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To Lecturer, Dept. Of Business Administration Shanto-Mariam University Of creative Technology. Uttar, Dhaka-1230.
Dear Sir, This is to inform you that I am really very interested to prepare an assignment on CAMELS Rating of Bank. This assignment gave me an opportunity to concentrate on the subject matter of Performance Analysis of multinational organizations.
So therefore, I need your kind permission to prepare this assignment. I will very grateful if you give the opportunity. It will be my pleasure to appear at your call for any further explanation.
Signature of Lecturer,
Preface
Financial Management is a vital course for Business students. Cause now at this time our whole world is running through Finance. As a BBA student I think without Finance whole world will just stop at any point. Because Finance is the main way to get anything that we need by managing funds.
Now come to the Overall Financial Performance Analysis &Strategic Position of Standard Chartered Bank (SCB), this analysis will help me to understand a business performance. Because this is really a practical topic & this is related with my future career. If anyone wants to know his/her business progress he/she obviously needs this typ of analysis. I select this topic because I think this topic will help me to know the practice and analysis of ratio analysis.
By preparing this topic my practical experience becomes more developed. I hope if anyone read this assignment he or she will benefited. Cause I make this assignment in a easy format. This is all about my discussion.
ACKNOWLEDGEMENT
At the very beginning, I would like to express my gratitude to Almighty Allah for whose kindness I am enough sound mentally and physically to prepare this report. Then I must express my deep gratitude to my uncle Mr. Shah Matin. Without his sincere direction and suggestions it could be extremely difficult for me to prepare this report. I am also truly thankful to Mr. Saduzzaman.
During the preparation of the project work I have come to the very supportive touch of different individuals (respondents & seniors from
SJIBL)
and friends,
who lend their ideas, time and caring guidance to amplify the reports contents. To be true to myself I must say that without their help it would be very hard for me to prepare such a long report. I am thankful to them with all of my feelings. I further want to convey my heartiest gratitude to the respondents (from of
SJIBL)
Vision
To be the unique modern Islami Bank in Bangladesh and to make significant contribution to the national economy and enhance customers' trust & wealth, quality investment, employees' value and rapid growth in shareholders' equity.
Mission
To provide quality services to customers. To set high standards of integrity. To make quality investment. To ensure sustainable growth in business. To ensure maximization of Shareholders' wealth. To extend our customers innovative services acquiring state-of-the-art technology blended with Islamic principles. To ensure human resource development to meet the challenges of the time.
Strategies
To strive for customers best satisfaction & earn their confidence. To manage & operate the Bank in the most effective manner. To identify customers needs & monitor their perception towards meeting those requirements. To review & updates policies, procedures & practices to enhance the ability to extend better services to the customers. To train & develop all employees & provide them adequate resources so that the customers needs are reasonably addressed. To promote organizational efficiency by communicating company plans, polices & procedures openly to the employees in a timely fashion. To cultivate a congenial working environment. To diversify portfolio both the retail & wholesale markets.
The BCBS of the BIS recommends a mandatory minimum CAR of 8% for banks in OECD countries. However, the emerging banking regulatory and supervision system in most ADB DMCs, combined with an emphasis on directed lending, results in poor portfolio quality. As such, these Guidelines recommend a minimum Capital Adequacy Ratio (CAR) of 12%.
Asset Quality
Asset quality has direct impact on the financial performance of an FI. The quality of assets particularly, loan assets and investments, would depend largely on the risk management system of the institution. The value of loan assets would depend on the realizable value of the collateral while investment assets would depend on the market value.
Ratios or Other Measures 1. Loan Concentration Tables Computation Method Concentration of Loans by: Significance and Notes
2. Related Party Policies and Exposure
Indicates concentration of exposure. The analyst should review whether the FI has a policy regarding the ceiling or maximum exposure to any company or group.
Loans outstanding to related parties. Current approval process for these loans. Checks and balances for such loans.
The Loan Loss Provision is the current period allocation to the loan loss reserve. Performing assets currently pay interest or are not more than 60 days past due. Average performing assets: beginning balance and ending balance are averaged for the period
Balance of Loans in Arrears x 100 Measures amount of default in the portfolio. Value of Loans Outstanding
Indicates extent of uncollectible loans over the last period. Any loan more than one year past due should automatically be considered uncollectible.
The Amount Written Off is the loss recognized on a loan during the period.
The Loan loss reserve is a reserve maintained to cover potential loan losses.
3. Interest-Spread Ratio (%) Income from Loan Portfolio x 100 (a) Average Loan Portfolio (b) Average Borrowings (d) Interest Expenses and Other Financial Charges x 100 (c)
(a) Sum of interest on the loan portfolio plus interest received from other FIs. It also includes discount and commission earned and other charges (front-end fees) levied on customers. (b) Average of customer loans, interbank loans and due from banks. (c) Includes commission and discount paid, brokerage, charges levied by correspondent banks, etc. (d) Comprises deposits and other borrowings.
4. Earnings-Spread Ratio (%) Total Income - NonOperating Income x 100 Average Total Portfolio (e) Average Total Resources (f) Interest Expenses and Other Financial Charges x 100
(e) Loan portfolio, cash, Due from Banks, Interbank loans, Investments in Government securities and other investments. (f) Equity + Deposits + Borrowings.
[Total Expenses - (Interest expenses + fees and commissions and commitment charges)] x 100 Average Total Assets
Assessing Liquidity
An FI must always be liquid to meet depositors' and creditors' demand to maintain public confidence. There needs to be an effective asset and liability management system to minimize maturity mismatches between assets and liabilities and to optimize returns. As liquidity has inverse relationship with profitability, an FI must strike a balance between liquidity and profitability. Current and quick ratios are inappropriate for measuring FI liquidity. A loan-to-deposit ratio is more relevant. However, an FI's liquidity and solvency are directly affected by portfolio quality. Consequently, financial analysts (investment officers) should carefully analyze the FI's portfolio quality on the basis of collectability and loan-loss provisioning. Suggests appropriate measures in this respect.
Ratios or Other Measures 1. Loan to Deposit Ratio (%) Computation Method Loans (excluding short-term loans and marketable securities) x 100 Customer Deposits 2. Loan to Deposit Ratio (Medium and Long-term) (%) Long and Medium-term Loans x 100 Long and Medium-term Deposits