modes of investment of ibbl-bubt

8/10/2019 Modes of Investment of IBBL-BUBT

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Objective of the report

Methodology of the report

Limitation of the report

Islamic vs conventionalbank

Corporate profile

Theoretical aspect

Analysis.

Comparative analysis Findings

reccomandation


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To analyze different modes of

investment.

To seek out all the strengths,

weaknesses, opportunities & threats.

To compare with other conventionalbanks.

To familiarize with the various

investment schemes.

To get the practical exposure of the

banking activities.To adapt with the corporate

environment.


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1.Research Design


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2. Data collection method

a) Primary source

Branch Manager &

Second Officer.

Face to face

conversation with

employees and staffs.

Practical work

experience.Face to face

conversation with

clients.


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b) Secondary source

Annual Report of IslamiBank Bangladesh Limited.

Various prescribed forms of

investment were analyzed.IBTRA Library.

Manuals of Investment ofIBBL.

Different text books &

materials.Website of the Islami BankBangladesh Limited.


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Lack of experiences has acted as constraints in the way of

meticulous exploration on the topic.

Unpublished data have not considered for the study.

Shortage of time for preparing the report in order.

The study was conducted mostly on secondary data.


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Islamic Banking:

A banking system that is based on the

principles of Islamic law (also known

Shariah) and guided by Islamic

economics. Two basic principles behindIslamic banking are the sharing of profit

and loss and, significantly, the

prohibition of the collection and

payment of interest. Collecting interest

is not permitted under Islamic law


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In August 1974, Bangladesh signed the Charter of

Islamic Development Bank and committed itself to

reorganize its economic and financial system as perIslamic Shariah.

Earlier in November 1980, Bangladesh Bank, the

countrys Central Bank, sent a representative to studythe working of several Islamic banks abroad

In November 1982, a delegation of IDB visited

Bangladesh and showed keen interest to participate

in establishing a joint venture Islamic Bank in the

private sector.

Islami Bank Bangladesh limited was established in

March 1983 and started its operation in 27th March,

1983


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To conduct interest-free banking.

To invest on profit and risk sharing basis.

To accept deposits on Mudaraba & Al-Wadeah basis.

To establish a welfare-oriented banking system.

To extend co-operation to the poor, the helpless and the low-income group for

their economic enlistment.

To play a vital role in human development and employmentgeneration.

To contribute towards balanced growth and development of thecountry

through investment operations particularly in the less developed

areas.

To contribute in achieving the ultimate goal of Islamic economicsystems

To establish a well-balanced economic system.


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BDT (Tk.) US Dollar ($)

Authorized Capital 20,000.00 Million 257.23 Million

paid-up Capital 14,636.28 Million 188.25 Million

Equity 45,511.90 Million 385.36 Million

Reserve Fund 29,149.01Million 374.91 million

Deposits 473,140.96 Million 6,085.41 Million

Investment

(including Investment in

Shares)

474,015.95 Million 6,096.67 Million

Foreign Exchange Business BDT (Tk.) US Dollar ($)

Import 285,890 Million 3,677.04 Million

Export 205,269 Million 2,640.12 Million


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a) Deposit Schemes

b) Investment Modes

c) Special Scheme

e) ATM Services

f) Special Services

g) Foreign Exchange Business


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To maintain all types of deposit accounts.

To make investment.

To conduct foreign exchange business.

To conduct social welfare activities through Islami Banking

Foundation


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Year Wise Deposits & growth rate of deposit of IBBL

20.45% 20.87% 19.50%17.10%

22.23%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2009 2010 2011 2012 2013

Growth Rate of Year Wise Deposit

GrowthRateInPercentage

Years

Year 2009 2010 2011 2012 2013

Amount (TK in

Millions)

202115 244292 291,935 341853 417844

Growth Rate (%) 20.45% 20.87 % 19.5% 17.10% 22.23%

Table 5.1: Amount of Deposit and Deposite growth rate of IBBL

source: Annual Report of IBBL (2009-2013)

Figure 5.1: Year wiseAmount of Deposit of IBBL

Figure 5.2: Year wise Deposit Growth Rate of IBBL


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Year Wise Investment to Deposit RatioAnalysis

Year Ratio

2009 89.08%2010 87.85%

2011 90.17%

2012 87.29%

2013 85.18%

89.08%

87.85%

90.17%

87.29%

85.18%

82.00%

83.00%

84.00%

85.00%

86.00%

87.00%

88.00%

89.00%

90.00%

91.00%

2009 2010 2011 2012 2013

Investment to Deposit Ratio

Investment to Deposit Ratio

Table 5.2 : Investment to Deposit Ratio of IBBL

Source: Annual Report of IBBL (2009-2013)

Figure 5.3: Investment to Deposit Ratio of IBBL


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Year Wise Investment & Growth Rate

24.24%19.20%

22.65%

16.19%

21.93%

0.00%

10.00%

20.00%

30.00%

2009 2010 2011 2012 2013

Growth Rate Investment

Growth Rate Investment

Year 2009 2010 2011 2012 2013

Amount(TK in Millions) 1,80,054 2,14,616 2,63,225 3,05,841 3,72,921

Growth Rate (%) 24.24% 19.20% 22.65% 16.19% 21.93%

Table: 5.3: Year Wise Investments

source: Annual Report of IBBL (2009-2013)

Figure-5.4: Year Wise Investments of IBBL

Figure- 5.5 : Investment Growth Rate of IBBL


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Modes Wise Investment in 2013Mode Amount in Million Taka %of total investment

Murabaha 2,21,632 59.43%

Musaraka 13,719 3.68%

Bai-Salam 4,532 1.22%

HPSM 96,056 25.76%

Bai-Muajjal 18,295 4.91%

Bill Purchased & Nagotiation 9,531 2.56%

Quard 9,156 2.46%

Mudaraba 0 0.00%Table: 5.4 Year Wise Trend of Mode Wise Investment in 2013

Source: Annual Report (2013)

Figure-5.6: Mode Wise Investment of IBBL in 2013 (in Million Taka and Percentage)


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Investment in Bai Murabaha

53.44%54.60%

55.52%

57.92%59.43%

50.00%

55.00%

60.00%

2009 2010 2011 2012 2013



Year 2009 2010 2011 2012 2013

Investment in Murabaha (Million tk.) 96,2,17 117180 146135 177136 221632

Percentage of Total Investment 53.44% 54.60% 55.52% 57.92% 59.43%

Table: 5.5 Year Wise Investment in Bai Murabaha

Source: Annual Report (2009-2013)

Figure-5.7: Year Wise Investment in Bai Murabaha (Million Tk)

Figure-5.8 Percentage of Investment in Murabaha


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Investment in HPSM

35.08% 34.42%30.42% 29.12%

25.76%

0.00%

10.00%

20.00%

30.00%

40.00%

2009 2010 2011 2012 2013

Percentage of Investment in HPSM

Trend of Percentage of Total

Investment in HPSM

Year 2009 2010 2011 2012 2013

Investment in HPSM (Million tk.) 63159 73871 80093 89070 96056


Table: 5.6 Year Wise Investment in HPSM

Figure-5.9 Year Wise Investment in HPSM (Million tk.)

Figure-5.10: Percentage of Investment in HPSM


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Investment in Bai Mujjal

3.64% 3.41%

4.71%5.20% 4.91%

0.00%

2.00%

4.00%

6.00%

2009 2010 2011 2012 2013

Percentage of Investment in Bai Mujjal



Year 2009 2010 2011 2012 2013

Investment in Mujjal (Million tk.) 6550 7318 12393 15912 18296


Table: 5.7: Year Wise Investment in Bai Mujjal


Figure-5.11: Amount of Investment in Bai Mujjal

Figure-5.12: Percentage of Investment in Bai Mujjal


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Investment in HPSM

35.08% 34.42%30.42% 29.12%

25.76%

0.00%

10.00%

20.00%

30.00%

40.00%

2009 2010 2011 2012 2013

Percentage of Investment in HPSM


Investment in HPSM

Year 2009 2010 2011 2012 2013

Investment in HPSM (Million tk.) 63159 73871 80093 89070 96056


Table: 5.6 Year Wise Investment in HPSM

Figure-5.9 Year Wise Investment in HPSM (Million tk.)

Figure-5.10: Percentage of Investment in HPSM


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3.64% 3.41%

4.71%5.20% 4.91%

0.00%

2.00%

4.00%

6.00%

2009 2010 2011 2012 2013

Percentage of Investment in Bai Mujjal



Year 2009 2010 2011 2012 2013

Investment in Mujjal (Million tk.) 6550 7318 12393 15912 18296


Table: 5.7: Year Wise Investment in Bai Mujjal


Figure-5.11: Amount of Investment in Bai Mujjal

Figure-5.12: Percentage of Investment in Bai Mujjal


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Investment in Quard E Hasana

1.19% 1.32%

0.80%

1.83%

2.46%

0.00%

1.00%

2.00%

3.00%

2009 2010 2011 2012 2013

Percentage of Investment in Quard E Hasana


Investment in Quard E Hasana

Year 2009 2010 2011 2012 2013

Investment in Quard E Hasana (Million tk.) 2151 2833 2095 5614 9156

Percentage of Total Investment 1.19 1.32% 0.80% 1.83% 2.46%Table: 5.9 Year Wise Investment in Quard E Hasana


Figure-5.15: Amount of Investment in Quard E Hasana

Figure-5.16 : Percentage of Investment in Quard E Hasana


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Investment in Bai Salam

0.95% 0.97%

1.38%

1.15% 1.22%

0.00%

0.50%

1.00%

1.50%

2009 2010 2011 2012 2013

Percentage of Total Investment in Bai Salam


Investment in Bai Salam

Year 2009 2010 2011 2012 2013

Investment in Bai Salam (Million tk.) 1719 2082 3624 3528 4532


Table: 5.10: Year Wise Investment in Bai Salam


Figure-5.17: Amount of Investment in Bai Salam

Figure-5.18: Percentage of Investment in Bai Salam


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Investment in Mudaraba

0.00% 0.00%

0.57%

0.74%

0.00%0.00%

0.20%

0.40%

0.60%

0.80%

2009 2010 2011 2012 2013

Percentage of Total Investment in Mudaraba


Investment in Mudaraba

Year 2009 2010 2011 2012 2013

Investment in Mudaraba (Million tk.) - 0 1500 2266 -

Percentage of Total Investment - 0.00% 0.57% 0.74% 0.00%

Table: 5.11: Year Wise Investment in Mudaraba


Figure-5.19: Amount of Investment in Mudaraba

Figure-5.20: Percentage of Investment in Mudaraba


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Sector Wise Investment in 2013Sector Industry Commerce Real

Estate

Agriculture Transport SME

Amount (TK in

Millions)

108930 44488 23231 20992 6887 168393

In percentage 29.21% 11.26% 5.46% 5.78% 1.90% 46.39%

Table: 5.13: Sector Wise Investment in 2013

Source: Annual Report (2013)

Figure-5.23: Sector Wise Investment of IBBL in 2013 (in Million Taka and Percentage)


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Industry Investment

55.11%

47.07% 43.30% 39.98%

29.21%

0.00%

20.00%

40.00%

60.00%

2009 2010 2011 2012 2013

Percentage of Total Investment in Industry

Trend of percentage of Total

Investment in Industry

Year 2009 2010 2011 2012 2013

Investment in Industry (Million tk.) 99233 101020 113979 122270 108930


Table: 5.14: Year Wise Trend of some Industryinvestment of IBBL


Figure-5.24: Amount of Investment in Industry

Figure-5.25: Percentage of Investment in Industry


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Commerce Investment

28.51%

17.47% 17.53%12.50% 11.26%

0.00%

10.00%

20.00%

30.00%

2009 2010 2011 2012 2013

Percentage of Total Investment in Commerce


Investment in Commerce

Year 2009 2010 2011 2012 2013

Investment in Commerce (Million tk.) 51332 37502 46142 38234 44448


Table: 5.15: Year Wise Commerce Investment


Figure-5.26: Amount of Investment in Commerce

Figure-5.27: Percentage of Investment in Commerce


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Real Estate Investment

5.65%

4.03%

4.31%

5.55% 5.46%

0.00%

2.00%

4.00%

6.00%

2009 2010 2011 2012 2013

Percentage of Total Investment in Real Estate


Investment in Real Estate

Year 2009 2010 2011 2012 2013

Investment in Real Estate (Million tk.) 10172 8649 11336 16966 23231


Table: 5.16: Year Wise Real Estate Investment


Figure-5.28: Amount of Investment in Real Estate

Figure-5.29: Percentage of Investment in Real Estate

A i lt I t t


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Agriculture Investment

5.06%

6.55%

5.41%

6.84%5.78%

0.00%

2.00%

4.00%

6.00%

8.00%

2009 2010 2011 2012 2013

Percentage of Total Investment in Agriculture


Investment in Agriculture

Year 2009 2010 2011 2012 2013

Investment in Agriculture (Million tk.) 9110 14057 14252 20923 20992


Table: 5.17: Year Wise Agriculture Investment


Figure-5.30: Amount of Investment of Agriculture

Figure-5.31: Percentage of Investment in Agriculture


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Transport Investment

2.27%

1.64% 1.74%2.11%

1.90%

0.00%

1.00%

2.00%

3.00%

2009 2010 2011 2012 2013

Percentage of Investment in Transport


Investment in Transport

Year 2009 2010 2011 2012 2013

Investment in Transport (Million tk.) 4082 3520 4583 6457 6887


Table: 5.18: Year Wise Transport Investment


Figure-5.32: Amount of Investment of Transport

Figure-5.33: Percentage of Investment in Transport


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SME Investment

0.00%

22.99%27.99%

33.02%

46.39%

0.00%

20.00%

40.00%

60.00%

2009 2010 2011 2012 2013

Percentage of Investment in SME


Investment in SME

Year 2009 2010 2011 2012 2013

Investment in SME (Million tk.) - 49337 72933 100991 168393

Percentage of Total Investment - 22.99% 27.99% 33.02% 46.39%

Table: 5.19: Year Wise SME Investment


Figure-5.34: Amount of Investment of SME

Figure-5.35: Percentage of Investment in SME


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Income from Investment

19543.8421370.53

24766.26

32019.53

43672.23

0

5000

10000

15000

20000

25000

30000

3500040000

45000

50000

2009 2010 2011 2012 2013

Amount (Million tk.)

Amount (Million tk.)

Year 2009 2010 2011 2012 2013

Amount (Million tk.) 19543.84 21370.53 24766.26 32019.53 43672.23

Table: 5.20: Year Wise Income from Investment


Figure-5.36: Amount of Income from Investment


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Income from Murabaha mode

62.33%

57.59% 57.10%

61.21%

63.03%

50.00%

55.00%

60.00%

65.00%

2009 2010 2011 2012 2013

Percentage of Investment Income

Income

InPercentage

Year 2009 2010 2011 2012 2013

Investment Income ( in Million Tk ) 11,726 11,716 13,436 18,634 25,625

%of totalInvestment Income 62.33% 57.59% 57.10% 61.21% 63.03%Source: Annual Report of IBBL Page-260, (2009-2013)

Table -5.21: Murabaha Total Investment IncomeinMillion Tk and the percentage of Income

Figure-5.37 :Amount of Murabaha Total Investment

Income in Million Tk

Figure5.38 : Murabaha Total Investment Income in percentage


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Investment Income from MusarakaYear 2009 2010 2011 2012 2013

Investment Income ( in Million Tk) 322 551 891 1608 1650

%of totalInvestment Income 1.71% 2.71% 3.79% 5.28% 4.06%


Table 4.22: Musaraka Total Investment Income in Million Tk and the percentage of Income

Figure 5.39:Amount of Musaraka Total Investment IIncome in Million Taka

Figure 5.40 : percentage of Musaraka Total Investment Income

1.71%

2.71%

3.79%

5.28%

4.06%

0.00%

2.00%

4.00%

6.00%

2009 2010 2011 2012 2013


Investment

YearInPercentag

e


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Investment Income from Bai-Muajjal

5.03%4.66%

4.97% 5.38%5.86%

0.00%

2.00%

4.00%

6.00%

8.00%

2009 2010 2011 2012 2013


Income

Year

InPercen

tage

Year 2009 2010 2011 2012 2013

Investment Income ( in Million Tk) 947 947 1170 1638 2382

%of totalInvestment Income 5.03% 4.66% 4.97% 5.38% 5.86% Source: Annual Report of IBBL (2009-2013)

Table 5.23: Bai-Muajjal Total Investment Income in Million Tk and the percentage of Income

Figure 5.41: Bai-Muajjal Total Investment Income in Million Tk

Figure 5.42: Bai-Muajjal TotalInvestment Income in percentage


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Investment Income from HPSM TotalYear 2009 2010 2011 2012 2013

Investment Income(in Million Tk) 5,817 7,129 8,032 8,562 11000

%of totalInvestment Income

30.92% 35.04% 34.14% 28.13% 27.05%

30.92%

35.04% 34.14%

28.13%27.05%

0.00%

10.00%

20.00%

30.00%

40.00%

2009 2010 2011 2012 2013


Income

Year

InPercentage


Table 5.24: HPSM TotalInvestment Income in Million Tk and the percentage of Income

Figure 5.43: HPSM Total

Investment Income in Million Tk

Figure 5.44: HPSM TotalInvestment Income in Percentage

Classified Investment as a Percentage of


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Classified Investment as a Percentage of

Total InvestmentYears 2009 2010 2011 2012 2013

Classified Investment(in Million Tk) 4,311.13 5,063.40 4,655.63 8,292.32 14,212.8

0

Total Investment(in Million Tk) 1,80,054 2,14,616 2,63,225 3,05,841 3,72,921

Classified Investment as a % of Total

Investment

2.39% 2.36% 1.77% 2.71% 3.81%

2.39% 2.36%1.77%

2.71%3.81%

0.00%

2.00%

4.00%

6.00%

2009 2010 2011 2012 2013

Percentage of Classified Investment

Classified Investment

Table: 5.25: Year Wise Classified Investment as a Percentage of Total Investment


Figure-5.45: Amount of Classified Investment

Figure-5.46: Percentage of Classified Investment

Bad or Loss as a Percentage of Total


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g

InvestmentYears 2009 2010 2011 2012 2013

Bad or Loss (in Million Tk) 2810 2735 3238 4337 10823

Total Investment(in Million Tk) 1,80,054 2,14,616 2,63,225 3,05,841 3,72,92

1

Bad or Loss as a % of Total Investment 1.56% 1.27% 1.23% 1.42% 2.90%

Table: 5.26: Bad or Loss as a Percentage of Total InvestmentSource: Annual Report (2009-2013)

Figure-5.47: Bad or Loss as a Percentage of Total Investment


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Deposit of IBBL as % of total National


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Deposit of IBBL as % of total National

DepositYear 2009 2010 2011 2012 2013

National deposit (Billion Taka) 2603.1 3037.8 3858.9 4484.4 5130.3

Deposit of IBBL (TK in Millions) 202115 244292 291,935 341853 417844

Deposit IBBL as % of total

National Deposit

7.76% 8.04% 7.57% 7.62% 8.14%

Table 6.1: Deposit IBBL as % of total National Deposit

Source: Annual report of IBBL & Bangladesh Bank (2009-2013)

Figure 6.1: Deposit IBBL as % of total National Deposit

Investment of IBBL as % of total


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InvestmentYear 2009 2010 2011 2012 2013

National (Billion Taka) 1939.9 2439.8 3297.5 3642.6 4743.8

Amount(TK in Millions) 1,80,054 2,14,616 2,63,225 3,05,841 3,72,921


Investment

9.28% 8.80% 7.98% 8.40% 7.86%

Table 6.2: Investment of IBBL as % of total InvestmentSource: Annual report of IBBL & Bangladesh Bank (2009-2013)

Figure 6.2: Investment of IBBL as % of total

Investment

C i f I t t t D it R ti f


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Comparison of Investment to Deposit Ratio of

IBBL & National Investment to Deposit Ratio:

Year 2009 2010 2011 2012 2013

Industry Average (%) 75 80.3 85.5 79.7 86.7

IBBL (%) 89.08 87.85 90.17 87.29 85.18

Table 6.3: Comparison of Investment to Deposit Ratio of IBBL & National Investment to Deposit RatioSource: Annual report of IBBL & Bangladesh Bank (2009-2013)

Figure 6.3: Comparison of Investment to Deposit Ratio of IBBL & National Investment to Deposit Ratio

N f i I t t f IBBL % f


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Non- performing Investment of IBBL as % of

total Investment

Year 2009 2010 2011 2012 2013

Industry Average 10.8 9.2 7.3 6.1 5.6

NPI OF IBBL 2.39 2.36 1.77 2.71 3.81

Table 6.4: Non- performing Investment of IBBL as % of total InvestmentSource: Annual report of IBBL & Bangladesh Bank (2009-2013)

Figure 6.4: Non- performing Investment of

IBBL as % of total Investment


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The total deposit of IBBL has increased over the years and the

deposit of IBBL as percentage of total national deposit hasincreased over the years from 7.57% in 2011 to 8.14% in 2013.This indicates that comparative deposit performance of IBBL hasincreased over the years.

Investment during the year 2009 to 2013 has increased over theyears. The investment has increased from taka in Millions1,80,054 to 3,72,921.

In the year 2013, IBBL invested their maximum portion in Bai Murabaha mode (59%) which is amount of TK 2, 21,632 millionthat means sale for which payment is made at a future fixed date

or within a fixed period in short, it is a sale on credit. The secondmaximum portion of investment is in HPSM mode which amountin TK 96,056 million & in percentage is 26%. The bank invests inother modes at lower percentage. The lowest portion wasinvested in Bai- Salam at 1%.


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Annual income of IBBL is massive comparing to other commercial

banks.

ATM service is very poor.

Server is very slow.

This Bank cant invest in all economic sectors which are prohibitedby the law of Islam.


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Attempt should be made for an improved information system

within the bank and within the investment clients unit.

Consider offering growth pre-investment and post investmentcounseling to both potential and existing investors according totheir needs.

Repayment behavior of different types of clients play a important

role not only in the successful implementation of investment planbut also in the cost-benefit analysis for the banks, there is need toanalysis in detail the repayment behavior at micro level. Such astudy provides proper guidance for the banks to be associated withthe clients at various stages of utilization of investment and its

repayment. Investment plan commitment should be included in the budget of

each branch of the bank and progress should be regularlymonitored.


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The productivity of the bank may be raised by better fundsmanagement and portfolio management improving recycling offunds and developing other income from the business activities ofthe bank

It could increase its advertising as well as awareness regardingIslamic investment modes.

The authority of IBBL should introduce more innovative andmodern customer service.

Investment should be provided in the SMEs sector for developingentrepreneur investment.

IBBL should try to improve the deposit investment ratio for higherproductivity.

IBBL should encourage the people for Mudaraba & MusharakaInvestment.


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modes of investment of ibbl-bubt

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