Risk Management of Commercial Bank: A Case Study on Dhaka Bank Limited

Abstract

Now-a day’s banking sector is modernizing and expanding its hand in different financial events every day. Dhaka Bank Ltd [DBL] is one of the leading private sector bank in Bangladesh. Being a leading bank in the financial sector of Bangladesh it invests in various financial instruments both internally and externally and also sells its own very financial products. As a result of this it become very much open to various market and different risks. My report is on the basis of the fundamental analysis rather than the general banking. So, I actually worked there full time, but prepared my report in my room after my work time or even finished my intern. This report primarily focuses on finding out the existing position of the bank in terms of interest rate and credit risk analysis, Exchange risk, Liquidity risk, Equity Risk by stress testing. If any adverse situation occurs the bank can easily overcome to this situation and be prepare for adept the loss that’s bank are doing stress testing. Beginning of this report enumerates the preliminary division which includes introduction, origin of the report, objectives, scope, limitations and methodology. After that I described all functions and present position of Dhaka Bank, and then gradually I entered into the main part of the report through describing the newly invented process of measuring the financial situation or position of a bank/FI, named Stress Testing. This report is deliberate to answer some of the basic questions that may arise as part of the process of stress testing. The report begins with a discussion of stress testing in a financial system context, Techniques of stress testing, importance of stress testing and finally did the analyzing Five risk shock and their consequences in detailed. A quantitative analysis of information is done by Stress testing and shown it’s graphically. Simple stress testing results of DBL reveals that the banks overall CAR (Capital adequacy ratio) would stay above the required level in minor and moderate shocks. But in major shocks the bank is exposed to risk to losing capital adequacy according to the required CAR.