Financial Performance Analysis of The City Bank Limited

Abstract

This report has been divided into six chapters. The summary of each chapter is discussed below. Introduction: I have done my internship at the Head Office of City Bank Limited in the Business Finance Department. The internship duration was 3 months starting from 15th January 2023 to 15th April 2023. The main objective of this report is to evaluate City Bank’s financial health and to be aware of all the activities of CBL. One of the biggest scopes of the study was that I got to collect the data directly from the members of the Business Finance team. The main limitation of the report was collecting all types of data and information because it was not supported by the banking policy. This report has been prepared using both primary and secondary data. The primary data includes interviewing some of the members of the Business Finance team and the secondary data was collected from the annual reports of CBL and from the excel file of my line manager. The data has been analyzed using both quantitative and qualitative method and is presented in written format as well as with the assistance of tables, column graphs etc. Company Overview: The second chapter is completely about the overview of The City Bank Limited. Firstly, I have included the history of The City Bank Limited, where I have discussed about how the bank was established in 1983 by 12 young businessmen to how it ended up being one of the top private commercial banks in Bangladesh. Then, I have also discussed about their mission, vision and core values and also the awards and accolades they have received in 2021. After that, I have done the SWOT Analysis where the main strength of CBL is the trust of the customers that they have built from the first day of operation. Another strength is their credit card business where CBL holds the market leader position. One of the major weaknesses of CBL is the retention of talented people within the organization. Then, Porter’s Five Forces Model of CBL has been analyzed. Lastly, I have discussed about the subsidiaries of CBL: City Brokerage Limited, City Bank Capital Resources, CBL Money Transfer SDN. BHD, City Hong Kong Limited. Internship Experience: For me, the internship experience has been truly amazing. This internship experience will always be special to me because I learned so much new information that I can hopefully apply to my future employment. I never felt like an intern because of the welcoming and lovely work environment and culture. My three months have been made memorable by the entire Business Finance team, who I respect, adore, and simply adore. Working at CBL allowed me to experience the corporate culture firsthand and pushed me to go beyond my comfort zone. My main roles and responsibility as an intern were to give inputs of all the 30 banks of the industry of year 2020, 2019 and 2018. Then these data have been used to compare City Bank’s performance with the industry. Other than that, I was also involved in the day-to-day activities and work as per the instructions of my line manager and supervisor. Five Years Financial Performance: In this chapter, I have analyzed the last five years financial performance of City Bank, that is from 2017-2021. The components of the Balance sheet, Income Statement, BIS Capital Measures, Credit Quality and Efficiency/Productivity ratios have been analyzed with graphs and interpretation of each component has been placed below. The balance sheet components include: Deposits, Loans and Advances, Credit-to-Deposit Ratio (CDR), Investment-to-Deposit Ratio (IDR), Debt-to-Equity Ratio, Investments, Total Assets. Among all these components, every section performed well except the CDR and IDR because it fluctuated too much. The income statement components include: Net Interest Income (NII), Operating Expenses, Profit After Tax (PAT). Here, NII and PAT performed exceedingly well throughout the years, but the problem was with the OPEX which continued to increase throughout the five years. BIS Capital measure includes: Total Capital Adequacy Ratio and Risk Weighted Assets which were quite good for CBL. The Credit Quality measure includes the NPL volume and NPL %. The NPL volume was rising throughout the years which is a matter of concern for CBL, and NPL % was also bad for the last 4 years but it improved a bit in 2021. The Efficiency/Productivity ratios include ROE, ROA, Cost to Income Ratio, Net Interest Margin Ratio, SLR, CRR which has been thoroughly analyzed in this report. The Share Information includes Earnings per share, Net Operating Cash Flow per share, Net Asset Value per share and the Total Dividend. All of these elements have been quite satisfactory for CBL. Comparison with Industry: In this chapter, I have done an industry analysis for the year 2019, 2020 and 2021 separately in the form of a table. I have taken the data of 28 banks for each component and made average of each item and compared it with the components of the City Bank to see whether CBL performed above or below the industry average. This analysis clearly gave an indication of how City Bank actually performed compared to the industry. I have found out that CBL’s balance sheet performance was not that satisfactory compared to the industry average, while CBL’s income statement performance was superb in all the three years except the OPEX. Suggestion and Recommendation: My suggestion for CBL would be to keep an eye on the OPEX and NPL and introduce new ideas and campaigns to control it. I would also suggest them to monitor their balance sheet items as they were below the industry average.