internship report on credit risk management of jamuna bank limited

8/18/2019 Internship Report on Credit Risk Management of Jamuna Bank Limited

1/22

INTERNSHIP REPORT

ONCredit Risk Management of

Jamuna Bank Limited

Supervised B

Su!tan "#med

"sso$iate Professor

%epartment of Business "dministration

Bang!ades# Is!ami &niversit

Su'mitted B

Md( Me#edi Hasan )#an

I% NO( *+*,-*..**/

Program0 BB"

Bat$#0 + t#

Ma1or in 2inan$e



%#aka3.-*/


2/22

INTERNSHIP REPORT

ONCredit Risk Management of

Jamuna Bank Limited

Supervised B

Su!tan "#med

"sso$iate Professor



Su'mitted B

Md( Me#edi Hasan )#an

I% NO( *+*,-*..**/

Program0 BB"

Bat$#0 + t#

Ma1or in 2inan$e



%#aka3.-*/


3/22

CONTENTSSu'1e$ts0 Page No(C#apter One0Introduction, Objectives of the report……………………..…………………………..1Scope of the report, Methodology of the study …………….…………………………2Time schedule, imit!tion of the report ………………………………………………"

C#apter T4o0#istoric!l $!c%ground of &$ ……………………………………………………….',()ision, Mission, *unction, +orpor!te culture of &$ ……………….………………...

M!n!gement of &$ ……………………………………..………………………….....-ivisions of &$ , #e!d office ……………………………….………………………1/

+redit rel!ted products !nd services……………………………………………...1101'elivery +h!nnels of &$ On0line $!n%ing………………………………………... 1(

*in!nci!l Inform!tion of the $!n%...……………………………………………...1 0"2

C#apter T#ree0efinition, +l!ssific!tion, roblems of $!n%………………………….…………." ,"3rospects of $!n%ing Industry……………………………………………………....."'

+redit, +redit 4is% …………………………………..…………………………...."(,"

C#apter 2our04!tion!l of the study…………………………………………………………………. /$!ngl!desh $!n% 5uidelines…………………………………………………….."-0 "

referred org!ni6!tion!l structure !nd 4esponsible………………………………….+redit 4is% M!n!gement 7+4M8, +redit 9dministr!tion …………………………... 3

rocedur!l 5uidelines ……………………………………………………………. ', (……………………………………………………………. ', (:!rly 9lert process……………………………………………………………...... (,+redit 4is% 5r!ding……………………………………………………………… -032$!sel II 9ccord…………………………………………………………………...32,3"+redit Oper!tion in &$ ……………………………………………………………...3+redit rinciple of &$ …………………………………………………………....33,3'+redit +!tegories in &$ …………………………………………………………3',3(

rocedure of M!n!gement of +redit 4is% in &$ ……………………………………3(M!jor *unction, uties !nd 4esponsibilities of +4M………………....................3 ,3-*unction of +redit officers osted !t +redit 4is% M!n!gement unit…………......3-0'1+redit Monitoring…………………………………………………………………….'2:ffects of M!n!gement of +redit 4is%s in &$ ………………………………...........'2

roblem in M!n!gement of +redit 4is% in &$ ………………………………...........'"S;OT 9n!lysis…………………………………………………………………..' ,'3

C#apter 2ive0


4/22

4ecommend!tion………………………………………………………………….'(,'+onclusion……………………………………………………………………………'-$ibliogr!phy………………………………………………………………………….(/-(.* 2inan$ia! Information of JBL0

Ratio "na! sis0Ratio "na! sis0

The fin!nci!l st!tement of !n ehich the !n!lysis is m!de >ill suggest emph!si6ing one set of r!tios in

preference to others. Some import!nt r!tios !re given belo>?

T!ble ? 2.1/.1 4!tio 9n!lysis

Year-2009 Year-2008 Year-2007 Year-2006A. Performance Ratio % :

1. Return on Average Assets (before tax) 3.89 2.9847 1.74 2.702. Return on Average Assets (after tax) 2.30 1.65 0.38 1.373. Return on Average Equ t! 30.06 25.12 5.54 21.39

4. "et #nterest $arg n(Avg) 6.36 4.78 4.39 4.395. "et #nterest $arg n 5.20 4.46 3.88 4.066. Return on nvest%ent 16.01 15.72 8.80 10.02

B. Asset Quality Ratio % :

1. "on &erfor% ng 'oan to ota' oan 2.20 2.84 5.06 5.032. oan oss Reserve to ota' oan 2.93 2.83 4.45 2.503. oan to *e&os t 76.23 77.04 79.42 74.03

. a!ital Ratio "rRe#ulatory a!ital Ratio % :

1. ota' R s+ , -ase* a& ta' Rat o 12.83 11.91 12.42 14.792. er 1 R s+/ -ase* a& ta' Rat o 9.80 10.39 10.95 13.583. everage a& ta' Rat o 8.78 1042 10.98 9.764. Average Equ t! to Average Assets 7.64 6.58 6.91 6.40

4eference? 9nnu!l report of &$ 2//-.


5/22

5rap#s of %ifferent Ratios0T!ble ? 2.1/.2 erform!nce 4!tios Year-2009 Year-2008 Year-2007 Year-2006A. Performance Ratio % :

1. Return on Average Assets (before tax) 3.89 2.9847 1.74 2.702. Return on Average Assets (after tax) 2.30 1.65 0.38 1.373. Return on Average Equ t! 30.06 25.12 5.54 21.394. "et #nterest $arg n(Avg) 6.36 4.78 4.39 4.395. "et #nterest $arg n 5.20 4.46 3.88 4.066. Return on nvest%ent 16.01 15.72 8.80 10.02

4eference? 9nnu!l report of &$ 2//-. *ig? 2.1/.1 4O99 7before t!


6/22

*ig? 2.1/. @et Interest M!rgin 79ver!ge8

*ig? 2.1/.3 4OI

Referen$es0 9nnu!l 4eport of &$ 2//-.

Comments0 *rom the !bove fin!nci!l perform!nce r!tio >e c!n s!y th!t fin!nci!l

perform!nce of &!mun! $!n% imited is incre!sing ye!r by ye!r such !s

return on !ver!ge !ssets 7before t!


7/22

9sset Bu!lity 4!tio AT!ble? 2.1/.2 9sset Bu!lity 4!tio

B. Asset Quality Ratio % : Year-2009 Year-2008 Year-2007 Year-20061. "on &erfor% ng 'oan to ota' oan 2.20 2.84 5.06 5.032. oan oss Reserve to ota' oan 2.93 2.83 4.45 2.503. oan to *e&os t 76.23 77.04 79.42 74.03

4eference? 9nnu!l report of &$ 2//-.*ig? 2.1/.'

$on !er formin# loan to %otal loan

2007

2008

2009

&.06

2.8'

2.2

(

2

)

"on &erfor% ng 'oan to(ota' )oan

1ear

*ig? 2.1/.(

*ig? 2.1/.

Referen$e0 9sset =u!lity r!tio of &$ 2//' to2//-

Comments0 This figure sho>s th!t the !sset =u!lity r!tio of &!mun! $!n% imited

is incre!sing signific!ntly from "1.12.2//' to "1.12.2//-.


8/22

+!pit!l 4!tio C 4egul!tory +!pit!l 4!tio AT!ble? 2.1/." +!pit!l 4!tio

. a!ital Ratio "r

Re#ulatory a!ital Ratio % : Year-2009 Year-2008 Year-2007 Year-2006 1. ota' R s+ / -ase* a& ta' Rat o 12.83 11.91 12.42 14.792. er 1 R s+/ -ase* a& ta' Rat o 9.80 10.39 10.95 13.583. everage a& ta' Rat o 8.78 1042 10.98 9.764. Average Equ t! to Average Assets 7.64 6.58 6.91 6.40

4eferences? 9nnu!l report of &$ 2//-.

*ig? 2.1/.-

*ig? 2.1/.1/

*ig? 2.1/.11

Referen$e0 9sset =u!lity r!tio of &$ 2//' to 2//-

Comments0 These figure sho>s th!t the !sset r!tio of &!mun! $!n% imited is

incre!sing signific!ntly from "1.12.2//' to "1.12.2//-.


9/22

Maturit grouping of !oans and advan$es0

Maturit 5rouping of !oans6 advan$es 7ear -**8 7ear -**9

!y!ble on dem!nd 2,2--,1"-,2'1 1,/1/,(31,"3' @ot More th!n three months ,/2-, ((, '" ",( 2,( ", 1More th!n three months but not more th!n 1 ye!r 1', 1(,1" ,"(" -, - ,/12, 11More th!n 1 ye!r but not more th!n 3 ye!rs (,23/,3 (,/ 2 3,2'3,2-", 2(More th!n 3 ye!rs 1, -/,-1 ,'1( 1,12 ,/1-,'//

Tota! /-6-9,6::.6.+: -.6*/:69:.6*.-

T!ble? 2.1/. M!turity grouping of lo!ns !nd !dv!nces


*ig? 2.1/.12 M!turity 5rouping of o!n !nd 9dv!nces

*ig? 2.1/.1" o!n @ot More th!n three months


10/22

*ig? 2.1/.1 o!n More th!n three months but not more th!n 1 ye!r

*ig? 2.1/.13 o!n More th!n 1 ye!r but not more th!n 3 ye!rs

4eferences? 9nnu!l report of &$ 2//-.

Comments0 This figure sho>s th!t the m!turity grouping of lo!ns !nd !dv!nces of

&!mun! $!n% imited is incre!sing signific!ntly from "1.12.2//' to "1.12.2//-.


11/22

Con$entration of advan$es0

T!ble? 2.1/. 3 +oncentr!tion of !dv!nces

Con$entration of advan$es 7ear -**8 7ear -**99dv!nces to !llied concerns of irectors9dv!nces to +hief :s th!t the customer group !dv!nces of &!mun! $!n%imited is incre!sing signific!ntly from "1.12.2// to "1.12.2//-.


12/22

Se$tor 4ise Loan and "dvan$es0

T!ble? 2.1/.' Sector >ise lo!n !nd !dv!nces


*ig? 2.1/. 1( Sector >ise o!n !nd 9dv!nces

SL No Se$tor 4ise !oan6 advan$es 7ear -**8 7ear -**91 9gricultur!l D *isheries 1'2,-//,/// - ,"//,///2 !rge D Medium Sc!le Industries 3,'/2,3//,/// ,/1-, //,///" ;or%ing +!pit!l 1/,-- , //,/// 3, 2, //,///

:


13/22

!gricultur!l !nd fisheries. In the ye!r 2// to 2//- in the 9gricultur!l !nd *isheries

sector of &$ g!ve less o!n !nd 9dv!nces.

On the other h!nd &$ g!ve more lo!n !nd !dv!nces on >or%ing c!pit!l.

C!assifi$ation of !oan6 advan$es as per Bang!ades# Bank $ir$u!ar0 T!ble ? 2.1/.( +l!ssific!tion of lo!n, !dv!nces !s per $!ngl!desh $!n% circul!r

C!assifi$ation of !oan6 advan$es as perBang!ades# Bank $ir$u!ar 7ear -**8 7ear -**9

; of Tota!Loan

Encl!ssified "1," 3,''/,133 2/,2 ',13',/12 -(.21Speci!l Mention 9ccount 1-1,1 ",/// 132,"-',/// /.3-

Subst!nd!rd 1/,-1(,/// 12 ,2'-,/// /./"oubtful 1 ,'/",/// -,3"(,/// /./3

$!d or oss ' 3,"" ,/// '/,3/",/// 2.12Tota! /-6-9,6::.6.++ -.6*/:69:.6*.- .**


*ig? 2.1/.1 o!n !nd 9dv!nces !s per $$


14/22


+omments? This figure sho>s th!t the +l!ssific!tion of lo!n !nd !dv!nces !s per

$!ngl!desh $!n% circul!r of &!mun! $!n% imited the Encl!ssified of tot!l lo!n is

-(.21A !nd Speci!l Mention 9ccount of tot!l lo!n is /.3-A !nd Subst!nd!rd of tot!l

lo!n is /./"A !nd oubtful of tot!l lo!n is /./3A !nd $!d or oss of tot!l lo!n is

2.12A

2inan$ia! Performan$e and 5rap#i$a! Presentation0

Return on "verage "ssets Return on "verage "ssets 7ear Ratio C#ange 5ro4t#

Rate7ear Ratio C#ange 5ro4t#

Rate2//' 2.(/ / / 2//' 1."( / /2//( 1.( 0/.-' 0"3.3' 2//( /." 0/.-- 0(2.2'2// 2.- 1.2 (1.2' 2// 1.'3 1.2( "" .212//- ". - /.-1 "/.3 2//- 2."/ /.'3 "-."-


9ver!ge 5ro>th 4!te of 4eturn on 9ver!ge 9ssets 7before t!


15/22

4eference? 9nnu!l report of &$ 2//-.*ig? 2.1/. 1-


T!ble? 2.1/.1/ 4O99 7!fter t!


16/22

!ver!ge !ssets 7before t!th r!te in 2//( is 0"3.3'A, in 2// is (1.2'A, in

2//- is "/.3/A. In 2//( the &$ h!d neg!tive position return on !ver!ge !ssets

7before t!th 4!te of 4eturn on 9ver!ge :=uity

70( .1/ F1-.3 F .- 8C" G 01'.32A

9ver!ge 5ro>th 4!te of 4eturn on 9ver!ge Investment

7012.1( F ./2 F 1. 8C" G 11.2"A

T!ble? .12 4eturn on 9ver!ge :=uity

Return on "verage E?uit7ear 5ro4t# Rate2//( 0( .1/A"3". 2A2// "3". 2A2//- 1-.''A



17/22

*ig? 2.1/. 21 4eturn on 9ver!ge :=uity


T!ble? 2.1/.1" 4OI

Return on Investment7ear 5ro4t# Rate2//( 012.1(A2// ./2A2//- 1. A


*ig? 2.1/. 22 4OI


+omment s0 I !m c!lcul!ting of the gro>th r!te of return on !ver!ge e=uity from

"/.12.2//- to "1.12.2//- of the &!mun! $!n% imited. The r!te of return on !ver!ge

e=uity gro>th r!te in 2//( is 0( .1/A, in 2// is "3". 2A, in 2//- is 1-.''A. In


18/22


19/22

Comment0 The investment portfolio of the b!n% !s on "1.12.2//- rose to T%. 3/".million from T%. 2" .'"million !s on "1.12.2// .

• Interest e >ith due

reg!rd to b!l!nces eposit mi< for minimi6ing the cost !nd m!ith the efficient >or%

force by studying the fe!sibility of introduction of ne> products, !n!lysis of

>or% force productivity !nd simil!r other rese!rch >or%s !nd eventu!lly the

efficient M!n!gement of +redit 4is%s.

• *or sust!in!ble gro>th, the $!n% should identity, reinvests in productive

sector, !nd termin!tes unproductive oper!tionsCdivisions.

• &$ should est!blish investment priorities !nd develop corpor!te $udgets th!t

steer resources into those intern!l !ctivities critic!l to str!tegic success. It

should be involved in ch!nneling resources into !re!s >here e!rning potenti!ls

!re higher !nd !>!y from !re!s >here they !re lo>er.

• &$ should initi!te responses to ch!nge under >!y in the industry, the

economy !t l!rge, the regul!tory !nd politic!l !ren! !nd other relev!nt !re!s.

• &$ should observe the competitors closely to !n!ly6e !ny ne> course of

!ctions t!%en by them !nd re!ct competitively to th!t !ction. It c!n be

!ccomplished by the follo>ing >!ys 0


20/22

H+!n get inform!tion !bout ! cert!in competitor s $usiness policies by

recruiting their employees.

Hc!n get inform!tion from the people >ho do $usiness >ith those riv!ls .

Hc!n get inform!tion !bout other $!n%s from published m!teri!ls !nd

published documents .

• &$ should enh!nce its m!r%et e th!n its boo% v!lue.

• The b!n% should incre!se the number of +redit 9n!lyst to reduce the eor% lo!ds !nd to ensure efficient M!n!gement of +redit 4is%s.

• &$ h!s to !rr!nge to tr!in up its personnel through !de=u!te tr!ining

progr!ms !nd >or%shops so !s to they c!n c!rry out their jobs properly !nd up

to the m!r%.

Con$!usion

9t the fin!le, I feel myself fortun!te to get the ch!nce of prep!ring ! 4eport on the

topic li%e M!n!gement of +redit 4is%s. The prep!r!tion of report >ill help me ! lot to

!ugment my eledge !s to negoti!ting the ris%s !ssoci!ted >ith the

+redits of the $!n%s.

&!mun! $!n% td. is ! gro>ing !nd profit!ble b!n% in $!ngl!desh th!t h!s been

rendering service to customer since 2//1. I h!ve been >or%ing in the $!n% !nd it >!s

!n immense ple!sure for me to c!rry out the c!se study of the $!n% in connection >ith

M!n!gement of +redit 4is%s.

o!ns !nd !dv!nces comprise the most import!nt !sset !s >ell !s the prim!ry source

of e!rning for the b!n%. $ut it is !lso the m!jor source of ris% for the b!n% m!n!gement. Buic% lo!n recovering process c!n en!ble the l!> !nd order system to

prev!il, >hich is !l>!ys ! good environment for business. In this sector, &!mun! $!n%

td. is st!nding on ! s!tisf!ctory position.

Scheduled priv!tes b!n%s !re perh!ps the m!in pl!yers in elimin!ting the lo!n def!ult

culture of $!ngl!desh. 9s ! concise citi6en I hope !ny other b!n% li%e &!mun! $!n%

td. c!n touch their go!l !nd enjoy the full fruit of their !chievement. *in!lly I believe


21/22

th!t >ith proper guid!nce !nd help of the $!ngl!desh $!n% perh!ps our country >ill

enjoy the over!ll sound !nd strong *in!nci!l System.

Bi'!iograp#Bi'!iograp#

1. $!ngl!desh $!n%, M!n!ging +ore 4is% in $!n%ing? +redit 4is% M!n!gement,

h!%!, 2//3.

2. $!ngl!desh $!n%, +redit 4is% 5r!ding M!nu!l, h!%!, 2//'.". $edi, $. . !nd #!rdi%!r, ).J, r!ctic!l $!n%ing 9dv!nce, 1/ th :dition, E$+

ublishers istribution td., @e> elhi, Indi!, 2//".

. +ho>dhury, .4., 9 Te K#ill, @e> Lor%,

ES9,2//2.

-. i%mund, ;illi!m 5., $usiness 4ese!rch Methods, ( th :dition, South0;estern

ublic!tions, Ohio, ES9, 2//".

1/. &!mun! $!n% imited, 9nnu!l 4eport 2//-02/1/, h!%!.

11. ;ebsite? Nhttp?CC >>>.b!ngl!deshb!n%.orgC , visited on M!rch 2", 2/11.


22/22

12. ;ebsite? Nhttp?CC >>>.j!mun!b!n%bd.comC , visited on M!rch 1-, 2/11

internship report on credit risk management of jamuna bank limited

Documents