans
Loans loans*100 =0.0225 or 2.25% =0.0136 or 1.36% has increased
by 0.89%
compared to
2017.

6. Total Asset Net interest 8,921,168,481/789,153,272,7 4,347,325,401/673,922,118, In 2018, Total

Turnover income/total 86*100 848*100 asset turnover
assets*100 =0.0113 or 1.13 times =0.00645 or 0.645 times has increased
by 0.49 times
compare to
2017.

48
(D) Solvency
ratio Total 747,567,158,581/41,586,114, 633,187,538,735/40,734,58 Company
1. Debt to debt/total 205*100 0,113*100 solvency
Equity Ratio equity *100 =17.9763 or 1,797.63% =15.5442 or 1,554.42% position is
upright.
Company debt
Long term 747,567,158,581/789,153,27 633,187,538,735/673,922,1 to equity ratio is
2. Long term debt/total 2,786*100 18,848*100 raising. But
debt-total capital*100 =17.9763 or 1,797.64% =0.9396 or 93.96% long-term debt
capital Ratio to total capital
ratio is
Total increasing in
liabilities/tota 747,567,158,581/789,153,27 633,187,538,735/673,922,1 2018.
3. Debt to Asset l assets*100 2,786*100 18,848*100
Ratio =0.9473 or 94.73% =0.9396 or 93.96% In 2018, Debt to
assets ratio has
increased by
0.77%
compared to
2017.
Total

4. Total equity equity/total 41,586,114,205/789,153,272, 40,734,580,113/673,922,11 In 2018, Total

to Total Asset asset *100 786*100 8,848*100 equity to total
Ratio =0.0527 or 5.27% =0.0604 or 6.04% asset ratio has
decreased by
0.77%
compared to
2017.
Total loans
5. Loan to and 935,753,029,491/789,153,27 319,118,598,413/673,922,1 In 2018, Loan
Assets Ratio advances/tota 2,786*100 18,848*100 to assets ratio
l assets*100 =0.5015 or 50.15% =0.4735 or 47.35% has increased
by 2.8%
compared to
Total loans 2017.
and
6. Loan to advances/tota 935,753,029,491/621,927,23 319,118,598,413/530,349,7 In 2018, Loan
Deposit Ratio l deposit*100 0,672*100 41,838*100 to deposits ratio
=0.6363 or 63.63% =0.6017 or 60.17% has increased
by 3.46%
compare to
2017.

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1. Return on Net income/ 103.55/78,915.33*100 675.93/67,392.21*100 In 2018, Return
Assets (ROA) total =0.013 or 0.13% =0.01 or 1.00% on assets has
assets*100 decreased by
0.87%
compared to
2017.
2. Return on Net income/ 103.55/4,158.61*100 675.33/4,073.46*100 In 2018, Return
Equity total equity =0.249 or 2.49% =0.1657 or 16.57% on equity has
capital*100 decreased by
14.08%
compared to
2017

Working:
Current assets (2018) = Total assets – Fixed assets

=789,153,272,786 – 14,783,579,480

= 774,369,693,306

Current assets (2017) = Total assets – Fixed assets

= 673,922,118,848 – 15,560,736,445

= 658,361,382,403

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 Deposits
( BDT in crore)

62,193
49,405 53,035
43,998
38,392

2014 2015 2016 2017 2018

Series 1

This graph shows that deposits have increased gradually every year from 2014 to 2018. In
2018, deposits have increased by 9158 crore compared to 2017
.

Loans and Advances

(BDT in crore)
45,000
40,000

35,000

30,000

25,000

20,000 39,575
15,000 31,912
24,480 26,587
23,509
10,000
5,000
0
2014 2015 2016 2017 2018

Series 1

This graph shows that loans and advances have increased progressively every year from 2014
to 2018. In 2018, loans and advances have increased by 7669 crore compared to 2017.

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This graph shows that operating profit has decreased from 2014 to 2016. But from 2017 it has
started to rise. In 2018, operating profit has increased by 19 crore compared to 2017.

This graph shows that profit after tax has declined significantly from 2014 to 2016. In 2017 it
has increased again but after that in 2018 profit after tax has decreased by -572 crore compared
to 2017.

52
This graph shows that cost of fund has declined slowly every year from 2014 to 2018. In 2018,
cost of fund has decreased by -0.08% compared to 2017.

total assets
Series 1

90,000
80,000

70,000

60,000

50,000

40,000 78,915
62,357 67,392
30,000 56,535
49,487
20,000
10,000

0
2014 2015 2016 2017 2018
Series 1 49,487 56,535 62,357 67,392 78,915

This graph shows that total assets have increased gradually year to year from 2014 to 2018. In
2018 total assets has increased by 11523 crore compared to 2017.

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 advance/deposit (AD) ratio
66.00%

64.00%

62.00%

60.00%

58.00%

56.00% 63.63%
61.23%
54.00% 60.17%

52.00% 55.64%
53.81%
50.00%

48.00%
2014 2015 2016 2017 2018

Series 1

This graph shows that advance/deposits (AD) ratio has decreased from 2014 to 2016. But from
2017 it has increased progressively. In 2018, advances/deposits ratio has increased by 3.46%
compared to 2017.

capital to risk weighted asset ratio (CRAR)

10.60%

10.40%

10.20%

10.00%

9.80%

9.60%

9.40%

9.20%

9.00
9.00% 2014 2015 2016 2017 2018
Series 1 10.44% 9.54% 10.03% 10.24% 10.09%

Series 1

This graph shows that capital to risk weighted asset ratio (CRAR) was in good position in 2014
but after that in 2015 it has decreased. Then 2016 to 2017 (CRAR) has started to increase. But
in 2018, capital to risk weighted asset ratio has again decreased by -0.15% compared to 2017.

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 Return on Equity (ROE)
20.00%
15.00%

10.00%
16.59%
5.00%
5.02%
1.46% 2.49%
0.00%
-5.00%
-10.00% -19.06%

-15.00%
-20.00%

-25.00%
2014 2015 2016 2017 2018
Return on Equity (ROE) 5.02% 1.46% -19.06% 16.59% 2.49%
Return on Equity (ROE)

This graph shows that return on equity (ROE) has reduced gradually. In 2018, return on equity
has decreased by -14.1% compared to 2017. In 2016, return on equity ratio has decreased
hugely.

This graph shows that return on assets (ROA) has decreased progressively. In 2018, return on
assets has decreased by -0.87% compared to 2017.

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This graph shows that cost to income ratio has increased gradually from 2014 to 2016. Then in
2017 it has decreased by 6.09% and in 2018, cost to income ratio has increased by 2.22%
compared to 2017.

4.8 Asset Portfolio

Particulars of assets 2018 2017

Loans and advances 39575.30 31911.86
Investments 15923.02 17087.61
Fixed assets 1478.36 1556.07
Money at call and short notice 69 270
Cash in hand 16275.89 11623.66
Other assets 5593.76 4943.01
total 78915.33 62356.75

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4.9 Future plan for increasing remittance business:
 Integrated mobile app for remittance collection through our subsidiaries;
 API arrangement with all interested exchange houses;
 Remittance arrangement with Bkash;
 Appoint bank officials at Bangladesh embassies/high commissions in different
remittance prone region to collect more remittance;
 Launch promotional program in collaboration with exchange houses;
 Increasing number of ROP (remittance only point) across the country;
 Remittance drawing arrangement under process with different exchange houses
especially in japan, Mauritius, South Korea, Brunei and Kenyan exchange houses;
 Remittance collection from different parts of the world especially with the collaboration
of USA/ Singapore based companies; and
 Remitter and beneficiary database software has been prepared and will be launched
soon.

4.10 Appropriation of profit

During 2018, AGRANI BANK PLC earned TK. 832.17 crore before provision and tax which
has been appropriated in the following manner:
(Taka in Crore)
Particulars 2018 2017

57
Profit/ loss before provision 832.17 679.97
and tax
Provision for loans and 128.72 (504.20)
advances
Other provision 353.14 216.12
Total provision 481.86 (288.08)
Net profit/loss before tax 350.31 968.05
Current tax 326.06 268.28
Deferred tax (79.30) 23.84
Total provision for tax 246.76 292.12
Net profit/loss after tax 103.55 675.93
Add. Retained surplus form 101.55 (585.53)
previous year
Available for appropriation 70.06 193.61
Retained surplus (68.31) (103.21)

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 CHAPTER – 5

Findings,
Recommendations And
Conclusion

59
5.1 Findings
While observing and analyzing the report, I have found some positive and some negative sides
of AGRANI BANK PLC. The findings are as follows:

5.1.1 Positive Findings:

1. Net interest income is increasing every year from 2014 to 2018. In 2018, Interest
income has increased by 41.82 percent compared to 2017.
2. Total operating income is increasing every year from 2014 to 2018. In 2018, Total
operating income has increased by 6% compared to 2017.
3. In 2018, Operating profit is increasing every year from 2014 to 2018. Operating profit
in 2018 is 78.47 percent, which is 2.27 percent higher than 2017.But in 2016 the bank
operating profit was negative value (losses).
4. Deposits and other accounts are increasing every year from 2014 to 2018. In 2018,
Deposits and other account have increased by 24% compared to 2017.
5. Loans and advances are increasing year to year from 2014 to 2018. In 2018, Loans and
advances have increased by 32% compared to 2017.
6. Total assets are increasing every year from 2014 to 2018. In 2018, total assets have
increased by 23% over the previous year.
7. In 2018, fixed assets turnover has increased by 32.41 times compared to 2017.
8. In 2018, Equity turnover has increased by 10.78 times compared to 2017.

5.1.2 Negative Findings:

1. Profit after tax is decreasing every year from 2014 to 2018. In 2017, bank had earned
profit after tax at 16.20%. But the bank suffered huge losses in 2016.
2. Total operating expense is increasing every year from 2014 to 2018. In 2018, operating
expenses have increased by 12%.which is actually higher than the previous year.
3. Interest expense is growing every year from 2014 to 2018. In 2018, Interest expense
has increased by 23.45% compared to 2017.
4. Investment is decreasing every year from 2014 to 2018. In 2018, Net investment has
decreased by 7% compare to 2017. So bank could not make a lot of profit.
5. In 2018, Return on assets has decreased by 0.87% compared to 2017.
6. In 2018, Return on equity has decreased by 14.08% compared to 2017.

60
5.2 Recommendations
From the findings we can see that, in the last year 2018, bank was not in a good position because
it has faced huge losses. But in previous year 2017, bank was in good position. Based on
findings it can be recommended to progress in future. The recommendations are disclosed
below:

1. Bank should focus on reducing total provision, taxes, etc. as well as increasing total
income and interest income.
2. Bank has to focus on decreasing the total operating expenses. This will help the bank
to increase the growth.
3. In 2018, the interest expense has increased over the previous year. But it is not good
situation for the bank to increase their interest expense. To overcome this problem, bank
should focus on their cost of borrowing. If borrowing cost increases then the interest
expense will also increase.
4. Bank need to increase their investment opportunities and keep track of loans and
advances.
5. Bank has to focus on their cost of assets, various expenses and income. In addition to
increasing income, the cost of assets and the various expenditures need to be reduced.
6. Currently, AGRANI BANK PLC has to focus on their assets turnover, idle cash, profit
margin and taxes to increase return on equity. If the profit margin increases, assets
turnover improves then the return on equity will increases.

Banking is a service-oriented marketing. Its business profit depends on its service quality.
That’s why the authority should always be aware about their service quality. Proper Banking
software should be used to get best benefit from this department. Payment to the workforce
should be such that will encourage the employees to work more. Compensation package must
be impressive and consistent with work performance

5.3 Conclusion
Nowadays the banking service is very competitive, so the real from the practical appearance of
customer dealing procedure during the whole period of my practical orientation in Agrani Bank
PLC. I have extended a firm and concrete conclusion in a very confident way. I believe that
my realization will be in coordination with most of the banking intellectuals. It is quite evident
that to build up an effective and efficient banking system to the highest desire level
computerized transaction is essential. Agrani Bank Ltd. is a new peers Bank. It is committed
to provide high quality financial services/products to contribute to the growth of G.D.P of the
country through stimulating trade and commerce, accelerating the pace of industrialization,
boosting up export, creating employment opportunity for the educated youth, poverty

61
alleviation, raising standard of living of limited income group and overall sustainable socio-
economic development of the country. Agrani Bank Ltd definitely satisfies their corporate
customers and to maintain this scenario in a more efficient and prospective manner the Bank
can surely accept this project in a cordial manner. To enrich and maintain a better reputation is
the only solution to make a business more progressive.

62
CHAPTER – 6
Reference

63
Report:
1. Annual Report of Agrani Bank PLC from 2014-2018.

Book:
1. Principles of Managerial Finance by Lawrance J. Gitman, (12th edition).
2. Business Analysis and Valuation using Financial Statements by Krishna G. Palepu&
Paul M. Healy.
3. Essentials of Investments by Bodie, Kane, Marcus (7th edition)

Website:
1. https://www.agranibank.com/profile.php
2. https://www.investopedia.com/

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