BBA Thesis: Financial Performance of Bank Asia Limited

This thesis report presents a comprehensive analysis of the financial performance of Bank Asia Limited, a leading private commercial bank in Bangladesh. The report, submitted to the University of Development Alternative (UODA), covers the period from 2014 to 2018 and examines various financial aspects, including export & import, capital structure, assets, loans, investments, and non-performing loans. Key financial ratios such as Return on Assets (ROA), Return on Equity (ROE), Debt to Equity Ratio, and Earnings per Share (EPS) are analyzed to assess the bank's profitability, efficiency, and financial health. The report also includes an overview of the banking sector in Bangladesh, the objectives of the study, and findings based on the analysis of the bank's financial data. The report concludes with an overview of the bank's performance and provides valuable insights into its financial standing.

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UNIVERSITY OF DEVELOPMENT ALTERNATIVE (UODA)
THESIS REPORT
A STUDY ON
Financial Performance of Bank Asia Limited
SUBMITTED TO:
THE DEAN
FACULTY OF BUSINESS ADMINISTRATION
SUPERVISED BY:
MR. SIDDIQUE HAYAT KHAN
ASSOCIATE PROFESSOR
SUBMITTED BY:
RAKIB HOSSAIN
BBA 53 BATCH, MAJOR FINANCE
STUDENT ID: 021163034
FACULTY OF BUSINESS ADMINISTRATION
BBA PROGRAM
UNIVERSITY OF DEVELOPMENT ALTERNATIVE (UODA)
DATE:
SEPTEMBER 12, 2020

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Letter of Transmittal
12-sep-2020
The Dean
Faculty of Business Administration
University of Development Alternative (UODA)
Subject: Submission of thesis on “Financial Performance of Bank Asia Limited”.
Dear Sir,
With due respect, I would like to state that I have completed a thesis with my honest and maximum effort
that fulfills partial requirements of Bachelor of Business Administration Degree. I have prepared this
report on the basis of my on Bank Asia Limited. It is a great pleasure for me to present you this report
under the heading of “Financial performance”. I enjoy preparing this report, which enriched my partial
knowledge of the theoretical concept. Under the supervision of Mr. Siddique Hayat Khan.
I would like to thanks you for giving me such a great job and opportunity like this to prove my ability in
making a quality report. Therefore, I sincerely hope that you would be kind enough to accept my report for
assessment and oblige thereby.
Thanking you for your kind supervisions.
Sincerely yours,
Rakib Hossain
Batch # 53rd
Std. ID # 021163034
University of Development Alternative

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Declaration
I am Rakib Hossain, hereby declare that the thesis titled “Financial Performance of Bank Asia
Limited” is uniquely prepared by my own efforts after the completion of three months works on
Bank Asia Limited. This report is a record of extensive research work under the supervision and
guidance of Mr. Siddique Hayat Khan, University of Development Alternative (UODA) .
I confirm that, the report is only prepared for only my academic requirement not for other purpose. I also
assure that this internship report is not submitted anywhere of Bangladesh before me.
Batch # 53rd
Std.ID # 021162034
University of Development Alternative (UODA)

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Executive Summary
In this report the financial performance of Bank Asia Ltd. has been analyzed. It has been one of the
leading private commercial banks in Bangladesh and also doing really well over past few years. At the
beginning of the report, a precise. At the beginning of the report, a precise Introduction, Objective of
report and Fact/ Summaries Information. In addition, the ratio analysis has been done of last five years
performance which will help to understand the current as well as past performance of Bank Asia Ltd. .
After that I want to show that export & Import , Authorized capital, Paid-up capital, Core (Tier 1) capital,
Supplementary (Tier 2) capital, Total capital (Tier 1 and Tier 2), Total risk weighted assets, Tier 1 capital
to risk-weighted asset ratio (%),Tier 2 capital to risk-weighted asset ratio (%),Number of share
outstanding, Deposits, Assets, Loans and Advances, Investments, Non-performing loans/assets
(NPL/NPA),Provisions, Classified loan. I have mentioned about some findings of this Bank.

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Table of Contents
SL NO SUBJECT PAGE
1. Introduction 7
2 Objectives of the Report 8
3 Fact/ Summaries Information 9
4 Ratios:
Return on Assets (ROA) 11
Return on Equity (ROE) 12
Debt to Equity Ratio 13-14
Earnings per Share 15
Dividend per share 16
Net Asset Value Per Share 16-17
5 Export &Import 18
6 Authorized capital: 18
7 Paid-up capital 19
8 Core (Tier 1) capital 19
9 Supplementary (Tier 2) capital 19
10 Total capital (Tier 1 and Tier 2) 20
11 Total risk weighted assets 20
12 Tier 1 capital to risk-weighted asset ratio (%): 21
13 Tier 2 capital to risk-weighted asset ratio (%) 21
14 Number of share outstanding 21
15 Deposits 21
16 Assets 22
17 Loans and Advances 22
18 Investments 22
19 Non-performing loans/assets (NPL/NPA) 23

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20 Provisions 24
21. Classified loans 24
22. Findings 25
23. Conclusion 26
24. Bibliography 27

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INTRODUCTION
Banks are very old form of financial institution that channel excess funds from surplus unit to
deficit unit in consideration of a price called Interest. The banking sector is dominating the financial
sector of Bangladesh that mobilizes resources for productive investments in a country which in turn
contributes to economic development. Like other countries, banking sector plays a vital role in the
economic development of Bangladesh. To achieve economic development, a sound and efficient
banking systems’ importance can’t be denied. In Bangladesh, this sector has reached to another
level during the last three decades or so, as a result of increased demand of the growing economy.
But in the recent times, the banking sector has been going through several uncertainties which is
very alarming for the economy. Non-performing loan or default loan is the most concerned issues of
the banking sector. Day by day the rate of NPL has been increasing which made the banks very
conscious about granting loans to the customers. Furthermore, siphoning money to other foreign
countries is also a very alarming issue regarding this sector.

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OBJECTIVE OF REPORT
The objectives of the report can be divided into two levels. One is primary objective and the other is
secondary objectives.
The primary objectives of the report are:
• To fulfill one of the requirements of achieving BBA degree.
• To secure good marks on internship report.
• To adapt with the corporate world.
The secondary objectives of the report are:
• To identify their key financial performances for acquiring the knowledge of
operational efficiency of Bank Asia Ltd.
• To obtain a clear concept of banking sector in Bangladesh.
• To get acquainted with the ratios which indicate and measure the performance of
a bank.

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Fact/ Summaries Information:
Information
Established 27th November 1999
Public Offering shares 2003
Number of directors:
Independent
15(Total)
5
ATM 149
Share distribution:
Local
Foreign
Institutions
Individuals
Total General Public
65.6%
6.00%
10.40%
10.2%
13.8%
Other information
Number of branches
Number of foreign branches
Number of SME Service Centers
Number of Islamic Windows
Number of Employees
Number of Foreign Correspondents
123
3
4
5
2,256
698

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Coverage Area District 64
Upazilla 417
SHARES INFORMATION MATRIX:
No. of Shares Outstanding(Million) 1,110.39
Earnings Per Share (Taka) 2.04
Number of Shareholders 10,344.00
Market Value Per Share (Taka) 17.70
Price Earnings Ratio 8.68
Net Asset Value Per Share (Taka) 21.02
Dividend Coverage ratio 2.04

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Ratios:
Return on Assets (ROA)
It’s a profitability indicator which shows the efficiency of an organization in managing assets to
generate income. It is expressed by dividing net profit after tax by total assets. The higher this ratio
is, the better it is. The higher level of this ratio indicates that the organization is very efficient at
using its resources.
Formula: ROA= Net Income/ Total Assets
Table :Return on Assets (ROA)
Return On Asset (ROA)
Years
2014 2015 2016 2017 2018
1.28% 1.26% 0.65% 0.76% 0.74%
Return on Assets (ROA)
1.40%
1.20%
1.00%
0.80%
0.60%
1.28% 1.26%
0.40%
0.65% 0.76% 0.74%
0.20%
0.00% 2014 2015 2016 2017 2018

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Interpretation:
From the above figure we can see that return on asset was in increasing trend from 2014 to 2015.
In 2014 Bank Asia Ltd. Has earned Tk. 1.28 for each taka of assets they have invested. But in
2016 return on asset declines drastically because profit after tax of 2016 was lower than 2014 and
2015 and total asset was higher than 2014 and 2015 and that’s why the return on asset declines. In
2017 it again increased because its profit after tax and total asset increased but in 2018, it slightly
decreased to 0.74% than the previous year.
Return on Equity (ROE)
Return on equity (ROE) is a measure of profitability that calculates how much profit a company
generates with each of its shareholders' equity. This ratio compares net income to shareholders’
equity. Return on equity compares the level of income against the level of shareholders equity
invested in an organization. The higher this ratio is the better it is. The higher level of this ratio
indicates that the company is very capable to turn its assets into profits.
Formula: ROE = Net Income / Total Equity
Table 4.6.2.1: Return on Equity
Return On Equity (ROE)
Years
2014 2015 2016 2017 2018
14.09% 14.36% 8.13% 10.21% 10.21%

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Return on Equity
(ROE)
14.09% 14.36%
10.21% 10.21%
8.13%
2014 2015 2016 2017 2018
Debt to Equity Ratio:
Debt to Equity (DE) ratio is a leverage ratio which measures the degree to which the bank’s assets
are financed by its debts and by the shareholders’ equity. The D/E ratio indicates how much debt a
company is using to finance its assets relative to the value of shareholders’ equity. A higher debt to
equity ratio indicates that the bank financially relies more on external lenders
I.e. the bank’s assets are crucially backed by the liabilities than the shareholders’ equity.
Formula: D/E Ratio = Total Liabilities / Shareholders' Equity

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Table 4.6.3.1: Debt to Equity Ratio
Debt to Equity Ratio
Years
2014 2015 2016 2017 2018
9.84 10.82 12.3 12.73 12.17
Debt to Equity
14
12 12.3 12.73 12.17
10 10.82
8 9.84
6
4
2
0
2014 2015 2016 2017 2018

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Interpretation:
From the above scenario we can see that the ratio started to rise after 2014. From the year 2015-
2018 the ratio has been higher though it slightly decreased to 12.17 in 2018. It indicates that, the
bank is mostly financed by the creditors rather than its own financial resources. If the bank
continues running with higher debt to equity ratio then it would be difficult for them to attract
additional lending capital.
Earnings per Share
Earnings per share (EPS) are the portion of a company's profit allocated to each outstanding shares
of common stock. Earnings per share serve as an indicator of a company's profitability.
Formula:
EPS= Net Income / Number of shares outstanding
Earnings Per Share
Years
2014 2015 2016 2017 2018
2.64% 2.92% 1.57% 1.84% 2.04%

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Dividend per share:
DIVIDEND, either in the form of cash or stock is viewed as one of the simplest yet powerful message
regarding a company’s historical performance and future prospect to its shareholders. A company’s
willingness to pay steady dividends over time and ability to increase them provide good clues about its
fundamentals. However, companies that do not regularly pay higher dividends are not necessarily without
profits. If a company thinks that its own desired strengthening of balance sheet or business expansion
opportunities are better than giving away higher dividends, it may choose to retain some earnings, handle
contingencies, reinvest into the business and create prospect for better dividend in the years to come. Bank
Asia issued stock dividend in the earlier years of its operation to strengthen its core capital and since 2014
a mix of stock and cash dividend are distributed. For 2018 the Board of Directors has proposed 10%
dividend (5% Stock and 5% Cash) amounting to Tk.1,110 Million.
Net Asset Value Per Share:
The Net Asset Value Per Share can be defined as an expression for net asset value which calculates
the value per share for a fund or a company. It is expressed as subtracting the liabilities from total
assets and the outcome will be divided by the no. of outstanding share.
Formula: NAVPS = Total Asset – Total Liabilities / No. of Outstanding Shares

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Table 4.6.7.1: Net Asset Value Per Share
Net Asset Value Per Share (Taka)
Years
2014 2015 2016 2017 2018
22.10 21.54 19.29 18.96 21.02
Net Asset Value Per Share
22.1
21.54
21.02
19.29
18.96
2014 2015 2016 2017 2018

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IMPORT & EXPORT STRATEGIES
Arranging credit lines for foreign currency from international agencies to facilitate international trade
business particularly import clients at a competitive rate and the country as a whole will get benefit of
building foreign exchange reserve.
Marketing for not only established business houses but also the potential clients having strong
entrepreneurship spirit to grow.
Garments sector will be more focused where tested and potential clients will be in the portfolio basket
under the regime of calculative risk return trade-off.
Emerging ship building and ship breaking sectors will explore new opportunities which the Bank will
tap for increasing international trade.
Industries having backward linkage will yield better opportunity and reduce risk exposure. Focusing
on service export sectors like IT and Education.
EXPORT in USD (Million) : 1,607
Import in USD (Million): 1,999
Authorized capital:
• Authorized share capital—also known as "authorized stock," "authorized shares," or
"authorized capital stock"—refers to the maximum number of shares a company is legally
allowed to issue or offer based on its corporate charter.
• Subscribed capital represents a portion of the authorized capital that potential shareholders
have agreed to purchase from the company's treasury, often as part of the company's initial
public offering (IPO).
Authorized capital: 2018-15,000 (Million BDT)

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Paid-up capital:
• Paid-up capital is money that a company receives from selling stock directly to investors.
• The primary market is the only place where paid-up capital is received, usually through an initial
public offering.
• Funding for paid-up capital is arrived at from two sources: the par value of stock and excess
capital.
Paid-up capital: 11103.87 (Million BDT)
Core (Tier 1) capital:
Tier 1 capital is used to describe the capital adequacy of a bank and refers to core capital that includes
equity capital and disclosed reserves. Equity capital is inclusive of instruments that cannot be redeemed at
the option of the holder.
Tier 1 capital is essentially the most perfect form of a bank’s capital—the money the bank has stored to
keep it functioning through all the risky transactions it performs, such as trading/investing and lending.
Core (Tier 1) capital: 21,165.37 (Million BDT)
Supplementary (Tier 2) capital:
The term tier 2 capital refers to one of the components of a bank's required reserves. Tier 2 is designated
as the second or supplementary layer of a bank's capital and is composed of items such as revaluation
reserves, hybrid instruments, and subordinated term debt. It is considered less secure than Tier 1 capital—
the other form of a bank's capital—because it's more difficult to liquidate. In the United States, the overall
capital requirement is partially based on the weighted risk of a bank's assets.
Supplementary (Tier 2) capital: 13,917.53 (Million BDT)

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Total capital (Tier 1 and Tier 2):
Total capital is all interest-bearing debt plus shareholders' equity, which may include items such
as common stock, preferred stock, and minority interest.
• Under Basel III, a bank's tier 1 and tier 2 assets must be at least 10.5% of its risk-weighted
assets, up from 8% under Basel II.
• Tier 1 capital is the primary funding source of the bank.
• Tier 1 capital consists of shareholders' equity and retained earnings.
• Tier 2 capital includes revaluation reserves, hybrid capital instruments and subordinated
term debt, general loan-loss reserves, and undisclosed reserves.
Total capital (Tier 1 and Tier 2): 35,082.90 (Million BDT)
Total risk weighted assets:
Risk-weighted assets are used to determine the minimum amount of capital that must be held by
banks and other financial institutions in order to reduce the risk of insolvency. The capital
requirement is based on a risk assessment for each type of bank asset.
• Basel III, a set of international banking regulations, sets the guidelines around risk-
weighted assets.
• Risk coefficients are determined based on the credit ratings of certain types of bank assets.
• Loans backed with collateral are considered to be less-risky than others because the
collateral is considered in addition to the source of repayment when calculating an asset's
risk
Total risk weighted assets: 233,085.63 (Million Taka)

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Tier 1 capital to risk-weighted asset ratio (%):
The tier 1 capital ratio is the ratio of a bank’s core tier 1 capital—that is, its equity capital and
disclosed reserves—to its total risk-weighted assets. It is a key measure of a bank's financial
strength that has been adopted as part of the Basel III Accord on bank regulation.
Tier 1 capital to risk-weighted asset ratio (%): 9.08%
Number of share outstanding:
Shares outstanding refer to a company's stock currently held by all its shareholders, including
share blocks held by institutional investors and restricted shares owned by the company’s officers
and insiders.
Number of share outstanding: 1,110.39
Deposits:
• A deposit is a financial term with multiple definitions.
• One definition of deposit refers to when a portion of funds is used as security or collateral
for the delivery of goods or services.
Another kind of deposit involves a transfer of funds to another party, such as a bank, for
safekeeping.
2018:222,471 (Million Taka)

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Assets:
A financial asset is a liquid asset that gets its value from a contractual right or ownership claim.
Cash, stocks, bonds, mutual funds, and bank deposits are all are examples of financial assets.
2018
307,291 (Million Taka)
Loans and Advances:
A loan and advance is a financial facility provided by the banks and financial institutions to
help their customers in financial need.
A finance is a life blood for any type of business or a particular need. So when one is not able
to get a full amount of money by his own. He can use this type of financial services provided
by a bank.
2018
214,618 (Million Taka)
Investments:
• Investment is the act of putting money to work to start or expand a business or project or the
purchase of an asset, with the goal of earning income or capital appreciation.
• Investment is oriented toward future returns, and thus entails some degree of risk.
Common forms of investment include financial markets (e.g. stocks and bonds), credit (e.g. loans or
bonds), assets (e.g. commodities or artwork), and real estate.
2018
35,999.20 (Million Taka)

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Non-Performing Loan
(NPL)
2018 4.10
%
2017 4.38
%
2016 5.41
%
2015 4.26
%
2014 5.31
%
0.00
% 1.00
% 2.00
% 3.00
% 4.00
% 5.00
% 6.00
%
Non-performing loans/assets (NPL/NPA):
Non-Performing Loan Ratio:
Non-Performing Loan (NPL) is the amount of money lent to the consumers which is either
default or close default. If the borrower of the money does not repay the installments for more
than 90 days, the loan is classified or Non-Performing Loan.
Formula: NPL= Total Non-Performing Loan / Total Loans & Advance
Non- Performing Loan Ratio
Non-Performing Loan Ratio
Years
2014 2015 2016 2017 2018
5.31% 4.26% 5.41% 4.38% 4.10%

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Provisions:
For banks, a general provision is considered to be supplementary capital under the first Basel
Accord. General provisions on the balance sheets of financial firms are considered to be a
higher risk asset, because it is implicitly assumed that the underlying funds will be in default
in the future.
2018-
3,892.76 (Million Taka)
Classified loans
• A classified loan is a bank loan that is in danger of default.
• Loans don't have to be past due in order to be considered classified.
• Lenders normally record classified loans as adversely classified assets on their
books as a precaution to prevent further risk and loss.
Lenders generally do a credit analysis to determine a borrower's creditworthiness and
the quality of a loan.
2018
4.10% (Ratio)

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Findings:
I got some key findings about the overall performance of Bank Asia Ltd. while doing
this report the findings are given below:
➢ Return on asset was highest in the year 2015 & it was reduced in 2016 and
it again increase in 2017. But in 2018, it slightly decreased to 0.74% which
indicates that the bank was less efficient to manage its resources compared to
the previous year.
➢ Over past few years’ debt to equity ratio is in increasing trend though it
decreased a bit in 2018. This higher ratio actually indicates that the bank is
dependent more on external lenders than their own shareholders equity.
➢ Cost of deposit ratio of the bank in 2014 and 2015 was higher due to high
interest rate. Then it came down to a commendable position in 2016 and 2017.
But the bank couldn’t hold the consistency which resulted in increase of the
COD ratio in 2018 because of high interest expense.
➢ Loan Deposit Ratio is in increasing trend and it shows that the bank is
providing more loans compared to the % of its assets. It might be riskier for the
bank because providing higher amount of loans will result in increase of
liability and liquidity pressure as well.

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Conclusion:
In the recent times Bank Asia makes a strong position through its’ various kinds of activities.
Its number of clients, amount of deposit and the rate of investment increases day by day. This
bank already has shown impressive performance in investment. Consumer are more or less
satisfied with the current services of the bank and to satisfy their customers more Bank Asia
is thinking of new innovative products and services with effective marketing strategy. In
2018, the bank has done really well in terms of financial performance which is quite
commendable.

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Bibliography:
Websites:
• https://www.investopedia.com/terms/r/ratioanalysis.asp
• https://www.investopedia.com/terms/f/financial-statement-analysis.asp
• https://corporatefinanceinstitute.com/resources/knowledge/finance/anal
ysis-of-financial- statements/
• https://blog.elearnmarkets.com/dupont-analysis/
https://www.thedailystar.net/backpage/news/banking-sectors-health-weakens-1724677
Report:
Bank Asia Ltd. Annual Report =2018