Comparative Analysis Between Islami Bank Bangladesh Limited and Jamuna Bank Limited:

A Study on Deposit Performance.

CHAPTER ONE

ORIENTATION OF THE STUDY

Abstract
In this paper analysis has been conducted to determine the comparative efficiency of deposit performance of Islami Bank Bangladesh Ltd (Interest free) and Jamuna Bank Ltd (Interest based) for the period 2008 to 2012 with respect to deposit position of current deposit, saving deposit, fixed deposit, deposit under schemes and total deposit . Deposit performance of IBBL and JBL has been determined and compared based on trend analysis and ratio analysis. This study shows that there is a significant difference between the two banks in deposit performance. The study also finds that the IBBLs deposit performance is more efficient than that of the JBL. The findings are important in the sense that a bank deposit performance depends more on its efficient management rather than on its size (total assets, and total branches, total employees).

1.1 Introduction Banks are the important component of any financial system. Banks perform a socially useful function of transferring financial resources from surplus units (households) to deficit units (business firms). That is why they are termed as financial intermediaries. At present the Bangladesh banking industry is comprised of two basic forms of banking one is conventional banking system and the other is Islamic commercial banking system. Conventional banks perform all functions on the basis of interest. But Islamic banks seek to carry out the same functions by developing a new relationship with their clients without indulging in interest. Deposit is the most important source of banking funds. Deposits play a significant role in running a banking industry. A bank collects deposits in order to produce loans and advances. Survival and development of banks are mainly influenced by their ability to attract deposits from different segment of the community rather than by the volumes of their capital resources. So every bank expects that deposits will be sufficient, safe and flow of deposit will remain smooth. Changes and different mixtures of economic and commercial activities make deposit management challenging to the bank managers. The diversity of transactions among money market and capital market participants continuously influence bank deposit. It is mentionable that some years ago the amount of current deposit was greater than that of term deposits. But with the passage of time, now-a-days, term deposits are contributing more to the volume of bank deposits not only in Bangladesh but also in the world as a whole. Amount of deposits largely influences the magnitude of loan and investment activities. It can be said that large amount of earnings come from bank deposits. For this reason any commercial conventional or Islamic bank requires to monitor and manage its deposit effectively and efficiently. In this analysis one Islamic Bank named Islami Bank Bangladesh Ltd ( IBBL) and one conventional bank named (Jamuna Bank Ltd)have been taken . Both are private and scheduled commercial banks. But the JBL is a conventional type of bank which earns interest at a fixed rate while the IBBL is based on Islamic shariah which earns profit. In this study a comparison has been made between IBBL and JBL in respect of deposit performance. Analysis has been conducted to find out whether there exists any significant difference in deposit performance between the two banks under study. Islami Bank Bangladesh Ltd (IBBL) was established in 1983 and started functioning with effect from March 30, 1983.It has been conducting all banking and investment activities on the basis of interest free profit and loss sharing (PLS) system confirming to the principles of islami shariah through 276 branches all over the country. Jamuna Bank Ltd (JBL) is a 3rd generation private commercial bank, was established under the Companies Act, 1994 of Bangladesh. The Bank started its operation from 3 June 2001 and has now in total of 83 branches. The Bank provides all types of support to trade, commerce, industry and overall business of the country.

1.2 Objectives of the study The main objective of this study is to analyze and compare the deposit performance of Islami Bank Bangladesh Limited with that of Jamuna Bank Limited. Specific objectives are: To compare and judge the deposit performance of both banks by calculating different ratios: Deposit to Owners equity, Deposit to Total fund, Profit Paid on Deposit , Operating expense to Deposit, Loan and Advance to Deposit, Return on Deposit, Deposit per Employee, Deposit per Branch, Current Deposit to Total Deposit, Saving Deposit to Total Deposit, Fixed Deposit to Total Deposit, Deposit under Schemes to Total Deposit. To analyze the trend of deposit performance over last few years. To make some recommendations based on the findings. 1.3 Methodology of the study In order to meet the objectives of the study data were collected from the secondary sources mainly from financial reports of these banks. First, the two banks deposit positions were analyzed based on their audited financial statements for the last five years (2008 - 2012). The comparative study was made by applying the basic statistical procedure like rates, ratios, percentages, and trend etc. The data was also analyzed and demonstrated with the pie diagram. Finally, the result findings and proposed suggestions were presented to improve performance.

1.4 Limitations of the study A whole hearted effort was applied to conduct the report and to bring a reliable and fruitful result. In spite of having the best effort, there exist some limitations, which acted as a barrier to conduct the program. The limitations were noted below Secondary data are not always reliable and accurate and up to date. So, in spite of their availability the data were quite difficult to sort out. Choosing the right and appropriate information, making the right comment and touching the ultimate point to which the study was directed was a bit difficult from the very beginning. Another problem was the structure of the report and conducting the study. How the study can be conducted how the data will be arranged and how the purpose can be served. Where from the study should start, what to include, which data to be analyzed, what to mention what to focus on all these questions were really making the whole task difficult.

CHAPTER TWO

THEORITICAL FRAMEWORK

2.1 Deposit Account A deposit account is a saving account, current account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the bank and represents the amount owed by the bank to the customer. Some banks may charge a fee for this service, while others may pay the customer interest on the funds deposited.

2.2 Classification of Deposit:

Deposit Products of Islami Bank Bangladesh Limited. Islami Bank Bangladesh Limited mobilizes deposits through different types of accounts. Such as Al-Wadeah Accounts Current Account(AWCA) Mudaraba Accounts Savings Account(MSA) Mudaraba Term Deposit Account(MTDA) Mudaraba Special Notice Account (MSNA) Mudaraba Foreign Currency Deposit Account(MFCDA) Mudaraba Special Notice Account(MSNA)

Al-Wadeah Current Account(AWCA) Islami Bank Bangladesh Limited operates Al-wadeah Current Account on the principles of Alwadeah. The Bank commits to refund money deposited in these Accounts on the demand of customers. On the other hand the Bank takes permission from customers that the Bank may utilize their money. Customers may operate these Accounts as their desires. No profit is disbursed in these Accounts and depositors do not bear any loss. Minimum deposit Tk.1000/-. Mudaraba Savings Account(MSA) Mudaraba savings account is opened under the Mudaraba principal of Islami Shariah. Under the above principal the clients is the Shaheb-Al Mal and the Bank is Mudarib. On behalf of depositors, the Bank invests their deposited money and distributes minimum 65% of investmentincome earned through deployment of Mudaraba funds among Mudaraba depositors after the closing of the year. Mudaraba Savings accounts are mainly meant for Non-Trading customers who have some potential saving with small no. of transactions taking place. More than one person can open and operate a Mudaraba savings account. A guardian on behalf of a minor can open a Mudaraba Savings A/C. In which case a declaration stating the date of birth of the minor should be obtained from the guardian. Initial deposit Tk.500/-.

Mudaraba Term Deposit Account (MTDA) Mudaraba Term Deposit Receipt (MTDA) is a profit bearing account which offers returns by depositing money for fixed period of time based on Mudaraba concept. These deposits are repayable subject to a period of notice and hence known as time deposits or time liabilities meaning thereby that these are withdrawable subject to a period of notice and not on demand. Tk.1000/- and multiple of Tk.100/- for the period of 3 months, 6 months, 12 months, 24 months and 36 months can be deposited. Minimum deposit Tk.1000/-. Mudaraba Special Notice Deposit Account (MSNDA) Mudaraba Special Notice Deposit (MSND) is a profit bearing Mudaraba deposit suitable for one who are involved in business or are frequent in transaction but does follow a pattern. It enables one to operate a kind of Current Account which incurs profit. Minimum deposit Tk.25000/-. Mudaraba Foreign Currency Deposit Account (MFCDA) This Account may be opened by depositing minimum US $1,000/- at designated Branches of the Bank. Bangladeshi nationals residing, working and earning abroad, foreign national residing in Bangladesh and also foreign firms registered abroad and operating in Bangladesh foreign missions and their expatriate employees are eligible to open this Account. The Account-holder will get profit as per rules and regulation. Minimum deposit US $1,000/-. Beside this Islami Bank Bangladesh Limited also offers various kinds of deposit schemes. Such as Mudaraba Hajj Savings Scheme(MHSC) Mudaraba Special Savings(Pension) Scheme(MSSC) Mudaraba Savings Bond Scheme(MSBC) Mudaraba Monthly Profit Deposit Scheme(MMPDS) Mudaraba Muhor Savings Scheme(MMSC) Mudaraba Waqf Cash Deposit Sccheme(MWCDS) Mudaraba NRB Savings Bond Scheme(MNSBS) Students Mudaraba Savings Scheme(SMSS) Mudaraba Farmers Savings Scheme(MFSS)

Mudaraba Hajj Savings Scheme (MHSS) Any Muslim intending to perform Hajj by bulding-up deposit in Hajj Saving Account required for meeting Hajj expenses will select one from the 25 alternative choices based on duration of period from 1 year to 25 years for building up savings by monthly installments.

Mudaraba Special Savings (Pension) Scheme (MSSS) Mudaraba Special Savings (Pension) Account of 5-year or 10-year term may be opened for monthly deposits of Tk. 100.00, Tk. 200.00, Tk. 300.00, Tk. 400.00, Tk. 500.00, Tk. 600.00, Tk. 700.00, Tk. 800.00, Tk. 900.00, Tk. 1000.00 and Multiple of thousand upto Tk. 20,000.00 only. After maturity of the account, the account holder will be paid his deposited amount with profit earned at a time or on installment basis. The parents or legal guardians shall be allowed to open this account jointly with a minor. Minimum deposit Tk.100/-.

Mudaraba Savings Bond Scheme (MSBS) Persons aged 18 years and above shall be eligible to purchase Mudaraba Savings Bond in single name or in joint names, Educational Instituions, Clubs, Associations and other non-trading and non-profit socio-economic institutions shall also be eligible to purchase Bonds in the name of the institutions. Guardians shall be allowed to purchase Bonds jointly with a minor mentioning the age of the minor. Mudaraba Savings Bond shall be available I Tk.1000, Tk.5000, Tk.25000, Tk.50000, 1,00,000, Tk.5,00,000 and Tk.10,00,000 denominations. Minimum deposit Tk.1000/-. Mudaraba Monthly Profit Deposit Scheme (MMPDS) Any individual may open this Account by depositing money a minimum amount of Taka 100,000/- and multiples thereof at a time for five years only. Monthly provisional profit shall be given to the Account just after completion of minimum 30 days from the date of opening of the Account. The profit amount shall be adjusted on completion of each accounting year after declaration of final rate of profit. Minimum deposit Tk.100000/-.

Mudaraba Muhor Savings Scheme (MMSS) As per Islamic Shariah, it is Fard for a husband to pay Muhorana to his wife. The Bank introduces this Account for creation of opportunities to establish this Fard. Any conscious husband may open Accont in the name of his wife for monthly installment of Tk. 500/-, Tk. 1,000/-, Tk. 2000/-, Tk. 3,000/-, Tk. 4,000/- and Tk. 5,000/- only in 5 years and 10 years terms.Minimum deposit Tk.500/-. Mudaraba Waqf Cash Deposit Scheme(MWCDS) To implement your noble desire, this Account may create cash waqf at a time or may start with a minimum deposit of Tk. 10,000/- (Taka ten thousand only) and the subsequent deposit shall be made by installments(s) in thousand taka or in multiple of thousand taka. Profit of this account is utilized for social and human welfare as per instruction of the account holders. Minimum deposit Tk.10000/-.

Mudaraba NRB Savings Bond Scheme (MNSBS) The Non-Resident Bangladeshi (NRB) aged 18 years and above who have been serving abroad and his family members will be eligible to purchase Mudaraba NRB Savings Bond maintaining the denomination of Tk.25,000, Tk.50,000, Tk.1,00,000, Tk.2,00,000, Tk.5,00,000 and Tk.10,00,000 in Bangladesh Currency for a period of 5 or 10 years term. An expatriate may

purchase this bond in the name of his/her minor children as per usual terms and conditions applicable to other deposit products. Minimum deposit Tk.25000/-. Students Mudaraba Savings Scheme (SMSS) With a view to grow up savings habit among the minor students, to gather knowledge about banking services and modern technology the Student Mudaraba Savings Account has been introduced. Special privileges have been offered in this account. The privilege to the minor students and encourage them to make savings in Banks that will be helpful for them to make a big savings little by little for completion of higher education. Any guardian can open this account in the name of students below 18 years of any educational institutions by showing Identity Card with Tk.100/- as initial deposit only.

Mudaraba Farmers Savings Scheme (MFSS) With a view to grow up savings habit among the farmers to involve them in banking transaction considering their contribution to the financial activities, to bring them under the banking arena and to increase Financial Inclusion of the country to encourage them to make savings in Banks that will be helpful for them to make a big savings little by little to enhance their financial strength at the time of their crucial need. This account can be opened by depositing Tk.10/- only.

Deposit products of Jamuna Bank Limited. Jamuna Bank Limited mobilizes deposits through different types of accounts. Such as- Current Deposits Savings Bank Deposits Fixed Deposits (Term Deposit) Short Term Deposits Monthly Term Deposits Any other deposits as may be approved/ advised by Head Office.

Current Deposit Account A Current Deposit Account may be opened by individual, firm, company and club, association, body corporate etc. Funds in the Current Deposit Account is payable on demand. No interest is payable on balances of Current Deposit Accounts. Current Deposit Account may be opened with a minimum initial balance of Tk.5,000/. Minimum balance to be maintained in the account is Tk.1, 000/.

Savings Bank Deposit Account Savings Bank Account may be opened in the name of adult individual who are mentally sound and also jointly in the names of two or more persons payable to either or both or all of them or to the survivor or survivors. Savings Bank Account may be opened in the name of a minor also. Saving Bank Account may be opened in the names of clubs, societies, association and similar institutions and even by government and semigovernment offices. Account shall be opened with atleast a minimum initial deposit of Tk.1,000/. Short Term Deposit Account Deposits held in this account are payable on short notice. Normally corporate bodies, bank and financial organizations invest their funds temporarily. Nowadays, private individuals having sound financial means also open this type of deposit accounts. Deposits held in STD Account are payable in 7 (Seven) days notice. Minimum balance requirement for accruing interest is Tk.100,000 (Taka one lac) only. Fixed Deposit Account Fixed Deposit is neither transferable nor negotiable. Fixed Deposit Account may be opened by individuals, firms, companies, corporate body etc. Fixed Deposit Account shall be opened for a fixed period ranging from 3 months to 36 months or above as determined by Head Office from time to time. Interest on deposits shall normally be payable on maturity along with principal. Customers may however, have the option of withdrawing interest accrued after every six months provided that the account is for more than 24 months period. Interest ceases to accrue on overdue Fixed Deposit Account. Branch may, however, allow interest to exceptionally valued clients on deserving cases with concurrence of Head Office. FDR may be encased before maturity on written request of the depositor. For payment of interest, branch shall follow Head Office instruction in this regard from time to time.

Schemes offered by Jamuna Bank Limited Monthly Benefit Scheme Monthly Saving Scheme Education Saving Scheme Marriage Deposit Scheme Double Growth Deposit Scheme Triple Growth Saving Scheme Lakhpoti Deposit Scheme Kotipati Deposit Scheme Millionaire Deposit Scheme

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 youre cherished Dream, JBL MSS is the right solution. 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. Double/Triple Growth Scheme For people who have cash flow at this moment and want to get it doubled/tripled quickly JBL has introduced Double/Triple Growth Deposit Scheme that offers to make double/triple money within 6(six) years and 9.5 (nine and a half) years respectively resulting a high rate of interest. Marriage Deposit Scheme Jamuna Bank Limited has introduced Marriage Deposit Scheme, which offers you an opportunity to build up your cherished fund by monthly deposit of serial, amount at your affordable capacity. Marriage of children involves expense of considerable amount. Prudent parents make effort for gradual building of fund as per their capacity to meet the matrimonial expense of their children specially daughters. It can be a great help to the parents if there is any scope of deposit of a modest mount as per their financial capacity, which groves very fast at high rate of interest yielding a sizeable amount on maturity. Education Savings Scheme Jamuna Bank Limited has introduced 'Education Savings Scheme' which offers you an opportunity to build up your cherished fund' by monthly deposit of small amount it at your affordable capacity or initial lump sum deposit to yield handsome amount on a future date to meet the educational expenses. Under this Scheme you have the different attractive options to avail the future benefit i.e. withdrawal of the total amount accumulated in lump sum or withdrawing monthly. 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 Jamuna Bank Limited has introduced "Lakhopati Scheme" which has flexibility report of maturity and monthly installment as per affordable capacity.

The following documents duly completed shall be obtained from the customer at the time of opening different types of accounts as applicable: Individual/ joint Account opening form as applicable duly filled in; Specimen Signature Card; Two photographs duly attested by introducer; Nominee Form (if nomination given by the account holder); Mandate or Authority Form (if a third person is authorized to operate the account); Proprietorship Firm Account Opening Form Specimen Signature Card; Copy of Trade License; Two photographs duly attested by introducer; Proprietorship Rubber Stamp against all signatures of the proprietor; Partnership Concern Account Opening Form; Specimen Signature Card; Copy of Trade License; Partnerships Deed; Two photographs of each partner duly attested by introducer; Partnership Rubber Stamp against all signatures of partners operating the accounts; Partnership letter; Private Limited Company Account Opening Form; Specimen Signature Card; Copy of Trade License; Copy of Memorandum and Articles of Association duly attested by the Managing Director/ Chairman of the Co; Certificate of Incorporation; List of Director as per return of Joint Stock Company with signature; Resolution of the Board for opening account with the bank; Photographs of each of the authorized signatories; Public Limited Company Account Opening Form; Specimen Signature Card; Copy of Trade License; Photograph of Directors and account operators other than Director; Certified copy of Memorandum and Articles of Association; Certificate of commencement of business; List of Directors as per returns of Joint Stock Company with their signature;

Resolution of the Board for opening account with the Bank; Certification of incorporation.

Clubs/ Association/ Society etc. (Non-Trading Concerns) Account opening Form for current account or SB accounts; Specimen Signature Card; Certified copy of Bye laws/ constitution of the organization; List of the Executives of Managing Committee with their signature and present and permanent address; Resolution of the Committee for opening account with the bank; Photographs of each operator of the account; Corporation/ Autonomous Bodies/ Govt. Organization Account Opening Form as applicable; Specimen Signature Card; Copy of the Act or Ordinance Showing authority to open account; Letter from the authorized persons in absence of the Board;

2.3 Terms and conditions Deposit - We will give only provisional credit until collection is final for any items, other than cash, we accept for deposit (including items drawn "on us"). Before settlement of any item becomes final, we act only as your agent, regardless of the form of indorsement or lack of indorsement on the item and even though we provide you provisional credit for the item. We may reverse any provisional credit for items that are lost, stolen, or returned. Actual credit for deposits of, or payable in, foreign currency will be at the exchange rate in effect on final collection in U.S. dollars. We are not responsible for transactions by mail or outside depository until we actually record them. We will treat and record all transactions received after our "daily cutoff time" on a business day we are open, or received on a day we are not open for business, as if initiated on the next business day that we are open. At our option, we may take an item for collection rather than for deposit. If we accept a third-party check for deposit, we may require any third-party indorsers to verify or guarantee their indorsements, or indorse in our presence. Withdrawals - Unless clearly indicated otherwise on the account records, any of you, acting alone, who signs to open the account or has authority to make withdrawals may withdraw or transfer all or any part of the account balance at any time. Each of you (until we receive written notice to the contrary) authorizes each other person who signs or has authority to make withdrawals to indorse any item payable to you or your order for deposit to this account or any other transaction with us.

CHAPTER THREE

LITERATURE REVIEW

Literature Review

Since the establishment of Islamic banking a considerable amount of theoretical literature has been published on its operations and methods of financing (Khan, 1985; Haron, 1995). Khan and Haron studied the investment behavior of individuals in 15 Islamic countries and concluded that interest-free money demand deposits are more desirable than interest-bearing deposits. The rate of return from investment with financial institutions has always an important role in explaining the saving behavior of an individual. In fact that is considered as the basic of financial activities. Thats why different financial institutions offering different return rates on their different depository schemes. Investment having high maturity has high rate of return and those having low maturity has low rate of return. For instance the current account has very shorter maturity having offered no return, and saving deposits have high maturity offered high rate of return. The difference among the Islamic and conventional banking system can be judged on the basis of risk involvement. The Islamic jurists (Ullama Keram) argued that the element of risk should not be removed from the financial transaction, if that is removed from the financial transaction then that transaction is no more remained the business or trade but involved in the category of Usury(Riba). Thats why the profit rates of Islamic banks should be accrued form one year to another year, according to the performance of the bank, not according to the change in interest rate (Gafoor, 2001). Just like to conventional banking, Islamic banking too provide the facility to their customers by offering different types of depository schemes. Islamic banking accept the capital providers right to utilize the best possible opportunity that arises from the factors such as the risk involvement, rate of profit and the period of investment. It found that Islamic banking system around the world use usually three main type of deposits; current accounts, saving accounts and investment accounts. On current and saving deposit the bank guaranty the depositor the nominal value that he has deposits but gives no guaranty on return; and the investment deposits are operated fully under the concept of profit and loss sharing (PLS) model (Ariff, 1988). In another study analyze the relationship between total Islamic deposits and rate of interest that offered under Islamic and conventional banking depository schemes in Malaysia. They reached to the result that there is negative relationship between interest rates and total interest free deposits. They argued that Islamic saving and investment accounts holders are highly influenced by the profit motive. So if the Islamic banking has to attract their customers then they must have to offered profit rate more than conventional banks or has to offer some other incentives that attract customers (Haroon and Nor Affifa, 2000). A study which conducted in Malaysia by Obaidullah (2005) has produced his wording on the Islamic banking as: that Islamic banking is facing very competitive environment due to their strong competitor. And Islamic financial institutions could be exposed to the risk of strong withdrawal by its customer because of the high rate they received from conventional institutions as compare to the Islamic institutions. In such scenario the Islamic financial institution should

have to pay such market competitive rates with which they could retain their customers (Obaidullah, 2005). In order to find out that weather the islamic banking and conventional banking is similar in practice are different from each other, a study conducted on the Malaysian Islamic banking system by Beng soon Chong and Ming-Hua Liu in 2007. They have found that there is relationship between both banking systems. Although in theoretical base a unique feature that differentiates both banking system is interest (Riba). But in practice they found that both systems were not as much different from each other (Chong & Liu , 2007). In Bangladesh few studies have been conducted comparing efficiency of deposit management of Islamic banking and conventional banking. The notable one is conducted by Mohammad Nurul Alam in 1994. He undertook a case study on an Interest-Free Financial Institution in Bangladesh known as Islami Bank Bangladesh Limited (IBBL). The aim of the study was to see how Islamic banking activities differ from a conventional bank and also tosee how Islamic banks may contribute to render financial services towards small and rural sector. By discussing various aspects of the IBBL, it is shown in detail how interest-free bank functions besides many established conventional banks in the country. Onother mentionable study was conducted by Kabir, Qayum& Islam in 2010. They analyzed the comparative efficiency of deposit management of Islamic Bank Bangladesh Ltd (Interest free) and Pubali Bank Ltd (Interest based) for the period 2006 to 2010 with respect to current deposit, time deposit, saving deposit, total deposit and various deposit ratios. Applying coefficient of variation (C.V) for measuring stability of deposits and F test for showing the significant differences of deposit management for the IBBL and the PBL, their findings showed that there is a significant difference between the two banks in deposit management. However, the study finds that there is no significant difference in current deposit management and investment to deposit ratio. The study also finds that the IBBL deposit management is more efficient than that of the PBL.

CHAPTER FOUR

COMPARATIVE ANALYSIS BETWEEN ISLAMI BANK BANGLADESH LIMITED AND JAMUNA BANK LIMITED

4.1 TREND ANALYSIS

4.1.1 Current deposit positions of IBBL& JBL and year to year growth.
Table: 4.1.1 Current deposit positions and year to year growth
50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0

0.43 0.254 0.18 32199 7948 2010 7948 32199 0.254 0.18 Jamuna(growth%) 36954 0.148 0.115 8860 2011 8860 36954 0.115 0.148

45744 0.238 0.123 9950 2012 9950 45744 0.123 0.238 Islami(growth%)

0.247 21889 4426 0 2008 4426 21889 27287 6340 2009 6340 27287 0.43 0.247 Islami

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

Amount in BDT. Million

Jamuna Islami Jamuna(growth%) Islami(growth%) Jamuna

Data Source: Banks Annual Report (2009, 2011, 2012) & Resume of Financial Institutions of Bangladesh.

Table 4.1.1 shows Current Deposit positions and trend of its growth of JBL and IBBL from 2008 to 2012. In 2008 Current Deposit position of JBL and IBBL was tk. 4426 million and tk. 21889 million respectively. In 2009 the amount of Current Deposit was tk.6340 million and 27287 million for JBL and IBBL respectively and rate of growth was 43% and 24.7% respectively. In 2010 the amount was tk.7948 million and tk.32199 million and rate of growth was 25.4% and 18% for JBL and IBBL respectively. In 2011 the total amount and rate of growth of Current Deposit of JBL was tk.8860 million and 11.5% respectively where as it was tk.36954 million and 14.8% respectively for JBBL. . In 2012 the amount of Current Deposit was tk.6340 million and 27287 million for JBL and IBBL respectively and rate of growth was 43% and 24.7% respectively. Here we see that the growth percentage of Current Deposit of JBL varies significantly in a wide range of 43% to 11.5%. On the other hand the growth percentage of IBBL varies narrowly in a range of 24.7% to 14.8%. The maximum growth percentage of Current Deposit was in 2009 for both banks.

Growth

4.1.2 Saving deposit positions of IBBL & JBL and year to year growth. Table 4.1.2
Saving deposit positions and year to year growth
160000 60%

Amount in BDT. Million

0.51
140000

151012 132052

0.44
120000 100000

50%

114314 98743 84134 0.174 0.16 0.13 0.155 4473 2011 4473 132052 0.13 0.155 0.13 0.144 5046 2012 5046 151012 0.13 0.144 Islami(growth)

40%

80000 60000 40000 20000

30%

20%

10%

1821
0

2630 2009 2630 98743 0.44 0.174

3968 2010 3968 114314 0.51 0.16

2008 1821 84134

0%

Jamuna Islami Jamuna(growth) Islami(growth)

Jamuna

Islami

Jamuna(growth)

Data Source: Banks Annual Report (2009, 2011, 2012) & Resume of Financial Institutions of Bangladesh.

Table 4.1.2 shows Saving Deposit positions and trend of its growth of JBL and IBBL from 2008 to 2012. In 2008 Saving Deposit position of JBL and IBBL was tk.1821 million and tk.84134 million respectively. In 2009 the amount of Saving Deposit was tk.2630 million and 98743 million for JBL and IBBL respectively and rate of growth was 44% and 17.4%% respectively. In 2010 the amount was tk.3968 million and tk.114314 million and rate of growth was 51% and 16% for JBL and IBBL respectively. In 2011 the total amount and rate of growth of Saving Deposit of JBL was tk.4473 million and 13% respectively where as it was tk.132052 million and 15.5% respectively for JBBL. . In 2012 the amount of Saving Deposit was tk.5046 million and 151012 million for JBL and IBBL respectively and rate of growth was 13% and 14.4% respectively. Here we see that the growth percentage of Saving Deposit of JBL varies significantly in a wide range of 51% to 13%. On the other hand the growth percentage of IBBL varies narrowly in a range of 17.4% to 14.4%. The maximum growth percentage of Saving Deposit was in 2009 for both banks. IBBL is very consistent in their saving deposit collection where JBL is inconsistent.

Growth rate

4.1.3 Fixed deposit positions of IBBL & JBL and year to year growth Table 4.1.3
120000 70%

Fixed Deposit positions and year to year growth rate

0.59 97278

Amount in BDT.Million

100000

60%

50% 80000

0.39
60000

40%

0.32 52451

65167 0.24

30%

40000

39673
20000

20%

0.17 36694 42857 44681

10%

28518 16054 25507

0.04 2009 25507 39673 0.59 0.39 2010 36694 52451 0.44 0.32 2011 42857 65167 0.17 0.24 2012 44681 97278 0.04 0.49
0%

2008 16054 28518

JBL IBBL JBL(growth rate) IBBL(growth rate)

Data Source: Banks Annual Report (2009, 2011, 2012) & Resume of Financial Institutions of Bangladesh.

Table 4.1.3 shows Fixed Deposit positions and trend of its growth of JBL and IBBL from 2008 to 2012. In 2008 Fixed Deposit position of JBL and IBBL was tk.16054 million and tk.28514 million respectively. In 2009 the amount of Fixed Deposit was tk.25507 million and tk.39673 million for JBL and IBBL respectively and rate of growth was 59% and 39%% respectively. In 2010 the amount was tk.36694 million and tk.52451 million and rate of growth was 44% and 32% for JBL and IBBL respectively. In 2011 the total amount and rate of growth of Fixed Deposit of JBL was tk.42857 million and 17% respectively where as it was tk.65167 million and 24% respectively for JBBL. In 2012 the amount of Fixed Deposit was tk.44681 million and 97278 million for JBL and IBBL respectively and rate of growth was 4% and 49% respectively. Here we see that the growth percentage of Fixed Deposit of JBL varies significantly in a wide range of 59% to 4%. On the other hand the growth percentage of IBBL varies relatively in a narrow range of 49% to 24%. The maximum growth percentage of Fixed Deposit was in 2009 for JBL. But the maximum growth percentage of IBBL was in 2012. IBBL is relatively more consistent than JBL in their fixed deposit collection. From the trend analysis we see that IBBLs Fixed Deposit position is getting stronger but JBLs Fixed Deposit position is getting weaker year by year.

Growth rate

0.44

0.49

4.1.4 Deposit positions of various Schemes of IBBL & JBL and year to year growth

Table 4.1.4
Deposit positions of various schemes and year to year growth
120000

Amount in BDT.Million

70% 0.59 60% 50% 40% 30% 20% 0.14 3159 5028 2009 5028 74191 0.59 0.18 JBL IBBL 7900 2010 7900 84592 0.57 0.14 JBL(growth rate) 11507 2011 11507 96367 0.46 0.14 0.14 15915 2012 15915 109475 0.38 0.14 IBBL(growth rate) 0% 0.14 10% 2008 3159 63100 Growth rate

100000

0.57 0.46 84592 109475 0.38

80000

60000

74191 63100

96367

40000

0.18
20000

JBL IBBL JBL(growth rate) IBBL(growth rate)

Data Source: Banks Annual Report(2009, 2011, 2012) & Resume of Financial Institutions of Bangladesh.

Table 4.1.4 shows Deposit positions of various Schemes and trend of its growth of JBL and IBBL from 2008 to 2012. In 2008 Deposit positions of various Schemes of JBL and IBBL was tk.3159 million and tk.63100 million respectively. In 2009 the amount of Deposit positions of various Schemes was tk.5028 million and tk.74191 million for JBL and IBBL respectively and rate of growth was 57% and 18% respectively. In 2010 the amount was tk.7900 million and tk.84592 million and rate of growth was 57% and 14% for JBL and IBBL respectively. In 2011 the total amount and rate of growth of Deposit positions of various Schemes of JBL was tk.11507 million and 46% respectively where as it was tk.96367 million and 14% respectively for JBBL. In 2012 the amount of Deposit positions of various Schemes was tk.15915 million and 109475 million for JBL and IBBL respectively and rate of growth was 38% and 14% respectively. Here we see that the growth percentage of Deposit positions of various Schemes of JBL shows downward trend and it varies in a range of 59% to 38%. On the other hand the growth percentage of IBBL varies relatively in a narrow range of 18% to 14%. The maximum growth percentage of Deposit positions of various Schemes was in 2009 for both the bank. From the trend analysis we find that JBLs Deposit Schemes is more attractive than IBBLs Deposit Schemes.

4.1.5 Total Deposit positions of IBBL & JBL and year to year growth Table 4.1.5
Year 2008 2009 2010 2011 2012 IBBL 202115 244292 291935 341854 417844 +/42177 47643 49919 75990 Growth rate .21 .195 .17 .22 JBL 27308 42356 60674 70508 79623 +/15048 18318 9834 9115 Growth rate .55 .43 .16 .13

Total deposit positions and year to year growth

450000 400000 350000 300000 250000 200000 150000 100000 50000 0

Amount in BDT.Million

0.55 0.43 291935 202115 27308 2008 27308 202115 244292 0.21 42356 2009 42356 244292 0.55 0.21 JBL IBBL 60674 2010 60674 291935 0.43 0.195 JBL(Growth rate) 0.195 0.16 0.17 70508 2011 70508 341854 0.16 0.17 341854

60%

40% 30%

0.22 0.13 79623 2012 79623 417844 0.13 0.22

20% 10% 0%

JBL IBBL JBL(Growth rate) IBBL(Growth rate)

IBBL(Growth rate)

Data Source: Banks Annual Report(2009, 2011, 2012) & Resume of Financial Institutions of Bangladesh.

Table 4.1.5 shows Total Deposit positions and trend of its growth of JBL and IBBL from 2008 to 2012. In 2008 Total Deposit position of JBL and IBBL was tk.27308 million and tk.202115 million respectively. In 2009 the amount of Total Deposit was tk.42356 million and tk.244292 million for JBL and IBBL respectively and rate of growth was 55% and 21% respectively. In 2010 the amount was tk.60674 million and tk.291935 million and rate of growth was 43% and 19.5% for JBL and IBBL respectively. In 2011 the total amount and rate of growth of Total Deposit of JBL was tk.70508 million and 16% respectively where as it was tk.341854 million and 17% respectively for JBBL. In 2012 the amount of Total Deposit was tk.79623 million and 417844 million for JBL and IBBL respectively and rate of growth was 13% and 22% respectively. Here we see that the growth percentage of Total Deposit of JBL varies significantly in a wide range of 55% to 13% and shows a downward trend whereas the growth percentage of IBBL varies relatively in a narrow range of 22% to 17%. The maximum growth percentage of Total Deposit was in 2009 for JBL. But the maximum growth percentage of IBBL was in 2012. IBBL is relatively more consistent than JBL in their Total Deposit collection. From the trend analysis we see that IBBLs Deposit collection is more consistent than JBLs Deposit collections. JBLs Deposit collection performance is dropping due to steep market competition. On the other hand IBBLs Deposit collection performance has less influenced by the market competition and economic condition.

Growth rate

417844

50%

4.2 RATIO ANALYSIS

4.2.1 Current deposit to Total deposit Table 4.2.1 Current deposit to total deposit ratio

18 16 Percentage 14 12 10 8 6 4 2 0 jamuna (in%) islami (in %) 2008 16.21 10.83 2009 14.97 11.17 2010 13.08 11.05 2011 12.56 10.81 2012 12.5 10.91 10.83 11.17 11.05 10.81 10.91 jamuna (in%) islami (in %) 16.21 14.97 13.08 12.56 12.5

Data Source: Banks Annual Report (2009, 2011, 2012) & Resume of Financial Institutions of Bangladesh.

Table 4.2.1 shows and compare Current Deposit to Total Deposit ratio of JBL and IBBL. In 2008 Current Deposit to Total Deposit ratio was 16.21% and 10.83% for JBL and IBBL respectively. In 2009 Current deposit to Total Deposit ratio of JBL and IBBL was increased and it was 14.97% and 11.17% respectively. In 2010 Current Deposit to Total Deposit ratio of JBL and IBBL was decreased and was 13.08% and 11.05% respectively. In 2011 Current Deposit to Total Deposit ratio of JBL and IBBL was decreased and was 12.56% and 10.81% respectively. In 2012 Current Deposit to Total Deposit ratio of JBL and IBBL was 12.5% and 10.91% respectively. Here we see that from 2008 to 2012 Current Deposit to total ratio of JBL varies in a range of (16.21-12.5), but Current Deposit to Total Deposit ratio of IBBL does not varies significantly. We also see that Current Deposit proportion of JBL is being lowered year by year but Current Deposit proportion of IBBL is being maintained almost the same proportion.

4.2.2 Saving deposit to total deposit Table 4.2.2 Saving Deposit to total deposit
45 40 35 Percentage 30 25 20 15 10 5 0 jamuna(in %) islami (in%) 2008 6.67 41.63 2009 6.21 40.42 2010 6.53 39.23 2011 6.35 38.63 2012 6.34 36.15 6.67 6.21 6.53 6.35 6.34 jamuna(in %) islami (in%) 41.63 40.42 39.23 38.63 36.15

Data Source: Banks Annual Report (2009, 2011, 2012) & Resume of Financial Institutions of Bangladesh.

Table 4.2.2 shows and compare Saving Deposit to Total Deposit ratio of JBL and IBBL. In 2008 Saving Deposit to Total Deposit ratio was 6.67% and 41.63% for JBL and IBBL respectively. In 2009 Saving Deposit to Total Deposit ratio of JBL and IBBL was decreased and it was 6.21% and 40.42% respectively. In 2010 Saving Deposit to Total Deposit ratio of JBL and IBBL was 6.53% and 39.23% respectively. In 2011 Saving Deposit to Total Deposit ratio of JBL and IBBL was 6.35% and 38.63% respectively. In 2012 Saving Deposit to Total Deposit ratio of JBL and IBBL was 6.34% and 36.15% respectively. Here we see that from 2008 to 2012 Saving Deposit to total ratio of IBBL varies in a range of (41.63-36.15), but Saving Deposit to Total Deposit ratio of JBL does not varies significantly. We also see that Saving Deposit proportion of IBBL is being lowered year by year but Saving Deposit proportion of IBBL is being maintained almost the same proportion. We also conclude that IBBLs Saving Deposit is more attractive than JBLs as IBBLs Saving Deposit constitutes a large portion of its Deposit portfolio compared to JBLs Deposit portfolio.

4.2.3 Fixed deposits to total deposits Table 4.2.3 Fixed deposit to total deposit
70 60 50 58.79 60.22 60.4 60.78 56.12

Percentage

40 30 20 10 0 14.11 2008 58.79 14.11 16.24 18.12 19.06 23.29 jamuna(in%) islami(in%)

jamuna(in%) islami(in%)

2009 60.22 16.24

2010 60.4 18.12

2011 60.78 19.06

2012 56.12 23.29

Data Source: Banks Annual Report (2009, 2011, 2012) & Resume of Financial Institutions of Bangladesh.

Table 4.2.3 shows and compare Fixed Deposit to Total Deposit ratio of JBL and IBBL. In 2008 Fixed Deposit to Total Deposit ratio was 58.79% and 14.11% for JBL and IBBL respectively. In 2009 Fixed Deposit to Total Deposit ratio of JBL and IBBL was 60.22% and 16.24% respectively. In 2010 Fixed Deposit to Total Deposit ratio of JBL and IBBL was 60.4% and 18.12% respectively. In 2011 Fixed Deposit to Total Deposit ratio of JBL and IBBL was 60.78% and 19.06% respectively. In 2012 Fixed Deposit to Total Deposit ratio of JBL and IBBL was 56.12% and 23.29% respectively. Here we see that from 2008 to 2012 Fixed Deposit to total ratio of IBBL varies in a range of (23.29-14.11), but Fixed Deposit to Total Deposit ratio of JBL does not varies significantly. We also see that Fixed Deposit proportion of IBBL is being increased year by year but Fixed Deposit proportion of JBL is being maintained almost the same proportion except in 2012. We also conclude that JBLs Fixed Deposit is more attractive than IBBLs as JBLs Fixed Deposit constitutes a large portion of its Deposit portfolio compared to IBBLs Deposit portfolio. We also see that IBBL is trying to increase its Fixed Deposit proportion in its portfolio as proportion of fixed deposit has increased over the last five years.

4.2.4 Deposit under schemes to total deposit Table 4.2.4 Deposit under schemes to total deposit ratio

35 30 Percentage 25 20 15 10 5 0 2008 jamuna(in%) islami(in%) 2008 11.57 31.22 2009 2009 11.87 30.37 2010 2010 13.02 29.03 2011 2011 16.32 28.19 2012 2012 19.99 26.2 16.32 11.57 11.87 13.02 31.22 30.37 29.03 28.19 26.2 19.99 jamuna(in%) islami(in%)

Data Source: Banks Annual Report(2009, 2011, 2012) & Resume of Financial Institutions of Bangladesh.

Table 4.2.4 shows and compare Deposit under Schemes to Total Deposit ratio of JBL and IBBL. In 2008 Deposit under Schemes to Total Deposit ratio was 11.57% and 31.22% for JBL and IBBL respectively. In 2009 Deposit under Schemes to Total Deposit ratio of JBL and IBBL was 11.87% and 30.37% respectively. In 2010 Deposit under Schemes to Total Deposit ratio of JBL and IBBL was 13.02% and 29.03% respectively. In 2011 Deposit under Schemes to Total Deposit ratio of JBL and IBBL was 16.32% and 28.19% respectively. In 2012 Deposit under Schemes to Total Deposit ratio of JBL and IBBL was 19.99% and 26.2% respectively. Here we see that from 2008 to 2012 Deposit under Schemes to total ratio of IBBL varies in a range of (31.22 to 26.2), and Deposit under Schemes to Total Deposit ratio of JBL varies in a range of (19.99 to 11.57). Here we see that IBBL has a bigger proportion of Deposit under schemes than JBL has on portfolio of Deposits. We also see that Deposit under Schemes proportion of JBL is being increased year by year but Deposit under Schemes proportion of IBBL is decreased over the years. We also conclude that JBL is focusing more focus on increasing the proportion of Deposit under Schemes in its portfolio of Deposits.

4.2.5 Deposits per employee and year to year growth Table 4.2.5
Deposit per employee and year to year growth of IBBL & JBL
70 Amount in BDT.Million 60 50 40 30 20 10 0 JBL IBBL JBL(growth rate) IBBL(growth rate) JBL IBBL 37.84 29.18 2008 29.18 37.84 43.27 34.86 2009 34.86 43.27 0.195 0.143 0.195 0.143 50.41 0.133 0.105 47.83 40.2 2010 40.2 47.83 0.133 0.105 JBL(growth rate) 0.054 39.48 -0.01 2011 39.48 50.41 -0.01 0.054 0.12 57.29 25% Growth rate 20% 15% 10% 5%

39.7 39.7

0.005 0% -5%

2012 57.29 0.005 0.12

IBBL(growth rate)

Data Source: Banks Annual Report (2009, 2011, 2012) & Resume of Financial Institutions of Bangladesh.

Table 4.2.5 shows that in 2008, Deposit per employee of JBL and IBBL was 29.18 million and 37.84 million respectively. In 2009, Deposit per employee of both banks was 34.86 million and 43.27 million respectively. In 2010, Deposit per employee of JBL and IBBL was 40.2 million and 47.83 million respectively. In 2011, Deposit per employee of JBL and IBBL was 39.48 million and 50.41million respectively. In 2012, Deposit per employee of JBL and IBBL was 39.7 million and 57.29 million respectively. We also see that JBL has 19.5%, 13.3%, -.1% and .5% growth in Deposit per employee over the year 2009, 2010, 2011 and 2012 respectively whereas IBBL has 14.3%, 10.5%, 5.4% and 12% growth in Deposit per employee over the year 2009, 2010, 2011 and 2012 respectively. From the analysis we can conclude that Deposit collection performance of IBBL was more or less consistent and did not varies so much over the year. Whereas Deposit collection performance of JBL did varies in a wide range (19.55% to -.1%). For JBL, the last two years growth rate on Deposit per employee was almost zero even in 2011 it was -.1%.

4.2.6 Deposit per Branche and year to year growth Table 4.2.6
Deposit per branch and year to year growth
1600 20%

Amount in BDT.Million

1400 1200 1000 800 600 400 200 0

0.173 0.12 0.08 981 700 2008 700 981 784 2009 784 1058 0.12 0.08 JBL IBBL 1058 920 2010 920 1161 0.173 0.1 JBL(growth rate) 0.1 1161 0.107 0.05 1285 966 2011 966 1285 0.05 0.107 959 959 1514

0.18
Growth rate
15% 10%

1514

5%

-0.007 0%
-5%

2012

JBL IBBL JBL(growth rate) IBBL(growth rate)

-0.007 0.18

IBBL(growth rate)

Data Source: Banks Annual Report (2009, 2011, 2012) & Resume of Financial Institutions of Bangladesh

Table 4.2.6 shows that in 2008, Deposit per branch of JBL and IBBL was tk.700 million and tk.981million respectively. In 2009, Deposit per branch of both banks was tk.784 million and tk.1058 million respectively. In 2010, Deposit per branch of JBL and IBBL was tk.920 million and tk.1161 million respectively. In 2011, Deposit per branch of JBL and IBBL was tk.966 million and tk.1285 million respectively. In 2012, Deposit per branch of JBL and IBBL was tk.959 million and tk.1514 million respectively. We also see that JBL has 12%, 17.3%, 5% and -.7% growth in Deposit per branch over the year 2009, 2010, 2011 and 2012 respectively whereas IBBL has 8%, 10%, 10.7% and 18% growth in Deposit per branch over the year 2009, 2010, 2011 and 2012 respectively. We also find that growth rate of Deposit per branch consistently increase over the year. Whereas growth rate of Deposit per branch varies inconsistently. For JBL, the last two years growth rate on Deposit per branch was almost zero even in 2012 it was -.7%. If we consider Deposit per employee and Deposit per branch altogether, we can easily conclude that Deposit performance of JBL was superior to that of IBBL for year 2009 and 2010. But Deposit performance of JBL drastically falls down in 2011 & 2012. But in the meantime deposit performance of IBBL consistently improved and surpasses the deposit performance of JBL in 2011& 2012.

4.2.7 Deposit to Owners Capital ratio

Table 4.2.7
Deposit to owners' capital
16 14 12 Multiple 10 8 6 4 2 0 JBL IBBL 2008 12.64 14.4 2009 10.64 14.11 2010 9.5 12.33 2011 9.7 12.3 2012 9.56 11.92 12.64 10.64 9.5 14.4 14.11 12.33 9.7 12.3 9.56 JBL IBBL 11.92

Data Source: Banks Annual Report (2009, 2011, 2012)

Table 4.2.7 indicates amount of total deposit of a bank relative to amount of owners equity. The greater the ratio, the better performance in deposit management is ensured. Here we see that Deposit to Owners equity of JBL was 12.64x, 10.64x, 9.5x, 9.7x, and 9.56x in 2008, 2009, 2010, 2011 & 2012 respectively. Deposit to owners equity of IBBL was 14.4x, 14.11x, 12.33x, 12.3x, and 11.92x in 2008, 2009, 2010, 2011 & 2012 respectively. If we analyze the data we can say that IBBL had better performance all time than JBL had, because IBBL had greater Deposit to Owners equity than JBL had in each of the five years.

4.2.8 Return on Deposits ratio (ROD): (Net Interest income/ Total Deposits)*100 Table 4.2.8 Return on Deposits ratio
4.5 4 3.5 3 Percentage 2.5 2 1.5 1 0.5 0 Jamuna bank% Islami Bank % 2008 2.08 3.65 2009 2.12 3.4 2010 2.44 3.53 2011 3.07 3.98 2012 2.3 4.26 2.44 2.08 2.12 3.98 3.65 3.4 3.53 3.07 2.3 4.26

Data Source: Banks Annual Report (2009, 2011, 2012) & Resume of Financial Institutions of Bangladesh.

Table 4.2.8 shows and compares the Return on Deposit ratio (ROD) of JBL and IBBL for year 2008 to 2012.This ratio shows the percentage of return earned on deposits. It is considered to be one of the profitability ratios. It also reflects the bank management ability to utilize the customers deposits in order to generate profits. In this sense it also measures the managerial efficiency of deposit management in banks. The higher this ratio is the higher is the superiority of managerial efficiency in deposit management. Here we see that Return on Deposit ratio of JBL was 2.08%, 2.12%, 2.44%, 3.07%, and 2.3% in 2008, 2009, 2010, 2011 & 2012 respectively. Return on Deposit ratio of IBBL was3.65%, 3.4%, 3.53%, 3.98%, and 4.26% in 2008, 2009, 2010, 2011 & 2012 respectively. If we analyze the data we can say that IBBL had better performance all time than JBL had, because IBBL had greater Return on Deposit ratio than JBL had in each of the five years.

4.2.9 Profit paid on Deposits ratio (PPD): (Total profit paid to the depositors/ Total Deposits)*100 Table 4.2.9 Profit paid on Deposits ratio(PPD)
12 10 9.78 Percentage 8 6 6.02 4 2 0 Jamuna Bank % Islami Bank % 8.5 6.82 5.35 6.13 4.96 5.38 8.95

6.19

2008 8.5 6.02

2009 6.82 5.35

2010 6.13 4.96

2011 8.95 5.38

2012 9.78 6.19

Data Source: Banks Annual Report (2009, 2011, 2012).

Table 4.2.9 shows and compares the Profit paid on Deposit ratio (PPD) of JBL and IBBL for year 2008 to 2012. This ratio shows the percentage of profit paid to the depositors on their deposit amount. It is very important ratio for measuring the efficiency of deposits management because the ability of attracting the depositors depends on it. So the higher is the value that ratio indicates, the stronger ability the banks have for paying profit to depositors and therefore, is an indicator of better performance in deposit management. Here we see that Profit paid on Deposit ratio of JBL was 8.5%, 6.82%, 6.13%, 8.95%, and 9.78% in 2008, 2009, 2010, 2011 & 2012 respectively. Profit paid on Deposit ratio of IBBL was 6.02%, 5.35%, 4.96%, 5.38%, and 6.19% in 2008, 2009, 2010, 2011 & 2012 respectively. If we analyze the data we can say that JBL paid more profit on Deposits than IBBL did over the last five years. So according to PPD ratio JBL should have performed better than IBBL performed. But other ratios indicate that IBBL had better performance than JBL had. So there are many things other than profit that depositors seek.

4.2.10 Operating expense to Deposits ratio (OED): (Total Operating Expenses/ Total Deposits)*100 Table 4.2.10
Operating expense to Deposits ratio
3.5 3 2.5 2.9 2.6 2.03 2.4 1.86 2.6 2.2 2.08 2.13 2.12 Jamuna Bank % Islami Bank %

Percentage

2 1.5 1 0.5 0

2008 2.6 2.03

2009 2.4 1.86

2010 2.2 2.08

2011 2.9 2.13

2012 2.6 2.12

Jamuna Bank % Islami Bank %

Data Source: Banks Annual Report (2009, 2011, 2012).

Table 4.2.10 shows and compares the Operating expense to Deposit ratio (OED) of JBL and IBBL for year 2008 to 2012. This ratio shows the operating expenses as a percentage of total deposits. It also provides information about managerial efficiency in deposit management. Lower value of that ratio indicates superior performance in deposit management. Here we see that Operating expense to Deposit ratio of JBL was 2.6%, 2.4%, 2.2%, 2.9%, and 2.6% in 2008, 2009, 2010, 2011 & 2012 respectively. Operating expense to Deposit ratio of IBBL was 2.03%, 1.86%, 2.08%, 2.13%, and 2.12% in 2008, 2009, 2010, 2011 & 2012 respectively. If we analyze the data we can say that IBBL had better performance all time than JBL had, because IBBL had less Operating expense to Deposit ratio than JBL had in each of the five years.

4.2.11 Loan and advance to deposits ratio Table 4.2.11

90 80 70 60 Percentage 50 40 30 20 10 0 jamuna (in %) islami (in %) 2008 77.04 88.08 2009 76.23 87.9 2010 81.97 89.7 2011 80.29 89.5 2012 68.93 89.8 jamuna (in %) islami (in %) 88.08 77.04

Loan and advance to deposits ratio

87.9 76.23 89.7 81.97 80.29 89.5 89.8 68.93

Data Source: Banks Annual Report (2009, 2011, 2012).

Table 4.2.11 shows and compares the Loan and Advance to Deposit ratio of JBL and IBBL for year 2008 to 2012. This ratio is a very crucial determinant of any bank for measuring the efficiency in deposit management. Because a bank takes deposits from their valued customers and it has to ensure security by investing their money in profitable sector. So ability to pay profit to the depositors depends on the banks earnings. Here we see that Loan and Advance to Deposit ratio of JBL was 77.04%, 76.23%, 81.97%, 80.29%, and 68.93% in 2008, 2009, 2010, 2011 & 2012 respectively. Loan and Advance to Deposit ratio of IBBL was 88.08%, 87.9%, 89.7%, 89.5%, and 89.8% in 2008, 2009, 2010, 2011 & 2012 respectively. If we analyze the data we can say that IBBL had better earnings against Deposit all time than JBL had, because IBBLs Loan and Advance to Deposit ratio produces more value than JBLs in each of the five years. So we can conclude that IBBL is able to pay more profit to depositors than JBL.

4.2.12 Deposits to total fund ratio Table 4.2.12 Deposits to total fund ratio
100 90 80 70 Percentage 60 50 40 30 20 10 0 Jamuna bank Islami bank 2008 86.3 87.54 2009 86.91 87.8 2010 86.66 87.66 2011 81 87.84 2012 72.6 86.6 87.54 87.8 87.66 87.84 86.6 Jamuna bank Islami bank 86.3 86.91 86.66 81 72.6

Data Source: Banks Annual Report (2009, 2011, 2012).

Table 4.2.12 shows and compares the Deposit to Total fund ratio of JBL and IBBL for year 2008 to 2012. This ratio measures deposits as a percentage of total assets. This ratio also provides information about bank liabilities against assets. It is a good indicator of deposit management. Higher value of this ratio indicates higher the efficiency in deposit management of a bank. Here we see that Deposits to Total fund ratio of JBL was 86.3%, 86.91%, 86.66%, 81%, and 72.6% in 2008, 2009, 2010, 2011 & 2012 respectively. Deposit to Total fund ratio of IBBL was 87.54%, 87.8%, 87.66%, 87.84%, and 86.6% in 2008, 2009, 2010, 2011 & 2012 respectively. If we analyze the data we can say that the value of Deposit to Total fund ratio of IBBL had all time more than JBL had. So IBBL has more debt against its asset compare to JBL. So we can conclude that IBBL has more efficiency in deposit management than JBL.

4.2.13 Deposit Mix Deposit mix of Jamuna Bank Limited of 2012

Deposit Mix of Jamuna Bank Limited(2012
0.254.81 19.99 12.5 6.34 current savings fixed schemes 56.12 forign short term

Data Source: Banks Annual Report (2009, 2011, 2012).

Deposit Mix of Islami Bank Bangladesh Limited of 2012

Deposit Mix of Islami Bank Bangladesh Limited(2012)

10.91 26.2 current savings 36.15 1.44 23.29 fixed Short term Schemes

Data Source: Banks Annual Report (2009, 2011, 2012).

CHAPTER FIVE

FINDINGS RECOMMENDATION CONCLUSION

5.1 Findings Table 4.1.1 shows the growth percentage of Current Deposit of JBL varies significantly in a wide range of 43% to 11.5%. On the other hand the growth percentage of IBBL varies comparatively in a narrow range of 24.7% to 14.8%. The maximum growth percentage of Current Deposit was in 2009 for both banks (43% for JBL and 24.7% for IBBL) and the minimum growth percentage of current Deposit was in 2011 for both the bank (11.5% for JBL and 12.8% for IBBL). Table 4.1.2 shows the growth percentage of Saving Deposit of JBL varies significantly in a wide range of 51% to 13%. On the other hand the growth percentage of IBBL varies narrowly in a range of 17.4% to 14.4%. The maximum growth percentage of Saving Deposit was in 2009 for both banks (44% for JBL and 17.4% for IBBL). IBBL is very consistent in their saving deposit collection where JBL is inconsistent. Table 4.1.3 shows the growth percentage of IBBL varies relatively in a narrow range of 49% to 24%. The maximum growth percentage of Fixed Deposit was in 2009 for JBL and minimum was in 2011. But the maximum growth percentage of IBBL was in 2012. IBBL is relatively more consistent than JBL in their fixed deposit collection. From the trend analysis we see that IBBLs Fixed Deposit position is getting stronger but JBLs Fixed Deposit position is getting weaker year by year. Table 4.1.4 shows the growth percentage of Deposit positions of various Schemes of JBL shows downward trend and it varies in a range of 59% to 38%. On the other hand the growth percentage of IBBL varies relatively in a narrow range of 18% to 14%. The maximum growth percentage of Deposit positions of various Schemes was in 2009 for both the bank. From the trend analysis we find that JBLs Deposit Schemes is more attractive than IBBLs Deposit Schemes because Deposit under schemes of JBL constitutes a bigger portion of Deposit mix compare to IBBL.

Table 4.1.5 shows that the growth percentage of Total Deposit of JBL varies significantly in a wide range of 55% to 13% and shows a downward trend whereas the growth percentage of IBBL varies relatively in a narrow range of 22% to 17%. The maximum growth percentage of Total Deposit was in 2009 for JBL. But the maximum growth percentage of IBBL was in 2012. IBBL is relatively more consistent than JBL in their Total Deposit collection. From the trend analysis we see that IBBLs Deposit collection is more consistent than JBLs Deposit collections. JBLs Deposit collection performance is dropping due to steep market competition. On the other hand IBBLs Deposit collection performance has less influenced by the market competition and economic condition. Table 4.2.1 shows that from 2008 to 2012 Current Deposit to total ratio of JBL varies in a range of (16.21-12.5), but Current Deposit to Total Deposit ratio of IBBL does not varies significantly. We also see that Current Deposit proportion of JBL is being lowered year by year but Current Deposit proportion of IBBL is being maintained almost the same proportion.

Table 4.2.2 shows that from 2008 to 2012 Saving Deposit to total ratio of IBBL varies in a range of (41.63-36.15), but Saving Deposit to Total Deposit ratio of JBL does not varies significantly. We also see that Saving Deposit proportion of IBBL is being lowered year by year but Saving Deposit proportion of IBBL is being maintained almost the same proportion. We also conclude that IBBLs Saving Deposit is more attractive than JBLs as IBBLs Saving Deposit constitutes a large portion of its Deposit portfolio compared to JBLs Deposit portfolio. Table 4.2.3 shows that from 2008 to 2012 Fixed Deposit to total ratio of IBBL varies in a range of (23.29-14.11), but Fixed Deposit to Total Deposit ratio of JBL does not varies significantly. We also see that Fixed Deposit proportion of IBBL is being increased year by year but Fixed Deposit proportion of JBL is being maintained almost the same proportion except in 2012. We also conclude that JBLs Fixed Deposit is more attractive than IBBLs as JBLs Fixed Deposit constitutes a large portion of its Deposit portfolio compared to IBBLs Deposit portfolio. We also see that IBBL is trying to increase its Fixed Deposit proportion in its portfolio as proportion of fixed deposit has increased over the last five years. Table 4.2.4 shows that from 2008 to 2012 Deposit under Schemes to total ratio of IBBL varies in a range of (31.22 to 26.2), and Deposit under Schemes to Total Deposit ratio of JBL varies in a range of (19.99 to 11.57). Here we see that IBBL has a bigger proportion of Deposit under schemes than JBL has on portfolio of Deposits. We also see that Deposit under Schemes proportion of JBL is being increased year by year but Deposit under Schemes proportion of IBBL is decreased over the years. We also conclude that JBL is focusing more focus on increasing the proportion of Deposit under Schemes in its portfolio of Deposits. Table 4.2.5 shows that Deposit collection performance of IBBL was more or less consistent and did not varies so much over the year. Whereas Deposit collection performance of JBL did varies in a wide range (19.55% to -.1%). For JBL, the last two years growth rate on Deposit per employee was almost zero even in 2011 it was -.1%. Table 4.2.6 shows that growth rate of Deposit per branch of IBBL consistently increase over the year. Whereas growth rate of Deposit per branch varies inconsistently. For JBL, the last two years growth rate on Deposit per branch was almost zero even in 2012 it was -.7%. If we consider Deposit per employee and Deposit per branch altogether, we can easily conclude that Deposit performance of JBL was superior to that of IBBL for year 2009 and 2010. But Deposit performance of JBL drastically falls down in 2011 & 2012. But in the meantime deposit performance of IBBL consistently improved and surpasses the deposit performance of JBL in 2011& 2012. Table 4.2.7 shows the amount of total deposit of a bank relative to amount of owners equity. The greater the ratio, the better performance in deposit management is ensured. Analyzing the data we can say that IBBL had better performance all time than JBL had, because IBBL had greater Deposit to Owners equity than JBL had in each of the five years

Table 4.2.8 shows the percentage of return earned on deposits. The higher this ratio is the higher is the superiority of managerial efficiency in deposit management. Analyzing the data we can say that IBBL had better performance all time than JBL had, because IBBL had greater Return on Deposit ratio than JBL had in each of the five years. Table 4.2.9 shows the percentage of profit paid to the depositors on their deposit amount. The higher is the value that ratio indicates, the stronger ability the banks have for paying profit to depositors and therefore, is an indicator of better performance in deposit management. Analyzing the data we can say that JBL paid more profit on Deposits than IBBL did over the last five years. So according to PPD ratio JBL should have performed better than IBBL. But other ratios indicate that IBBL had better performance than JBL. So there are many things other than profit that depositors seek. Table 4.2.10 shows the operating expenses as a percentage of total deposits. Lower value of that ratio indicates superior performance in deposit management. Analyzing the data we can say that IBBL had better performance all time than JBL had, because IBBL had less Operating expense to Deposit ratio than JBL had in each of the five years.

Table 4.2.11 shows and compares the Loan and Advance to Deposit ratio of JBL and IBBL for year 2008 to 2012. This ratio is a very crucial determinant of any bank for measuring the efficiency in deposit management. Because a bank takes deposits from their valued customers and it has to ensure security by investing their money in profitable sector. So ability to pay profit to the depositors depends on the banks earnings. Analyzing the data we can say that IBBL had better earnings against Deposit all time than JBL had, because IBBLs Loan and Advance to Deposit ratio produces more value than JBLs in each of the five years. So we can conclude that IBBL is able to pay more profit to depositors than JBL.

Table 4.2.12 measures deposits as a percentage of total assets. Higher value of this ratio indicates higher efficiency in deposit management of a bank. Analyzing the data we can say that the value of Deposit to Total fund ratio of IBBL had all time more than JBL had. So IBBL had more debt against its asset compare to JBL. So we can conclude that IBBL had more efficiency in deposit management than JBL.

5.2 Recommendation In the light of the preceding discussion the following activities need to be performed by the banks to become more efficient and effective in deposit management. 1 By analyzing the trend of Deposit growth and various ratios it is seen that Deposit performance of both banks specially the Jamuna Bank Limited has fell down in the last two years. It may for the intense market competition. So for survival in the intense market competition, both banks should establish new and updated financial products to attract potential depositors. Both the banks should adopt highly promotional activities to inform the customers about their products and services. The findings are important in the sense that a bank deposit management depends more on its efficient management rather than on its size (total assets, and total branches, total employees). The study also reveals that IBBLs Loan and Advance to Deposit ratio is higher than standard norm of 85% which is prescribed by Bangladesh Bank. For maintaining standard norms of this ratio IBBL should reduce Loan and Advance amount or increase the total volume of deposits. Deposit per Branch of JBL is very low compare to that of IBBL. Only three branches out of 83 branches of JBL have Islami banking wings. About 85% people of the country is Muslim and many muslims follow Islami Code of Life. So the management of JBL should open Islami banking wings in each branch side by side conventional banking wings for attracting depositors. JBL should open the new branches all over the country for capturing large segment of Depositors.

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5.3 Conclusion Deposit management is very important for any bank. Banks have been playing a vital role in socio-economic, industrial, and agricultural development as well as in the overall economic development of the country through deposit mobilization. So its efficient management will play an important role in any bank. This study is made on comparative efficiency of deposit performance of JBL and IBBL. It is observed from the whole analysis (other than Profit Paid on Deposit) that IBBL showed better performance in deposit management than JBL. On the other hand Profit Paid on Deposit (PPD) of JBL showed better performance in deposit management than IBBL. But the operating expenses to deposit ratio of IBBL is lower than JBL. It indicates that IBBLs deposit management is more efficient than JBLs. As JBL provides more interest against amount deposited, JBLs growth of Deposit acquisition should be more than that of IBBL. But the real scenario depicts deferent things. The reason may be aggressive market campaign of IBBL and establishment of new branches covering all the districts of Bangladesh even rural areas. Another reason is that IBBL follow shariah based interest free banking. About 85% people of this country are muslim and many muslim follow Islami Code of Life. Thats why people choose Islamic bank to deposit their money. On the practical dimension, such information should help the decision makers of these banks in creating appropriate financial strategies for attaining the required amount of planned deposits. Finally, the study provides bank managers with understanding of activities that would enhance their efficiency in deposit management. The results of this study imply that it might be necessary for a bank management to take all the required decisions to enhance the efficiency of deposit performance in the banks.