Role of Investment in Financial Assets: A Case Study of The City Bank Limited

Abstract

Banking business is the latest dimension in the financial sector to boost up economic growth and sustainability. In the new competitive business era, private banking sector is getting more competitive in Bangladesh. In this sector the one of the significant income for a private commercial Bank is the investment income of the bank which is come from investment in financial assets. Financial assets are more liquid than tangible assets which can increase the banks’ liquidity also.

In banking sector the most used financial statements are the balance from which the investment in financial assets can be identified. By analyzing percentage of investment and yearly Growth rate of investment in financial assets it is possible to evaluate a bank’s performance over years on investments in financial assets. In my report I had to study CBL’s investment in financial assets for the last few years then had to analyze and give significant comments regarding the changes of investment in the financial assets. Analysis and interpretation of these investment in financial assets through percentage and growth rate analysis has now become an important technique for performance appraisal because the investors, financial experts, management executives and the bankers are always rely on these analysis to make important decisions. The management team of any bank, investor and the government agencies always concern about liquidity which can be understood by knowing about the percentage rate of investment in financial assets which are considered as more liquid assets than others.

I have analyzed the investment in financial assets of CBL to find out its percentage of yearly growing rate of investment by using its past and current records. After preparing this report I came to know that the main principles of financial asset managements are safety, liquidity and profitability. City Bank also invests its deposit and money in the financial assets which are more risk free and profitable. But year to year the decreasing rates of investment in financial assets are being observed and it is the indication of decreasing rate of liquid assets. It is not a good sign for any commercial bank. Because decreasing rate of liquidation of assets can be hindrance in payment in liabilities. From the decreasing rate in financial assets the investment income is also decreasing among the total interest income. For this reason CBL should make a little change at the investment decision for its betterment and profit earning.