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Comparative Analysis of Credit Portfolio of Selected
Private Commercial Banks of Bangladesh
Internship report submitted to the IBA Career Centre, Institute of Business
Administration to fulfill the degree of Masters of Business Administration
Submitted by:
Md. Iftekhar Ahsan
Roll # 54, Batch # 57D
Supervised by:
Mrs. Shakila Yasmin
Associate Professor & Coordinator, BBA Program
Institute of Business Administration, University of Dhaka
Date of Submission: May 30, 2020
Letter of Transmittal
May 30, 2020
Coordinator
Career Center
Institute of Business Administration (IBA)
University of Dhaka.
Dear Sir,
Here is my Internship report for course completion of MBA Programme due on May 30, 2020.
The topic of the report is “Comparative Analysis of Credit Portfolio of Selected Private
Commercial Banks of Bangladesh.”
This report has helped me to know more about the credit performance of the bank that I am
currently working and compare its portfolio with peer banks. The report has also given me the
opportunity to enhance my report writing skills. If you require any further information on the
submitted report and how I have prepared it, I will be obliged to provide accordingly.
Yours sincerely,
Md. Iftekhar Ahsan
Batch: 57D, Roll: 54
Acknowledgement
First of all, I am thankful to Almighty God, by Whose grace I have accomplished the completion
of this internship report with due care. My special gratitude to my honorable Faculty Advisor,
Mrs. Shakila Yasmin, Associate Professor, Institute of Business Administration (IBA),
University of Dhaka, who provided me guidance with necessary feedbacks and then analyzing the
data collected. Her knowledge, approach and professionalism has inspired me and helped me
understand, analyze and solve problems in a practical manner.
I would like to pay tribute to all worthy teachers who are the main source of enlightenment of my
mind. I am thankful to them as they have groomed me to have an open mind towards worldly
matters and understand that there is a scope for improvement in all matters. This internship paper
was one of the means of giving me practical knowledge about “Comparative Analysis of Credit
Portfolio of Selected Private Commercial Banks of Bangladesh.”
I would also like to show gratitude to my organizational supervisor & employees of Jamuna Bank
Limited, Ring Road Branch who have helped me to finalize the study through providing me
necessary information regarding banking rules & regulations.
I want to thank and show my deepest gratitude to my parents for their encouragement and support.
Last but not the least, I express my overall gratitude to my institution, which provided me with the
platform and academic requirements to prepare this Internship report.
Table of Contents
1. Introduction ………………………………………………………………………………………………………… 1-4
1.1 Introduction ……………………………………………………………………………………………………… 1
1.2 Origin of the Report …………………………………………………………………………………………. 2
1.3 Objective of the Report …………………………………………………………………………………….. 3
1.4 Research Methodology …………………………………………………………………………………….. 3
1.5 Limitations ………………………………………………………………………………………………………………... 4
2. Literature Review ……………………………………………………………………………………………….. 5-6
3. Organizational Overview ………………………………………………………………………………………… 7-12
3.1 Vision, Mission & Core Values ……………………………………………………………………………… 7
3.2 Business Overview …………………………………………………………………………………………………… 7
3.3 Deposit ……………………………………………………………………………………………………………… 8
3.4 Loans & Advances…………………………………………………………………………………………….. 9
3.5 Geographic Distribution of Loans ………………………………………………………………….. 10
3.6 Profitability & Performance ………………………………………………………………………. 11-12
4. Comparative Analysis …………………………………………………………………………………….. 13-21
4.1 Concentration of Loans & Advances ………………………………………………………………. 13
4.2 Sector Wise Loan Distribution ……………………………………………………………………….. 14
4.3 Geographical Distribution of Loans & Advances ………………………………………….. 15
4.4 Cost of Deposit ………………………………………………………………………………………….. 16-17
4.5 Rate of Interest………………………………………………………………………………………………….18
4.6 Non-Performing Loan Management………………………………………………………………. 19
4.7 Net Interest Margin …………………………………………………………………………………… 20-21
5. Recommendation …………………………………………………………………………………………………….. 22-24
6. References………………………………………………………………………………………………………………25
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Executive Summary
This study attempts primarily to measure the credit performance of private commercial banks of
Bangladesh during the period from 2014 to 2018. For this purpose, 10 private commercial banks
(PCBs) have been selected from 38 PCBs through simple random sampling method. This study is
mainly based on secondary data which has been collected from the annual reports of the respective
banks. The main objectives of the report are identifying the different types of loan portfolios and
their overall management and performance in the last few years. The first part of this report covers
introductory part which includes introduction, objective, research methodology and limitations of
the study. In the second chapter relevant literatures have been analyzed and summarized for better
understanding of the banking industry. The third part of this report is organization part which
covers organizational overview of Jamuna Bank Limited including its mission, vision, activities,
core business and last five years’ highlights. The later chapters of the report encompass
comparative analysis, findings, recommendations, conclusion and references. The comparative
analysis has been done using trend analysis and weighted average method. The criteria for
comparison was the size of credit portfolio, sector-wise and geographic distribution of loans &
advances, management of NPL, performance in Net Interest Margin, etc. In this study, it has been
found that the loan & advances of PCBs are heavily concentrated in Dhaka Division and banks
prefer Corporate lending over SME & Retail Financing. The profitability of private commercial
banks is extremely dependent on the generation of Interest Income. Thus, the declining rate of
lending will have an adverse effect on Bank’s profitability. Finally, some recommendations are
made on the basis of the analysis in order to develop the credit portfolio performance of Private
Commercial Banks in Bangladesh
Internship Report on Credit Portfolio Analysis of Selected Private Commercial Banks of Bangladesh
Chapter 01: Introduction
1.1 Introduction
Portfolio management of any banking institution involves both liabilities and asset management.
Estimating deposit and loan liabilities need in most efficient manner is the central point of portfolio
management in a bank. Through portfolio management of banks in Bangladesh is considered by a
number of factors, the recent introduction of financial sector reform measures has injected an
element of dynamism and necessitated the need for diversification of credit in the portfolio
management of banks.
A credit portfolio is an investment portfolio comprised of debts, like home and car loans. Lending
is the principal business activity for the commercial banks. The credit portfolio is typically the
largest asset and the predominate source of revenue. Effective management of the loan portfolio
and the credit function is fundamental to a bank’s safety and soundness. With effective credit
portfolio management, banks can increase their credit portfolio without increasing risks, and still
minimize credit losses without shrinking the revenues and opportunities.
Banks may decide the composition of portfolios keeping in view the nature and the distribution of
its loans and advances. They may classify total credit exposure into purpose-wise, sector-wise,
borrower-type-wise, or even product-wise portfolios. It is, however, advantageous to classify large
credits into sector-wise portfolios, like infrastructure sector, manufacturing sector, trade sector,
and real estate sector portfolios, and relatively medium- and small-size credits into retail portfolios,
like residential housing loan portfolio, auto loan portfolio, personal loan portfolio, education loan
portfolio, and credit card portfolio.
There are many different types of bank loans under a credit portfolio each having their own
respective purpose. All bank loans are categorized into two distinct groupings; Secured and
Unsecured loans. Commercial banks make loan and advances in different forms. All types of
credit facilities can be broadly classified into two groups – Funded credit and Non-funded
credit. As per the circular of Bangladesh Bank, all loans and advances are grouped into four (4)
categories for the purpose of classification, namely- (a) Continuous Loan, (b) Demand Loan, (c)
Fixed Term Loan and (d) Short-term Agricultural & Micro-Credit. Commercial banks in
Bangladesh categorizes their credit portfolio in 4 sectors such as Corporate, SME, Retail and
Others. Within in each category of loans there are several different sub-types loan. Each type of
loan has unique repayment terms, and understanding those terms can make choosing the right loan
easier.
1.2 Origin of the Report
Every professional degree needs down to earth information of the individual field of a training to
be productive. The MBA program of Institute of Business Administration, University of Dhaka
additionally has an internship program with the goal that the understudies can apply their
hypothetical learning into genuine useful circumstance.
Internship is a pragmatic opportunity for a student to get the taste of the corporate venture which