Performance Evaluation of Jomuna Bank Ltd - Assignment Point
Performance Evaluation of Jomuna Bank Ltd
Subject: Organizational Behavior | Topics:

Performance of the bank:

The incessant fall-out of international credit market due to world economic meltdown resulting sluggish growth has put significant pressure on financial performance of banks and financial institutions worldwide. Jamuna Bank Ltd has achieved continuous growth in almost all arenas of its business arenas despite this economic crisis, facing intensified competition of the industry. The bank remained in financial strong position with its continued focus on the vision of becoming country’s finest corporate citizen , providing excellent and need-based customer service.

The bank mobilized deposits of BDT 42356 million as at December 31,2009 compared to BDT 27307million, till 2008. Total loans and advances stood at BDT 32287million at the end of 2009 that was BDT 21036million at the end of 2008. Import business stood at BDT 46685 million in 2009 compared to BDT 30312 million in 2008. Export business stood at BDT 21407 million in 2009 as against BDT 18617 million in 2008. The bank collected foreign remittance of BDT 5.06 billion in 2009 compared to BDT 4.72 billion in 2008.

In 2009, the bank was able to make profit before tax BDT 1.66 billion as compared to 1.28 billion indicating 29.73% growth. Net profit attributable to shareholders stood at BDT 807.52 million. The return on equity remained 18.80% during 2009 and earning per share (EPS) stood at BDT at 56.92. Non performing loan (NPL) ratio reduced to 2.54% in 2009 as compared to 2.86% in 2008.

JBL made adequate provision against classified loans which is significantly higher than last year. Adequate provision made the bank stronger than before. Tier-1 capital stood at BDT 3054.14 million at the end of 2009 compared to that of BDT 2131.02 at the end of 2008. Tier-2 capital reached to BDT 943.52 million at the end of December 2009 as compared to that of BDT 313.32million at the end of 2008. Return of assets (ROA) increased to 1.89% in 2009 from 1.51% in 2008 and return on equity (ROE) also increased significantly to 18.80% from 17.75% in 2008. The capital adequacy ratio (CAR) increased to 10.48% in 2009 as against that of 10.17% in 2008. Net interest margin (NIM) stood at 3.58% at the end of 2009, suggesting a healthy growth in net interest income.

HIGHLIGHTS OF JAMUNA BANK LIMITED

 Amount in Taka ( Except  Ratio)

Sl.No.

Particulars

2009

2008

1

 

2

 

3

 

4

 

5

 

6

 

7

 

8

 

9

 

10

 

11

 

12

 

13

 

14

 

15

 

16

 

17

 

18

 

19

 

20

 

21

 

22

 

23

Paid up Capital

 

Total Capital

 

Capital surplus/(deficit)

 

Total Assets ( excluding off balance sheet items)

 

Total Deposits

 

Total Loans & Advances

 

Total Contingent Liabilities & Commitments

 

Advance Deposit Ratio

 

% of classified loans against Total Loans

 

Profit after taxation & provisions

 

Amount of classified loans

 

Provision kept against Classified loan

 

Provision surplus / deficit

 

Cost of Fund ( Deposit cost & overhead cost)

 

Interest Earning Assets

 

Non-interest earning Assets

 

Return on Assets (ROA)

 

Return on Investment (ROI)

 

Income from Investment

 

Earning per Share (Taka)

 

Net income per share (Taka)

 

Net asset value per share

 

Price Earning Ratio

1,621,882,500

 

3,997,664,705

 

880,659,405

 

48,730,951,557

 

42,356,203,563

 

32,287,661,155

 

14,718,947,868

 

76.23%

 

2.20%

 

923,123,207

 

710,858,000

 

465,638,000

 

 

11.93%

 

34,961,013,269

 

13,769,938,289

 

1.89%

 

16%

 

1,361,492,698

 

56.92

 

56.92

 

245.45

 

9.20

1,313,265,200

 

2,444,338,501

 

392,695,301

 

31,646,629,499

 

27,307,936,141

 

21,036,861,012

 

9,169,471,638

 

77.04%

 

2.84%

 

479,437,923

 

598,309,000

 

296,285,000

 

 

12.49%

 

27,668,329,466

 

3,978,300,033

 

1.51%

 

16%

 

666,152,122

 

29.56

 

29.56

 

133.22

 

9.02

Key Financial Indicator:

Profit scenario of Jamuna Bank:

In 2009 Jamuna Bank Limited posted an operating profit of Tk.1914.25 million as against Tk.1040.20 million in 2008 with a spectacular growth of 84.03 percent over the preceding year. After having made necessary provisions for loans and advances of Tk.351.05 million in accordance with the instruction of Bangladesh Bank Net Income Before Tax (NIBT) stood at Tk.1536.20 million in the year under review against Tk.865.82 million in the preceding year. An amount of Tk.632.26 million has been kept as provision for payment of Tax. Thus Net Income after Tax and provision stood at Tk.923.12 million in 2009 which was Tk.479.44 million in 2008.

Operating Profit

YearTk.(Million)
2005419.94
2006701.32
2007824.20
20081040.20
20091914.25

Capital Structure:

Jamuna Bank Limited has a conviction of maintaining a strong capital base in carrying on opereat operation on June 03, 2001 with a paid-up capital of Tk.390.00 million divided into 3.90 million ordinary shares of Tk.100 each. The authorized capital of the Bank is Tk.1600 million divided into 16.00 million of Tk.100 each. The Bank’s paid-up capital as at 31st December 2009 stood at Tk.1621.88 million. Tk429.00 million was raised through initial public issue of 4.29 million ordinary shares of TkA 00 each with a premiu- each while Tk.214.50 million was raised by issue of Bonus Shares in the ratio of 1:4, i.e. one bonus _s-holding of 8.58 million ordinary shares as on 31.12.2005, for every 4 shares out of profits upto the Thus, as on 31st December 2009, the total shareholder’s equity and reserve stood at Tk.3997.66 million!”

CAPITAL ADEQUACY RATIO

The Bank adopted BIS risk adjusted capital standards to measure the capital adequacy in line with set by Bangladesh Bank. According to the instructions contained in Bangladesh Bank’s BRPD Circ dated May 14, 2007 relating to Capital Adequacy every commercial bank operating in the required to maintain at minimum 9 percent of its risk-weighted assets as capital. Jamuna Bank Li-maintain Capital Adequacy ratio of 12.83 percent as at 31.12.2009 which was higher than the require Adequacy Ratio. The amount of capital with break-up is given below:

 

“Fig in BDT Million”

Particulars

2009

2008

Tier I Capital

3054.14

2131.02

Paid up Capital

1621.88

1313.27

Non-repayable Share Premium Account

Statutory Reserve

816.48

503.84

Retained Earnings

615.78

313.91

Proposed Bonus Share

Tier II capital

943.52

313.32

1 % Provision against Unclassified Loans

332.64

213.80

Exchange Equalization Fund

0.33

0.33

 

Total Capital (Tier I +Tier 11)

3997.66

2444.34

DEPOSITS AND DEPOSIT MIX

In commercial banks operation starts with mobilization of resources i.e. tapping of deposits and then the said resources are deployed as loans, advances and investments for the purpose of maximizing wealth which -sans deposits have dominance in commercial bank’s operations. That is why; there is a common saying that deposit is the lifeblood of a bank. In keeping with this axiom JBL attaches utmost importance to the deposit mobilization campaign and to the optimal deposit mix for minimizing COF as far as practicable. A stiff competition persisted in the market as to deposit mobilization and there was a pressure on interest rate. 3esides, instability in political atmosphere was adversely affecting business, which stood as a hindrance to the smooth operation of banks including deposit mobilization. Despite all these unfavorable factors JBL was able to instill confidence in customers as to its commitments to the depositors and borrowing customers and thereby could mobilize a total deposit of Tk.42356.20 million in 2009 against that of Tk.27307.94 million in the preceding year showing an increase of Tk.15048 million being 55.10 percent. Endeavor is underway for augmenting low cost deposit by accommodating good customers at competitive price. For healthy growth of business JBL puts emphasis on no cost and low cost deposit all the time. A number of savings schemes are in place for mobilizing long term deposits which can be planned to be invested in term loans in-the area lease finance, project finance and consortium finance with a view to having better yields. JBL’s such move will motivate the people to have good savings habit, as well. The comparative position of deposit mix of the Bank as on 31.12.2009 and 31.12.2008 is depicted below:

Type of Deposit

As on 31.12.2009

As on 31.12.2008

Changes

(+)/(-)

Changes in % over the year

Current A/C & other4715.313283.21+1432.1043.62
Bills Payable516.31412.03+57.5925.30
Savings Deposit2891.251679.40+1211.8572.15
Short term Deposit25201.5216360.18+8841.3454.04
Fixed Deposit2762.491335.16+1427.3393.54
Scheme Deposits6118.324131.80+1986.5248.07
Foreign Currency Deposit151.00106.16+44.8442.24
Total Deposits151.0027307.94+15048.2655.10

Import, Export & Remittance Position

 Import Trade

 The total import business handled by the bank in 2009 was Tk.46684.73 million compared to Tk.30311.71 million in the preceding year registering a growth of Tk.16373.02 million being 54.02 percent. A sizable L/C’s were also opened by the bank in the year under review. The import items included industrial raw materials, machinery, consumer goods,  fabrics, accessories, food item etc.

Import

YearTk. (Million)
200512152
200615458
200722192
200830312
200946685

 

 

Export Trade

The Bank handled export business worth Tk.21406.94 million in the year under report. In 2008 export business handled by the Bank was Tk.1861.43 million. Thus there was an increases of Tk.2789.51 million in export business handled by the Bank, being 14.98 percent over the preceding year. The major export item was Readymade Garments.

Export
YearTk. (Million)
20056522
200611584
200713990
200818617
200921407

 

 

Foreign Remittance

Total foreign remittance in a single year,i.e. in 2009 made a record high to the tune of BDT 5061.30 million compared to that of BDT 4722.90 million in 2008. The Bank has deepened its step on the foreign soils further by establishing more and more remittance arrangements with overseas exchange companies where Bangladeshi expatriates are working. These Include U.K, U.A.E, Kuwait, Baharain, Canada, Italy, France etc. Moreover, for prompt and safe distribution of this hard earned money to their near and dear ones in every corner of the country, the Bank has made an arrangement with Bangladesh Post Office, Western Union and some other agencies.

Particulars

Upto Last Date  on 23/06/2010

As on 23/06/2010 Total  
Amount is Crore Tk.
NoAmountNo.AmountNo.Amount
Import
  1. L/C (Cash)
741447.35155.29756452.64
  1. L/C (BTB Local)
2389397.23172.822406400.05
  1. L/C (BTB Foeign)
890290.8034.15893294.95
Sub Total BTB L/C3279688.03206.973299695.00
Total39921135.383512.2640271147.64
Export a)Export Bill (Gen)374107.1610.67375107.83
b) Export Bill (RMGF2350711.01195.332369716.33
c) Export Bill (RMGL)1626229.87121.881638231.75
Total43501048.03327.8843821055.91
Remittance Inward051.570.00051.57
Outward05.300.0005.30
Total 56.87 56.87

Banking industry has entered into the new Risk Based Capital Adequacy Framework (Basel II ) arena from 2010. JBL has already taken necessary steps to comply with this accord properly. The bank will also continue strengthen its position by expanding the core business activities,

Particularly in tread finance, commercial landing to SME, structured finance, import and export business. The Bank is continuously working to enhance its delivery standards, promote fee-beached activities & pursue grater cost efficiency and staff productivity by promoting a pro-active business process. In pursuit of its business growth, the Bank is invariably adhere to good corporate governance, sound risk management policies, prudent credit policies & practices in order to support sustainable long tram growth and profitability of the bank for the benefit of all stake holders. Given its strong performance in 2009 and in the first half of 2010, The Bank confidently look forward to continue sharing its success in delivering superior share holder’s value.

Recommendations

 In view of the facts, the following recommendations are made to the respective concerned for the consideration and implementation.

► The bank should have standardized system of measuring customer satisfaction.

► Need for integrity of the officials within reasonable limits.

► The officials should have a through knowledge of the product.

► The officials should be trained up for their efficiency.

► Reasonable interest rate for all kinds of loan.

► Increasing number of staffs and cash terminals.

► Officials should be more cooperative with the clients.

► Officials should be trained up for self-management.

► Customized new financial product development.

► Officials should be faster during transaction.

► Bank can accept new ideas from the customers for regarding improvement the quality of their service.

►They need to maintain an upgraded guideline for the employees to avoid any kind of confusion.

►They should enhance their savings facilities by introducing many other saving schemes, because customers really look for various savings programs.

►Special increment should be given to middle and junior level managers and executives also to increase their motivation level.

Conclusion

From the beginning of greater change in the world economic structure, banking activities has becoming an important thing. Now a day the idea of banking is also developed and a huge number of private commercial banks are just on waiting for business. So it is  a matter of think that how to establish an idea with different techniques, In Bangladesh, Commercial banks are playing vital role in the development of our economy and financial system. Standard Charted Bank Limited has a strong position in the today’s competitive market. The JBL, Malibagh Branch, Dhaka also contributing a better proportion of profit in JBL’s total earning. Total analysis of the bank has the greater opportunity to do better in the future.

Day by day JBL’s area of service is increased all over the country through setting up new branches at new places. The reliability of the customer on JBL‘s increasing day by day for its better services. But they may introduce online and ATM services comparing with other commercial bank to improve their services and to make efficient and easy customer services. They also may follow the given recommendations in order to improve day by day. Jamuna Bank Limited may contribute a vital role in the socio-economic prospective and in the development of our economy.

The JBL has been trying to operate its business successfully in Bangladesh since 1999. JBL has already developed an image of goodwill among its clientele by offering its excellent services. This success has resulted from dedication, commitment and dynamic

Leadership of its management over the periods. During the short span of time of its operation, the bank bas successfully grabbed a position as a progressive and dynamic financial institution in the country. If the bank goes this way. It is expected that in the near future JBL may become one of the top performers in the banking sector.

Here I observed its deposit figure is strong. The bank should take necessary action for maintaining .JBL has been able to maintain its recovery position in sector wise credit financing is up to the satisfactory level. At last it should give more emphasis in this sector to acquire more profit.

Bibliography

1.Annual Report of Jamuna Bank Limited, 2005, 2006,2007

2.  Chowdhury, L.R; A Textbook on Foreign Exchange, Fair Corporation,139, Azimpur, Dhaka, 1205

3.   Foreign Exchange Manual, Jamuna Bank Limited., 1st November,2009

4.   Collyer Gary, ICC Uniform Customs And Practice For Documentary Credits ,3rdEdition, International Chamber Of Commerce, ICC Publication No.600

5.  Bangladesh Bank Foreign Exchange Guidelines, Volume-1

6. www.jamunabankbd.com

Jamuna Bank Limited

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