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Introduction
Asia Pacific, internship is an 8 weeks program to introduce the students with the real life business
name in the banking industry of Bangladesh. I am proud to work as an intern at Islami Bank
Bangladesh Ltd (IBBL) and this experience will surely help me in my future career. Being an
intern the main challenge was to translate the theoretical concepts into real life experience. The
Islami Bank Bangladesh Limited has significantly contributed in flow of international transactions.
Among the private commercial banks of our country. IBBL has consistently been in a dominating
position in earnings the operating profit. I have chosen this topic, because to focus on the general
banking performance of Islami Bank Bangladesh Limited and its activities based on Islamic
Shariah.
I did my internship at the Islami Bank Bangladesh Limited, Shyamoli branch from 2nd October
2017 to 30th November 2017 and at the end of the program an internship report focusing on the
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overall general banking activities. Banking sector and banking activities is an intrinsic
requirement. Banking sector and banking activities play a vital and important role to achieve the
optimum goal of any countries economy. As commercial banks, IBBL has a huge responsibility
to ensure consistent service all over the Bangladesh in a sound manner with other banks’
competitors.
General Objective
Specific Objective
General Objectives:
Specific Objectives:
To analyze the ratio analysis to evaluate the performance of Islami Bank Bangladesh
Limited.
In my internship program, the scope of the work was immense as I was assigned to work in
every department of the bank in Shyamoli branch. I have tried to observe and understand all the
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banking activities especially general banking activities and other day to day functions performed
in this branch. I also tried to understand different topic from the bank personnel.
1.5 Methodology
Sources of Data
Conversation with the officers of different sections of Islami Bank Bangladesh Limited
Personal experience gained by visiting different desks, and by asking customer’s opinions
The major limitations that I faced during my internship period and preparation of this report are
as follows:
Lack of experience
This report includes five chapters. The first chapter is introductory chapter. Second chapter
contains the overview of the banking industry and overview of Islami Bank Bangladesh Limited.
The third chapter contains brief descriptions about my roles and responsibilities during internship
and general banking activities of Islami Bank Bangladesh Limited. The fourth is the findings,
where I have discussed about BCG Matrix, SWOT Analysis, Ratio Analysis and Challenges and
Opportunities. Conclusion and Recommendation is in fifth chapter and at the end of the report
reference is given.
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Chapter Two
Following independence, banking industry in Bangladesh started its journey with 6 nationalized
commercialized banks, 2 State owned specialized banks and 3 Foreign Banks. In the 1980's
banking industry achieved significant expansion with the entrance of private banks. Now, there
are 66 banks in Bangladesh. Out of the 66 banks, 6 are state owned commercial banks, 32 private
commercial banks, 8 islami shariah based commercial banks, 9 foreign banks and the rest 11 are
specialized development banks. Bangladesh Bank (BB) regulates and supervises the activities of
all banks.
6
11
32 Foreign Bank
8
Development Bank
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2.2 Overview of Islami Bank Bangladesh Limited
Islami Bank Bangladesh Limited is a Joint Venture Public Limited Company engaged in
commercial banking business based on Islamic Shari'ah with 63.09% foreign shareholding
having largest branch network ( total 329 Branches) among the private sector Banks in
Bangladesh. Islami Bank Bangladesh Limited (IBBL) was established on March 13, 1983 as a
public limited company under Companies Act, 1913 as the first Islamic Bank in the South East
Asia. The bank started commercial operation on March 30, 1983 as the first interest-free Islamic
Shariah based commercial bank with an objective of catering to the need of increasing demand
for Islamic Shariah based financial products. It is listed with Dhaka Stock Exchange Ltd. and
Chittagong Stock Exchange Ltd. Authorized Capital of the Bank is Tk. 20,000.00 Million and
Paid-up Capital is Tk. 16,099.90 Million having 33,686 shareholders as on 31st December 2016.
Islamic banking is based on the principles of serving as the masses in the light of Islamic
economy or its ‘Maqasid’ or purpose. Despite the setbacks and deficit of global economy and
subsequent volatility in the country economy, IBBL maintained its leading position in the
banking sector of Bangladesh and could manage to achieve reasonable outcomes in all the
business areas. The total assets of the Bank amounted to Tk. 936,946 million as on December 31,
2016 registering 9% increase over previous year. Equity base of the Bank has increased to stand
at Tk. 48,739 million at year end 2016 against Tk. 47,461 million of the previous year. However,
the Bank achieved promising growth in general investment (16.26%) and moderate growth in
the period Profit after tax of the Bank was Tk. 4,464.98 million, Earnings Per Share (EPS) was
Tk. 2.77 compared to Tk. 2.04 of the year 2016. IBBL is the biggest automated bank in
Bangladesh. Islami Bank’s programs are run by its own software which is unique in banking
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industry of Bangladesh. The core operational software e-IBS is created by bank’s own young
employees. Islami bank is increasing technology-based services like internet banking, mobile
As interest is haram in Islam, the Muslim scholars in an attempt to establish a banking system
that is free from interest and will work in the basis of profit-loss sharing have come up with the
Islamic banking has been defined in a number of ways. According to Organization of Islamic
Conference (OIC), “An Islamic bank is a financial institution whose rules expressly state its
commitment to the principle of Islamic Shariah and to the banning of the receipt and payment of
Two basic principles behind Islamic banking are the sharing of profit and loss and the
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2.3.2 Difference between Islamic bank and Conventional bank
The functions and operating modes of Islamic The functions and operating modes of
banks are based on the principles of Islamic conventional banks are based on manmade
Shariah. principles.
prohibited sector, so its investment scope is Its investments scope is not narrow.
narrow.
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2.3.3 Products and Services of Islami Bank Bangladesh Limited
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2.3.4 Islami Bank Bangladesh Limited Organogram
Chairman
Vice Chairman
Board of Director
Officer
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2.3.5 Corporate information of Islami Bank Bangladesh Limited at a glance
1000, Bangladesh
Website www.IslamiBankBd.com
Michael Porter introduced "Five Forces Model" to analyze an industry, which was introduced in
to enter or not. So, if all the forces are high then it is easily meant that the industry is risky to
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enter whereas if majority or important forces are comparatively low then a company can enter
Threat of
New Entrants
(Low)
Threat of
Substitute
Products or
Services
(Medium)
Figure 2.2: Porters’ Five Forces Industry Framework on the Competiveness of the Banking Industry.
Capital requirement for establishing a new bank in Bangladesh is 400 crore taka, relatively high
than other industries. Now, government has enforced a rule for new banking companies is that
every bank should set their branches 75% on rural and semi rural areas and 25% on urban areas.
So, it is a challenge for them. For establishing a new bank, there is a Govt. and legal barriers on
licensing as well. As a new bank they may face "Image Crisis" because there are already many
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banks in Bangladesh. As a new bank they also have lack of confidence and experience.
Bangladesh bank sometimes gives permission to new banks due to political consideration,
government restriction, inflation rate thus this scenario increases competition in the market. So,
Suppliers bargaining power is medium in the banking industry. Suppliers of the Banks are
depositors mainly who deposit their money by opening different types of accounts, scheme and
other things that are required by the banks. They can easily switch to other banks if they get a
little higher rate of return, better environment, better service. As the Bangladesh bank usually
takes decisions associated with interest rate and banks have to follow that rules and regulations.
The customers of the banks are borrowers. The banks in our country are instructed and controlled
depositors demand to change loan sanction policy of bank or to increase interest rate, Bank will
not accept until they get permission from Bangladesh bank. They can easily switch to other
banks, if other banks offer lower interest rate to borrow money. Customers have no power to
change the rules and regulations set by the banks. For this reason customers/buyers bargaining
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2.4.4 Threat of Substitute Products or Services
Substitute products are produced in a different industry but crucially satisfy the same customer
need. Various financial institutions are coming up to provide financial services in Bangladesh
which might act as a replacement for the banking services. There are some non-banks/substitute
financial institutions that do many of the activities and transactions of a bank like- Lanka Bangla
Financing, Industrial Leasing and Development Company Ltd (IDLC), BRAC etc. do same types
of activity. Lankabangla finance provide various loans like- home loan, personal loan etc. IDLC
Finance Limited works for home loan, car loan, SME loan. In this case, threat of Substitute
In banking industry the number of competitors are increasing day by day with its increasing
number of different products, improved service, attractive advertising and attractive interest
rates. Also some foreign commercial banks like Standard Chartered Bank, HSBC Bank etc. are
intensity rivalry of the banking industry. All the banks are trying to improve their relationship
with customers by providing quality service to compete with others to make profit. So the degree
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Chapter Three
As an intern I had started my internship program in IBBL on 2nd October 2017. There were two
types of training methods. First step was theoretical training at Islami Bank Training and
Research Academy (IBTRA) and second step was practical session at Islami Bank Bangladesh
Limited (IBBL), Shyamoli branch. My practical experience was enriched immensely during my
internship at IBBL which enabled me to relate this know-how with my academic exposure. My
working area and responsibilities schedule were provided to me by the bank manager, which is
Opening Account.
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Changing customer address, phone number, photo, signature and close existing account,
Providing clear concept to the clients regarding the difference between profit and interest.
Dealing with the necessary papers and required documents in the investment section.
Islamic Bank does not provide any loan rather they provide investment on sharing profit
General Banking is the starting point of all the banking operation. General Banking Department
is considered as the direct customer service center. General banking department performs the
core functions of bank, operates day-to-day transactions of banking operation. This is the busiest
department. Every day it receives deposits from customers and meets their demand for cash. It
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opens new accounts, remits customer’s money from one place to another. There are basically
IBBL
The activities of general banking of IBBL are mainly divided into the following categories:
0 0
3.2.1 Account opening Section
Banker-customer relationship begins with the opening of an account by the customer. Opening of
an account binds the same into a contractual relationship. But the selection of customer is very
crucial. IBBL officer opens different types of account on the request of clients.
There are various types of accounts in IBBL. These are: Al- Wadeah Current Account (AWCA),
Al-Wadeah has been derived from the Arabic word “Wadayun” which means to keep/to
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Required Documents
Signature of Introducer
Mudaraba means travel for undertaking business, where one party provides capital, here the
provider of capital known as “Shahib-al-maal”. Other party provides skill and labour, here the
Required Documents
Signature of Introducer
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3.2.2 Cash Section
The cash section of IBBL plays very significant role in general banking department. Basically
cash department is the most vital and sensitive department of the branch which deals with all
kinds of transaction in cash. All cash receipts and payments are made through this department.
This section receives cash from depositors and pay cash against cheques. The drawer who wants
to receive money against cheque comes to the payment counter and presents the cheque to the
Whether the amount in figure and in word corresponds with each one.
Each Bank has its own clearing department. This department has several jobs. These are:
Whenever the branch of IBBL receives a cheque from other Bank to collect money, then
the branch send the cheque to the Head Office. The Head Office arranges the cheque
separately by the name of different Banks and then it send to the respective bank for its
clearing. Bangladesh Bank has given condition for this job of clearing house name
HOUSE. This is done twice in a day. First house and return house. First house is to
deliver the cheque and collect cheques from different banks. And return house is to return
the honored cheques. As soon as the principal branch gets the clearance it sends to the
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b) Outward Cheque Clearing:
This is the opposite flow of the Inward Cheque clearance. When IBBL send cheque to
another person of another bank, that bank does the same things to claim the money from
Sending money from one place to another place for the customer is another important service of
banks. There are various kinds of techniques for remitting money from one place to another
This is the service for the people. A person can do pay order transaction without having bank
account. Pay order is an instrument which is used to remit money within a city through banking
channel.
b) Demand Draft
Demand draft is a popular instrument for remitting money from one corner of country to another.
This instrument is used for transfer and payment. Difference between pay order and demand
draft is in terms of place only. PO is used for remittance money with the city where as DD is
Telegraphic Transfer (TT) is another widely used mode for remittances of funds. TT is quicker
than DD. For TT both parties should have account as money is transferred.
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Chapter Four
SWOT analysis means strength, weakness, opportunity and threat analysis of company. From the
Strengths Weaknesses
SWOT
Opportunities Threats
Strengths
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Leading Bank
Bank reputation
Islami Bank Bangladesh Ltd has already established a favorable reputation in the banking
industry of the country with its significant business growth. It continues to earn a
IBBL’s working environment is very friendly. It provides its work force excellent place
to work. Its work environment boosts up the spirit and motivation of employees. Many
jobs are performed in-groups in order to reduce the burden of the workload and enhance
Financial Strength
IBBL has adequate financial base and does not required to borrow money from
Bangladesh Bank or any other banks. As a result, customers feel comfortable and more
secure while dealing with the bank. It has already established its position in the banking
industry of Bangladesh. The number of deposits and investments are also increasing
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Weaknesses
Limited Workforce
Islami Bank Bangladesh Limited, in some areas, has inadequate human resources, burden
of extra workloads. This might cause high employee turnover and it will lead to higher
cost.
This is a great weakness. Less than adequate number of foreign exchange departments is
a barrier to improve foreign business. Earnings from foreign exchange sector will not
Staff meetings and departmental meetings at the branch level are not held routinely
Due to lack of adequate prowess and academic knowledge of latest computer applications
some of the system operators manifest inefficiency in carrying out their activities
Opportunities
Branch Expansion
Bangladesh has 64 districts. Besides expanding in the urban areas, IBBL may explore the
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More concentrated banking based on Islamic Banking
As the functions of Islamic banks are based on the principles of Islamic Shariah they can
The Nationalized Commercial Bank’s (NCB’s) service is traditional and often backward,
Islami Bank Bangladesh Limited has the scope of nurturing their option in the SME
Threats
Many local and foreign banks are entering in the banking industry despite huge capital
requirements and Government restriction. They are offering similar products and can
Most of the people in our country have misconception about Islamic banking because
they have no clear idea about the activities of Islamic banks. As similar products are
In banking industry customer loyalty is very unsteady. Sometimes client even does not
know what they actually need. They always look for better option compared to the
existing one.
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Political Instability
Unstable political situation causes barrier in the smooth flow of business. Sudden Hartals and
other political programs create problems for the employees. This might also be considered as a
In the early 1970’s the Boston Consulting Group developed a model for maintaining a portfolio
of different business units (or major product lines). The BCG growth share matrix displays the
various business units on a graph of the market growth rate v/s market share relative to
competitors. BCG matrix has four cells. Each of these cells represents a particular type of
business. The four cells of this matrix have been called as-
Stars
Question mark
Cash cows
Dogs
High Question
Stars
marks
(RDS)
Market Growth
(SMSA, MMSA)
High Low
Market Share
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Stars
Stars are those products, who have high growth and high market share. Stars are market leader.
They may generate cash but because of fast growing market, stars require huge investments to
IBBL's star product is- Rural Development Scheme (RDS). They generate huge cash but for
Question marks
Question marks are those in high growth rate markets but have low market share. They require
huge amount of cash to maintain and gain market share. These products need to increase their
market share quickly or they become dogs. So, they need huge investment to capture market
share.
IBBL’s question marks products are- SMSA (Students Mudaraba Savings Account), MMSA
Cash Cows
Cash cows are in a position of high market share with low growth. Cash cows are normally in
mature position in the life cycle of the product. Cash cows require small investment and generate
IBBL's Cash Cow product is- MHSA (Mudaraba Hajj Savings Account). These type of service
generate more cash but there is no need to finance or not required any investment.
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Dogs
Dogs are in low growth markets and have low market share. They neither generate cash nor require
huge amount of cash. Dogs should be avoided and minimized because they generate low profits
or losses for the organization. Such businesses consume more management time. IBBL's dog
Ratio analysis is an important and useful technique of financial analysis. Here I select Al Arafah-
Islami Bank Limited (AIBL) to evaluate and compare their performance with IBBL, because I
got available information of AIBL from their annual reports than the other banks and also as
AIBL is an Islamic bank it was more easy for me to evaluate the ratio analysis.
Return on investment is the percentage of income compared to general investment. That means
we can measure the income performance by this ratio. The higher the ratio greater is the income
of the organization.
5Year
Bank/Year 2012 2013 2014 2015 2016
Average
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16.00%
4.00%
2.00%
0.00%
2012 2013 2014 2015 2016
IBBL AIBL
We know that a bank with lowest non performing investment shows greater efficiency in
managing investment to earn maximum return due to its satisfactory recovery rate. From the
table, we see that AIBL earns greater return on investment due to its greater efficiency in
Non-performing investment means the portion of investment that have unpaid profit and
principle outstanding. It measures the portion of non-performing investment over the total
investment. If NPIs increase that means bank should put in more investment effort and should
5Year
Bank/Year 2012 2013 2014 2015 2016
Average
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6.00%
4.92%
5.00% 4.66% 4.54%
2.00%
1.63%
1.00%
0.00%
2012 2013 2014 2015 2016
IBBL AIBL
The above table shows that the average NPI of IBBL is highest. Since the NPI of AIBL shows
lowest ratio compared to IBBL, so we can say that their recovery performance is better and
improving.
Investment to deposit ratio measures the portion of investment over the deposit .If this ratio is
high that means the organization may earn greater profit but the organization may face the
5Year
Bank/Year 2012 2013 2014 2015 2016
Average
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92.00%
90.56%
90.00%
88.59% 88.50%
88.74%
88.00%
86.00% 86.43%
84.58%
85.18%
84.00%
83.59%
82.00% 82.35%
80.00% 79.88%
78.00%
2012 2013 2014 2015 2016
IBBL AIBL
The above table shows that the investment to deposit ratio of AIBL is higher than IBBL.
Although the average investment to deposit ratio of IBBL is lower but their average NPI is
Return on Asset is an indicator of how profitable a company is relative to its total assets. ROA
gives an idea as to how efficient management is at using its assets to generate earnings.
5Year
Bank/Year 2012 2013 2014 2015 2016
Average
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1.40%
1.30% 1.31%
1.23%
1.20% 1.27%
1.10% 1.08%
1.00%
0.96%
0.80%
0.67%
0.60%
0.59%
0.40% 0.48%
0.20%
0.00%
2012 2013 2014 2015 2016
IBBL AIBL
From the above table it is found that, return on asset ratio of AIBL is higher than IBBL. It
indicates that AIBL has good asset management efficiency and the bank is more efficient to
convert its assets into net earnings. The asset management efficiency of IBBL is not good
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Lack of skilled system operators
Often due to failure to keep pace with the advancement of technological changes especially in
terms of use new computer applications, IBBL is caught at the wrong end of the bargain in terms
Marketing strategy of the bank is very poor. They do not use any modern advertising method to
attract customers.
Lack of motivation
The bank does not provide any extra incentive for showing extra ordinary performance. So,
Challenges
Due to the lack of proper monitoring and efficiency IBBL’s NPI has increasing trend year
to year.
Because of the increasing rate of NPIs, IBBL has a low investment to deposit ratio that
means they keep large proportion as provision against classified investment which causes
a decline in ROI.
IBBL keeps huge proportion of provision against classified investment. It indicates that
NPI is increasing year to year. This may be caused by lack of proper monitoring.
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Opportunities
Before granting fund for investment, IBBL should examine the investment proposal carefully to
know whether the proposal fulfills the investment criteria of the bank and after granting fund for
investment they should monitor properly. If they are able to do these perfectly, the amount of
NPI is likely to decrease. As a result, they can decrease the volume of provision against
classified investment which can be used as new investment. Besides this, they can also increase
their investment to deposit ratio and ultimately their ROI will increase.
AIBL should increase the number of efficient personnel of investment department for forecasting
investment properly.
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Comparative Financial Performance Analysis between Islami Bank and Al-Arafah-Islami
Bank:
Authorized
1. 20,000.00 10,000.00 20,000.00 15,000.00 20,000.00 15,000.00 20,000.00 15,000.00 20,000.00 15,000.00
Capital
Paid up
2. 12,509.64 7,130.98 14,636.28 8,343.25 16,099.91 9,469.58 16,099.91 9,469.58 16,099.91 9,943.06
Capital
Earning
3. per Share 4.42 2.03 3.40 2.46 2.48 2.20 1.88 2.25 2.77 3.07
(Taka)
Import
4. 284,588.00 71,931.70 285,890.00 85,915.00 316,975.00 101,244.70 343,668.00 107,049.80 339,954.00 118,786.60
Business
Export
5. 197,095.00 58,476.60 205,269.00 68,980.30 222,753.00 75,843.90 224,236.00 79,362.90 243,647.00 88,152.20
Business
Net
6. Investment 17,801.80 5,288.12 17,170.27 5,858.61 18,459.69 7,109.14 19,414.41 7,494.99 23,596.98 8,872.42
Income
Return on
7. Equity 13.42 13.85 11.36 14.15 8.85 12.80 7.00 12.82 9.28 15.67
(ROE)%
Return on
8. Assets 1.27 1.30 0.96 1.31 0.67 1.10 0.48 1.08 0.59 1.23
(ROA)%
Fixed
9. 14,808.23 2,394.62 15,732.81 2,517.22 15,926.36 2,661.11 15,836.48 3,057.38 15,586.91 3,240.18
Assets
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Chapter Five
5.1 Conclusion
A strong banking sector can change the economic structure of the country. IBBL performs
various activities according to Islamic Shariah both for the public and for the government. Islami
Banks are those who do not charge interest, rather they do business on profit sharing basis.
Most of the people in our country have misconception about Islamic banking. They cannot find
any difference in its operation between conventional commercial banks and Islamic banks
because they have no clear idea about the activities of Islamic banks. At present there are eight
Islamic banks operating in our country and they are making contribution through performing
their activities with better efforts. However, Islami Bank Bangladesh Limited is not free from
limitations.
There are no laws of Bangladesh Bank based on Islamic principles to regulate Islamic Banks.
The traditional regulatory systems are neither suitable nor sufficient. So, up-to-date Islamic
banking laws are very essential. Some financial instruments approved by Islamic Shariah should
be introduced so that investors may comfortably put their funds into those financial instruments
Islamic bank is now functioning efficiently, smoothly and satisfactorily despite facing various
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In this report, I have analyzed BCG growth share matrix to show the market position in banking
industry of IBBL. In addition, Porters five forces is analyzed to show the competition of Islami
Bank Bangladesh Limited with others banks. SWOT analysis has been shown to determine the
IBBL’s strengths, weaknesses, opportunities, and threats, and finally ratio analysis to determine
I hope in spite of my all limitations, this experience of sharing works with such working
5.2 Recommendations
For improving the performance of Islami Bank Bangladesh Limited, the following steps may be
fruitful:
Management Efficiency
In order to increase efficiency, the authorities of Islami Bank Bangladesh Limited should set up
There may be communication gap between top and bottom management. Many bright ideas from
the bottom level personnel are not able to reach the top management. Islami Bank Bangladesh
Limited should delegate authority and responsibility to the branch so that they can take some
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Turn company objectives into individual target
The entire department should be informed regarding their goals and objectives. A philosophy of
working for the customer instead of working for boss must be introduced.
The bank should give an aggressive advertisement in form of outdoor advertising - specifically
through 'Electronic digital billboards’ in its pursuit of building up a strong image and reputation
adapting large portion of the market. It will help to collect more deposits and enhance investment
scope.
The management of Islami Bank Bangladesh Limited should regularly execute marketing
research like face to face interview, consumer survey in order to keep the management informed
about the changing attitude of the customers and to minimize the gap between the customer
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Reference
Websites
Ibtra.com. (n.d.). Islami Bank Training and Research Academy :: Home Page ::. [online]
Al-arafahbank.com. (n.d.). Al-Arafah Islami Bank Limited. [online] Available at: http://www.al-
Annual report
Al-Arafah Islami Bank Limited (2012). Annual Report 2012. [online] Available at: https://al-
Al-Arafah Islami Bank Limited (2013). Annual Report 2013. [online] Available at:
2018].
38
Al-Arafah Islami Bank Limited (2014). Annual Report 2014. [online] Available at:
2018].
Al-Arafah Islami Bank Limited (2015). Annual Report 2015. [online] Available at:
Al-Arafah Islami Bank Limited (2016). Annual Report 2016. [online] Available at:
Books:
Internship Program for the University students and class notes of IBTRA.
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Appendix
Questionnaire Survey
Section A
1. Name :
2. Age:
Section B
a. Current
b. Saving
c. Others
a. 0-3 years
b. 3-5 years
c. 5-10 years
d. Above 10 years
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7. What is your opinion about online service of IBBL
a. Excellent
b. Good
c. Moderate
d. Poor
Strongly Strongly
No. 1 2 3 4 5
problem?
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