a comprehensive review on investment management of al-arafah islami bank limited & dutch-bangla...

7/30/2019 A Comprehensive Review on investment management of Al-Arafah Islami Bank Limited & Dutch-Bangla Bank Limited”.

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Welcome…

Comparative Financial Study

B-504



Topic



We are-

Md. Jahir Uddin Palash 12- 004 Irin Sultana 12- 024 Tareq Bin Ziad

12- 048

Tania Tahmina 12- 055 Md. Hasib 12- 066 Debashish Saha 12- 071 Rubayat Yasir Mustafa 12- 076



Contents

Background

Objective

Methodology

Findings

Analysis

Recommendation



Background



Objectives

The main objective of this report is “AComprehensive Review on investmentmanagement of Al-Arafah Islami Bank Limited &Dutch-Bangla Bank Limited”.

To find out the sectors in which AIBL & DBBLprovides Investment.

To identify the main differences between AIBL &DBBL.

To identify the risk management technique of AIBL & DBBL.

To evaluate financial affairs of those Banks.



MethodologyResearch Types

It is based on quantitative, qualitative, subjective research by nature.

Sources of data

Secondary Sources:

Annual report of the Al-Arafah Islami Bank Ltd and Dutch-Bangla BankLimited

Balance sheet and various documents.

Bangladesh Bank Reports.

Various websites related with investment management

Methods of Data Analysis To reach our final securitization on investment management, we have

arranged following techniques for the analysis:

Individual Bank analysis

Graphical analysis



Findings

The functions and operating modes of DBBL isbased on fully manmade principles. The functions

and operating modes of AIBL is based on the

principles of Islamic Shariah.

DBBL gives importance to its creditworthinesscustomers but AIBL works to its clients as a partners,

investors and traders.

IBBL enjoy less SLR rate than DBBL. In our Country

SLR rate for Islamic bank is 10.50% in the other hand SLR rate for commercial bank like DBBL is

18.5%. So AIBL enjoy more fund to invest in the

market than DBBL.



Findings (Continue…)

In the modern Islamic banking system, it has becomeone of the service-oriented functions of the Islamic banksto be a Zakat Collection Centre and they also pay outtheir Zakat. AIBL does not different from this feature italso deal with Zakat . DBBL does not deal with Zakat.

EPS, P/E Ratio, ROE, net profit margin, market price per share of the DBBL is much higher than AIBL in the lastfive years. That show the management efficiency of theDBBL is better than AIBL.

Loan to deposit ratio of DBBL is much higher than AIBL.

It can be said in this way that the AIBL maintain adequateloan to deposit ratio than DBBL. For DBBL it is very muchrisky for them to invest more than 85% to its total deposit.



Findings (Continue…)

Credit risk, market risk, exchange risk, liquidity risk,operational risk etc are mainly related with the DBBL

banking practice on the other hand exchange risk,

default risk, religious risk, concentration risk etc are

related with the AIBL investment. Number of investment products and services of

DBBL are much wider than AIBL. Though DBBL is

practicing traditional banking and AIBL is Islamic

banking DBBL investment area is much better than AIBL.



Qualitative Analysis

Regulatory Differences between the Islamic Bankingand Conventional Banking

AIBL Banking is based on Shariah and DBBL is based on

man made principle

AIBL SLR 10.5%, DBBL 18.5% Mode of Investment Differences between AIBL and

DBBL

AIBL invest on buy or profit sharing; DBBL lend on

interest Safety on loan

Financial strength

Observation on Shariah



Qualitative Analysis (Continue…)

Risk of Investment of DBBL and AIBL DBBL-

Credit Risk

Market Risk

Interest Rate Risk

Foreign Exchange Risk

AIBL-

Exchange Risk

Price Risk

Concentration Risk

Default Risk

Religious Risk



Quantitative Analysis

181.97

38.78

179.18

55.02

237.37

25.1

54.7848.29

75.85

41.45

2005 2006 2007 2008 2009

EPS

DBBl AI BL

12.02

7.91

10.274.89

28.5

14.62

78.79.53

25.81

12.885

2005

2006

2007

2008

2009

P/E Ratio

DBBL AI BL




2005

2006

2007

2008

2009

31.01

24.07

24.02

29.89

30.28

21.55

27.81

17.05

24.7

22.45

ROE AIBL DBBL

7.48

9.48.8 9.11

8.44

10.99

7.66

10.46

6.53

11.255

2005 2006 2007 2008 2009

Cost of Fund

DBBL AI BL




Net Profit Margin

10.7

6.997.53

11.29

12.76

5.966.81

3.69

4.87

3.735

2005 2006 2007 2008 2009

DBBL AIBL

2187.5

306

1840

242

6765

440

4311

444

1957

511

2005 2006 2007 2008 2009

Market Price Per Share

DBBL AI BL




1.58

5.85

2.68

3.683.26

3.72

3.27

2.752.46

1.685

2005 2006 2007 2008 2009

Classified Loan to Total Investment

DBBL AI BL

20052006

2007

2008

2009

1.74 2.19

1.15 1.71

1.4151.29

0.931.01

1.491.6

0

5

ROA

DBBL AI BL




0

100

200

300

400

500

600

20052006

20072008

2009

17.1222.36

0

356.02

568.4

Agriculture, Fishing andForestry- AIBL

0

100

200

300

400

500

600

700

800

900

20052006

20072008

2009

157.29

865.2

235.05

663.43

618.72

Agriculture, Fishing andForestry -DBBL




0

5000

10000

15000

20000

25000

30000

35000

40000

2005 2006 2007 2008 2009

10802

16781

22760

28493

37652

Standard - AIBL

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

2005 2006 2007 2008 2009

19988.06

27355.1 28299.33

39592.98

46793.15

Standard - DBBL



Recommendation

AIBL should focused more on the investment of thefund to diversified sectors. They should find somenew sector to invest their fund. For DBBL theyshould keep it up their investment as well as lookingfor some new sectors to invest their fund.

AIBL profitability ratio is very lower than DBBL. Topmanagement of the bank should looking forward it toincrease it. DBBL management should keep their increasing trend of their profitability ratio.

AIBL SLR rate is higher than the SLR rate of DBBL.So AIBL should take the opportunity to invest their fund and make more profit for the bank and itshareholders.



Recommendation (Continue…)

DBBL provides loan to the creditworthinesscustomers rather than customer’s emergency. They

should change this practices provide fund the fund

needed customers.

AIBL invested most of its fund in the rural area onthe other hand DBBL invested most of its fund in the

urban area so they should change their focus point.

AIBL should look forward to invest in the urban area

and DBBL should invest in rural area.

a comprehensive review on investment management of al-arafah islami bank limited & dutch-bangla...

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