TERM PAPER

ON
MARKET MICRO STRUCTURE & STOCK RETURN

OF EXIM BANK LIMITED

TERM PAPER
ON
MARKET MICRO STRUCTURE & STOCK RETURN

OF
EXIM BANK LIMITED
Supervised By:-
Mr. KhairulAlom
Facultyof BusinessAdministration
Southeast University

Prepared By:-
Umma Kulsum
ID: 2016110004128
Subject: Investment Theory
Subject Code: FIN6161
Section: 1
Major: Finance, Batch: 24th
Program: MBA
Department ofBusinessAdministration

Date of Submission:28.12.2016
 Acknowledgement

This study is the outcome of an individual work undertaken by the course instructed by
Md.Khairul Alom fall semester student to experience and gather knowledge from a practical
problem.

I`m grateful to them who have assisted me in conduction the study specially.I`m thankful to our
honorable Md.Khairul Alom teacher helped me in every step of starting and completing this
assignment paper promptly.

I`m thankful to those people, who co-operate me with their kind patience.I`m also gratified to all
those people who helped me to complete this study directly or indirectly. I also pay my
indebtedness to those websites that indirectly helped me by providing fruitful information.
Without these help, support and cooperation I should not be able to complete my study
successfully.
 EXECUTIVE SUMMARY
Banking system of Bangladesh has gone through three phases of development- Nationalization,
Privatization, and Lastly Financial Sector Reform. Export Import (EXIM) Bank of Bangladesh
Limited has started its journey as a private commercial bank from 1999.

The term paper is designed to bridge the gap between the theoretical knowledge&real life
experience .it is designed to have a practical knowledge experience while passing through the
theoretical knowledge.

The report portrays the overall operation of EXIM Bank Limited, including the operations of
different divisions and departments, the different types of products and services offered. On the
other part I have discussed market micro structure,classification & application.on the third part
I have dicussed reason behind the performance gap.at the last I have give
recommendation,findings&conclusion.

Introduction
Commercial banks play an important role in economic development of developing country.
Economic development involves investment in various sectors of economy. The banks collect
savings from the people and mobilize saving for investment in industrial project. The investors
borrow from banks to finance the projects. Promote the growth rate through the reorientation of
loan policy. Special funds are provided to the investors for the completion of projects. The banks
provide a guarantee for industrial loan from international agencies. The foreign capital flows to
developing countries for investment in projects.

PRODUCTS & SERVICES:

L/C (Import & Export) Products

EXIM Bank is posed to extend L/C facilities to its importers / exporters through establishment of
correspondent relations and Nostro Accounts with leading banks all over the world.

Investment Products

The bank provides credit services such as, corporate finance, industrial finance, lease finance,
hire purchase finance, commercial investments, and project finance and syndicate loans.

Deposit Products
The bank introduced a number of financial products and services since its banking operation.
Among them Mudaraba Savings Deposit,Mudaraba Short Term Deposit Mudaraba Term Deposit,
Mudaraba Monthly Income Scheme, Mudaraba Monthly Saving Scheme, Mudaraba Super
Savings Scheme, Mudaraba Hajj Scheme.

Foreign Exchange

Non Resident Foreign Currency Deposit Account (NFCD)

Foreign Currency Deposit Account

Letter of Credit (L/C) facilities through establishment of correspondent relations with

leading banks all over the world.

ATM:
The bank is currently providing Credit Card Service (Master Card) to the privileged customers of
the bank in collaboration with the Standard Chartered Bank.

Other Services

Other services include utility bill collection for Grameen Phone from its users in all the branches
and for Palli Biddut somity of Gazipur from its consumers in Gazipur branch.

Market Micro structure; Classification &

Application:-
This specialized Division cautions the bank against any financial and
operational risk at macro level impacting the micro functionalities. It
oversees the management of various core risk management guidelines
prescribed by Bangladesh Bank and approved by the bank in different
functional areas: credit, foreign exchange, asset andliability management,
internal control and compliance, money-laundering and information
communication technology risks etc. apart from capital adequacy risk. Risk
Management Division has been established for the following purposes:
Ensure quality assets as well as sustainable profit Improve compliance
culture Reduce cost of inefficiency Strong risk management due-diligence
reduces risk weighted assets under Basel-II framework. Strong risk focused
risk management means comfortable reputation level. Highlight deficiency
to the top management in time, and Potential problem areas are quickly
identified. The RMD periodically reviews the risk status of the bank based
on qualitative and quantitative Key Risk Indicators (KRI) on different risk
area; prepare a monthly Risk Management Paper (RMP). To manage
different risks, an extensive system, limits, process and controls based on
the above principle is in operation at EXIMBANK LIMITED.

Capital structure

From the above table we can understand that last four years from 2002 to 2005 surplus in profit
account had a great contribution to increase in capital of this bank.

Deposit Measures

From the above table and the figures bellow we can understand that the major portion of deposit
came from saving deposit, fixed deposit. In 2004, 82.35% of its deposit came from fixed deposit.
It is good for the banks operation because they can use this stable fund in long term loan or in
long term investments which increase interest earning. One the other hand fixed deposit has a
bad impact on net income of the bank because it is the most costly fund. It increases means cost
of fund increase.

Growth of net profit

The table shows net profit of EXIM Bank Ltd. in different years. Its profit increases gradually.
From the end of 2003 to the end of 2004 the percentage change in net profit was 49.85; it is the
highest change in net profit within last four years.

The chart also shows net profit of EXIM Bank Ltd. in different years. Its profit increases
gradually. Every year it earns positive return which has a positive impression on shareholders. So
the bank is able to maximize its shareholder equity. To see the chart it can be said that the
performance of EXIM Bank Ltd. is good. Though there are some factors which determine the
performance level, initially we can take a decision about performance by seeing net profit.

Profitability ratio

Now there are 49 scheduled banks operating in Bangladesh market. Among them four are
Nationalised Commercial Bank (NCB), five are Specialised Bank, ten are Foreign Commercial
Bank (FCB), and thirty are Private Commercial Bank (PCB) including Islamic Banks.

Return on Asset (ROA) the ratio of net income to total assets; it provides an idea of the overall
return on investment earned by the firm. Return on Equity (ROE) the ratio of net income to
common equity; it measures the rate of return on common stockholders investment.

Above table and figure shows the profitability of overall Banking Industry in Bangladesh. Here it
is observed that every year ROA and ROE of Foreign Commercial Banks (FCBs) is higher
among all banks. So the overall return on investment and the rate of return on common
stockholders investment of FCBs are higher than other. And after FCBs the position of Private
Commercial Banks (PCBs) is strong. PCBs also are in profitability. But Nationalised
Commercial Banks (NCBs) and Specialised Banks are in trouble, because they incurring huge
loss every years. Lets see what about the EXIM Bank Ltd..

In 2004 EXIMs 1.75 percent return is well above the 0.70 percent average for the industry. And
in 2003 EXIMs 3.15 percent return is well above the 0.50 percent average for the industry. And
in 2002 EXIMs 3.40 percent return is well above the 0.50 percent average for the industry.

In 2004 EXIMs 27.27 percent return is well above the 13 percent average for the industry. And
in 2003 EXIMs 34.05 percent return is well above the 9.8 percent average for the industry. And
in 2002 EXIMs 36.53 percent return is well above the 11.6 percent average for the industry.
In terms of profitability EXIM Bank Ltd. is doing well because its return on assets (investment)
and equity are above average industry return. The banks ROA and ROE are well above of
market average of private commercial bank (PCB).

Reasons behind the Performance gap:-

performance gap analysis often occurs when new technologies are introduced. the performance
of your company is compared with a set of industry-established benchmarks, or with the stated
mission of your company. These benchmarks can refer to companies that have acquired large
market share, achieved excellent profit levels or which have earned high esteem from their
customers.

Role played by the EXIM Bank Limited,

Sponsor, Director & SEC:
EXIM Bank Limited was established in 1999 by Shahjahan Kabir, founder chairman.[ Nazrul
Islam Mazumder became the new chairman after the founding chairman died. The bank started
functioning from 3 August 1999 with Alamgir Kabir, as the adviser and Mohammad Lakiotullah
as the Managing Director. On 2009, the bank made history for being the first privately owned
bank in Bangladesh to open an exchange house in the UK.[The bank started its operation with an
initial authorized capital of Taka 1 billion ($12.87 million USD) and paid up capital of Taka 225
million (2.9 million USD).

Since then the authorized and paid up capital remained unchanged till December 2000. Later,
both were increased from time to time and their amounts stood at Tk.16.12 billion ($207.31
million USD) and Tk.9.22 billion ($118.7 million USD) respectively on 31 December
2011.EXIM bank is the first bank in Bangladesh to have converted all of its operations of
conventional banking into shariah-based banking, since July/2004.
Recommendations:

1. Their ATM BOOTH is not available everywhere. So the bank needs to increase their
ATM BOOTH in different places of their branch operational area.

2. Bank need to do aggressive marketing activities to make popular their Visa Islamic Card
and also to attract the customer.

3. The Bank should reduce the profit rate on loans product and keep it reasonable.
Because 19% profit rare is comparatively high and customer notice about this.

4. As it is Export Import based commercial schedule bank so, it is very essential that all
branches must have AD service because some customer notice that they face problem for
not availability of this service and need to depend on the support of Head Office.

5. Bank must need to increase their promotional activities to promote their products and
services.

6. The bank should introduce new products to the market by doing proper research and
development. Consumers are not getting the suitable loan for their own purpose. They
should emphasis on proper research and development of proper products according to the
driven market consumer preference.
Conclusions:

Lots of new commercial banks have established in last few years and the bank has made these
banking sectors very competitive. So, banks have to organize their operation and do their
operations according to their need of market. We moved a long way from the time when the
banks were only deposit taking and money lending institution. Modern banking is an outcome
development driven by changing financial activities and lifestyle. Bangladesh has not lagged
behind. Banks are required to participate in the nation building activities and act as agent for
banking about socioeconomic changes.

It is a great pleasure for me to have practical experience to EXIM Bank Limited, Savar Branch.
Without practical knowledge, it is not possible for me to compare the academic knowledge &
practical knowledge. Since the time is very limited to learn the all the sectors of a Bank. If the
duration of internship can be increased, then it is possible to learn all the Banking activities more
properly.

To compete in the environment of advancing technology and faster communication the EXIM
Bank Limited should depend more heavily on the quality service and information technology.
EXIM Bank Limited should be connected through wide area network. So that all the
informational and service can be accessed from any branch of the world.

No doubt about it that EXIM Bank Limited achieves superior position in our Banking industry
but to cope with customer EXIM Bank Limited should think how to make its service proactive.
To compete with other Banks operation in Bangladesh, EXIM Bank Limited should introduce
easier way for faster processing of credit analysis.

Overall customers are satisfied about the services provided by Exim bank Ltd. To capture whole
market they need do more market research to develop and improve the products and services that
will meet the expectations of near 100% customers.

As a leading new generation Bank EXIM Bank Limited is contributing significantly to the
economy of Bangladesh with a promising future. I can hope that EXIM Bank Limited will be
able to spread their business with increasing various schemes & other utility services.
: