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Credit Analysis:
The division of the bank responsible for analyzing and making recommendations on the fate of the most loan applications is the credit department. This department should satisfactory answer three major questions regarding each loan application:
Is the borrower creditworthy?
Can the loan agreement be properly structured and documented?
Can the bank perfect its claim against the assets or earnings of the customer so that, in the event of default, bank funds can be recovered rapidly at low cost and with low risk?
3.3 Written loan Policy:
One of the most important ways a bank can make sure its loans meet regulatory standards and are profitable is to establish a written loan policy. It should contain:
Ø A goal statement for the bank’s loan portfolio.
Ø Specification of the lending authority given to each loan officer and loan committee.
Ø Lines of responsibility in making assignments and reporting information within the local loan department.
Ø Operating procedures for soliciting, reviewing, evaluating, and making decision on customer loan application.
Ø The required documentation that is to accompany each loan application and what must be kept in the bank’s credit files.
Ø Lines of authority within the bank, detailing who is responsible for maintaining and reviewing g the bank’s credit files.
Ø Guidelines for taking, evaluating, and perfecting loan collateral.
Ø A statement of quality standards applicable to all loans.
Ø A statement of the preferred upper limit for total loans outstanding.
Ø A description of the bank’s principal trade area, from which most loans should come.
Ø A discussion of the preferred procedures for detecting, analyzing, and working out problem loan situations.
The division of the bank responsible for analyzing and making recommendations on the fate of the most loan applications is the credit department. This department should satisfactory answer three major questions regarding each loan application:
Is the borrower creditworthy?
Can the loan agreement be properly structured and documented?
Can the bank perfect its claim against the assets or earnings of the customer so that, in the event of default, bank funds can be recovered rapidly at low cost and with low risk?
3.3 Written loan Policy:
One of the most important ways a bank can make sure its loans meet regulatory standards and are profitable is to establish a written loan policy. It should contain:
Ø A goal statement for the bank’s loan portfolio.
Ø Specification of the lending authority given to each loan officer and loan committee.
Ø Lines of responsibility in making assignments and reporting information within the local loan department.
Ø Operating procedures for soliciting, reviewing, evaluating, and making decision on customer loan application.
Ø The required documentation that is to accompany each loan application and what must be kept in the bank’s credit files.
Ø Lines of authority within the bank, detailing who is responsible for maintaining and reviewing g the bank’s credit files.
Ø Guidelines for taking, evaluating, and perfecting loan collateral.
Ø A statement of quality standards applicable to all loans.
Ø A statement of the preferred upper limit for total loans outstanding.
Ø A description of the bank’s principal trade area, from which most loans should come.
Ø A discussion of the preferred procedures for detecting, analyzing, and working out problem loan situations.
Uses of Fund
The banks cannot simply keep the resources with them without investing them profitably outside. Before a bank can plan intelligently for the employment of funds to advantage, he must be completely familiar with the nature 0 the funds with which he has to work.
The total working funds may vary from bank to bank depending upon the capital, reserves, deposits and borrowings of each bank; but the bank's own funds, viz, paid- up share capital, reserves and unallocated profits as stated earlier, accounts for only a small percentage of working funds. The contributions coming from various deposits in Current, Savings, Fixed and other Accounts constitute the major part of bank's funds. As these deposits from the public are payable on demand, or at a very short notice, banker cannot make advance whole of them. A part of the deposit is kept in cash to meet withdrawals of the depositors and a portion in the form of other liquid assets to maintain statutory cash reserve with the Central Bank, i.e., Bangladesh Bank.
The Premier Bank Limited do not lockup their funds for long periods. They usually grant short term advances which are utilized to meet the working capital requirements of the borrowers repayable at short notice. Only a small portion of a bank's demand and time liabilities is advanced on a long term basis where the banker usually insists on a regular repayment by the borrower. Thus The PBL has to employ his funds wisely so that he is able to meet the obligations and at the same time make maximum profit.
The banks cannot simply keep the resources with them without investing them profitably outside. Before a bank can plan intelligently for the employment of funds to advantage, he must be completely familiar with the nature 0 the funds with which he has to work.
The total working funds may vary from bank to bank depending upon the capital, reserves, deposits and borrowings of each bank; but the bank's own funds, viz, paid- up share capital, reserves and unallocated profits as stated earlier, accounts for only a small percentage of working funds. The contributions coming from various deposits in Current, Savings, Fixed and other Accounts constitute the major part of bank's funds. As these deposits from the public are payable on demand, or at a very short notice, banker cannot make advance whole of them. A part of the deposit is kept in cash to meet withdrawals of the depositors and a portion in the form of other liquid assets to maintain statutory cash reserve with the Central Bank, i.e., Bangladesh Bank.
The Premier Bank Limited do not lockup their funds for long periods. They usually grant short term advances which are utilized to meet the working capital requirements of the borrowers repayable at short notice. Only a small portion of a bank's demand and time liabilities is advanced on a long term basis where the banker usually insists on a regular repayment by the borrower. Thus The PBL has to employ his funds wisely so that he is able to meet the obligations and at the same time make maximum profit.
Management of fund:
The two main function of a bank are borrowing money from public by accepting deposits and lending to others for development of trade, commerce, industry and agriculture. A banker’s dealer in money and credit. It acts as financial intermediaries between savers and investors. It is a profit seeking business concern as any other commercial on industrial organization. The bank resources are slightly different from other business concern as it depends upon the mobilization of deposits from the public. Their owned fund (share capital and reserves) constitute generally not more than 10 % of the total. A banks main source of fund is the deposits made by the customers. So, a bankers has to pay interest to depositors at prescribe rate and meet the demand of money when their require it.
2.17 Sources of fund of the premier bank.
2.17.1 Paid up share capital: Paid-up share capital indicates the contribution made by the shareholders of the bank.
2.17.2 Reserve fund and undistributed profits: Reserve Fund is the amount accumulated over the years out of undistributed profit. It actually belongs to the shareholders. The accumulation of such retained reserves is an essential condition for financial soundness, stability and growth of the banks to fulfill special roles assigned to them from time to time. Besides, such reserves provide a cushion for meeting unforeseen contingencies. The Reserve Fund operates as an additional security to the bank's customers.
2.17.3 Deposits from the public in various accounts: Deposits from public represent by far the most powerful source of funds to a bank, accounting for over 90% of the total. These deposits are the key to a bank's potential growth. These funds are liabilities of the bank, because these have to be returned to the owners on demand. The principal types of deposit offered traditionally by all the major banks are Current deposits, Savings bank deposit and Fixed or Term deposits.
2.17.4 Borrowings from the Bangladesh Bank and other banks: Borrowing from the Bangladesh Bank and other banks also source of fund. In the emergency situation The Premier Bank Limited like other local commercial bank borrows money from Bangladesh bank and other local banks with very high rate of interest. Though it is not a regular of option of fund, but it is also very important in crisis situation. It takes secured and unsecured loan from banks. Bangladesh plays as a last resort for all commercial bank as well as for The premier Bank also.
The two main function of a bank are borrowing money from public by accepting deposits and lending to others for development of trade, commerce, industry and agriculture. A banker’s dealer in money and credit. It acts as financial intermediaries between savers and investors. It is a profit seeking business concern as any other commercial on industrial organization. The bank resources are slightly different from other business concern as it depends upon the mobilization of deposits from the public. Their owned fund (share capital and reserves) constitute generally not more than 10 % of the total. A banks main source of fund is the deposits made by the customers. So, a bankers has to pay interest to depositors at prescribe rate and meet the demand of money when their require it.
2.17 Sources of fund of the premier bank.
2.17.1 Paid up share capital: Paid-up share capital indicates the contribution made by the shareholders of the bank.
2.17.2 Reserve fund and undistributed profits: Reserve Fund is the amount accumulated over the years out of undistributed profit. It actually belongs to the shareholders. The accumulation of such retained reserves is an essential condition for financial soundness, stability and growth of the banks to fulfill special roles assigned to them from time to time. Besides, such reserves provide a cushion for meeting unforeseen contingencies. The Reserve Fund operates as an additional security to the bank's customers.
2.17.3 Deposits from the public in various accounts: Deposits from public represent by far the most powerful source of funds to a bank, accounting for over 90% of the total. These deposits are the key to a bank's potential growth. These funds are liabilities of the bank, because these have to be returned to the owners on demand. The principal types of deposit offered traditionally by all the major banks are Current deposits, Savings bank deposit and Fixed or Term deposits.
2.17.4 Borrowings from the Bangladesh Bank and other banks: Borrowing from the Bangladesh Bank and other banks also source of fund. In the emergency situation The Premier Bank Limited like other local commercial bank borrows money from Bangladesh bank and other local banks with very high rate of interest. Though it is not a regular of option of fund, but it is also very important in crisis situation. It takes secured and unsecured loan from banks. Bangladesh plays as a last resort for all commercial bank as well as for The premier Bank also.
Premier Social Activities:
As in the previous years, Premier Bank is involving its activities in social arena more vigorously. The bank extended financial assistance to the victims who were affected by natural disinters during the year 2004, the premier bank donated Tk. 4.00 million to the Prime Minister a relief fund and Tk. 4.00 million to the relief fund of Bangladesh Awami League for rehabilitations of flood affected people. The Bank also donated 1.00 million to the Leader of Opposition of the Parliament for the Medicare and rehabilitations of August 21, 2004 grenade victims. Premier Bank Limited also sponsors Premier Football League of 2005 and they also associated with Royal University Bangladesh as well as sponsor to others social activities. The bank has set up “Premier Bank Foundation” for extending benevolent services to the society. The bank will contribute to foundation out of its operating profit each year.
As in the previous years, Premier Bank is involving its activities in social arena more vigorously. The bank extended financial assistance to the victims who were affected by natural disinters during the year 2004, the premier bank donated Tk. 4.00 million to the Prime Minister a relief fund and Tk. 4.00 million to the relief fund of Bangladesh Awami League for rehabilitations of flood affected people. The Bank also donated 1.00 million to the Leader of Opposition of the Parliament for the Medicare and rehabilitations of August 21, 2004 grenade victims. Premier Bank Limited also sponsors Premier Football League of 2005 and they also associated with Royal University Bangladesh as well as sponsor to others social activities. The bank has set up “Premier Bank Foundation” for extending benevolent services to the society. The bank will contribute to foundation out of its operating profit each year.
Human Resources:
Premier Bank considers its employees as the most the most valued resources and the focal point of all its activities. The bank tried to assemble a pool of highly talented professionals coupled with fresh university graduates and built the finest the finest team in the industry and is providing them an environment in which team sprit, creativity and excellence thrives. As a service industry the bank is constantly trying to improve quality of its human resources where performance excellence is always encouraged by reward and recognition. The bank conducted comprehensive training sessions and workshops through is own Training Institutes and Bangladesh Institutes of Bank Management(BIBM) with the vision of developing Human Resources to the highest professional level and boosting productivity across the Bank Employees’ compensation package and other welfare schemes are kept in line with the prevailing market level. The total number of employees of the Bank as on December 31, 2004 stood at 554 corresponding to 435 in 2003. Net earning per employee was Tk. 1.67 million in 2004 reflecting a significantly high productivity.
Premier Bank considers its employees as the most the most valued resources and the focal point of all its activities. The bank tried to assemble a pool of highly talented professionals coupled with fresh university graduates and built the finest the finest team in the industry and is providing them an environment in which team sprit, creativity and excellence thrives. As a service industry the bank is constantly trying to improve quality of its human resources where performance excellence is always encouraged by reward and recognition. The bank conducted comprehensive training sessions and workshops through is own Training Institutes and Bangladesh Institutes of Bank Management(BIBM) with the vision of developing Human Resources to the highest professional level and boosting productivity across the Bank Employees’ compensation package and other welfare schemes are kept in line with the prevailing market level. The total number of employees of the Bank as on December 31, 2004 stood at 554 corresponding to 435 in 2003. Net earning per employee was Tk. 1.67 million in 2004 reflecting a significantly high productivity.
Treasury:
Treasury operations had long been considered as an important avenue for income generation purpose within the Head Office guided by Assets and Liability Committee (ALCO). Treasury operation played a major role in raising the banks income and recorded an income of Tk. 203.00 million in 2004.
The bank ensures available funds to meet its obligations of maintaining statutory liquidity Ratio (SLR) and investment of liquid assets in a profitable manner. We had liquid assets of Tk. 4449.30 million and as on 31 December 2004 our ratio of liquid assets to total asset was 22.14 percent.
2.6 Consumes Credit:
The bank is extending credit facilities through its Customers Credit Scheme to cater the credit needs of the fixed income group for household durables and cars/automobiles. Total outstanding in this segment stood at Tk. 196.94 million and recovery rate was 94 percent as December 31.2004.
2.7 Credit Card:
Premier Bank launched VISA Credit Card (Local & International) at the beginning of 2004 as New Year bonanza- first time in Bangladesh by local bank. PBL issued 14,200 cards just in 11 months with accumulated revenue of Tk. 78.10 million and profit of Tk. 35.00 Million by the end of the year under review. Card Division is now conducting its operation as an independent vital profit center of the bank as steps has been taken for extending merchant network for acquiring more business as well.
2.8 Operating Result:
The year under review was a successful year in terms of profits and turnover. The Bank made an operating profit of Tk. 930.93 million in 2004, compared to Tk 400.73 million in 200.3 registering a significant rise of 132.20 percent over the preceding year. After necessary provision net profit stood at Tk. 470.54 million as on December 31.2004. An amount of Tk. 385.35 million has been set aside for our tax contribution to the National Exchequer. PBL return on Assets (ROA) was 4.63 percent which was well above the industry average. As dynamic institutions we always stressed on sustainable growth. During the year we have given more of consolidation in different segment of business and our relationship with customers. PBL introduce credit cards, Corporate Banking, Treasury and a separate Leasing Division as vital profit centers.
2.9 Islamic banking branch:
The Premier Bank Limited is operating two branches one at Mohakhali , Dhaka and another one in Lalclighirpar, Sylhet on Islamic Shariah base profit & loss sharing principles. Premier bank Shariah Council under the chairmanship of Mr. Shah Abdul Hannan determines the guiding principles for operation of those who branches. The bank is maintaining a separate set of accounting system for Islamic banking branches which is completely different from conventional banking branches to confirm to the standards adopted by financial accounting & auditing organization for Islamic financial institutions.
The performance of PBL Islamic Banking during the year 2004-2005 is given bellow:
Deposits 876.53
Investments 282.42
Profit 1.05
2.10 Automation in banking operation:
The Bank continued to bring to all the branches under one network in order to facilitate “Real Time Online Banking” service to its customers. As a result customers are enjoying the advantage of any branch banking facility. Very soon the bank is going to provide internet banking and PBL already providing SMS banking facility allowing its customers to make query regarding account balance, cheque payment and deposit status and also delivery request for account statement.
Treasury operations had long been considered as an important avenue for income generation purpose within the Head Office guided by Assets and Liability Committee (ALCO). Treasury operation played a major role in raising the banks income and recorded an income of Tk. 203.00 million in 2004.
The bank ensures available funds to meet its obligations of maintaining statutory liquidity Ratio (SLR) and investment of liquid assets in a profitable manner. We had liquid assets of Tk. 4449.30 million and as on 31 December 2004 our ratio of liquid assets to total asset was 22.14 percent.
2.6 Consumes Credit:
The bank is extending credit facilities through its Customers Credit Scheme to cater the credit needs of the fixed income group for household durables and cars/automobiles. Total outstanding in this segment stood at Tk. 196.94 million and recovery rate was 94 percent as December 31.2004.
2.7 Credit Card:
Premier Bank launched VISA Credit Card (Local & International) at the beginning of 2004 as New Year bonanza- first time in Bangladesh by local bank. PBL issued 14,200 cards just in 11 months with accumulated revenue of Tk. 78.10 million and profit of Tk. 35.00 Million by the end of the year under review. Card Division is now conducting its operation as an independent vital profit center of the bank as steps has been taken for extending merchant network for acquiring more business as well.
2.8 Operating Result:
The year under review was a successful year in terms of profits and turnover. The Bank made an operating profit of Tk. 930.93 million in 2004, compared to Tk 400.73 million in 200.3 registering a significant rise of 132.20 percent over the preceding year. After necessary provision net profit stood at Tk. 470.54 million as on December 31.2004. An amount of Tk. 385.35 million has been set aside for our tax contribution to the National Exchequer. PBL return on Assets (ROA) was 4.63 percent which was well above the industry average. As dynamic institutions we always stressed on sustainable growth. During the year we have given more of consolidation in different segment of business and our relationship with customers. PBL introduce credit cards, Corporate Banking, Treasury and a separate Leasing Division as vital profit centers.
2.9 Islamic banking branch:
The Premier Bank Limited is operating two branches one at Mohakhali , Dhaka and another one in Lalclighirpar, Sylhet on Islamic Shariah base profit & loss sharing principles. Premier bank Shariah Council under the chairmanship of Mr. Shah Abdul Hannan determines the guiding principles for operation of those who branches. The bank is maintaining a separate set of accounting system for Islamic banking branches which is completely different from conventional banking branches to confirm to the standards adopted by financial accounting & auditing organization for Islamic financial institutions.
The performance of PBL Islamic Banking during the year 2004-2005 is given bellow:
Deposits 876.53
Investments 282.42
Profit 1.05
2.10 Automation in banking operation:
The Bank continued to bring to all the branches under one network in order to facilitate “Real Time Online Banking” service to its customers. As a result customers are enjoying the advantage of any branch banking facility. Very soon the bank is going to provide internet banking and PBL already providing SMS banking facility allowing its customers to make query regarding account balance, cheque payment and deposit status and also delivery request for account statement.
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