Report on

FINANCIAL PERFORMANCE EVALUATION

OF

EXIM BANK LIMITED

Submitted To

Rakibul Islam

Assistant Professor

Department of Finance

Jagannath University

Submitted Date-07.08.2015

JAGGANNATH UNIVERSITY

1 | P a g e

JAGANNATH UNIVERSITY

Report

On

FINANCIAL PERFORMANCE EVALIATION

OF

EXIM BANK LIMITED

2 | P a g e

LETTER OF TRANSMITTAL

07 August,2015

Roushanara Islam

Assistant Professor

Department of Finance

Jaggannth University

Subject: Submission of “Report on Financial Performance Evaluation of EXIM Bank

Limited”

Dear Madam,

We have prepared report on the topic of “Financial Performance Evaluation of EXIM

Bank Ltd under your kind supervision as a requirement of completing the degree of MBA

program. We have tried my best to prepare the report in consistence with the optimal standard

under your valuable direction.

We made every effort to reveal greater insight in this report. We hope that this will meet the

standard of your judgment.

Thanking you for your kind supervision.

Sincerely yours

On the behalf of group Members

Rakiba Sultana

Department Of Finance

Jaggannth University

Executive Summary

The report have prepared on the topic of “Financial Performance Evaluation of EXIM

3 | P a g e

Bank Limited. EXIM Bank Ltd bank is very old institution that is contributing toward

the development of any economy and is treated as an important service industry in modern

world. The report had included some chapter. Those ares---

Chapter One: This is Introduction of the report. There has background of the report,

objective, methodology, Scope of report.

Chapter Two: This chapter described overview of EXIM Bank Ltd, Historical

Background, and Company Mission& Vision.

Chapter Three: This Chapter described Performance of the Bank (EXIM Bank) a

brief review of the activities, Ratio analysis, Foreign Exchange Business, porter’s five

forces of Exim Bank, SWOT analysis.

Chapter Four: This chapter has findings, recommendations, and conclusion

TABLE OF CONTENTS

Chapter One: Introduction of the Study

1.1Introduction 1

4 | P a g e

1.2 Background 2

1.3Objectives 3

1.4Scope 4

1.5Methodology 5

Chapter Two: Overview of EXIM Bank Ltd

2.1 An Overview 6

2.4 Company Mission& Vision 7-9

Chapter Three: Ratio Analysis & Discussion

Analysis & Discussion

Performance of the Bank (EXIM Bank): A brief review of the activities

11

3.1 Ratio Analysis 12-27

3.2 Foreign Exchange Business 28-29

3.3 porter’s Five forces 30-36

3.4SWOT Analysis of Exam Bank Limited 37-38

Chapter Four: Findings

Findings 40

Recommendations 41

Conclusion 42

5 | P a g e

6 | P a g e

CHAPTER-01

7 | P a g e

Introduction:

Ratio analysis is a useful management tool that will improve our understanding of financial results and trends over time,and provides indicators of organizational performance.Managers will use ratio analysis to pinpoint strengths and weekness from which strategies and initiatives can be formed. Financial ratio is one of the most common tools of managerial decision making.A ratio is the comparison of one number to another mathematically,a simple division problem.Financial ratio involve the comparison of various figures from financial statements in order to gain information about a company’s performance.It is the interpretation,rather than the calculation,that makes financial ratios a useful for business managers.Ratio may serve as indicators,clues,or red flags regarding noteworthy relationship between variables used to measure the firm’s performance in term of profitability,asset utilization,liquidity,leverage or market valuation.

1.1

EXIM Bank Ltd bank is very old institution that is contributing toward the development of

any economy and is treated as an important service industry in modern world. Now days

the function of bank is not limited to within the same geographical limit of any country. Due

to globalization and free market economy, this industry is facing severe competition in any

country and implementation of WTO will further increase competition. The overall

performance of Bank does not only depend upon the banking industry itself but also on

the Performance of economy where it is operating.

The Banking sector is one of the major service sectors in Bangladesh economy. There are

several types of banks, which differ in the number of services they provide and the clientele

they serve. Although some of the differences between these types of banks have lessened as

they begin to expand the range of products and services they offer, there are still key

distinguishing traits.

Commercial banks, which dominate this industry, offer a full range of services for

individuals, businesses, and governments. Commercial banks are the primary contributor to

the economy of a country. So we can say commercial banks are a profit making institution

that holds the deposit of the individuals & business in checking & savings account and then

8 | P a g e

uses these funds to make loans. Banks collect deposit at the lowest possible cost and provide

loans and advances at higher cost because they are profit earning industries.

It has become essential for every person to have some idea on the bank and banking

procedure.

Background:

EXIM Bank Ltd Limited is one of the leading local private commercial banks in Bangladesh.

This bank has already 78 branches located in different places and also going to establish more

branches. This organization has created a positive image to the customer’s mind by providing

better service. This bank has introduced some modern banking scheme that has got high

market demand. As it maintain the pace with competitive business world, its activities,

culture, philosophy and style leads an intern student to be the best at any field of working life.

1.2 Objectives:

The objective of the study may be viewed as:

General Objective Specific Objective

General Objective:

The general objective of the study to describe Financial Performance Evaluation in EXIM

Bank Limited”                                                                   

*Specific Objectives:  

1) To provide an overview on the major Financial Performance of EXIM Bank Ltd.

2) To Analysis the financial performance of EXIM Bank Ltd.

3) To identify the weaknesses Of Financial Performance Analysis of the Bank.

4) To analysis porter’s five forces analysis.

9 | P a g e

Methodology:

To prepare report has been collected from various sources. And the major source of data for

preparing the report is based on secondary information like annual reports.

We have used different types of data in completion of our report. Here important to mention

that no questionnaires are used for collecting the data.

Sources of information and collection of data:

Annual Report of Exim Bank limitied.

EBL web site.

Bangladesh Bank Report.

Scope:

The scope of the study may be stated as under:

The study would help top management in planning and decision Of Financial

Performance Analysis

.

The study would help management in identifying the key areas of weakness and

strength.

The study would aware the top management to take corrective and appropriate

measure timely to improve the company’s Financial and other performance.

The study would also help the shareholders as a guide to company’s present and

future position (Financial Position)

10 | P a g e

CHAPTER-02

11 | P a g e

An Overview of EXIM Bank Ltd:

The EXIM Bank of Bangladesh Limited is an "Islamic Shariah Based Commercial Bank",

which is committed to provide high quality financial services to contribute to the growth of

G.D.P. (Gross Domestic Product) of the country through stimulating trade & commerce,

accelerating the pace of industrialization, boosting up export, creating employment

opportunity for the educated youth, Poverty alleviation, raising standard of living of the

limited income group and over all socio-economic development of the country. The Bank

offers full range of Personal, Corporate, International Trade, Foreign Exchange, Lease

Finance and Capital Market Services. EXIM Bank Ltd is the preferred choice in banking for

its friendly and personalized services, cutting edge technology, tailored solutions for business

needs, global reach in trade and commerce and high yield on investments, assuring

excellence in Banking Services.

EXIM BANK LTD AT A GLANCE

Name of the Institution Export Import Bank of Bangladesh Limited

Date of incorporation June 02,1999

Commencement of operation August 03.1999

Authorized Capital Tk. 10000.00 million

Paid up Capital Tk. 225 million (initial) Tk. 6832.27 million

Converted to Islamic bank July 01,2004

Legal form "A Sbariah based Islamic Bank"

Slogan "Together Towards Tomorrow"

Target customers Individuals and Corporate customers

Deposits, accumulated Tk. 94949.40 million

12 | P a g e

General Investments Tk.93296.65 million

Investments (shares & securities) Tk.6012.86 million

Credit Rating Long Term Short Term

Notification of reporting

„AA‟-(High Safety) „ST-2‟(High Grade)

Registered Office “SYMHONY” Plot no.SE(F):9, Road No.142

Gulshan Avenue,Dhaka-1212,Bangladesh

Number of branch (31-12-2012) 78

Total manpower 1440

Chairman Mr.Md. Nazrul Islam Mazumder

Managing director KaziMasihurRahman

Web address www.eximbankbd.com

Corporate Mission:

The bank has checked out the following corporate objectives in order to ensure smooth

achievement of its goals-

To be the most caring and customer friendly and service oriented bank.

To create a technology base most efficient banking environment for its customers.

To ensure ethics and transparency in ail levels.

To ensure sustainable growth and establish full value of the honorable shareholders.

Above all, to add effective contribution to the national economy.

Eventually the bank also emphasize on:

Provide high quality financial services in export and import trade.

Providing efficient customer service.

Maintaining corporate and business ethics.

13 | P a g e

Being trusted repository of customers‟ money and their financial adviser.

Making its products superior and rewarding to the customers.

Enhancement of shareholders wealth.

Company Vision:

Export Import Bank Ltd. as the name implies, is not a new type of bank in some countries on

the global, but is the first of its kind in Bangladesh. It believes in togetherness with its

customer, in its march on the road to growth and progress with services. To achieve the

desired goal, it has intention to pursuit of excellence at all stages with a climate of continuous

improvement. Because it believes, the line of excellence is never ending. It also believes that

its strategic plans and business networking will strengthen its competitive edge over in

rapidly changing competitive environment.

Company slogan is

Investment:

The investment portfolio of the Bank was propelled efficiently in 2008 is 15096.83,2009 is

15312.9,2009 is 16440.26,2010 is 19951.3,2013 is 26580.28,2012 is 36680.28,and 2014 is

53908.57.We are now concentrating our essorts to increase quality investments to facilitate the

investment earnings. It is mentionable here that the assets quality of some of our Branches have

deteriorated since 2009 resulting in the increase of classification but we have succeaafully

maintained required provision against classified investment as depicted in the Audit Report. To

overcome the situation, we launched special drives to recover the sticky and classified investments.

The following graphs show the year wise position of investment:

Deposit:

Since deposit is the life blood of the, we drew – up series of action plan, both short term and long

term to raise the deposit base of the bank in line with the directives of the Bangladesh Bank. The

short term action plan included launching of special drives like deposit mobilization months during

April to June.

14 | P a g e

Together Tomorrow Towards

CHAPTER-03

15 | P a g e

3. Ratio Analysis & Discussion:

Performance of the Bank (EXIM Bank): A brief review of the activities:

We take this opportunity to place before you the present overall operational of the bank a follows:

a) During 2012 bank has made a net pre-tax profit of TK. 1133784578 after providing

provision as per requirements of Bangladesh Bank. The net pre-tax profit of

TK1901280224 of 2014 which showsBusiness performance shall much better.

b) The growth rate in formal sector – Deposit in 2012 was significant, based on actual

expected growth rate of deposit in 2014would be much better.

Performance Evaluation of five years

Now a day’s Banking sector is modernizing and expanding its hand in different financial

events every day. At the same time the banking, process is becoming faster and easier. In

order to survive in the competitive field of the banking sector all organizations are looking

for better service opportunities to provide their fellow clients.

We have completed our report based on “Measurement of comparative performance of

five years of EXIM Bank Ltd.”

Ratio Analysis.

Short term Ratio :

1.Current Ratio = Current Assets / Current Liabilities

Year 2010 2011 2012 2013 2014

Current Ratio .280 .306 .157 .179 .223

16 | P a g e

2010 2011 2012 2013 2014

$0.28$0.31

$0.16$0.18

$0.22

Current Rati o

Comments:

Current Ratio: Current Ratio for the year 2010 to 2014 is 0.280,0.306,0.157,0.179,0.223. We

know that the standard legend for current ratio of any Bank or firm is 2. We found form our

calculation that in the year 2011the bank has 0.306 as its current ratio which indicates that the

bank is in a good position to meet its obligation. But in 2010 it decreased to 0.157 to 0.306

and 2014it is increasing to 0.79 to 0.223which is good for the bank. It means that the liquid

condition of the bank is increased. Form the forecasted overall data we can say that the bank

has a little bit improved condition.

17 | P a g e

Profitability Ratio:

2.Return on Equity (ROE):

Return on Equity Capital (ROE) = Net Income / Total Equity Capital

Year 2010 2011 2012 2013 2014

Return on Equity Capital

(ROE)

9% 11.8% 12.1% 15.2% 11.5%

2010 2011 2012 2013 2014

9.00%

11.80% 12.10%

15.20%

11.50%

Return on Equity (ROE)

Comments:

In 2010, the Exim Bank Limited was the lowest shareholder’s equity where it was 9.00% and

in 2014.Exim Bank Limited was shareholder’s equity where it was 11.5%. If the Exam

Bank Limited enhances their shareholder’s equity, then the Bank will increases the banking

Performance.

18 | P a g e

3. Return on Assets (ROA):

Net Income / Total Assets

Year 2010 2011 2012 2013 2014

Return on Assets (ROA)

.06% .o7% 1.07% 1.17% 1.29%

2010 2011 2012 2013 20140.00%

0.07%

1.07%1.17%

1.29%

Return on assets (ROA)

Comments:

In 2010, the Exim Bank Return on assets was the highest where it was .06%. Moreover, from

2010 to 2014 Exim Bank return on assets increased year to year which means the

performance of the bank would be better. Return on assets is very significant aspect of any

bank when the banks want to earn profit from the banking business.

19 | P a g e

4.Operating Expense Ratio:

Operating Expense / sales revenue

Year 2010 2011 2012 2013 2014

Operating Expense Ratio

71.94% 73.05% 76.18% 80.30% 81.86%

2010 2011 2012 2013 201466.00%

68.00%

70.00%

72.00%

74.00%

76.00%

78.00%

80.00%

82.00%

84.00%

71.94%73.05%

76.18%

80.30%81.86%

Operati ng Expense rati o

Comment:

In 2014, the Exim Bank Limited was the highest Operating Expense where it was 81.86%

and in 2010Exim Bank Limited was the lowest Operating Expense where it was 71.94%. If

the Exim Bank Limited enhances their Operating Expense, then the Bank will decrease the

banking Performance. The Operating Expense was also increased regularly.

20 | P a g e

5. Gross Profit Margin:

Gross Income/ Sales revenue

Year 2010 2011 2012 2013 2014

Gross Profit Margin

51.97% 52.08% 48.22% 44.80% 47.20%

2010 2011 2012 2013 2014

51.97% 52.08%

48.22%

44.80%

47.20%

Gross Profi t Rati o

Comments

In 2010 Exim bank gross profit margin was the highest which was 51.97% whereas in 2013

Exim bank gross profit margin was the lowest which was 44.80%. The graph says that from

2010 to 2011 it increased slowly and after that it decreased drastically which was up to 2013.

However, in 2014 Exim bank gross profit margin increased slowly.

21 | P a g e

6.Profit Margin:

Net profit / sales revenue

Year 2010 2011 2012 2013 2014

Profit Margin

14.83% 12.61% 10.67% 8.82% 6.89%

2010 2011 2012 2013 20140.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

Profit Margin

Comments:

In 2010, the Exim Bank Limited was the highest Net Profit Margin where it was 14.83% and

in 2014. Exim Bank Limited was the lowest Net Profit Margin where it was 6.89%. If the

Exim Bank Limited enhances their Net Profit Margin, then the Bank will increase the

banking Performance. If the Net Profit Margin is enhanced the Exim Bank Limited day by

day contributing to the welfare of the country as well as the Business sector, then the banking

performance will be increased.

22 | P a g e

7. Operating profit margin:

Operating profit / sales revenue

Year 2010 2011 2012 2013 2014

Operating profit margin

71.94% 73.05% 69.17% 74.90% 73.60%

2010 2011 2012 2013 201466.00%

67.00%

68.00%

69.00%

70.00%

71.00%

72.00%

73.00%

74.00%

75.00%

76.00%

Operating Profit Ratio

Comment:

In 2013, the Exim Bank Limited was the highest Operating Income where it was 74% and in

2012. Exim Bank Limited was the lowest Operating Income where it was 69.17%. The

Operating Income was also increased regularly except 2012. If the Operating Income is

enhanced the Exim Bank Limited day by day contributing to the welfare of the country as

well as the Business sector, then the banking performance will be increased.

23 | P a g e

8. Earnings per Share (EPS):

Net Income after Taxes / Common Equity Shares Outstanding

Year 2010 2011 2012 2013 2014

Earnings per Share (EPS)

17.60 17.20 18.39 2.14 1.81

2010 2011 2012 2013 2014

1760.00%

17.20% 18.39%

214.00% 181.00%

Earning Per Share (Per Taka)

Comment:

In 2010, the earning per share of Exim Bank Limited was the highest which was 17.60

whereas in 2014, the earning per share of Exim Bank Limited was the lowest which was 1.81.

Earnings per share of Exim Bank Limited was the lowest position as the graph says that from

the 2010 to 2014, there was drastically changed because of inefficient banking activities.

Finally, the Exim bank earnings per share is not better position.

24 | P a g e

9. Pricing Earning Ratio:

Market price per share/ earning price per share

Year 2010 2011 2012 2013 2014

Pricing Earning Ratio (Times)

28.79 12.49 16.74 28.09 15.23

2010 2011 2012 2013 20140

5

10

15

20

25

30

35

28.79

12.49

16.74

28.09

15.23

Price Earning Ratio (Times)

Comment:

In 2010, the price earnings ratio of Exim Bank Limited was the highest which was 28.79

whereas in 2014, the price earnings ratio of Exim Bank Limited was the lowest which

was15.23 but in 2011 the price earnings ratio of Exim Bank Limited reduced as compared to

2010. The more price earnings ratio of a bank, the more it will indicate that the position of the

bank would be better in the market. Consequently, the Exim bank price earnings ratio is not

better position.

25 | P a g e

Credit Performance Ratio:

10. Debt to Equity Ratio:

Total debt/Total equity

Year 2010 2011 2012 2013 2014

Debt to Equity Ratio (Time

13.74 14.96 10.24 12.02 .7.97

2010 2011 2012 2013 20140

2

4

6

8

10

12

14

16

13.7414.96

10.24

12.02

7.97

Debt toEquity Ratio

Comment:

In 2010, Exim Bank Debt to Equity Ratio was 10.27 as well as in 2014 Exim Bank Debt to

Equity Ratio was 7.97. The graph depicts that Exim Bank Debt to Equity Ratio enhanced

year after year.The position of the Exim Bank Debt to Equity Ratio was not better also.

26 | P a g e

11. Debt Ratio:

Total debt/ Total assets

Year 2010 2011 2012 2013 2014

Debt Ratio 66% 68% 71% 71% 74%

2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 462%

64%

66%

68%

70%

72%

74%

76%

Debt Rati o

Comment:

In 2010, Exim Bank Debt Ratio was 66% as well as in 2014 Exim Bank Debt Ratio was

74% respectively. Besides, if the any bank reduces their debt ratio from the banking

activities, then the bank can achieve their profit and make strong relationship with their client

by their strong banking position.

27 | P a g e

11. Cost of Fund:

Year 2010 2011 2012 2013 2014

Cost of Fund 8.65% 8.86% 9.32% 9.45% 8.55%

2010 2011 2012 2013 20148.00%

8.20%

8.40%

8.60%

8.80%

9.00%

9.20%

9.40%

9.60%

8.65%

8.86%

9.32%9.45%

8.55%

Cost of fund

Comment:

In 2010, Exim Bank cost of fund was the lowest whereas in 2013 Exim Bank cost of fund was

the highest which was 8.65% and 9.45% but in 2014 Exim Bank cost of fund gradually

decreased which was from 9.45% to 8.55%. When the Exim Bank cost of fund reduces from

the various sources, then the bank earn a lot of profit compared to other banks also.

28 | P a g e

Assets quality Performance:

12.Total assets turnover:

Sales revenue/ Total assets

Year 2010 2011 2012 2013 2014

Total assets turnover (Times)

6.79 7.64 8.44 8.44 7.59

2010 2011 2011 2013 2014

6.79

7.648.44 8.44

7.59

Total assets turnover

Comment:

In 2010, Exim Bank total assets turnover was lowest where it was 6.64 times whereas in

2013, Exim Bank total assets turnover was highest which it was 8.44 times completely. But in

2014 Exim Bank total assets turnover gradually decrease where the point was 7.59 times. The

more total assets turnover, the more efficiency will be enhanced also.

29 | P a g e

13. Assets Utilization Ratio:

Operating income/ operating assets

Year 2010 2011 2012 2013 2014

Assets Utilization Ratio

19.44% 11.77% 9.85% 13.87% 8.92%

2010 2011 2012 2013 20140.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Assets utilazation Ratio

Comment :

In 2010, Exim Bank assets utilization ratio was pinnacle which it was 19.44% whereas in

2014, Exin Bank assets utilization ratio was very low that it was 8.92%. Dramatically, in

2013 Exim Bank assets utilization ratio increased where it was 13.87%. After that, it would

again fall successively.

30 | P a g e

14.Classified investment to Total investment:

Classified investment / Total investment

Year 2010 2011 2012 2013 2014

Classified investment to Total investment

1.77% 2.71% 3.81% 3.71% 4.92%

2010 2011 2012 2013 2014

1.77%

2.71%

3.81% 3.71%

4.92%

Classifi ed investment to Total investment

Comment:

In 2014, the Exim Bank Limited was the highest Classified Investment to total Investment

where it was 4.92% and in 2010 was the lowest Classified Investment to total Investment

where it was 1.77%. If the Exim Bank Limited enhances Classified Investment to total

Investment, then the Bank will increases the banking Performance.

31 | P a g e

15. Investment deposit ratio:

Year 2010 2011 2012 2013 2014

Investment deposit ratio

90.17% 89.47% 85.18% 82.35% 79.88%

2010 2011 2012 2013 2014

90.17%89.47%

85.18%

82.35%

79.88%

Investment Deposit Rati o

Comment:

In 2010, the Exim Bank Limited was the highest Investment where it was 90.17% and in

2014 Exim Bank Limited was the lowest Investment where it was 79.88%. If the Exim Bank

Limited enhances their Investment, then the Bank will increases the banking Performance.

The Investment was also increased regularly. The increment was done because of the bank’s

future expansion philosophy and to keep rein with the market competitiveness.

32 | P a g e

Foreign Exchange Business

Foreign Exchange Business stood at TK.108308.30 million in 2014 against TK. 61931 million of 2013

which is a sharp increase of 74.59% The break –up of this foreign exchange business as under:

Years Particulars

Import Export Remittance Total

2009 11791.00 10714 775 23280.00

2010 13482.30 9961.60 459.90 23903.80

2011 18343.80 12674.30 2341.10 33363.20

2012 22753.30 14433.20 1923.50 39110.00

2013 39459.50 12674.30 1099.40 61931.00

2014 68198.50 34975 5134.90 108308.30

Growth Rate 72.83% 63.65%% 367.06%% 74.89%

Import Business:

We also deal in import business and our import business is extended to commercial importers (traders) for import of various shariah approved items and industrial importers (Users) for import of raw cotton, yarn, clinker, pharmaceutical raw materials, TV parts, Computer parts etc raw materials for their industries.

We also provide post import finance such as MPI (LIM), LTR and HPSM (Lease financing). Our post import finance is also provided for importing of capital machinery.

33 | P a g e

Table : 1

Year Import

(Tk. In Million)

2011 22753.30

2012 39459.50

2013 68198.50

Source: Annual Report of EXIM Bank Ltd

Export Business:

Foreign Exchange Trade of EXIM Bank Ltd is dealt with its 09 AD branches out of which 4 branches

are in Dhaka and the remaining 05 are in Chittagong, Khulna, Sylhet, Rajshahi and Bogra. We as a

21st Century Bank, providing our services in foreign trade through import and export finance and

also playing significant role in the area of foreign remittance. To facilitate the import obligation of

our Bank as well as considering the requirement of foreign currency of our country we encourage

potential exporters to do their export business with us. We provide working capital on their

requirement. Presently our export finance is extended for RMG and for non-traditional item that is

handled by a number of experienced bankers.

Year Export

(Tk. In Million)

2008 10714

2009 9961.60

2010 12674.30

2011 14433.20

2012 12674.30

2013 34975

34 | P a g e

Competitive Analysis : Porter’s Five Forces Model and the key External Forces having an effect on Exim Bank Ltd.

 

Porter’s Five Forces Model

Porter’s Five Forces Model of competitive analysis is a widely used approach for

developing strategies in many industries. The intensity among firms varies widely across

different industries. In the banking industry, the competition level among the different public

and private banks is also seen. Due to the emergence of many commercial banks in

Bangladesh, there exists a competitive environment as all the banks try their level best to stay

in the challenging competitive environment.

I have also considered the Porter’s Five Forces Model and the key external factors that affect

the operations of Exim Bank Ltd.

35 | P a g e

According to Porter, the nature of competitiveness in a given industry can be viewed as a

composite of five forces. They five forces of Porter’s Model that have the effect on the

operations of Exim Bank Ltd. are as follows:

1 Rivalry among Competing Firms

2 Threats of New Entrants

3 Bargaining Power of Buyers

4 Bargaining Power of Suppliers

5 Threats of New Substitutes

Porter argues that the stronger each of these forces is, the more limited is the ability of

established companies to raise prices and earn greater profits. Thus, a strong competitive

force can be regarded as a threat since it depresses profit. Similarly, a weak competitive force

can be viewed as an opportunity, for it allows a company to earn greater profits.

1 Rivalry among Competing Firms

Rivalry among competing firms is usually the most powerful of the five competitive forces.

The strategies pursued by one firm can be successful only to the extent that they provide

competitive advantage over the strategies pursued by rival firms. Changes in strategy by one

firm may be met with retaliatory countermoves, such as lowering prices, enhancing quality of

services, adding features to the existing services and increasing promotional tools to attract

customers.

The intensity of rivalry among competing firms tends to increase as the number of

competitors increases. Such as the case for the banks in Bangladesh, where the competition is

having effect on the banking industry and this environment is growing day by day. As the

emergence of many new commercial banks has taken place, therefore the banks are trying to

get the competitive advantage over their rival banks. By introducing new schemes and

attracting customers through promotional activities, the banks are having a close and

interactive competition in the industry.

36 | P a g e

Such is the case for Exim Bank Ltd. also. In the years of operation, since its establishment,

the bank has faced stiff competition from the competing banks. Therefore continuous

development and market research regarding the services offered has to be conducted.

The extent of rivalry among established companies within an industry is largely a function of

three factors:

a)      The Industry’s Competitive Structure

b)     Demand conditions

c)      The height of exit barriers in the industry

1.1 The Competitive Structure

Competitive structure refers to the number and size distribution of companies in an industry.

Structures vary from fragmented to consolidated and have different implications for rivalry.

A fragmented industry contains a large number of small or medium-sized companies, none of

which is in a position to dominate the industry. A consolidated industry may be dominated by

a small number of large companies (oligopoly) or in extreme cases, by just one company (a

monopoly). In many countries, banking is a consolidated industry, with a few major players

in the market. But in our country, the industry is very much fragmented, as a whole. 

Competitive Structure of the Banking Sector

The prime characteristics of a fragmented industry are low entry barriers and identical

product offering from the firms. Such is the case in our banking industry. Banks operate with

pre-fixed and unanimously agreed interest rates, and their offerings are somewhat identical.

The only way to differentiate product offerings from those of the competitors is to lower

prices. Such phenomenon occurs as new entrants flood into a booming fragmented industry.

This also creates excess capacity. A vicious price war is usually followed by the situation of

excess capacity. It can be expected that our banking industry will experience severe price cuts

in the following years. As a whole, a fragmented industry increases competition, and it also

depresses overall industrial profitability.

1.2 Demand Conditions

37 | P a g e

An industry’s demand conditions are another determinant of the intensity of rivalry among

established companies. Growing demand from either new customers or additional purchases

by existing customers tends to moderate competition by providing greater room for

expansion. Growing demand tends to reduce the rivalry because all companies can sell more

without taking market share away from other companies. In the case of banking, the demand

has been growing at a satisfactory rate, throughout the last decade. However, it is not certain

whether the trend will sustain or not.

1.3 Exit Barriers 

Exit barriers are economic, strategic and emotional factors that keep companies in an industry

even when returns are low. If exit barriers are high, companies can become locked into an

unprofitable industry in which overall demand is static or declining. The common exit

barriers are:

1. Investment in plant and equipment

2. High fixed costs of exit

3. Emotional attachments to an industry

4. Economic dependence on the industry

In order to keep up-to-date with today’s complicated banking practices, a bank needs to

invest on computers, software, secured vaults, security systems and different other controlling

and monitoring measures. Most of these assets are customized, and therefore serves the

purposes of the intended organization, only. This customization invalidates the resell value of

these assets. High fixed costs of exit can appear in the form of employee severance payments,

and also in the form of government penalties, etc.

Many local banks of our country have become part of our everyday lives. Thus many people,

both within the government and the mass have emotional attachments with these banks. This

acts as a serious exit barrier for these banks. So, in spite of being highly inefficient and loss

bearing, some banks are still operating.

Some banks are so big that shutting any of them will give a serious blow to our foreign and

domestic trade. Such an occurrence can impact the whole economy.

38 | P a g e

2 Threat of New Entrants

Whenever new firms can easily enter a particular industry, the intensity of competitiveness

among firm increases. New Entrants are companies that are not currently competing in an

industry but have the capability to do so if they choose. The banking industry in our country

is still in its growth stage. So the threat of potential New Entrants is quite high. Usually the

existing companies try to deter potential competitors by setting certain entry barriers. Barriers

to entry are factors that make it costly for companies to enter an industry. The common

barriers to entry are Brand Loyalty, Absolute Cost Advantage, Learning Curve Effect,

Economies of Scale and Government Regulations. In Bangladesh, the question of Brand

Loyalty is somewhat evident in the banking industry. A person who is a loyal customer of a

local or government owned bank usually does not prefer an account in a multinational bank,

whatever lucrative the benefits seem. This creates barriers for new entrants. No bank enjoys

an absolute cost advantage, due to the fragmented nature of the industry. Most of the

government banks and some local banks enjoy learning curve effect as well as the scale of

economy; due to the fact that they have been doing business for quite a long time, they have

gathered a long time experience of operating in Bangladeshi environment, and they have

branches all over the country. The multinational banks are also on the process of achieving

scale of economy. The increasing number of branches supports this statement. Government

regulation is quite supportive towards the formation and operation of new banks. So this

factor is not a significant entry barrier in this sector. For Exim Bank Ltd. , there also exist

Threats of New Entrants as these new banks sometimes enter the banking industry with

higher quality products, lower prices and substantial marketing resources.

3 Bargaining Power of Buyers

When customers are concentrated or large or buy the products services in volume, their

bargaining power represents a major force affecting the intensity of competition in an

industry. Rival firms may offer extended warranties or special services to gain customer

loyalty whenever the bargaining power of consumers is substantial. Bargaining power of

consumers also is higher when the products being purchased are standard or undifferentiated.

Bargaining power of the buyer can be viewed as a competitive threat when they are in a

position to demand lower prices from the company or when they are in a position to demand

better service that can increase operating costs. On the other hand, when buyers are weak, a

39 | P a g e

company can raise its prices and earn greater profits. For the banking industry buyer means

customers who take loan from the banks. The bargaining power of the buyers depends on the

following factors

3.1 Number of Loan Applicants

There are more than 50 banks in our banking sector including multinational and nationalized

banks. There are not enough original business loan applicants in our country. Investment

opportunities are not growing as well; for lots of other factors. So, banks are setting with their

idle money for giving loans; mostly in the form of personal credits. As a result, competition

for doing business is increasing day by day among these established Banks.

3.2 Switching Cost

Switching cost is very low in banking industry. Every bank is giving the similar types of loan

at similar interest rate. So, an individual who wants to take loan from banks can switch easily

to other banks if he or she does not like the terms and conditions. Customers of many banks

are switching to other banks because of low interest rate and lots of other reasons. Lower

switching cost makes the industry more competitive.

3.3 Threat of Backward Integration

In banking industry, there is always a chance for threat of backward integrations. Big

multinational companies or corporations can give threats to the commercial banks that they

will arrange their funds by forming another bank by themselves, where the cost of fund is low

compared to other banks. For this reason, giant customers of this industry always possess

more power than their banks. However, the individual non-corporate clients do not possess

this type of bargaining power.

4 Bargaining Power of Suppliers

The bargaining power of suppliers affects the intensity of competition in an industry,

especially when there is a large number of suppliers, when there are only a few good

substitute products or when the cost of switching the services is especially costly. Bargaining

power of suppliers can be viewed as a threat when the suppliers are capable of forcing up the

price that a company must pay for its inputs or reduce the quality of the inputs they supply,

40 | P a g e

thereby depressing the company’s profitability. On the other hand, if suppliers are weak, this

gives the company the opportunity to force down prices and demand higher input quality. For

the bank the main supplier of fund is the depositor. Bank also gets its funds from the

directors. So, the strength of the suppliers depends on the following factors:

4.1 Number of Supplier

Bargaining power of the fund suppliers is low in banking industry because there are lots of

individual savings in the economy but banks don’t have too many opportunities for

investment.

4.2 Threat of Forward Integration

Sometimes suppliers of funds can give threat to the bank as well. Corporations or big

multinational companies can give threat to the private bank that they will form another bank

for depositing their money. They will not supply any fund to other banks. We all know that

bank makes money by investing other’s money. So, this can lead to a higher competition in

procurement of fund.

Therefore, Exim Bank Limitied has to be concerned about the issues of the suppliers in

carrying out the day to day operations regarding the services provided to its valuable clients.

5.Threat of New Substitutes

In many industries, firms are in close competition with producers of substitute products and

services in other industries. Competitive pressures arising from substitute products increase

as the relative price of substitute products declines and as consumer’s switching costs

decrease. Substitute products are those of industries that serve consumer needs in a way that

is similar to those being served by the industry. Loans, the major banking product, have some

substitutes. All informal sources and channels of financing are treated as viable substitutes.

Some wealthy individuals lend out money at a very high interest rates.

41 | P a g e

SWOT Analysis of EXIM Bank Ltd.

SWOT analysis refers to analysis of Strengths, Weakness, Opportunities and Threats of the

organization. This analysis helps the organization to facilitate improve its future performance

in comparison to its competitors. An organization can also study its current position through

SWOT analysis. For these reason, SWOT analysis is considered as an important tool for

making changes in the strategic management of an organization.

Strengths

EXIM Bank has a Reputation all over the country for its excellent service

The bank has already achieved a high growth rate of deposit, Loans and advances,

Import and Export business.

A well-educated and trained workforce is the major strengths of EXIM Bank.

The bank has satisfactory IT infrastructure

EXIM Bank has satisfied customers

Product Diversification is also a major strength of EXIM Bank.

Skilled, creative & committed manpower

They have their own training center.

The working environment of the bank is very friendly, interactive and informal. There is

no barrier or boundary to communicate with the superiors and the employees.

Weaknesses

The promotional activities of EXIM Bank are not adequate to gain market share.

Most of the branch does not have any car parking facility.

Shortage of spaces.

In selecting people for providing services to the customers, the employees’ personality,

manners, attitudes and acceptability are not properly examined.

Only few branches have spacious car parking facility, which discourage some customers

to deal with EXIM Bank Limited.

There are two major categorized employees one group who are from different banks or

joined through competitive exams, the other group who joined here from different

42 | P a g e

references. There is a big difference in term of attitude, manner, working style, and

behavior between the two groups, which has bad impact to the service. Branch

management also loves to ignore the problem.

Opportunities

EXIM Bank has diversified product offering for Small and Medium Enterprises (SMEs)

Foreign bank penetration may help in technology transfer in our banking system

catering the necessity of improving operational efficiency. To increase operational

efficiency EXIM Bank can adopt technology of foreign bank.

Different types of retail lending products have a great appeal to our middle class people

EXIM Bank can bring these products for retail lending.

They do not look forward to increase their product or service basket.

They have a big opportunity if they provide online Banking system.

Threats

Increasing competition. More private commercial banks are providing service in the

market.

Foreign bank penetration is a major threat for banking industry. It is too bad to lose

market share.

Regulatory restrictions may be a cause of threats.

In our country industries are becoming sick at an increasing rate and growth of

industrialization is very slow in the country. Therefore, it is very likely that poor

industrial growth will affect the potentiality of EXIM Bank.

43 | P a g e

CHAPTER-04

4.0 Findings:

44 | P a g e

1) We found from our Calculation that During 2014 bank has made a net pre-tax profit of

TK.1133784578 after providing provision as per requirement of Bangladesh Bank. And 2013

is 1901280224.

2) The growth rate in formal sector –Deposit in 2014 was significant, based on actual

expected growth rate of deposit in 2013 would be much better.

3) Banking with the poor under micro credit and micro Enterprise under family

empowerment credit program is increase very rapidly.

4) Current Ratio: I found from my calculation that the liquid condition of the bank is

increase. From the forecasted overall data I can say that the bank has a little bit improve

conditions.

5) Cash Ratio: Cash ratio which indicates that the bank is in the middle position to meet the

obligation. From the forecasted overall data we can say that the little bit unimproved

conditions.

7) Equity Multiplier: Equity multiplier for the year 2010is 14.74 and for 2014 is 8.97 .From

the forecasted overall data of I can say that the bank has a improved conditions.

8) Long Term Debt Ratio: I know that the standard legend for this ratio of any Bank or firm

But in 2010to 2014 it increased to 0.93 to 0.87 which is good for bank .It means that the

condition of the bank is increased. The bank has little bit low positions.

9) Return on Assets is higher than better on any bank. In the year 2010 to 2014 are increase

of return on assets.

10) Return On Equity: We found calculation that returns on equity is higher than better on

any firm or bank. So we can say return on equity boost it

45 | P a g e

Recommendation

Though EXIM Bank has become one of the leading commercial Islamic banking processes in

Bangladesh within a short time, therefore some recommendations have been made for improving its

overall performance. These are:

Bank had net pre-tax profit of satisfied position.

The growth rate in formal sector Deposit was significant based on actual expected growth rate of

deposit in 2012 to 2014 would be much better.

Bank should micro credit and micro enterprise program is increase very rapidly.

In the competitive banking environment, EXIM Bank should have planned diversification, both in

relation to sources and uses of funds which will help improve the liquidity position of the banks.

EXIM Bank should introduce electronic devices which are used in international banking

operations e.g. E-commerce which represents paperless method of undertaking commercial

transactions over the computer network.

Promotional activities of EXIM Bank are not satisfactory. So it should be increased.

More attention should be given to recruit qualified people at different levels of management

Cash ratio is the little bit unimproved condition the bank can try improve .

Total debt ratio analysis of the 2014 is not excelent.The bank try growth of total debt ratio.

Long Term Debt Ratio has little bit low positions. the bank has perfect position.

Banking is a service-oriented business. So authority should be aware of improving their service

quality

46

Conclusion:

Despite all the economic challenges and political crisis faced in previous years EXIM Bank

Ltd. stood resolute in its firm commitment to financial growth. The objective of EXIM Bank

Ltd. is geared towards the changing needs of its customers. The Bank is on a strong footing to

impart tailored services. The focus of the Bank lies on its large clientele base and their

expectation from the Bank. It is the aim and intension of EXIM Bank Ltd. to accelerate the

trend of growth and development in advanced level, so as to reach a position where the

Banks’ brand will be associated with being the leading provider of quality banking and

financial services in the country. Modern Commercial Banking is an exacting business.

Commercial banks are great monetary institutions, important to the general welfare of the

economy more than any other financial institution. It has a vastly sobering and exacting

responsibility.

Today is not like yesterday and tomorrow will be different from today. Given the fast

changing, dynamic global economy and the increasing pressure of globalization, We

consolidation and disintermediation, it is essential that EXIM Bank Ltd Limited should make

a reasonable change in its inanimate environment to serve its consumers in a more attractive

and effective way that are sensitive to these changes. To improve the customer service

programs further, EXIM Bank Ltd Limited should adopt some of the industry best practices

that are not practiced currently.

Financial Performance Analysis means the Financial logic by which the business unit hopes

to achieve its Financial objectives. Through Finance segmentation, targeting, and positioning,

the company decides which customers it will serve and how. It identifies the total Finance,

then divided it into smaller segments, select the most promising segments, and focuses on

serving and satisfying customers in these segments.

Guided by Financial Performance Analysis, the company designs a Financial mix made up of

factors under its control To find the best Financial Performance Analysis and mix, the

company engages in Financial analysis, planning, implementation, and control. Through

these activities, the company watches and adapts to the actors and forces in the Financial

environment.

47

Bibliography

References:

1. Leopold A.Bernstein, Financial Statement Analysis 5 th Edition

Websites

http://www.scribd.com/doc/75455732/-of-Exim-Bank

http://www.eximbankbd.com/deposit

http://www.eximbankbd.com/Investment.

48

49

50