WELCOME TO THE PRESENTATION

“APPLICATION OF E-BANKING IN BANGLADESH”

A CASE ANALYSIS OF ISLAMI BANK BANGLADESH LIMITED

GROUP MEMBERS

1)Mohammad Wahidul Haque 111-11-19062)Abul kalam Azad 111-11-17703)Faruqul Islam 111-11-17794)Sohag Parvez 111-11-17725)Monjur Morshed Rahat 111-11-17746) G.M. Reyad Hossain 111-11-1866

BANK OVERVIEWBANK OVERVIEW

PORTER’S FIVE FORCES MODEL

Porter’s five forces model helps in accessing where the power lies in a business situation. 

Porters Model is considered an important part of planning tool set.

THREAT OF NEW COMPETITION

The threat of new entry or competition of Islami Bank Bangladesh Limited is high because :

The starting capital requirement is less Few economies of scale are in place The switching cost or sunk cost is

comparatively low than the other banks so customer can easily switch

The key technology is protected but is hard to acquire

Brand Equity is satisfactory

THREAT OF SUBSTITUTE PRODUCTS OR SERVICES

Here the threat of IBBL on substitute products or services is also high due to the below factors:

There are many substitute products available Customer can easily find the product or service

that the competitors are offering at the same or less price

Substandard product is available Ease of substitution. Information-based products

are more prone to substitution, as online product can easily replace material product.

BARGAINING POWER OF SUPPLIERS

IBBL’s suppliers are more powerful because: Suppliers are concentrated and well

organized a few substitutes available to supplies Their product is most effective or unique Switching cost, from one suppliers to

another, is high IBBL is an important customer to Supplier Strength of distribution channel

BARGAINING POWER OF CUSTOMERS (BUYERS)

IBBL’s Buyer has low bargaining power due to below issues:

• Offering differentiated product• Buyer purchases in bulk quantities• Product is differentiated• Shopping cost is medium• Buyers are price sensitive• Buyer information availability• Differential advantage (uniqueness) of

industry products

INTENSITY OF COMPETITIVE RIVALRY

IBBL’s Industry rivalry is high because There are number of small or equal

competitors and less when there’s a clear market leader.

Customers have low switching costs Industry is growing Exit barriers are high and rivals stay and

compete Fixed cost are high resulting huge production

and reduction in prices Level of advertising expense Powerful competitive strategy

BANK ANALYSISBANK ANALYSIS

IBBL was established on the 13th March 1983 as the first Islamic Bank in the South East Asia.

Mission To establish a welfare oriented banking

system To ensure equity & justice in the field of

economics To encourage socio-economic uplift To provide financial assistance in rural areas To achieve balanced growth & equitable

development through diversified investment

VISION

To establish and maintain the modern banking techniques

To ensure soundness and development of the financial system based on Islamic principles

To become the strong and efficient organization with highly motivated professional

To work for the benefit of people To encourage savings in the form of direct

investment To encourage investment particularly in

projects which are more likely to lead to higher employment.

CORE VALUES

Trust in Almighty Allah Strict observance of Islamic Shari’ah Highest standard of Honesty, Integrity &

Morale Welfare Banking Equity and Justice Environmental Consciousness Personalized Service Adoption of Changed Technology Proper Delegation, Transparency &

Accountability

PRODUCT

Al-Wadeah Current Account (AWCA) Mudaraba Savings Account (MSA) Mudaraba Term Deposit Account (MTDR) Mudaraba Special Notice Account (MSNA) Mudaraba Hajj Savings Account (MHSA) Mudaraba Special Savings (Pension) Account (MSSA) Mudaraba Savings Bond (MSB) Mudaraba Monthly Profit Deposit Account (MMPDA) Mudaraba Muhor Savings Account (MMSA) Mudaraba Waqf Cash Deposit Account (MWCDA) Mudaraba NRB Savings Bond (MNSB) Account Mudaraba Foreign Currency Deposit Account (MFCD) Students Mudaraba Savings Account (SMSA) Mudaraba Farmers Savings Account (MFSA)

SERVICE

NRB (Non Resident Bangladeshi) Entrepreneurs Services

Remittance Card Investment Scheme for Foreign Expatriate Mudaraba NRB Saving Bond SME Service1. Manufacturing2. Trading3. Services Foreign Exchange Serviceo Importo Exporto Remittance

CORPORATE INFORMATION

Authorized Capital TK 20,000.00 Million

Paid-up Capital TK 10007.71 Million

Deposits TK 341,361.00 Million

Investment ( including investment in shares)

TK 341,031.00 Million

FOREIGN EXCHANGE BUSINESS

Import TK 301,207.00 Million

Export TK 178,244.00 Million

Remittance TK 236,607.00 Million

SWOT ANALYSISSWOT ANALYSIS

SWOT analysis (alternately SWOT Matrix) is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture.

Strengths: characteristics of the business, or project team that give it an advantage over others

Weaknesses: are characteristics that place the team at a disadvantage relative to others

Opportunities: external chances to improve performance (e.g. make greater profits) in the environment

Threats: external elements in the environment that could cause trouble for the business or project

STRENGTHS

interest-free banking system according to Islamic Shariah

income of the Bank is shared with the depositors welfare oriented banking system equity and justice in the field of all economic

activities. financial services to the poor, helpless human resource development achieve balanced growth ICAB awarded IBBL for presenting best Annual

Report IBBL is enlisted in the TOP 1000 banks in the

world

WEAKNESSES

lack of expert employees insufficient advertisement emphasize only developed sectors feeble modern technology deficiency of expertise number of ATM booth

OPPORTUNITIES

Huge chance of depositing & investment due to islamic shariah based operation

Development of the financial system based on Islamic Principles

Innovative as well as modern customer service Encourage savings in the form of direct investment Investing developed sectors Transactions with NRB (Non Resident

Bangladeshi) Lending SME sectors Enriching Foreign Exchange Business Providing Locker service Distribution of offshore services

THREATS

Establishment of Competitors Advancement of Modern Technology The switching cost or sunk cost is

comparatively low than the other banks so customer can easily switch

There are many substitute products available Different kinds of facilities from other banks Improved advertisement from others Online Banking is satisfactory

RATIO ANALYSIS

&

TREND ANALYSIS

RATIO ANALYSIS

&

TREND ANALYSIS

LIQUIDITY RATIO: Liquidity Ratio 2007-08 2008-09 2009-10 2010-11 2011-12

Liquid Asset

Current Liabilities

47743111949

22167444018= 2.15

51235982040

21369827458= 2.40

55369875318

21584679280= 2.57

62035742189

22654789123= 2.73

78951258456

25369741852= 3.11

2007-08 2008-09 2009-10 2010-11 2011-120

0.5

1

1.5

2

2.5

3

3.5

Liquidity Ratio

Liquidity Ratio

DECISION

The ratio indicates that Islami Bank Bangladesh Limited can cover only 3.11(Current year) percent of their existing debt obligations with their current liquid assets. Clearly, Islami Bank Bangladesh Limited plans to meet the debt obligations from their income, but the ratio suggests that their liquid funds do not provide a large production.

CURRENT RATIO

Current Ratio 2007-08 2008-09 2009-10 2010-11 2011-12

Current Asset

Current Liabilities

48756111949

22167444018= 2.20

51935982040

21369827458= 2.43

55969875318

21584679280= 2.59

72035742189

22654789123= 3.18

88951258456

25369741852= 3.51

2007-08 2008-09 2009-10 2010-11 2011-120

0.5

1

1.5

2

2.5

3

3.5

4

Current Ratio

Current Ratio

DECISION

The higher the current ratio, the more liquid the firm is considered to be. The more predictable a firm’s cash flows, the lower acceptable current ratio. And the lower the current ratio, the less liquid the firm is considered to be.

QUICK RATIOQuick Ratio 2007-08 2008-09 2009-10 2010-11 2011-12Current assets – Inventory Current Liabilities

19895413697

22167444018= 0.90

31835982040

21369827458= 1.49

35969875316

21584679280= 1.66

42035542189

22654789123= 1.86

63951258456

25369741852= 2.52

2007-08 2008-09 2009-10 2010-11 2011-120

0.5

1

1.5

2

2.5

3

Quick Ratio

Quick Ratio

DECISION

A quick ratio of 1.0 or greater is occasionally recommended, but as with the current ratio, what value is acceptable depends largely on the firm. But in the year of 2007-08 the quick ratio is less than 1.00. All depend on the firm though the quick ratio is less than 1.00.

AVERAGE PAYMENT PERIODAve. pay. Per 2007-08 2008-09 2009-10 2010-11 2011-12Accounts Payable Annual Purchases 365

2216744401

1464938454 365= 552 days

2640868554

877960724 365= 550 days

6561288485

2207078082 365= 511 days

6985275312

2296542587 365 = 498 days

7025841982

2254962587 365= 444 days

2007-08 2008-09 2009-10 2010-11 2011-120

1

2

3

4

5

6

Average payment period

Average payment period

DECISION

As the average payment period indicates that the time needed to pay accounts payable. Here it is clearly seen that the Islami Bank Bangladesh Limited needs less time relating to the previous year to pay accounts payable.

DEBT RATIODebt Ratio 2007-08 2008-09 2009-10 2010-11 2011-12

Total Liabilities

Total Assets

48756111949

321674440180= 0.15 X 100= 15%

51935982040

413698274587= 0.14 X100= 14%

55969875318

455846792802= 0.145 X 100= 14.5%

30709186251

530586118271= 0.13 X 100= 13%

88951258456

653697418525= 0.11 X 100= 11%

2007-08 2008-09 2009-10 2010-11 2011-120

2

4

6

8

10

12

14

16

Debt ratio

Debt ratio

DECISION

The higher this ratio, the greater the firm’s degree of indebtedness and the more financial leverage it has. Again, the lower ratio refers to the fewer degree of indebtedness and the less financial leverage it has.

DEBT EQUITY RATIO

Debt Equity Ratio

2007-08 2008-09 2009-10 2010-11 2011-12

Total Liability

Shareholders Equity

48756111949

121674440182= 0.27 X 100= 27%

51935982040

213698274587= 0.24 X 100= 24 %

55969875318

315846792808= 0.23 X 100= 23 %

72035742189

326547891237= 0.20 X 100= 20 %

88951258456

453697418529= 0.19 X 100= 19 %

2007-08

2008-09

2009-10

2010-11

2011-12

0

5

10

15

20

25

30

Debt Equity Ratio

Debt Equity Ratio

TIME INTEREST EARNED RATIO T.I.E.R 2007-08 2008-09 2009-10 2010-11 2011-12

EBIT

Interest

8489792032

258951753= 4.71

8895478512

256987412= 4.58

9008547892

265879215= 4.78

9215248895

278954621= 4.86

9625846987

289563487= 4.94

2007-08 2008-09 2009-10 2010-11 2011-124.4

4.5

4.6

4.7

4.8

4.9

5

T.I.E.R.

T.I.E.R.

DECISION

The higher the value, the better able the firm is to fulfill its interest obligations. The lower the value, the less able the firm is to fulfill its interest obligations.

RETURN ON ASSET:

Return on Asset 2007-08 2008-09 2009-10 2010-11 2011-12Earnings available for common stock holders

Total Assets

47743111949

22167444018= 25%

51235982040

21369827458= 26.50%

55369875318

21584679280= 27%

62035742189

22654789123= 28%

78951258456

25369741852= 30.20%

2007-08 2008-09 2009-10 2010-11 2011-120

5

10

15

20

25

30

35

Return on Asset

Return on Asset

DECISION

The higher the firm’s return on total assets, the better effectiveness of management in generating profits with its available assets. The lower the firm’s return on total assets, the less effectiveness of management in generating profits with its available assets.

RETURN ON EQUITY

Return on Equity

2007-08 2008-09 2009-10 2010-11 2011-12

Earnings available for common stock holders

Common stock equity

47743111949

332167444018= 28%

51235982040

51369827458= 29.50%

55369875318

641584679280= 30%

62035742189

652654789123= 32%

78951258456

685369741852= 33.10%

2007-08 2008-09 2009-10 2010-11 2011-1225

26

27

28

29

30

31

32

33

34

Return on Equity

Return on Equity

DECISION

The higher this return, the better off are the owners in terms of earning on the common stockholders investment in the firm. The lower this return, the less better off are the owners.

PRICE EARNINGS RATIOPrice Earnings Ratio

2007-08 2008-09 2009-10 2010-11 2011-12

Market price per share of common stock Earnings per share

298.72

12.03= 9.56

330.45

31.10= 8.27

410.27

45.91= 8.94

620.36

60.21= 10.30

702.18

78.12= 8.99

2007-08 2008-09 2009-10 2010-11 2011-120

2

4

6

8

10

12

Price Earnings Ratio

Price Earnings Ratio

DECISION

The higher the price earnings ratio, the greater the investor confidence. The lower the price earnings ratio, the less the investor confidence.

DIVIDEND PAYOUT RATIO

Dividend Payout ratio

2007-08 2008-09 2009-10 2010-11 2011-12

Yearly Dividend per share

No. of share

282889600

5090300= 55.57

3012569874

10369524= 60.36

3269528445

15698456= 62.48

4025698458

19568546= 65.07

4802365287

20136952= 67.25

2007-08 2008-09 2009-10 2010-11 2011-120

10

20

30

40

50

60

70

80

Dividend Payout Ratio

Dividend Payout Ratio

DECISION

The higher the ratio, the more chance to gain profit. And the lower the ratio, the less chance to gain the profit.

EARNINGS PER SHARE

EPS 2007-08 2008-09 2009-10 2010-11 2011-12

Earnings after TaxNo.of share

1025497621

5090300= 12.03

2565489521

10369524= 31.10

3698527458

15698456= 45.91

4203574218

20568546= 60.21

5895125845

29136952= 78.12

2007-08 2008-09 2009-10 2010-11 2011-120

10

20

30

40

50

60

70

80

EPS

EPS

DECISION

 The higher the EPS, the greater chance of profit of the firm. Whereas the lower EPS indicates the lower chance of profit of the firm.

OTHER TRENDS

2007 2008 2009 2010 20110

50000

100000

150000

200000

250000

300000

350000

166325

202115

244292

291935310225

Trend of Deposit

Trend of Deposit

Amount in MillionTaka

2007 2008 2009 2010 20110

50000

100000

150000

200000

250000

300000

144921

180054

214616

263225

297113

Trend of Investment

Trend of Investment

Sector wise Investment

IndustrialCommercialReal EstateAgricultureTransportSMEOthers

FOREIGN EXCHANGE BUSINESS

2007 2008 2009 2010 20110

50000

100000

150000

200000

250000

300000

96870

137086

168329161230

246281

53819

8414393962

106424

148421

51133

66690

140404

194716

214629

ImportExportRemittance

ELECTRONIC BANKINGELECTRONIC BANKING

E-BANKING

Electronic banking refers to the bank account maintained by computer and telecommunications links rather than physical transfer of cash, cheques or other negotiable instruments.

In other words, the banking customer processes transactions directly via computer, without dealing with entity

Standard Chartered Bank brought first E-banking service in Bangladesh.

TYPES OF E-BANKING

ATM (Automated Teller Machine) Using an ATM, customers can access their

bank accounts in order to make cash withdrawals, debit card cash advances, and check their account balances as well as purchase pre-paid mobile phone credit.

Authentication is provided by the customer entering a personal identification number (PIN)

ELECTRONIC FUNDS TRANSFER (EFT)

the electronic exchange transfer of money from one account to

another either within a single financial institution or

across multiple institutions, through computer-based systems.

DEBIT CARD

make purchases Make payments occur at a store or business, online, or by

phone.

CREDIT CARDS

a customer can avail various facilities or buy products/services without making immediate  payment and that could be made at later stage of time.

PERSONAL COMPUTER BANKING 

To handle many banking transactions via your personal computer

To view your account balance request transfers between accounts, and pay bills electronically.

MOBILE BANKING

Mobile banking provides customer to access their account on mobile phone screen.

Routine banking transactions can be performed by just punching a few buttons on the mobile.

SMS BANKING

SMS banking uses short text messages sent through the client’s mobile phone

A client can automatically receive information about his account balance

ELECTRONIC BANKING

OF

ISLAMI BANK BANGLADESH LIMITED

ELECTRONIC BANKING

OF

ISLAMI BANK BANGLADESH LIMITED

IBBL has introduced its Online Banking service since 2006

Now more than 60,000 of existing ATM card holders can use IBBL’s own 48 ATMs & 157 ATMs of shared ATM network.

About 5000 transactions with withdrawal of more than Tk. 4 crores are now done per day.

THE ATM PROJECT

Since 2001, IBBL started providing ATM service to its customers from 55 branches through a consortium of 9 financial organizations using a 3rd party ATM service provider.

SERVICES Cash Withdraw Fund Transfer Mini Account Statement Balance InquiryTransaction Limit For Cash Withdrawal maximum amount is Tk. 50,000

in a calendar date.Charges Tk.300 Yearly fees is applicable.

SMS BANKING

Through SMS push-pull service, clients can see their latest balance information and last three transactions in their mobiles from anywhere in the world.

At present more than one lac clients have been registered in SMS banking and on average 6500 requests are being received per day.

Services Multiple Account Registration International Push- Pull Facility Account Balance (BAL ) Mini Account Statement (STM) Account Information (ACI)

INTERNET BANKING

Through iBanking, Foreign Remittance Houses & valued clients can check account details at IBBL’s web portal. So far, nearly 20000 clients have registered for taking the internet banking services.

Services Transfer funds (iTransfer) between IBBL

accounts Purchase airtime / Recharge account

( iRecharge) from all mobile operators in Bangladesh, except teletalk.

Wimax Recharge

OTHER TYPES OF E-BANKING

Shariah based Credit card Remittance Card VISA facility SWIFT service(Society for Worldwide Inter-

Bank Financial Telecommunication)

COMPARISONCOMPARISON

Factors of E-Banking IBBL BRAC Bank DBBL ATM DEBIT CARD X SHARIAH BASED CREDIT CARD

x x

CREDIT CARD x

REMITTANCE CARD VISA SMS BANKING INTERNET BANKING MOBILE BANKING x x

MIS x x

SWIFT SERVICE x x

MAIL BANKING

PC BANKING

EFT SYSTEM

WAP SERVICE

RECOMMENDATIONRECOMMENDATION

After all IBBL needs some steps to be taken to improve the E-Banking which are as follows-

To expand the number of ATM booths To place ATM booths in good areas To update the ATM machines To update the software of ATM To provide security to the ATM user like cc camera

in ATM booth To develop SMS Banking To reduce I-Banking charge To give more facilities on remittance card user

specially foreigners To improve SWIFT service To start Mobile Banking as early as possible To construct a developed MIS

To establish core banking system like BACH,BEFTN,MIS

To facilitate PC Banking To improve the WAP service To improve the web page adding more features To store the E-banking transactions in secured

place To accomplish the E-banking transactions quickly To establish electronic integrated banking system To equip more IT expert employees for the

development of E-Banking To implement the core objectives for the

development of E-banking

THANK YOU ALL !!!