Internship Report on Financial Performance Analysis of

Jamuna Bank Limited

Submitted To
Department of Finance
Faculty of Business Studies
Jagannath University, Dhaka

Under The Supervision of

Mokta Rani Sarker
Assistant Professor,
Department of finance
Faculty of Business Studies
Jagannath University

Submitted By
Abdullah Al Mamun
ID No: B-150203076
Session: 2015-16(10th
Batch)
Department of Finance
Jagannath University

Date of Submission:

Page I
 Letter of Transmittal

Mokta Rani Sarker

Assistant Professor,
Department of finance
Jagannath University,
Dhaka-1100

Subject: Submission of Letter of

Transmittal. Dear Madam,

This is my pleasure to present you my internship report titled- Financial performance analysis of
Jamuna Bank Limited. The internship was a compulsory issue for successfully completion of my
BBA program. To fulfill this requirement I worked in Jamuna Bank Limited, Chistia market
branch (near elephant road) under different sector.

The internship program had given me a great opportunity to learn about a well-known private
banking organization in Bangladesh. It was a great help to gather knowledge about practical
official environment prior to perform into the real job field.

Despite the limitations during the compilation of the study my best effort was given to fulfill all
the requirements to satisfy your positive review. I will be grateful to you if you accept the report.

Yours Sincerely,

Abdullah Al Mamun
ID: B-150203076
Session: 2015-16(10th
Batch)
Department of Finance
Faculty of Business Studies
Jagannath University,
Dhaka-1100

Page II
 Supervisor’s Certification

The internship report entitled on “Financial Performance Analysis of Jamuna Bank Ltd.” has
been submitted to the office of chairman, in partial fulfillment of the requirements for the Degree
of Bachelor of Business Administration (BBA) from the Department of Finance, Jagannath
University, on 24th April, 2019 by Abdullah Al Mamun with Id: B-150203076. The report has
been accepted and may be presented to Internship Defense Committee for evaluation.

Any opposition, suggestion made in this report is entirely that of the author of the report. The
university neither admits nor rejects any of these opinions or suggestions.

…………………………

Mokta Rani Sarker

Assistant Professor
Department of Finance,
Jagannath University
 Student’s Declaration

I hereby, declare that this report entitled on “Financial Performance Analysis of Jamuna Bank
Ltd.” has been prepared under the guidance of Mokta Rani Sarker, Assistant Professor of
Department of Finance, as a requirement for the accomplishment BBA from the Department of
Finance, Jagannath University. My report neither fully nor partially has ever been submitted for
the award of any other degree to either this university or any other university. This report has
been prepared only for academic purpose.

………………………….
Abdullah Al Mamun
ID No: B-150203076
Session: 2015-15(10th
Batch)
Department of Finance
Jagannath University
 Acknowledgements

At first, all praises to almighty Allah who has created me and has given me opportunities and
strength to work with people.

This internship study is an accumulation of many peoples’ endeavor. At the beginning I want to
express my sincere gratitude to my honorable internship supervisor Mrs. Mokta Rani Sarker, a
faculty member of department of Finance, Jagannath University, Dhaka. I’m deeply indebted to
her whole hearted supervision during the internship period. Her valuable suggestions and
guidance helped me a lot to complete this study with the appropriate manner and formality. The
time and effort he has given to me was a great help in the way to complete the study.

I would also like to show my respect to all the officers and stuffs at Jamuna bank Chistia market
branch. It would be very hard for me to mention their name specifically but a few of them was
very helpful for me that I feel bound to mention few of their names like my direct supervisor was
Yousuf Ifthakhar (SEO), Md. Rafiqul Islam (AVP & Manager operation) and Shamim Ahmed
Sagor (SAVP & Manager)

A lot of hard work has gone into making this project and it would never be successful without all
the help and encouragement.
 Executive summary
Jamuna Bank Limited is one of the most prominent banks in Bangladesh. It is well known for its
organizational reputation, expertise, professionalism. JBL’s corporate branch is well known for
the way they do business, handle clients and maintain diversified portfolio. I have got
opportunity to complete this internship in this reputed organization where I have able to match
theoretical knowledge with practical situation. The report is descriptive in nature. The report was
entitled “Financial Performance Analysis of Jamuna Bank Limited”. Qualitative and quantitative
both data were analyzed in this report and data were presented by using the Microsoft word. Due
to the time limitation, the scope and dimension of the study has been curtailed.

Ratio analysis is structural and logical way to present overall financial performance of a financial
institution. Successful bank must be identified for the interest of the depositors and the country as
a whole. The bank which has better financial condition, less risky and more profitable, is
identified as a successful bank.
The current position of JBL is not much satisfactory. The net profit margin of 2018 was less than
the previous year 2017. In 2018 it was (54%), in 2017 it was (70 %). The ROE was increasing in
2018 and comes to the point of (13.43 %), 2017 it was (11.33%). But it has a point, ROE is
increasing because of financial leveraged is increased. There is a decline in the Interest income to
Total asset of Jamuna bank from 2014 to 2018. It has decreased from .085 to .058 in 2017. It
implies that the bank has not been able to efficiently utilize its interest income to total asset for
the last five years. The ratio of earning asset to total asset of Jamuna Bank is showing an
increasing trend. In 2017 earning asset to total asset was 69.64% and its increasing in 2018 was
74.92%. It increased because the increase assets that are directly generating income, such as
interest-generating investments or income-generating rentals .It indicates that bank performance
outcome is up to the mark.

Financial soundness and management skill of JBL is quite good boosting up at a very
satisfactory level. The top level authority, management team and executives of the bank
are concern about their investment, market expansion and more innovative and effective
financial performance to make JBL perform better in future.
 Table of Contents

Contents
Chapter- 01 Background of the study.....................................................................................................................1
Chapter-02..............................................................................................................................................................4
Overview of the organization.........................................................................................................4
2.1. Organizational Overview:............................................................................................................................5
2.2 products and services of JBL........................................................................................................................6
2.3 Five(5) years Key financial highlights of JBL(Jamuna bank limited)..........................................................8
Chapter-03 Performance Analysis..........................................................................................................................9
Financial Performance Analysis.......................................................................................................................10
Ratio Analysis..................................................................................................................................................10
Chapter- 04 (Project part).....................................................................................................................................20
Ratio analysis of Jamuna Bank Limited (JBL) Year-(2014-2018).......................................................................20
Chapter- 05........................................................................................................................................................37
5.1 Findings about the financial performance analysis of Jamuna Bank limited..............................................38
5.2 Recommendation........................................................................................................................................39
5.3 Conclusion..................................................................................................................................................40
Reference...................................................................................................................................................41
Appendix......................................................................................................................................................44
 Lists of Figures
Contents Page No

Basic DuPont model 20

Ratio of interest income to total asset 23
Ratio of securities to total asset 24
Ratio of earning asset to total asset 25
Ratio of current deposits to total liabilities 26
Ratio of Bank Capital to total asset 27
Asset per employee 28
Salaries and allowance per employee 29
Ratio of loan and advance to total asset 30
Ratio of Interest expense to total asset 31
Ratio of non-interest expense to total asset 32
Ratio of provision for loan loss to total asset 33
Ratio of nonperforming loan and advance to total loan and 35
advance
DuPont Analysis 37

Lists of Tables
Contents Page No

5 years key financial highlights of JBL 10

Ratio of interest income to total asset 23
Ratio of securities to total asset 24
Ratio of earning asset to total asset 25
Ratio of current deposits to total liabilities 26
Ratio of Bank Capital to total asset 27
Asset per employee 28
Salaries and allowance per employee 29
Ratio of loan and advance to total asset 30
Ratio of Interest expense to total asset 31
Ratio of non-interest expense to total asset 32
Ratio of provision for loan loss to total asset 33
Ratio of nonperforming loan and advance to total loan and 34
advance
DuPont analysis 36
Chapter- 01 Background of the study

Page 1
1.1 Origin of the Report
Internship program is the most important period for a BBA student. The duration of internship
program is 3 months, which carries a best learning process to know about the organization and
cope up the environment in such a way like professional employees. The experience that got by
an intern during the internship period will make them more smart and professional in their future
job sector. I was started my internship at Jamuna Bank Limited, Chistia Market Branch (Near
Elephant Road) from January 24, 2019 and ended in April 23, 2019

1.2 Objective of the Report

The main objective of the study was to know about the financial performance analysis of Jumana
Bank Ltd. And this report, try to make an overall analysis on all activities of Jamuna Bank Ltd
specially focuses on Financial prospect of the whole bank. For evaluating a 3rd generation bank
Jamuna Bank Limited was chosen and its financial performance from 2013 to 2017 using several
ratios was evaluated.

1.3 Data collection

To prepare a report gathering data is very important. The information was collected from
secondary sources of data. Regarding the information required was collected within the
organization from the Corporate Division of Jamuna Bank Limited.

 Study on Annual Reports of Jamuna Bank Limited.

 Online data from JBL website.
 Analysis several article related on financial analysis importance through internet.

1.4 Scope of the Report

Banks have been playing an important role in economic development and contributing
immensely to build the country. Banking sector is fast expanding in our country because of
globalization and reform of private sector. To survive as a key player in this highly competitive
and complex business environment a bank should develop its business focusing the customer’s
satisfaction.

1.5 Significance of the report

This report helps to explain financial performance analysis of Jamuna Bank limited. It will be
also benefited for the people who are interested to know about JBL. Here try to evaluate the
different ratio and these interpretations. Those who looking for the information about Financial
Performance Analysis of JBL they might get help from this report. The study explores the
present market scenario of Jamuna Bank and future market growth prospects in Bangladesh.
1.6 Limitations of the study
Altogether the internship period in the bank was not free from limitations. I faced some problems
during the study, which I am mentioning below:

 The duration of the internship/ study is only 3 months. Banking is a vast phenomenon and
a huge concept encompassing a great variety of divergent field of studies. It is quite
impossible to grasp all the relevant matters within 3 months and make a report on it. Only
a bird’s eyes view has been presented in the report due to the time constraint.

 There were various types of information’s that the bank officers cannot disclose due to
the security and other corporate obligations.

 A business organization cannot reveal all its data and information to public because of its
policy of secrecy. So all these secret matters have not been possible to collect and to
incorporate in the report which may result in less acceptability.
 Chapter-02

Overview of the organization

2.1. Organizational Overview:
Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994
of Bangladesh with its Head Office currently at ChiniShilpa Bhaban 3, Dilkusha C/A, Dhaka-
1000, and Bangladesh. The Bank started its operation from 3rd June 2001.

JBL undertakes all type of banking transactions to support the development of trade and
commerce in the country. JBL‟s services are also available for the entrepreneurs to set up new
ventures and BMRE for industrial units. The Bank gives special emphasis on Export, Import,
Trade Finance, SME Finance, Retail Credit and Finance to Women Entrepreneurs.

At present the Bank has real-time Online banking branches (of both Urban and Rural areas)
network throughout the country having smart IT-backbone. Besides traditional delivery points,
the bank has ATMs of its own, sharing with other partner banks and consortium throughout the
country.

The operation hour of the Bank is 10:00 A.M. To 6:00 P.M. from Sunday to Thursday with
transaction hour from 10:00 A.M. to 4:00 P.M. The Bank remains closed on Friday, Saturday
and government holidays. To provide clientele services in respect of International Trade it has
established wide correspondent banking relationship with local and foreign banks covering major
trade and financial center at home and abroad.
2.2 products and services of JBL
The main responsibility of Jamuna Bank Limited is to provide financial solution by considering
different socio-economic factor. It has been playing an important role for the economic growth
of this country. By considering all the people from different segments it has been launching wide
variety of products and services according to the needs of the people. Jamuna Bank Limited is
now offering the following products to its customers.

2.2.1 Transactional account

 Current deposit account

 Short notice deposit
 Savings bank account
 Special savings accounts
 Resident Foreign currency deposit accounts

2.2.2 Fixed deposit receipts

It is offered for 3 months, 6 months and 12 months tenors at attractive interest rate. However,
some scheme has a tenor more than 12 months like-

 Double Growth Deposit Schemes (DGDS)

 Triple Growth Deposit Schemes (TGDS)
 Monthly Benefit Scheme (MBS)
 Pension Deposit Scheme 2nd Choice
 Education Savings Scheme 2nd Choice

2.2.3 Deposit scheme

2.3.3.1 Monthly Savings Scheme (MSS)

Savings is the best friend in bad days. Small savings can build up a prosperous future. Savings
can meet up any emergences. JBL has introduced Monthly Savings Scheme (MSS) that allows
saving on a monthly basis and getting a handsome return upon maturity. If anyone wants to build
up a significant savings to carry out you’re cherished Dream, JBL MSS is the right solution.

2.4.3.2 Monthly Benefit Scheme (MBS)

Jamuna Bank Limited has introduced Monthly Benefit Scheme (MBS) for the prudent persons
having ready cash and desiring to have fixed income on monthly basis out of it without taking
risk of loss and without enchasing the principal amount. This scheme offers highest return with
zero risk. Everyone can plan your monthly expenditure with the certain monthly income under
the scheme.

2.3.3.2 Lakhpati Deposit Scheme

To become a lakhpati is a dream to most of the people of Bangladesh especially to the lower and
lower middle class income group. They experience their expectations and wants are enormous in
nature in our small span of life. To meet our deposit and wants we need right plan.
Keeping the above in mind JBL has introduced "Lakhopati Scheme" which has flexibility report
of maturity and monthly installment as per affordable capacity.

2.3.3.3 Education Savings Scheme

Education is a basic need of every citizen. Every parent wants to impart proper education to their
children. Education is the pre-requisite for socio-economic development of the country. As such,
there should be pre-arrangement of fund to ensure higher education of the children. Today's
higher education is becoming expired day by day. Parents can get relief and can have peace of
mind if they can arrange the necessary fund for higher education of their children.

Service of JBL
2.2.4 Loan product:

 Auto loan
 Any purpose loan
 Personal loan
 salary loan
 doctors loan
 education loan
 overseas job loan

2.2.5 Cards & ADC

2.3.5.1 Cards:

 Visa classic credit card

 Visa gold credit
 Visa dual gold credit
 Visa electron debit
 Protection plus
 Corporate facility

2.3.5.2 ADC (Alternative delivery channel):

 ATM
 SME & mobile banking service
 Mobile financial service
2.3 Five(5) years Key financial highlights of JBL(Jamuna bank limited)

(In million)
Particulars 2014 2015 2016 2017 2018

Interest Income 10421.56 9902.69 9709.01 11472.09 16001.78

Interest expense 8830.35 8194.85 7140.30 7625.48 9656.43

Net Interest Income 1591.21 1707.84 2566.71 3846.61 5345.37

Profit before tax 1352.73 1642.85 1791.05 2076.58 2297.12

Totals shareholders’ 10830.87 15729.227 15784.25 15424.56 18045.12

equity
Current deposits 11096.67 14625.82 15757.97 19901.67 23587.32

Total liabilities 129064.55 127704.74 153396.06 182244.64 207294.32

Loan and advances 79032.30 88428.80 118293.78 143,488.81 166601.15

Investments 40166.62 34926.34 30315.15 26240.79 31878.78

Total asset 139895.43 143434.02 169180.32 197669.20 225540.89

Earning asset 79962.54 84181.69 117821.36 148099.29 169254.54

Total capital 11096.67 14625.82 15757.97 19901.67 21564.87

Non-performing loans 4422.15 5839.60 4743.50 5725.10 6254.21

No. of share 516.07 614.12 614.12 614.12 614.12

outstanding

No of employees 2204 2304 2443 2592 2689

Net income 1389.68 1642.85 1793.76 2076.58 2297.65

Loan loss provision 1333.05 1517.1338 1338.71 825.67 1050.89

Salaries and allowance 875871.03 904253.76 1019123.95 1043160 1093610.54

Table 1: Source: Annual Report of Jamuna Bank Limited 2018

Chapter-03 Performance Analysis
Financial Performance Analysis
Financial performance analysis includes analysis and interpretation of financial statements in
such a way that it undertakes full diagnosis of the profitability and financial soundness of the
business. The financial analyst program provides vital methodologies of financial analysis.

Financial performance analysis is the process of identifying the financial strengths and
weaknesses of the firm by properly establishing the relationship between the items of balance
sheet and profit and loss account. It also helps in short-term and long term forecasting and
growth can be identified with the help of financial performance analysis. The analysis of
financial statement is a process of evaluating the relationship between the component parts of
financial statement to obtain a better understanding of the firm’s position and performance.

3.1 Objectives
 To analyze the financial changes over a period of five years.
 To analyze the financial statements of the company by using financial tools.
 To suggest effective measures in the existing system of the company

3.2 Techniques/ Tools of Financial performance analysis:

An analysis of financial performance can be possible through the use of one or more tools /
techniques of financial analysis:

3.3.1 Accounting Techniques

It is also known as financial techniques. Various accounting techniques such as Comparative
Financial Analysis, Common-size Financial Analysis, Trend Analysis, Fund Flow Analysis,
Cash Flow Analysis, CVP Analysis, Ratio Analysis, Value Added Analysis etc. may be used for
the purpose of financial Analysis.

Ratio Analysis
Ratio analysis is used to evaluate relationships among financial statement items. Ratio analysis is
a diagnostic tool that helps to identify problem areas and opportunities within a company. Ratio
analysis is very important for every business, because by calculating ratio analysis we can
understand the business position, business strength and weakness. By knowing this information,
management can takes its necessary steps to organize their goal.
3.3.2 Statistical Techniques

Every analysis does involve the use of various statistical techniques. Some of the important
statistical techniques which are suitable for the financial analysis those are measure of central
tendency, measure of dispersion.

3.3 Significance of Financial Analysis

3.4.1 Finance Manager
Analysis of financial statements helps the finance manager in:

 Assessing the operational efficiency and managerial effectiveness of the company.

 Analyzing the financial strengths and weaknesses and creditworthiness of the
company.
 Analyzing the current position of financial analysis,
3.4.2 Top Management
Financial analysis helps the top management

 To assess whether the resources of the firm are used in the most efficient manner
 Whether the financial condition of the firm is sound
 To determine the success of the company’s operations
 Appraising the individual’s performance
3.4 Ratio of Interest Income to Total Assets
The "Ratio Interest income to total assets" reflects banks reliance on interest from bank lending
as a source of funding. A high ratio is a good indicator (but a too high ratio is not necessarily a
good indicator), while a low ratio might indicate that banks rely on non-interest source of funds.

Calculate the interest income to total assets ratio by using this equation:

Interest Income/Total Asset

Normally the higher this ratio the better indicating the bank is earning a high interest rate or the
proportion of interest earning assets to total assets is high or both of these effects. Too high of
interest income to total assets ratio would be attributed to the high interest income (rate) derived
from high risk loans (subject to default).Also, if the high interest income is being generated by
too high a proportion of assets in loans that could stem from lack of liquidity. That is, the bank
should have a reasonable amount of cash and cash like securities (easily converted to cash such
as Treasury bills) as part of their total assets to meet withdrawal needs. If the interest income to
total assets ratio is too low that usually is from earning low interest income (rate) and/or too little
lending. This ratio refers to the interest earned on the total assets used for this purpose to
determine whether the rate is good, too high, or too low in order for the responsible management
to decide whether to continue leaving these assets as is or use them differently.

3.5 Ratio of securities to total assets

Ratio of securities to total assets. A security is a tradable financial asset. Securities is financing or
investment instruments (some negotiable, others not) bought and sold in financial markets, such
as bonds, debentures, notes, options, shares (stocks), and warrants. This ratio measures the risk
involved in the assets held by a bank.

Calculate the Ratio of securities to total assets by using this equation:

Ratio of securities to total assets= Securities / Total Assets

3.6 Ratio of earning assets to total assets ratio
Bank analysts want to know what percentage of a company’s assets are actually generating
income. They determine this with the earning assets to total assets ratio.

Of all the assets that a company owns (referred to as total assets), analysts want to know what
percentage of them are actually generating income. Earning assets usually include any assets that
are directly generating income, such as interest-generating investments or income-generating
rentals, but in some cases, they include other forms of assets that directly contribute to income,
such as machinery, computers, or anything that is directly involved in producing goods and
services that will be sold to customers.

Calculate the Ratio of earning assets to total assets by using this equation:

Ratio of earning assets to total assets = Total Earning Assets/ Total Assets

3.7 Ratio of Current deposits to total liabilities

The ratio considers the weight of the total current deposits versus the total liabilities. It is
calculated by dividing the deposits by the total liabilities at a bank.

Calculate the Ratio of current deposits to total liabilities by using this equation:

Ratio of current deposits to total liabilities = Current Deposits/ Total Liabilities

3.8 Ratio Bank capital to total assets

Bank capital to assets is the ratio of bank capital and reserves to total assets. Capital and reserves
include funds contributed by owners, retained earnings, general and special reserves, provisions,
and valuation adjustments. Capital includes (paid-up shares and common stock), which is a
common feature in all countries banking systems, and Total assets include all nonfinancial and
financial assets. Divide the company's capital by its assets and express the resulting figure as a
percentage to obtain its capital-to-asset ratio.

Calculate the Ratio bank capital to total assets by using this equation:
Ratio of Bank capital to Total asset = Bank Capital/Total Assets
 3.9 Asset per employee
Assets per Employee are a company's total assets over the number of employees it has. Because
companies only report employee counts on an annual basis, this metric will only show once a
year. This ratio measures the efficiency of employees. It also gives valuable inputs to assess the
real strength of a bank’s branch network. The higher the ratio, higher is the efficiency of the
management.

Calculate the asset per employee by using this equation:

Per employee asset = Total Assets/Total Employees

3.10 Salaries and allowances per employee

Any monetary benefit offered by the employer to its employees for meeting expenditures, over
and above the basic salary is known as Salary Allowances. Salaries and allowances is very
important factor to any organization to indicating a successful organization. The ratio considers
the weight of the salaries and allowance versus per employee.

Calculate the salaries and allowances per employee by using this equation:
Salaries and allowance per employee =Total Salaries and Allowance/Total Employees

Higher salaries and allowances are considering less employees turnover. And it does also
promote to employees higher motivation. So, it has a less agency conflict.

3.11 Ratio of Loan and advance to total assets

It is a measurement representing the percentage of a bank’s asset that’s financed with loans and
financial obligations lasting more than one year. The ratio provides a general measure of a
financial position of a company, including its ability to meet financial requirements for
outstanding loan. The ratio has a positive relationship with quality of the asset of the bank.
Higher loan and advance to total asset indicate the sound financial health of the bank.
Calculate the Ratio of loan and advance to total assets by using this equation:

Ratio of Loan and advance to total asset = Loans and Advances / Total Assets

3.12 Ratio of Interest Expense to Total asset

An interest expense is the cost incurred by an entity for borrowed funds. Interest expense is a
non-operating expense shown on the income statement. It represents interest payable on any
borrowings – bonds, loans, convertible debt or lines of credit. Normally the lower this ratio the
better indicating the bank is expense a lower interest rate or the proportion of interest expense to
total assets is high or both of these effects. Interest income for banks is revenue and once you use
it as to total assets, it shows efficiency. This ratio refers to the interest expense on the total assets
used for this purpose to determine whether the rate is too high or too low in order for the
responsible management to decide whether to continue leaving these assets as is or use them
differently.

Calculate the Ratio of interest expense to total assets by using this equation:

Ratio of interest expense to total asset= Interest Expenses/Total Assets

3.13 Ratio of Interest expense to interest bearing liabilities

An interest expense is the cost incurred by an entity for borrowed funds. Interest expense is a
non-operating expense shown on the income statement. It represents interest payable on any
borrowings – bonds, loans, convertible debt or lines of credit. Interest-bearing liabilities are debts
that cost money to hold. They include most financial liabilities that businesses commonly have,
including bank loans and corporate bonds.

Calculate Ratio of the interest expense to interest bearing liabilities by using this equation

Ratio of the interest expense to interest bearing liabilities= Interest Expenses/Interest Bearing
liabilities
3.14 Ratio of Non-interest expense to total asset
The non-interest expenditure of banks comprises of expenses like wages, allowances,
Contribution to provident fund etc. for establishment purpose, provision and Contingencies and
other expenses. Ideally, this ratio should be as low as possible for the banks.

Calculate the Ratio of non-interest expense to total assets by using this equation:

Ratio of non-interest expense to total asset= Non Interest Expense/Total Assets

3.15 Ratio of Provision for loan loss to total asset

loan loss provisioning should reflect the confidence of bank managers about their loan portfolio
quality, which means that provisions should cover the entire spectrum of expected credit losses
in case they really believe that loan loss provisioning is the best indicator of true credit risk If
Loan loss provision increase ROA decrease, if Loan loss provision decrease ROA increase. If
Loan loss provision increase ROE decrease, if Loan loss provision decrease ROE increase.

Calculate the Ratio of provision for loan loss to total assets by using this equation:

Ratio of provision for loan loss to total asset= Provision for loan loss/ Total Assets

3.16 Ratio of loan loss to total loan and advances

It is calculated by dividing the loan loss by the total loan and advances. Actually loan loss is a
loss made by a bank when money it has lent is not paid back. The bank set aside the amount to
cover anticipated loan losses. Loan loss including bad loans, customer defaults, and renegotiated
term of a loan that incur lower than previously estimated payments.

Calculate the Ratio of loan loss to total loan and advances by using this equation:

Ratio of loan loss to total loan and advances= Provision for loan loss/Total loans

and advances
3.18 Ratio of Nonperforming loan and advances to total loan and advances
The ratio can also be expressed as a percentage of the bank's nonperforming loans. Investors can
view NPL ratios to choose where to invest their money; they can view banks with low NPL
ratios as being lower-risk investments than those with high ratios. The nonperforming loan ratio,
better known as the NPL ratio, is the ratio of the amount of nonperforming loans in a bank's loan
portfolio to the total amount of outstanding loans the bank holds. The NPL ratio measures the
effectiveness of a bank in receiving repayments on its loans.

Calculate the nonperforming loan and advances to total loan and advances by using this
equation:

Ratio of non-performing loan and advances to total loan and advance= NPL/Total Loans and
Advances

=
3.19 DuPont Analysis

To avoid mistaken assumptions, a more in-depth knowledge of ROE is needed. In the 1920s the
DuPont Corporation created an analysis method that fills this need by breaking down ROE into a
more complex equation. DuPont analysis shows the causes of shifts in the number. There are two
variants of DuPont analysis: the original three-step equation, and an extended five-step equation.
The three-step equation breaks up ROE into three very important components.

DuPont analysis is a greater tool to understand the broader picture of return on equity of the
company. It gives the view of insight of where the strength of the company lies and where work
needs to be done.
3.19.1 Formula

ROE = (net profit margin) × (asset turnover) × (equity multiplier)

These components include:

 Operating efficiency – as measured by profit margin.

 Asset use efficiency – as measured by total asset turnover.
 Financial leverage –as measured by the equity multiplier.

3.19.2 Calculation:
Taking the ROE equation: ROE = net income / shareholder's equity and multiplying the equation
by (sales / sales), we get:

ROE = (net income / sales) × (sales / shareholders' equity)

We now have ROE broken into two components: the first is net profit margin and the second is
the equity turnover ratio. Now by multiplying in (assets / assets), we end up with the three-step
DuPont identity:

ROE = (net income / sales) × (sales / assets) × (assets / shareholders' equity)

This equation for ROE breaks it into three widely used and studied components:

ROE = (net profit margin) × (asset turnover) × (equity multiplier)

We have ROE broken down into net profit margin (how much profit the company gets out of its
revenues), asset turnover (how effectively the company makes use of its assets) and equity
multiplier (a measure of how much the company is leveraged). The usefulness should now be
clearer.

3.19.3 DuPont Analysis: Interpretation

DuPont Analysis gives a broader view of the Return on Equity of the company. It highlights the
company’s strengths and pinpoints the area where there is a scope for improvement. Say if the
shareholders are dissatisfied with lower ROE, the company with the help of DuPont Analysis
formula can assess whether the lower ROE is due to low-profit margin, low asset turnover or
poor leverage.
 Chapter- 04 (Project part)
Ratio analysis of Jamuna Bank Limited
(JBL) Year-(2014-2018)
4.1 Ratio of interest income to total assets
The "Ratio of Interest income to total assets" reflects banks reliance on interest from bank
lending as a source of funding.

(In million)
Particulars 2014 2015 2016 2017 2018

Interest Income 10421.56 9902.69 9709.01 11472.09 16001.78

Total Assets 139895.43 143434.02 169180.32 197669.20 225540

Interest income
to total assets .074 .069 .057 .058 0.070
ratio
Table 4.1 Ratio of interest income to total assets

(Source: JBL Annual Report: 2014-2018)

Ratio of Interest income to total assets

0.074 0.069

0.057

0.058 0.070

2018
2014 2015 2016 2017
Figure 4.1 (Ratio of interest income to total assets of Jamuna 17
Bank limited 2014-2018)
Interpretation

There is a decline in the Interest income to Total assets of Jamuna bank from 2014 to 2018. It has
decreased from .074 to .070 in 2018. It implies that the bank has not been able to efficiently
utilize its interest income to total asset for the last five years. While a low ratio might indicate that
banks rely on non-interest source of funds.
.

4.2 Ratio of Securities to total assets

(In million)
Particular 2014 2015 2016 2017 2018

Securities 617.57 5263.31 4605.93 3951.72 4512.15

Total Assets 139895.43 143434.02 169180.32 197669.20 225540

Securities to .44% 3.66% 2.72% 2% 2%

total assets
Table 4.1 Ratio of Securities to total assets
(Source: JBL Annual Report: 2014-2018)
Interpretation

There is a decline in the securities to total asset in last five years with year 2014 to 2018.In 2015,
Jamuna bank securities to total asset ratio was 3.66%.In 2014,securities to total asset is very low
and 2016 is 2.72% and 2018 was 2%. So, it is not good indicator for successful bank.

4.3 Ratio of earning asset to total assets

Bank analysts want to know what percentage of a company’s assets are actually generating
income. This ratio calculated by:

Particulars 2014 2015 2016 2017 2018

Earning asset 79962.54 84181.69 117821.36 148099.29 169254

Total assets 139895.43 143434.02 169180.32 197669.20 225540

Ratio of
Earning asset 57.15% 69.64% 74.92% 75%
58.69%
to total assets
Table 4.3 Ratio of earning asset to total assets

(Source: JBL Annual Report: 2014-2018)

Ratio of Earning asset to total assets

75.%

57.15% 58.69% 74.92%

69.64%

2014 2015 2016 2017 2018

Figure 2.3 (Ratio of earning asset to total assets of Jamuna Bank limited 2014-2018)
Interpretation

The ratio of earning asset to total asset of Jamuna Bank is showing an increasing trend. From
2014 to 2018 has increased incredibly. In 2016 earning asset to total asset was 69.64% and its
increasing in 2017 was 74.92%. It increased because the increase assets that are directly
generating income, such as interest- generating investments or income-generating rentals .It
indicates that bank performance outcome is up to the mark.

4.4 Ratio of current deposits to total liabilities

The ratio considers the weight of the total current deposits versus the total liabilities. This ratio
calculated by:

(In million)
Particulars 2014 2015 2016 2017 2018

Current 114626.46 118844.00 141505.95 167563.85 192654

deposits
Total liabilities 129064.55 127704.74 153396.06 182244.64 207294

Ratio of current
deposits to total 91.39% 88.81% 91.94%
93% 92.24%
liabilities
Table 4.3 Ratio of current deposits to total liabilities
(Source: JBL Annual Report: 2014-2018)

Ratio of Current deposits to total liabilities

93%
92.24% 91.94%
91.39%

88.81%

2014201520162017 20182017

Figure4.3 (Ratio of current deposits to total liabilities of Jamuna Bank limited 2014-2018 )
Interpretation
Though there are slight fluctuations, Jamuna Bank has been able to maintain average current
deposits to total liabilities of 91.26% from 2014 to 2018. Their current deposits and their
liabilities are increasing mostly in same range. But it has slightly decreased from 2017 in 92.24%
to 91.94% in 2018

4.5 Ratio of Bank capital to total assets

Ratio of Bank capital to Total assets is the bank capital and reserves to total assets.

(In million)
Particulars 2014 2015 2016 2017 2018

Bank capital 11096.67 14625.82 15757.97 19901.67 21564

Total assets 139895.43 143434.02 169180.32 197669.20 225540

Ratio of 8.05%
Bank 7.93% 10.19% 9.31% 10.06%
capital
to Total
asset
Table 4.5 Ratio of Bank capital to total asset

(Source: JBL Annual Report: 2014-2018)

Ratio of Bank capital to total asset

12.00%
10.19% 10.06%
10.00% 9.31%
8.05% 7.93%
8.00%

6.00%

4.00%

2.00%

0.00%

2014 2015 2017 2018

2016

Figure 2.5(Ratio of Bank capital to total asset of Jamuna Bank limited 2014-2018 )
Interpretation

Bank capital to total asset could provide an accurate measure of the appropriate capital level for a
bank. It can show by percentage. For Jamuna bank, Bank capital to asset ratio are increased in
2015 to 2016 is 7.93% to 10.19% but reduce in 2017 is 9.31% .To compare 2017 to 2018 is
lightly increased in 2018 is 10.06%. So, we can say that bank performance is good in 2018.

4.6 Per employee asset

(In million)
Particulars 2014 2015 2016 2017 2018

Total assets 115121.76 139895.43 143434.02 169180.32 197669.20

Employees 2138 2204 2304 2443 2592

Per 53.84% 63.47% 62.25% 69.25% 76.26%

employee
asset
Table 4.6 per employee asset
(Source: JBL Annual Report: 2014-2018)

Per employee asset

2014 2015 2016 2017 2018

Figure4.6 (Per employee asset of Jamuna Bank limited 2014-2018 )

Interpretation

Normally this ratio indicates that how much percentage is generating by per employee. In
Jamuna bank this ratio is follow the increasing trend. 2017 in Jamuna bank per employee asset is
69.25% and 2018 it is rising by 76.26%. So, we can say that, this ratio indicate bank performance
also good.

4.7 Salaries and allowance per employee

(In million)
Particulars 2014 2015 2016 2017

Salaries & 1696825647 1930419766 2083400674 2489719802 2703870717

Allowance
Employees 2138 2204 2304 2443 2592

Salaries and 793650.91 875871.03 904253.76 1019123.95 1043160

allowance per
employee
Table 4.7 salaries and allowance per employee
(Source: JBL Annual Report: 2014-2018)

Salaries and allowance per employees

1200000

1000000

800000

600000

400000

200000

2014 2015 2016 2017 2018

Figure 4.7(Salaries and allowance per employee of Jamuna Bank limited 2014-2018 )
Interpretation

This is ratio is very important .If this ratio is higher, it will indicate lower employee turnover.
Higher ratio also promotes employees higher motivation and less agency conflict. For Jamuna
bank, this ratio is increasing every year. In 2017 salaries and allowance per employees was
1019123.95 and 2018 was 1043160 and also indicate that good performance.

4.8 Ratio of Loans and advance to total assets

(In million)
Particular 2014 2015 2016 2017 2018

Loans and 68439.84 79032.30 88428.80 118293.78 143,488.81

advance
Total assets 115121.76 139895.43 143434.02 169180.32 197669.20

Ratio of 59.44%
loans &
advance to 56.49% 61.55% 69.92% 72.59%
total assets
Table 4.8 Ratio of loans and advance to total assets
(Source: JBL Annual Report: 2014-2018)

Ratio of loans and advance to total assets

69.92% 72.59%

59.44% 61.55%
56.49%

2014 2015 2016 2017 2018

figure 4.8( Ratio of loans and advance to total assets of Jamuna Bank limited 2014-2018 )
Interpretations

The ratio provides a general measure of a financial position of a company, including its ability to
meet financial requirements for outstanding loan. The lower the capacity ratio of a bank, the
better the position. The ratio is decreasing gradually since 2014 to 2015 is 59.44% to 56.49% and
the bank is performing well. But, 2016 to 2017 increasing the ratio of loan and advance to total
asset. For Jamuna bank, 2017 loan and advance to total asset was 69.92% and 2018 was 72.59%

4.9 Ratio of interest expense to total assets

( In million)
Particular 2014 2015 2016 2017 2018

Interest expense 8064.00 8830.35 8194.85 7140.30 7625.48

Total assets 115121.76 139895.43 143434,02 169180.32 197669.20

Ratio of interest .07 .063 .057 .042 .0385

expense to
total assets
Table 4.9 Ratio of interest expense to total assets
(Source: JBL Annual Report: 2014-2018)

Ratio of Interest expense to total assets

0.07
0.063
0.057

0.042
0.0385

2014 2015 2016 2017 2018

figure4.9 (Ratio of interest expense to total assets of Jamuna Bank limited 2014-2018)
Interpretations

Normally the lower this ratio the better indicate the bank. For Jamuna bank, interest expenses are
decreasing that is good sign for this bank. Interest expenses are slightly decreased in every year.
In 2014 to 2018 is .07 to .038, mainly 2017 was .042 and 2018 was .038. So, we can say that
ratio of interest expense to total asset is very good sign for the Jamuna bank.

4.10 Ratio of non-interest expense to total assets

(In million)
Particulars 2015 2016 2017 2018

Non-interest (3010.95) (3413.75) (4030.58) (4563.49)

expense
Total asset 139895.43 143434.02 169180.32 197669.20

Ratio of non-interest (.0215)

expense to total (.0238) (.0238) (.0230)
asset
Table 4.10 Ratio of non-interest expense to total assets

(Source: JBL Annual Report: 2015-2018, & https://www.investing.com/equities/jamuna-bank-

ltd-income-statement)

Ratio of non-interest expense to total assets

2015 2016 2017 2018

-0.0215

-0.023
-0.0238
-0.0238

Figure 4.10 (Ratio of non-interest expense to total assets of Jamuna Bank limited 2014-
2017)
Interpretations

Noninterest expenses are associated with employee salaries and benefits, information technology
(IT), rent, telecommunication services, taxes, professional services, marketing and other general
operating expenses. Ideally, this ratio should be as low as possible for the banks. For Jamuna
bank, 2017 Ratio of non-interest expense to total asset is (0.0238) and 2018 was (0.023)

4.11 Ratio of provision for loan loss to total assets

(In million)
Particulars 2015 2016 2017 2018

Loan loss 1333.05 1517.1338 1338.71 825.67

provision
Total assets 139895.43 143434.02 169180.32 197669.20

Ratio of non- .0095 .010 .0079 .0041

interest expense
to total assets
Table 4.11 Ratio of provision for loan loss to total assets

(Source: JBL Annual Report: 2015-2018 & https://www.investing.com/equities/jamuna-bank-

ltd-income-statement)

Ratio of provision for loan loss to total asset

2015 2016 2017 2018

Figure 4.11( Ratio of provision for loan loss to total assets of Jamuna Bank limited 2014-
2017 )
Interpretations

Loan loss provision is an expense set aside as an allowance for uncollected loans and loan
payments. For Jamuna bank Ratio of provision for loan loss to total asset comparatively 2017 to
2018 this ratio is.0079 to .0041 is performing well.

4.12 Ratio of non-performing loans and advances to total loans and advances
The ratio can also be expressed as a percentage of the bank's nonperforming loans. Investors can
view NPL ratios to choose where to invest their money; they can view banks with low NPL
ratios as being lower-risk investments.

Calculate the nonperforming loan and advances to total loan and advances by using this
equation:

(In million)
Particular 2014 2015 2016 2017 2018

Nonperforming loans 5133.75 4422.15 5839.60 4743.50 5725.10

and advances
Total loans and 68439.84 79032.30 88428.80 118293.78 143488.81
advances
Ratio of non- 7.50% 5.60% 6.60% 4.01% 3.99%
performing loans and
advances to total loans
and advance

Table 4.12 Ratio of non-performing loans and advances to total loans and advances
(Source: JBL Annual Report: 2014-2018)
 Ratio of nonperforming loans and advances to total
Loans and advances
7.50%
6.60%
5.60%

4.01% 3.99%

2014201520162017 2018

figure 4.12(Ratio of non-performing loans and advances to total loans and advances of
Jamuna Bank limited 2014-2018)

Interpretations

The NPL ratio measures the effectiveness of a bank in receiving repayments on its loans.
Investors can view NPL ratios to choose where to invest their money; they can view banks with
low NPL ratios as being lower-risk investments than those with high ratios. For Jamuna bank,
2017 and 2018 non-performing loan and advance ratio is 4.01% to 3.99%. Jamuna bank,
nonperforming loan and advance is performing well.
 4.13 DuPont Analysis of Jamuna Bank Limited

Title 2014 2015 2016 2017 2018

Net Income 1144.85 1389.68 1642.85 1793.76 2076.58
Net interest 1795.06 1591.21 1707.84 2566.71 3846.61
income(sales)
Total asset 115121.76 139895.43 143434.02 169180.32 197669.20
Total 8895.52 10830.87 15729.227 15784.25 15424.56
shareholders’
equity
(Source: JBL Annual Report: 2014-2018)

ROE = (net profit margin) × (asset turnover) × (equity multiplier)

Financial ratio 2014 2015 2016 2017 2018

Net profit margin 64% 87% 96% 70% 54%

Asset turnover .0155 .0113 .0119 .0151 .0194

Financial leverage 12.94 12.91 9.11 10.72 12.82

ROE 12.84% 12.69% 10.41% 11.33% 13.43%

 net profit margin
financial leverage
asset turnover

2014 2015 2016 2017 2018

Figure 4.13 DuPont analysis of Jamuna Bank limited 2014-2018)

Interpretations:

ROE (Return On Equity):

From the table, we can see that Jamuna bank has improved its ROE from 12.84% to 13.43% in
reporting period. ROE is very popular ratio toward the shareholders of any bank. The higher the
percentage is the better for the bank as well as for shareholders. But the ROE of Jamuna bank
shows that the shareholders are receiving decreasing rate of returns in 2014 their ROE was
10.41%.but 2017 to 2018 ROE is 11.33% to increase 13.43%. It’s ROE by improving assets
utilization. Now, things is that when you look at return on equity ,want to make sure that this
ratio is actually increasing due to profit margin and asset turnover because when this is
happening it is very good for the company and it is beneficial for the company. But, when return
on equity is mainly increasing due to leverage then this is not good for the company and should
be careful.
Now what we are saying with this formula, what is actually happened?

For Jamuna Bank 2018, ROE is actually increased for remain 3 factor.1 st of all the bank have
huge leverage is 12.82% it means the bank using more debt for increasing ROE. On the other
hand, Net profit margin and asset turnover is in average position. So, Bank should be careful
because in this case used the leverage to increase ROE. For Jamuna Bank 2017, ROE is 11.33%
that is less than 2018 is 13.43%. But something is happened there, there is net profit margin is
70% more than 2018 is 54% and financial leverage is 10.72 is less than 2018 is 12.82. That is
obviously good sign for the 2017 to ROE.ROE is high company is profitable.
Chapter- 05
5.1 Findings about the financial performance analysis of Jamuna Bank limited

After analyzing the financial performance analysis of Jamuna bank limited, all the findings are
given below:

 In 2018 the Net profit margin is 54%, which is decreasing than 2017 which was 70%.

 Return on Equity is very low. In 2018 it is 13.43%, in 2017 it was 11.33% and in 2016 it
was 10.41%. It is fluctuated year to year basis.

 Ratio of Loan and advance to total asset is increasing in 2018 it is 72.59%, in 2017 it was
69.92%. This state that, the bank loan on asset increasing day by day.

 Ratio of interest income to total asset was not good. In 2016 to 2018 decreased in every
year. 2016,it was .069 and 2017 to 2018 was .057 to .058

 Ratio of current deposits to total asset were slight fluctuate. In 2016 it was 93% .2017 it
was 92.24% and 2018 was 91.94%

 Ratio of Bank capital to total asset can increase over time, in 2016 it was 10.19% ,in 2017
it have little bit fallen become 9.31% and 2018 was 10.06%

 Throughout my internship period it had to opportunity to observe some unnoticed things,

that is: JBL performance is very poor; many employees have no skill about IT section. So
this is the reason that people do not want to open account in JBL. The computer training
is necessary for the employees, because there is some senior manager who has very
limited knowledge of computer. It affects the banking system and works.
5.2 Recommendation
The report is prepared on the basis of financial performance analysis. The report has attempted to
given detail of financial performance. Nevertheless, it wills recommendation some issues that
will be useful for the operation of financial performance.

 There is a decline in the Interest income to total asset of Jamuna bank from 2014 to 2018.
It has decreased from .085 to .058 in 2018. It implies that the bank has not been able to
efficiently utilize its interest income to total asset for the last five years. So, Bank should
be aware of this.

 Normally the lower this ratio the better indicate the bank. For Jamuna bank, interest
expenses are decreasing that is good sign for this bank.
.
 Net profit margin ratio is decreasing. It is very important to increase the net profit. By
investing the capital more profitable sector, reducing non expenses and payoff the
liabilities properly bank can increase the net profit ratio.

 Ratio of earning asset to total asset, It increased because the increase assets that are
directly generating income, such as interest-generating investments or income-generating
rentals. It indicates that bank performance outcome is up to the mark. So, Bank should
maintain this performance very carefully.

 Jamuna bank has improved its ROE from 12.84% to 13.43% in reporting period. ROE is
very popular ratio toward the shareholders of any bank. The higher the percentage is the
better for the bank as well as for shareholders. But the ROE of Jamuna bank shows that
the shareholders are receiving decreasing rate of returns in 2014 their ROE was
10.41%.but 2017 to 2018 ROE is 11.33% to increase 13.43%. One thing is happened
there, ROE is increasing for increasing by financial leverage. So, Bank should be careful
because the bank using more debt for increasing ROE.

 Throughout my internship period it had to opportunity to observe some unnoticed things,

that is: JBL performance is very poor; many employees have less skill about IT section.
So, bank should be take proper action to improve computer efficiency among employees.
5.3 Conclusion

Jamuna Bank Ltd. started with a vision to be the most efficient financial intermediary in the
country and it believes that the day is not far off when it will reach its desired goal. JBL looks
forward to a new horizon with a distinctive mission to become a highly competitive modern and
transparent institution comparable to any of its kind at home and abroad.
Jamuna Bank Limited has been working with great confidence and competing tremendously with
Government oriented bank, local commercial banks along with the multinational banks also.

Jamuna Bank Limited always tried its level best to perform financially well. In spite of trying to
do well in some aspects Jamuna Bank Limited faced some financial problems from time to time.
Some of the problems were-excessive bad loans, shortage of loans and advances, scarcity of cash
in hands due to vault limit etc. These problems arouse time to time due to economic slowdown,
interest rate fluctuation, emerging capital market, inflation in the money market and so on.
Fighting with all these problems and competing with other banks every moment the bank is
trying to do better to best. If this thing continues we hope that Jamuna Bank Limited will develop
even more in the future.
Reference

 http://www.jamunabankbd.com/
 JBL Annual Report 2014-2018
 https://www.investing.com/equities/jamuna-bank-ltd-income-statement
 http://lankabd.com/companies/companyDetails.html?companyId=25&goToHomePagePa
ram=true
 https://www.dsebd.org/company%20listing.php
 http://shodhganga.inflibnet.ac.in/bitstream/10603/13629/12/12_chapter%202.pdf
Appendix
Balance sheet
(In million)
Particulars 2014 2015 2016 2017 2018

Total Asset 115121.76 139895.43 143434.02 169180.32 197669.20

Total liabilities 106226.24 129064.55 127704.74 153396.06 182244.64

Total 8895.52 10830.87 15729.227 15784.25 15424.56

shareholders’
equity
Total Liabilities 115121.76 139895.43 143343.02 169180.32 197669.20
and shareholders’
equity
Book Value per 19.82 20.99 25.61 25.70 25.12
share
Paid up capital 4487.54 5160.67 6141.19 6141.19 6141.19

Source: Jamuna Bank Annual report 2018

Income Statement
(In million)
Particulars 2014 2015 2016 2017 2018

Net interest 1795.06 1591.21 1707.84 2566.71 3846.61

income(sales)
Total Operating 5781.44 6277.96 7118.01 8188.98 8871.58
Income
Total operating 2688.70 3047.30 3370.39 3964.26 4481.70
expense
Profit before 3092.74 3230.66 3747.62 4224.72 4389.88
provision and tax
Provision for loan 720.13 1296.70 1516.65 1315.82 802.57
and asset
Profit before tax 2372.62 1933.96 2230.97 2908.90 3587.31

Profit after tax 1144.48 1352.73 1642.85 1791.05 2076.58

https://www.investing.com/equities/jamuna-bank-ltd-income-statement

Page
XLIV
 Cash Flow Statement
(In million)
Particulars 2014 2015 2016 2017 2018

Net cash from 3171.80 5402.40 (3267.21) (4466.97) 2443.03

operating
activities
Net cash from 2603.83 (5635.82) 8912.66 4435.97 3597.67
investing
activities
Cash & Cash 49859.81 10930.922 16380.07 15770.39 17265.24
equivalents at
beginning of
the
year
Cash and 41595.25 16380.07 15770.389 16164.65 18547.21
cash
equivalents
at bending of
the
year
Net increase and (8263.55) 5449.155 (609.67) 394.26 7143.9
decrease in cash
and cash
equivalents

Source: https://www.investing.com/equities/jamuna-bank-ltd-cash-flow