1Report on Lankabangla Finance Ltd.

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Financial Analysis of TDR

of

LankaBangla Finance Limited

Prepared for

Department of Business Administration

Northern University Bangladesh

Supervised by

Farhana Rob Shampa

Senior Lecturer in Finance



Prepared by

Syeda Bashira Khatun

ID NO: BBA 080260787

Major in Finance



Date of submission: 08th July, 2012

Financial Analysis of TDR of LBFL

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FINANCIAL ANALYSIS OF TDR

OF LANKABANGLA FINANCE

LIMITED

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FINANCIAL ANALYSIS of TDR

of


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FINANCIAL ANALYSIS of TDR


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of


Prepared by


ID NO: BBA 080260787

Major in Finance




Financial Analysis of TDR


Growing together…

of


Prepared for



Supervised by

Farhana Rob Shampa




Prepared by


ID NO: BBA 080260787

Major in Finance




LETTER OF TRANSMITTAL


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July 08th, 2012

ToFarhana Rob Shampa, Senior Lecturer in Finance Department of Business AdministrationNorthern University Bangladesh

Subject: Submission of Internship Report on “Financial Analysis of TDR of LankaBangla

Finance Limited”.

Dear Madam,

I am the student of BBA program of NUB. I am happy and delighting to submit here with a copy of internship report for your kind evaluation and appreciation.

I would honor if you go through my report and find worthwhile as I really put in a lot effort while preparing it. My internship period was from 13.02.2012 to 12.05.2012. It is a privilege and great for me to submit my internship report on titled “Financial Analysis of TDR (Term Deposit Receipt) of LankaBangla Finance Limited” that has been prepared as an original part of my degree requirement. I have tried my best to follow the instructions of my supervisor in preparing this report.

But there may be some mistakes due to various limitations. For this reason, I would like your kind consideration in this regard.

I hope you will find this report up to your expectation. I would be grateful to receive your suggestions and comments regarding this.

Sincerely Yours,

-----------------


ID NO: BBA 080260787Major in Finance Department of Business AdministrationNorthern University Bangladesh


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STUDENT DECLARATION

I am Syeda Bashira Khatun, hereby declare that the presented internship report entitled

“Financial Analysis of TDR of LankaBangla Finance Limited” is uniquely prepared by me

and the report has not been submitted to, any other university or institution, for any degree or

award or any other purpose.

Signature

………………………..


ID NO: BBA 080260787

Major in Finance

Bachelor of Business Administration



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Certificate of Acceptance

This is to certify that the Internship Report on “Financial Analysis of TDR of LankaBangla Finance Limited” is submitted in partial fulfillment of the requirement for the degree of Bachelor of Business Administration (BBA), Northern University Bangladesh, Which is accepted in form and quality.

…………………………………………. …………………………….

Farhana Rob Shampa

Supervisor Internship Committee


Department of Business Administration Department of Business Administration

Northern University Bangladesh Northern University Bangladesh


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ACKNOWLEDGEMENT

First of all, I express my deep gratitude to Almighty Allah who create and nature us in this

transitory.

I also express my sincere express gratitude and wholehearted respect to my internship supervisor

Mrs. Farhana Rob Shampa, Senior Lecturer, Department of Business Administration, Northern

University Bangladesh for her Cooperation and guidelines assistance to complete this report.

I also express my warm gratitude and cordial thanks to the management and some officials of

LankaBangla Finance Limited who have given me the opportunity to work with them and help a

lot by providing the information and enabling me to prepare this report. I have received their

generous help and support. So special thank to Mr. Quamrul Islam CFO (Senior Vice President

and Chief Financial Officer), Mr. Nazimuddin Ahmed (Senior Manager-Treasury), Mr. Amit

Kumar Roy (Assistant Manager), Mr. Farhad Ahmed Chowdhury (Manager- HRD), Mrs.

Sharmin Sultana (Principal officer), Mr. Chowdhury Shifuddin Mahmud (Principal officer),

Mr. Galib Mohammed Hasan (officer).

I would like to take the opportunity to express my wholehearted gratitude to my fellow friends,

near and dear ones who offered encouragement, information, inspiration and assistance the

course of constructing this report.

However, the responsibility of errors and omissions in this report, if any lies in my account.


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TABLE OF CONTENTS

SLNO

PARTICULARSPAGE

NOLETER OF TRANSMITTAL ….......................................................... 6ACKNOWLEDGEMENT …................................................................ 9EXECUTIVE SUMMARY .................................................................. 12

1.00 CHAPTER ONE: INTRODUCTION1.1 Introduction …...................................................................................... 141.2 Problem Statement …........................................................................... 141.3 Objectives of the Report …................................................................... 14-151.4 Methodology of the Study …................................................................ 15

1.4.1 Sources of data ….................................................................. 151.5 Limitation of the Study …..................................................................... 15-161.6 Scope of the Study …............................................................................ 162.00 CHAPTER TWO: LBFL AT A GLANCE2.1 Background of LBFL …....................................................................... 182.2 Vision of LBFL …................................................................................ 192.3 Mission of LBFL ….............................................................................. 192.4 Objectives of LBFL ….......................................................................... 19-202.5 Features of LBFL …............................................................................. 20-212.6 The Structure of LBFL …..................................................................... 21-222.7 Divisions of LBFL ……....................................................................... 23

3.00CHAPTER THREE: INTERNSHIP POSITION DUTIES & LEARNING POINT

3.1 First day at work ……........................................................................... 253.2 Job Rotation …….................................................................................. 203.3 Nature of the job……............................................................................ 25-26

3.3.1. Term Deposit Opening Section ……...................................... 25-263.3.2. Encash Section ……............................................................... 26

3.4 Learning point …….............................................................................. 274.00 CHAPTER FOUR: TDR POLICY OF LBFL4.1 Introduction of TDR Policy of LBFL ……........................................... 294.2 Policy Guidelines ……......................................................................... 29-30

4.2.1 Deposit Principles ……............................................................ 304.3 Organizational Structures & Responsibilities …….............................. 30-32

4.3.1 Organizational Structure …….................................................. 31


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4.3.2 Key Responsibilities ……........................................................ 324.4 Procedural Guidelines …….................................................................. 324.5 Approval Process …….......................................................................... 335.00 CHAPTER FIVE: TDR PRACTICES OF LBFL5.1 Extent & Restrictions ……................................................................... 355.2 TDR Department & its Function …….................................................. 35-365.3 Processing of TDR Proposals ……....................................................... 366.00 CHAPTER SIX: FINANCIAL ANALYSIS & FINDINGS6.1 Deposit Schemes Categories ……........................................................ 38-406.2 LBFL’s Structure of Finance ……........................................................ 40-426.3 Earnest Money Financing Scheme ……............................................... 436.4 Ratio of Financial Analysis on Graph .................................................. 43-506.5 Findings ……........................................................................................ 51

7.00CHAPTER SEVEN: CONCLUSION & RECOMMENDATIONS

7.1 Conclusion …….................................................................................... 537.2 Recommendations ……........................................................................ 54

LIST OF TABLESTable 1: Term deposit opening procedure …….............................................. 26Table 2: Function of Encashment ……........................................................... 26Table 3: Cumulative Term Deposit Amount ……........................................... 38Table 4: Periodic Return Term Deposit Rate & Amount ……........................ 39Table 5: Money Builders Term Deposit Amount …….................................... 39-40Table 6: Consolidated Financial Highlights ……........................................... 41-42LIST OF FIGURES Figure 2.1: Management Hierarchy ……....................................................... 22Figure 4.1: Organizational Structure of LBFL ……..................................... 31Figure 4.2: Flow Chart of Approval Process ……........................................ 33


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EXECUTIVE SUMMARY

The internship report is prepared of BBA program of NUB. This report will give a clear idea

about the TDR and financial analysis of LBFL. Especially on the “Financial Analysis of TDR

of LankaBangla Finance Limited”.

LankaBangla Finance Limited (LBFL) is established in 1997 with a view to establishing a new

way of deposit as a leading non-banking financial institution in Bangladesh. It is located to the

Safura Tower (Level 11) - 20 Kemal Ataturk Avenue, Banani Corporate Branch. LankaBangla

Finance Limited (LBFL) is a leading operating enterprise in Bangladesh in the field of deposit

keeping. Technical support provided by Sampath Bank Limited, Sri Lanka has been working as a

catalyst to emerge LBFL as most innovative financial solution provider strictly in compliance

with the rules & regulations of Bangladesh Bank.

First chapter: is the introduction chapter; here I mentioned problem statement, objectives of the report, methodology of the study, sources of data, limitation of the study, scope of the study.

Second chapter: I present overall briefing about the organization. Here I also background of

LBFL, vision, mission, objectives, features, structure of the LBFL and divisions of LBFL.

Third Chapter: Here I discussed my internship duty, job description that I have to perform and

the learning point during the performances.

Forth chapter: In the chapter four I mentioned introduction of TDR policy of LBFL, policy guidelines, deposit principles, organizational structures & responsibilities, procedural guidelines and approval process of TDR.

Fifth chapter: TDR practices of LBFL are mentioned here.

Sixth chapter: I discussed financial analysis and findings of the report, through evaluation of the

ratio of the financial analysis and put it into graph.


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Lastly, we have described some suggestions that should be taken by LBFL to overcome their

weaknesses.

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INTRODUCTION

1.1 Introduction:

This report has been done as per the requirement for successful completion of the Internship

program. Exposure to the business world and acquiring practical work experience was the

primary objective of this report. I was attached with LankaBangla Finance Limited; at located in

Safura Tower (Level 11) - 20 Kemal Ataturk Avenue, Banani Corporate Branch. The report

focuses on treasury division as I was attached with that division during the period of my

internship program. The topic of this report was decided upon after approval by my internship

supervisor.

1.2 Problem Statement:

The objective of my study work is to learn about the TDR deposit categories and deciding the

characteristics and features of their products and financial analysis of the product of LBFL. I

have tried my level best to find out characteristics and features of their products.

The company has different categories of product; which features are attractive to the clients. But

it was not well designed process how to reach to the clients. I tried my supreme to find the

financial effect through ratio analysis of the products that maintaining in LBFL.

1.3 Objectives of the Report:

The present study has been designed to achieve the following objectives:

The first objective is to know about the LBFL TDR Policy as a private non-banking

organization.


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Secondly how LBFL operates its TDR division being controlled with rules and

regulations of Bangladesh Bank.

Another basic objective of the report are to see whether the process of TDR practice

operation in LankaBangla Finance Limited is complying with the guideline issued by

Bangladesh Bank and how LankaBangla Finance Limited is handling the deposits and

interests.

To find out barriers or bottlenecks in collecting the overall TDR and maintaining process.

To recommend on those problems.

1.4 Methodology of the Study:

The study was based on primary and secondary data. In order to prepare practical training report

various source and method of data collection was used.

1.4.1 Sources of data:

In this report only secondary data have been used. For both the Organizational part and Project

part, quantitative information from the Annual reports of LBFL and qualitative information from

other literature regarding the division and their functions, operations were used. So, only the

secondary data were utilized.

While I was conducted the study I collected various types of secondary data. Data has been

collected through different sources, by talking with the responsible officers, organization’s

annual report, and from different circular published by Bangladesh Bank for non-banking

organization and their own circular.

1.5 Limitation of the Study:

The following limitations are apparent in this report:

There was little or no scope to contact with the direct clients of the TDR for the internee

students. So I could not realize well all the procedures of collecting TDR.


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Only those TDRs which are highest practiced by the organization have been focused in

this report.

For organizational part, almost no financial information for the previous years was

available; in some cases only un-audited information could be collected.

TDR (or FDR) policy is the Internal Confidential matter to every bank or non-banking

organization. So only most important parts and provisions of policy related to selected

schemes loans and advances were focused.

1.6 Scope of the Study:

Non-banking sector is a robust and sensitive area. A non- banking organization has different

products; Different services and different customers. Different departments of a bank perform

different activities. However, scope of the study is limited within specific area of an organization

that is LankaBangla Finance Limited.

Again it was prepared on the basis of data and information gathered from Safura Tower (Level

11) - 20 Kemal Ataturk Avenue, Banani Corporate Branch. So this study says only about the

activities of the LankaBangla Finance Limited Safura Tower (Level 11) - 20 Kemal Ataturk

Avenue, Banani Corporate Branch in the light of LBFL as a whole. This study covers only

various parts and provisions of LBFL TDR policy and practice as a sample of non-banking

organizations in Bangladesh.


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2.1 Background of LBFL:

LankaBangla Finance Limited (LBFL) a joint venture financial institution established with

multinational collaboration is in operation since 1997 having license from Bangladesh Bank

under Financial Institutions Act, 1993. With institutional shareholding structure, educated &

motivated human resources, friendly working environment & dynamic corporate culture has

enabled LBFL to be a diversified financial services providing institution of the country.

Technical support provided by Sampath Bank Limited, Sri Lanka has been working as a catalyst

to emerge LBFL as most innovative financial solution provider strictly in compliance with the

rules & regulations of Bangladesh Bank.

LBSL (Formerly known as Vanik Bangladesh Securities Ltd) started its stock broking business

in 1997 trading on the Chittagong Stock Exchange (CSE) Ltd, while commencing trading on the

Dhaka Stock Exchange (DSE) in 1998. The company was renamed LankaBangla Securities with

effect from 27 April 2005 following a restructuring of the company.

Under the right of an enlightened board of directors, and the policy by the resourceful

management, the company has emerged as one of the leading financial institutions in the

country. Having strong presence and recognition in almost all financial product and service lines

in the industry, LankaBangla is the lone financial institution which operates MasterCard & VISA

card and provides third party card processing services to different banks.

LankaBangla Finance Limited (LBFL) is a private non-banking organization with Head Office at

Safura Tower (Level 11) - 20 Kemal Ataturk Avenue, Banani, Dhaka - 1213, Bangladesh. With

the assets of 22,380.00 million BDT, the non-banking organization has diversified activities in

deposits; invest in business and credit cards. LankaBangla Finance is playing an important role

in providing lease in all market segments of customers, individuals, Small & Medium


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Enterprises, Commercial Houses, Large Corporate organizations. The total amount of lease has

been provided 16,659.83 million BDT till its main investing projects are automobiles, etc. the

policy has gained popularity among consumers.

2.2 Vision

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To be the nation's most sought after facilitator in creating, nurturing and maximizing value to the

stakeholders, the society, and the environment.

2.3 Mission

To lead by example through a committed team of nurtured resources fostering ownership that

motivates thriving towards excellence in knowledge, systems, processes and procedures, thereby

empowering the organization on at every level to deliver the highest quality of product, customer

care, and stakeholder value keeping environmental safety a priority.

2.4 Objectives of LBFL:

a. Strategic Objectives:

Enrichment & expansion of financial offerings by introducing new product and service

lines through proper diversification and customization of existing products & services for

ensuring maximum market coverage to meet & exceed stakeholders’ needs &

expectations;

Continuous improvement in operational processes through technological advancement,

employee capacity building through human resources development programs, thereby

ensuring effective and efficient utilization of resources to maximize the value of the

company;

Strengthening building blocks to consolidate the product & service framework and

maintaining strict compliance to good governance norms and regulations to ensure long

term sustainability of the company;


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Building synergy among resources and activities to ensure maximum outputs from

resource inputs;

Contribute to the society to share the achievements of the company with the nation

putting priority to ecological balance of the environment in our way of doing business,

thereby ensuring long term economic potential for us as well as our society.

b. Financial Objectives:

To be the most preferred financial services provider;

To maximize the value of being our customer, shareholder or employee;

To build and retain a team of highly skilled human resources through talent hunting,

nurturing, training, developing and motivating through rewarding to deliver the highest

level of customer service;

To build state-of-the-art technological framework for ensuring faster, accurate, timely

and risk calculated operations capable of coping with ever increasing financial and

operational complexities;

To develop and maintain an organizational culture committed towards ownership thriving

for continuous innovation and improvement in our way of doing business to meet and

exceed stakeholders ever growing expectations;

2.5 Features of LBFL:

Safe & Secured;

High Return;

Flexible/Diversified Deposit Scheme tailored to your needs;

Minimum deposit amount of Tk. 100,000;

Minimum duration---Six Months for individual & institution as directed by Bangladesh

Bank ;

Interest payment periodically (Monthly/Quarterly/Half-Yearly/Annually) as per client

choice;


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No incidental costs;

Premature encashment allowed after completion of minimum duration;

Specialized customer service;

Depositor can nominate nominee(s) to withdraw the deposited amount in absence of

depositor;

Legal guardian can open deposit in the name of minor;

Any Individual/Firm/Corporate Houses are eligible to participate in the Deposit Scheme

of LankaBangla.

2.6 The Structure of LBFL:

The organization structure and corporate of LankaBangla Finance Limited (LBFL) strongly

reflect its determination to establish, uphold and gain a stronger as an organization which is

customer-oriented and transparent in its management.

Board of Directors: The Board of LankaBangla Finance Limited consists of 10 (ten)

members, elected from the sponsors of the non-banking organization.

Board Committees: The Board of Directors who also decides on the composition of

each committee determines the responsibilities of each committee.

Executive Committee: The committee has 8 (eight) members.

Audit Committee: All internal audit facts are executives by the audit committee. The

committee has 4 (four) members.

Management Committees: Under management committee there are 11 (eleven)

members and also there are 8 (eight) committees. These are:

I. Human Resource Committee: There are 4 (four) members.

II. Internal Control and Compliance Committee: There are 10 (ten) members.

III. Management Credit Committee: There are 5 (five) members.

IV. Anti Money Laundering Compliance Committee: There are 5 (five) members.

V. Asset Liability Management Committee: There are 8 (eight) members.

VI. IT Development Committee: There are 3 (three) members.


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VII. Credit Card Operations Committee: There are 7 (seven) members.

VIII. BASEL II Implementation Committee: There are 7 (seven) members.


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Figure 2.1: Management Hierarchy

SOURCE: LBFL Website & Annual Report 2011

2.7 Divisions of LBFL:

All policy formulations and subsequent execution are done in the Head Office. It comprises of 10

(ten) major divisions namely Treasury Division, Credit & Investment Division, Accounts

Division, Human Resources Division, Marketing Division, Credit Administration Division,

Information Technology Division, Research and Development Division, Audit and Compliance

Division, Training and Development Division. Besides these main divisions, there are 7(seven)

branches including Dhaka, Chittagong and Sylhet branches to look after the non-banking

operations. The structures and sanctions of each of the divisions of LBFL are described below:

Treasury Division

Credit & Investment Division

Accounts Division

Human Resources Division

Marketing Division

Credit Administration Division

Information Technology Division

Research and Development Division

Audit and Compliance Division

Training and Development Division


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3.1 First day at work:

I joined in 20 Kemal Ataturk Avenue, Banani Corporate Branch on 13 th February 2012. On the

day I met with VP & Company Secretary & Head of HR, Mr. Mostafa Kamal to report my

joining as an internee. He warmly received and introduced me to Mr. Farhad Ahmed Chowdhury

to introduce with Mr. Quamrul Islam who monitored my total internship program. From that day

I was placed in Treasury Sector and used the full day for understanding the job duties of this

section.

3.2 Job Rotation:

The report has been prepared on the basis of experience gathered during the period of internship

from 13th February 2012 to 12th May 2012. Within this period I worked in Treasury Department.

Total working duration I learn different facts of this department.

3.3 Nature of the job:

As a part of internship program, I was required to learn various types of Treasury related

activities which are assigned by the different officers of this department. In this period, I am

working with all officers of this department but basically in a major portion of time I spend in

Term deposit sector of Treasury department. Because excess load was always created in this

sector. I am also done many tasks like encashment term deposit, renewal of term deposit,

database analysis for bank ultimus software, etc. this has definitely enriched my practical

experience. My different types of works are described below:

3.3.1. Term Deposit Opening Section:

Term deposit opening was one of my task, where my jobs was giving the information regarding

new term deposit opening, help the client to fill up the deposit opening form, and input the


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information into the account opening software. Under this section, LBFL opens different types of

term deposit on the request of clients.

Table-1: Term deposit opening procedure:

Step 1

The term deposit should be properly introduced by Any one of the following:

A client can open TDR under a respectable person of the locality well known to

the PMO of the branch concerned.

Step 2Receiving filled up application in LBFL’s prescribed form mentioning what type of

term deposit is desired to be opened.

Step 3

The form filled up by the applicant himself/herself.

One of passport sixe photographs from individual are taken; in case of firms

photographs of all partners or selective authorities are taken.

Applicant must select a nominee and should give nominees one copy photo with

his own signature to prove that it is attached. But in case of joint applicants

nominee is not essential.

Step 4 Authorized officer accepts the application.

Step 5 The committed amount is deposited - only cheque is accepted.

Step 6 The checklist is verified by the respective officer.

Step 7 The term deposit is opened and term deposit certificate is given.

3.3.2. Encash Section:

LBFL, as a non-banking organization, accept surplus money from the people as deposit for a

certain period and give the interest in a specific rate. The client not able to withdraw the money

in this running period but if he/she wants then withdraw interest. And after fulfill the time period

the client can encash the deposit. This is the section that directly deals with clients; the reputation

of the organization depends much on it. The function of encash section described below:

Table-2: Function of Encashment:

Interest payment The client who is interest to withdraw interest that is paid by cheque;


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and others interest is added with their deposit by renewal.

Cash Payment The client who withdraw deposit their money is returned by cheque.

3.4Learning point:

There are many things that I learned in the LankaBangla Finance Limited in 20 Kemal Ataturk

Avenue, Banani Corporate Branch. These are given below:

How to open their several deposit in their organization.

What are the requirements for opening their deposit

How to provide information to their clients

How clients can get deposit confirmation as TDR Certificate

How clients get their interest confirmation

How collect the deposit amount

How operate money builder’s account

How different officers do their work

How Repo are collect from Bangladesh Bank

How Call Money are collect from different bank

How to submit report to internal and external audit committee

How to sell Repo by online transaction

How to bargaining for select Repo and Call Money rate

How to prepare a report for submitting the Bangladesh Bank in month ending

Finally I learned to prepare an internship report.


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4.1 Introduction of TDR Policy of LBFL:

LankaBangla Finance Limited is committed to provide high quality services to its constituents

through different financial products and profitable utilization of fund and contribute to the

growth of GDP by financial profitable sectors, helping industrialization, creating employment

opportunities for the educated youth.

With a view to achieving the aforesaid objectives of the organization, TDR operation is of

paramount importance as the greatest share revenue of the total revenue of the organization is

generated from it. The success of a non-banking organization, therefore, depends on how

efficiently and judiciously it makes build of its capital. In other words, careful and efficient

management of its TDR collection is very essential for the success of the organization.

In formulating a TDR judgment and making quality is TDR decision, the marketing officer must

be equipped with all information needed to evaluate a TDR clients character, management

competence, capacity, ability to provide amount, external conditions and extra requirements

which may affect in maintain a TDR.

The TDR making Policy has been divided into the following categories:

i. Policy Guidelines;

ii. LankaBangla Deposit Scheme Form;

iii. KYC Form;

iv. Checklist.

4.2 Policy Guidelines:


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The TDR making Policy guidelines of the organization describes details fundamental TDR risk

management policies, outlines general principles that are designed to govern the implementation

of more detailed lending procedures and deposit risk analysis system.

4.2.1 Deposit Principles:

For sound capital the following points should be kept in view:

Judicious selection of customers

I. Purpose

II. Safety

III. Sources of fund

IV. passport size photograph of applicant(s)

V. passport size photograph of nominee(s) attested by the applicant

VI. Photocopy of National ID/Voter ID/Passport/Driving License

VII. Other papers if required in futures

VIII. Deposit can be used as collateral with LankaBangla or other Banks/Financial

Institutions

IX. Each account would have unique number

X. Bangladesh Bank guidelines

XI. Taxes & levies as imposed by Government would be applicable

XII. reserves the right to change or amend the terms & conditions of TDR

XIII. account can be opened by Cheque/ Pay Order/Draft

XIV. Legal guardian can open deposit in the name of minor

XV. Premature encashment allowed after completion of minimum duration

XVI. Minimum deposit amount of Tk. 100,000

XVII. Flexible/Diversified Deposit Scheme tailored to your needs

These guidelines will be updated annually.

4.3 Organizational Structures & Responsibilities:


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The appropriate organizational structure must be in place to support the adoption of policies

described policy guidelines. The key feature is the segregation of the Marketing / Relationship

Management function from approval / Risk management/ Administration Functions.

4.3.1 Organizational Structure:

The following chart represents the management structure:


Board Secretariat

Executive Committee

Audit Committee

Internal Audit Credit Risk Management

Credit & Investment Division

Merchant Banking

Credit Card

Mortgage Loan Division

Finance &

AccountsTreasury

Information Technology

HR & Admin

Managing Director

Board of Directors

Management Committee

Credit Risk Management Committee

Merchant Banking Committee

Assets & Liability Management Committee

HR Committee

IT Development Committee

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Figure 4.1: Organizational Structure of LBFL

SOURCE: Adapted from LBFL Annual Report 2008

4.3.2 Key Responsibilities:

There are various responsibilities that done by various concerned. The key responsibilities that

have been vested upon them as follows:

Head of Deposit Risk Management

Head of Deposit

Head of Deposit Division ( Treasury)

4.4 Procedural Guidelines:

Approval Process

Delegation of power

Sanctioning Authority

Encashment

Legal Action

Write Off Of TDRs/Deposits


ICC Committee

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4.5Approval Process of TDR:


TDR Marketing Team

(Officers and PMO)

Head of Branch

(Approval/Decline)

As Per Delegation

Beyond Capacity Recommended To

Special Recommendation of Clients

Interest Rate Respective officers Approval

Principal officer‘s approval

KYC Approval of the specific branch officer

Treasury Department’s Manager Approval

CFO and MD (approval/decline)

Board OF Directors concern in special cases

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Figure 4.2: Flow Chart of Approval Process

Source: Adapted at the time of working with the Department


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5. TDR PRACTICES OF LBFL

5.1 Extent & Restrictions:

It is applied to all the branches of LankaBabgla Finance Limited in Bangladesh. Extension of

TDR facilities are subject to deposit policy of the non-banking organization. As non-banking

organization respect and maintain some rules, regulations and policies of Bangladesh Bank in a

word government given all policies.

5.2 Treasury Department & its Function:

The TDR department is assisted by the Finance Department, which is mainly concerned with the

post-approval functions of Finance Division. The aspects that are critically tracked and

monitored by Finance Division are

TDR expiry

Past Record or previous client

Document deficiency

Deposit date

Interest rate

Special requirements by client if any

Deduct exise duty

Deduct income tax

Treasury Division is involved in basically two broad functions:

Deposit Monitoring:


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The important aspects of this part are:

The sources of fund

The occupation of the client

Deposit amount

Time period of the deposit

Interest rate of the deposit

Creates opportunity to maximize your returns.

5.3 Processing of TDR Proposals:

TDR account can be opened by Cheque/ Pay Order/Draft.

Safe & Secured

High Return

Flexible/Diversified Deposit Scheme tailored to your needs

Minimum deposit amount of Tk. 100,000

Minimum duration---Six Months for individual & institution as directed by

Bangladesh Bank

Interest payment periodically (Monthly/Quarterly/Half-Yearly/Annually) as per

client choice

No incidental costs

Premature encashment allowed after completion of minimum duration

Depositor can nominate nominee(s) to withdraw the deposited amount in absence

of depositor

Any Individual/Firm/Corporate Houses are eligible to participate in the Deposit

Scheme of LankaBangla

The following papers/documents are to be submitted by the Branch-in-charge along with

the deposit proposals:


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Application form and KYC form duly filled in.

One passport size photograph of applicant(s), nominee(s) attested by the

applicant.

Photocopy of National ID/Voter ID/Passport/Driving License.

Other papers if required in future


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FINANCIAL ANALYSIS & FINDINGS

6.1Deposit Schemes Categories

LankaBangla offers various Deposit Schemes with attractive rate of return. Under this there are

4(four) types of Term Deposits:

i. LB Cumulative Term Deposit

Under this scheme customers Deposit will turn into a desirable amount through accumulation of

interest. The minimum tenure of the scheme is at least 2 years. If their deposit amount is

Tk.100,000 the receivables on maturity will be:

Table -3: Cumulative Term Deposit Amount:

2 Years 3 Years 4 Years 5 Years

Tk.123,766 Tk. 138,620 Tk.154,561 Tk.172,335

2 Years 3 Years 4 Years 5 Years0

40000

80000

120000

160000

200000

Amount with Interest

Amount with Interest

Graph 5.1: Cumulative Term Deposit Amount with interest

Significant:


Growing together…

Here we can figure out that this term deposit is providing certain amount after a fixed time

period. Not in case of premature.

ii. LB Periodic Return Term Deposit

Under this scheme customer can draw the interest periodically (Monthly/Quarterly/Half-

yearly/Annually) keeping the original deposited amount intact.

Table -4: Periodic Return Term Deposit Rate & Amount:

Tenure Monthly Quarterly Half-Yearly Annually

1 Year 1,229 3,725 7,475 15,000

Rate 14.75% 14.90% 14.95% 15.00%

2 Years 1,188 3,600 7,225 14,500

Rate 14.25% 14.40% 14.45% 14.50%

3 Years 1,188 3,600 7,225 14,500

Rate 14.25% 14.40% 14.45% 14.50%

iii. LB Double Money Term Deposit

Deposit amount placed at a time will turn double on completion of 6 years 3 months.

iv. Money Builders Term Deposit (Like DPS of Commercial Banks):

Under this scheme the depositor will open an account. On expiry the depositor will receive the

deposited amount along with the interest accrued there on.


Growing together…

Table -5: Money Builders Term Deposit Amount:

Installment per month Return after 3 years Return after 5 years Return after 10 years

1,000 44,000 83,000 230,000

2,000 88,000 166,000 460,000

3,000 132,000 249,000 690,000

5,000 220,000 415,000 1,150,000

10,000 440,000 830,000 2,300,000

25,000 1,100,000 2,075,000 5,750,000

Graph 5.2: Money Builders Term Deposit Amount

Significant:

Here we can figure out the money builders monthly deposit amount are different. And base on

that their gaining money amount is also different.


Money Build

ers 1

Money Build

ers 2

Money Build

ers 3

Money Build

ers 4

Money Build

ers 5

Money Build

ers 6

0

5,000

10,000

15,000

20,000

25,000

30,000

01,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,000

InstallmentReturn after 10 years

Growing together…

6.2LBFL’s Structure of Finance:

LankaBangla Finance Limited (LBFL) has indeed, completed another successful year of its

journey towards its goal by way of stretching maximum and achieving its best. Figures of

December-end-2010 speak for themselves the steady growth in its fundamental indicators over

the past few years. Table below shows the comparatives figures:

Table -6: Consolidated Financial Highlights:

All figures in BDT million except (%)

2007 2008 2009 2010 2011Growth

(%)

Financial Performance

Total Assets 5,782.38 8,108.87 13,435.00 19,322.24 22,380.00 15.83%

Total Liabilities 5,185.03 7,186.40 11,335.07 14,532.20 16,659.83 14.64%

Business Disbursement 3,024.22 3,258.97 4,689.28 4,275.50 4,443.70 3.93%

Current Assets 3,977.61 5,554.92 8,839.66 8,985.65 9,345.29 4.00%

Current Liabilities 3,477.92 4,793.27 7,394.94 7,869.65 8,945.25 13.67%

Non Current Assets 1,804.77 2,553.95 4,595.93 10,336.59 13,034.71 26.10%

Long Term Liabilities 1,707.12 2,393.12 3,940.13 6,662.55 7,714.58 15.79%

Term Deposits 1,818.52 2,627.30 4,432.90 4,560.00 5,309.62 16.44%

Total Investment

Portfolio4,717.46 6,869.63 10,699.17 15,064.57 18,703.35 24.15%

Operational

Performance

Operating Revenue 946.96 1,542.18 2,427.07 4,176.11 3,410.33 -18.34%

Operating Expenses 648.57 1,069.97 1,362.38 1,513.72 2,023.40 33.67%

Financial Expenses 418.76 707.16 936.61 1,016.08 1,396.57 37.45%

Net Profit Before Tax 298.39 472.21 908.07 2,331.10 1,304.04 -44.06%

Net Profit After Tax 210.47 377.64 744.08 1,700.15 791.1 -53.47%

Turnover of Share 65,972.4 127,605.37 242,210.58 560,366.03 229,161.62 -59.11%


Growing together…

Trading by LBSL 8

Financial Ratios

Current Ratio 1.14 1.16 1.2 1.14 1.04 -8.50%

Debt Equity Ratio 8.68 7.79 5.4 3.03 2.91 -4.00%

Financial Expense

Coverage Ratio1.5 1.53 1.79 2.67 1.57 -41.40%

Return on Equity (%) 41.23% 40.94% 35.42% 35.49% 13.83% -61.04%

Return on Assets (%) 4.89% 4.66% 5.54% 8.80% 3.53% -59.83%

Equity Parameters

Authorized Capital 1,000.00 1,000.00 1,000.00 1,000.00 3,000.00 200.00%

Paid-up Capital 350 385 442.75 531.3 823.52 55.00%

Shareholders' Equity 597.34 922.48 2,100.53 4,790.04 5,720.17 19.42%

No. of Share

Outstanding35 38.5 44.28 53.13 82.35 55.00%

Net Asset Value (NAV)

Per Share17.07 23.96 47.44 90.18 69.46 -22.98%

Earnings Per Share

(EPS)5.47 9.81 14 32 9.61 -69.98%

Market Price Per Share

(Closing)100.1 196.6 313.8 497.9 170.2 -65.82%

Price Earnings Ratio

(Times)18.3 20.04 22.41 15.56 17.72 13.87%

Dividend Payment (C-

cash & B- bonus)

10% B 15% B 20% B 55% B 30% B-

15% C 15% C 15% C - -

Dividend Payout Ratio

(%)76.50% 69.45% 44.15% 72.49% 52.94% -26.97%

Dividend Coverage

(Times)1.19 1.44 2.27 1.38 1.89 36.93%


Growing together…

Dividend Yield (%) 2.50% 1.53% 1.12% 1.10% 1.76% 59.57%

6.3Earnest Money Financing Scheme:

Lankabangla Finance Ltd. reported unaudited consolidated earnings results for the second

quarter and six months ended June 30, 2011. For the quarter, the group reported net interest

income of BDT 96.5 million against BDT 180.1 million a year ago. Total operating income for

the period was BDT 474.5 million against BDT 886.5 million a year ago. Net operating income

for the quarter was BDT 371.6 million against BDT 787.3 million a year ago. Profit before tax

and reserve was BDT 363.2 million against BDT 667.9 million a year ago. Net profit attributable

to shareholders of the company was BDT 258.4 million against BDT 457.3 million a year ago.

Earnings per share were BDT 3.14 against BDT 5.55 a year ago. For the six months period, the

group reported net interest income of BDT 220.6 million against BDT 268.8 million a year ago.

Total operating income for the period was BDT 1,010 million against BDT 1,443.5 million a

year ago. Net operating income for the period was BDT 802.4 million against BDT 1,248.8

million a year ago. Profit before tax and reserve was BDT 739.5 million against BDT 1,105.5

million a year ago. Net profit attributable to shareholders of the company was BDT 511.5 million

against BDT 897.4 million a year ago. Earnings per share were BDT 6.21 against BDT 10.08 a

year ago. Net cash from operating activities was BDT 1,578.5 million against net cash used in

operating activities of BDT 903.7 million a year ago. Purchase of property, plant and equipment

was BDT 15.1 million against BDT 31.9 million a year ago.

6.4 Ratio of Financial Analysis on Graph:

Current Ratio2007 2008 2009 2010 2011

1.14 1.16 1.2 1.14 1.04


Growing together…

Current Ratio

0.95

1

1.05

1.1

1.15

1.2

20072008200920102011

Graph 6.1: Current ratio point on graph

Significant:

This organization current ratio is in a fluctuating position. But now its low than previous five

years. That indicates that the company’s current liabilities facing power is lessen.

Debt Equity Ratio2007 2008 2009 2010 2011

8.68 7.79 5.4 3.03 2.91

Debt Equity Ratio0123456789

20072008200920102011

Graph 6.2: Debt Equity Ratio on graph


Growing together…

Significant:

Here we can find that the debt equity ratio is decreasing day after day. This indicates that the

organization’s dependency on debt is decreasing. This is indicating that the company is going to

a good position.

Financial Expense

Coverage Ratio

2007 2008 2009 2010 2011

1.5 1.53 1.79 2.67 1.57

Financial Expense Coverage Ratio0

0.5

1

1.5

2

2.5

3

20072008200920102011

Graph 6.3: Financial Expense Coverage Ratio on graphSignificant:

Here the financial expense ratio is high and in a fluctuating mode, which shows that the

organization is good in maintaining the financial expense in a good way.

Return on Equity

(%)

2007 2008 2009 2010 2011

41.23% 40.94% 35.42% 35.49% 13.83%


Growing together…

Return on Equity (%)

0.00%10.00%20.00%30.00%40.00%50.00%

2007

2008

2009

2010

201120072008200920102011

Graph 6.4: Return on Equity (%) on graph

Significant:

Here we can see that the return on equity is in instable. But the organization should maintain

these high. Otherwise, the investor and also the clients will be de-motivated.

Return on Assets

(%)

2007 2008 2009 2010 2011

4.89% 4.66% 5.54% 8.80% 3.53%

Return on Assets (%)0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

20072008200920102011


Growing together…

Graph 6.5: Return on Assets (%) on graph

Significant:

Here we find that the return on asset is very low than the previous year. This is a risk for the

organization. The organization should emphasis on the progress, to avoid the decrease.

No. of Share

Outstanding

2007 2008 2009 2010 2011

35 38.5 44.28 53.13 82.35

No. of Share Outstanding

0102030405060708090

20072008200920102011

Graph 6.6: No. of Share Outstanding on graphSignificant:

Here in graph we clearly see that the number of share is increasing day after day.

Net Asset Value

(NAV) Per Share

2007 2008 2009 2010 2011

17.07 23.96 47.44 90.18 69.46


Growing together…

Net Asset Value (NAV) Per Share

0102030405060708090

100

20072008200920102011

Graph 6.7: Net Asset Value (NAV) Per Share on graph

Significant:

Here we can figure out that the (NAV) is increasing day by day. Those motivate the investors to

invest more in the organization.

Earnings Per

Share (EPS)

2007 2008 2009 2010 2011

5.47 9.81 14 32 9.61


Growing together…

Earnings Per Share (EPS)

0

10

20

30

2007

2008

2009

2010

201120072008200920102011

Graph 6.8: Earnings Per Share (EPS) Per Share on graphSignificant:

Here we can find out that earnings per share are suddenly fall this year. This may influence the

investor and clients badly. So the organization have to pay more attention on it.

Price Earnings

Ratio (Times)

2007 2008 2009 2010 2011

18.3 20.04 22.41 15.56 17.72

Price Earnings Ratio (Times)

05

10152025

2007

2008

2009

2010

201120072008200920102011

Graph 6.9: Price Earnings Ratio (Times) on graph


Growing together…

Significant:

Price earnings ratio is in a moving situation. Here we can see that this year it is good but not as

the pervious few years. So that should give more effort to improve that.

Dividend Payout

Ratio (%)

2007 2008 2009 2010 2011

76.50% 69.45% 44.15% 72.49% 52.94%

Dividend Payout Ratio (%)0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

20072008200920102011

Graph 6.10: Dividend Payout Ratio (%) on graph

Significant:

Here we can find that the divided pay percentage is lessen; which indicates that the organization

give importance on the retain earnings. Which also motivate the investors, because it increases

their ownership.


Growing together…

6.5 Findings:

During internship period in LankaBangla Finance Limited, Safura Tower (Level 11) - 20 Kemal

Ataturk Avenue, Banani Corporate Branch the following problems or shortage are observed.

Lack of sufficient executives especially in treasury department that hampers the deposit

sanctioning process in time.

LBFL takes relatively more times in providing the certificates to the clients. It seriously

discourages the persons who are interested to keep deposit here. mode of honors check,

checking of different legal documents etc. Head office takes so longer time in processing

and approval of certificates of the deposits.

LBFL does not provide certificates to all deposits like double money term deposit, money

builder’s term deposit. So the client loss their faith and not interested to keep deposits.

LBFL does not give premature withdrawal like bank; or if allowed premature withdrawal

then charges some extra charges, which discourage the clients to keep money here.

LBFL only like to invest in business sectors; they do not eager to invest in private

sectors. Which minimize the opportunity of their profit maximizing.

LBFL does not provide any extra benefits to the existing client for keeping deposit here

again. That’s discouraging them to keep relationship with the organization.


Growing together…

Growing together…


Growing together…

7.1 Conclusion:

In Bangladesh commercial Banks have spread their command in financial system, but we have to

recognize the fact that non-Bank Financial Institutions are also significant for smooth economy.

Company like LBFL is providing some additional and dynamic financial services which helped

them to become well known. In one hand they are providing support for those financial sectors

that was not served by commercial bank. As an efficient company LBFL helps in minimizing

risk which in turn helps the economy as a whole. As LBFL becoming stronger and efficient day

by day it can be hoped that if they get necessary support from government it will be able to play

a more historic role in the economic development of Bangladesh.

I also find that LankaBangla specialize in providing you with instant cash through the purchase

of accounts receivable or debts outstanding which is a financing technique known as Factoring.

Factoring moves your cash flow forward creating immediate cash to improve your financial

position and increase your purchasing power.

As the Non-banking financial institution it is searching for new area of business and collect information about the potential sector as well as to prepare strategy for getting competitive advantage.

Lastly, I can said that the Non-banking financial institution have huge opportunity to increase business and profit in the Bangladeshi economic. Its plan should be innovative to do these jobs.


Growing together…

7.2Recommendations:

LBFL should provide the certificate of the all type of deposits.

Deposit process and giving certificates should be faster.

The invest sector should be the moderate and more.

The deposit policies should be revised to moderate and made easy for the clients.

LBFL also should concentrate on the promotion activities; that all levels of client know

about their services.

The interest rate should be more attractive than their competitors.


Growing together…

References:

Annual Report of LankaBangla Finance Limited (2008 & 2011)

LankaBangla Finance Ltd. Web sites: http://www.lankabangla.com/

LBFL database

Deposit manual of LankaBangla Finance Limited

Directors organogram: www.lbsbd.com/AboutUs/BoardofDirectors.aspx

Different Types of Form of LBFL

http://www.lankabangla.com/financial_highlight.php _visit on the 22-04--2012

http://www.lankabangla.com/corporate_management.php_visited on the 20-06-2012

http://www.lankabangla.com/term_finance.php_visited on the 24-05-2012

http://www.lankabangla.com/factoring.php_viisted on the 18-05-2012

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