Premium Essay



Submitted By shsentu
Words 6159
Pages 25


Syeda Zabeen Ahmed ID # 0120269

An Internship Report Presented in Partial Fulfillment of the Requirements for the Degree Bachelor of Business Administration


An investigation of the relationship between Non-performing Loans, Macroeconomic Factors, and Financial Factors in context of Private Commercial Banks in Bangladesh


Syeda Zabeen Ahmed ID # 0120269

has been approved April, 2006

_________________ Shubhankar Shil Lecturer School of Business Independent University, Bangladesh

Page List of Tables Abstract 1. Introduction 2. Problem Statement 3. Purpose of the Study 4. Limitations of the Study 5. Research Timeline 6. Review of Literature 6.1 Non-performing Loans 6.2 Development of hypotheses 6.3 Macroeconomic factors and NPLs 6.4 Bank specific indicators and NPLs 6.5 Terms of Credit and NPLs 7. Methodology 7.1 Research Approach 7.2 Sampling Method 7.3 Measure of variables 7.4 Data Collection Procedure 7.5 Data Analysis 8. Results 8.1 Descriptive 8.2 Correlations 8.3 Regression 9. Significant of the Study 11. Conclusion Reference Appendix 1 I 1 1 2 2 3 3 3 4 5 6 7 7 8 8 8 8 9 9 10 10 11 12 13 13 14 16

List of Tables
Page 1. Demographics of respondents 2. Occupational experience of respondents 3. Responsibility statements
4. Reliability statements

12 24 25 26 29

5. Decision usefulness

An investigation of the relationship between Non-performing Loans, Macroeconomic Factors, and Financial Factors in context of Private Commercial Banks in Bangladesh

Based on the studies by Ranjan, and Dhal (2003), this study aims to investigate the relationship between Non-performing Loans, Macroeconomic Factors, and Financial

Similar Documents

Premium Essay

Non Performing Loan of Sonali Bank Limited Rajshahi Corporate Branch

...sustained and rapid economic progress. Among various indicators of financial stability, banks’ non-performing loan (NPL) assumes critical importance since it reflects on the asset quality, credit risk and efficiency in the allocation of resources to productive sectors. Nonperforming loans (NPLs) refer to those financial assets from which banks no longer receive interest and/or installment payments as scheduled. They are known as non-performing because the loan ceases to “perform” or generate income for the bank. Choudhury et al. (2002: 21-54) state that the nonperforming loan is not a “uniclass” but rather a “multiclass” concept, which means that NPLs can be classified into different varieties usually based on the “length of overdue” of the said loans. NPLs are viewed as a typical byproduct of financial crisis: they are not a main product of the lending function but rather an accidental occurrence of the lending process (Woo, 2000: 2). This is because NPLs can bring down investors’ confidence in the banking system. Only for a few defaulting borrowers, the banks suffer, depositors suffer, performing borrowers suffer, shareholders suffer, Government suffers and consequently economy and the people of the country suffer. The latest data reveal that in Bangladesh banking sector the amount of NPL is Tk 2572.65 crores (7.17% of total loans) up to September 2011. The ratio of NPL was as high as 41.1% in 1999, which came down gradually to the present level as mentioned. Unfortunately, it is...

Words: 1954 - Pages: 8

Premium Essay

Planetarium Essay In English School

...For the planetarium, the dome structure was decided on 6 meters diameter where 40 people could sit and enjoy a show. Meanwhile, in 1956, UNESCO had a General Conference in Delhi. A large ‘India and Science’ exhibition was set up to coincide with the session of the conference along with two UNESCO travelling science exhibitions titled ‘Energy and Its Transformation’ and ‘Our Senses and the Knowledge of the World’. Participating in the exhibition was leading planetarium manufacturer, Carl Zeiss who donated a planetarium instrument, model ZKP1 manufactured by them in Germany to Indian Prime Minister, Pandit Jawaharlal Nehru, who passed it on to NPL to Sir Krishnan, who in turn passed it on to Subramanian for installing it in the NPL...

Words: 781 - Pages: 4

Premium Essay

Nestle Report

...Pakistan Limited is selected to study that how they have planned their marketing strategy for Nestlé Pure Life (water). Nestlé is a multinational food company and offering Fast Moving Consumer Goods (FMCG). The motto of Nestlé is “Good Food, Good Life”, so delivering the qualitative products to the customer is their main objective. It is offering 75 brands of bottled waters worldwide. Nestlé Pure Life (NPL) is one of them that was first offered in Pakistan by Nestlé Pakistan Limited in 1998. People felt need of Pure, safe and clean water because of impurities in water especially in the industrialized cities like Karachi, Lahore, Faisalabad etc. Nestlé identified this opportunity and lunched NPL that satisfied the customer needs and Nestlé become market leader in the water industry. The customers of NPL showed interest on NPL because of trust on Quality of Nestlé, at the heart of which there are qualitative products and its long term commitment to deliver better products to consumers. Being the market leader, the market share of NPL is 78% that is much higher than its competitors. NPL is passing through its Growth stage (of Product Life Cycle) i.e. its sales are increasing tremendously and competitors are entering in the market like Aqua Fina by Pepsi and Askari Waters. There...

Words: 3361 - Pages: 14

Premium Essay

Marketing Pland for Launching of New Product such specific guidelines and policies from its regulatory body DDA, Nepalese pharmaceuticals feel the gap for visionary support from government. Though the country is self reliant in various categories the chunk of market share is still being enjoyed by foreign and Indian companies due to the lack of specific guidelines. Nepal pharmaceutical Laboratory is going to introduce its new product in the market where its competitors already exists. Osamax competing brands are : RESTOFOS – Sun Pharmaceuticals – Indian company OSTEOFOS – Cipla Pharmaceuticals – Indian company FOSSIL – Magnus Pharmaceuticals – Nepali company Since it is difficult to adopt differentiation strategy in pharmaceutical products in terms of product and its features, NPL has to work on other aspects to add value to the product and gain competitive advantage over competitors’ product. Market description Currently total market size of pharmaceutical product is 12 billion and the share of Nepali companies in the market is 35 % with 45 manufactures operating and (5– 18) in the pipeline. With an annual growth rate of 19 %, this sector is one of the fastest growing industries. This sector is contributing around 12 billion to nation’s economy of which domestic industry accounts for approximately 4 billion. This sector has become strong and stable in various aspects . Report of 2006: The study shows the consumption of allopathic drugs in the fiscal year 2061/62 (2004/05) has been Rs. 10659 millions. The annual increment...

Words: 4869 - Pages: 20

Premium Essay


...Corporate NPL in Poland Challenging the status quo in one of the most competitive markets by tailoring unique transactions and creating ingenious know how in collection, P1 invests in NPL portfolios and makes two digit IRR in cash. Corporate Debt Servicer Pragma Inkaso • Pragma Inkaso SA. Group has existed since 2002 and it focuses on the actions in the field of company debt collection and business financing. • With over 5 thousand clients it has been the leader of the corporate debt market for several years now. • In 2013, the composition of the Group was enhanced with a securitization fund – Pragma 1 FIZ NFS and a business unit responsible for the buyout of debt from bulk suppliers and banks. • Pragma Inkaso is quoted on the Warsaw Stock Exchange. Corporate Debt Servicer The Company Corporate Debt Servicer Pragma Inkaso Soft Collection / Deal Makers – 15 people and growing Hard Collection – 17 people External Field Collection – 40 people Litigation – 20 lawyers (8 advocates, 12 sollicitors) NPL origination and management – 6 managers and analysists Corporate Debt Servicer Pragma Inkaso is an NPL expert, which - thanks to the thorough knowledge on the market - moves on its most difficult area – small & medium enterprise debt and corporate debt. Corporate Debt Servicer Debt market in Poland Sold retail debt 2013 2014 2015 PLN 11.2 billion PLN 14 billion (25% increase) PLN 20 billion ...

Words: 830 - Pages: 4

Free Essay

Stress Testing

...A. Introduction Part Origin of the Report Now-a-days, education is not just limited to books and classrooms. In today’s world, education is a tool to understand the real world and apply knowledge for the betterment of the society as well as business. From education the theoretical knowledge is obtained from courses of study, which is only the half way of the subject matter. Practical knowledge has no alternative. The perfect coordination between theory and practice is of paramount importance in the context of the modern business world in order to resolve the problem between these two areas. Therefore, an opportunity is offered by Mahmood Osman Imam sir. Objective of the Report The objective of the report is to evaluate the potential impact on a bank (or a group of entities) of a specific event &/ or movement in a set of financial or macro variable. That’s why we try to find out the following risk: • Credit risk • Interest rate risk • Exchange rate risk • Equity price risk • Liquidity risk Scope of the Report The report may be classified in three broad sections: • Introduction part • Pre-Analysis part • Analysis part Limitations of the Study In preparing the report, some problem is found, affected the presentation of the report. The acute problems are- a) Lack of information or data: Bank is sophisticated business sector. So they are not interested to provide the confidential data. As a result...

Words: 8535 - Pages: 35

Premium Essay

Mgmt 520 Week 2

...up to ensure we are not breaking the law when it comes to transporting, handling, and destroying the chemical agent. As it stands, the current regulation is only for three sites Alabama, Indiana, and Michigan, which do not apply to our site in Colorado. Later in the cycle, the EPA could issue to have this regulation include our site in Colorado is anything goes wrong during processing. 2. Describe the proposal or change. Currently the CERCLA requires that the National Contingency Plan (NCP) include a list of national priorities of the known releases or threatened releases of hazardous substance, pollutants or contaminants throughout the United States of America. The National Priorities List (NPL) is what the populated list of threats is placed on. The EPA utilizes the NPL in order to know which...

Words: 954 - Pages: 4

Premium Essay

Nol of Vietnam Banking System

...B/ The problem of NPLs in Vietnamese bank: I/The Definition of Non-Performing Loans (NPLs): Based on IMF: A loan is non performing when payments of interest and principal are past due by 90 days or more, or at least 90 days of interest payments have been capitalized, refinanced or delayed by agreement, or payments are less than 90 days overdue, but there are other good reasons to doubt that payments will be made in full. Based on the SBVDecision 493/2005/QD-NHNN dated 22 Apr 2005: NOL are prescribed to only debts cannot afford to pay both principal and interest or to fall into this situation. Within 3 months, if the debts that cannot afford to pay will be provided for bad debt. However, it also depends on the terms agreed upon by a loan agreement. Based on this Decision the NOL is classified in to 4 groups as follows: • NPLs Group 1 (Debts to which attention shall be paid) : includes debts overdue for less than 90 days and reschedule debts that are now no longer due according to reschedule terms. This group shall be provisioned at the rate of 5% • NPLs Group 2 (Sub-standard): includes debts overdue between 90 and 180 days and reschedule debts overdue for less than 90 days according to reschedule terms. This group shall be provisioned at the rate of 20% • NPLs Group 3 (doubtful debts): includes debts overdue for between 181 and 360 days and reschedule debts that are overdue for between 90 and 180 days according to the reschedule terms. This group is subject to a provisioned...

Words: 920 - Pages: 4

Premium Essay

Bad Debts

...DIWATA S. SORIANO CURRENT ISSUE ANALYSIS Banks’ bad loans down to 2.05% as of Sept By Prinz P. Magtulis (The Philippine Star) | Updated December 1, 2012 - 12:00am MANILA, Philippines - The non-performing loan (NPL) ratio of universal and commercial banks showed a slight improvement in the first three quarters of the year, the Bangko Sentral ng Pilipinas (BSP) reported yesterday. Big lenders’ NPL ratio improved to 2.05 percent as of September from 2.46 percent a year ago. It was also slightly better than the 2.08 percent in the first eight months of the year. Excluding bank loans among themselves, the ratio also improved to 2.15 percent from 2.46 percent a year ago and 2.08 percent as of August, data showed. NPL pertains to loans that remained unpaid 30 days after due date. The ratio reflects the proportion of NPL against banks’ total loan portfolio. A lower ratio indicates a healthy balance sheets for lenders allowing them to lend more to drive consumption and investment, which in turn, could boost economic growth. The “combined effect” of extending more loans and having some bad ones paid contributed to the industry’s better performance, the central bank said. Business ( Article MRec ), pagematch: 1, sectionmatch: 1 A total P3.410 trillion worth of loans were granted during the first nine months, up 12.91 percent from last year’s P3.020 trillion. The latest figure was...

Words: 672 - Pages: 3

Premium Essay

Analysis of Financial Report

...Assignment on Title: Measurement of Comparative Performance of AB Bank and Douch Bangla Bank Ltd. Bank Profile AB Bank Ltd. MISION: "To be the best performing bank in the country" Vision: "To be the trendsetter for innovative banking with excellence & perfection" Objectives of the Bank: To exceed customer expectations through innovative financial products & services and establish a strong presence to recognize shareholders’ expectations and optimize their rewards through dedicated workforce. Douch Bangla Bank Ltd. VISION: * Dutch-Bangla Bank dreams of better Bangladesh, where arts and letters, sports and athletics, music and entertainment, science and education, health and hygiene, clean and pollution free environment and above all a society based on morality and ethics make all our lives worth living. DBBL’s essence and ethos rest on a cosmos of creativity and the marvelmagic of a charmed life that abounds with spirit of life and adventures that contributes towards human development.. MISSION: Dutch-Bangla Bank engineers enterprise and creativity in business and industry with a commitment to social cause. "Profits alone" do not hold a central focus in the Bank’s operation; because "man does not live by bread and butter alone". Core objectives Dutch-Bangla Bank believes in its uncompromising commitment to fulfill its customer needs and satisfaction and to become their first choice in banking. Taking cue from its pool...

Words: 2731 - Pages: 11

Premium Essay

Conventional Bank And Islamic Bank Case Study

...not applied to the conventional one. Banks have to maintain their financial performance for the public confidence. There is a standard of the banking industry to measure or evaluate the health, it can be from the financial report that published by the bank periodically. This report is very useful to determine the condition of the bank especially for owners, management, government, and the society (Kasmir, 2012). Based on BI regulation No.6/10/PBI/2004 on 12th April 2004 stated that CAMELS (Capital, Asset Quality, Management, Earning, Liquidity, Sensitivity to Market Risk) is the analysis to measure the health of the banks. The aspects of the analysis by using the financial ratio of the bank. Capital covered by CAR, Asset Quality covered by NPL/NPF, Management covered by BOPO, and Liquidity covered by LDR/FDR. CAMEL analysis that connected with the health of the bank is to know the condition of the bank (Kasmir, 2011). ROA is a major indicator of profitability bank (Sirraj and Philai, 2012) and researcher wants to measure the financial performance by using the financial ratio of the bank. Profitability is the most important indicator to measure the performance or operation of the bank. In determined the bank’s health, Central Bank (BI) more concerned in the ROA rather than ROE because BI more focus to measure the profitability of the bank in the term of the asset which is the fund comes from the deposits of the customers, so ROA is used to measure the bank’s profitability as a whole...

Words: 2382 - Pages: 10

Premium Essay

Thai Banking System

...the high demand from large corporations. This is due to the expectations of economic recovery and better investment conditions. Consumer loan demand is also expected to rise in Q3, especially by way of credit cards and other consumer loans. This shows that financial institutions are expecting an increase in private consumption (although they have tightened standard for consumer credit due to the worrying borrower’s credit worthiness and economic slowdown in the last period) Private credit to GDP The most recent value for the domestic credit to private sector (%GDP) was measured at 131.92 in 2011. Corporate and consumer NPLs There has been deterioration in loan quality, the evidence of which lies in the NPL 279.8 THB billion (the figure is mostly comprised of consumer and SME loans as opposed to corporate loans). The ratio on gross NPL and net NPL to loans are 2.3% and 1.1% respectively. REF:

Words: 283 - Pages: 2

Premium Essay

Bank Performance

...contributor loans and advances increased by 32 percent at the same time and deposit growth was 19 percent compared to that of 2013 audited financials. Loan to Deposit ratio is 91% in 2014(Q3), which was 82% in FY’13. ROA and ROE of the Bank was 12.2 percent and 0.7 percent respectively in 2014(Q3). NPL (nonperforming loan) ratio was 3.1 percent in FY’13, which was 4.6% in FY’12. Key Financials Particulars Net Interest Income Investment Income Operating Income Operating Expense Total Provision Tax Net Profit After Tax Trust Bank Limited (DSE: TRUSTBANK) 2012 1,913.0 913.6 3,757.3 1,929.1 876.2 769.3 182.7 13,675.8 58,599.1 83,063.0 6,849.8 96,339.3 426.2 0.4 16.1 0.2% 2.9% 4.6% 2013 1,439.2 1,586.6 4,174.4 2,238.1 772.8 841.5 322.0 19,060.1 83,798.4 102,523.9 7,200.2 118,308.5 426.2 0.8 16.9 0.3% 4.6% 3.1% Figure in Million 9M, 2014 1,995.7 1,366.0 4,467.3 1,763.0 641.9 1,125.1 937.3 22,637.0 110,248.9 121,614.3 8,106.1 150,085.2 426.2 2.2 19.0 0.7% 12.2% - Investments/Investments in Shares & Securities Loans and Advances [Conventional Bank] /Investments [Islami Bank] Deposit & Other Shareholders' Equity Total Assets Total No. of Shares EPS (Restated) BVPS (Restated) ROA ROE NPL(%) Analysis of Performance: Social Islami Bank Limited (DSE: SIBL) Net interest income in 2014 (Q3) grew by 13 percent compared to 2013 (Q3). Income from investment was increased by 6.56 percent, where income from commission, exchange and...

Words: 1033 - Pages: 5

Premium Essay

Faces of Indebtness

...FACES OF INDEBTNESS 1) KENYA Kenyan borrowers promptly repay their loans despite the stiff interest rates and high inflation, presenting a lower default risk investment environment for banks compared to other parts of the world. The low default risk for banks has however not translated to lower interest rates for customers despite the credit referencing system taking effect. The credit risk is measured in terms of gross non-performing advances as a percentage of the total gross advances. A survey by audit firm RSM Ashvir, based on banks 2012 financial reports showed only 4.6 per cent of loans by banks in 2011 ended up as non-performing advances. The banking industry disbursed Sh1, 335 billion, out of which only Sh61.4 million was defaulted. The risk has consistently decreased from 7.9 per cent in 2009 to 6.3 per cent in 2010. With the increase in interest rates and inflation rate, non-performing advances were expected to go higher, but it is not the case. This shows that the risk in the Kenyan market is low Interest rates spiked in December 2011 after the Central bank increased its key lending rate to a high of 18 per cent to curb the inflation rate which had peaked at 19.72 per cent in November that year. Though both the Central Bank Rate and inflation rate have dropped to 9.5 per cent and 4.11 per cent, banks are still lending at an average of 17.84 per cent. Microfinance institutions in Kenya have suffered significant loan repayment default resulting into subsequently...

Words: 8289 - Pages: 34

Premium Essay

Bank Industry

...Chapter: One Introduction 1.1:Introduction: We know business is mainly concerned with the financial activities. In order to ascertain the financial status of the business every enterprise prepares certain statements, known as financial statements. Financial statements are mainly prepared for decision making purposes. But the information as is provided in the financial statements is not adequately helpful in drawing a meaningful conclusion. Thus, an effective analysis and interpretation of financial statements is required. Analysis means establishing a meaningful relationship between various items of the two financial statements with each other in such a way that a conclusion is drawn. By financial statements we mean two statements : (i) Profit and loss Account or Income Statement (ii) Balance Sheet or Position Statement These are prepared at the end of a given period of time. They are the indicators of profitability and financial soundness of the business concern. The term financial analysis is also known as analysis and interpretation of financial statements. It refers to the establishing meaningful relationship between various items of the two financial statements i.e. Income statement and position statement. It determines financial strength and weaknesses of the firm. Analysis of financial statements is an attempt to assess the efficiency and performance of an enterprise. Thus, the analysis and interpretation of financial statements is very essential to measure...

Words: 15156 - Pages: 61