Internship Report on

Financial Statement
Analysis of Janata
Bank Limited
Submitted to
Dr. Md. Abdur Rouf
Associate Professor
Department of Business Administration
Faculty of Business & Entrepreneurship
Daffodil International University

Prepared By
Md. Mizanur Rahman
ID: 162-11-5236
Major in Accounting
Bachelor of Business Administration
Department of Business Administration
Faculty of Business and Entrepreneurship
Daffodil International University

Submission Date: 16th June, 2020

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 Letter of Transmittal

16th June, 2020

Associate Professor Dr. Md. Abdur Rouf

Department of Business Administration
Faculty of Business & Entrepreneurship
Daffodil International University.

Subject: Submission of Internship Report Financial Statement Analysis of First Security

Islami Bank Limited

Dear Sir,

I am very glad to submit you my internship report on “Financial Statement Analysis of

Janata Bank Limited”. I collected data and finally analyzed the information to have this
report to place before you for approval. In completing the internship report I have tried my
best in imparting every available details of the bank avoiding unnecessary amplification of
the report. However, I am ready to provide any additional information in this context if
required.

Therefore, I pray and hope that my report will satisfy you and be approved by the
examination committee.

Sincerely,

………………………

Md. Mizanur Rahman

ID: 162-11-5236
Program: BBA
Department of Business Administration
Major in Accounting
Faculty of Business and Entrepreneurship
Daffodil International University

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 Certificate of Approval

This is to certify that Md. Mizanur Rahman ID No. 162-11-5236 BBA (Accounting), is a
regular student of Department of Business Administration, Faculty of Business and
Entrepreneurship, Daffodil International University. He has successfully completed his
internship program at First Security Islami Bank Limited and has prepared this internship
report under my direct supervision. His assigned topic is “Financial Statement Analysis of
Janata Bank Limited’’. I think that the report is worthy of fulfilling the partial requirements
of BBA program.

..............................
Associate Professor Dr. Md. Abdur Rouf
Department of Business Administration
Faculty of Business & Entrepreneurship

Daffodil International University

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 Acknowledgement

Thanks to the Almighty for enabling me to finish the report on time. I might want to
thank my internship Supervisor, Dr. Md. Abdur Rouf who has helped me in every step of
my internship. Despite his bustling timetable, he has consistently been there to clear the
entirety of my perplexity to the report. I would like to express my gratitude towards my
supervisor MD. Shumon (Assistant Branch Manager), his steady help and exhortation.
He has consistently been there with his direction in regards to the Banking Practice and
continually finding out on the off chance that I am in disarray. Finally, I might want to
say thanks to Janata Bank Limited for enabling me to learn with the highly expert
Bankers.

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 Executive Summary
The internship program is an essential part of to obtain a Bachelor of Business
Administration (BBA) from Daffodil International University. Each student must meet the
required credit hours, then they replaced for observing a specific situation in a real workplace
and to guide him to prepare their internship report an honorable supervisor always guides the
students to prepare their report well.

I am so thankful to who managed me the opportunity to work as an intern in Janata Bank

Limited which is the 2nd largest government owned commercial bank of Bangladesh. It
offers banking services through its 901 branches in all 64 districts of Bangladesh. The bank's
commercial banking activities add a wide variety of services, including the preparation of
deposits, the granting of investment offices, discounts, cash and foreign exchange
transactions and the execution of related services, such as the preservation, and issuance of
guarantees, recognitions and letters of credit.

I did several tasks as an apprentice and gathered information that could enrich my study of
this report valuable. This knowledge was so important for me where I can compare the
knowledge that I learned from my university with the practical financial institution.

I tried to provide an in-depth analysis of the bank's financial performance analysis using data
from the 2014-2018 annual report. In the beginning of preparing this report, I have shared the
general and basic ideas of the report as well as the objectives of the report, because without
goals the report cannot be a relevant one. After that, there are discussion on the basic
information to share the history and activities performed by Janata Bank Limited. Finally, in
the financial statement analysis part, the Horizontal, vertical and ratio analysis has been
analyzed to portray the financial performance of Janata Bank Ltd during the last five years of
2014-2018 as financial analysis is a logical and mathematical way to show the overall
financial performance of the bank over these years.

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Last but not the least, some problems are shared that are found while analyzing the financial
performance and in the later chapter few suggestions are mentioned for the betterment of the
Bank so that manager of Janata Bank can take precautionary steps if the feel the suggestions
are well enough.

Table of Contents
Title Page No.
Chapter One: Introduction of the Study 07
1.1 Background of the Report 07
1.2 Scope of the Report 07
1.3 Objectives of the Report 07
1.4 Methodology of the Report 08
1.5 Limitations of the Report 08
Chapter Two: Overview of Janata Bank Limited 09
2.1 Background of Janata Bank Limited 09
2.2 Mission of Janata Bank 10
2.3 Vision of Janata Bank 10
2.4 Values of Janata Bank 10
2.5 Ethical Principles of Janata Bank Limited 11
2.6 Services provided by Janata Bank Limited 12
2.8 Interest Services of Janata Bank Limited 12
2.9 Services for International Trades 13
2.10 Export finance of Janata Bank Limited 13
2.11 Janata Bank at a glance 14
Chapter Three: Literature Review 15
3. Literature Review 15
3.1 The concept of financial statement analysis 15
3.2 Methods of financial statement analysis 16
3.2.1 Horizontal Analysis 17
3.2.2 Vertical Analysis 17
3.2.3 Ratio Analysis 18
Chapter Four: Analysis of Financial Statement of Janata Bank Limited 21
4.1 Contribution of Janata Bank Limited 21
4.2 Horizontal and Vertical Analysis of Janata Bank 21
4.5 Ratio Analysis 24
4.5.1 Liquidity Ratio 25
4.5.2 Leverage Ratio 27
4.5.3 Management Efficiency Ratio 31

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 4.5.4 Profitability Ratio 32
Chapter Five: Findings Recommendations & Conclusion of the report 35
5.1 Findings of the report 35
5.2 Recommendations 35
5.3 Conclusion 36
Reference 37
Appendices 38
Chapter One

Introduction of the Study

1.1 Background
The of theisReport
internship program an essential part of to acquire a Bachelor of Business
Administration (BBA) degree from Daffodil International University. Each student must
complete the required credit, then they're placed for observing a particular scenario in a real
workplace and to guide them to put together their internship document, an honorable
supervisor always monitors the students to prepare their internship report well. I sense myself
lucky that I were given an opportunity to join in Janata Bank Limited as an intern. While
working inside the bank, I determined to prepare my internship report on the Financial
Statement Analysis of Janata Bank Limited.

1.2 Scope of the Report

The purpose of the report is to analyze the financial statement of Janata Bank comparing the
years of 2014-2018. The evaluation of overall financial performance is a subjective measure
of a company's ability to utilize the sources of its primary mode of business and to generate
revenue. This term is also used as a general measure of the overall financial condition of a
commercial bank over a given time period. To keep way from complexity some overall
performance variables are taken into consideration while analyzing performance. The study
would focus on the two major financial tools to analyze the financial performance of Janata
Bank Limited. The first part is Trend analysis that includes Horizontal and vertical analysis,
and the Second part is the ratio analysis that is a highly famous method to examine any
financial institutions.

1.3 Objectives of the Report

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The main objective of the report will be to present the financial performance analysis of Janata Bank
Limited with fulfilling the requirement of MBA program. However, the objective behind this study is
something broader. Objectives of the report are summarized in the following manner-

 To present an overview of JBL.

 To analyze the financial performances of JBL of different years.

 To provide recommendations based on the findings of the study.

1.4 Methodology of the Report

i. Sampling and Sample size: The report consists of 5 years of financial information of
Janata Bank Limited taken from the five years annual report from the years of 2014 to
2018. All the analysis consists of those five years valid information.
ii. Data Collection: The data are gathered from several applicable sources of the study
and can be divided into two sources.
I. Primary sources:
a. Formal and informal conversation of the Janata Bank’s employees
b. The realistic reports by operating inner of the Bank
c. The annual document of the bank
d. Various courses, leaf-lets of the bank.
II. Secondary sources:
a. Various courses and articles on financial overall performance analysis
b. Websites of the Janata Bank and few other related web sites and blogs
c. Several books on financial overall performance analysis
iii. Data analysis: The study follows exploratory research techniques that use both
qualitative and quantitative statistics. The quantitative records are directly collected
from the Janata Bank’s annual report of the year 2014-2018 and used Microsoft word
and excel to examine the performance with the help of different pie charts and bar
charts.

1.5 Limitations of the Report

Though working as an intern was good but there are some limitations found that create
difficulties to put together the report. The limitations are:

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 i. Short period of time: Preparing such an extensive report on financial performance of
such a large bank was difficult in the three months of internship period.
ii. Secrecy: Janata Bank Limited maintain too much secrecy on several parts of
information because of the fear of bad reputation. Several important information that
can enrich my report with valuable information couldn’t attach because of the
restriction.

Chapter Two

Overview of Janata Bank Limited

2.1 Background of Janata Bank Limited

History

With the emergence of Bangladesh as an independent, sovereign state in 1971 after a

devastating nine month war against the West Pakistani occupation army, a war, full of blood
and tears, trauma and pain of millions of our beloved ones, the legacy of rebuilding the
already broken financial base of the country was felt as an urgent call of the day against a
collapsed economic reality of a newly born state.

Inception

In this backdrop, in order to rebuild the country’s economy, measures had been taken to
merge a number of banks previously operated in this region and make new banks and this
initiatives led to formation of Janata Bank in 1972 by combining the erstwhile United Bank
Limited and Union Bank Limited under the Banks Nationalization Order (President’s Order
No. 26) of 1972.

Corporatization

In 15 November, 2007 Janata Bank got registered with the Joint Stock of Registrars and
restructured it as a public limited company with the name Janata Bank Limited.

Roundup
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Including 4 overseas branches in United Arab Emirates Janata Bank runs its business with
913 branches across the country having a big family of around 11,966 (As on 30.06.2019)
employees with its head office located at Janata Bhaban at Motijheel C/A, the heart of the
capital city, Dhaka.

At the end of 2018 the Bank held Deposit BDT 675,548.46 million, Advance BDT
533,707.17 million with Authorized capital BDT 30,000 million and Paid-up Capital BDT
23,140 million.

Janata Bank Limited, a corporate body trusted over the years, the 2nd largest (in respect of
Deposits/Assets) commercial bank in Bangladesh, has been playing pivotal role in overall
financial activities of the country and is possessing a long heritage of discharging laudable
services to the society since her embankment immediately after the emergence of this verdant
rich alluvial soil as a sovereign, independent state.

The contribution of the Bank to the national economy and social reform has set standard bar
so high that others in this business can’t help aspire touching the benchmark of success
earned by JBL. More so a matter of great honor is that the contribution, commitment and
success of the Bank have been recognized with a number of prestigious awards by national
and international organizations of repute.

2.2 Mission of Janata Bank

Janata Bank Limited will be an effective commercial bank by maintaining a stable growth
strategy, delivering high quality financial products, providing excellent customer service
through an experienced management team and ensuring good corporate governance in every
step of banking network.

2.3 Vision of Janata Bank

To become the effective largest commercial bank in Bangladesh to support socio-economic

development of the country and to be a leading bank in South Asia.

2.4 Values of Janata Bank

Professionalism

10 | P a g e Integrity Growth
Core values
of Janata
Bank
 Accountability Diversity

Dignity

2.5 Ethical Principles of Janata Bank Limited

Janata Bank deals with public funds for which the respect of ethics is very important. Janata
Bank maintains its reputation as a law-abiding organization and a good organization.
Employees are properly guided to carry out their activities in a compatible manner. Janata
Bank's business process policies and procedures are prepared in accordance with laws and
regulations. JBL respects and applies ethical principles in all areas of its banking and
customer service. The main features of the Code of Ethics and Employee Conduct are:

a. To implement justice and equity

b. provide optimal services to the client

c. preserve the confidentiality and confidentiality of the customer's information and at the
same time, it respects the Right to Information Act of 2009

d. prevent money laundering and corruption

e. protect and defend the values of the company

f. maintain the accuracy and transparency of financial information

g. protect the natural environment

h. Perform all activities in accordance with guidelines and laws approved by the various
regulatory authorities

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2.6 Services provided by Janata Bank Limited
Janata Bank Limited provides its customers with all banking facilities and services. Its vast
branch network and with a fast and efficient staff provides the personalized services given
below:

Telegraphic
Demand Draft Mail Transfer
Transfer

Security deposit
Payment Order General Transfer
receipt

Transfer of Funds Electronic

Through Special Transfer Through Foreign payments
Agreements a Credit Card List

2.8 Interest Services of Janata Bank Limited

The bank offers the following advantages of interest:

Current savings Merchant

FDR accounts
account / STD account

Advanced
status of the Debit account
statement NRB account
accounts

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 2.9 Services for International Trades

i. Janata Bank Ltd. is one of the pioneers in the promotion of the Letter of Credit (L/C)
for the RMG sector (Ready Made Garments)

ii. Financing the export as part of the export policy of Bangladesh.

iii. Bank management and financing create an excellent corporate reputation in the
Bangladeshi Banking industry in terms of International trade, especially in the
country's exports and exports.

2.10 Export finance of Janata Bank Limited

i. To increase the country's exports, Janata Bank Limited has provided assistance to
several exporters. Some of these are the following:
ii. Interest discount rates for export financing.

iii. Continuous L/C facilities for the bonded warehouse facilities.

iv. 100% export-oriented industries for foreign investments and opportunities for joint
ventures.

v. Data entry to computer programs and export services to the export financing program.

vi. As a specialized consulting agency, the bank serves a group of consulting services.

vii. Banking in export processing zone (EPZ).

viii. Export incentive programs.

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2.11 Janata Bank at a glance

FEATURES VALUES
Name Janata Bank Limited
Genesis Janata Bank Limited, the 2nd largest State
Owned Commercial Bank (SCB) in
Bangladesh, is playing pivotal role in overall
financial activities of the country. The Bank
emerged as ‘Janata Bank’ by combining the
erstwhile United Bank Limited and Union
Bank Limited under the Banks
Nationalization Order (President’s Order- 26)
of 1972 and was restructured as a limited
company in November, 2007. Since inception
in 1972 the Bank has commendably
contributed to the socio-economic
development of Bangladesh and helped
structuring solid financial ground of the
country as well. Janata Bank runs its business
with 912 branches across the country
including 4 overseas branches in United Arab
Emirates.
Janata Bhaban, 110, Motijheel Commercial
Registered Address
Area Dhaka - 1000, Bangladesh.
Legal Status Public Limited Company
Chairman Dr. Jamaluddin Ahmed, FCA
CEO & Managing Director Md. Abdus Salam Azad (F.F.)
Company Secretary Hussain Yeahyea Chowdhury
Date of Incorporation 21-May-07
Authorized Capital BDT 30,000 Million
Paid up Capital BDT 23,140 Million
Face value per share BDT 100 per share
100% Share owned by the Government of
Shareholding Pattern
Bangladesh
Number of Employees 11,895 (As on 31.10.2019)
Banking license obtained from
31-May-07
Bangladesh Bank
+88 02-9560000, 9566020, 9556245-49,
Phone
9565041-45, 9560027-30
Fax 88-02-9554460, 9553329, 9552078
SWIFT JANBBDDH
www.jb.com.bd, www.janatabank-bd.com,
Website
জনতা ব্যাং ক.বাং লা
E-mail md@janatabank-bd.com
   

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 Chapter Three

Theoretical Aspects

3. Literature Review

The literature review is to help the reader to understand all the technical terms such financial
concepts that are used in this study in order that any reader of the report can easily recognize
all of the important principles of the report as well as understand the financial performance of
the Janata bank of last five years. As shared earlier, the evaluation of financial performance is
a subjective measure of a company's ability to utilize the sources of its primary mode of
business and to generate revenue. This term is also used as a general measure of the overall
monetary health of a business over a given time frame and can be used to compare similar
businesses in the same sector or to compare industries or sectors. The assessment of the
overall performance is may be included ways, the first part is Trend analysis that consists of
Horizontal and vertical analysis, and the Second part is the ratio analysis that's a highly
applied method to examine any financial institutions.

3.1 The concept of financial statement analysis

According to Kaplan financial performance refers to the achievement of financial objectives

and is an important aspect of financial risk management. It is the process of monetary
measurement of the results of a company's policies and operations. It is used to measure the
overall financial health of the business over a given period and can also be used to compare
similar businesses in the same sector or to compare industries or sectors. Businesses and
interested groups, such as executives, shareholders, creditors and tax authorities, try to
answer important questions such as:

i. What is the financial position of the company at any given time?

ii. What is the financial performance of the company over a given period?

These queries can be solved using a financial analysis of a company. Financial analysis
involves the use of financial statements. A financial statement is a collection of data

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organized according to logical and consistent accounting procedures. Its purpose is to
understand certain financial aspects of a commercial enterprise. It is possible to visualize a
position during a given period, as in the case of a balance sheet, or to reveal a series of
activities for a certain period, as in the case of an income statement. As a result, the term
"balance sheet" generally refers to two fundamentals: the balance sheet and the income
statement.

The financial balance sheet indicates the financial condition of the company at a given time.
It provides a snapshot that can be considered a static image. The financial statements are a
summary of a company's financial position at a given date, showing total assets = total
liabilities + owner's capital. The income statement reflects the performance of the company
over a given period. The income statement is a summary of the income and expenses of the
business in a given period, which ends with the net profit or loss of the period. Anyways,
financial statements do not reveal all the information about a company's financial
transactions, but they provide extremely useful information that highlights two important
factors: profitability and financial strength.

3.2 Methods of financial statement analysis

There are various methods or techniques to analyze or to measure financial performance of a

firm or company. The methods are listed below:

Horizontal
Analysis

Vertical Analysis

Ratio Analysis

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The methods mentioned above are the ways to measure financial performance of a company.
It is depended on the user what are the most flexible ways for them to measure his firm. The
methods that are used to analyze the Janata Bank Limited performance from the year 2016 to
2018, is through Ratio and Trend Analysis. These are very popular and widely accepted
financial analysis these days. The two analysis are discussed below:

3.2.1 Horizontal Analysis

Trend analysis also referred as horizontal analysis is the comparison of company’s financial
report information over some periods of time. Trend analysis is a technique used in technical
analysis to try to predict future stock price developments from recent trend data. The trend
analysis is based on the idea that what happened in the past gives traders an idea of what will
happen in the future. Applying horizontal analysis to firm’s statements makes it comfortable
to estimate its performance over time. Vertical is the analysis of items of the company’s
statements when one item is being compared to the base item. While the horizontal analysis
aims to estimate the dynamics, vertical is commonly applied for a single period. The reason
for performing it is the necessity to e

3.2.2 Vertical Analysis

Vertical analysis is the proportional analysis of a financial statement, where each line item on
a financial statement is listed as a percentage of another item. This means that every line item
on an income statement is stated as a percentage of gross sales, while every line item on a
balance sheet is stated as a percentage of total assets.

The most common use of vertical analysis is within a financial statement for a single
reporting period, so that one can see the relative proportions of account balances. The most
common use of vertical analysis in an income statement is to show the various expense line
items as a percentage of sales, though it can also be used to show the percentage of different
revenue line items that make up total sales. The central issue when creating a vertical analysis
of a balance sheet is what to use as the denominator in the percentage calculation. The usual
denominator is the asset total, but one can also use the total of all liabilities when calculating
all liability line item percentages, and the total of all equity accounts when calculating all
equity line item percentages.

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3.2.3 Ratio Analysis

According to Bierman Ratio in accounting refers to the significant relationships between the
figures that are reported in a balance sheet, income statement, budget control system, or any
other part of the accounting organization. The accounting ratios indicate a quantitative
measure that is used for performance analysis and decision making. Moreover, a ratio is a
two-digit quotient and the ratio expressed between two accounting numbers is called an
accounting ratio. The analysis of the ratio is a very powerful analysis tool and very helpful
for measuring the performance of a firm. The analysis of the report focuses on the
interrelationship between the figures in the financial statements. The analysis of the ratios
helps management to analyze the past performance of the company and to create other plans.
The analysis of the relationship allows stakeholders, such as investors, creditors, governments
and analysts, to evaluate certain aspects of a company's performance. The analysis of the
relationship is a process of comparing one number with another, giving a relationship. The
valuation of the ratio will allow a correct analysis of the strengths and weaknesses of the
company's activities. Evaluating ratio is a relatively simple and straightforward task, but
proper analysis and interpretation of ratios can only be performed by a qualified analyst.
When interpreting financial information, the analyst must act with caution within the limits
imposed by accounting concepts and methods. Non-financial information will also be
considered before any significant analysis. The analysis of the ratio is extremely useful for
providing valuable information on a company's financial situation. Normally, relationships
identify a company's strengths and weaknesses in two ways:

a. Ratios are a simple way to compare current performance with previous ones.
b. The ratios describe the areas in which a given company has competitive advantages or
disadvantages in comparing relationships with those of other companies of the same size
within the same sector.

There are many kinds of ratio now a days. People are creating different software to get
proper analysis of their respected balance. Ratio are categorized in five ways in banking
sector. These are given below:

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 Liquidity Ratio

Leverage Ratio

Management Efficiency Ratio

Profitability Ratio

1) Liquidity Ratio: Liquidity Ratio is the ratio by which a company can calculate the
company’s ability to meet up the amount of liability to creditor. Most of the firm used
to take a large amount of loan from respected lender to expand its productive activity.
Against the loan a company has to calculate the cost of capital. Because a levered
company is more beneficial compare to unlevered company. In that case a company
has to maintain liquidity ratio to aware of its liability to creditors. There are some
liquidity ratios those are given below.

Current Ratio

Statutory Liquidity Ratio

2) Leverage Ratio: A leverage ratio is any one of several financial measurements that
look at how much capital comes in the form of debt (loans) or assesses the ability of a
company to meet its financial obligations. The leverage ratio category is important
because companies rely on a mixture of equity and debt to finance their operations,
and knowing the amount of debt held by a company is useful in evaluating whether it
can pay off its debts as they come due. Several common leverage ratios are listed
below:

Debt Ratio

Debt Equity Ratio

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Interest Coverage Ratio
 3) Management Efficiency Ratio: A management efficiency ratio is a
financial ratio designed to measure the efficiency of management in controlling the
working capital or other resources used by the business. A management efficiency
ratio is

Total Assets Turnover

4) Profitability Ratio: Profitability ratios are a class of financial metrics that are used to
assess a business's ability to generate earnings relative to its revenue, operating costs,
balance sheet assets, and shareholders' equity over time, using data from a specific
point in time. For most profitability ratios, having a higher value relative to a
competitor's ratio or relative to the same ratio from a previous period indicates that
the company is doing well. Ratios are most informative and useful when used to
compare a subject company to other, similar companies, the company's own history,
or average ratios for the company's industry as a whole. Several common profitability
ratios are listed below:

Return on Assets

Return on Equity

Net Profit Margin

Chapter Four

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 Analysis of Financial Statement of Janata Bank Limited

4.1 Contribution of Janata Bank Limited

Contribution of JBL in the Banking sector Banking sector of Bangladesh is being operated by
57 banks having more than 9 thousand branches. Along with contributing to the socio-
economic development of the country, JBL has earned 9,788.96 million operating profit in
2018.
BDT in millions
Sl. Components Amount
1. Loans and Advances 866,046.48
2. Deposits 675,548.45
3. Total Assets 533,707.16
4. Import 220,413.70
5. Export 114,681.00
6. Foreign Remittance 76,078.10
7. Branches (number) 913
8. Manpower (number) 11,849

4.2 Horizontal and Vertical Analysis of Janata Bank

Horizontal analysis is a financial statement analysis technique that shows changes in the
amounts of the corresponding items in financial statements over a period of time. It is a
useful tool for evaluating trend situations. Statements of two or more periods are used in the
horizontal analysis. The horizontal analysis allows investors and analysts to see what has
motivated the financial performance of a company over several years, as well as detect trends
and growth patterns such as seasonality. It allows analysts to evaluate the relative changes in
different items over time and project them. By simultaneously reviewing the statement of
results, the balance sheet and the cash flow statement, it is possible to obtain a complete
picture of the operating results, to see what motivated the performance of a company and
determine if it is operating effectively or not. While the horizontal analysis analyses how the
dollar amounts in a Janata Bank's balance sheets have changed over time, the vertical analysis
considers each element as a percentage of a basic figure within the financial statement.
Therefore, items in an income statement can be declared as a percentage of gross sales, while
items in a balance sheet can be expressed as a percentage of total assets or liabilities.

21 | P a g e
 Horizontal Statement Analysis of Janata Bank Limited

Balance sheet Matrix 2014 2015 2016 2017 2018

Authorized capital 0.00% 0.00% 0.00% 0.00% 0.00%
Paid up capital 0.00% 0.00% 0.00% 0.00% 20.90%
Reserve fund & surplus 0.00% 49.67% 51.36% 58.61% 54.64%
Total shareholders' equity 0.00% 25.58% 26.44% 30.18% 38.27%
Capital employed 0.00% 9.91% 14.06% 21.48% 29.68%
Deposits 0.00% 10.25% 24.38% 25.86% 30.92%
Loans and advances 0.00% 9.41% 26.04% 43.72% 66.90%
Investments 0.00% 11.41% 18.59% -9.85% -15.21%
Fixed Assets 0.00% 3.13% 8.68% 5.96% 5.63%
Total assets 0.00% 9.91% 23.90% 28.26% 37.81%
Total off balance sheet exposures 0.00% 67.70% 45.08% 66.74% 30.69%
Earning assets 0.00% 10.44% 21.87% 22.79% 14.53%
Non-earning assets 0.00% 7.90% 31.55% 48.89% 125.70%
Net assets 0.00% 25.58% 26.44% 30.18% 38.27%
Income Statement Matrix 2014 2015 2016 2017 2018
Interest income 0.00% -9.13% -5.44% -7.67% 2.24%
Investment income 0.00% 9.07% -1.95% -13.90% -32.21%
Non-interest income 0.00% 14.32% 1.97% 16.83% -17.75%
Total income 0.00% -1.27% -3.63% -6.95% -10.09%
Interest expenses 0.00% -5.56% -12.93% -24.71% -25.04%
Non-interest expenses 0.00% 12.86% 33.44% 44.04% 43.38%
Total expenses 0.00% -1.64% -3.06% -10.08% -10.49%
Net interest income/ Net interest
0.00% 47.90% -125.18% -280.10% -434.09%
margin (NIM)
Net non-interest expenses 0.00% 10.58% 82.31% 86.31% 138.31%
Operating profit 0.00% 0.35% -6.04% 6.42% -8.37%
Earnings before interest
0.00% 0.34% -4.41% 7.53% -5.84%
depreciation and tax
Profit before provision & tax 0.00% 0.35% -6.04% 6.42% -8.37%
Profit before tax 0.00% 14.43% -36.33% -26.57% -88.25%
Net profit after tax 0.00% 26.09% -31.67% -29.55% -93.47%

Vertical Statement Analysis of Janata Bank Limited

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 Balance sheet Matrix 2014 2015 2016 2017 2018
Authorized capital 4.77% 4.34% 3.85% 3.72% 3.46%
Paid up capital 3.05% 2.77% 2.46% 2.37% 2.67%
Reserve fund & surplus 3.23% 4.40% 3.95% 4.00% 3.63%
Total shareholders' equity 6.28% 7.17% 6.41% 6.37% 6.30%
Capital employed 51.35% 51.35% 47.28% 48.64% 48.32%
Deposits 82.11% 82.37% 82.43% 80.58% 78.00%
Loans and advances 50.89% 50.66% 51.76% 57.02% 61.63%
Investments 31.30% 31.73% 29.96% 22.00% 19.26%
Property, plant & equipment (Fixed
1.55% 1.45% 1.36% 1.28% 1.19%
Assets)
Total assets 100.00% 100.00% 100.00% 100.00% 100.00%
Total off balance sheet exposures 11.54% 17.60% 13.51% 15.00% 10.94%
Earning assets 79.05% 79.44% 77.76% 75.68% 65.70%
Non-earning assets 20.95% 20.56% 22.24% 24.32% 34.30%
Net assets 6.28% 7.17% 6.41% 6.37% 6.30%
Income Statement Matrix 2014 2015 2016 2017 2018
Interest income 59.82% 55.06% 58.69% 59.36% 68.02%
Investment income 29.69% 32.80% 30.21% 27.47% 22.39%
Non-interest income 10.49% 12.15% 11.10% 13.17% 9.60%
Total income 100.00% 100.00% 100.00% 100.00% 100.00%
Interest expenses 63.81% 61.03% 57.65% 51.63% 53.19%
Non-interest expenses 17.25% 19.71% 23.88% 26.70% 27.50%
Total expenses 81.06% 80.75% 81.53% 78.33% 80.69%
Net interest income/ Net interest
-3.99% -5.98% 1.04% 7.72% 14.82%
margin (NIM)
Net non-interest expenses 6.76% 7.57% 12.78% 13.53% 17.90%
Operating profit 18.94% 19.25% 18.47% 21.67% 19.31%
Earnings before interest
19.76% 20.08% 19.60% 22.83% 20.69%
depreciation and tax
Profit before provision & tax 18.94% 19.25% 18.47% 21.67% 19.31%
Profit before tax 10.17% 11.78% 6.72% 8.02% 1.33%
Net profit after tax 6.76% 8.64% 4.79% 5.12% 0.49%

4.5 Ratio Analysis

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A tool used by analysts which utilizes the relationship between accounting figures and their
trends over time to establish values and evaluate risks. Ratio analysis provide analyst with
useful information understand about developing insights into the economic characteristics of
different industries and of different firms in the same economic additional ,different over time
in a single firm or between firms due to operation ,financing and investing decision made by
management as well as external economic factor are often highlighted by common-side
statement.

Assumption of Ratio Analysis

The most common mode in which financial statement data are summarized is the ratio form.
Motivations for examining data in ratio form include:
 To control for the effect of size differences across the bank overtime.
 To make the data better satisfy the assumptions underlying statistical tools
 To probe a theory in which a ratio is the variable of interest.
 To exploit an observed empirical regularity between a financial ratio and the
estimation of variable of interest.
Purpose and Use of Ratio Analysis
In the world of business the importance of ratio analysis is very important. A primary
advantage of ratios is that they can be used to compare the risk and return relationships of
firms of different sizes. Ratios can also provide a profile of a firm, its economic
characteristics and competitive strategies, and its unique operating, financial, and investment
characteristics. In addition ratios are very informative for both the insiders and outsiders of
the firm.

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 Ratio analysis of Janata Bank Limited from 2014 to 2018

4.5.1 Liquidity Ratio

Current Ratio: The Current Ratio indicates whether the bank has enough cash and cash-
equivalents to cover its short-term liabilities. It is a comparison of current assets
to current liabilities, calculated by dividing your current assets by your current liabilities.
Potential creditors use the current ratio to measure a company's liquidity or ability to pay off
short-term debts. The current ratio of a good bank should always be greater than 1. A ratio of
less than 1 poses a concern about the bank's ability to cover its short-term liabilities.

Year 2014 2015 2016 2017 2018

1.0
Current Ratio (times) 1.31 1.02 1.04 0.91
4

Graphical Explanation

Current Ratio
1.40 1.31
1.20
1.02 1.04 1.04
1.00 0.91
0.80

0.60

0.40

0.20

0.00
Current Ratio (times)

2014 2015 2016 2017 2018

Interpretation: The Bar Chart is representing that the current ratio of Janata bank of the
year 2018 was lower than the previous four years. In 2015, the current ratio of Janata Bank
fell down from the year 2014, but somehow it manages to increase in 2016. However, the
changes of this current ratio were not very significant except in 2018. So, it can be said,
Janata Bank Limited is stable to utilize its current assets in terms of managing its current
liabilities.

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Statutory Liquidity Ratio: The central bank of Bangladesh (Bangladesh Bank)
determines and maintains the statutory liquidity ratio to control bank credit, guarantee the
solvency of commercial banks and force banks to invest in government bonds. By changing
the reflection, the flow of bank credit in the economy can be increased or decreased. For
example, when the central bank decides to reduce bank credit to control inflation, the
reflection will increase. On the contrary, when the economy faces recession and the central
bank decides to increase bank credit, the reflection will be reduced. However, The Statutory
Liquidity Ratio (SLR) refers to the proportion of deposits that the commercial bank must
maintain in the form of liquid assets in addition to the reserved index.

Year 2014 2015 2016 2017 2018

23.79
Statutory Liquidity Ratio 37.98% 39.38% 35.95% 19.93%
%

Graphical Explanation

Statutory Liquidity Ratio

45.00%
37.98% 39.38%
40.00%
35.95%
35.00%
30.00%
25.00% 23.79%
19.93%
20.00%
15.00%
10.00%
5.00%
0.00%
Statutory Liquidity Ratio

2014 2015 2016 2017 2018

Interpretation: From the above bar chart, it can be interpreted that the statutory liquidity
ratio of Janata Bank is gradually decreasing and it can be at its crucial stage if precautionary
steps are not taken. In 2015, the SLR of Janata Bank Limited was higher and it was at its
worst in 2018.

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4.5.2 Leverage Ratio

Debt Ratio: The analysis of the debt ratio, defined as an expression of the relationship
between the debt and the total assets of a company, enables the ability to serve a company's
debt to be measured. Indicates what percentage of a company's financial capital derives from
debt, making it a good way to verify a company's long-term solvency. In general, a lower
ratio is preferable. A debt ratio of less than or equal to 1 indicates the good financial health of
a company.

Year 2014 2015 2016 2017 2018

Debt Ratio 82.11% 82.37% 82.43% 80.58% 78.00%

Debt Ratio
83.00% 82.37% 82.43%
82.11%
82.00%
81.00% 80.58%
80.00%
79.00%
78.00%
78.00%
77.00%
76.00%
75.00%
Debt Ratio

2014 2015 2016 2017 2018

Graphical Explanation

Interpretation: The Bar Chart shows what percentage of Janata Bank’s financial capital
derives from debt from the year 2014-2018, making it a good way to verify the bank’s long-
term solvency. There were slightly ups and downs, but in general was similar in the debt ratio
among the years 2014-2016. But in 2017 it decreases around 2 percent and it follows same
trend in 2018.

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Debt Equity Ratio: The debt-to-equity ratio (D/E) is a financial ratio that shows the
relative proportion of capital and debt used to finance the assets of a business. Closely linked
to leverage, the relationship is also called risk, debt or leverage. Usually, the two variables
are collected from the company's or bank's balance sheet (the book value), but the ratio can
also be calculated using market values for both if the company's debt and equity are traded on
the stock exchange, or a combination of book value for debt and market value for the capital
stock.

Year 2014 2015 2016 2017 2018

11.6
Debt Equity Ratio (times) 12.08 10.48 11.86 11.38
4

Debt Equity Ratio

12.50
12.08
12.00 11.86
11.64
11.50 11.38

11.00
10.48
10.50

10.00

9.50
Debt Equity Ratio (times)

2014 2015 2016 2017 2018

Graphical Explanation

Interpretation: The chart shows the relative proportion of capital and debt used to finance
the assets of Janata Bank Limited from the year 2014-2018. Here Janata bank used its capital
and debt mostly in 2014 and lower in 2015. Though, the bank used its capital less in 2015, it
had improved its finance in 2016. But the ratio deceased a little bit in 2017 and 2018.

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Interest Coverage Ratio: The Interest Coverage Ratio (ICR) is a financial index used to
determine the extent to which a company can pay interest on its outstanding debts. Creditors,
lenders, and investors often use the ICR to determine the degree of risk of capital to a
company. Another name of this interest coverage ratio is the time interest earned ratio. The
formula to calculate interest coverage ratio is:

Year 2014 2015 2016 2017 2018

31.55 32.04
Interest Coverage Ratio 29.69% 41.96% 38.90%
% %

Graphical Explanation

Interest Coverage Ratio

45.00% 41.96%
40.00% 38.90%

35.00% 31.55% 32.04%

29.69%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Interest Coverage Ratio

2014 2015 2016 2017 2018

Interpretation: The bar chart above, represent the extent to which Janata bank limited have
paid interest on its outstanding debts from the year of 2014-2018. As an analyst, I tried to
describe the profitability and risks of Janata bank and highly concerned that if the ratios
among these years are gradually forwarding as it will share the payment of interest given by
Janata bank for our investment. The ratios among the year shows that it was slightly
increasing from 2014 to 2016 but in 2017, it reaches at its highest at 41.96%. After that, the
ratio decreases a little bit in 2018.

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Price Earnings Ratio: Price earnings ratio shows the market perspective relationship that
calculates the market value of an action against its earnings by comparing the market price
per share for profit per share. In other words, the price-earnings ratio shows how much the
market wants to pay for a value based on its current earnings. Analysts usually use this ratio
to assess what the fair market value of action should be when forecasting future earnings per
share (EPS). In general, companies who have a higher price to earnings ratio are expected to
generate higher dividends or appreciate shares in the future.

Year 2014 2015 2016 2017 2018

Price Earnings Ratio 10.35 10.31 19.15 19.11 201.51

Graphical Explanation

Price Earnings Ratio

250.00

201.51
200.00

150.00

100.00

50.00
19.15 19.11
10.35 10.31
0.00
Price Earnings Ratio

2014 2015 2016 2017 2018

Interpretation: The chart shows that how much the market had paid for a value based on its
current earnings and how much effectively the Janata Bank Limited provided dividends to its
consumers. Janata Bank Limited P/E ratio was not good enough in 2014-2015. However, the
bank is sharing well enough surprisingly in terms of dividend to its shareholders from 2016
and 2017 even in 2018, it reaches at its highest at 201.51.

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4.5.3 Management efficiency Ratio

Total Asset Turnover: The total asset turnover is an activity ratio that measures a
company's ability to efficiently use its resources to generate sales. It can be calculated by
dividing net sales by average total assets. Unlike the rotation of fixed assets, which includes
only the property, the structure and the equipment to be calculated, this report measures the
efficiency with which the company uses all its activities. The total value of the assets'
turnover measures the number of goods and services sold per dollar of assets used during the
period analyzed.

Year 2014 2015 2016 2017 2018

Total Asset Turnover -0.37% -0.50% 0.08% 0.51% 0.90%

Graphical Explanation

Total Asset Turnover

1.00% 0.90%
0.80%
0.60% 0.51%
0.40%
0.20% 0.08%
0.00%
Total Asset Turnover
-0.20%
-0.40%
-0.37%
-0.60% -0.50%

2014 2015 2016 2017 2018

Interpretation: The chart there was a great fall in terms of asset turnover in the years of
2014 to 2015. However, it has increased gradually. This represents that Janata Bank is
utilizing their resources and the sales is increasing year after year in terms of its assets quite
well from the past.

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4.5.4 Profitability Ratio

Return on Assets: Return on Assets (ROA) is an index of profitability which evaluates the
rate of return on resources that a company owns. It measures the level of net income
generated by the assets of a company. The return on assets is a list of crossed financial
statements. It uses the "net income" of the income statement and the "total assets" of the
balance sheet.

Year 2014 2015 2016 2017 2018

Return on Assets 0.61% 0.70% 0.33% 0.33% 0.03%

Graphical Explanation

Return on Assets
0.80%
0.70%
0.70%
0.61%
0.60%
0.50%
0.40%
0.33% 0.33%
0.30%
0.20%
0.10%
0.03%
0.00%
Return on Assets

2014 2015 2016 2017 2018

Interpretation: The bar chart above represent the level of net income generated by the assets
of Janata Bank Limited between the years of 2014-2018. The results are highly dissatisfied
for any analyst as the return of asset were very low in last five years. It is continuously down
till 2018. It means the bank is not efficient enough to maintain its net income generated that
by its assets.

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Return on equity: ROE is an indicator of how effectively management uses capital
funding to finance operations and grow the company. Moreover, it is a profitability ratio that
measures a company's ability to generate profits from its shareholders' investments in the
company. In other words, the rate of return on capital indicates the number of profits
generated by each dollar of equity. Therefore, a return of 1 means that every dollar of net
worth generates 1 dollar of net income. This is an important step for potential investors
because they want to see how effectively a company will use its money to generate net
income.

Year 2014 2015 2016 2017 2018

Return on equity 9.66% 9.70% 5.22% 5.23% 0.46%

Return on equity
12.00%

10.00% 9.66% 9.70%

8.00%

6.00% 5.22% 5.23%

4.00%

2.00%
0.46%
0.00%
Return on equity

2014 2015 2016 2017 2018

Graphical Explanation

Interpretation: The bar chart represents how effectively management of Janata Bank had
used capital funding to finance operations and to grow the bank. Moreover, it shows the
bank's ability to generate profits from its shareholders' investments. The performance of the
bank in terms of ROE is very poor. Though it was not good from 2014 to 2015, the ROE fell
significantly from the year of 2016 to 2018 and it reaches at its lowest at 0.46% in 2018 as
well. At present they cannot still improve it.

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Net Profit Margin: The net profit margin ratio or the net margin is a measure of profitability
which calculates the percentage of each dollar earned by a company that becomes a profit at
the end of the year. In other words, the net profit margin ratio shows the net income of a
business for every dollar of sales. Investors and analysts often use net margins to predict the
effectiveness of running a business and future profit forecast based on the manager's sales
forecast. By comparing net sales with total sales, investors can see how much percentage of
their operating income and operating costs and any percentage for shareholders or company
will be redefined.

Year 2014 2015 2016 2017 2018

6.76 8.64 4.79
Net Profit Margin 5.12% 0.49%
% % %

Graphical Explanation

Net Profit Margin

10.00%
9.00% 8.64%
8.00%
7.00% 6.76%
6.00%
5.12%
5.00% 4.79%

4.00%
3.00%
2.00%
1.00% 0.49%
0.00%
Net Profit Margin

2014 2015 2016 2017 2018

Interpretation: The Bar chart above is to describe the net profit margin ratio shows the net
income of Janata Bank Limited for every dollar of sales. The performance of this net profit
margin was very low and it was not bad from 2014 to 2015 but in 2016 to 2017, it fell down
and eventually it reaches at its lowest at 0.49% in 2018.

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 Chapter Five
Findings, Recommendations & Conclusion of the Report

5.1 Findings
After analyzing of
thethe report of Janata Bank Limited the findings are noted down:
performance

1. In Most cases, after analyzing through several variables, it can be said that the year
2018 was not good enough for Janata Bank Limited as most of the ratio displayed
several poor performances.
2. The debt ratio of 2018 was not good enough compared to the other years and it is
found that Janata bank might not be done well enough in terms of its long-term
insolvency.
3. Janata Bank Limited is doing well in its payment of interest on its outstanding debts.
Most of the investor are highly concerned for this information.
4. Dividend payments to shareholders are quite well and a huge comeback from the years
2014-2015 when the dividend payment was not good enough.
5. Janata Bank Limited is performing very poor gradually in terms of managing its net
income generated that by its assets.
6. The performance in the bank's ability to generate profits from its shareholders'
investments was very poor since 2014 to 2018.
7. A sudden drop in net profit margin as well as net profit shows that performance of the
Janata bank Limited was significantly poor in 2018.

5.2 Recommendations
The findings of Janata Bank were measurable in terms of several variables. The part hare is
going to share some suggestions according to my academic knowledge for the betterment and
to improve the variables and conditions of the financial performance of Janata Bank Limited.

1. Janata bank Limited need to provide high concern on their investors and depositor’s
interest as the performances of the bank is decreasing in the most cases, the bank might
face lack of investor deposits in the coming future.

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2. There is a tendency in the employees of Janata bank to wasting their time doing nothing
or walking around the bank, therefore, all the employees should be monitored on daily
basis and should be provided specialization training in their own field.
3. I highly felt the absence of ethical or moral obligations while working there as an intern.
If employees are not treated and serve well just because the bank is government owned
and employees are on a permanent salary basis is highly responsible for the performances
of the bank today.
4. The net profit margin has decreased in 2018 and the ratio was significantly low. Janata
Bank needs to focus on improving their profit margin.
5. Managing the banks net income generated that by its assets and profits from its
shareholders' investments were very poor. The bank needs to give high importance to
tackle the situation.
6. Janata Bank Limited need to introduce few new ideas on services so that customers can
receive better service that may change their interest from other banks.
7. Few recent corruptions made by the insiders created a huge influence on the bank. Janata
Bank Limited should introduce and provide special securities to their consumer’s savings
so that the consumers can feel free to deposit in the bank.

5.3 Conclusion
Janata Bank Limited (JBL), which sets new standards for the banking sector in economic
conditions without obstacles. As a part of the long-term fiscal reform and therefore the
planning of state modernization, the bank has become a public limited company. The Janata
Bank Limited operation helps strengthen the resources to remain strong in the main area. By
operating within the Treasury area, JBL continues to be the main player in improving market
value, risk assessment and return on investment in foreign currency. Treasury operations are
strengthened to facilitate transactions that require more sophisticated products and services.
the most important customers and institutional companies. Although the network and
customer relationships are extensive, reducing problems is problematic. The authorities aren't
so flexible and take the time to form decisions. Janata Bank Limited has always tried to do
everything possible to achieve good financial results. But actually, financial services
associated with the banking sector aren't entirely satisfactory. Janata Bank Limited has
sometimes encountered financial problems. the matter was the big profitability and solvency,
the shortage of recent technology, the shortage of modern technology, etc. These problems,

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inflation within the currency market, etc. Fighting with all these problems and trying to do
everything possible whenever you compete with other banks. If this continues, we hope that
Janata Bank Limited continues to progress.

Reference

Books:
1. Horne, V. J. C., & Wachowicz, J. M. (2005). Financial statement analysis, 11th
edition.
2. Pandey, I. M. (2004). “Financial statement analysis,” 9th edition. New Delhi, India.

Others:
1. JBL Annual Report 2013-2017

Websites:

1. https://www.jb.com.bd/

2. https://www.jb.com.bd/about_us/financial_highlights

3. https://www.jb.com.bd/about_us/annual_report

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 Appendices

Highlight of Financial Statement of Janata Bank Ltd.

BDT in millions
Balance sheet Matrix 2014 2015 2016 2017 2018
Authorized capital 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00
Paid up capital 19,140.00 19,140.00 19,140.00 19,140.00 23,140.00
Reserve fund & surplus 20,315.70 30,407.44 30,749.66 32,223.33 31,416.37
Total shareholders' equity 39,455.70 49,547.44 49,889.66 51,363.33 54,556.37
Capital employed 322,712.54 354,689.00 368,100.88 392,032.44 418,483.41
Deposits 516,010.74 568,911.14 641,819.15 649,440.78 675,548.45
Loans and advances 319,773.25 349,861.30 403,037.42 459,580.05 533,707.16
Investments 196,713.53 219,150.10 233,274.87 177,342.15 166,783.79
Property, plant & equipment (Fixed
9,729.02 10,033.61 10,573.26 10,308.63 10,277.04
Assets)
Total assets 628,415.27 690,667.66 778,603.91 805,988.41 866,046.48

Total off balance sheet exposures 72,495.16 121,570.93 105,174.55 120,881.92 94,744.22

Earning assets 496,785.00 548,634.47 605,444.04 610,004.45 568,956.06

Non-earning assets 131,630.27 142,033.19 173,159.87 195,983.96 297,090.42
Net assets 39,455.70 49,547.44 49,889.66 51,363.33 54,556.37
Income Statement Matrix 2014 2015 2016 2017 2018
Interest income 33,734.43 30,655.17 31,897.90 31,145.61 34,488.66
Investment income 16,742.67 18,260.44 16,416.87 14,414.82 11,350.63
Non-interest income 5,915.90 6,763.21 6,032.29 6,911.54 4,865.55
Total income 56,393.00 55,678.82 54,347.06 52,471.97 50,704.84
Interest expenses 35,984.27 33,982.70 31,331.30 27,093.67 26,972.08
Non-interest expenses 9,725.39 10,975.62 12,977.48 14,008.82 13,943.80
Total expenses 45,709.66 44,958.32 44,308.78 41,102.49 40,915.88
Net interest income/ Net interest margin
-2,249.84 -3,327.53 566.6 4,051.94 7,516.58
(NIM)
Net non-interest expenses 3,809.49 4,212.41 6,945.19 7,097.28 9,078.25
Operating profit 10,683.34 10,720.50 10,038.28 11,369.48 9,788.96
Earnings before interest depreciation
11,142.02 11,180.33 10,650.94 11,981.14 10,491.68
and tax

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 Profit before provision & tax 10,683.34 10,720.50 10,038.28 11,369.48 9,788.96
Profit before tax 5,733.05 6,560.05 3,650.16 4,210.05 673.84
Net profit after tax 3,813.15 4,807.88 2,605.48 2,686.50 248.97

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