Barna DOC-20171218-WA0000

Financial Statements Analysis of an
Islami Bank in Bangladesh

A Study on First Security Islami
Bank Limited, Bangladesh
Internship Report
on
“Financial Statements Analysis of an Islami Bank in Bangladesh:
A Study on First Security Islami Bank Limited, Bangladesh”
Supervised By:
Mr. Iehit Sharma
Senior Lecturer
Department of Business Administration
Leading University, Sylhet
Submitted By:
Jannatul Naim Barna
ID: 1101010183
Major in Accounting & Information Systems
BBA Program
27th Batch
Submitted To:
For the partial fulfillment of the requirements for the
Degree of Bachelor of Business Administration (BBA)
Major in Accounting & Information Systems (AIS)
at
Leading University
Sylhet, Bangladesh
Date of Submission: February 28, 2015

iv
Letter of Transmittal
February 28, 2015
Mr. Iehit Sharma

Senior Lecturer
Subject: Submission of Internship Report
Dear Sir,
With the passage of time, I am now standing on the verge of Bachelors of

Business Administration program, hence am finalized with my Internship Report
named “Financial Statements nalysis of an Islami Bank in Bangladesh: A
Study on First Security Islami Bank Limited, Bangladesh” . Vividly enough, my
research comprises adequate endeavors. But no doubt, my contribution will be
best evaluated on your sharp scale of acceptance and remarks.
Consequently, I am transmitting my Internship Report to your very concern.
Hopefully you will discover my well-researched, informative and innovative
approach as a hallmark of exploration. Rather, in case of any further clarification
or elaboration as to my research work, I would welcome the opportunity to
consult with you to explore how my findings could best meet your needs.
Thanking you.
Yours Sincerely,
___________________________
Moez Al Azim Ansary
ID No: 1101010183
Major: Accounting & Information Systems
BBA Program (27 th Batch)
v
Letter of Acceptance
February 28, 2015
This is to certify that Internship Report titled “Financial Statements nalysis

of an Islami Bank in Bangladesh: A Study on First Security Islami Bank
Limited, Bangladesh” is submitted in partial fulfillment of the requirements for
the award of the degree in Bachelor of Business Administration from Leading
University, Sylhet is a record of the analysis carried out by Moez Al Azim Ansary,
ID No-1101010183 under my active supervision and guidance as the partial
fulfillment for the award of BBA degree.
I wish his success in the future.
Supervisor
___________________________________
Mr. Iehit Sharma
Senior Lecturer

vi
Declaration
I, Moez Al Azim Ansary, a student of BBA program at Leading University, Sylhet,

solemnly affirm and hereby declare that the Internship report titled “Financial
Statements Analysis of an Islami Bank in Bangladesh: A Study on First
Security Islami Bank Limited, Bangladesh” submitted in partial fulfillment of
the requirements for completion of the degree in Bachelor of Business
Administration at Leading University, Sylhet.
I also declare that this report is prepared after completing my three months
Internship period in First Security Islami Bank Limited, Amborkhana Branch,
Sylhet. This is my original work and not submitted for the award of any other
Degree, Diploma Fellowship or other similar title or prizes. It is prepared under
the extensive supervision and guidance of Mr. Iehit Sharma, Senior Lecturer,
Department of Business Administration, Leading University, Sylhet.
Declared by
___________________________
Moez Al Azim Ansary
ID No: 1101010183
Major: Accounting & Information Systems
BBA Program (27 th Batch)
vii
Acknowledgement
First, I would like to express my gratitude to almighty ALLAH to give me the

strength to complete the study within the stipulated time.
I deeply thank to my honorable internship supervisor Mr. Iehit Sharma, Senior

Lecturer, Department of Business Administration, Leading University for
assigning me the project and for all his kind support to accomplish it. His
valuable suggestions and guidance helped me a lot to prepare the report in a
well-organized manner. I would like to thank our whole Department of Business
Administration specially Head of the Department Dr. Tofayel Ahmed, for
facilitating me to do internship and preparing this report.
I also wish to thank and give the due respect to my family and friends for their
cordial support and help they offered throughout the process of performing the
whole report.
Finally, my heartfelt gratitude goes to Mr. Md. Sohrab Uddin Molla (Branch
Manager and AVP), Mr. Md. Maksud Ibn Mustafa (SPO and Operation Manager),
Mr. Salahuddin Shamim (Probationary Officer), Mr. Md. Ishtiaque Uddin
(Probationary Officer), Mr. Anwar Hossain Misba (Senior Cash Officer), Mr. Ariful
Islam Nayeem (Assistant Officer), Mrs. Rabea Binte Shiraj (Principal Officer) and
all the co-workers of First Security Islami Bank Limited, Amborkhana Branch,
Sylhet for their keenness in giving me training and valuable information, which
was very helpful to complete my internship report.
viii
Executive Summary
Banks are the most important financial institutions in modern economy. They
are an integral part of modern economic activities. In a developing country like
Bangladesh, the Islamic banking system as a whole has a vital role play in the
process of economic development. First Security Islami Bank Limited (FSIBL) has
started its journey on 29th August 1999 with the said principles in mind and
conduct banking system according to Shariah based policy. This report mainly
deals with the financial statements analysis of an Islami bank in Bangladesh: a
study on First Security Islami Bank Limited. The horizontal analysis, vertical
analysis and ratio analysis are essential technique for financial statements
analysis. Different users such as investors, management, bankers and creditors
use the financial statements analysis of a company for their decision making
purpose. In this report, the financial statements of First Security Islami Bank
Limited have been studied for five years from 2009 to 2013 and also different
types of financial ratios of the bank are calculated. The clear concept on bank,
Islamic banking and different types of financial analysis are given in the report.
The liquidity, profitability, financial position and the financial trend of First
Security Islami Bank Limited are the main focus of this report which have been
analyzed and used for comparing different years. By analyzing the financial
statements of the bank, it has been traced the financial strengths and weakness
of the bank. Finally some comments are shown regarding the changes of this
bank’s financial performance for the last five years. By analyzing the horizontal,
vertical and different ratios like liquidity ratios, efficiency ratios, profitability
ratios, solvency ratios and market prospect ratios, and cash flow analysis, it can
be said that FSIBL has been improving and doing well in the last five years except
in few years. So the bank should be concern about the types of financial analysis
especially the types of ratios. However, FSIBL’s overall earnings performance
was satisfactory, but it should be improved.
ix
Table of Contents
Chapter Title Page No.

One Introduction 1-6
1.1 Origin of the Report 2
1.2 Significance of the Study 2
1.3 Objective of the Study 3
1.4 Scope of the Study 3
1.5 Methodology of the Study 4
1.6 Sources of Data 5
1.7 Limitation of the Study 6
Two Theoretical Overview 7-45
2.1 Bank 8
2.2 Functions of Bank 9
2.3 Islamic Banking 14
2.3.1: Principles of Islamic Banking 15
2.3.2: Riba or Interest 15
2.4 Difference between Riba and Profit 16
2.5 Difference between Conventional Banking and Islamic
Banking 17
2.6 Financial Statements 18
2.7 Components of Financial Statements 19
2.8 Components of Bank’s Financial Statements 19
2.9 Financial Statements Analysis 20
2.10 Techniques to Financial Statements Analysis 20
2.11 Literature Review 21
2.11.1: Classification of Assets and Liabilities 22
2.11.2: Limitations of Financial Statements 24
2.11.3: Building Blocks of Financial Statement
.................
Analysis 25
2.11.4: Horizontal Analysis 25
2.11.5: Vertical Analysis 28
x
2.11.6: Ratio Analysis 30

2.12 Relationships between Financial Statements 44
Three Organizational Overview 46-63
3.1 Corporate Profile of FSIBL 47
3.2 Historical Background of FSIBL 49
3.3 Vision, Mission, Objective and Strategies of FSIBL 50
3.4 Organizational Structure of FSIBL 52
3.5 Branches of FSIBL 55
3.6 Functions of FSIBL 59
3.7 Features of FSIBL 60
3.8 Principal Products & Services of FSIBL 61
3.9 Society for Worldwide Interbank Financial 63
Four Core Part : Financial Statements Analysis of FSIBL 64-100
4.1 Introduction 65
4.2 Reconstruction of Financial Statements of FSIBL 65
4.3 Horizontal Analysis 68
4.3.1: Comparative Balance Sheet Analysis 68
4.3.2: Comparative Income Statement Analysis 70
4.3.3: Trend Analysis 73
4.4 Vertical Analysis 76
4.4.1: Common-size Balance Sheets Analysis 79
4.4.2: Common-size Income Statements Analysis 82
4.5 Ratio Analysis 83
4.5.1: Liquidity and Efficiency Ratio 83
4.5.2: Solvency Ratio 89
4.5.3: Profitability Ratio 93
4.5.4: Market Prospects Ratio 96
4.6 Analysis of Cash Flow Statement 98
Five Findings, Recommendation and Conclusion 101-106
5.1 Findings 102
5.2 Recommendations 105
5.3 Conclusion 106
xi
References 107
Appendix 109
1
Chapter One
Introduction
Introduction
Fi rst Security Isl ami B ank Limi ted .
Fin a nc ial S ta teme nts Ana lys is | 2
. .
Financial statement analysis is the process of reviewing and analyzing a

company's financial statements to make better economic decisions. These
statements include the income statement, balance sheet , statement of cash
flows, and statement of retained earnings. Financial statement analysis is
required for evaluating risks, performance, financial health, and future
prospects of an organization. In this report, the financial statements of First
Security Islami Bank Limited (FSIBL) are analyzed. FSIBL is one of the reputed
banks in Bangladesh. It conducts its banking activities according to Islami
Shariah.
1.1: Origin of the Report

This report on “Financial Statements Analysis of an Islami Bank in
Bangladesh: A Study on First Security Islami Bank Limited, Bangladesh” has
been prepared as a partial requirement for the completion of the internship
program for the Bachelor of Business Administration (BBA) program of
Leading University, Sylhet. For internship purpose, I chose First Security
Islami bank Ltd. (FSIBL), Ambarkhana Branch, Sylhet. The preparation of
this report was supervised by Mr. Iehit Sharma, Senior Lecturer, Leading
University, Sylhet.
1.2: Significance of the Study

First Security Islami Bank Ltd. is one o f the leading private banks in
Bangladesh. It provides highest benefits to its clients among the Islami
Banks in Bangladesh. There are few private banks those provide profits or
interest to their clients as high as FSIBL. FSIBL’s banking system is aiming to
attain the goal of Islamic Economy through setting well designed Islamic
Monitory System. Islam has clear-cut guidelines to avoid interest (Riba)
regarding use of money. So, Islamic Banking System strongly follows the
Islamic Shariah in its business. Islamic Shariah appreciates risk and profit
sharing. As an Islami bank FSIBL has to take risk when doing banking
. .
business and share profit to its stakeholders and customers. So, to know
about the ability of the bank to take risk and making profits, its financial
strength and performance should be understood. Therefore, the financial
statements of the bank should be analyzed for understanding the financial
strength and performance of the bank.
1.3: Objective of the Study
General Objective:
To analyze the financial statements of First Security Islami Bank Ltd.
with the key focus of its overall financial performance.
Specific Objectives:
To know the current financial position of First Security Islami Bank
Ltd.
To know the five years financial performance of FSIBL by calculating
and analyzing different types of ratio.
To know the financial trend of FSIBL focusing the five years’ financial
performance.
To get the practical experience on banking activities.
To give some recommendation for the development of First Security
Islami Bank Ltd.
1.4: Scope of the Study

This report is based on my observation and studies during my internship
period in First Security Islami Bank Limited, at Amborkhana Branch. The
prime focus was on financial statement analysis of First Security Islami Bank
Limited for giving some concepts about the financial position and financial
performance of the bank over at least five years. The scope of my study is
limited to the First Security Islami Bank Limited. During the three months
internship program almost all sections I have been observed. However, in
this report the financial statements of FSIBL are analyzed from different
viewpoint including ratio analysis. This repost may help those people who
. .
want to know about the financial performance of First Security Islami Bank
Limited.
1.5: Methodology of the Study

Several types of research methods are used in studies depending o n the field
or research. As this research is on financial statement analysis, certain
methods were followed to fulfill the objectives of the report, making the
maximum utilization of the scopes and to avoid the limitations as much as
possible to prepare the final outcome of the report. There are four types of
research methods were used to complete this report. These methods are -
Qualitative Method: Qualitative method is concerned with the quality or
kind and describing meaning. In this report I have used qualitative
research method to provide a clear concept about my research topic and
to maintain the standards of my research I have analyzed the financial
statements from different viewpoint.
Quantitative Method: Quantitative research is based on the quantitative
measurements of some characters. It is applicable to phenomena that can
be expressed in terms of quantities. I have used the quantitative
approaches in this report for some statistical content analysis and to
determine the significance of findings.
Analytical Method: In analytical research, the researcher has to use facts
or information those already available, and analyze these to make a
critical evaluation of the material. In this report, I have used analytical
method for ratio analysis and to evaluate the financial performance of
FSIBL.
Descriptive Method: Descriptive research includes surveys and fact-
finding enquiries of different kinds. The major purpose of descriptive
research is description of the state of affairs as it exists at present. In this
repost, I have used the descriptive approach to explain the financial
statements, graphs, ratios, financial trend, financial performance and
current financial condition of FSIBL.
. .
Financial statement analysis needs the combination of mathematical

equations, graphical presentation and explanation. So, I have used above
four types of research methods to get proper and successful outcome from
my research.
1.6: Sources of Data

Data have been collected from two sources such as primary sources of data
and secondary sources of data. Primary sources of data are those sources
from which the researcher collects data directly by field work. And
secondary sources of data are those sources which provide data that are
already collected by another researcher. From this point of view data are
two types among them one is primary data and another is secondary data.
The data directly collected by the researchers are called primary data. The
data that has been already collected by another researcher or person for
his/her work purpose are called secondary data. I have collected the both
types of data from primary and secondary sources.
Primary Sources of Data:

Face to face conversation with the employees,
senior officers, SPO and the Manager.
Studying different relevant files like register bo oks,
statement of affairs, financial statements etc.
Practical work at FSIBL during my internship
program to increase my knowledge.
Secondary Sources of Data:

Annual Reports including financial reports of FSIBL.
Website of FSIBL.
Journals and prospectus of FSIBL.
Different books, magazines and journals related to
the finance and banking.
Different websites and blogs.
. .
1.7: Limitation of the Study

I did my best and there has no dearth of sincerity on my part to make the
report. But there are some limitations which I have faced while reaching the
objectives of this report, because it is very difficult to analyze the financial
statements over five years of a Bank. Some of these following limitations are
apparent in this study:
The time limit of the internship is only 3 months which is very short
period of time to learn about whole banking activities.
As annual reports need 3-4 months to be published after end of the
period, I cannot collect the recent annual financial report (2014) of
FSIBL.
As final financial statements are prepared in head office, it becomes
difficult to understand the elements of the statements from branch
office.
When I have prepared the classified financial statement from
unclassified one then I faced problem to replacement of the items of
the statement, because the duration of all items are not properly
mentioned.
There were lack of proper secondary information about First
Security Islami Bank Limited and its products. Annual reports,
policy guidelines, website and other related documents do not cover
full and sufficient information.
As the bank officials are so much busy that it was difficult for them
to co-operate with me, which is also a constraint for this report.
. .
2
Chapter Two
Theoretical Overview
Theoretical Overview
. .
2.1: Bank
Bank is a financial institution that collects money from peo ple as deposit
committing to pay interest or profit at a fixed or probable percentage rate
to the depositors for their deposited money and lends or invests it to the
businesses requiring interest or profit as return at a fixed or pro bable
percentage rate which is higher than the rate at which it pays interest or
profit to the depositors against the loan or investment and gains profit
from the difference between the interest or profit against loan or
investment and interest or profit against deposits. In broadly, any
financial institution that receives, collects, transfers, pays, exchanges,
lends, invests or safeguards money fo r its customers is called bank.
Generally we indicate the commercial bank when using the term “Bank”.
Commercial banks are those institutions which conduct the business
purely on profit motive. Commercial banks receive surplus money from
the people who are not using it and lend to those who need it for
pro ductive purpose.
A commercial bank is a dealer in short and medium-term credit. It

borrows money from a group of people at a lower rate of interest and
lends to the other group of people at some higher rate of interest. The
difference between the two rates of interest is the profit of the bank.
. .
2.2: Functions of Bank

In modern time, the functions of commercial banks are modified. The
functions of a bank may broadly be divided into two parts.
Functions of Bank
Primary Functions Secondary Functions
Accepting Deposits Agency Functions

Current Account
Saving Account General Utility Functions
Fixed Deposit Account

Miscellaneous Functions
or Term Deposit
Account
Making Advance and Loan
Exhibit -2.1
2.2.1: Primary Functions
Basic or primary functions of a c ommercial bank are very important in nature.

These functions provide the base of the whole operation of the bank. The basic
functions of a commercial bank are as follows:
Accepting deposits: Accepting deposits is the most important function of

all commercial banks. Deposit is the basis of commercial banks' activities. In
order to attract The general public to deposit their surplus money in the
bank, the bank offers to deposit money in any of the following accounts:
. .
Current Account: Current or demand account is one where the

amount can be withdrawn at any time by the depositor. Such deposit
accounts are generally maintained by businessmen or organizations.
They can be drawn upon by a cheque without any restriction. Banks
do not pay any interest on these accounts. Rather, banks impose
service charges fo r running these accounts.
Saving Account: Saving account is suitable for non-trading and small
income earners. Saving account helps in mobilization of the saving of
low income people. The commercial banks pay interest on this type
of deposits. But, the interest rate is very poor.
Fixed Deposit Account or Term Deposit Account: Fixed deposit
account is the account in which amounts are deposited fo r a certain
fixed period of time. The deposits cannot be withdrawn before the
expiry of this fixed period. The longer the period of deposits, the
higher is the rate of profit or interest.
Deposit Scheme Account: These types of deposit accounts are newly
added by the commercial banks in the banking systems for
encouraging the fixed-income and low-income people to deposit. In
this system people have to pay monthly installment at a fixed amount
for a certain perio d of time to his/her deposit account, and after
maturity date he/she will get a large sum of mo ney including the
principal and profit.
Making Advance and Loan: The deposits received by banks are not
allowed to remain idle. So, after keeping certain cash reserves, the
balance is given to needy borrowers and interest is charged from them,
which is the main source of income for the banks. Different types of
loans and advances made by Commercial banks are:
Overdraft: Overdraft is a short-term loan granted by commercial
banks to their account holders. Under this type of loan, the
customers are allowed to draw more than what they have in
their current account up to a certain limit. The excess amount
overdrawn is called overdraft.
. .
Cash Credit: Cash credit refers to a loan given to the borrower

against his current assets like shares, stocks, bonds, etc. A credit
limit is sanctioned and the amount is credited in his account. The
borrower may withdraw any amount within his credit limit and
interest is charged on the amount actually withdrawn.
Demand Loans: Demand loans refer to those loans which can be
recalled on demand by the bank at any time. The entire sum of
demand loan is credited to the account and interest is payable on
the entire sum.
Loans: Commercial banks grant loans for short and medium-
term to individuals and traders against the security of movable
and immovable property. The amount of loan is credited to the
borrower's account. Interest is charged on the entire loan
sanctioned.
2.2.2: Secondary Functions

The secondary functions of commercial bank can be classified in three
heads. They are described below:
Agency Functions : The banks render important services as agent on
behalf of their customers in return for a small commission. When banks
act as agent, law of agency applies. The agency functions or services of
bank are as follows:
Collection of Cheques: Commercial banks collect the cheques, bills

of exchange, etc . on behalf of their customers. Banks collect local and
outstation cheques and bills of exchange through clearing house
facilities provided by the central bank .
Collection of Income: The commercial banks collect dividends,
interest on investment, pension and rent of property due to the
customers. When any income is collected by the bank, a credit
voucher is sent to the customer for information.
Payment of Expenses: The banks make payment of insurance
premiums, rent, trade subscription, school fee and other o bligation of
. .
the customers. When any expense is paid by the bank, a debit voucher
is sent to the customer for information.
Dealer in Securities: The banks carry out purchase and sale of
securities on behalf of their customers. Banks do it well because they
are aware of the market conditions.
Acts as Trustee: The banks act as trustee to manage trust property
as per instructio ns of property owners. Banks are required to follow
the terms and conditions of trust deed.
Acts as Agent: Commercial bank sometimes acts as an agent on behalf
of its customers at home or abroad in dealing with other banks or
financial institutions.
Obeys Standing Instructions: Sometimes, customer may order his
bank to do something on his behalf regarding the conduct of his
account. This written order is called standing instruction. The bank
being the agent of its customer obeys the standing instructions.
Acts as Tax Consultant: Commercial bank acts as tax consultant to its
client. The commercial bank prepares general sales tax return, income
tax return, etc. Tiles the same with tax authorities.
Collection of Utility Bills: Commercial banks provide facilities for the
collection of utility bills from general public on behalf of government
bodies. This facilitates the public to pay utility bills in time.
General Utility Functions: Commercial bank performs different utility

functions for their customers. When bank performs utility functions, it
does not act as an agent of the customers. The general utility functions
are as follows:
Provides Lockers Facilities: Commercial banks provide lockers
facilities to its customers for safe custody of Jewelery, shares,
securities and other valuables. This has minimized the risk of losing
due to theft.
. .
Issue of Travelers Cheque: Commercial banks preserve the wills of

their customers as trustees and execute them after their death as
executors.
ATM Facilities: An ATM is also known as cash point. The banks
nowadays provide ATM facilities through issuing debit card and credit
card. The customers can withdraw money easily and quickly 24 hours
a day.
Foreign Exchange: Commercial banks deal in foreign exchange. This
enables the individuals and businessmen to obtain foreign currency in
exchange of their home currency. For dealing in foreign exchange,
commercial banks have to obtain permission from the central bank.
Transfer of Money: Commercial banks provide facilities for the
transfer of money to any place within and o utside the country. The
funds are transferred by means of draft, telephonic transfer,
electronic transfer etc.
Finance Foreign Trade: A commercial bank finances foreign trade by
accepting foreign bills of exchange. Bank also issues letter of credit on
behalf of its customers to facilitate foreign trade.
Trade Information : Commercial banks collect and provide trade
information and tender advice to its customers about financial
matters.
Issuing Credit Cards: Banks issue credit cards to their trustworthy
and valued customers. This facilitates the customers to pay for their
necessities of life.
Miscellaneous Functions: Commercial banks perform the following

miscellaneous functions:
Zakat Collection: Commercial banks collect Zakat from their account
holders and deposit the same into Central Zakat Fund, according to
Zakat and Usher ordinance - 1980.
Hajj Services: The commercial banks provide free Hajj sendees to the
intending pilgrims. Banks receive Hajj applications. Banks also
. .
facilitate to form Hajj groups. Banks make necessary arrangements for

the training of intending pilgrims.
Qarz-e-Hasna: The commercial banks provide Qarz-e-Hasna to
deserving patients for medical treatment and to students for higher
studies within the country and abroad. The Qarz-e-Hasna is refund Ale
in easy installments.
2.3: Islamic Banking

Islamic banking has been defined in a number of ways. The definition of
Islamic bank, as approved by the General Secretariat of the OIC, is stated in
the following manner. "An Islamic bank is a financial institution whose
status, rules and procedures expressly state its commitment to the
principle of Islamic Shariah and to the banning of the receipt and payment
of interest on any of its operations"(Ali & Sarkar 1995, pp.20-25). Ajaz A.
Khan viewing the concept from the perspective of an Islamic economy and
the prospective role to be played by an Islamic bank therein opines:
“Islamic banking is banking or banking activity that is consistent with the
principles of sharia and its practical application through the development
of Islamic economics. As such, a more correct term for 'Islamic banking' is
'Sharia compliant finance.”
It appears from the above definitions that Islamic banking is systems of
financial intermediation that avoids receipt and payment of interest in its
transactions and conducts its operations in a way that helps achieve the
objectives of an Islamic economy. Alternatively, this is a banking system
whose operation is based on Islamic principles of transactions of which
profit and loss sharing (PLS) is a major feature, ensuring justice and equity
in the economy. That is why Islamic banks are often known as PLS-banks.
In single sentence Islamic Bank can be defined as a financial intermediary
that conducts its banking activities according to Islamic Shariah by
avoiding receipt and payment of interest/riba in its transactions and
conducts its activities based on profit or loss sharing motive for achieving
the objectives of Islamic economy.
. .
2.3.1: Principles of Islamic Banking:

Islamic Banking has some exclusive principles by which it can be
distinguished from conventio nal banking. The core principles of Islamic
banking are stated below:
Prohibition of Interest: Interest is strictly prohibited in Islam. Because,
Interest is fixed and predetermined benefit accepted by the lender for
lending his money and given by the borrower for borrowing money.
Islamic Shariah prohibits all benefits in transactions. Interest is called
Riba in Islam.
Partnership Business: Islamic banks invest money to the business
organization as partner and they look after business for ensuring the
proper use of fund.
Profit and Loss Sharing: It is the basic principle of Islamic banking.
Islamic banking system conducts the business activities based on profit
and loss sharing. As bank works as partner it accepts the losses if any
loss occurred in business and participates in profits when profits gain.
Invest in Shariah approved Heads: Islamic Banking system is
concerned in use of fund. It only invests into Halal businesses that mean
Shariah approved business heads.
Shariah Board: In every Islamic bank, there have a special governing
committee that governing the whole activities of the bank is called
Shariah Board. This board ensures that the investment is made to the
Halal business and activities are conducted according to Islamic Shariah.
2.3.2: Riba or Interest:
The word used by the Quran concerning 'interest' is Riba. The literal
meanings of Riba are money increase, increase of anything or increment of
anything from its original amount. However, all increases are not
considered as Riba in Islam. Money may increase in business activities as
well. This increase is not at all considered as Riba. Islam prohibits only
those increases that are charged on the loan with a prefixed rate.
. .
In the Shariah, Riba technically refers to the premium that must be paid by
the borrower to the lender along with the principal amount as a condition
for the loan or for an extension in its maturity. In other words, Riba is the
predetermined return on the use of money.
2.4: Difference between Riba and Profit

There are persons who try to equate Riba with profit. In effect, they are
fundamentally different from each other as can be seen from the following:
Riba Profit
1. When money is "charged", its 1. When money is used in trading, its
imposed positive and define result uncertain result is profit.
is Riba
2. By definition, Riba is the premium 2. By definition, profit is the difference
paid by the borrower to the lender between the value of production and
along with principal amount as a the cost of production.
condition for the loan.
3. Riba is prefixed and hence there is 3. Profit is post-determined and hence
no uncertainty on the part of either its amount is not known until the
the givers or the takers of loans. activity is done.
4. Riba cannot be negative, it can at 4. Profit can be positive, zero or even
best be very low or zero. negative.
5. From Islamic Shariah point of view, 5. From Islamic Shariah point of view,
it is Haram. it is Halal.
Exhibit -2.2
. .
2.5: Difference between Conventional Banking and

Islamic Banking
The distinguishing features of the conventional banking and Islamic
banking are shown in terms of a box diagram as shown below:
Conventional Banks Islamic Banks
1. The functions and operating modes 1. The functions and operating modes
of conventional banks are based on of Islamic banks are based on the
manmade principles. principles of Islamic Shariah.
2. The investor is assured of a 2. In contrast, it promotes risk sharing
predetermined rate of interest. between provider of capital (investor)
and the user of funds (entrepreneur).
3. It aims at maximizing profit without 3. It also aims at maximizing profit but
any restriction. subject to Shariah restrictions.
4. It does not deal with Zakat. 4. In the modern Islamic banking
system, it has become one of the
service-oriented functions of the
Islamic banks to collect and
distribute Zakat.
5. Leading money and getting it back 5. Participation in partnership
with interest is the fundamental business is the fundamental function
function of the conventional banks. of the Islamic banks.
6. Its sco pe of activities is narrower 6. Its scope of activities is wider when
when compared with an Islamic bank. compared with a conventional bank. It
is, in effect, a multi-purpose
institution.
7. It can charge additional money 7. The Islamic banks have no provision
(compound rate of interest) in case of to charge any extra money from the
defaulters. defaulters.
8. In it very often, bank's own interest 8. It gives due importance to the public
becomes prominent. It makes no effort interest. Its ultimate aim is to ensure
to ensure growth with equity. growth with equity.
. .
9. For interest-based commercial 9. For the Islamic banks, it is

banks, borrowing from the money comparatively difficult to borrow
market is relatively easier. money from the money market.
10. Since income from the advances is 10. Since it shares profit and loss, the
fixed, it gives little importance to Islamic banks pay greater attention to
developing expertise in project developing project appraisal and
appraisal and evaluations. evaluations.
11. The conventional banks give 11. The Islamic banks, on the other
greater emphasis on credit- hand, give greater emphasis on the
worthiness of the clients. viability of the projects.
12. The status of a conventional bank, 12. The status of Islamic bank in
in relation to its clients, is that of relation to its clients is that of
creditor and debtors. partners, investors and trader.
13. A conventional bank has to 13. Strictly speaking, and Islamic bank
guarantee all its deposits. cannot do that.
Exhibit -2.3
2.6: Financial Statements

Financial Statements are the summary of the financial activities of a firm
or an organization. AIS Board define the financial statement, “A financial
statement (or financial report) is a formal record of the financial activities
of a business, person, or other entity. Relevant financial information is
presented in a structured manner and in a form easy to understand.”
It appears from the above definitions that financial statements are the
records that outline the financial activities of a business, an individual or
any other entity. Financial statements are intended to present the financial
information of the entity in question as clearly and concisely as possible
for both the entity and for readers. Financial statements for businesses
usually include: income statements, balance sheet, statements of changes
in equity and cash flows, as well as other possible statements.
. .
2.7: Components of Financial Statements

According to International Accounting Standards (IAS) a complete set of
financial statements includes the flowing components.
Statement of Financial Position / Balance Sheet
Income Statement / Statement of Profit and Loss Account
Statement of Cash Flow
Statement of Changes in Equity
Notes to these statements
2.8: Components of Bank’s Financial Statements

Since a bank is a financial institution, its financial statements are different
from other organization. Bank’s Financial Statements include an additional
component which is called Liquidity Statement. The basic components of
bank’s financial statements are given below.
Balance Sheet
Statement of Profit and Loss Account / Income Statement
Cash Flow Statement
Statement of Changes in Equity
Liquidity Statement
Notes to these statements
2.8.1:Balance Sheet: Balance sheet is a financial statement that

summarizes a company's assets, liabilities and shareholders' equity
at a specific point in time of a business' calendar year. These three
balance sheet segments give investors an idea as to what the
company owns and owes, as well as the amount invested by the
shareholders.
2.8.2:Statement of Profit and Loss Account / Income Statement:
Income statement is a financial report that shows an entity's results
of financial performance over a specific time period. The time
period usually covers for a month, quarter, half year or year.
. .
2.8.3:Cash Flow Statement: A cash flow statement is the financial

statement that measures the cash generated or used by a company
in a given period.
2.8.4:Statement of Changes in Equity: Statement of changes in equity
is a financial statement that presents a summary of the changes in
shareholders’ equity accounts in a company over an accounting
period. It reconciles the opening balances of equity accounts with
the closing balances.
2.8.5:Liquidity Statement: Liquidity Statement is a financial statement
that shows a company’s remaining liquid assets to meet the short
term obligations over a certain period of time. Liquid assets
mainly cover cash and cash equivalent assets. Liquidity statement
is necessary for banking companies and other financial
institutions.
2.8.6:Notes: Notes are not core financial statement, but they are
necessary understand other financial statements. Notes are the
details of summary statements like balance sheet, income
statement. Notes present process of calculation and particulars
included of significant items in core financial statements.
2.9: Financial Statements Analysis

Financial Statements Analysis is the process of reviewing and evaluating a
company's financial statements (such as the balance sheet or profit and loss
account statement), thereby gaining an understanding of the financial health
of the company and enabling to make more effective policies.
2.10: Techniques to Financial Statements Analysis

Financial statement analysis is an evaluative method of determining the
past, current and projected performance of a company. Several techniques
are commonly used as part of financial statement analysis. Widely used are
sated below.
. .
Horizontal Analysis: It compares the financial data of two or more

years in both money and percentage form.
Vertical Analysis: In vertical analysis each category of accounts o n
the balance sheet is shown as a percentage of the total account.
Ratio Analysis: Ratio analysis is a fundamental means of examining
the health of a company by studying the relationships of key financial
variables. It calculates statistical relationships between data.
A bank’s financial statements are always different from general companies. So,
banks’ financial statements analysis is critical. Among the stated techniques the
ratio analysis is mostly used for analysis of any organization’s financial
statements.
2.11: Literature Review

Financial statement analysis applies analytical tools to general-purpose
financial statements and related data for making business decisions. It
involves transforming accounting data into more useful information.
Financial statement analysis reduces our reliance on hunches, guesses, and
information as well as our uncertainty in decision making. It does not lessen
the need for expert judgment; instead, it provides us an effective and
systematic basis for making business decisions.
It is a standard practice for businesses to present financial statements that
adhere to generally accepted accounting principles (GAAP), to maintain
continuity of information and presentation across international borders. As
well, financial statements are often audited by government agencies,
accountants, firms, etc. to ensure accuracy and for tax, financing or investing
purposes. Financial statements are integral to ensuring accurate and honest
accounting for businesses and individuals alike. So, some basic requirement
must be fulfilled by a person when he/she prepares financial statements.
Balance sheet, income statement, statement of cash flow, statement of
equity and liquidity statement are the core financial statements of a banking
company. When one goes to analysis the financial statements he/she first
. .
concentrate to the balance sheet. Because balance sheet is required for

every type of financial analysis including ratio analysis. The balance sheet
depicts the assets and the liabilities at a stated point of time, for example
31 st December. The figures of the assets and liabilities are given in the
balance sheet from the basis of financial appraisal and duration. In fact,
there are two stages in the evaluation of balance sheet:
The analysis of balance sheet, refers examination of individual items
of assets and liabilities and their classification into well-defined
categories, and
Interpretation of the balance sheet through the Ratio Analysis.
2.11.1: Classification of Assets and Liabilities

The first step in the analysis of balance sheet is the scrutiny and
examination of different items of assets and liabilities and they are classified
into various categories.
Assets:
In the Balance sheet the assets are divided into three major
categories in general when organizations prepare the balance sheets.
These are as follows:
Current Assets
Fixed/Long-Term Assets
Other Assets
Current Assets: Current assets are those assets, which changes
their form in a short period and are exchanged for cash. In other
words, current assets are meant to be liquidated for cash in the near
future. Generally the duration of these assets is within one year.
Fixed/Long-Term Assets: The assets which are not consumed or
sold during the normal course of business and they are used for
carrying on the business, such as land, building, machinery,
furniture and fixtures etc. are fixed assets.
Other Assets: Other assets are a grouping of accounts that are listed
as a separate line item in the assets section of the balance sheet and
. .
which contain minor assets that do not naturally fit into any of the
main asset categories. “These assets do not represent any property;
rather they represent certain deferred revenue expenses or losses
which are being written-off over the years” (S. A. Ali & R. A.
Howlader, pp.345). But, some of the writers include the other assets
into fixed assets, some writers include them into current assets and
some of the writers include the other assets into both fixed assets
and current assets according to their duration and type.
It appears from the above definitions that other assets are the
miscellaneous assets that cannot be classified as current assets or
fixed assets. Examples of other assets include deferred tax assets,
bond issue costs, advances to officers, prepaid pension costs, and
long-term prepayments. But, other assets can be included into major
categories, if we have proper information or notes about their time
duration. Most of the case other assets include negligible accounts,
so it can be included in current assets. In the case of FSIBL, the
notes about other assets indicate that it should be included in
current assets when I have prepared the classified balance sheet
according maturity for the purpose of ratio analysis.
Liabilities:
In the Balance sheet the liabilities are broadly divided into two
categories when organizations prepare the balance sheets. These are
as follows:
Current Liabilities
Long-Term Liabilities
Current Liabilities: Current liabilities are the obligations those

are payable within one accounting year. Common examples are
accounts payable, wages payable, bank loan payable, interest
payable and tax payable. Fo r a banking company placement from
Banks and other Financial Institutions, all deposit accounts, bills
payable, current portion of ling-term liabilities and other
liabilities are elements of current liabilities.
. .
Long-Term Liabilities: Long-term liabilities are the obligations

that a company expects to pay after o ne accounting year.
Liabilities in this category include subordinated bonds, bonds
payable, and mortgages payable, loan payable, long-term notes
payable, lease liabilities, pension liabilities and other long-term
liabilities.
For the need of my research work I have prepared a comparative balance

sheet by classifying items of the balance sheets according to their duration
and character. Comparative Balance Sheets consist of balance sheet
amounts from two or more balance sheet dates arranged side by side. Its
usefulness is often improved by showing each item’s money amount
change and percentage change to highlight large changes.
Analysis of comparative financial statements begins by focusing on items

that shows large dollar and percent changes. We then try to identify the
reason for these changes and, if possible, determine whether they are
favorable or unfavorable. We also follow up on items with small changes
when we expected the changes to be large.
2.11.2: Limitations of Financial Statements

Though Balance Sheet and Profit and Loss Account of a company are
important sources for the analysis, the financial data contained therein have
certain limitations. The financial data depict the state of affairs or the
operating results in numerical terms. Sometimes wrong or illogical
conclusion may be derived from them if attention is not given to other
factors that are not evident from the financial statements. For example, the
production of a manufacturing company may fall due to labor strike or non-
availability of raw materials due to transport bottlenecks, but it should not
be interpreted as decline in the efficiency or profitability of the concern. It is,
therefore, essential that the investor should look beyond the financial data
and make future enquiries regarding the causes for any variation or
abnormal trend noted in analyzing the data. Besides, the financial
. .
statements represent the performance of the business concern. Any

meaningful analysis of these statements will depend upon the projections of
the future trend. Past events are just guides as to what may reasonably be
expected to occur in future.
2.11.3: Building Blocks of Financial Statement Analysis
Financial statements analysis focuses on one or more elements of a
company’s financial condition or performance. Our analysis emphasizes four
areas of inquiry with varying degrees of importance. These four areas are
described and illustrated in this chapter and considered the building blocks
of financial statements analysis:
Liquidity and Efficiency: It refers the ability of a company to meet

short-term obligations and to efficiently generate revenues.
Solvency: It refers the ability to generate future revenue and meet
long-term obligations by a company.
Profitability: It is the ability to provide financial rewards sufficient
to attract and retain financing.
Market prospects: It refers a company’s ability to generate positive
market expectation.
2.11.4: Horizontal Analysis
Analysis of any single financial number is of limited value. Instead, much of

financial statement analysis involves identifying and describing relations
between numbers, groups of numbers and changes in those numbers.
Horizontal analysis refers to examination of financial statement data across
time. The term “horizontal analyses” arises from the left-to-right movement
of our eyes as we review comparative statements across time.
2.11.4.1: Comparative Statements

Comparing amounts for two of more successive periods often helps in
analyzing financial statements. Comparative financial statements facilitate
this comparison by showing financial amount in side-by-side columns on a
. .
single statement, called comparative format. By using comparative financial

statements financial changes can be expressed in both dollar amount and
percentage.
Computation of Dollar Change and Percent Change: Computing

financial statements over time periods generally two-to-five years is often
done by analyzing changes in line items. A change analysis usually
includes analyzing absolute dollar amount changes and percent changes.
Both analyses are relevant because dollar changes can yield large
percentage changes inconsistent their importance. Dollar amount is
necessary to retain a proper perspective and to assess the importance of
changes. The computation of dollar change for a financial statement item
as follows:
Dollar change = Analysis period amount - Base period amount
Analysis period is the point or period of time for the financial statements
under analysis, and base period is the point or period of time for financial
statements used for comparison purposes. The prior year is commonly
used as a base period. We compute percent change by dividing the dollar
change by the base period amount and then multiplying this quantity by
100 as follows:
(%) = - ×
We can always compute a dollar change, but we must be aware of a few

rules in working with percent changes. These rules are as follows:
When a negative amount appears in the base period and a positive
amount appears in the analysis period then we cannot compute a
meaningful percent change.
When a positive amount appears in the base period and a negative
amount appears in the analysis period then we cannot compute a
meaningful percent change.
When no value is in the base period then no percent is computable.
When an item has a value in the base period and zero in the
analysis period, the decrease is 100 percent.
. .
Comparative Balance Sheets: Comparative balance sheets consist of

balance sheet amounts from two or more balance sheet dates arranged
side by side. Its usefulness is often improved by showing each item’s dollar
change and percent change to highlight large changes.
Analysis of comparative financial statements focusing on items that shows
large dollar or percent changes. Then we try to identify the reasons for
these changes and, if possible, determine whether they are favorable or
unfavorable. We also follow up items with small changes when we
expected the changes to be large. The format of comparative balance sheet
showing dollar and percent change, their calculation process is as follows:
Company Name
Comparative Balance sheet
Ending date of Analysis year and Base/previous year
1 2 3 4=(2-3) 5=(4/3)
Particulars Analysis Base/previous Dollar Percent
Year Year Change Change (%)
Assets
Current Assets $0.00 $0.00 $0.00 0.00%
Fixed Assets $0.00 $0.00 $0.00 0.00%
$0.00 $0.00 $0.00 0.00%
Liabilities
Current Liabilities $0.00 $0.00 $0.00 0.00%
Long-term Liabilities $0.00 $0.00 $0.00 0.00%
$0.00 $0.00 $0.00 0.00%
Shareholders’
Equity $0.00 $0.00 $0.00 0.00%
$0.00 $0.00 $0.00 0.00%
Exhibit -2.4
Comparative Income Statements: Comparative income statements are

prepared similarly to comparative balance sheets. Amounts for two or
more periods are arranged side by side, with additional columns for dollar
and percent changes.
2.11.4.2: Trend Analysis

Trend analysis is also called trend percent analysis or index number trend
analysis. It is a form of horizontal analysis that can reveal patterns in data
across successive periods. It involves computing trend percent for a series
. .
of financial numbers and is a variation on the use of percent changes. The

difference is that trend analysis does not subtract the base period amount in
the numerator. To compute trend percent, we do the following:
Select a base period and assign each item in the base period a weight of
100%.
Express financial numbers as a percent of their base period number.
Specially, a trend percent, also called an index number, is computed as
follows:
(%) = ×
It should be noted, that the percent change or index refers the comparison
of the analysis periods to the base period. Trend analysis expresses a
percent of base, not a percent of change.
2.11.5: Vertical Analysis

Vertical analysis is a tool to evaluate individual financial statement items or
a group of items in terms of a specific base amount. We usually define a key
aggregate figure as the base, which for an income statement is usually
revenue and for a balance sheet is usually total assets. The term “vertical
analysis” arises from the up-down or down-up movement of our eyes as we
review common-size financial statements. Vertical analysis is also called
common size analysis.
2.11.5.1: Common-Size Statements
Common-size statements express each item as a percent of a base amount.

We use common-size financial statements to reveal changes in the relative
importance of each financial statement item. All individual amounts in
common-size statements are redefined in terms of common-size percent. A
common-size percent is measured by dividing each individual financial
statement amount under analysis by its base amount. The formula of
common-size percent is as follows:
. .
- (%) = ×
Common-Size Balance Sheet: Common-size balance sheets express each

item of balance sheets as a percent of a base amount, which is a usually
total asset. The base amount is assigned a value of 100%. This implies
that the total amount of liabilities plus equity equals 100% since this
amount equals total asset. We compute a common-size percent for each
asset, liability and equity items using total asset as base amount. When
we present a company’s successive balance sheets in this way, the
changes in the mixture of assets, liabilities and equity are apparent.
Common-Size Income Statements: Analysis also benefited from using a

common-size income statement. Revenue is usually the base amount,
which is assigned a value of 100%. Each common-size income statement
items appears as a percent of revenue. If we think of the 100% revenues
amount as representing one sales dollar, the remaining items show how
each revenue dollar is distributed among costs, expenses and income.
2.11.5.2: Common-Size Graphics
Two of the most common tools of common-size analysis are trend analysis
of common-size statements and graphical analysis. The trend analysis of
common-size statements is similar to that of comparative statements
discussed under horizontal analysis. It is not illustrated here because the
only difference is the substitution of common-size percent for trend percent.
Instead, this section discusses graphical analysis of common-size
statements. Pie charts and bars are commonly sued for common-size
graphics analysis of common-size statement analysis. For common-size
income statement analysis, the revenue is considered as the base of the pie
chart because revenue affects nearby every item of an income statement.
. .
2.11.6: Ratio Analysis

Ratios are among the more widely used tools of financial statement analysis
because they provide clues to and symptoms of underlying conditions. A
ratio can help us uncover conditions and trends difficult to detect by
inspecting individual components making up the ratio. Ratios, like other
analysis tools, are usually future oriented. They are often adjusted for their
probable future trend and magnitude, and their usefulness depends on the
skillful interpretation. A ratio expresses a mathematical relation between
two quantities. It can be expressed as a percent, rate, or proportion.
Computation of ratio is a simple arithmetic operation, but its interpretation
is not. To be meaningful, a ratio must refer to an economically important
relation.
In this section an important set of financial ratios and its applications are
described. The selected ratios are organized into the four building blocks of
financial statement analysis. These are as follows:
(i) Liquidity and Efficiency Ratios
(ii) Solvency Ratios
(iii) Profitability Ratios
(iv) Market Prospects Ratios
2.11.6.1: Liquidity and Efficiency Ratios
Liquidity refers to the availability of resources of a company to meet short-

term cash requirements. It is affected by the timing of cash inflows and
outflows along with prospects for future performance. Analysis of liquidity
is aimed at a company’s funding requirements.
Efficiency refers to ho w productive a company in using its assets. Efficiency
is usually measured relative to how much revenue is generated from a
certain level of assets.
Both liquidity and efficiency are important and complementary. If a
company fails to meet its current obligations, its continued existence is
doubtful. From this view point, all other measures of analysis are in
secondary importance. Although accounting measurements assume the
company’s continued existence, our analysis must always assess the validity
. .
of this assumption using liquidity measures. Moreover inefficient use of

assets can cause liquidity problems. A lack of liquidity often precedes lower
profitability and fewer opportunities. A company’s customers and suppliers
are also affected by short-term liquidity problems, and it is keener, when it
is a banking company. This section describes the key ratios relevant to
assessing liquidity and efficiency.
Current Ratio: Current ratio is widely used to show the ability of a
company to meet its current liabilities with its current assets. This ratio
is computed by dividing current assets by current liabilities. Its formula
is given below:
A high current ratio suggests a strong liquidity position and an ability to

meet current obligations by current assets. An excessively high current
ratio means that a company has invested too much in current assets
compared to its current liabilities. An excessive invest ment in current
assets is not an efficient use of fund, because current assets no rmally
generate a low return on investment. On the other hand, lower current
ratio indicates that a company may be failed to meet current obligations
by its current assets. Many users apply a guideline about composition of
current assets and current liabilities of 2:1, which means the result of
current ratio is 2. But, such a guideline or any analysis of the current
ratio must recognize at some additional factors such as, type of business,
composition of current assets, and Turnover of current assets. A service
company like bank that having no inventory can probably operate on a
current ratio of 1:1 or less than 1:1. The composition of a company’s
current assets is important to an evaluation of short-term liquidity. For
instance, cash, cash equivalents, and short-term investments are more
liquid then account and notes receivable. Cash, of course, can be used to
immediately pay current liabilities. But, for a banking company,
retaining excessive cash and cash equivalent as liquid assets decreases
profitability.
. .
A banking company may maintain current ratio of less than 1:1

according to its banking principle for efficient investment of its collected
deposits.
Acid-Test (Quick) Ratio: The measurement used by business to

analysis their ability to pay their current liabilities with current assets
excluding less liquid assets is acid-test ratio. It is also called quick ratio.
Quick assets are cash, short-term investments and current receivables.
These are the most liquid types of assets. Acid-test ratio is differs from
current ratio by excluding less liquid assets such as inventory and
prepaid expenses, because they take longer time to be converted into
cash. The acid-test test or quick ratio is defined as quick assets (cash,
short-term investment and current receivable) divided by current
liabilities. Its formula is given below:
()
- =
The common guideline for an acceptable acid-test ratio is 1:1. Similar to

analysis of current ratio, we need to consider other factors. For instance,
the frequency with which a company converts its current assets into
cash affects its working capital requirements. Acid-test ratio is the most
important measurement for banking companies as financial institutions.
Accounts Receivable Turnover: We can measure how frequently a

company converts its receivables into cash by computing account
receivable turno ver. Account receivable turnover is a measure of both
the quality and liquidity of account receivables. Quality of receivables
refers to the likelihood of collection without loss. Liquidity of receivable
refers to the speed of collection. Accounts receivable turnover is
computed by dividing net sales by average account receivable. Its
formula is given below:
=
. .
Average accounts receivable is computed as follows:
=+
2
Accounts receivable turnover is more precise if net credit sales are used
for the numerator because net sales include cash sales, but external
users generally use net sales (or net revenue) because information about
net credit sales is typically not reported in financial reports. Some users
use net receivable as denominator when use net credit sales as
numerator, but using the average account receivable as denominator is
more perfect for computing accounts receivable turnover. A high
turnover is favorable because it means a company need not commits
large amount of funds to account receivable. A high turnover indicates
that a company is too efficient to collect receivables.
Inventory Turnover: Invento ry turnover shows how long a company

holds inventory before selling it affects working capital requirements.
Inventory turnover is also called merchandise turnover or merchandise
inventory turnover. It is computed as follows:
The average inventory is computed as follows:
=+
2
If the beginning and ending inventory for the year do not represent the
usual inventory amount, an average of quarterly or monthly inventories
can be used. A generally agreed minimum value for inventory turnover
ratio is about 2:1 (from a secured creditor perspective), but the ratio
needs careful interpretation because it is based on the book value of
pledged assets. Inventory turnover is important for merchandisers, but
not for service providing company because service providing company
have a little or no inventory. So as service company banks and financial
institutions’ do not need analysis of the inventory turnover ratio for
their operations.
. .
Days’ Sales Uncollected: Accounts receivable turnover provides insight

about how frequently a company converts its accounts receivable into
cash. This is important for evaluating a company’s liquidity. One
measure of the receivables’ nearness to cash is the days’ sales
uncollected. It is computed as follows:
=×
A rough guideline states that days’ sales uncollectable should not exceed
1 times the days in its credit period, if discounts are not offered; or
discount period, if favorable discounts are offered.
Days’ Sales in Inventory: Days’ sales in inventory, also called day’s

stock on hand, is a ratio that reveals how much invento ry is available in
terms of the number of days’ sales. It can be interpreted as the number
of days one can sell from inventory if no new items are purchased. This
ratio is often viewed as a measure of the buffer against out-of-stock
inventory and is useful in evaluating liquidity of inventory. It is
computed as follows:
=×
Days’ sales in inventory focuses on ending inventory and it estimates

how many days it will take to convert at the end of a period into
accounts receivable of cash. Notice that, days’ sales in inventory focuses
on ending inventory whereas inventory turnover focuses on average
inventory.
Total Asset Turnover: Total asset turnover is a measure of a company’s

ability to use its assets to generate sales and is an important indicator of
operating efficienc y. A company’s assets are important in determining
its ability to generate sales and earn income. Total asset turnover is
=
. .
Average total assets is computed as follows:
=+
2
Companies desire higher total asset turnover from their operations.
Interpreting the total asset turnover also requires an understanding of
the company’s operations. Some operations are capital intensive,
meaning that a relatively large amount is invested in assets to generate
sales. This suggests a relatively lower total asset turnover. Other
companies’ having labor intensive operations, meaning that generate
sales more by the efforts of people than using assets.
2.11.6.2: Solvency Ratios
Solvency refers to a company’s long-run financial viability and its ability to

cover long-term obligations. All of a company’s business activities like
financing, investing and operating activities affect its solvency. Analysis of
solvency is long term and uses less precise but more encompassing
measures than liquidity. One of the most important components of solvency
analysis is the composition of a company’s capital structure. Capital
structure refers to a company’s financing sources. It ranges from relatively
permanent equity financing to riskier or more temporary short-term
financing. This analysis focuses on a company’s ability to meet its
obligations and provide security to its creditors over long run. Indicators of
this ability include debt and equity ratios, the relation between pledged
assets and secured liabilities, and the company’s capacity to earn sufficient
income to pay fixed interest charges.
Debt and Equity Ratios: One element of solvency analysis is to assess

the portion of a company’s assets contributed by creditors and the
portion contributed by its owners is called debt and equity ratio. A
company that finances a relatively large portion of its assets with
liabilities is said to have a high degree of financial leverage. Higher
financial leverage involves greater risk because liabilities must be repaid
. .
and often require regular interest payments. The risk that a company
might not be able to meet such required payments is higher if it has more
liabilities. One way to assess the risk associated with a company’s use of
liabilities is to compute the debt ratio. Debt ratio is computed as follows:
=×
The equity ratio provides complementary information by expressing total

equity as a percent of total assets. A company is considered less risky if its
capital structure contains more equity. Equity ratio is computed as
follows:
=×
Pledged Assets to Secured Liabilities: A company’s ability to borrow

money with or without collateral agreements depends on its credit rating.
In some cases, debt financing is unavailable unless the borrower can
provide security to creditors with a collateral agreement. To borrow
funds at a favorable rate, many bonds and notes are secured by collateral
agreements in the form of mortgages. Investors of a company’s secured
debt obligations need to determine whether the debtor’s pledged assets
provide adequate security. One method to evaluate this is pledged assets
to secured liabilities ratio. This ratio also is relevant to unsecured
creditors because of what it implies about the remaining assets available.
This ratio is computed as follows:
A generally agreed minimum value for this ratio is about 2:1 (from a
secured creditor perspective), but the ratio needs careful interpretation
because it is based on the book value of pledged assets. Boo k values are
not necessarily intended to reflect amounts to be received from assets in
event of liquidation. Also, a company’s long-run earning ability is equally
important.
. .
Times Interest Earned: The amount of income before deductions for

interest expense and income taxes is the amount available to pay interest
expense. A company incurs expenses on many of its current and long-
term liabilities. Interest expense is often viewed as a fixed expense
because the amount of these liabilities is likely to remain in one form or
another for a substantial period of time. This means that the amount of
interest is unlikely to vary due to change in sales or other operating
activities. While fixed expenses can be advantageous when a company is
growing, they create risk. This risk stems from the possibility that a
company might be unable to pay fixed expenses if sales decline. One
method that measures a company’s ability to pay interest expenses is
times interest earned ratio. This ratio is computed as follows:
The larger this ratio, the less risky is the company for creditors. One
guideline says that the creditors are reasonably safe if the company earns
its fixed interest expense two or more times each year.
2.11.6.3: Profitability Ratios
We are especially interested in a company’s ability to use its assets

efficiently to produce profits and positive cash flows. Profitability refers to a
company’s ability to generate an adequate return o n invested capital. Return
is judged by assessing earnings relative to the level and source of financing.
Profitability is also relevant to solvency. This section describes key
profitability measures and their importance to financial statement analysis.
Profit Margin: A useful measure of a company’s operating results is the

ratio of its net income to net sales. This ratio is called profit margin. It
reflects a company’s ability to earn net income from sales. Profit margin is
= ×100
. .
To evaluate profit margin, we should consider the industry median if

possible. For instance, companies including banks might require a profit
margin between 10% and 15%.
Return on Total Assets: Return on total assets is a profitability ratio that

measures the net income produced by total assets during a period by
comparing net income to the average total assets. In other words, the
return on assets ratio or ROA measures how efficiently a company can
manage its assets to produce profits during a period. Return on total
assets is computed as follows:
= × 100
An average total asset is computed as follows:
=+
2
Since companies’ assets' sole purpose is to generate revenues and pro duce
profits, this ratio helps both management and investors to see how well
the company can convert its investments in assets into profits. In short,
this ratio measures how profitable a company's assets are. Generally
companies expect higher return on total assets because that indicates a
company’s assets provide more returns.
Return on Common Stockholders’ Equity: Perhaps the most important

goal in operating a company is to earn net income for its owner(s). The
return on common stockholders’ equity measures a company’s success in
reaching this goal and is defined as follows:
=-×
Average common stoc kholders’ equity is computed as follows:

h
' + shareholders '
= Beginning shareholders
2
. .
The denominator in this computation is the book value of common equity

including any minority interest. In the numerator, the dividends on
cumulative preferred stock are subtracted whether they are declared or
are in arrears. If preferred stock is noncumulative, its dividends are
subtracted only if declared.
2.11.6.4: Market Prospects Ratios
Market measures are useful for analyzing corporations with publicly traded
stock. These market measures use stock price, which reflects the market’s
(public’s) expectations for the company. This includes expectations of both
company’s return and risk as market perceives it.
Price-Earnings Ratio: A stock’s market value is determined by its

expected future cash flows. A comparison of a company’s EPS and its
market value per share reveals information about market expectations.
This comparison is traditionally made using a price-earnings ratio. Price-
earnings ratio can be viewed as an indicator of the market ’s expected
growth and risk for a stock. Some analysts interpret this ratio as what
price the market is willing to pay for a company’s current earnings
stream. Price-earnings ratios can differ across companies that have
similar earnings because of either higher or lower expectations of future
earnings. A high level of expected risk suggests a low PE ratio. A high
growth rate suggests a high PE ratio. The price-earnings ratio is defined
as follows:
-=()
This ratio is often computed using EPS from the most recent period.
However, many users compute this ratio using expected EPS for next
period. Some analysis view stocks with high PE ratios as more likely to be
overpriced and stocks with low PE ratios as more likely to be
underpriced. These investors prefer to sell or avoid buying stock with
high PE ratios and to buy or hold stocks with low PE ratios. However,
. .
investment decision making is rarely so simple as to rely on a single ratio.

For instance, a stock with a high PE ratio can prove to be a good
investment if its earnings continue to increase beyond current
expectations. Similarly, a stock with a low PE ratio can prove to be a poor
investment if its earnings decline below expectations.
Dividend Yield: Investors buy shares of a company’s stock in

anticipation of receiving a return fro m either or both cash dividends and
stock price increases. Stocks that pay large dividends on a regular basis
called income stock are attractive to investors who want recurring cash
flows from their investments. In contrast, some stocks pay little or no
dividends but are still attractive to investors because of their expected
stock price increases. The stocks of companies that distribute little or no
cash but use their cash to finance expansion are called growth stocks. One
way to help identify whether a stock is an income stock or a growth stock
is to analyze its dividend yield. It is used to compare the dividend-paying
performance of different investment alternatives. Dividend yield is
= ×
Dividend yield can be computed for current and prior periods using
actual dividends and stock prices and for future periods using expected
values.
2.11.6.5: Summary of Ratios
Exhibit -2.5 summarizes the major financial statement analysis ratios

described in this chapter. This summary includes each ratio’s title, its
formulas, and the purpose for which it is commonly used.
First Securit y Islami Bank Limited ...
Financial Statement Analysis Ratios:

Ratio Formula Measure of
Liquidity and
Efficiency
Current Assets
Current Ratio = Short-term debt-paying
Current Liabilities ability
Cash and equivalents + Short - term investment + Current receivables (net)
Acid-Test Ratio = Immediate short-term
Current Liabilities debt-paying ability
Accounts Receivable Net Sales

Turnover = Efficiency of collection
Average Accounts Receivable
Cost of Goods Sold

Inventory Turnover = Efficiency of inventory
Average Inventory management
Account Receivable
Days’ Sales Uncollected = Liquidity of receivables
Net Sales × 365
Ending Inventory
Days’ Sales in = Liquidity of inventory
Cost of Goods Sold × 365
Inventory
Net Sales
Total Asset Turnover = Efficiency of assets in
Average Total Assets producing sales
Exhibit -2.5
Solvency
Total Liabilities
Debt Ratio = Creditor financing and
Total Assets × 100 leverage
Total Equity
Equity Ratio = Owner financing
Total Assets × 100
Pledged Assets to Book Value of Pledged Assets

Secured Liabilities = Protection to sec ured
Book Value of Secured Liabilities
creditors
Income before Interest Expense and Income Taxes

Times Interest Earned = Protection in meeting
Interest Expense interest payments
Profitability
Net Income
Profit Margin Ratio = Net income in each sales
Net Sales × 100
dollar
Net Sales - Cost of Goods Sold
Gross margin ratio = Gross margin in each
Net Sales sales dollar
Net Income Overall profitability of
Return on Total Assets =
Average Total Assets × 100 assets
Net Income Overall profitability of
Return on Equity =
Total Shareholders Equity × 100 Equity
Exhibit -2.5
Return on Common Net Income - Preferred Dividends

Stockholders’ Equity = Profitability of owner
Average Common Stockholders Equity × 100 investment
Book value Per

Shareholders Equity Applicable to Common Share
Common Share = Net income per common
Number of Common Share Outstanding share
Basic Earnings Per Net Income - Preffered Dividends

Share = Net income per common
Weighted - average Common Shares Outstanding share
Market Prospects
Market Value(price)Per Share
Price-Earnings Ratio = Market value relative to
Earnings Per Share earnings
Annual Cash Dividends Per Share

Dividend Yield = Cash return per common
Market Price Per Share × 100 share
Exhibit -2.5
Above ratios are used for various purpose of financial analysis. These depend on the need of analyst. All ratios are not use for every type
of business. According to nature of business ratios are varying. For example, a service company generally has not any inventory, so it is
not required for it to co mpute the inventory turnover ratio. When I have analyzed the financial statements of First Security Islami Bank
Exhibit -2.5
. .
Limited, I only use those ratios which are useful for a banking company. A
banking company’s ratio analysis is different from the ratio analysis of a
merchandising company.
2.12: Relationships between Financial Statements
Previous Year Current Year

Balance Sheet Changes Balance Sheet
Profit/Loss
Donations
Loan Loss
Depreciation
Profit/Loss
Current Year Current Year
Cash Flow Income
Statement
Non-Cash Items
Exhibit -2.6
From the exhibit -2.6, it is appeared that all financial statements are correlated
and all transactions are directly or indirectly affect the cash flow. Cash flow
represents the actual cash generation by a business over a period. Further, a
business’s main aim is to generate enough cash. So a cash flow statement is
useful to the investors to know the actual cash generating capacity of a
business, trend of cash flow and management’s efficiency to increasing cash. In
my analysis, I analyze the FSIBL’s cash flow statement and try to lay bare the
trend of cash flow of FSIBL, and trace reason of cash increase or decrease.
Understanding the purpose of financial statement analysis is crucial to the

usefulness of any analysis. This understanding leads to efficiency of effort,
effectiveness in application, and relevance in focus. The purpose of most
financial statement analysis is to reduce uncertainty in business decisions
through a rigoro us and sound evaluation. A financial statement analysis report
. .
helps by directly addressing the building blocks of analysis and by identifying

weakness in inference by requiring explanation. If forces us to organize our
reasoning and to verify its flow and logic. A report also serves as a
communication link with readers, and the writing process reinforces our
judgments and vice versa.
. .
3
Chapter Three
Organizational Overview
Organizational
Overview
. .
3.1: Corporate Profile of FSIBL
Registered Name of the First Security Islami Bank Limited

Company
Legal Form A scheduled commercial bank incorporated on August
29, 1999 as a Public Limited Company under the
Companies Act 1994 and Bank Companies Act 1991.
Registered Office 23 Dilkhusha Commercial Area, Dhaka-1000,
Bangladesh.
Tel: 9560229, Fax: 9561637, E-mail: info@fsiblbd.com
Head Office House No. SW(1) 1/A, Road No. 8, Gulshan-1, Dhaka-
1212, Bangladesh.
Tel: 88-02-9888446, Fax: 88-02-9891915
Authorized Capital Tk.10,000 Million
Paid up Capital Tk.4,114.38 Million (2014)
Incorporation Certificate C-38464(422)/99, Dated: August 29, 1999
Commencement of Issue No. 3060, Dated August 29, 1999
Business Certificate
Bangladesh bank BRPD(P) 744(73)/99-2931 Dated: 22/09/1999
Approval Certificate
Listing with Dhaka and September 22, 2008
Chittagong Stock
Exchange Limited
Commencement of September 22, 2008
trading with DSE & CSE
VAT Registration 9011047423 Dated: 28/11/1999
TIN Certificate 003-201-1101/Co-3/Tax Zone-1/Dhaka
Auditors Hoda Vasi Chowdhury & Co, Chartered Accountants
BTMC Bhaban (8 th Floor), 7-9 Karwan Bazar C/A,
Dhaka-1215
Legal adviser The Law Counsel, Barrister & Advocate City Heart
(7 th Floor), Suit No. 8/8, 67 Naya Paltan, Dhaka-1000
Tax Consultants K.M. Hasan & Co., Chartered Accountants Home Tower
Apartment, 87 New Eskaton Road, Dhaka-1000
Exhibit -3.1
. .
3.1.1: Financial Performance at a Glance of FSIBL
(Amount in million Tk.)

Sl. No. Particulars 2009 2010 2011 2012 2013
1 Authorized Capital 4,600.00 4,600.00 4,600.00 10,000.00 10,000.00
2 Paid-up Capital 2,300.00 2,036.00 3,400.00 3,740.35 4,114.38
3 Shareholders' Equity 2,865.41 3,920.01 4,548.95 5,664.48 6,433.60
4 Total Capital (Tier-1+Tire-2) 3,379.03 4,582.21 5,449.44 8,145.33 9,261.24
5 Statutory Reserve 263.44 460.16 704.20 1,004.57 1,310.40
6 Total Assets 47,978.55 63,619.79 91,012.89 129,733.17 161,822.98
7 Total Liabilities 45,113.14 59,699.78 86,463.94 124,068.69 155,389.38
8 Deposits 42,423.09 56,344.95 78,145.04 109,905.57 139,520.95
9 Total Investment and Adv ances 38,725.87 52,123.90 69,467.32 96,304.23 114,601.80
10 Total Contingent Liabilities 5,971.67 8,859.66 11,363.57 9,248.23 11,865.56
11 Total Risk Weight Asset 31,113.43 50,423.90 60,010.80 79,817.20 91,434.10
12 Total Fixed Assets 376.47 573.61 979.35 1,997.72 2,476.43
13 Operating Income 1,327.63 2,085.20 2,738.25 3,734.68 4,409.60
14 Operating Expenditure 576.79 881.60 1,148.66 1,792.72 2,383.88
15 Profit before Prov ision & Tax 750.83 1,203.60 1,589.58 1,941.96 2,025.72
16 Profit before Tax 646.83 983.60 1,219.95 1,501.86 1,529.12
17 Net Profit af ter Prov ision & Tax 326.83 548.60 579.93 761.86 769.12
18 Foreign Exchange Business: 20,208.92 35,103.57 40,807.30 36,067.20 2,580.48
a) Import Business 16,101.17 28,391.20 29,534.90 24,056.20 1,217.70
b) Export Business 3,549.00 5,868.90 10,260.60 7,279.40 650.00
c) Remittance 558.75 843.47 1,011.80 4,731.60 712.78
19 No. of Foreign Correspondent 240.00 240.00 1,400.00 1,400.00 1,400.00
20 Profit Earning Assets 41,371.52 56,040.95 79,211.72 112,003.37 135,976.09
21 Non Prifit Earning Assets 6,607.02 7,578.84 11,801.17 17,729.80 25,846.88
22 Investment as a % of Total Deposit 91.28% 92.51% 88.90% 87.62% 82.14%
23 Capital Adequacy Ration 10.91% 9.09% 9.07% 10.20% 10.13%
24 Divident
a) Cash Nil Nil Nil Nil 10%
b) Bonus 10% 12% 10% 10% Nil
c) Right Share Nil 20% Nil Nil Nil
25 Cost of Fund 9.28% 8.90% 10.01% 11.00% 11.64%
26 Net Asset Value Per Share 12.45 12.81 13.38 15.28 15.64
27 Earning Per Share (EPS) 1.42 1.61 1.71 1.85 1.87
28 Price Earning Ration (times) 15.39 25.21 15.37 9.99 8.08
29 Return on Assets (ROA) 1.56% 1.89% 1.75% 0.69% 0.53%
30 No. of Shareholders 54,400 82,230 90,954 89,994 90,985
31 Number of Employees 775 929 1,342 2,090 2,367
32 Number of Branches 52 66 84 100 117
Exhibit -3.2
. .
3.2: Historical Background of FSIBL
First Security Islami Bank Limited (FSIBL) was formed in Bangladesh on

29th August 1999 under Companies Act 1994 to start banking business. It
obtained permission from Bangladesh Bank o n 22 September 1999 to begin
its business. The Bank carries banking activities through its 136 branches in
the country. Their commercial banking activities include a wide range of
services including accepting deposits, discounting bills, conducting money
transfer and foreign exchange transactions, and performing other related
services such as safe keeping, collections and issuing guarantees,
acceptances and letter of credit. FSIBL started their business with
traditional commercial banking services as First Security Bank Ltd.
However, from January 01, 2009 they converted their business to Islamic
Banking with Islamic Shariah Act and the bank changed its name and mode
of business and incorporated as First Security Islami Bank Ltd. It started
with 14 branches in 1999 but now has 134 branches in Bangladesh which
shows the impact they have had in the economy. The bank maintains a
friendly relationship with the top ranking banks. They have online, SMS and
ATM banking facilities for their clients.
The company philosophy “A step ahead in time” has been exactly the spirit
for Asian success; the bank has been operating with talented and brilliant
personnel, equipment with modern technology so as to make it most
efficient to meet the challenges of 21st century and to fulfill the needs and
wants of its customers.
. .
3.3: Vision, Mission, Objective and Strategies of FSIBL
3.3.1: Vision
To be the premier financial institution in the country by providing high quality

products and services backed by latest technology and a team of highly
motivated personnel to deliver excellence in Banking.
3.3.2: Mission
To be the most caring and customer friendly and service oriented bank.
To create a technology based most efficient banking environment for its
customers.
To contribute to the socio-economic development of the country.
To attain the highest level of satisfaction through the extension of
services by dedicated and motivated professionals.
To maintain continuous growth of market share by ensuring quality.
To ensure ethics and transparency in all levels.
To ensure sustainable growth and establish full value of the honorable
shareholders and
Above all, to contribute effectively to the national economy.
3.3.3: Objective
To conduct banking service according to Islamic Shariah

To provide efficient computerized banking system.
To ensure foreign exchange operations.
To accept deposit on profit-loss sharing basis.
To establish a welfare-oriented banking system.
To play a vital role in human development and employment generatio n.
To contribute toward balanced growth and development of the country
through investment operations particularly in the less developed areas.
. .
3.3.4: Strategies
To achieve our customer’s best satisfaction & win their confidence.

To manage & operate the bank in the most effective manner.
To identify customer’s need & monitor their perception towards meeting
those requirements.
To review & update policies, procedures & practices to enhance the
ability to extend better customer services.
To train & develop all employees & provide them adequate resources so
that customers’ needs can reasonably addressed.
To promote organizational efficiency by disclosing company’s plans,
policies & procedures openly to the employees in a timely fashion.
To ensure a congenial working environment.
To diversify portfolio in both retail & wholesale market.
. .
3.4: Organizational Structure of FSIBL
3.4.1: Board of Director
Mohammed Saiful Alam

Chairman
Alhaj Mohammed Abdul Maleque

Vice-Chairman
Ms. Farzana Ms. Rahima Md. Wahidul

Ms. Atiqur Nesa
Parveen Khatun Alam Seth
Director
Director Director Director
Shahidul Islam Mohammad Ahsanul Alam Md. Sharif Hussain

Director Oheidul Alam Director Independent Director
Director
Mohammad Kutub Mohammad Ishaque Khurshid Jahan Mr. Syed Waseque

Uddowllah Independent Director Md. Ali
Depositor Director
Independent Director Managing Director
Exhibit -3.3
. .
3.4.2: Management of FSIBL

Organogram
Managing Director
Deputy Managing Director
Executive Vice President
Senior Vice President
Vice President
First Vice President
Assistant Vice President
Senior Executive Officer
Executive Officer
Principal Officer
Senior Officer
Officer
Assistant Officer
Junior Officer
Trainee Officer
Exhibit -3.4
. .
3.4.3: Shariah Board

Shariah Members
Name Position Address
Sheikh (Moulana) Chairman Baitush Sharaf Complex, Shah
Mohammad Qutubuddin Abdul Jabbar (R) Road
Dhanialapara, Chittagong-4100.
Mufti Sayeed Ahmed Vice Chairman Markaz-e- Eshaete Islam 2/2 Darus
Salam, Mirpur, Dhaka
Moulana M. Shamaun Ali Member 491, Wireless Railgate, Bara
Secretary Moghbazar, Dhaka-1217
Moulana Abdus Shaheed Member 2/C Green Valley Apartment 493,
Naseem Wireless Railgate, Bara Moghbazar,
Dhaka-1217
Mr. Mohammad Azharul Member Lecturer Department of law,
University of Dhaka, Dhaka-1000
Islam
Observers Members
Alhaj Md. Abdul Maleque Vice Chairman, Board of 8/A, OR Nizam Road
Directors, FSIBL & Panchlaish R/A Chittagong
Observer Member,
Shari’ah Council
Prof. Md. Sharif Hussain Board of Directors, FSIBL 57, East Hajipara (5 th
& Observer Member, Floor) Rampura, Dhaka-
Shari’ah Council 1219
Mr. Shahidul Islam Board of Directors FSIBL House# 7, Road# 1,
& Observer Member, Nasirabad Housing Society,
Shari’ah Council Post: Medical P.S:
Panchlaish, Dist.:
Chittagong
Managing Director
Mr. Syed Waseque Md. Ali Managing Director House SW(I)1/A(4 th Floor),
(Current Charge), FSIBL & Road – 8, Gulshan -1,
Observer Member, Dhaka-1212
Shari’ah Council
Exhibit -3.5
. .
3.5: Branches of FSIBL

Division Serial No. Branch Name Branch Code
01 AZAMPUR 140
02 BANGSHAL 106
03 BHALUKA SME 168
04 BISWAROAD 120
05 CITY UNIVERSITY 178
06 DAMODYA 180
07 DILKUSHA 101
08 FARIDPUR 162
09 BANANI 115
10 BASHUNDHARA 177
11 BHUAPUR BRANCH 202
12 BONOSREE 138
13 COLLEGE GATE 125
14 DHANMONDI 108
15 DONIA 121
16 GAZIPUR CHOWRASTA 214
17 GULSHAN 112
18 KARWAN BAZAR 176
19 KONAPARA 191
20 MALIBAG 174
21 MASTERBARI 183
22 MOHAKHALI 103
23 MOTIJHEEL 129
24 MYMENSINGH 160
25 ISLAMPUR 155
26 KERANIGONJ BRANCH 207
27 MADHABDI SME/KRISHI 154
28 MANIKGANJ BRANCH 203
29 MIRPUR 113
. .
30 MOHAMMADPUR 186
31 MUKSUDPUR 127
32 NARAYANGANJ 170
33 NORIA 181
34 POSTOGOLA BRANCH 225
35 RING ROAD 133
36 SAVAR 149
37 SHAFIPUR 117
38 TONGI BARI BRANCH 199
39 UTTARA 158
40 PACCHOR BRANCH 210
41 RANABHOLA BRANCH 228
42 RUPNAGAR BRANCH 223
43 SENANIBASH 126
45 SREEPUR 143
46 TOPKHANA 118
47 ZIRABO 148
48 AMBORKHANA 128
49 BISWANATH 105
50 MOULVIBAZAR 122
51 TALTOLA 153
52 SYLHET 111
53 GOBINDA GONJ 132
54 BEANI BAZAR 175
55 AGRABAD 104
56 BAHADDARHAT 123
57 BANSKHALI 187
58 CHAWK BAZAR 166
59 COURT BAZAR 135
60 DOVASHI BAZAR 124
61 FENI 165
62 HATHAZARI 137
. .
63 ANDERKILLAH 000
64 BANDAR TILA 148
65 CHAKARIA 121
66 COMILLA 150
67 COX’S BAZAR 139
68 EID GAON 151
69 HALISHAHAR 185
70 HNILA 221
71 JUBILEE ROAD 107
72 KATIRHAT 206
73 KHATUNGONJ 102
74 MIRZAKHIL 218
75 MOHRA SME/KRISHI BR. 161
76 NAZU MEAH HAT 112
77 PAHARTOLI RAOZAN BR. 196
78 PATIYA 127
79 KADAMTALI 212
80 KERANIHAT 110
81 KUMIRA 193
82 MOHILA 167
83 NAZIR HAT 138
84 PAHARTOLI 159
85 PATHER HAT 145
86 PATIYA MOHILA 182
87 PEKUA 192
88 RAMGONJ 131
89 RANIR HAT SME/KRISHI BR. 156
90 PROBORTAK MOR 0
91 RAMU 200
92 TANTOR 229
93 BAGACHRA BRANCH 213
94 BARGUNA 0
. .
95 CHUADANGA 190
96 FAKIRHAT 0
97 FULTOLA 222
98 JESSORE 141
99 KALIGANJ 224
100 KESHABPUR 188
101 BAGERHAT 172
102 BAROBAZAR 211

103 DINAJPUR 171
104 FAKIRHAT 215
105 GALACHIPA 194
106 JHENAIDAHA 197
107 KAPILMUNI 208
108 KHAJURA BAZAR 220
109 KHULNA 116
110 MAGURA 173
111 MORRELGANJ 216
112 NARAIL 204
113 NARIA 0
114 SATKHIRA 146
115 KUSHTIA 179
116 MEHERPUR 219
117 NAOGAON 0
118 NARAIL LOHAGARA SME 157
119 NAVARON BRANCH 198

120 SHYAMNAGAR 205
121 BOGRA BRANCH 0
122 KANSAT BRANCH 227
123 PABNA 169
124 DHUPOIL BAZAR BRANCH 217
125 NATORE BRANCH 231
126 RAJSHAHI BRANCH 136
. .
127 BARGUNA BRANCH 201

128 BAUFOL BRANCH 230
129 GALACHIPA BRANCH 0
130 SWARUPKATI BRANCH 195
131 BARISAL BRANCH 163
132 BHOLA BRANCH 226
133 PATUAKHALI 144
134 UZIRPUR BRANCH 202
135 DINAJPUR BRANCH 171
136 RANGPUR BRANCH 109
Exhibit -3.6
3.6: Functions of FSIBL
First Security Islami Bank is performing the following functions:

Collection of deposit
Maintaining all types of deposit accounts
To make investment
To handle foreign remittance
Collection of utility bills payment
To provides locker service
Pro viding Inland/Online Transaction Service
Handling Foreign Exchange Business Transaction
Smart Banking
To conduct social welfare activities
. .
3.7: Features of FSIBL

The bank is committed to run all its activities as per Islami Shariah. FSIBL
achieves the customers’ satisfactions through its fast and excellent service.
The distinguishing features of FSIBL are as follows:
All its activities are conducted on interest -free banking system
according to Ialami Shariah.
Establishment of participatory banking system instead of banking on
debtor-creditor relationship.
Investment is made in different modes permitted by Islami Shariah.
Investment income of the Bank is shared to the Mudarabah
Depositors according to a ratio to ensure a fair rate of return on their
deposits.
The bank ensures life insurance of Tk.100000 to its clients against
their MMPS and MMDS accounts without taking additional
installment from the clients for the insurance.
Its aims are to introduce a welfare-oriented banking system and also
to establish equity and justice in the field of all economic activities.
It extends Socio-econo mic and financial services to the poor, helpless
and low-income group of people.
The bank provides scholarship to the talent students as a part of
Corporate Social Responsibility.
According to the needs and demands of society and the country as a
whole the Bank invests money to different Halal business. The bank
participates in different activities aiming at creating jobs,
implementing development projects taken by the Government and
developing infrastructure.
. .
3.8: Principal Products & Services of FSIBL
3.8.1: Deposit Products

Al-Wadiah Current Deposit
Mudarabah Savings Deposit
Mudarabah Short Term Deposit
Mudarabah Term Deposit :
One Month
Three Months
Six Months
Twelve Months
Twenty Four Months
Thirty Six Months
Foreign Currency Deposit
Mudarabah Savings Scheme :
Monthly Savings Scheme
Monthly Profit Scheme
Mudaraba Double Benefit Deposits Scheme in 6 years
Mudaraba Triple Times Deposit Scheme in 10 years
Mudaraba Four Times Deposit Scheme in 12 years
3.8.2: Investment Products
Investment / Utilization of the funds:

Bai-Murabaha (Deferred Lump Sum/ Installment Sale)
Bai-Muajjal (Deferred Installment / Lump Sum Sale)
Ijara (Leasing)
Musharaka (Joint-Venture, Profit-Sharing)
Mudaraba (Trustee Profit-Sharing)
Bai-Salam (Advance Sale and Purchase)
Hire-Purchase
Direct Investments
. .
Ijara (Leasing)
Post Import Investment
Purchase and Negotiation of Export Bills
Inland Bills Purchased
Murabaha Import Bills
Bai-Muajjal Import Bills
Pre-Shipment Investment
Quard-ul-Hasan (Benevolent Investment)
Letter of Guarantee
Tender Guarantee
Performance Guarantee
Guarantee for Sub-Co ntracts
Shipping Guarantee
Advance Payment Guarantee
Guarantee in lieu of Security Deposits
Guarantee for exemption of Customs Duties
Others
Letter of Credit (L/C) / Back to Back Letter of Credit (L/C)

Specialized Schemes
Tender Guarantee
Consumer Investment Scheme
SME Investment Scheme,
Lease Investment Scheme,
Hire Purchase,
Earnest Money Investment Scheme,
Mortgage Investment,
Employees House Building Scheme,
ATM, VISA Investment Card, EEF, etc.
3.8.3: Foreign Remittance

3.8.4: Utility Bill Payment
. .
3.8.5: Locker Service

Personalized service
Facilities to access outside scheduled time
Parcel handling
Safe custody of goods and bonds/shares
Lockers available in various sizes. For example: Small, Medium and
Large.
3.8.6: Inland and Online Transaction Services
3.8.7: Foreign Exchange Business Transaction / Service
3.9: Society for Worldwide Interbank Financial

Telecommunication (SWIFT)
FSIBL SWIFT BIC

Head Office FSEBBDDH
Dilkusha Branch FSEBBDDHDIL
Motijheel Branch FSEBBDDHMOT
Bangshal Branch FSEBBDDHBNG
Dhanmondi Branch FSEBBDDHDHA
Gulshan Branch FSEBBDDHGUL
Mohakhali Branch FSEBBDDHMKH
Banani Branch FSEBBDDHBAN
Agrabad Branch FSEBBDDHAGR
Khatungonj Branch FSEBBDDHKTG
Jubilee Road Branch FSEBBDDHJUB
Sylhet Branch FSEBBDDHSYL
Exhibit -3.7
. .
4
Chapter Four
Core Part
Financial Statements Analysis of First
Security Islami Bank Limited (FSIBL)
Core Part
Financial Statements
Analysis of First Security
Islami Bank Limited (FSIBL)
. .
4.1: Introduction
A bank is a financial institution whose main job is to collect fund from
surplus units and invest in deficit units and making profits. Owners,
depositors and shareholders of a bank invest to a bank to get profit or
interest as a reward in return. But their profit is depends on the bank’s
financial performance. It depends on how a bank operates itself, how
efficiently management operates the operations of a bank. To understand
the financial performance of a bank, the investor should analyze the
financial statements of that bank. They may use different financial ratios to
analyze the financial performance of a bank. By analyzing the financial
performance of a bank investors and management can know the strengths
and weakness of the bank, and can take proper policy making decisions for
future. To analyze the financial performance of First Security Islami Bank
Limited (FSIBL), different financial ratios are used to determine the
strengths and weakness of FSIBL. Actually, to understand the overall
financial position and performance of FSIBL is the main aim of this chapter.
4.2: Reconstruction of Financial Statements of FSIBL

The all core financial statements of FSIBL are obtained. These statements
include Balance Sheet, Income Statement, Statement of Cash Flows,
Statement of Equity, Statement of Liquidity and their notes fo r five years.
But, these are not in the format which is required for different financial ratio
analysis. So, some of these financial statements are reconstructed in various
format for the interest of the analysis. The renovated statements are mainly
concerned based on the duration of the accounts which is very important for
ratio analysis. For preparing these financial statements no fictional data are
used, only the real financial data from notes of statements are used
according their duration and types.
F I RS T S ECU R I TY I S LA M I BA N K LI M I TE D
CO MP ARA TI VE B AL AN C E SH E E T
F OR T H E Y E ARS- 2 0 13 , 2 0 12 , 2 0 1 1, 20 1 0 , 2 00 9 an d 2 0 08
C ha ng es in BD T C ha nge s in P er ce nt a ge
2 0 13 2 01 2 2 01 1 2 0 10 20 0 9 2 00 8 2 01 3 2 0 12 2 0 11 20 1 0 2 0 09 2 01 3 2 0 12 2 0 11 2 0 10 2 0 09
Pa rt i cul ar s
BDT BDT BDT BDT B DT BDT BDT BDT BDT BDT BDT % % % % %
PRO PE RT Y AN D A SS E TS
C urre nt A sse t s 4 0 ,4 7 3,1 7 7 ,1 56 2 9 ,7 05 ,0 5 8 ,83 6 18 ,1 5 1, 65 0 ,5 28 8,5 8 7 ,8 67 ,6 0 3 7 ,2 02 ,7 2 2, 79 3 5 ,3 6 4,3 6 6 ,9 09 10 ,7 6 8, 11 8 ,3 20 1 1,5 5 3 ,4 08 ,3 0 8 9 ,56 3 ,7 8 2,9 2 5 1 ,3 85 ,1 4 4 ,81 0 1 ,8 3 8 ,35 5 ,8 8 4 3 6% 6 4% 1 1 1% 1 9% 3 4 %
C ash 1 1, 5 49 , 3 81 , 96 9 1 0, 5 28 , 14 4 , 96 7 71 45 5 64 65 2 4 85 75 42 2 03 5 03 3 53 24 3 9 13 94 6 71 40 7 1 , 0 2 1, 2 37 , 0 02 3 , 38 2 , 58 0, 3 15 2 , 2 88 , 02 2, 4 4 9 (1 75 , 9 90 , 23 6 ) 3 , 63 8, 8 6 1, 0 32 1 0 % 4 7 % 47 % -3 % 2 61 %
B a lan ce Wi th B an k an d Fin an cia l In st it ut ion s 1 4, 3 79 , 0 93 , 08 4 1 0, 7 85 , 71 6 , 06 1 56 99 8 04 59 5 1 03 61 99 0 77 73 1 15 03 2 1 21 01 4 36 24 4 3 , 5 9 3, 3 77 , 0 23 5 , 08 5 , 91 1, 4 66 4 , 6 63 , 60 5, 5 1 8 3 0 5, 0 48 , 75 6 ( 1 , 37 0, 2 85 , 9 23 ) 3 3 % 8 9 % 45 0 % 42 % - 65 %
I n vest m en ts i n Sh ar e s & Secu r it ies 2, 7 2 3, 6 32 , 78 6 3, 1 87 , 22 3 , 27 0 16 30 0 19 09 2 52 49 3 78 61 24 1 02 60 3 2 7 36 9 69 10 0 ( 46 3, 5 90 , 4 84 ) 1 , 55 7 , 20 4, 1 78 1 , 1 05 , 08 1, 2 3 1 2 8 3, 9 11 , 82 9 ( 49 5, 9 4 3, 0 68 ) -1 5 % 9 6 % 21 1 % 11 8 % - 67 %
O th er A sset s 1 1, 8 21 , 0 69 , 31 7 5, 2 03 , 97 4 , 53 8 36 76 2 62 18 9 2 16 91 88 4 62 1 19 7 01 40 0 1 11 31 2 90 15 8 6 , 6 1 7, 0 94 , 7 79 1 , 52 7 , 71 2, 3 49 1 , 5 07 , 07 3, 7 2 7 9 7 2, 1 74 , 46 1 6 5, 7 2 3, 8 43 12 7 % 4 2 % 69 % 81 % 6 %
--
Fi x ed Ass e ts 12 1 ,3 4 9,7 9 9 ,6 89 1 0 0 ,0 28 ,1 1 4 ,25 2 72 ,8 6 1, 24 8 ,5 61 5 5,0 3 1 ,9 30 ,1 9 6 4 0 ,7 75 ,8 3 0, 15 9 2 5 ,8 7 5,0 2 6 ,5 09 21 ,3 2 1, 68 5 ,4 37 2 7,1 6 6 ,8 65 ,6 9 1 1 7 ,82 9 ,3 1 8,3 6 5 1 4 ,2 56 ,1 0 0 ,03 7 14 ,9 0 0 ,80 3 ,6 5 0 2 1% 3 7% 3 2% 3 5% 5 8 %
I n vest m en ts i n Sh ar e s & Secu r it ies 4, 2 7 1, 5 69 , 45 0 1, 7 26 , 16 9 , 45 0 24 14 5 69 45 0 2 33 44 16 7 00 1 67 3 47 79 9 8 5 96 0 00 00 0 2 , 5 4 5, 4 00 , 0 00 ( 68 8 , 40 0, 0 00 ) 80 , 15 2 , 75 0 6 6 0, 9 38 , 70 2 1 , 07 7, 4 7 7, 9 98 14 7 % -2 9 % 3 % 39 % 1 81 %
I n vest m en ts 11 4, 6 01 , 7 98 , 17 7 9 6, 3 04 , 22 8 , 58 8 6 94 67 3 28 28 4 5 21 2 39 03 1 64 38 72 5 87 47 7 4 2 50 94 65 8 07 7 1 8, 2 9 7, 5 69 , 58 9 26 , 83 6 , 9 0 0, 3 04 17 , 3 43 , 42 5, 1 2 0 1 3, 3 98 , 0 28 , 39 0 1 3 , 63 1, 2 16 , 6 97 1 9 % 3 9 % 33 % 35 % 54 %
F ix ed A sse ts I ncl ud in g P r em ises, Fu r nit u r e & F ixt ur e s 2, 4 7 6, 4 32 , 06 2 1, 9 97 , 71 6 , 21 4 9 79 3 50 82 7 57 36 1 03 32 37 6 47 73 8 7 1 84 3 68 43 2 47 8, 7 15 , 8 48 1 , 01 8 , 36 5, 3 87 4 05 , 74 0 , 4 9 5 1 9 7, 1 32 , 94 5 19 2, 1 0 8, 9 55 2 4 % 10 4 % 71 % 52 % 1 04 %
-
To t al A sse t s 16 1 ,8 2 2,9 7 6 ,8 45 1 2 9 ,7 33 ,1 7 3 ,08 8 91 ,0 1 2, 89 9 ,0 89 6 3,6 1 9 ,7 97 ,7 9 9 4 7 ,9 78 ,5 5 2, 95 2 3 1 ,2 3 9,3 9 3 ,4 18 32 ,0 8 9, 80 3 ,7 57 3 8,7 2 0 ,2 73 ,9 9 9 2 7 ,39 3 ,1 0 1,2 9 0 1 5 ,6 41 ,2 4 4 ,84 7 16 ,7 3 9 ,15 9 ,5 3 4 2 5% 4 3% 4 3% 3 3% 5 4 %
LI A BI L IT IE S A ND C API TA L
Li a bil i t ie s:
C urre nt L i ab il it i e s 15 2 ,7 0 9,5 8 8 ,4 39 1 2 1 ,6 50 ,1 1 8 ,33 9 86 ,4 3 2, 83 4 ,5 21 5 9,6 9 9 ,7 86 ,3 1 3 4 5 ,1 13 ,1 4 2, 19 7 2 8 ,7 0 0,8 2 0 ,4 12 31 ,0 5 9, 47 0 ,1 00 3 5,2 1 7 ,2 83 ,8 1 8 2 6 ,73 3 ,0 4 8,2 0 8 1 4 ,5 86 ,6 4 4 ,11 6 16 ,4 1 2 ,32 1 ,7 8 5 2 6% 4 1% 4 5% 3 2% 5 7 %
P la cem en t f r om B an ks & Oth er F in anci al I nst it u tio ns 3, 9 5 0, 0 00 , 00 0 4, 4 00 , 00 0 , 00 0 32 00 0 00 00 0 - - 6 30 0 00 00 0 ( 45 0, 0 00 , 0 00 ) 1 , 20 0 , 00 0, 0 00 3 , 2 00 , 00 0, 0 0 0 - ( 63 0, 0 0 0, 0 00 ) -1 0 % 3 8 % - - -
D epo sit s an d Ot h er A ccou n ts 13 9, 5 20 , 9 55 , 78 3 1 0 9, 9 05 , 56 8 , 87 1 7 81 45 0 45 00 8 5 63 4 49 59 1 67 42 42 3 09 27 2 2 2 58 54 54 1 50 0 2 9, 6 1 5, 3 86 , 91 2 31 , 76 0 , 5 2 3, 8 63 21 , 8 00 , 08 5, 8 4 1 1 3, 9 21 , 8 66 , 44 5 1 6 , 56 8, 5 51 , 2 22 2 7 % 4 1 % 39 % 33 % 64 %
O th er Li ab ilit ie s 9, 2 3 8, 6 32 , 65 6 7, 3 44 , 54 9 , 46 8 50 87 7 89 51 3 3 35 48 27 1 46 2 69 0 04 94 7 5 22 16 2 78 91 2 1 , 8 9 4, 0 83 , 1 88 2 , 25 6 , 75 9, 9 55 1 , 7 32 , 96 2, 3 6 7 6 6 4, 7 77 , 67 1 47 3, 7 7 0, 5 63 2 6 % 4 4 % 52 % 25 % 21 %
--
Lo ng - Te rm L ia bi li t i es 2 ,6 7 9,7 8 8 ,8 42 2 ,4 18 ,5 7 4, 96 7 3 1,1 1 4 ,0 00 - - - 2 6 1,2 1 3 ,8 75 2,3 8 7 ,4 60 ,9 6 7 3 1 ,1 1 4,0 0 0 - - 1 1% 7 6 7 3% - - -
P la cem en t f r om B an ks & Oth er F in anci al I nst it u tio ns 1 7 9, 7 88 , 84 2 1 98 , 5 74 , 96 7 31 1 14 00 0 - - - ( 1 8, 7 86 , 1 25 ) 16 7 , 46 0, 9 67 31 , 11 4 , 00 0 - - -9 % 53 8 % - - -
M u da r ab a Su bo r di nat ed B on d 2, 5 0 0, 0 00 , 00 0 2, 2 20 , 00 0 , 00 0 - - - - 28 0, 0 00 , 0 00 2 22 00 00 0 00 - - -- - 13%----
To t al L i abi l it i e s 15 5 ,3 8 9,3 7 7 ,2 81 1 2 4 ,0 68 ,6 9 3 ,30 6 86 ,4 6 3, 94 8 ,5 21 5 9,6 9 9 ,7 86 ,3 1 3 4 5 ,1 13 ,1 4 2, 19 7 2 8 ,7 0 0,8 2 0 ,4 12 31 ,3 2 0, 68 3 ,9 75 3 7,6 0 4 ,7 44 ,7 8 5 2 6 ,76 4 ,1 6 2,2 0 8 1 4 ,5 86 ,6 4 4 ,11 6 16 ,4 1 2 ,32 1 ,7 8 5 2 5% 4 3% 4 5% 3 2% 5 7 % -
C api t a l/ S har e ho lde rs ' E qui t y -
P ai d- up C ap ita l 4, 1 1 4, 3 87 , 20 0 3, 7 40 , 35 2 , 00 0 34 00 3 20 00 0 3 03 60 00 0 00 2 30 0 00 00 0 0 23 00 0 00 00 0 37 4, 0 35 , 2 00 34 0 , 03 2, 0 00 3 64 , 32 0 , 0 0 0 7 3 6, 0 00 , 00 0 - 1 0 % 1 0 % 12 % 32 % 0 %
S ta tu to r y R ese r ve 1, 3 1 0, 3 98 , 87 0 1, 0 04 , 57 4 , 91 4 7 04 2 02 21 4 46 01 6 98 45 26 3 44 96 9 9 1 34 0 82 14 9 30 5, 8 23 , 9 56 30 0 , 37 2, 7 00 2 44 , 03 2 , 3 6 9 1 9 6, 7 20 , 14 6 12 9, 3 6 7, 5 50 3 0 % 4 3 % 53 % 75 % 96 %
O th er R eser v e 1 1 4, 0 61 , 07 4 84 , 0 00 , 00 0 24 0 00 00 0 2 40 0 00 00 24 00 00 0 0 24 0 00 00 0 3 0, 0 61 , 0 74 60 , 00 0, 0 0 0 - - - 3 6 % 25 0 % 0 % 0 % 0 %
A sse ts R ev alu at io n R ese r ves 3 9 2, 3 81 , 87 6 4 02 , 4 42 , 95 0 3 71 5 37 50 9 - - - ( 1 0, 0 61 , 0 74 ) 30 , 90 5, 4 4 1 3 71 , 53 7 , 5 0 9 - - -3 % 8 % - - -
R e ta ine d E ar n in gs 5 0 2, 3 70 , 54 4 4 33 , 1 09 , 91 8 48 8 90 84 5 39 98 4 16 41 27 7 96 10 5 6 80 4 90 85 7 6 9, 2 60 , 6 26 38 4 , 21 9, 0 73 ( 3 50 , 95 0, 7 9 6) 1 2 1, 8 80 , 58 5 19 7, 4 7 0, 1 99 1 6 % 78 6 % -8 8 % 44 % 2 45 %
To t al S ha re ho lde r s' E qui t y 6 ,4 3 3,5 9 9 ,5 64 5 ,6 64 ,4 7 9, 78 2 4 ,5 4 8, 95 0 ,5 68 3,9 2 0 ,0 11 ,4 8 6 2 ,8 65 ,4 1 0, 75 5 2 ,5 3 8,5 7 3 ,0 06 7 6 9,1 1 9 ,7 82 1,1 1 5 ,5 29 ,2 1 4 62 8 ,9 3 9,0 8 2 1 ,0 54 ,6 0 0 ,73 1 3 2 6 ,83 7 ,7 4 9 1 4% 2 5% 1 6% 3 7% 1 3 %
---
To t al L i abi l it i e s a nd E qui t y 16 1 ,8 2 2,9 7 6 ,8 45 1 2 9 ,7 33 ,1 7 3 ,08 8 91 ,0 1 2, 89 9 ,0 89 6 3,6 1 9 ,7 97 ,7 9 9 4 7 ,9 78 ,5 5 2, 95 2 3 1 ,2 3 9,3 9 3 ,4 18 32 ,0 8 9, 80 3 ,7 57 3 8,7 2 0 ,2 73 ,9 9 9 2 7 ,39 3 ,1 0 1,2 9 0 1 5 ,6 41 ,2 4 4 ,84 7 16 ,7 3 9 ,15 9 ,5 3 4 2 5% 4 3% 4 3% 3 3% 5 4 %
E xh ib i t - 4 .1
F IR ST SE C U RI TY IS L AM I BAN K L I MI T E D
CO M P ARAT IV E I NC OM E S T AT E M ENT
FOR T HEY E AR S- 20 1 3, 2 01 2, 2 01 1, 2 01 0 , 20 09 an d 2 00 8
C h an g es i n BDT C h an g es i n P e rce nt a ge
2 0 13 20 1 2 2 0 1 1 2 01 0 2 0 0 9 20 0 8 2 0 13 20 1 2 2 0 11 20 1 0 2 0 0 9 20 1 3 2 0 1 2 2 0 11 2 01 0 2 0 0 9
P art i cu la rs
BDT BD T BD T BDT BDT BDT BDT BD T BDT BD T BDT % % % % %
In ves t m ent s In com e 18 , 27 7, 6 86 , 53 1 1 3, 3 39 , 66 8, 7 30 8 , 74 7, 7 63 , 44 3 5, 5 47 , 04 7, 7 95 4 , 3 4 8, 67 4 , 5 5 3 3 , 14 1, 7 99 , 47 0 4, 9 38 , 01 7, 8 01 4 , 59 1, 9 05 , 28 7 3, 2 00 , 71 5, 6 48 1 , 19 8, 3 73 , 24 2 1 , 20 6, 8 75 , 08 3 37 . 02 % 52 . 49 % 5 7. 7 0% 2 7. 56 % 38 . 41 %

Pr e fit Pa id o n d ep os it s ( 14 , 59 7, 5 53 , 39 0) (1 0, 3 09 , 75 5, 4 93 ) ( 6 , 67 0, 9 51 , 22 0) ( 4, 1 25 , 82 6, 5 00 ) ( 3, 3 33 , 80 0, 3 67 ) (2 , 93 9, 1 55 , 77 9) ( 4, 2 87 , 79 7, 8 97 ) (3 , 63 8, 8 04 , 27 3) ( 2, 5 45 , 12 4, 7 20 ) ( 79 2, 0 26 , 13 3) ( 39 4, 6 44 , 58 8) 41 . 59 % 54 . 55 % 6 1. 6 9% 2 3. 76 % 13 . 43 %
Net I nv est men t In co me 3 ,6 8 0,1 3 3,1 4 1 3 ,02 9 ,9 13 ,2 37 2 ,0 76 ,8 1 2,2 2 3 1,4 2 1 ,22 1 ,29 5 1 ,0 14 ,8 74 ,1 8 6 2 0 2, 64 3 ,69 1 6 50 ,2 19 ,9 0 4 9 5 3,1 0 1 ,01 4 65 5 ,5 90 ,9 28 4 0 6 ,34 7 ,10 9 8 1 2,2 3 0,4 9 5 2 1 .4 6% 4 5. 89 % 4 6.1 3 % 40 .0 4% 4 0 0.8 %
In com e f r om In ves t m ent in s har e s a nd s ecur i tie s 23 5, 6 70 , 96 8 98 , 99 7, 1 29 8 1, 9 67 , 64 6 2 64 , 20 8, 0 27 5 3, 5 10 , 5 2 7 20 2, 3 45 , 83 4 1 36 , 67 3, 8 39 1 7, 0 29 , 48 3 ( 1 82 , 24 0, 3 81 ) 21 0 , 6 97 , 50 0 ( 14 8, 8 35 , 30 7) 1 38 . 06 % 20 . 78 % -6 8. 9 8% 3 9 3. 75 % - 73 . 55 %
Co m mu s s io n, E xcha nge and B r oke ra ge 32 6, 7 76 , 98 7 4 04 , 24 0, 2 45 40 3, 3 10 , 16 0 2 82 , 56 1, 9 56 19 4, 6 31 , 4 1 9 13 3, 3 84 , 18 4 ( 77 , 46 3, 2 58 ) 9 30 , 08 5 1 20 , 74 8, 2 04 8 7 , 9 30 , 53 7 6 1, 2 47 , 23 5 - 19 . 16 % 0 . 23 % 4 2. 7 3% 4 5. 18 % 45 . 92 %
O th er O p er ati ng I nco m e 16 7, 0 15 , 62 9 2 01 , 53 3, 3 44 17 3, 6 62 , 88 8 1 17 , 21 6, 6 60 6 4, 6 17 , 5 7 6 3 4, 4 09 , 25 0 ( 34 , 51 7, 7 15 ) 2 7, 8 70 , 45 6 56 , 44 6, 2 28 5 2 , 5 99 , 08 4 3 0, 2 08 , 32 6 - 17 . 13 % 16 . 05 % 4 8. 1 6% 8 1. 40 % 87 . 79 %
7 2 9,4 6 3 ,58 4 70 4 ,7 70 ,7 18 6 5 8,9 4 0,6 9 4 66 3 ,98 6 ,6 43 3 12 ,7 5 9,5 2 2 3 7 0, 13 9 ,26 8 24 ,6 9 2,8 6 6 4 5, 83 0 ,02 4 ( 5 ,0 45 ,9 49 ) 3 5 1 ,22 7 ,12 1 ( 5 7,3 7 9,7 4 6 ) 3 .5 0% 6 .96 % - 0.7 6 % 11 2 .3 0% -1 5 .50 %
T ot al Op era ti n g I nco me 4 ,4 0 9,5 9 6,7 2 5 3 ,73 4 ,6 83 ,9 55 2 ,7 35 ,7 5 2,9 1 7 2,0 8 5 ,20 7 ,93 8 1 ,3 27 ,6 33 ,7 0 8 5 7 2, 78 2 ,95 9 6 74 ,9 12 ,7 7 0 9 9 8,9 3 1 ,03 8 65 0 ,5 44 ,9 79 7 5 7 ,57 4 ,23 0 7 5 4,8 5 0,7 4 9 1 8 .0 7% 3 6. 51 % 3 1.2 0 % 57 .0 6% 1 3 1.8 %
Le ss : To ta l O per a tin g E xp ens es (2 , 38 3, 8 76 , 94 3) ( 1, 7 92 , 72 5, 3 52 ) ( 1 , 14 6, 1 91 , 07 0) ( 8 81 , 60 7, 2 07 ) (5 76 , 79 5, 9 59 ) ( 38 3, 1 79 , 20 6) (5 91 , 15 1, 5 91 ) ( 64 6, 5 34 , 28 2) ( 2 64 , 58 3, 8 63 ) ( 30 4, 8 11 , 24 8) ( 19 3, 6 16 , 75 3) 32 . 98 % 56 . 41 % 3 0. 0 1% 5 2. 85 % 50 . 53 %
P rof it b ef ore Pr ov isio n an d T ax 2 ,0 2 5,7 1 9,7 8 2 1 ,94 1 ,9 58 ,6 03 1 ,5 89 ,5 6 1,8 4 7 1,2 0 3 ,60 0 ,73 1 7 50 ,8 3 7,7 4 9 1 8 9, 60 3 ,75 3 83 ,7 6 1,1 7 9 3 5 2,3 9 6 ,75 6 38 5 ,9 61 ,1 16 4 5 2 ,76 2 ,98 2 5 6 1,2 3 3,9 9 6 4 .3 1% 2 2. 17 % 3 2.0 7 % 60 .3 0% 2 9 6.0 %
Le ss : To ta l Pr o vis io ns ( 49 6, 6 00 , 00 0) (4 40 , 09 5, 1 04 ) ( 36 9, 4 00 , 00 0) ( 2 20 , 00 0, 0 00 ) (1 04 , 00 0, 0 00 ) - ( 56 , 50 4, 8 96 ) (7 0, 6 95 , 10 4) ( 1 49 , 40 0, 0 00 ) ( 11 6, 0 00 , 00 0) ( 10 4, 0 00 , 00 0) 12 . 84 % 19 . 14 % 6 7. 9 1% 1 1 1. 54 % -
P rof it b ef ore T ax 1 ,5 2 9,1 1 9,7 8 2 1 ,50 1 ,8 63 ,4 99 1 ,2 20 ,1 6 1,8 4 7 98 3 ,60 0 ,7 31 6 46 ,8 3 7,7 4 9 1 8 9, 60 3 ,75 3 27 ,2 5 6,2 8 3 2 8 1,7 0 1 ,65 2 23 6 ,5 61 ,1 16 3 3 6 ,76 2 ,98 2 4 5 7,2 3 3,9 9 6 1 .8 1% 2 3. 09 % 2 4.0 5 % 52 .0 6% 2 4 1.2 %
Le ss : To ta l Ta x ( 76 0, 0 00 , 00 0) (7 40 , 00 0, 0 00 ) ( 64 0, 0 00 , 00 0) ( 4 35 , 00 0, 0 00 ) (3 20 , 00 0, 0 00 ) (8 5, 3 21 , 68 9) ( 20 , 00 0, 0 00 ) ( 10 0, 0 00 , 00 0) ( 2 05 , 00 0, 0 00 ) ( 11 5, 0 00 , 00 0) ( 23 4, 6 78 , 31 1) 2 . 70 % 15 . 63 % 4 7. 1 3% 3 5. 94 % 2 75 . 05 %
Net P ro fit a ft er T a x 7 6 9,1 1 9 ,78 2 76 1 ,8 63 ,4 99 5 8 0,1 6 1,8 4 7 54 8 ,60 0 ,7 31 3 26 ,8 3 7,7 4 9 1 0 4, 28 2 ,06 4 7 ,2 5 6,2 8 3 1 8 1,7 0 1 ,65 2 3 1 ,5 61 ,1 16 2 2 1 ,76 2 ,98 2 2 2 2,5 5 5,6 8 5 0 .9 5% 3 1. 32 % 5.7 5 % 67 .8 5% 2 1 3.4 %
R eta ine d E ar ni ng Br o ugh t F or w ar d f r om Pr e viou s Y ear 43 3, 1 09 , 91 8 3 71 , 65 1, 1 19 39 9, 8 40 , 64 1 2 77 , 96 1, 0 56 8 0, 4 90 , 8 5 7 1 4, 1 29 , 54 4 61 , 45 8, 7 99 (2 8, 1 89 , 52 2) 1 21 , 87 9, 5 85 19 7 , 4 70 , 19 9 6 6, 3 61 , 31 3 16 . 54 % -7 . 0 5 % 4 3. 8 5% 2 45 . 3 % 46 9. 7 %
1 ,2 0 2,2 2 9,7 0 0 1 ,13 3 ,5 14 ,6 18 9 8 0,0 0 2,4 8 8 82 6 ,56 1 ,7 87 4 07 ,3 2 8,6 0 6 1 1 8, 41 1 ,60 8 68 ,7 1 5,0 8 2 1 5 3,5 1 2 ,13 0 15 3 ,4 40 ,7 01 4 1 9 ,23 3 ,18 1 2 8 8,9 1 6,9 9 8 6 .0 6% 1 5. 66 % 1 8.5 6 % 10 2 .9% 2 4 4.0 %
A p pro p ria ti on s:
St atu to r y R es er ve 30 5, 8 23 , 95 6 3 00 , 37 2, 7 00 24 4, 0 32 , 36 9 1 96 , 72 0, 1 46 12 9, 3 67 , 5 5 0 3 7, 9 20 , 75 1 5 , 45 1, 2 56 5 6, 3 40 , 33 1 47 , 31 2, 2 23 6 7 , 3 52 , 59 6 9 1, 4 46 , 79 9 1 . 81 % 23 . 09 % 2 4. 0 5% 5 2. 06 % 24 1. 2 %
O th er R es er ve 2 0, 0 00 , 00 0 60 , 00 0, 0 00 - - - - ( 40 , 00 0, 0 00 ) 6 0, 0 00 , 00 0 - - - - 66 . 67 % - - - -
B on us Sh ar e I s s ued 37 4, 0 35 , 20 0 3 40 , 03 2, 0 00 36 4, 3 20 , 00 0 2 30 , 00 0, 0 00 - - 34 , 00 3, 2 00 (2 4, 2 88 , 00 0) 1 34 , 32 0, 0 00 23 0 , 0 00 , 00 0 - 10 . 00 % -6 . 6 7 % 5 8. 4 0% - -
T ot al A p pro p ria ti on s 69 9, 8 59 , 15 6 7 00 , 40 4, 7 00 60 8, 3 52 , 36 9 4 26 , 72 0, 1 46 12 9, 3 67 , 5 5 0 3 7, 9 20 , 75 1 ( 54 5, 5 44 ) 9 2, 0 52 , 33 1 1 81 , 63 2, 2 23 29 7 , 3 52 , 59 6 9 1, 4 46 , 79 9 -0 . 08 % 15 . 13 % 4 2. 5 6% 2 29 . 9 % 24 1. 2 %
R eta ine d E ar ni ng s Car r ie d F or wa rd 5 0 2,3 7 0 ,54 4 43 3 ,1 09 ,9 18 3 7 1,6 5 0,1 1 9 39 9 ,84 1 ,6 41 2 77 ,9 6 1,0 5 6 8 0 ,49 0 ,85 7 69 ,2 6 0,6 2 6 6 1, 45 9 ,79 9 (2 8 ,1 91 ,5 22 ) 1 2 1 ,88 0 ,58 5 1 9 7,4 7 0,1 9 9 1 5 .9 9% 1 6. 54 % - 7.0 5 % 43 .8 5% 2 4 5.3 %
Ea rn in gs P e r Sh are ( EP S) 1 .87 1 .8 5 1 .71 2 .3 3 1.4 2 7 .35 0.0 2 0 .15 ( 0 .6 2) 0 .9 0 ( 5.9 3 ) 0 .9 5% 8 .53 % - 26 .6 4 % 63 .6 6% -8 0 .67 %
E xh ib it - 4.2
. .
4.3: Horizontal Analysis

In horizontal analysis, we analyze the financial statement data across time
period. For that we use comparative financial statements and observe the
changes in both money amount and percentage of data across the years.
Following two formulas are used in comparative financial statements
analysis:
Taka amount change = Analysis period amount - Base period amount
(%) = - ×
These statements generally include comparative balance sheet and

comparative income statement for horizontal analysis. Here base period
amount refers the previous period’s amount. For example year 2012 is the
base period for year 2013 and 2011 is for 2012.
4.3.1: Comparative Balance Sheet Analysis

Exhibit -4.1 shows the comparative balance sheet of FSIBL and it also
represents the changes in both taka amount and percentage of items of the
statement over year 2009-2013. I have just used the major lines or bold
lines of the comparative balance sheet of FSIBL for analysis.
40,000,000,000
35,000,000,000
All amount in BDT
30,000,000,000
25,000,000,000
20,000,000,000
15,000,000,000
10,000,000,000
5,000,000,000
-
2009 2010 2011 2012 2013
Current Assets 1,838,355, 1,385,144, 9,563,782, 11,553,408 10,768,118
Fixed Assets 14,900,803 14,256,100 17,829,318 27,166,865 21,321,685
Current Liabilities 16,412,321 14,586,644 26,733,048 35,217,283 31,059,470
Long-Term Liabilities 31,114,000 2,387,460, 261,213,87
Exhibit -4.3: BDT Changes over the Years Percentage Changes over the
Years in Balance Sheet items
. .
Interpretation: From Exhibit -4.3, it is appeared that all assets and

liabilities were decreased from year 2009 to 2010, because at that perio d
great economic recession were arrived in the world. For that reason the
investments and deposits of FSIBL were decreased. But in 2011 both assets
and liabilities were increasing and that trend was stable to 2012 and in
2013 the indexes were dropped again. That refers the bank is being matured
from growing position. On the other hand, current liability is higher than
current asset which refers FSIBL’s deposit collection is increasing
significantly than loan sanctioning. Fixed asset is higher than a current asset
which means the bank has invested for its expansion and invested more for
long term loans. From 2011 the bank starts to take long-term liabilities.
First Security Islami Bank Limited

Percentage Changes in Comparative Balance Sheet
Particulars 2013 2012 2011 2010 2009

%%%%%
Current Assets 36% 64% 111% 19% 34%
Fixed Assets 21% 37% 32% 35% 58%
Total Assets 25% 43% 43% 33% 54%
Current Liabilities 26% 41% 45% 32% 57%
Long-Term Liabilities 11% 7673% - - -
Total Liabilities 25% 43% 45% 32% 57%
Total Shareholders' Equity 14% 25% 16% 37% 13%
Total Liabilities and Equity 25% 43% 43% 33% 54%
Exhibit -4.4: Percentage Changes over the Years of Balance Sheet items
Interpretation: Both assets and liabilities were higher at percentage of

54% in 2009 but it dropped to 33% in 2010. From year 2011 the percentage
was increased to 43% than previous year and in 2011 current asset is
significantly increased to 111%. It indicates FSIBL has efficiently recovered
the losses of the year 2010 and made a sustainable and positive flow in asset
generating. In year 2012 FSIBL’s long-term liability was greatly increased by
issuing subordinated bond and placement from financial institutions. In
2013 FSIBL could not grip its sustainability and the percentage was fell
down to 25% in total asset and liability.
From the comparative balance sheet discussion it seems that FSIBL’s
operations staying on an unstable position.
. .
4.3.2: Comparative Income Statement Analysis
Exhibit -4.2 shows the comparative income statement of FSIBL and it also
shows the changes in both taka amount and percentage of particulars of the
statement over year 2009-2013. So, one can easily understand the changes
of every element of the statement. Here I have illustrated only the total
operating income and net profit after tax. Identifying the changes in
operating income and net profit is the main objective for a bank’s income
statement analysis. Based on operating income and net profit the
management makes policy and investors make investment decisions .
1,200,000,000
All amount in BDT
998,931,038
1,000,000,000
800,000,000 754,850,749 757,574,230

650,544,979 674,912,770
600,000,000
400,000,000
222,555,685 221,762,982
181,701,652
200,000,000
31,561,116 7,256,283
-
2009 2010 2011 2012 2013
Total Operating Income Net Profit after Tax
Exhibit -4.5: BDT Changes over the Years in CIS
Interpretation: From exhibit -4.5, it is seemed that in years 2009 and 2010
both total operating income and net profit were increased compare to the
previous year’s operating income and net profit, and the trend of these
increments were almost same. But, in 2011 FSIBL couldn’t hold the speed of
increment comparing the previous years. In 2011 increment is poor than
previous year and the different between total operating income and net
profit is high than previous year. The increment of total operating income in
2012 is significant which has broken all the previous years’ records, but the
net profit was not increased by balancing with the operating income. In
. .
2013 the increment has become slow again. The high to low increment
indicates FSIBL is going to mature stage from growth stage. This lower
increment in 2012 and 203 not means that the bank’s income and profit is
decreased, because it shows the changes from one year to another year in
operating income and net profit.
Now, I illustrate the percentage changes of total operating income and net
profit over the years.
250.0%
200.0%
150.0%
100.0%
50.0%
0.0%
2009 2010 2011 2012 2013
Total Operating Income 131.8% 57.06% 31.20% 36.51% 18.07%
Net Profit after Tax 213.4% 67.85% 5.75% 31.32% 0.95%
Exhibit -4.6: Percentage Changes over the Years of CIS Items
Interpretation: In exhibit -4.6, it is appeared that the indexes are

downward from 2009 to 2011. It refers the net increment from one year to
another year is reducing but not in total. Net increment or changes in total
operating income fro m 2008 to 2009 is 131.8%, from 2009 to 2010 is
57.06%, from 2010 to 2011 is 31.20%, from 2011 to 2012 is 36.51% and
from 2012 to 2013 is 18.07%. On the other hand, the net profit changes
from 2008 to 2009 is 213.4%, from 2009 to 2010 is 67.85%, from 2010 to
2011 is 5.75%, from 2011 to 2012 is 31.32% and 2012 to 2013 is 0.95%. In
2010 net profit was increased 67.85% on total operating income of 57.06%;
it indicates FSIBL’s non-operating expenses were less at that period but in
2011 net profit was increased only 5.75% on total operating income of
31.20%, it indicates in the period FSIBL’s non-operating expenses were
. .
increased more compare to previous year. In 2012 the increment in both

total operating income and net profit were increased compare to previous
year, the index dropped again in 2013. The fluctuation of the growth of net
increment is was high from 2009 to 2011 and the fluctuation rate was slow
from 2011 to 203, it means the bank is going to a mature stage.
To make clearer about total operating income and net profit of FSIBL I have
used actual data from the income statement, and illustrate them again.
5,000,000,000
All amount in BDT 4,409,596,725
4,500,000,000
4,000,000,000 3,734,683,955
3,500,000,000
3,000,000,000 2,735,752,917
2,500,000,000 2,085,207,938
2,000,000,000
1,500,000,000 1,327,633,708
1,000,000,000
500,000,000 326,837,749 548,600,731 580,161,847 761,863,499 769,119,782
-
2009 2010 2011 2012 2013
Total Operating Income Net Profit after Tax
Exhibit -4.7: Total Operating Income and Net Profit over the Years
Interpretation: Exhibit -4.7 presents the total operating income and net
profit from FSIBL’s income statements. It does not show the net changes in
operating income and net profit. In the graph is has seemed that both
operating income and net profit are increase year by year. So, it indicates
FSIBL is progressing in its operation and profit generation.
So, we cannot tell FSIBL is doing bad or good in operation by seeing the net
changes of total operating income and net profit over the years. Net changes
may be increased or decreased but it cannot be said that a bank is not in
stable or growing position at any year until a negative figure is arise.
. .
4.3.3: Trend Analysis

Trend analysis is a form of horizontal analysis. In involves computing trend
percent for a series of financial numbers and is a variation on the use of
percentage changes. In trend analysis, base period refers only one
successive period, not the previous period of analysis period. Trend analysis
is generally used for income statements analysis. Following formula is used
for trend analysis:
(%) = ×
Here I have analyzed the trend of FSIBL’s income and expenses. So I have
used the bank’s income statements. I have used 2008 as base period (year)
for the following five years. Exhibit -4.8 is used for trend analysis.
FIRST SECURITY ISLAMI BANK LIMITED
COMPARATIVE INCOME STATEMENT
F OR TH E YE ARS - 2 0 13 , 2 0 12 , 2 0 11 , 2 01 0 , 2 00 9 a nd 20 0 8
Percentage Changes
2013 2012 2011 2010 2009 2008 2013 2012 2011 2010 2009
Particulars
BDT BDT BDT BDT BDT BDT % % % % %
I nv es tm en ts In c o me 18 ,2 7 7 ,6 86 ,5 3 1 1 3, 33 9 ,6 6 8, 73 0 8 ,7 4 7 ,7 63 ,4 4 3 5 ,5 47 ,0 4 7 ,7 95 4, 34 8 ,6 7 4, 55 3 3 ,1 4 1, 79 9 ,4 7 0 5 8 1. 76 % 4 2 4. 5 9% 2 7 8 .4 3% 1 7 6 .5 6% 1 3 8 .4 1%
P r efi t P ai d on de po s i ts ( 14 , 59 7 ,5 53 , 39 0 ) ( 1 0, 3 09 ,7 5 5, 4 93 ) (6 ,6 7 0 ,9 51 ,2 2 0 ) ( 4 ,1 25 , 82 6 ,5 00 ) ( 3, 33 3 ,8 0 0, 36 7 ) (2 ,9 3 9, 15 5 ,7 7 9) 4 9 6. 66 % 3 5 0. 7 7% 2 2 6 .9 7% 1 4 0 .3 7% 1 1 3 .4 3%
N e t I nve st me nt Inc om e 3 ,6 8 0 , 1 3 3 ,1 4 1 3 , 0 2 9 ,9 1 3 , 2 3 7 2 ,0 7 6 , 8 1 2 ,2 2 3 1 , 4 2 1 ,2 2 1 , 2 9 5 1 , 0 14 , 8 7 4 ,1 8 6 2 0 2 , 6 4 3 ,6 9 1 1 8 1 6 . 0 6% 1 4 9 5 . 1 9 % 1 0 2 4 . 8 6 % 7 0 1 . 3 4 % 5 0 0 . 8 2 %
I nc o me fr om I nv es tm en t in sh ar es an d s ec u r it i es 2 3 5 ,6 70 ,9 6 8 9 8 ,9 9 7, 12 9 8 1, 9 67 ,6 4 6 2 64 ,2 0 8 ,0 27 5 3 ,5 10 , 52 7 2 0 2, 34 5 ,8 3 4 1 1 6. 47 % 4 8. 9 2% 4 0 .5 1% 1 3 0 .5 7% 2 6 .4 5%
C o mm u ss i o n, E xc h an ge an d Br o ke ra ge 3 2 6 ,7 76 ,9 8 7 40 4 ,2 4 0, 24 5 4 0 3, 3 10 ,1 6 0 2 82 ,5 6 1 ,9 56 19 4 ,6 31 , 41 9 1 3 3, 38 4 ,1 8 4 2 4 4. 99 % 3 0 3. 0 6% 3 0 2 .3 7% 2 1 1 .8 4% 1 4 5 .9 2%
O th er O pe ra ti ng In c o me 1 6 7 ,0 15 ,6 2 9 20 1 ,5 3 3, 34 4 1 7 3, 6 62 ,8 8 8 1 17 ,2 1 6 ,6 60 6 4 ,6 17 , 57 6 3 4, 40 9 ,2 5 0 4 8 5. 38 % 5 8 5. 7 0% 5 0 4 .7 0% 3 4 0 .6 5% 1 8 7 .7 9%
7 2 9 , 4 6 3 ,5 8 4 7 0 4 ,7 7 0 , 7 1 8 6 5 8 , 9 4 0 ,6 9 4 6 6 3 ,9 8 6 , 6 4 3 3 12 , 7 5 9 ,5 2 2 3 7 0 , 1 3 9 ,2 6 8 1 9 7 . 08 % 1 9 0 . 4 1 % 1 7 8 . 0 3 % 1 7 9 . 3 9 % 8 4 . 5 0 %
T o ta l O pera ti ng Inco m e 4 ,4 0 9 , 5 9 6 ,7 2 5 3 , 7 3 4 ,6 8 3 , 9 5 5 2 ,7 3 5 , 7 5 2 ,9 1 7 2 , 0 8 5 ,2 0 7 , 9 3 8 1 , 3 27 , 6 3 3 ,7 0 8 5 7 2 , 7 8 2 ,9 5 9 7 6 9 . 85 % 6 5 2 . 0 2 % 4 7 7 . 6 2 % 3 6 4 . 0 5 % 2 3 1 . 7 9 %
L es s : T o tal Op er ati n g Ex pe ns e s (2 , 38 3 ,8 76 , 94 3 ) ( 1, 7 92 ,7 2 5, 3 52 ) (1 ,1 4 6 ,1 91 ,0 7 0 ) ( 8 81 ,6 0 7 ,2 07 ) ( 57 6 ,7 95 , 95 9 ) (3 8 3, 17 9 ,2 0 6) 6 2 2. 13 % 4 6 7. 8 6% 2 9 9 .1 3% 2 3 0 .0 8% 1 5 0 .5 3%
P rof it b efo re Pr ov isio n and Ta x 2 ,0 2 5 , 7 1 9 ,7 8 2 1 , 9 4 1 ,9 5 8 , 6 0 3 1 ,5 8 9 , 5 6 1 ,8 4 7 1 , 2 0 3 ,6 0 0 , 7 3 1 7 50 , 8 3 7 ,7 4 9 1 8 9 , 6 0 3 ,7 5 3 1 0 6 8 . 4 0% 1 0 2 4 . 2 2 % 8 3 8 . 3 6 % 6 3 4 . 8 0 % 3 9 6 . 0 0 %
L es s : T o tal Pr o vi s i on s (4 9 6 ,6 00 ,0 0 0 ) ( 44 0 ,0 9 5, 10 4 ) (3 6 9 ,4 00 ,0 0 0 ) ( 2 20 ,0 0 0 ,0 00 ) ( 10 4 ,0 00 , 00 0 ) - - - - - -
P rof it b efo re T ax 1 ,5 2 9 , 1 1 9 ,7 8 2 1 , 5 0 1 ,8 6 3 , 4 9 9 1 ,2 2 0 , 1 6 1 ,8 4 7 9 8 3 ,6 0 0 , 7 3 1 6 46 , 8 3 7 ,7 4 9 1 8 9 , 6 0 3 ,7 5 3 8 0 6 . 48 % 7 9 2 . 1 1 % 6 4 3 . 5 3 % 5 1 8 . 7 7 % 3 4 1 . 1 5 %
L es s : T o tal T ax (7 6 0 ,0 00 ,0 0 0 ) ( 74 0 ,0 0 0, 00 0 ) (6 4 0 ,0 00 ,0 0 0 ) ( 4 35 ,0 0 0 ,0 00 ) ( 32 0 ,0 00 , 00 0 ) ( 8 5, 32 1 ,6 8 9) 8 9 0. 75 % 8 6 7. 3 1% 7 5 0 .1 0% 5 0 9 .8 4% 3 7 5 .0 5%
N e t P ro fit aft e r Ta x 7 6 9 , 1 1 9 ,7 8 2 7 6 1 ,8 6 3 , 4 9 9 5 8 0 , 1 6 1 ,8 4 7 5 4 8 ,6 0 0 , 7 3 1 3 26 , 8 3 7 ,7 4 9 1 0 4 , 2 8 2 ,0 6 4 7 3 7 . 54 % 7 3 0 . 5 8 % 5 5 6 . 3 4 % 5 2 6 . 0 7 % 3 1 3 . 4 2 %
R etai n ed E ar n i n g Br o u gh t F or wa rd fro m P r evi o us Y ear 4 3 3 ,1 09 ,9 1 8 37 1 ,6 5 1, 11 9 3 9 9, 8 40 ,6 4 1 2 77 ,9 6 1 ,0 56 8 0 ,4 90 , 85 7 1 4, 12 9 ,5 4 4 30 6 5. 28 % 26 3 0. 31 % 28 2 9. 8 2% 19 6 7. 2 3% 5 6 9 .6 6%
1 ,2 0 2 , 2 2 9 ,7 0 0 1 , 1 3 3 ,5 1 4 , 6 1 8 9 8 0 , 0 0 2 ,4 8 8 8 2 6 ,5 6 1 , 7 8 7 4 07 , 3 2 8 ,6 0 6 1 1 8 , 4 1 1 ,6 0 8 1 0 1 5 . 3 0% 9 5 7 . 2 7 % 8 2 7 . 6 2 % 6 9 8 . 0 4 % 3 4 3 . 9 9 %
A ppro pria tio ns:
S tatu to r y Res er ve 3 0 5 ,8 23 ,9 5 6 30 0 ,3 7 2, 70 0 2 4 4, 0 32 ,3 6 9 1 96 ,7 2 0 ,1 46 12 9 ,3 67 , 55 0 3 7, 92 0 ,7 5 1 8 0 6. 48 % 7 9 2. 1 1% 6 4 3 .5 3% 5 1 8 .7 7% 3 4 1 .1 5%
O th er Re s er ve 2 0 ,0 00 ,0 0 0 6 0 ,0 0 0, 00 0 - - - - - - - - -
Bo n us Sh ar e Is s ued 3 7 4 ,0 35 ,2 0 0 34 0 ,0 3 2, 00 0 3 6 4, 3 20 ,0 0 0 2 30 ,0 0 0 ,0 00 - - - - - - -
T o ta l A ppropr iat io ns 6 9 9 ,8 59 ,1 5 6 70 0 ,4 0 4, 70 0 6 0 8, 3 52 ,3 6 9 4 26 ,7 2 0 ,1 46 12 9 ,3 67 , 55 0 3 7, 92 0 ,7 5 1 18 4 5. 58 % 18 4 7. 02 % 16 0 4. 2 7% 11 2 5. 2 9% 3 4 1 .1 5%
R etai n ed E ar n i n gs C ar r i ed F or wa rd 5 0 2 , 3 7 0 ,5 4 4 4 3 3 ,1 0 9 , 9 1 8 3 7 1 , 6 5 0 ,1 1 9 3 9 9 ,8 4 1 , 6 4 1 2 77 , 9 6 1 ,0 5 6 8 0 , 4 9 0 ,8 5 7 6 2 4 . 13 % 5 3 8 . 0 9 % 4 6 1 . 7 3 % 4 9 6 . 7 5 % 3 4 5 . 3 3 %
E a rning s Pe r S h ar e (E PS ) 1 .8 7 1 . 8 5 1 .7 1 1 . 6 1 1 4 .2 1 7 . 3 5 2 5 . 43 % 2 5 . 1 9 % 2 3 . 2 1 % 2 1 . 9 5 % 1 9 3 . 3 4 %
Exhibit -4.8
. .
From exhibit -4.8, I have used the data of total operating income, total
operating expenses and net profit. I have took the percent changes from
exhibit -4.8 and put them in a line graph to sho w the trend of total operating
income, total operating expenses and net profit of FSIBL.
900.00%
800.00%
700.00%
600.00%
500.00%
400.00%
300.00%
200.00%
100.00%
0.00%
2009 2010 2011 2012 2013
Total Operating Income 231.79% 364.05% 477.62% 652.02% 769.85%
Total Operating Expenses 150.53% 230.08% 299.13% 467.86% 622.13%
Net Profit 313.42% 526.07% 556.34% 730.58% 737.54%
Exhibit -4.9: Trend Analysis of Income and Expenses

Interpretation: Exhibit -4.9 shows the trend percent of total operating
income, total expenses and net profit from exhibit -4.8 in line graph. It
reveals that the trend line for total operating income consistently exceeds
the total operating expenses. Moreover that magnitude of the difference has
consistently grown. This result bodes well for FSIBL because its operating
expenses are not much increased than its operating income. The bank shows
an ability to control its expenses as expands. On the other hand, the trend
line for net profit exceeds the total operating income in all years except
2013 because net profit is increased more rapidly than total operating
income. That indicates FSIBL has expertly minimized its non-operating
expenses and increased the revenues. The line graph also reveals a
consistent increase in each of these accounts over the years, which is a
typical of high growth company. So, it is clear that FSIBL is in growing
position.
. .
4.4: Vertical Analysis

Vertical analysis is a tool to evaluate individual financial statement items or
a group of items on term of specific based amount. We usually define a key
aggregate figure as the base, which for a bank’s income statement is total
income or revenue income and for a balance sheet is usually total assets.
Vertical analysis is required common-size statements. So, for vertical
analysis of FSIBL’s financial statements I have prepared its common-size
income statements and common-size balance sheets for five years. The
common-size statements of FSIBL are prepared by using the following
formula.
- (%) = ×
I use common-size statements of FSIBL to reveal the changes in the relative

importance of each financial statement items. All individual amounts in
common-size statements are redefined in terms of common-size
percentages. The common-size balance sheets and income statements are
shown comparatively from 2009 to 2013 in exhibit -4.10 and exhibit -4.11
accordingly.
COMMON-SIZE COMPARATIVE BALANCE SHEET
FOR THE YEARS- 2013, 2012, 2011, 2010 and 2009
Common-size Percent
2013 2012 2011 2010 2009 2013 2012 2011 2010 2009
Particulars
BDT BDT BDT BDT BDT % % % % %
PROPERTY AND ASSETS
Current Assets 40,473,177,156 29,705,058,836 18,151,650,528 8,587,867,603 7,202,722,793 25.01% 22.90% 19.94% 13.50% 15.01%
Cash 11,549,381,969 10,528,144,967 7145564652 4857542203 5033532439 7.14% 8.12% 7.85% 7.64% 10.49%
Balance With Bank and Financial Institutions 14,379,093,084 10,785,716,061 5699804595 1036199077 731150321 8.89% 8.31% 6.26% 1.63% 1.52%
Investments in Shares & Securities 2,723,632,786 3,187,223,270 1630019092 524937861 241026032 1.68% 2.46% 1.79% 0.83% 0.50%
Other Assets 11,821,069,317 5,203,974,538 3676262189 2169188462 1197014001 7.30% 4.01% 4.04% 3.41% 2.49%
Fixed Assets 121,349,799,689 100,028,114,252 72,861,248,561 55,031,930,196 40,775,830,159 74.99% 77.10% 80.06% 86.50% 84.99%
Investments in Shares & Securities 4,271,569,450 1,726,169,450 2414569450 2334416700 1673477998 2.64% 1.33% 2.65% 3.67% 3.49%
Investments 114,601,798,177 96,304,228,588 69467328284 52123903164 38725874774 70.82% 74.23% 76.33% 81.93% 80.71%
Fixed Assets Including Premises, Furniture & Fixtures 2,476,432,062 1,997,716,214 979350827 573610332 376477387 1.53% 1.54% 1.08% 0.90% 0.78%
Total Assets 161,822,976,845 129,733,173,088 91,012,899,089 63,619,797,799 47,978,552,952 100.00% 100.00% 100.00% 100.00% 100.00%
LIABILITIES AND CAPITAL
Liabilities:
Current Liabilities 152,709,588,439 121,650,118,339 86,432,834,521 59,699,786,313 45,113,142,197 94.37% 93.77% 94.97% 93.84% 94.03%
Placement from Banks & Other Financial Institutions 3,950,000,000 4,400,000,000 3200000000 - - 2.44% 3.39% 3.52% 0.00% 0.00%
Deposits and Other Accounts 139,520,955,783 109,905,568,871 78145045008 56344959167 42423092722 86.22% 84.72% 85.86% 88.57% 88.42%
Other Liabilities 9,238,632,656 7,344,549,468 5087789513 3354827146 2690049475 5.71% 5.66% 5.59% 5.27% 5.61%
Long-Term Liabilities 2,679,788,842 2,418,574,967 31,114,000 - - 1.66% 1.86% 0.03% 0.00% 0.00%
Placement from Banks & Other Financial Institutions 179,788,842 198,574,967 31114000 - - 0.11% 0.15% 0.03% 0.00% 0.00%
Mudaraba Subordinated Bond 2,500,000,000 2,220,000,000 - - - 1.54% 1.71% 0.00% 0.00% 0.00%
Total Liabilities 155,389,377,281 124,068,693,306 86,463,948,521 59,699,786,313 45,113,142,197 96.02% 95.63% 95.00% 93.84% 94.03%
Capital/ Shareholders' Equity
Paid-up Capital 4,114,387,200 3,740,352,000 3400320000 3036000000 2300000000 2.54% 2.88% 3.74% 4.77% 4.79%
Statutory Reserve 1,310,398,870 1,004,574,914 704202214 460169845 263449699 0.81% 0.77% 0.77% 0.72% 0.55%
Other Reserve 114,061,074 84,000,000 24000000 24000000 24000000 0.07% 0.06% 0.03% 0.04% 0.05%
Assets Revaluation Reserves 392,381,876 402,442,950 371537509 - - 0.24% 0.31% 0.41% 0.00% 0.00%
Retained Earnings 502,370,544 433,109,918 48890845 399841641 277961056 0.31% 0.33% 0.05% 0.63% 0.58%
Total Shareholders' Equity 6,433,599,564 5,664,479,782 4,548,950,568 3,920,011,486 2,865,410,755 3.98% 4.37% 5.00% 6.16% 5.97%
Total Liabilities and Equity 161,822,976,845 129,733,173,088 91,012,899,089 63,619,797,799 47,978,552,952 100.00% 100.00% 100.00% 100.00% 100.00%
Exhibit -4.10
COMMON-SIZE COMPARATIVE INCOME STATEMENT
F OR THE Y E ARS- 2 01 3 , 2 01 2 , 20 1 1 , 20 1 0 an d 2 0 0 9
Common-size Percent
2013 2012 2011 2010 2009 2 0 1 3 20 1 2 20 1 1 20 1 0 2 00 9
Particulars
BDT BDT BDT BDT BDT %%%%%
Revenues
I nv es tm en ts In c o me 18,277,686,531 13,339,668,730 8,747,763,443 5,547,047,795 4,348,674,553 96.16% 94.98% 92.99% 89.31% 93.29%
I nc o me fr om I nv es tm en t in sh ar es an d s ec u r it i es 235,670,968 98,997,129 81,967,646 264,208,027 53,510,527 1.24% 0.70% 0.87% 4.25% 1.15%
C o mm u ss i o n, E xc h an ge an d Br o ke ra ge 326,776,987 404,240,245 403,310,160 282,561,956 194,631,419 1.72% 2.88% 4.29% 4.55% 4.18%
O th er O pe ra ti ng In c o me 167,015,629 201,533,344 173,662,888 117,216,660 64,617,576 0.88% 1.43% 1.85% 1.89% 1.39%
Total Revenue 19,007,150,115 14,044,439,448 9,406,704,137 6,211,034,438 4,661,434,075 100.00% 100.00% 100.00% 100.00% 100.00%
Less: Operating Expenses
P r efi t P ai d on de po s i ts 14,597,553,390 10,309,755,493 6,670,951,220 4,125,826,500 3,333,800,367 76.80% 73.41% 70.92% 66.43% 71.52%
Other Operating Expenses 2,383,876,943 1,792,725,352 1,146,191,070 881,607,207 576,795,959 12.54% 12.76% 12.18% 14.19% 12.37%
T o ta l O pera ti ng Ex pe nses 16,981,430,333 12,102,480,845 7,817,142,290 5,007,433,707 3,910,596,326 89.34% 86.17% 83.10% 80.62% 83.89%
Income from Operation 2,025,719,782 1,941,958,603 1,589,561,847 1,203,600,731 750,837,749 10.66% 13.83% 16.90% 19.38% 16.11%
Less: Non-operating Expenses

Provisions 496,600,000 440,095,104 369,400,000 220,000,000 104,000,000 2.61% 3.13% 3.93% 3.54% 2.23%
Total Tax 760,000,000 740,000,000 640,000,000 435,000,000 320,000,000 4.00% 5.27% 6.80% 7.00% 6.86%
Total Non-operating Expenses 1,256,600,000 1,180,095,104 1,009,400,000 655,000,000 424,000,000 6.61% 8.40% 10.73% 10.55% 9.10%
Net Profit 769,119,782 761,863,499 580,161,847 548,600,731 326,837,749 4.05% 5.42% 6.17% 8.83% 7.01%
Exhibit -4.11
. .
4.4.1: Common-size Balance Sheets Analysis
Exhibit -4.10 shows common-size comparative balance sheets for FSIBL. Some
relations that stand out on both a magnitude and percent are shown in column
graph.
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2009 2010 2011 2012 2013
Investments in Businesses 80.71% 81.93% 76.33% 74.23% 70.82%
Deposits and Other Accounts 88.42% 88.57% 85.86% 84.72% 86.22%
Long-Term Liabilities 0.00% 0.00% 0.03% 1.86% 1.66%
Fixed Assets 0.78% 0.90% 1.08% 1.54% 1.53%
Cash 10.49% 7.64% 7.85% 8.12% 7.14%
Exhibit -4.12: Common-size Comparative Balance Sheets Analysis
Interpretation: Exhibit -4.12 shows investment in businesses is increased from

80.71% to 81.93% in the period of 2019-2010, decreased from 81.93% to
76.33% within 2010-2011, decreased from 76.33% to 74.23% within 2011-
2012 and decreased from 74.23% to 70.82% in the period of 2012-2013. This
trend indicates the bank efficiently recovering its invested money. Deposits are
fluctuating from 84.72% to 88.57%, it refers the bank is able to collect enough
deposit from customers and more than 84% of its investment are financed by
deposit accounts. The bank’s fixed assets and long-term liabilities are remained
less than 2% across 2009-2013 that means the FSIBL does not keep idle asset.
Cash is decreased from 10.49% to 7.64%, increased fro m 7.64% to 7.85%,
increased from 7.85% to 8.12% and decreased from 8.12% to 7.14% across the
years 2009-2013 consequently, that states FSIBL maintain adequate cash to
meet immediate needs according to requirement of Bangladesh Bank. Thus,
FSIBL is efficiently maintaining its assets and liabilities and largest part of its
asset is covered by investment in businesses which is main purpose of a bank,
. .
and largest portion of its liabilities is covered by deposit from customers which
is the most important source of fund for a bank.
It is the matter to discuss how much portion is covered by a particular asset

from total asset. To understand the share of each particular asset, the percent
from Exhibit -4.10 are shown in the following column graph.
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
2009 2010 2011 2012 2013
Cash 10.49% 7.64% 7.85% 8.12% 7.14%
Balance With Bank and
Financial Institutions 1.52% 1.63% 6.26% 8.31% 8.89%
Investments in Shares &
Securities2 0.50% 0.83% 1.79% 2.46% 1.68%
Other Assets (Current) 2.49% 3.41% 4.04% 4.01% 7.30%
Investments in Shares &
Securities (Fixed) 3.49% 3.67% 2.65% 1.33% 2.64%
Investments in Businesses 80.71% 81.93% 76.33% 74.23% 70.82%
Fixed Assets (Premises,
Furniture & Fixtures) 0.78% 0.90% 1.08% 1.54% 1.53%
Exhibit -4.13: Portion of a Particular Asset on Total Asset
Interpretation: It is apparent from exhibit -4.13; the largest portion of total

asset of FSIBL is covered by investment in businesses which is the key source of
income for a bank. Second large area is covered by cash from 7.14% to 10.49%
for maintaining adequate liquidity to meet instant needs and to o perate regular
activities. Fixed assets including premises, furniture and Fixtures are covering
the smallest portion covering 0.78% to 1.54% of total assets. Long-term
. .
investment provides high profit. From this view point FSIBL has well form to
generate profits.
Here, I have discussed about the proportion of particular liabilities and equity
in the perspective of total liabilities and equity. So, by using the percent related
to liabilities and equity from Exhibit -4.10 following column graph is drawn.
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2009 2010 2011 2012 2013
Placement from Banks &
Financial Institutions (Current) 0.00% 0.00% 3.52% 3.39% 2.44%
Deposits and Other Accounts 88.42% 88.57% 85.86% 84.72% 86.22%
Other Liabilities (Current) 5.61% 5.27% 5.59% 5.66% 5.71%
Placement from Banks &
Financial Institutions (Fxied) 0.00% 0.00% 0.03% 0.15% 0.11%
Mudaraba Subordinated Bond 0.00% 0.00% 0.00% 1.71% 1.54%
Shareholders' Equity 5.97% 6.16% 5.00% 4.37% 3.98%
Exhibit -4.14: Portion of Particular Liability and Equity on Total Liabilities and
Equity
Interpretation: Exhibit -4.14 shows that FSIBL’s short-term liabilities are more
than long-term liabilities where the largest portion is covered by deposit
accounts. Deposits accounts fluctuate from 84.72% to 88.57% on total liabilities
and equity across the five years from 2009 to 2013. It indicates FSIBL collets
enough deposits from customers and successfully holds its customers or
depositors. FSIBL maintains a little amount of long-term liabilities. It borrowed
. .
from bank and other financial institutions at 0.03% on total liabilities and
equity in 2011, 0.15% in 2012 and 0.11% in 2013 as long-term liabilities, and
borrowed 3.52% in 2011, 3.39% in 2012 and 2.44% in 2013 as short-term
liabilities. FSIBL collects fund by issuing subordinated bond in 2012 at 1.71%
and in 2013 at 1.54%. It refers FSIBL try to maintain low long-term liabilities
and meet the debt from other banks and financial institutions.
4.4.2: Common-size Income Statements Analysis
In commo n-size income statement, total revenue is usually the based amount
which is assigned a value of 100%. Each common-size income statement item
appears as a percent of total revenue. Exhibit -4.11 shows common-size
comparative income statements for each taka of FSIBL’s revenues. By using the
data from the statement, following column graph is drawn.
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2009 2010 2011 2012 2013
Net Profit 7.01% 8.83% 6.17% 5.42% 4.05%
Tax 6.86% 7.00% 6.80% 5.27% 4.00%
Provisions 2.23% 3.54% 3.93% 3.13% 2.61%
Operating Expenses 83.89% 80.62% 83.10% 86.17% 89.34%
Exhibit -4.15: Vertical Analysis of Common-size Comparative Income

Statements
From exhibit -4.15, it is appeared that the largest portion of revenues is used
for operating expenses. Operating expenses include the profit paid to the
depositors. FSIBL’s operating expenses are decreased from 83.89% to 80.62%
within 2009-2010, increased from 80.62% to 83.10% within 2010-2011,
. .
increased from 83.10% to 86.17% within 2011-2012 and increased from

86.17% to 89.34% within 2012-2013. It is revealed that from 2010 FSIBL’s
operating expenses are increasing year by year. On the other hand, its net
profit starts to decrease from 2010. So, FSIBL should control the operating
costs excluding the depositors’ profits. Thus, the bank should properly apply
the green banking and make maximum utilization of technology and
resources to control the operating cost and for increase the net profit.
4.5: Ratio Analysis

Ratio analysis is a study of the relationships between financial variables. It is
used to evaluate various aspects of a company’s operating and financial
performance such as its efficiency, liquidity, profitability and solvency. The
trend of these ratios over time is studied to check whether they are improving
or deteriorating. Ratios can be expressed as a percent, rate or proportion. The
ratio analysis is an essential technique for financial statements analysis.
Different users such as investors, management, bankers and creditors use the
ratio to analyze the financial situation of a company for their decision making
purpose. Here, this report contains the most common ratios and analyze to
evaluate the operating and financial performance of First Security Islami Bank
Limited (FSIBL) over the years 2009, 2010, 2011, 2012 and 2013.
4.5.1: Liquidity and Efficiency Ratio

As First Security Islami Bank Limited is a financial institution the liquidity
ratios and the efficiency ratios are the most important ratios to evaluate its
liquidity to pay its short-term debt and deposits, and efficiency of the bank to
use its assets and manage its operations to quickly convert its assets into cash.
These ratios show how quick FSIBL is able to convert its assets into cash.
Here, the current ratio, acid-test ratio, accounts receivable turnover ratio and
days’ sales uncollectable ratio are shown below respectively for knowing the
liquidity and efficiency of First Security Islami Bank Limited.
. .
4.5.1.1: Current Ratio:

The current ratio is computed by dividing current assets by current liabilities.
Current ratio is measure here to k now how FSIBL meets its current liabilities
through its current assets.
Current Ratio =
Years 2009 2010 2011 2012 2013

Current
Assets 7,202,722,793 8,587,867,603 18,151,650,528 29,705,058,836 40,473,177,156
Current
Liabilities 45,113,142,197 59,699,786,313 86,432,834,521 121,650,118,339 152,709,588,439
Results 0.16 0.14 0.21 0.24 0.27
Exhibit -4.16: Current Ratio
0.30
0.24 0.27
0.25 0.21
0.20 0.16 0.14
0.15
0.10
0.05
-
2009 2010 2011 2012 2013
Current Ratio
Exhibit -4.17: Current Ratio
Interpretation: According to the result, the current ratio of FSIBL was 0.16
in 2009, 0.14 in 2010, 0.21 in 2011, 0.24 in 2012 and 0.27 in 2013. In 2012
current ratio was 0.24 means FSIBL had current assets of 0.24 taka against
short-term debt or liabilities of 1taka. In 2013 current ratio was 0.27 means
FSIBL had current assets of 0.27 taka current liabilities of 1 taka. It indicates
FSIBL has not enough ability to pay o ff its all current liabilities by its current
assets. But, the trend tells that FSIBL will be able to achieve enough current
assets to pay off current liabilities in future. On the other hand, maintaining
low current asset is better for a bank or financial institution to earn
. .
maximum profit, because current asset earns low profit. In fact, higher
current ratio is better for the institution because its higher ratio helps to
prevent default. This ratio should be at least 1:1.
4.5.1.2: Acid-test (Quick) Ratio

The acid-test ratio measures a company’s ability to meet its short-term
obligations with its most liquid assets. This ratio is computed by dividing
the sum of cash, short-term investment and net receivables by current
liabilities.
Acid - T est Ratio = Cash and equivalents + Short - terminvestment + Current receivables (net)
Current Liabilities
Years 2009 2010 2011 2012 2013

Cash and
equivalents +
Short-term
investment +
Current
receivables
(net) 6,005,708,792 6,418,679,141 14,475,388,339 24,501,084,298 28,652,107,839
Current
Liabilities 45,113,142,197 59,699,786,313 86,432,834,521 121,650,118,339 152,709,588,439
Results 0.13 0.11 0.17 0.20 0.19
Exhibit -4.18: Acid-test Ratio
0.2
0.15
0.1 0.17 0.20 0.19

0.13 0.11
0.05
0
2009 2010 2011 2012 2013
Acid-test Ratio
Exhibit -4.19: Acid-test Ratio

Interpretation: According to the result, the acid-test ratio of FSIBL was 0.13 in
2009, 0.11 in 2010, 0.17 in 2011, 0.20 in 2012 and 0.19 in 2013. It is seen that
the trend of acid-test ratio of FSIBL was fluctuating over the years. The
. .
common guideline for applicable acid-test ratio is 1:1, but FSIBL’s acid-test
ratio is very poor than the guided ratio. So, FSIBL has not enough ability to
meet immediate current obligations by its most liquid assets. But, other factors
should be considered such as FSIBL includes the deposits in current liabilities
and all investment in businesses in long-term assets, that reasons affect the
ratio greatly. An organization’s acid-test ratio depends on the system of its
maintaining assets and liability according to the duration.
4.5.1.3: Accounts Receivable Turnover

It indicates how frequently a company collects its receivable during an
accounting period. Here, accounts receivable turnover is measured to see how
successfully FSIBL collects its receivables. It is calculated by dividing net sales
by the average receivable.
Accounts Receivable Turnover =
Years 2009 2010 2011 2012 2013

Net Sales 4,661,434,075 6,211,034,438 9,406,704,137 14,044,439,448 19,007,150,115
Average
Accounts 370,873,467 503,660,842 651,235,583 641,202,006 876,957,172
Receivable
Results 12.57 times 12.33 times 14.44 times 21.90 times 21.67 times
Exhibit -4.20: Accounts Receivable Turnover
25
20
15
21.90 21.67
10
12.57 12.33 14.44
5
0
2009 2010 2011 2012 2013
Accounts Receivable Turnover
Exhibit -4.21: Accounts Receivable Turnover

. .
Interpretation: FSIBL’s accounts receivable turnover was 12.57 times in

2009, 12.33 times in 2010, 14.44 times in 2011, 21.90 times in 2012 and 21.67
times in 2013. FSIBL’s accounts receivable turnover over the years are enough
high. A high turnover is favorable because it minimizes the time length
between Sales and cash collection. High turnover of FSIBL indicates the bank
collects the receivables rapidly and need not commit large amounts of funds to
accounts receivable. After all FSIBL has a strong position in receivable
turnover.
4.5.1.4: Days’ Sales Uncollected

Days’ sales uncollected are measured to know how quickly a company converts
its receivables into cash. Here FSIBL’s days’ sales uncollected are measured.
Days’ Sales Uncollected = × 365
Years 2009 2010 2011 2012 2013

Account
Receivables 225,150,258 782,171,425 520,299,740 762,104,271 991,810,073
Net Sales 4,661,434,075 6,211,034,438 9,406,704,137 14,044,439,448 19,007,150,115
(×) Days 365 365 365 365 365
Results 18 days 46 days 20 days 20 days 19 days
Exhibit -4.22: Days’ Sales Uncollected
50 46
40
30
20 20 19
20 18
10
0
Days
2009 2010 2011 2012 2013
Exhibit -4.23: Days’ Sales Uncollected

. .
Interpretation: Days’ sales uncollected for FSIBL in 2009 were 18 days. This
means that it will take about 18 days to collect cash after creating accounts
receivable. Days’ sales uncollected in 2010 were 46 days which is higher than
2009. The low value of days’ sales uncollected is expected and low value means
a company is strong in receivable collection. In 2011 and 2012 the value has
reduced to 20 days and in 2013 it has come about 19 days. The trend indicates
FSIBL is becoming stronger gradually in collecting receivables.
4.5.1.5: Total Asset Turnover
Total asset turnover reflects a company’s ability to use its assets to generate
sales and is an important indication of operating efficiency. The total asset
turnover ratio of FSIBL is measured to know its operating efficiency.
Total Asset Turnover =
Years 2009 2010 2011 2012 2013

Net Sales 4,661,434,075 6,211,034,438 9,406,704,137 14,044,439,448 19,007,150,115
Average
Total Assets 39,608,973,185 55,799,175,376 77,316,348,444 110,373,036,089 145,778,074,967
Exhibit -4.24: Total Asset Turnover
0.13
0.125
0.12
0.115 0.13 0.13
0.12 0.12
0.11
0.11
0.105
0.1
2009 2010 2011 2012 2013
Total Asset Turnover
Exhibit -4.25: Total Asset Turnover

. .
Interpretation: FSIBL’s total asset turnover express that it turned its assets
over 0.13 times during the year 2013. This means that each Tk. 1.00 of
assets earns Tk. 0.13 of revenues. Is a total asset turnover of 0.13 is good or
bad? It is safe to say that all companies desire a high total asset turnover.
Like many ratio analyses, however a company’s total asset turnover must be
interpreted in comparison with that of prior years. Comparing with prior
years FSIBL’s total asset turnover of 2013 is higher than prior years and
FSIBL’s total asset turnover is increasing year by year. It indicates FSIBL is
being more efficient in operation and earns revenues by using its total asset.
Interpreting the total asset turnover also requires an understanding of
company’s operations. As FSIBL is a banking company its total asset
turnover is depending o n its deposit collection and investment in
businesses, and profit get and paid on them.
4.5.2: Solvency Ratio

Solvency refers to a company’s long-run financial viability and its ability to
cover long-term o bligations. Here FSIBL’s solvency ratios are analyzed to
evaluate its long-run viability and its ability to cover long-term obligations.
4.5.2.1: Debt and Equity Ratios

One element of solvency analysis is to assess the portion of a company’s
assets contributed by its owners and the portion contributed by creditors.
This relation is reflected in debt and equity ratios. Here FSIBL’s debt ratio is
measured to assess its total liability as a percent of total assets, and equity
ratio is measured to assess its total equity as a percent of total assets. These
ratios are calculated by using two different formulas.
Debt Ratio = × 100

. .
Years 2009 2010 2011 2012 2013

Total
Liabilities 45,113,142,197 59,699,786,313 86,463,948,521 124,068,693,306 155,389,377,281
Total
Assets 47,978,552,952 63,619,797,799 91,012,899,089 129,733,173,088 161,822,976,845
Results 94.03% 93.84% 95.00% 95.63% 96.02%
Exhibit -4.26: Debt Ratio
Equity Ratio = × 100
Years 2009 2010 2011 2012 2013

Total
Equity 2,865,410,755 3,920,011,486 4,548,950,568 5,664,479,782 6,433,599,564
Total
Assets 47,978,552,952 63,619,797,799 91,012,899,089 129,733,173,088 161,822,976,845
Results 5.97% 6.16% 5.00% 4.37% 3.98%
Exhibit -4.27: Equity Ratio
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
2009 2010 2011 2012 2013
Equity Ratio 5.97% 6.16% 5.00% 4.37% 3.98%
Debt Ratio 94.03% 93.84% 95.00% 95.63% 96.02%
Exhibit -4.28: Debt and Equity Ratio
Interpretation: In exhibit -4.28, the red color area indicates the portion of
total asset contributed by owners and blue color area indicates the portion
of total asset contributed by creditors. From the graph it is appeared that
maximum area is covered by debt ration that means FSIBL’s lion share of
total asset is contributed by creditors. FSIBL’s debt ratio was 94.03% and
. .
equity ratio was 50.97% in 2009 and 2013 FSIBL’s debt ratio came to
96.02% and equity ratio came to 3.98%. The trend of debt and equity ratios
tells that the debt ratio is in increasing trend and equity ratio is in
decreasing trend which is not a good sign for any general business or
company. But, for a banking company that trend is not a bad sign. Because
as a financial institution a bank collects deposit from customers as debt or
liability and invests or lends that money in businesses as asset. So, as a bank
FSIBL’s investment is largely depended on liability and profit is depended in
investments. Further, a bank’s maximum portion of asset is covered by
financial assets which are created by deposits and investments. So, FSIBL’s
debt ratio’s increasing trend indicates its deposits are increasing as well as
investments are increasing which is a good sign for the bank.
4.5.2.2: Times Interest Earned

The amount of income before deductions for interest expenses and income
taxes is the amount available to pay interest expense. It is measured for
assess the protection in meeting interest payments by a company. Here
FSIBL’s time interest earned is measure to assess its protection in meeting
interest payments.
Times Interest Earne d =
Years 2009 2010 2011 2012 2013

Income before
Interest
Expense and
Income Taxes 4,084,638,116 5,329,427,231 8,260,513,067 12,251,714,096 16,623,273,172
Interest
Expense 3,333,800,367 4,125,826,500 6,670,951,220 10,309,755,493 14,597,553,390
Exhibit -4.29: Times Interest Earned
. .
1.3
1.2
1.23 1.29 1.24 1.19 1.14
1.1
1
2009 2010 2011 2012 2013
Times Interest Earned
Exhibit -4.30: Times Interest Earned
Interpretation: Times interest earned ratio reflects the creditors’ risk of

loan or debt repayment with the interest. The larger this ratio, the less risky
is the company for creditors. Though one guideline says that creditors are
reasonably safe if the company earns its fixed interest expense two or more
times, FSIBL earns 1.23 times in 2009, 1.29 times in 2010, 1.24 times in
2011, 1.19 times in 2012 and 1.14 times in 2013. But, these ratios are not
too bad, because is always earns more than 1 times each year which is
necessary for safety. The trend time interest earned of FSIBL has started
downward from the year 2010. It indicates FSIBL is in danger line to pay
interest expenses.
4.5.3: Profitability Ratio
Profitability ratios are measured to assess the ability of a company to use its
assets efficiently to produce profits. Here, the profitability ratios of FSIBL are
measured to recognize its ability to generate an adequate return on its invested
capital.
4.5.3.1: Profit Margin Ratio
Profit Margin shows a company’s operating efficiency and profitability. Profit

margin reflects a company’s ability to earn net income from sales. It is
measured by expressing net income as a percent of sales. Here, FSIBL’s Pro fit
Margin is measured as following.
. .
Profit Margin Ratio = × 100
Years 2009 2010 2011 2012 2013

Net
Income 326,837,749 548,600,731 580,161,847 761,863,499 769,119,782
Net Sales 4,348,674,553 5,547,047,795 8,747,763,443 13,339,668,730 18,277,686,531

Results 7.52% 9.89% 6.63% 5.71% 4.21%
Exhibit -4.31: Profit Margin Ratio
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2009 2010 2011 2012 2013
Profit Margin Ratio 7.52% 9.89% 6.63% 5.71% 4.21%
Exhibit -4.32: Profit Margin Ratio
Interpretation: In year 2009 the result was 7.52% that means in Tk. 100 of
net income FSIBL earns net profit of Tk. 7.52. In the year 2010 FSIBL’s profit
margin was increased to 9.89% and from the following year it started to
decline. This profit margin is declined to 4.21% in 2013. It is seem that
FSIBL’s profit margin is in decline trend. So, FSIBL should improve its
operating policy to make the profit margin index upward.
4.5.3.2: Return on Total Assets

The return on total assets of a company determines its ability to utilize the
assets employed in that company efficiently and effectively to earn a good
return. This ratio measured the amount of profit that FSIBL has generated as
a percentage of the value of its total assets. It shows how profitable t he bank
. .
is related to its total assets. This ratio is calculated by dividing net income by
average total assets.
Return on Total Assets = × 100
Years 2009 2010 2011 2012 2013
Net Income 326,837,749 548,600,731 580,161,847 761,863,499 769,119,782

Average Total
Assets 39,608,973,185 55,799,175,376 77,316,348,444 110,373,036,089 145,778,074,967
Results 1% 1% 0.75% 0.69% 0.53%
Exhibit -4.33: Return on Total Assets
1%
1%
1%
1% 1%
0% 0.75% 0.69%
0.53%
0%
0%
2009 2010 2011 2012 2013
Return on Total Assets
Exhibit -4.34: Return on Total Assets
Interpretation: Return on Total Assets is the most used profitability ratio.

As FSIBL was a part of banking industry and its most of the assets come
from the debt which was the reasons for its low net profit as well as poor
Return on Assets (ROA). As per result, exhibit 4.34 shows that FSIBL had
ROA of 1% in the years 2009 and 2010 which was a low ROA. From 2011
ROA of FSIBL started decreasing gradually and in 2013 it came down to
. .
0.53%. It means the management of the bank cannot efficiently used its
assets to generate profit.
4.5.3.3: Return on Equity

Return on equity (ROE) is a measure o f profitability ratio that calculates the
amount of profit that FSIBL has generated as a percentage of the value of its
total shareholders’ equity. It is computed by dividing net income by total
shareholders’ equity.
Return on Equity = × 100
Years 2009 2010 2011 2012 2013
Net Income 326,837,749 548,600,731 580,161,847 761,863,499 769,119,782

Total Shareholders'
Equity 2,865,410,755 3,920,011,486 4,548,950,568 5,664,479,782 6,433,599,564
Results 11% 14% 13% 13% 12%
Exhibit -4.35: Return on Equity
14%
12%
10%
8% 14% 13% 13% 12%
6% 11%
4%
2%
0%
2009 2010 2011 2012 2013
Return on Equity
Exhibit -4.36: Return on Equity

Interpretation: Return on Equity is very popular ratio toward the
shareholders of any bank. Analyzing the financial statements of FSIBL it’s
appeared that FSIBL earns in the years 2009, 2010, 2011, 2012 and 2013
returns from Tk. 100 invested by the shareholders was respectively 11%,
. .
14%, 13%, 13% and 12%. In 2010 the bank’s ROE was high and higher
percentage is better for the bank as well as for shareholders. So, the
management of the bank had the ability to generate adequate returns from
the capital invested by the owners in 2010 than any other years which are
analyzed.
4.5.4: Market Prospects Ratio

Market measures are useful for analyzing corporations with publicly traded
stock. This market measures use stock price, which reflects the market’s or
public’s expectations toward the company. This includes expectations of
both company return and risk as the market perceives it. Market prospects
ratios relate the market price of the company’s common stock and the
financial statement figures.
4.5.4.1: Price-Earnings Ratio

The price –earning (PE) ratio compares a company’s EPS and its market
value per share and reveals information about market expectations. The
price-earnings ratio is computed by dividing marked value (price) per share
by earning per share (EPS).
()
Price-Earnings Ratio =
Years 2009 2010 2011 2012 2013

Market Value(price)Per
Share 21.85 40.59 26.28 18.48 15.11
Earnings Per Share 1.42 2.33 1.71 1.85 1.87
Exhibit -4.37: Price-Earnings Ratio
. .
20
15
10 15.38 17.45 15.40
5 9.98 8.08
0
2009 2010 2011 2012 2013
Times
Exhibit -4.38: Price-Earnings Ratio
Interpretation: In the years 2009, 2010, 2011, 2012 and 2013 the Price-
Earnings Ratio of FSIBL was respectively 15.38 times, 17.45 times, 15.40
times, 9.98 times and 8.08 times. FSIBL’s price-earnings ratio was very high
in 2010 and also low in 2013. The ratio was decreased from 2011 to 2013.
The high profit-earnings ratio indicates confidence for this bank, because it
suggests that its earnings are expected to grow in the future years. On the
other hand, the low profit-earnings ratio indicates that FSIBL’s future
prospects for EPS growth are expected to be poor, so that investors do not
put a high value on the shares.
4.5.4.2: Earnings per Share (EPS)

Earnings per share (EPS) are a measure of the net income earned on share
of commo n stock. It is computed by dividing net income by the number of
weighted-average common shares out standings during the year.
Earnings per Share =
As EPS is computed in income statement, it not need to re-computation.

From the income statement the values of EPS are putted on the following
graph.
. .
2.50
2.00
1.50
2.33
1.00 1.71 1.85 1.87
1.42
0.50
0.00
2009 2010 2011 2012 2013
Taka
Exhibit -4.39: Earnings per Share (EPS)
Interpretation: From the above information, it is found that FSIBL’s EPS

was lowest in the year 2009 which was Tk. 1.42 and highest in the year
2010 which was Tk. 2.33. In year 2011 EPS was decreased to Tk. 1.71. But ,
from the year 2012 EPS was started to increase and that was Tk. 1.85, and in
year 2013 EPS was Tk. 1.87. The trend indicates EPS of FSIBL has started
increasing. So , it is a good point for FSIBL for attracting large investors in
this competitive era by earning profit o n each share of stock.
4.6: Analysis of Cash Flow Statement

An easy way of financial analysis of a business is cash flow statements
analysis. From cash flow statement we can easily trace the real cash
generating capacity of a business. To understand the trend of FSIBL’s cash
flow I have analyzed the five years’ cash flow statements of the bank. First I
have scratched the net and total cash flows generated by FSIBL over five
years.
. .
30,000,000,000
25,928,833,653
25,000,000,000
21,314,515,328
20,000,000,000
15,000,000,000
12,815,496,581
10,000,000,000 8,499,018,747
7,036,299,306
5,765,356,760 5,894,875,380
4,614,318,325
5,000,000,000
2,267,781,609
129,518,620
-
2009 2010 2011 2012 2013
Net Cash Increase(Decrease) Total Cash Increase(Decrease)
Exhibit -4.40: Trend of Cash Flow
Interpretation: In Exhibit -4.40, it has been seen that the total cash is
increased over five years but the net cash flow is fluctuating over the five
years. In 2010 and 2013 the net cash flow is dropped. In 2010 the bank has
generated enough cash from the profit and loss account related operating
activities, but in other operating activities related to balance sheet such as
investment to customers, assets, the bank invest more than collection
deposits and liabilities compare to previous year which has decreased the
net cash flow. In this year the bank has spent much cash for investing
activities which were investment in share and securities, purchase of
property, plant and equipment. In year 2011 and 2012 both total cash and
net cash are increased. In year 2013 total cash has increased than previous
year but net cash has slowly increased than previous years.
. .
4.6.1: Cash Flow Analysis according to Head
Particulars 2009 2010 2011 2012 2013

Net cash inflow (outflow)
from operating activities 3,709,020,558 659,907,586 5,401,509,804 6,798,328,792 7,575,992,726

from investing activities (811,238,949) (1,266,388,966) (1,596,324,498) (1,886,771,012) (2,772,888,276)

from financing activities (630,000,000) 736,000,000 3,231,114,000 3,587,460,967 (188,786,125)
Net Increase (Decrease)
of Cash & Cash
Equivalent 2,267,781,609 129,518,620 7,036,299,306 8,499,018,747 4,614,318,325
Exhibit -4.41: Summary of Cash Flow Statement
From exhibit -4.41, it is appeared that FSIBL has generated enough cash
from operating activities over five years, but the trend of cash inflow was
fluctuating. Net cash inflow was high in year 2013 which is higher than
previous year. Investing activities cannot provide cash at any year; this head
had only used cash over the years. Financing activities provides cash in the
years 2010, 2011 and 2012.
4.6.2: Cash Flow on Total Assets

This ratio reflects actual cash flow and is not affected by accounting income
recognition and measurement. It can help business decision makers to
estimate the amount and timing of cash flows when planning and analyzing
operating activities. Cash flow on total assets ratio is computed as follows:
Cash Flow on Total Assets = ×100
Particulars 2009 2010 2011 2012 2013

Cash Flow from
Operation 3,709,020,558 659,907,586 5,401,509,804 6,798,328,792 7,575,992,726
Average Total Assets 39,608,973,185 55,799,175,376 77,316,348,444 110,373,036,089 145,778,074,967

Results 9% 1% 7% 6% 5%
Exhibit -4.42: Cash Flow on Total Assets
FSIBL’s cash flow on total assets ratio for several prior years in exhibit -4.42.
Results show that its 5% return is lowest in year 2013 than all but one of the
prior years’ returns. Its cash flow on total assets was highest of 9% in 2009.
FSIBL’s cash flow on total assets has started to decrease from the year 2011.
. .
5
Chapter Five
Findings, Recommendation
and Conclusion
Findings,
Recommendation
and Conclusion
. .
5.1: Findings Regarding First Security Islami Bank

Limited’s Financial Position by Analyzing Financial
Statements and Ratios
First Security Islami Bank Limited’s maximum assets are covered by

investment in businesses and the lowest percentage of the bank’s total
assets is covered by fixed assets. On the other hand, the lion share of its
liabilities is covered by deposits collected from public. In total of
liabilities and equity, the bank’s liability was very high comparing with
equity. In the aspect of income statement, FSIBL’s net profit was
decreasing and operating expenses were increasing over the years
2009, 2010, 2011, 2012 and 2013 consequently. This indicates the bank
was fail to control the cost in its operation or could not make adequate
investment of its liabilities, thus the liability was expertly higher than
the investment in years 2012 and 2013 where the most liquid asset-
cash was lower than previous years.
Liquidity ratios are the most important ratios to evaluate company’s

liquidity to pay its short-term debt and deposits. These ratios show
how quick First Security Islami Bank Ltd. is able to pay debt or convert
its assets into cash. I have discussed about current ratio, acid-test ratio,
accounts receivable turnover ratio and days’ sales uncollected ratio.
From the analysis of liquidity ratios I have found that the current ratio
of FSIBL was 0.16 in year 2009 but it was slightly decreased to 0.14 in
the year 2010. This ratio again increased in years of 2011, 2012 and
2013. The higher current ratio is better for the institution because the
higher ratio helps to prevent getting default. On the other hand FSIBL
was highly liquid in the year 2012 because its acid-test ratio or quick
ratio was 0.20 which was higher than the years of 2009, 2010, 2011 and
2013. FSIBL’s acid-test ratio was higher in 2012 and 2013. It means
FSIBL’s acid-test ratio is increasing. The higher acid-test ratio enables
the bank to pay short-term debt quickly. FSIBL’s accounts receivable
turnover of 21.90 times and 21.67 times were substantially higher in
. .
the years of 2012 and 2013 than years- 2009, 2010 and 2011. FSIBL
took highest time of 46 days to collect account receivable in year 2010,
but the days’ sales uncollected was decreased to 19 days in year 2013.
From these above information, it is cleared that FSIBL’s liquidity
position is improving, but it was not enough goo d comparing with
industry.
Efficiency ratios determine the efficiency of using the bank’s assets and
managing its o perations. I have discussed about total asset turnover
ratio. FSIBL’s total asset turnover was lowest in year 2010 and high in
year 2012 and year 2013 which was 0.13 times in both years. That
means FSIBL invested more on those assets which bring more revenues.
Solvency ratios measure the ability of a company to survive over a long

period of time and to meet its financial obligations. There I have
discussed about debt and equity ratio , and times interest earned ratio.
From the years 2009 to 2013 the debt to total assets ratio was high and
the equity to total assets was low. The higher debt to total assets bears
high risk for the company. So, FSIBL bears high risk to survive over a
long period of time and to meet its financial obligations. On the other
hand, the higher debt to total assets not only creates higher risk but also
increase profitability.
FSIBL’s times interest earned ratio was high in year 2010 which was
1.29 times and that decreased to 1.14 times in year 2013. This means
FSIBL’s interest expense have increased more than the increment of
revenues.
Profitability ratios measure the income or operating success of a

company for a given period of time. The profitability ratios that I have
discussed are profit margin ratio, return on total assets and return on
equity. The profit margin ratio of FSIBL was high in year 2010 and it
was started to decrease from year 2011. FSIBL’s lowest profit margin
was 4.21% in year 2013. FSIBL’s return on total assets was high in the
. .
years 2009 and 2010 which was 1%. The bank’s return on tot al assets
low in year 2013 which was 0.53%. FSIBL’s return on equity was high
in year 2010 and low in year 2013. From the above discussion it is
appeared that FSIBL’s profitability was decreasing because the bank
could not operate properly its activities comparing the previous years.
So, it was failing to increase the profitability.
Market prospects ratios relate the observable market values like the
stock price with the book values obtained from the firm’s financial
statements. The market value ratios that I have used to analyzed are
Price Earnings Ratio (P-E) and Earning per Share (EPS). FSIBL’s P-E
ratio was high in year 2010 comparatively than the last three years. The
ratio was decreased from 2011 to 2013. The P-E ratio was lowest in the
year 2013 which only 8.08 times. The high P-E ratio indicates a sign of
confidence for the bank, because it suggests that its earnings are
expected to grow in the future years. On the other hand, the low P-E
ratio indicates that the bank’s future prospects for EPS growth are
expected to be poor, so that investors do not put a high value on the
share. The EPS of FSIBL was taka 2.33 was high in year 2010 and it
decreased in year 2011 and increased from years 2012 to 2013 which
are taka 1.85 and taka 1.87 accordingly. So, it was a good point for
FSIBL for attracting large investors in the new competitive era by
earning profit on each share of stock.
During my three months internship period in First Security Islami Bank

Limited, Amborkhana Branch, Sylhet, I have found the borrowers were not
paying the installment timely, even the bank could not recover its money yet
from some powerful clients. These make losses for the bank and dec rease the
profit. On the other hand, some depositors deposit their money for very short
period of time; even some of the depositors withdraw their money before the
maturity date. Thus, the bank cannot use the money for long-term investment
projects which earn high profits. For these reasons, the bank’s profitability is
decreasing.
. .
5.2: Recommendations
First Security Islami Bank Limited has to concentrate to adequate

investment. It should minimize the operating expenses and follow the
green banking system. The bank should be strict to recovery of invested
money and time to time collecting profits.
FSIBL’s liquidity position was not enough strong co mparing to industry.

So the bank should be concerned about increase its liquidity.
The efficiency ratios of FSIBL were good and remaining in increasing

trend.
FSIBL’s had fair solvency ratios in where it uses the debt most to
increase revenue rather than the equity. It may increase the risk for the
bank. So, it would be better for FSIBL to finance more equity to minimize
the risk.
Though there were higher profitability ratios in year 2010, FSIBL was
not successful in increasing its overall earnings performance because
Profit Margin, Return on Assets and Return on Equity had been
decreasing during the years 2011 to 2013. So for getting more benefit of
earnings, FSIBL should concern about its profitability and improve its
operating polices for minimizing costs and increasing profits.
Though the EPS was increased in years 2012 and 2013 comparing to
year 2011, the overall market prospects ratios of FSIBL was decreasing
during the years 2011 to 2013. If it decreases over the years, investors
will not put high value on the shares issued by the bank. So the bank
should concern about this.
FSIBL should capture and hold those depositors who will agree to
deposit their money for long period of time. Then the bank can make
. .
long-term investments and earn higher profits. FSIBL also should lend
the money to reliable clients and invest in profitable businesses.
5.3: Conclusion
By analyzing the financial statements as well as the ratios, it can be said that
First Security Islami Bank Limited gas been do ing well in few sectors. If we see
the comparative analysis of balance sheet items, it is seemed that the current
liabilities are higher than assets. And all the assets and liabilities were in
increasing trend from year 2010 to 2012 and decreased from year 2012 to
2013. In the case of comparative income statement, most of time the net profit
was decreased ant it was fluctuating over the period. But, when compare overall
total operating income and net profit they were simply increased over the
years. In case of common-size comparative analysis of balance sheet items, it is
appeared that the investment was in decreasing trend and the liabilities were in
increasing trend. Over the five years period of 2009 to 2013, the investments
were lower than the liabilities created by deposits and other debt accounts. The
most liquid asset cash was decreasing and fixed assets were increasing over the
periods. In common-size income statement, the operating expenses were too
high and they were increasing over the years and net profit was decreasing year
by year. The liquidity ratios of FSIBL were increased most of the times which is
good for the bank. If we see the profitability position of the bank, it can easily
be said the Profit Margin, Return on Assets and Return on Equity were not so
good and its trend was downward. We can see the EPS ratio of FSIBL was
fluctuating and the P-E ratio was decreasing, so it is better to give more
concentration when maintaining these types of ratios and increasing such a
market price of the share. Also when we have a look on the solvency ratios, we
can say that FSIBL should do their best to maintain their leverage ratios as all
these ratios shows that they have very high leverage and thus they also have a
higher risk. Besides this, they need to increase the amount of equity capital as
too much leverage may be associated with more risk and also it indicates the
bank’s financial weakness. Finally, it can be said that FSIBL’s overall
performance was good enough.
. .
References:
While preparing this report, I had to collect data from the annual reports of
FSIBL, different books related to Accounting and Finance, the website of FSIBL
and other websites and blogs. The references are given below:
Accounting Info (n. d.) U.S. GAAP Codification of Accounting

Standards [Internet blog]. Available from:
<http://accountinginfo.com/financial-accounting-standards/asc-
200/210-balance-sheet.htm> [Accessed 1 st December 2014].
Ajaz A. Khan (2013) Sharia Compliant Finance. Halal Monk [Internet
blog]. Available from: <http://www.halalmonk.com/ajaz-ahmed-khan-
sharia-compliant-finance> [Accessed 23 rd November 2014].
Annual report of First Security Islami Bank Limited -2009, 2010, 2011,
2012 and 2013.
Business Science Articles (n. d.) Articles, Functions of Banks [Internet],
Business. Available from: <http://www.business-science-
articles.com/articles/business/76-functions-of-banks-i-primary-and-
secondary> [Accessed 12 th November 2014].
First Security Islami Bank Limited (n. d.) Home Page [Internet], Home,
Products & Services, Smart Banking, Financial Information, Meet Us, CSR
and News, First Security Islami Bank Limited. Available from:
< http://www.fsiblbd.com> [Accessed 10 th November, 31 st December
2014].
Helen Mongan (2014) Guidelines for Writing a Literature Review.

Duluth [Internet blog]. Available from:
<http://www.duluth.umn.edu/~hrallis/guides/researching/litreview.ht
ml> [Accessed 13 th November 2014].
Investopedia (n. d.) Dictionary [Internet], Islami Banking. Available

from: <http: //www.investopedia.com/terms/i/islamicbanking.asp>
[Accessed 20 th November 2014].
. .
Jemes C. Van Horne, John M. Wachowicz and Jr. (2009) Fundamentals of

Financial Management. 13 th edition. Pearson Education Limited.
K. D. Larson, J. Wild and B. Chiappetta (2005) Fundamental Accounting

Principles. 17 th edition. McGraw-Hill, Irwin.
S. A. Ali and R. A. Howlader (2009) Banking Law and Practice. Revised

edition. New S R Printing Press, Dhaka.
Smriti Chand (n. d.) Commercial Banks [Internet Blog]. Available from:
<http://www.yourarticlelibrary.com/banking/commercial-banks/
commercial-banks-primary-and-secondary-functions-of-commercial-
banks/30321/> [Accessed 12 November 2014].
Weygandt, Kieso and Kimmel (2008) Accounting Principles. 8th edition.

John Wiley & Sons, Inc.
. .
Appendix
. .
Acronyms
CIS: Comparative Income Statement

FSIBL: First Security Islami Bank Limited
GAAP:Generally Accepted Accounting Principles
OIC:Organization of Islamic Countries
PLS: Profit & Loss Sharing
AIS: International Accounting Standards
AAR: Average Accounts Receivable
AR: Accounts Receivable
PE: Price-Earnings
EPS: Earnings Per Share
. .
List of Exhibits
Exhibit No. Particulars Page No.
2.1 Functions of Bank 9

2.2 Difference between Riba and Profit 16
2.3 Difference between Co nventional Banking and Islamic Banking 17
2.4 Comparative Balance Sheets Sample 27
2.5 Summary of Ratios 41
2.6 Relationships between Financial Statements 44
3.1 Corporate Profile of FSIBL 47
3.2 Financial Performance at a Glance of FSIBL 48
3.3 Board of Director 52
3.4 Organogram 53
3.5 Shariah Board 54
3.6 Branches of FSIBL 55
3.7 Society for Worldwide Interbank Financial Telecommunication
(SWIFT) 63
4.1 Comparative Balance Sheet 66
4.2 Comparative Income Statement 67
4.3 BDT Changes over the Years Percentage Changes over the Years
in Balance Sheet items 68
4.4 Percentage Changes over the Years of Balance Sheet items 69
4.5 BDT Changes over the Years in CIS 70
4.6 Percentage Changes over the Years of CIS Items 71

4.7 Total Operating Income and Net Profit over the Years 72
4.8 Comparative Income Statement for Trend Analysis 74
4.9 Trend Analysis of Income and Expenses 75
4.10 Common-Size Comparative Balance Sheet 77
4.11 Common-Size Comparative Income Statement 78
4.12 Common-size Comparative Balance Sheets Analysis 79
4.13 Portion of a Particular Asset on Total Asset 80
. .
4.14 Portion of Particular Liability and Equity on Total Liabilities

and Equity 81
4.15 Vertical Analysis of Common-size Comparative Income 82
Statements
4.16 Current Ratio 84
4.17 Current Ratio 84

4.18 Acid-test Ratio 85
4.19 Acid-test Ratio 85
4.20 Accounts Receivable Turnover 86
4.21 Accounts Receivable Turnover 86
4.22 Days’ Sales Uncollected 87
4.23 Days’ Sales Uncollected 87
4.24 Total Asset Turnover 88
4.25 Total Asset Turnover 88
4.26 Debt Ratio 90
4.27 Exhibit 90
4.28 Debt and Equity Ratio 90
4.29 Times Interest Earned 91
4.30 Times Interest Earned 91
4.31 Profit Margin Ratio 93
4.32 Profit Margin Ratio 93
4.33 Return on Total Assets 94
4.34 Return on Total Assets 94
4.35 Return on Equity 95
4.36 Return on Equity 95

4.37 Price-Earnings Ratio 96
4.38 Price-Earnings Ratio 97
4.39 Earnings per Share (EPS) 98
4.40 Trend of Cash Flow 99
4.41 Summary of Cash Flow Statement 100
4.42 Cash Flow on Total Assets 100
Fir s t S e c u r i t y I s l a m i B a n k L i m i t e d .
Fi n a nc i a l S t a t e m e nt s An a l y s i s | 113
..
Click to get Excel Sheets
Click to get Financial Statements of FSIBL
Financial Year 2013

Financial Year 2012
Financial Year 2011
Financial Year 2010
Financial Year 2009
Financial Statements Analysis
First Security Islami Bank Limited
2015
JANUARY MAY SEPTEMBER
S M T W T F S S M T W T F S S M T W T F S
1 2 3 1 2 1 2 3 4 5
4 5 6 7 8 9 10 3 4 5 6 7 8 9 6 7 8 9 10 11 12
11 12 13 14 15 16 17 10 11 12 13 14 15 16 13 14 15 16 17 18 19
18 19 20 21 22 23 24 17 18 19 20 21 22 23 20 21 22 23 24 25 26
25 26 27 28 29 30 31 24 25 26 27 28 29 30 27 28 29 30
31
FEBRUARY JUNE OCTOBER

1 2 3 4 5 6 7 1 2 3 4 5 6 1 2 3
8 9 10 11 12 13 14 7 8 9 10 11 12 13 4 5 6 7 8 9 10
15 16 17 18 19 20 21 14 15 16 17 18 19 20 11 12 13 14 15 16 17
22 23 24 25 26 27 28 21 22 23 24 25 26 27 18 19 20 21 22 23 24
28 29 30 25 26 27 28 29 30 31
MARCH JULY NOVEMBER

1 2 3 4 5 6 7 1 2 3 4 1 2 3 4 5 6 7
8 9 10 11 12 13 14 5 6 7 8 9 10 11 8 9 10 11 12 13 14
15 16 17 18 19 20 21 12 13 14 15 16 17 18 15 16 17 18 19 20 21
22 23 24 25 26 27 28 19 20 21 22 23 24 25 22 23 24 25 26 27 28
29 30 31 26 27 28 29 30 31 29 30
APRIL AUGUST DECEMBER

1 2 3 4 1 1 2 3 4 5
5 6 7 8 9 10 11 2 3 4 5 6 7 8 6 7 8 9 10 11 12
12 13 14 15 16 17 18 9 10 11 12 13 14 15 13 14 15 16 17 18 19
19 20 21 22 23 24 25 16 17 18 19 20 21 22 20 21 22 23 24 25 26
26 27 28 29 30 23 24 25 26 27 28 29 27 28 29 30 31
30 31
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Financial Statements Analysis of an

Islami Bank in Bangladesh

Jannatul Naim Barna

Major in Accounting & Information Systems

Department of Business Administration

Leading University, Sylhet

For the partial fulfillment of the requirements for the

Degree of Bachelor of Business Administration (BBA)

Major in Accounting & Information Systems (AIS)

Date of Submission: February 28, 2015

February 28, 2015

Mr. Iehit Sharma

Subject: Submission of Internship Report

With the passage of time, I am now standing on the verge of Bachelors of

February 28, 2015

This is to certify that Internship Report titled “Financial Statements nalysis

I wish his success in the future.

Mr. Iehit Sharma

Department of Business Administration

Leading University, Sylhet

I, Moez Al Azim Ansary, a student of BBA program at Leading University, Sylhet,

First, I would like to express my gratitude to almighty ALLAH to give me the

I deeply thank to my honorable internship supervisor Mr. Iehit Sharma, Senior

Chapter Title Page No.

2.11.6: Ratio Analysis 30

Financial statement analysis is the process of reviewing and analyzing a

1.1: Origin of the Report

1.2: Significance of the Study

1.3: Objective of the Study

1.4: Scope of the Study

1.5: Methodology of the Study

Financial statement analysis needs the combination of mathematical

1.6: Sources of Data

Primary Sources of Data:

Secondary Sources of Data:

1.7: Limitation of the Study

A commercial bank is a dealer in short and medium-term credit. It

2.2: Functions of Bank

Primary Functions Secondary Functions

Accepting Deposits Agency Functions

Fixed Deposit Account

Making Advance and Loan

2.2.1: Primary Functions

Basic or primary functions of a c ommercial bank are very important in nature.

Accepting deposits: Accepting deposits is the most important function of

Current Account: Current or demand account is one where the

Cash Credit: Cash credit refers to a loan given to the borrower

2.2.2: Secondary Functions

Collection of Cheques: Commercial banks collect the cheques, bills

General Utility Functions: Commercial bank performs different utility

Issue of Travelers Cheque: Commercial banks preserve the wills of

Miscellaneous Functions: Commercial banks perform the following

facilitate to form Hajj groups. Banks make necessary arrangements for

2.3: Islamic Banking

2.3.1: Principles of Islamic Banking:

2.3.2: Riba or Interest:

2.4: Difference between Riba and Profit

2.5: Difference between Conventional Banking and

Conventional Banks Islamic Banks

9. For interest-based commercial 9. For the Islamic banks, it is

2.6: Financial Statements

2.7: Components of Financial Statements

2.8: Components of Bank’s Financial Statements