A brief overview on the operations of merchant banks of Bangladesh

1. Merchant Banking Operations in Bangladesh

2. Fahim Ahmad
Syeda Sumya Zaman 17221033
Mrittika Sadi 17221035
17221037Labib Hasnath
17221031

3. Ekhtear Ahmed
Samin Sakib
Md Mostafa Asef Rafi
Khondokar Abu Syed
Saikat
17221047
17221045
17221041
17221039

4. 17221049Fathan Sakib
Jenifer Trisha 17221051

5. BACKGROUND OF THE STUDY

6. Merchant Bank helps in the progress of capital
market for any nation
In Bangladesh Merchant Banks are the one stop
solution and source for capital for new business
visionaries
Protection in stock trade , IPO Management,
Raising funds etc.

7. OBJECTIVES OF THE STUDY

8. Principle Objectives
To find out the overall
systems about the
operations of merchant
banks in Bangladesh.

9. Secondary Objectives
To appraise the financial
performances of the
selected merchant banks of
the country

10. SCOPE & RATIONALE OF THE STUDY
To investigate the operations of the Merchant Banks
of Bangladesh

11. METHODOLOGY

12. Quantitative and Qualitative
Analysis
Primary and secondary sources
Descriptive Statistics
Frequency Analysis

13. SPSS (Statistical Package for Social
Sciences) was used for analyzing the
data

14. Sample Design and Determination of Sample Size
For taking sample data from Population Yamane’s
Formula was used
n= Sample Size
N= Population Size
e= level of precision

15. It was presumed that the number of employees enrolled in th
Merchant Banks of Bangladesh is more than
One Hundred Thousand
Level of precision is presumed as 0.081
e= 0.081
The required number of sample size becomes
approximately 150
n= 150

17. Questionnaire Design
Structured Questionnaire with 5 point scale ranging from
1 (“Strongly disagree”) to 5 (“Strongly agree”) was used
The survey contained the opinions of total 150 employees of 5
Merchant Banks of Bangladesh

18. The internal consistency of the questionnaire was
0.850
which was acceptable as per Nunally(1967)

19. OVERVIEW OF MERCHARNT BANKS
OF
BANGLADESH

20. HISTORY OF MERCHANT BANKS OF BANGLADESH
The first ever stock trade appeared in Bangladesh (at that point
East Pakistan) for the sake of "East Pakistan Stock Exchange
Association Ltd
In 1997, some bank and non-banking association offer proposition
to get the consent of work merchant banking activity
IDLC of Bangladesh got permission as the first full-fledged
merchant banker

21. In 1999, another 5 non-banking association began as full-fledge
merchant banker. Prime Finance and Investment Limited began
their full-fledge merchant banking activity from this year
In 2001, Prime Bank and Arab Bangladesh Bank began their
activity as a merchant banker, another 2 non-banking association
began their merchant banking activity

22. MERCHANT BANKS’ OPERATIONS IN BANGLADESH

23. A merchant bank is a financial institution that
engages in underwriting and business loans,
catering primarily to the needs of large
enterprises and high net worth individuals

24.  Raising Finance for Clients
 Helping in Project Management
 Giving Advice on Expansion and Modernization
 Managing Public Issue of Companies
 Handling Government Permission for Industrial Projects
 Special Assistance to Small Companies and Entrepreneurs
FUNCTIONS OF MERCHANT BANKS

25.  Provide Services to Public Sector Units
 Portfolio Management
 Corporate Restructuring
 Money Market Operation
 Leasing Services
 Management of Interest and Dividend

26. ANALYSIS & INTERPRETATION OF DATA

27. FINANCIA
L
STATEME
NT
FINANCI
AL
HEADS
DESCRIPTI
VE

28. 2014 2015 2016 2017 2018
EBIL N/A N/A Doreen Power
Limited, Bangladesh
National Insurance
Company Limited,
The ACME
Laboratories ltd
N/A Silva
Pharmaceuticals
Ltd, Indo-Bangla
Pharmaceuticals
Ltd, VFS Thread
Dyeing Ltd
CBCRL Ifad
Autos
N/A Pacific Denim Jeans
Ltd
N/A N/A
LIST OF IPO’s MANAGED BY THE SELECTED BANKS

29. ABBIL N/A N/A N/A N/A N/A
LBIL The
Peninsula
Chittagong
Limited
AMAN
Feed
Limited,
Regent
Textile
Limited,
United
Power
Generation
Evince
Textiles
Limited
Aamra
Networks
Limited
Baraka
Patenga
Limited, Aman
Tex Limited

30. IDLCIL Matin Spinning
Mills, Far East
Knitting and
Dyeing Ltd
Tosrifa
Industrie
s Ltd,
Regent
Textile
Mills Ltd
N/A One Bank Ltd N/A

31. FINANCIAL STATEMENT ANALYSIS

32. Operational Profit Growth
Year EBIL CBCRL ABIL LBIL IDLCIL
2014 38.98% 92.77% 30.91% -1577.05% -126.37%
2015 -3.34% 7.03% -27.50% -7.55% 4.83%
2016 14.65% -15.22% 1.32% -58.70% 7.93%
2017 73.02% 13.84% -10.82% -136.62% 70.86%
2018 -52.45% -15.86% 16.42% -686.68% -60.21%

33. -1800.00%
-1600.00%
-1400.00%
-1200.00%
-1000.00%
-800.00%
-600.00%
-400.00%
-200.00%
0.00%
200.00%
2014 2015 2016 2017 2018
OPG
EBL CITY AB LANKABANGLA IDLC

34. Profit After Tax Growth
Year EBIL CBCRL ABBIL LBIL IDLCIL
2014 64.20% 49.63% 24.63% -1745.63% -124.88%
2015 -28.92% 41.15% -82.00% 53.56% 124.80%
2016 99.33% 0.22% 2.70% -17.58% 42.54%
2017 61.95% 174.88% -97.30% -101.01% 62.59%
2018 -62.57% -22.43% 38.10% -11803.75% -34.89%

35. -14000.00%
-12000.00%
-10000.00%
-8000.00%
-6000.00%
-4000.00%
-2000.00%
0.00%
2000.00%
2014 2015 2016 2017 2018
PATG
EBL CITY AB LANKABANGLA IDLC

36. Return on Equity
Year EBLIL CBCRL ABBIL LBIL IDLCIL
2014 8.30% 6.12% 6.94% -21.72% 37.90%
2015 5.92% 8.81% 5.57% -25.46% 8.52%
2016 11.20% 2.75% 5.64% -21.54% 12.15%
2017 19.30% 4.81% 0.13% 0.97% 10.20%

37. -140.00%
-120.00%
-100.00%
-80.00%
-60.00%
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
2014 2015 2016 2017 2018
ROE
EBL CITY AB LANKABANGLA IDLC

38. Net Profit Margin
Year EBLIL CBRCL ABBIL LBIL IDLCIL
2014 47.73% 40.20% 10.37% -105.32% 67.40%
2015 35.10% 45.17% 11.93% -218.95% 38.97%
2016 61.03% 46.74% 11.84% -166.70% 52.73%
2017 57.93% 53.88% 0.29% 1.16% 51.23%
2018 45.45% 49.59% 0.22% -389.82% 70.17%

39. -500.00%
-400.00%
-300.00%
-200.00%
-100.00%
0.00%
100.00%
2014 2015 2016 2017 2018
NPM
EBL CITY AB LA IDLC

40. Debt To Equity
Year EBIL CBCRL ABBIL LBIL IDLCIL
2014 9.60% 10.52% 13.03% 252.90% 90.11%
2015 10.06% 22.02% 11.51% 134.56% 42.31%
2016 15.35% 8.41% 12.62% 96.92% 65.72%
2017 41.99% 5.99% 12.81% 570.07% 82.55%
2018 28.19% 7.57% 13.24% 532.80% 35.44%

41. 0.00%
100.00%
200.00%
300.00%
400.00%
500.00%
600.00%
2014 2015 2016 2017 2018
DEBT TO EQUITY
EBIL CBCRL ABBIL LBIL IDLCIL

42. Earning Per Share
Year EBIL CBCRL ABBIL LBIL IDLCIL
2014 0.09 0.68 2.37 -2 0.38
2015 0.06 0.9 2.12 -3.11 0.85
2016 0.12 0.29 1.94 -2.56 1.21
2017 0.2 0.78 0.04 0.03 0.33
2018 0.07 0.68 0.02 -2.37 0.32

43. -4
-3
-2
-1
0
1
2
3
2014 2015 2016 2017 2018
EPS
EBIL CBCRL ABBIL LBIL IDLCIL

44. Tax Management Efficiency
Year EBIL CBCRL ABBIL LBIL IDLCIL
2014 71.42% 73.76% 33.00% 99.39% 93.56%
2015 64.50% 79.11% 19.00% 100.27% 62.17%
2016 79.86% 75.30% 65.00% 100.00% 65.16%
2017 79.95% 70.53% 46.00% 100.00% 61.99%
2018 68.84% 74.05% 32.00% 100.17% 101.44%

45. 0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
2014 2015 2016 2017 2018
Tax Management Efficiency
EBIL CBCRL ABBIL LBIL IDLCIL

46. FINANCIAL HEADS RELATED TO
MERCHANT BANKING OPERATIONS

47. Investment in Securities (All in BDT Mi
Year 2014 2015 2016 2017 2018
EBLIL -23.54 90.89 172.59 261.05 298.87
CBRCL 467.49 397.08 366.77 397 331.14
ABBIL 746.89 686.57 721.55 456.08 331.14
LBIL 325.46 2016.7 503.66 531.19 346.19
IDLCIL 410.08 437.31 159.28 177.79 163.06

48. -500
0
500
1000
1500
2000
2500
2014 2015 2016 2017 2018
Investment in Securities
EBL CITY AB LA IDLC

49. Marginal Loans provided to clients (All in BDT Millio
Year 2014 2015 2016 2017 2018
EBLIL 48.05 5.94 10.07 118.66 171.09
CBRCL 205.56 203.81 223.66 262.42 422.29
ABBIL 710.7 699.03 722.97 680.9 699.27
LBIL 4262.86 3559.65 2473.8 1985.49 1538.26
IDLCIL 29.62 33.74 1300.5 1979.95 1538.26

50. 0
500
1000
1500
2000
2500
3000
3500
4000
4500
2014 2015 2016 2017 2018
Margin Loans
EBL CITY AB LA IDLC

51. Fees & Commissions (All in BDT
Year 2014 2015 2016 2017 2018
EBLIL 2.69 5.68 7.73 16.63 17.98
CBRCL 18.15 40.35 44.54 67.49 77.25
ABBIL 69.33 44.14 42.52 54.04 28.02
LBIL 53.13 58.07 90.56 102.01 56.44
IDLCIL 46.24 38.5 20.02 58.63 31.13

52. 0
20
40
60
80
100
120
2014 2015 2016 2017 2018
FEES AND COMMISSIONS
EBL CITY AB LA IDLC

53. Interest Income (All in BDT Mi
Year 2014 2015 2016 2017 2018
EBLIL 400.92 354.51 522.95 574.47 750.62
CBRCL 512.3 550.6 647.7 749.5 920.5
ABBIL 607.88 427.93 283.7 267 191.01
LBIL 26.68 138.62 186.75 208.11 237.75
IDLCIL 284.92 319.67 353.03 310.45 392.58

54. 0
100
200
300
400
500
600
700
800
900
1000
2014 2015 2016 2017 2018
Interest Income
EBL CITY AB LA IDLC

55. Investment Income (All in BDT M
Year 2014 2015 2016 2017 2018
EBLIL 18.7 14.05 25.63 62.87 7.17
CBRCL 82.33 75.96 82.93 257.43 180.51
ABBIL 22.62 0.25 7.9 19.55 13.19
LBIL 38.62 34.13 67.04 14.26 -17.06
IDLCIL -16.86 0 28.41 46.55 59.81

56. -50
0
50
100
150
200
250
300
2014 2015 2016 2017 2018
Investment Income
EBL CITY AB LA IDLC

57. DESCRIPTIVE ANALYSIS

58. The bank is helping in raising
funds for its client
The bank is helping in project
management activities
The Bank is managing public
issues of different companies
The bank is handling
Government permission for
handling Industrial project
The bank is advising its
clients for modernization
and expansion
The bank supports short
and medium business
enterprises
FACTORS

59. The bank is providing
service to public sector
The bank is involved in
portfolio management
The bank is involved in
money market operations
The bank is helping its clients in
corporate restructuring
The bank provides leasing
service
The bank manages and
interest and dividend

60. 2%
1%
5%
59%
33%
Bank is helping in raising funds
Strongly Disagre
Disagree
Neutral
Agree
Strongly Agree

61. 2%
5%
19%
49%
25%
The bank is helping in project management activities
Strongly Disagree
Disagree
Neutral
Agree
Strongly Agree

62. 3%10%
22%
38%
27%
The Bank is managing public issues of different
companies
Stongly Disagre
Disagree
Neutral
Agree
Strongle Agree

63. 35%
37%
25%
3%
0%
The bank is handling Government permission for
handling Industrial project
Strongly Disagree
Disagree
Neutral
Agree
Strongly Agree

64. 0%
5%
17%
48%
30%
The bank is advising its clients for modernization and expansion
Strongly Disagree
Disagree
Neutral
Agree
Strongly Agree

65. 0%0%
23%
44%
33%
The bank supports short and medium business
enterprises
Strongly Disagree
Disagree
Neutral
Agree
Strongly Agree

66. 2%
10%
23%
43%
22%
The bank is providing service to public sector
Strongly Disagree
Disagree
Neutral
Agree
Strongly Agree

67. 5% 7%
11%
40%
37%
The bank is involved in portfolio management
Strongly Disagree
Disagree
Neutral
Agree
Strongly Agree

68. 1%
3%
15%
38%
43%
The bank is involved in money market operations
Strongly Disagree
Disagree
Neutral
Agree
Strongly Agree

69. 0%1%
18%
45%
36%
The bank is helping its clients in corporate restructuring
Strongly Disagree
Disagree
Neutral
Agree
Strongly Agree

70. 0%0%
23%
47%
30%
The bank provides leasing service
Strongly Disagree
Disagree
Neutral
Agree
Strongly Agree

71. 0%0%
22%
40%
38%
The bank manages interest and dividend
Strongly Disagree
Disagree
Neutral
Agree
Strongly Agree

72. FINDINGS

73. Generating employment
Profitability is satisfactory
Capable of managing Tax
efficiently
Probe out other companies
before publishing any news
publicly

74. Fees and Commissions
fluctuated frequently
Limited scope of activities
Rate of NPL is increasing

75. RECOMMENDATION

76. Concentrate on the fluctuation of fees and commissions
LBIL & ABBIL should increase their investment in securities
LBIL should focus on their income and expense head for
long term betterment
ABBIL should take steps for managing their Tax efficientl

77. Loans should be provided after proper credit analysis
as
NPL rate is increasing

78. CONCLUSION

79. Studied and Evaluated the Merchant Banking
Operations of Bangladesh
Findings shows that not only Banks but also Merchant
Banks will contribute largely in the Economic
Development of Bangladesh if some policies are
undertaken

80. THANK YOU