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Comparative Analysis between The International Finance Investment (IFIC) and Commerce Bank Limited and Al-Arafah Islami Bank Limited (AIBL)
STAMFORD UNIVERSITY BANGLADESH
An Assignment on
Financial Accounting (FIN 131)
Submitted to:
Farjana Yeshmin
Assistant Professor
Department of Business Administration
Stamford University Bangladesh
Submitted by:
Sultan Mahmud
ID No. BBA04815014
Dipu Miah
ID No. BBA04815058
Batch/ Sec: BBA 057-D
Submission Date: December 06, 2015
2
Farjana Yeshmin
Course Teacher
Financial Accounting (FIN 131)
Department of Business Administration
Stamford University Bangladesh
Dear Sir,
It gives us pleasure to submit the assignment on “Comparative Analysis between The
International Finance Investment and Commerce Bank Limited and Al-Arafah Islami Bank
Limited”. It was a fantastic opportunity for us to prepare the assignment under your guidance,
which really was a great experience for us.
We have worked hard and tried our best to prepare the assignment. But due to some
limitations we failed to collect more accurate data. We will be very pleased to provide further
information if necessary.
Sincerely,
Sultan Mahmud
On behalf of the group
3
Table of Contents
Chapter One: Introduction.....................................................................................................6
Bank...................................................................................................................................6
Objective............................................................................................................................6
Functions of Bank..............................................................................................................7
Classification of Bank........................................................................................................7
Chapter Two: Financial Statement........................................................................................9
Objective of Financial Statement.......................................................................................9
Chapter Three: Overview of the International Finance Investment and Commerce Bank Limited and Al-Arafah Islami Bank Limited......................................................................10
The International Finance Investment and Commerce Bank Limited.................................10
Mission.............................................................................................................................10
Vision...............................................................................................................................11
Strategic Objectives.........................................................................................................11
Corporate Profile..............................................................................................................12
Al-Arafah Islami Bank Limited...........................................................................................14
Mission.............................................................................................................................14
Vision...............................................................................................................................15
Objectives.........................................................................................................................15
Corporate Profile..............................................................................................................15
Chapter Four: Financial Statement.....................................................................................17
Financial Statements of International Finance Investment and Commerce Bank Limited (IFIC):..................................................................................................................................17
International Finance Investment and Commerce Bank Limited....................................17
Balance Sheet...................................................................................................................17
as at 31 December 2014...................................................................................................17
International Finance Investment and Commerce Bank Limited....................................19
Profit and Loss Account...................................................................................................19
for the year ended 31 December 2014.............................................................................19
International Finance Investment and Commerce Bank Limited....................................21
Cash Flow Statement........................................................................................................21
4
for the year ended 31 December 2014.............................................................................21
Financial Statements of Al-Arafah Islami Bank Limited:...................................................23
Al-Arafah Islami Bank Limited.......................................................................................23
Balance Sheet...................................................................................................................23
for the year ended 31 December 2014.............................................................................23
Al-Arafah Islami Bank Limited.......................................................................................25
Profit and Loss Account...................................................................................................25
for the year ended 31 December 2014.............................................................................25
Al-Arafah Islami Bank Limited.......................................................................................26
Cash Flow Statement........................................................................................................26
for the year ended 31 December 2014.............................................................................26
Chapter Five: Comparison between AIBL and IFIC.........................................................27
Total Capital.....................................................................................................................27
Total Assets......................................................................................................................28
Total Deposits..................................................................................................................29
Return on Investment (ROI).............................................................................................30
Return on Equity (ROE)...................................................................................................31
Return on Assets (ROA)..................................................................................................32
Earnings per Share...........................................................................................................33
Price Earning Ratio..........................................................................................................34
Conclusion...........................................................................................................................36
Reference.............................................................................................................................37
5
Chapter One: Introduction
BankA bank is a financial intermediary that creates credit by lending money to a borrower, thereby
creating a corresponding deposit on the bank’s balance sheet. (1)
Objective Objective from the view point of Bank owners
I. Earning profit
II. Rendering Services
III. Investment of fund
IV. Earning good will
V. Raising efficiency
Objective from the view point of the government
I. Issuance of Note and currency notes
II. Formation of capital
III. Investment of capital and industrialization
IV. Control of money market
V. Creation of employment
VI. Counseling in financial matters
Objective from the view point of Bank customers
I. Safe custodian of public money
II. Custodian of public money
III. Representative or trustee
IV. Providing credit facility
6
Functions of Bank In modern time, the functions of a modem commercial bank are manifold. The functions of a
bank may broadly be divided into two parts. The functions of banks are briefly highlighted in
following Diagram or Chart.
Classification of Bank Classification on the Basis of Function
a. Central Bank
b. Commercial Bank
c. Industrial Bank
d. Agricultural Bank
e. Exchange Bank
f. Saving Bank
7
g. Investment Bank
h. Mortgage Bank
i. Micro-Finance Bank
Classification on the Basis of Ownership
a. Public Sector Bank
b. Private Sector Bank
c. Co-operative Bank
Classification on the Basis of Domicile
a. Domestic Bank
b. Foreign Bank
Classification on the Basis of Status
a. Schedule Bank
b. Non-schedule Bank (3)
8
Chapter Two: Financial Statement
Financial statements are records that outline the financial activities of a business, an
individual or any other entity. Financial statements are meant to present the financial
information of the entity in question as clearly and concisely as possible for both the entity
and for readers. Financial statements for businesses usually include: income statements,
balance sheet, statements of retained earnings and cash flows, as well as other possible
statements. (4)
Objective of Financial StatementThe objectives of financial statement are following
To determine the ability of a business to generate cash, and the sources and uses of
that cash.
To determine whether a business has the capability to pay back its debts.
To track financial results on a trend line to spot any looming profitability issues.
To derive financial ratios from the statements that can indicate the condition of the
business.
To investigate the details of certain business transactions, as outlined in the
disclosures that accompany the statements. (5)
9
Chapter Three: Overview of the International Finance Investment and Commerce Bank Limited
and Al-Arafah Islami Bank Limited
The International Finance Investment and Commerce Bank LimitedInternational Finance Investment and Commerce Bank Limited (IFIC Bank) is banking
company incorporated in the People�s Republic of Bangladesh with limited liability. It was
set up at the instance of the Government in 1976 as a joint venture between the Government
of Bangladesh and sponsors in the private sector with the objective of working as a finance
company within the country and setting up joint venture banks/financial institutions aboard.
In 1983 when the Government allowed banks in the private sector, IFIC was converted into a
full fledged commercial bank. The Government of the People�s Republic of Bangladesh
now holds 32.75% of the share capital of the Bank. Directors and Sponsors having vast
experience in the field of trade and commerce own 11.31% of the share capital and the rest is
held by the general public.
MissionThe mission of IFIC Bank is to provide service to their clients with the help of a skilled and
dedicated workforce whose creative talents, innovative actions and competitive edge make
their position unique in giving quality service to all institutions and individuals that they care
for.
They are committed to the welfare and economic prosperity of the people and the
community, for they derive from them their inspiration and drive for onward progress to
prosperity.
They want to be the leader among banks in Bangladesh and make their indelible mark as an
active partner in regional banking operating beyond the national boundary.
10
In an intensely competitive and complex financial and business environment, they
particularly focus on growth and profitability of all concerned.
VisionAt IFIC, they want to be the preferred financial service provider through innovative,
sustainable and inclusive growth and deliver the best in class value to all stakeholders.
Strategic Objectives1. To strive for sound business growth by ensuring customer satisfaction through quality
and timely services
2. To manage and operate the Bank in the most efficient manner to ensure achievement
of goals
3. To maintain adequate capital flow to support further growth
4. To ensure effective and efficient risk management for sustainable business growth
5. To diversify loan portfolio through structured finance and expansion of Corporate,
SME, Agri and Retail businesses
6. To mount state-of-the-art technologies and adopt innovative ideas for financial
inclusion
7. To groom human resources for serving customers efficiently
8. To increase brand visibility by creating positive image of the Bank
9. To be a trend-setter in serving the society and remain responsive to the environment
10. To ensure sound corporate governance practices
11. To facilitate mobility in banking by up-gradation of internet and Mobile Banking
12. To add value for all stakeholders.
11
Corporate Profile
Name of the Company AuditorsInternational Finance Investment and Commerce
Bank Limited (IFIC)
Howladar Yunus & Co.
Chartered Accountants
Legal Form Legal AdviserIFIC Bank Limited was incorporated in
Bangladesh and registered with the Registrar of
Joint Stock Companies & Firms as a public
company limited by shares
Ahsanul Karim
Company Registration Number Tax ConsultantsC-4967, Dated October 08, 1976 Adil & Associates
Authorized Capital Credit Rating Agency
BDT 20,000.00 million
Credit Rating Agency of Bangladesh (CRAB)
Limited
Paid up Capital ChairmanBDT 4,377.50 million Salman F Rahman
Listing Status Managing Director & CEOListed with Dhaka Stock Exchange Ltd. (DSE)
and Chittagong Stock Exchange Ltd. (CSE) in
1986 and 1997 respectively
M. Shah Alam Sarwar
Market Category Chief Financial Officer (CFO)‘A’ Category S. M. Abdul Hamid
12
Tax Payer Identification Number (TIN) Company Secretary135055865054, LTU, Dhaka A. K. M. Mozharul Hoque
VAT Registration Number No. of the Employees19071035167 2,527
Registered Office No. of BranchesBDBL Bhaban (8th – 10th & 16th - 19th floor)
8, Rajuk Avenue, Dhaka-1000
Tel: 9563020-29, Fax: 9562015
Swift: IFIC BD DH
E-mail: [email protected]
Web: www.ificbankbd.com
120
Subsidiary Companies No. of ShareholdersIFIC Securities Limited
IFIC Money Transfer (UK) Limited 44,444
Off-shore Banking Unit (OBU) Investor RelationsIFIC Bank Limited - OBU
Federation Branch, FBCCI Building
60, Motijheel C/A, Dhaka
BDBL Bhaban (10th floor)
8, Rajuk Avenue, Dhaka-1000
Hotline: 9563020
13
Al-Arafah Islami Bank LimitedWith the objective of achieving success here & hereafter by pursuing the way directed by
Allah and the path shown by His Rasul (SM), Al Arafah Islami Bank Ltd was established
(registered) as a private limited company on 18 June 1995. The inaugural ceremony took
place on 27 September 1995. The authorized capital of the Bank is Tk.15000.00 million and
the paid up capital is Tk. 8343.24 million as on 31.12.2013. Renowned Islamic Scholars and
pious businessmen of the country are the sponsors of the Bank. 100% of paid up capital is
being owned by indigenous shareholders.
The equity of the bank stood at Tk. 14478.06 million as on 31 December 2013, the manpower
was 2387 and the number of shareholders was 58466. It has achieved a continuous profit and
declared a good dividend over the years. High quality customer service through the
integration of modern technology and new products is the tool of the bank to achieve success.
The bank has a diverse array of carefully tailored products and services to satisfy customer
needs.
The Bank is committed to contribute significantly to the national economy. It has made a
positive contribution towards the socio economic development of the country with 127
branches of which 23 is AD throughout the country.
Missiono Achieving the satisfaction of Almighty Allah both here & hereafter.
o Proliferation of Shariah Based Banking Practices.
o Quality financial services adopting the latest technology.
o Fast and efficient customer service.
o Maintaining high standard of business ethics.
o Balanced growth.
o Steady & competitive return on shareholders' equity.
o Innovative banking at a competitive price.
o Attract and retain quality human resources.
o Extending competitive compensation packages to the employees.
o Firm commitment to the growth of national economy.
14
o Involving more in Micro and SME financing.
Visiono To be a pioneer in Islami Banking in Bangladesh and contribute significantly to the
growth of the national economy
Objectiveso Al-Arafah Islami Bank Limited is a customer focused modern Islamic Banking sound
and steady growth in both mobilizing deposit and making quality Investment to keep
their position as a leading Islami bank in Bangladesh.
o To deliver financial services with the touch of their heart to retail, small and medium
scale enterprises, as well as corporate clients through our branches across the country.
o Their business initiatives are designed to match the changing trade & industrial needs
of the clients.
Corporate Profile
Name of the Company ChairmanAl-Arafah Islami Bank Limited Badiur Rahman
Date of Registration Managing Director18 June 1995 Md. Habibur Rahman
Opening Ceremony Company Secretary27 September, 1995 Md. Mofazzal Hossain
Authorized Capital Equity15,000.00 Million 18,159.52 Million
Paid-up Capital Number of Branches9,469.58 Million 119
Local Partnership of Capital Deposit100% 166,851.17 Million
Registered Office InvestmentPeoples Insurance Building
15
36, Dilkusha Commercial Area
(6th - 9th & 19th Floor), Dhaka-1000
Tel: PABX : 9567885, 9567819
9569353, 9568007
9560198, 7123255-7
Fax : 880-2-9569351
SWIFT : ALARBDDH
E-mail : [email protected]
Web : www.al-arafahbank.com
146,740.36 Million
Auditors Number of EmployeesKHAN WAHAB SHAFIQUE RAHMAN &
CO.
Chartered Accountants
SYFUL SHAMSUL ALAM & CO.
Chartered Accountants
2,649
Credit Rating Agency Number of ShareholdersCredit Rating Agency of Bangladesh
(CRAB) Limited52,007
16
Chapter Four: Financial Statement
Financial Statements of International Finance Investment and Commerce Bank Limited (IFIC):
International Finance Investment and Commerce Bank Limited
Balance Sheet
as at 31 December 2014Amount in Taka (Thousand)
Particulars 2014 2013 2012
PROPERTY AND ASSETSCash 10,398,813 9,686,767 9,582,853
Cash in hand (including foreign currencies) 1,829,379 2,019,892 1,793,359
Balance with Bangladesh Bank and its agent bank(s) (including foreign currencies)
8,569,433 7,666,874 7,789,494
Balance with other banks and financial institutions12,042,832 10,028,347 5,151,800
In Bangladesh 11,214,966 8,755,055 3,497,911Outside Bangladesh 827,866 1,273,291 1,653,889
Money at call and on short notice 1,450,000 - 950,000
Investments 22,845,255 21,170,763 15,670,685
Government securities 17,217,294 5,893,691 11,311,623Other investments 5,627,961 5,277,071 4,359,061
Loans and advances 102,282,149 84,110,385 77,159,761
Loans, cash credits, overdrafts etc. 94,532,881 77,989,360 70,259,542Bills purchased and discounted 7,749,268 6,121,024 6,900,219
Fixed assets including premises, furniture and fixtures 2,929,319 2,382,855 2,342,321Other assets 4,016,791 4,310,035 3,871,326Non-banking assets 373,474 373,474 -Total assets 156,338,637 132,062,628 114,728,749
17
LIABILITIES AND CAPITAL
Liabilities
Borrowing from other banks, financial Institutions and agents 5,621,445 3,492,857 874,456
Deposit and other accounts 129,745,805 110,463,796 92,432,755Current deposit and other accounts 15,464,779 13,356,063 11,540,229Bills payable 1,874,975 1,573,829 1,492,411Savings bank deposit 18,366,462 13,890,792 11,468,553Fixed deposit 94,039,587 81,643,111 65,317,764
Other liabilities 10,343,270 9,008,123 13,668,135Total liabilities 145,710,521 122,964,777 106,975,347
Capital / Shareholders’ equityPaid up capital 4,377,499 3,806,521 3,460,473Statutory reserve 3,909,507 3,374,079 2,832,536General reserve 55,771 55,771 55,771Revaluation reserve against securities 1,575 16,043 17,084Revaluation reserve against fixed assets 115,314 115,314 115,314Reserve against non banking assets - - -Foreign currency translation gain/(loss) - - -Surplus in profit and loss account 2,168,447 1,730,120 1,272,220Attributable to equity holders 10,628,115 9,097,850 7,753,401Non controlling interest - - -Total shareholders’ equity 10,628,115 9,097,850 7,753,401Total liabilities and shareholders’ equity 156,338,637 132,062,628 114,728,749
18
International Finance Investment and Commerce Bank Limited
Profit and Loss Account
for the year ended 31 December 2014
Amount in Taka (Thousand)
Particulars 2014 2013 2012
Interest income 11,858,390 11,111,313 10,442,619Interest paid on deposits, borrowings, etc. 8,466,644 8,499,298 7,636,960Net Interest income 3,391,745 2,612,015 2,805,659
Investment income 2,377,463 2,168,408 1,813,933Commission, exchange and brokerage 1,328,028 1,235,487 1,150,676Other operating income 528,973 507,884 408,233
4,234,464 3,911,779 3,372,843Total operating income 7,626,210 6,523,794 6,178,503
Salaries and allowances 2,447,559 1,887,630 1,769,162Rent, taxes, insurance, electricity, etc. 669,310 581,678 483,346Legal expenses 6,430 5,042 3,734Postage, stamp, telecommunication, etc. 94,177 90,061 72,441Stationery, printing, advertisement, etc 174,941 100,583 102,027Managing Director’s salary 13,660 13,660 7,952Directors’ fees 1,175 900 1,285Auditors’ fee 1,275 700 700Charges on loan loss - 35,777 -Depreciation and repair of bank’s assets 397,901 300,657 269,127Other expenses 646,956, 559,232 358,342Total operating expenses 4,453,386 3,575,923 3,068,120Profit/(Loss) before provision 3,172,823 2,947,871 3,110,382Provision for loans, investments and other assetsSpecific provision 405,683 (145,290) 1,611,799General provision 260,000 49,392 (33,000)Provision for off-Shore Banking unit 4,000 9,600 (6,500)Provision for off-balance sheet exposure 50,000 63,220 1,500Provision for diminution in value of investments (250,000) 235,566 193,710Other provisions 26,000 27,672 (47,210)Total Provision 495,683 240,160 1,720,299Profit/(Loss) before taxes 2,677,140 2,707,711 1,390,082Provision for taxationCurrent tax 1,290,000 1,090,000 963,216Deferred tax expense/(income) (157,592) 272,221 (678,279)
1,132,407 1,362,221 284,936Net profit after taxation 1,544,733 1,345,490 1,105,146
1,159,142 926,173 445,090
19
Retained earnings brought forward from previous year
2,703,875 2,271,663 1,550,237AppropriationsStatutory reserve 535,428 541,542 278,016General reserve - - -
535,428 541,542 278,016Retained Surplus 2,168,447 1,730,120 1,272,220Earnings per share (EPS) 3.53 3.07 2.90
20
International Finance Investment and Commerce Bank Limited
Cash Flow Statement
for the year ended 31 December 2014Amount in Taka (Thousand)
Particulars 2014 2013 2012
A. Cash flows from operating activitiesInterest received 14,253,383 12,867,164 10,442,619Interest payments (8,687,897) (8,450,326) (7,636,960)Dividend received 105,718 82,493 53,213Fees and commission received 1,328,028 1,235,487 1,150,684Recoveries of loans and advances previously written-off 194,316 648,876 175,200Cash payments to employees (2,481,219) (1,871,290) (1,619,388)Cash payments to suppliers (237,324) (155,073)Income taxes paid (1,194,602) (1,027,512) (808,310)Receipts from other operating activities 587,439 560,885 2,168,944Payments for other operating activities (1,516,126) (1,326,887) (1,088,471)Operating cash flows before changing in operating assets and liabilities 2,351,714 2,563,816 2,837,532Increase/(decrease) in operating assets and liabilitiesStatutory deposits - - -Loans and advances to other banks - - -Loans and advances to customers (17,521,662) (8,215,063) (12,518,589)Other assets 269,122 (433,866) 310,761Deposits from other banks (225,339) (279,194) 1,522Deposits from customers 19,507,347 15,414,260 19,026,670Trading liabilitiesOther liabilities 68,947 (133,107) 308,493
2,098,415 6,353,027 7,128,859Net cash flows from operating activities 4,450,130 8,916,843 9,966,391
B. Cash flows from investing activities
Net proceeds/(payments) from sale/(purchase) of Government securities (1,255,048) (4,216,501) 18,000Net proceeds/(payments) from sale/(purchase) of securities (285,614) (1,130,775) (261,731)Purchase of property, plant & equipment (Annexure-D) (833,303) (220,369) (310,872)Proceeds from sale of property, plant & equipment 3,253 4,912 1,437Payment against lease obligation (7,263) (5,140) -
Net cash used in investing activities (2,377,976) (5,567,874) (553,165)C. Cash flows from financing activities
Borrowing from other banks, financial institution and agents 2,128,587 640,162 -Receipts from issue of sub-ordinated bond - - -Dividend paid (cash) - - -
Net cash flow from financing activities 2,128,587 640,162 (245,558)D. Net increase/(decrease) in cash (A+B+C) 4,200,742 3,989,132 9,167,667
21
E. Effects of exchange rate changes on cash and cash equivalents (24,714) (42,255) -
F. Opening cash and cash equivalents 19,721,469 15,690,081 17,805,611G. Closing cash and cash equivalents (D+E+F) 23,897,497 19,721,469 26,973,278
Closing cash and cash equivalentsCash in hand 1,829,379 2,019,892 1,793,359Balance with Bangladesh Bank and its agents bank 8,569,433 7,666,874 7,789,494Balance with other banks and financial institutions 12,042,832 10,028,347 5,151,800Money at call and on short notice 1,450,000 - 950,000Govt. Securities - - 11,283,196Prize bonds 5,851 6,355 5,427
23,897,497 19,721,469 26,973,278
22
Financial Statements of Al-Arafah Islami Bank Limited:
Al-Arafah Islami Bank Limited
Balance Sheet
for the year ended 31 December 2014Amount in Taka (Thousand)
Particulars 2014 2013 2012
Cash in handCash in hand (including foreign currencies) 1,301,483 1,532,281 1,082,941Balance With Bangladesh Bank and its Agents Banks (including foreign currencies) 19,372,830 16,046,314 11,601,779
20,674,314 17,578,595 12,684,720Balance with other Banks and Financial InstitutionsIn Bangladesh 2,512,574 3,136,874 1,055,592Outside Bangladesh 1,703,815 1,561,507 1,257,383
4,216,389 4,698,381 2,312,975Placement with Banks & Other Financial institutions 9,750,000 5,400,000 11,300,000Investment in Share & SecuritiesGovernment 7,000,000 5,480,000 4,200,000Others 842,092 1,047,885 997,514
7,842,092 6,527,885 5,197,514InvestmentsGeneral Investments etc. 138,198,168 113,084,774 90,736,824Bills purchased and discounted 3,103,911 8,214,210 10,830,210
141,302,079 121,298,985 101,567,035Fixed assets less Accumuladated Depreciation 2,641,594 2,489,986 2,361,213Other Assets 20,122,243 12,941,766 10,911,353Non-Banking Assets - - -Total Assets 206,548,713 170,935,600 146,334,812
LIABILITIES AND CAPITALLiabilitiesPlacement from Banks & Other Financial institutions 8,900,000 3,400,000 5,100,000Deposits and other AccountsMudaraba Savings Deposits 17,501,279 12,267,376 9,998,519Mudaraba Term Deposits 99,362,221 90,765,477 77,314,883Other Mudaraba Deposits 33,500,490 24,152,503 18,208,830Al-Wadia Current Accounts and Others Accounts etc. 15,304,022 13,566,062 12,898,844Bills Payable 1,396,165 953,220 959,167
167,064,179 141,704,640 119,380,245Other Liabilities 13,911,521 11,288,222 9,379,937
23
Deferred tax Liabilities/ (Assets) 74,890 64,678 48,885
Total Liabilities 189,950,591 156,457,541 133,909,068Capital/Share Holders EquityPaid up Capital 9,469,585 8,343,246 7,130,980Statutory Reserve 4,643,316 3,849,648 3,102,076Other Reserve 977,548 977,548 977,548Retained Earnings 1,507,672 1,307,616 1,215,138Total Share holders’ equity 16,598,122 14,478,059 12,425,743Total Liability and Share holders equity 206,548,713 170,935,600 146,334,812
24
Al-Arafah Islami Bank Limited
Profit and Loss Account
for the year ended 31 December 2014Amount in Taka (Thousand)
Particulars 2014 2013 2012Investment Income 19,019,524 16,988,630 14,119,185Profit paid on deposits & Borrowing (12,660,720) (12,052,492) (9,575,649)Net Investment Income 6,358,804 4,936,138 4,543,535Income from Investment in Shares /Securities 665,289 607,225 772,218Commission, Exchange and Brokerage 1,601,306 983,843 1,012,084Other Operating Income 188,358 236,014 195,115
2,454,954 1,827,083 1,979,419Total operating income 8,813,758 6,763,222 6,522,954Salaries and allowances & contribution to P.F 2,003,166 1,603,625 1,357,953Directors fees & expenses 10,268 9,054 6,715Shariah Supervisory Committee's fees & expenses 271 204 260Rent, taxes, insurance and lighting etc. 354,694 283,960 221,169Postage, telegram, telephone and stamp etc. 68,041 74,916 71,875Legal charges 4,222 2,607 2,242Auditors' fee 1,909 1,127 646Salary & Allowances to the Managing Director 11,570 11,030 10,660Depreciation and repairs to the bank's properties 241,185 216,883 169,293Stationery, printing and advertisement etc. 82,899 65,062 55,482Other expenses 336,899 279,881 222,752Total operating expenses 3,115,128 2,548,353 2,119,050Profit/(Loss) before Tax & provision 5,698,630 4,214,868 4,403,903Provision against Investments & Contingent Liabilities 1,727,328 374,282 668,204Provision for diminution in value of invevtment - 101,500 89,474Other Provision 2,959 1,230 -Total provision 1,730,287 477,012 757,679Profit/(Loss) before Tax 3,968,342 3,737,856 3,646,224Current tax 1,838,066 1,669,747 1,709,802Deferred tax 10,212 15,793 16,892Provision for Taxation 1,848,279 1,685,540 1,726,694Net Profit/(Loss) after tax 2,120,063 2,052,315 1,919,529AppropriationStatutory Reserve 793,668 747,571 729,244General Reserve - - -
793,668 747,571 729,244Retained Earnings 1,326,394 1,304,744 1,190,284Earnings per Ordinary share (EPS) 2.24 2.17 2.30
25
Al-Arafah Islami Bank Limited
Cash Flow Statement
for the year ended 31 December 2014
Amount in Taka (Thousand)
Particulars 2014 2013 2012Cash flows from operating activitiesInvestment income receipt in Cash 19,272,806 13,659,057 13,620,158Profit paid on deposits (11,018,733) (10,820,548) (7,547,823)Dividend received 388,990 366,734 10,076Fees & Commission received in cash 1,601,306 983,843 952,084Recoveries from write off investments 23,017 2,631 14,154Cash payments to employees (2,014,736) (1,613,721) (1,344,936)Cash payments to suppliers (82,899) (42,969) (36,730)Received from other operating activities (item-wise) 188,358 476,505 772,218Paid for other operating activities (item-wise) (815,718) (704,027) (569,252)Advance income tax paid (1,750,544) (1,180,364) (1,691,678)Operating profit before changes in operating assets and liabilities 5,791,845 1,127,141 4,178,271Changing in Operating assets & liabilitiesIncrease/Decrease of trading securities 205,793 (50,370) (368,595)Increase/Decrease of investment and advances to other banks (4,350,000) 5,900,000 (1,500,000)Increase/Decrease of Investment and advances to customers (other than Banks) (21,645,081) (17,279,888) (27,264,653)Increase/Decrease of other assets (item-wise) (5,429,932) (618,713) (1,836,883)Increase/Decrease of Deposits from other banks 5,500,000 (1,700,000) 200,000Increase/Decrease of Deposits from customers (other than Banks) 25,359,538 22,346,666 35,244,375Increase/Decrease of Other liabilities account of customers - - -Increase/Decrease of Trading liabilities (item-wise) (1,146,828) (724,268) 466,764Cash receipt from operating activities (1,506,510) 7,873,426 4,941,007A. Net Cash from operating activities 4,285,334 9,000,567 9,119,278Cash flows from investing activities:Proceeds from sale of securities - - -Payments for purchases of securities - - -Purchase of property, plant and equipment (151,607) (426,286) (663,713Sales proceeds of Fixed assets - - -Purchase-sale of subsidiary - (15,000) (825,000)B. Net cash flows from investing activities (151,607) (441,286) (1,488,713)Cash flows from financing activitiesIncrease in Exchange Equalization Account - - -Increase in Share Capital - - -Dividend paid - - -C. Net cash flows from financing activities - - -D. Net increase in cash and cash equivalent (A+B+C) 4,133,727 8,559,281 7,630,564E. Effects of exchange rate changes on cash and cash-equivalents - - -
26
F. Net increase in cash and cash equivalent (D+E) 4,133,727 8,559,281 7,630,564G. Cash & Cash Equivalents at the beginning of the year 27,756,976 19,197,695 11,567,130H. Cash & Cash Equivalents at the end of the year 31,890,704 27,756,976 19,197,695
Chapter Five: Comparison between AIBL and IFIC
International Finance Investment and Commerce Bank Limited and Al-Arafah Islami Bank
Limited, both are financially sound banks in Bangladesh. They will be financially compared
on the basis of following points:
Total Capital
Total Assets
Total Deposits
Return on Investment (ROI)
Return on Equity (ROE)
Return on Assets (ROA)
Earnings per share
Price Earning ratio (Times)
Total CapitalTotal capital usually refers to the sum of long-term debt and total shareholder equity; both of
these items can be found on the company's balance sheet. (6)
Amount in Taka
Name of The Banks 2014 2013 2012
Al-Arafah Islami Bank
Limited
17,352,630,670 15,012,259,604 13,179,777,862
International Finance
Investment and Commerce
Bank Limited
11,308,447,906 9,630,845,996 7,923,695,690
27
2014 2013 20120
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
12,000,000,000
14,000,000,000
16,000,000,000
18,000,000,000
20,000,000,000
AIBLIFIC
In case of total capital, Al-Arafah Islami Bank Limited is in better position in the last three
years.
Total AssetsTotal assets are the sum of all current and noncurrent assets that a company owns. (7)
Amount in Taka
Name of The Banks 2014 2013 2012
Al-Arafah Islami Bank
Limited
206,548,713,972 170,935,600,596 146,334,812,318
International Finance
Investment and Commerce
Bank Limited
156,338,637,021 132,062,628,567 114,728,749,779
28
2014 2013 20120
50,000,000,000
100,000,000,000
150,000,000,000
200,000,000,000
250,000,000,000
AIBLIFIC
Al-Arafah Islami Bank Limited has more total asset than International Finance Investment
and Commerce Bank Limited in the past three years which makes it more financially sound
bank.
Total DepositsTotal deposit is the money placed into a banking institution for safekeeping. Bank deposits
are made to deposit accounts at a banking institution, such as savings accounts, checking
accounts and money market accounts. (8)
Amount in Taka
Name of The Banks 2014 2013 2012
Al-Arafah Islami Bank
Limited
167,064,179,104 141,704,640,624 119,380,245,882
International Finance
Investment and Commerce
Bank Limited
129,745,805,362 110,463,796,836 92,432,755,891
29
2014 2013 20120
20,000,000,000
40,000,000,000
60,000,000,000
80,000,000,000
100,000,000,000
120,000,000,000
140,000,000,000
160,000,000,000
180,000,000,000
AIBLIFIC
Al-Arafah Islami Bank Limited holds more deposits rather than International Finance
Investment and Commerce Bank Limited which helps it to be financially stronger.
Return on Investment (ROI)Return on investment (ROI) is a performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. ROI measures the amount of return on an investment relative to the investment’s cost. (9)
Name of The Banks 2014 2013 2012
Al-Arafah Islami Bank
Limited
13.70% 13.01% 12.51%
International Finance
Investment and Commerce
Bank Limited
7.22% 7.16% 11.58%
30
20142013
2012
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
AIBLIFIC
Al-Arafah Islami Bank Limited is in better position with higher ROI than International
Finance Investment and Commerce Bank Limited
Return on Equity (ROE)Return on Equity is the amount of net income returned as a percentage of shareholders equity.
Return on equity measures a corporation's profitability by revealing how much profit a
company generates with the money shareholders have invested. (10)
Name of The Banks 2014 2013 2012
Al-Arafah Islami Bank
Limited
12.80% 14.15% 13.85%
International Finance
Investment and Commerce
Bank Limited
15.67% 15.98% 15.43%
31
2012 2013 20140.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
AIBLIFIC
International Finance Investment and Commerce Bank Limited is doing good in case of
Return on Equity (ROE).
Return on Assets (ROA)Return on Assets (ROA) is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. (11)
Name of The Banks 2014 2013 2012
Al-Arafah Islami Bank
Limited
1.03% 1.20% 1.31%
International Finance
Investment and Commerce
Bank Limited
1.07% 1.09% 1.07%
32
2014 2013 20120.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
AIBLIFIC
Al-Arafah Islami Bank Limited had quite good ROA in 2013 and 2012. But it declines over
time. In 2014, it has ROA of 1.03%. On the hand, International Finance Investment and
Commerce Bank Limited was holding better ROA than Al-Arafah Islami Bank Limited in
2014. It indicates that IFIC Bank improves and retains their ROA over time. It makes them
better company.
Earnings per ShareEarnings per share is the portion of a company's profit allocated to each outstanding share of common stock. It serves as an indicator of a company's profitability. (12)
Amount in Taka
Name of The Banks 2014 2013 2012
Al-Arafah Islami Bank
Limited
2.20 2.46 2.38
International Finance
Investment and Commerce
Bank Limited
3.53 3.07 2.90
33
2012 2013 20140
0.5
1
1.5
2
2.5
3
3.5
4
AIBLIFIC
In account of EPS, International Finance Investment and Commerce Bank Limited is in better
position than Al-Arafah Islami Bank Limited.
Price Earning Ratio The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative to its per-share earnings. (13)
Amount in Taka
Name of The Banks 2014 2013 2012
Al-Arafah Islami Bank
Limited
6.77% 7.76% 10.21%
International Finance
Investment and Commerce
Bank Limited
7.40% 11.16% 12.47%
34
20122013
2014
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
AIBL
IFIC
AIBLIFIC
Same as EPS, International Finance Investment and Commerce Bank Limited holds greater
P/E ratio than Al-Arafah Islami Bank Limited which indicated better profitability.
35
ConclusionBanking sector of Bangladesh consists of several nationalized and private banks. They are
doing their activities and highly contribute to the national economy. Among them Al-Arafah
Islami Bank Limited and International Finance Investment and Commerce Bank Limited also
make significant contribution to the economy. They are performing their activities, as a result
not only the bank but also the economy is benefited. The banks are performing general
banking, Loan-advance, foreign exchange activities etc, as a result they are mobilizing the
money and do well for the economy. Although they have some limitations in their services,
they are doing tremendous job for the economy. If they can reduce their limitation and
introduce new ideas, they can do better in the banking sector of Bangladesh. Comparing these
two banks is not a easy task. They have their own system and Al-Arafah Islami Bank Limited
follows Islami Banking. Al-Arafah Islami Bank Limited is in way better position in case of
Total capital, total assets, total deposits, Return on Investment (ROI), and Return on Assets
(ROA). But when it comes with Return on Equity (ROE), Earning per Share (EPS), and P/E
ratio, International Finance Investment and Commerce Bank Limited is holding much better
than Al-Arafah Islami Bank Limited which proves of having better portability.
36
Reference 1. https://en.wikipedia.org/wiki/Bank
2. http://kalyan-city.blogspot.com/2011/04/functions-of-banks-important-banking.html
3. www.business-science-articles.com/articles/business/102-banking-and-its-
classifications
4. http://www.investopedia.com/terms/f/financial-statements.asp
5. http://www.accountingtools.com/definition-financial-statemen
6. http://money.stackexchange.com/questions/21506/calculating-the-total-capital-of-a-
company
7. http://study.com/academy/lesson/total-assets-definition-lesson-quiz.html
8. http://www.investopedia.com/terms/b/bank-deposits.asp
9. http://www.investopedia.com/terms/r/returnoninvestment.asp
10. http://www.investopedia.com/terms/r/returnonequity.asp
11. http://www.investopedia.com/terms/r/returnonassets.asp
12. http://www.investopedia.com/terms/e/eps.asp
13. http://www.investopedia.com/terms/p/price-earningsratio.asp
14. Annual Report 2014, The International Finance Investment and Commerce Bank
Limited
15. Annual Report 2013, The International Finance Investment and Commerce Bank
Limited
16. Annual Report 2014, Al-Arafah Islami Bank Limited
17. Annual Report 2013, Al-Arafah Islami Bank Limited
37