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

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JAGANNATH UNIVERSITY
Report
On

FINANCIAL PERFORMANCE EVALIATION

OF
EXIM BANK LIMITED

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

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1
1.1Introduction
2
1.2 Background
3
1.3Objectives
4
1.4Scope
5
1.5Methodology

Chapter Two: Overview of EXIM Bank Ltd

2.1 An Overview
2.4 Company Mission& Vision

6
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 porters Five forces

30-36

3.4SWOT Analysis of Exam Bank Limited

37-38

Chapter Four: Findings

Findings

40

Recommendations

41

Conclusion

42

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6 | Page

CHAPTER-01

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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 companys 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 firms
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
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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
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 customers 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.

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

4) To analysis porters five forces analysis.

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 companys Financial and other performance.

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The study would also help the shareholders as a guide to companys present and
future position (Financial Position)

CHAPTER-02
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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

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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

General Investments

Tk.93296.65 million

Investments (shares & securities)

Tk.6012.86 million

Credit Rating Long Term Short Term AA-(High Safety) ST-2(High Grade)
Notification of reporting
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
Managing director

Mr.Md. Nazrul Islam Mazumder

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.
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 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.
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

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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.

CHAPTER-03
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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 days 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.
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Short term Ratio :

1.Current Ratio = Current Assets / Current Liabilities

Year

2010

2011

2012

2013

2014

Current Ratio

.280

.306

.157

.179

.223

Current Ratio
$0.31
$0.28
$0.22
$0.18
$0.16

2010

2011

2012

2013

2014

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.
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Profitability Ratio:
2.Return on Equity (ROE):
Return on Equity Capital (ROE) = Net Income / Total Equity Capital
Year

2010

Return on 9%
Equity Capital
(ROE)

2011

2012

2013

2014

11.8%

12.1%

15.2%

11.5%

Return on Equity (ROE)

15.20%
11.80%

12.10%

2011

2012

11.50%

9.00%

2010

2013

2014

Comments:

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In 2010, the Exim Bank Limited was the lowest shareholders equity where it was 9.00% and
in 2014.Exim Bank Limited was

shareholders equity where it was 11.5%. If the Exam

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

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%

Return on assets (ROA)

1.29%
1.17%
1.07%

0.00%
2010

0.07%
2011

2012

2013

2014

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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.

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%

Operating Expense ratio

84.00%
82.00%

81.86%
80.30%

80.00%
78.00%
76.18%

76.00%
74.00%
72.00%
71.94%

73.05%

70.00%
68.00%
66.00%
2010

2011

2012

2013

2014

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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.

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%

Gross Profit Ratio

51.97%

52.08%

48.22%
47.20%
44.80%

2010

2011

2012

2013

2014

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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.

6.Profit Margin:
Net profit / sales revenue
Year
Profit
Margin

2010
14.83%

2011

2012

2013

2014

12.61%

10.67%

8.82%

6.89%

Profit Margin
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2010

2011

2012

2013

2014

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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.

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%

Operating Profit Ratio

76.00%
75.00%
74.00%
73.00%
72.00%
71.00%
70.00%
69.00%
68.00%
67.00%
66.00%
2010

2011

2012

2013

2014

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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.

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

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Earning Per Share (Per Taka)

1760.00%

2010

18.39%
2012

17.20%
2011

214.00%

181.00%

2013

2014

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.

9. Pricing Earning Ratio:

Market price per share/ earning price per share

Year
Pricing
Earning
Ratio
(Times)

2010
28.79

2011
12.49

2012

2013

2014

16.74

28.09

15.23

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Price Earning Ratio (Times)

35
30
28.79

28.09

25
20
16.74

15

15.23

12.49
10
5
0
2010

2011

2012

2013

2014

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.

Credit Performance Ratio:

10. Debt to Equity Ratio:
Total debt/Total equity

Year

2010

Debt to
13.74
Equity
Ratio (Time

2011
14.96

2012
10.24

2013
12.02

2014
.7.97

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Debt toEquity Ratio

16

14.96

14
13.74

12.02

12
10.24

10
8

7.97

6
4
2
0
2010

2011

2012

2013

2014

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.

11. Debt Ratio:

Total debt/ Total assets
Year

2010

2011

2012

2013

2014

Debt Ratio

66%

68%

71%

71%

74%

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Debt Ratio
76%
74%
72%
70%
68%
66%
64%
62%

2010

2011

2012

2013

2014

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.

11. Cost of Fund:

Year

2010

2011

2012

2013

2014

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Cost of Fund 8.65%

8.86%

9.32%

9.45%

8.55%

Cost of fund
9.60%
9.45%

9.40%

9.32%

9.20%
9.00%
8.80%

8.86%

8.65%
8.60%

8.55%

8.40%
8.20%
8.00%
2010

2011

2012

2013

2014

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.

Assets quality Performance:

12.Total assets turnover:
Sales revenue/ Total assets

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Year
Total assets
turnover
(Times)

2010

2011

2012

2013

2014

6.79

7.64

8.44

8.44

7.59

Total assets turnover

8.44

8.44

7.64

7.59

6.79

2010

2011

2011

2013

2014

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.

13. Assets Utilization Ratio:

Operating income/ operating assets

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Year

2010

Assets
19.44%
Utilization
Ratio

2011

2012

2013

2014

11.77%

9.85%

13.87%

8.92%

Assets utilazation Ratio

25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
2010

2011

2012

2013

2014

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.

14.Classified investment to Total investment:

Classified investment / Total investment

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Year

2010

Classified
investment to
Total investment

1.77%

2011

2012

2.71%

3.81%

2013

2014

3.71%

4.92%

Classified investment to Total investment

4.92%
3.81%

3.71%

2012

2013

2.71%
1.77%

2010

2011

2014

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.

15. Investment deposit ratio:

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Year

2010

2011

2012

2013

2014

Investment
deposit ratio

90.17%

89.47%

85.18%

82.35%

79.88%

Investment Deposit Ratio

90.17%

89.47%

85.18%

82.35%

79.88%

2010

2011

2012

2013

2014

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

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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.

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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

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

Porters Five Forces Model

Porters 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 Porters Five Forces Model and the key external factors that affect
the operations of Exim Bank Ltd.
According to Porter, the nature of competitiveness in a given industry can be viewed as a
composite of five forces. They five forces of Porters 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.

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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.
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 Industrys 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
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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
An industrys 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
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3. Emotional attachments to an industry

4. Economic dependence on the industry
In order to keep up-to-date with todays 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.

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
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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
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
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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,
thereby depressing the companys 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 dont 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

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bank makes money by investing others 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 consumers 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.

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.

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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 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

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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.

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CHAPTER-04

4.0 Findings:
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.

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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

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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

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

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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.

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