An Overview of United Commercial Bank Ltd. (UCBL):

Sponsored by some dynamic and reputed entrepreneurs and eminent industrialists of the country and also participated by the Government, UCB started its operation in mid 1983 and has since been able to establish one of the largest networks of 98 branches among the first generation banks in the private sector. With its firm commitment to the economic development of the country, the Bank has already made a distinct mark in the realm of Private Sector Banking through personalized service, innovative practices, dynamic approach and efficient Management. The Bank, aiming to play a leading role in the economic activities of the country, is firmly engaged in the development of trade, commerce and industry thorough a creative credit policy.

Products and Services of UCBL:

In United Commercial Bank Limited, the following products and services are available for its customers:

• UCB Multi Millionaire
• Consumer Credit Scheme

• UCB DPS Plus
• Western Union Money Transfer
• SMS Banking Service
• Saving Insurance Scheme
• Online Service
• Credit Card
• One Stop Service
• Time Deposit Scheme
• Monthly Savings Scheme
• Special Deposit Scheme
• Inward & Outward Remittances
• Travelers Cheques
• Import Finance
• Export Finance
• Working Capital Finance
• Loan Syndication
• Underwriting and Bridge Financing
• Trade Finance
• Industrial Finance
• Foreign Currency Deposit A/C
• Consumer Credit Scheme
• Locker Service

 Consumer Credit Scheme

“Buying home appliances? Get them through our Consumer Credit Scheme.”

United Commercial Bank Limiter’s CCS gives a great opportunity to its customers to buy house and office items on easy installments. This scheme gives an advantage of part payment to cope with high price tags of many necessary home and office appliances. A consumer is the ultimate user of a good. Thus “Consumer credit” is the credit, which directly comes into the use of consumer.

Objectives of Consumer Credit Scheme:

The Objectives of CCS of United Commercial Bank Limited is as follows:

1. To bring the credit facility to wide range of customers.
2. To provide financial assistance to the limited income group people toward buying utility products.
3. To help the professionals to raise their living standard.
4. To participate in the socio-economic development of the country.

Goods and services under the scheme:

Under the “Consumer Credit Scheme” UCBL grants pecuniary help for the following goods and services.

1. Private car and station wagon new and reconditioned.
2. Refrigerator and deep fridge.
3. Air cooler, Air condition, Room-heater, Water Purifier.
4. Sewing machine.
5. Generator.
6. Other goods that are not mentioned above but are considered essential

 Special Deposit Scheme

“Add to your monthly income, add to your solvency.”

For most of the people on fixed income, this opportunity to supplement their monthly earning is a golden one. And UCBL ’s Special Deposit Scheme gives a customer just that.

Under this scheme, customers can deposit money for a term of 5 years. The deposited money is fully refundable at the expiry of the term. At the same time, during the term period they can enjoy a monthly profit corresponding to their deposited amount. As for instance, under this scheme a deposit of Tk.55,000/- gives a monthly income of Tk.500/-.

  Table-2: Deposited amounts and monthly benefits of SDS

 Monthly Savings Scheme

“See your small savings grow with UCBL.”

This scheme is specially designed for the people of the limited income. This scheme helps to accrue small monthly savings into a significant sum at the end of the term. So, after the expiry of the term period the depositor will have a sizeable amount to withdraw.

United Commercial Bank Limited has got quick response in this project. A depositor can deposit 500-10000 Taka monthly for 3-8 years.

Table-3: Monthly installments and returns of MSS

“Safe, Instant and Universal Money”.

Through its Credit Card, United Commercial Bank Limited has not only initiated a new scheme but also brought a new life style concept in Bangladesh. Now the dangers and the worries of carrying cash money are memories of the past.

Credit Card comes in both local and international forms, giving the clients the power of buying all over the World. Now customers enjoy the conveniences and advantages of Credit Card as they step into the new millennium.

Saving Insurance Scheme

“Worried about the future? UCBL has just the scheme for you”

This is an uncertain World and the threatening silhouettes of future catastrophes are always looming around. This scheme of UCBL gives its customer’s family the protection against the insecurities of the world. This scheme is the first of its kind in Bangladesh. It combines the benefits of regular savings and insurance scheme, so, customers get the usual rate of interest on the deposited amount while they enjoy the protection of a comprehensive insurance coverage. Under this scheme, the beneficiaries will get equal the deposit in case of natural death of the account holder whereas in the event of accidental death of the account holder the beneficiaries will receive twice of the deposit. As for example, if a customer picks up Easy Class (Tk.50,000/-) he/she will get Tk.50,000/- for natural death and Tk.1,00,000/- for accidental death apart from his/her deposited amount and interest.

Table-4: Deposited amounts and its normal and accidental benefits of SIS

 Western Union Money Transfer

”Money transfer from anywhere in the World to Bangladesh in minutes.”

Joining with the world’s largest money transfer service “Western Union”, UCBL has introduced Bangladesh to the faster track of money remittance. Now money transfer between Bangladesh and any other part of the globe is safer and faster than ever before.

This simple transfer system, being on line eliminates the complex process and makes it easy and convenient for both the sender and the receiver. Through UCBL – Western Union Money Transfer Service, customers’ money will reach its destination within a few minutes.

 UCBL ATM Service

United Commercial Bank Limited has introduced ATM service to its Customers. The card will enable to save its valuable customers from any kind of predicament in emergency situation and time consuming formalities. UCBL ATM Card will give its distinguished clients the opportunity to withdraw cash at any time, even in holidays, 24 hours a day, and 7 days a week.

Consumer Services Expansion Program of UCBL:

Present age is the age of competition. A good number of new private commercial banks came to banking sector in Bangladesh during the last decade. Foreign banks (Standard chartered, American Express, HSBC, Citibank N.A, etc) also conduct banking business in Bangladesh very successfully. These new generation banks introduced many attractable products for customers. United Commercial Bank Limited is also introduced many products to attract customers.

The products introduced during the last five years are as follows:

• E-Cash/ATM card.
• SWIFT Services.
• Power Card.

E- Cash/ ATM CARD:

ATM service is the dynamic process of electronic technology in modern banking. United Commercial Bank Limited has elevated services to the highest standard by bringing Electronic Banking (E-Banking) and ATM services at the doorstep of clients. Today the entire banking system has been undergoing are evolution change in providing improved services to the clients. ATM has made the lifestyle of its clients much easier and comfortable. The note able characteristics of ATM are:

• Payment facility for 24 hours a day
• Arrangement for payment of bills
• Instant inquiry
• Multiple location facility Dhaka, Chittagong, and Sylhet.

SWIFT Services:

UCBL is one of the first few Bangladesh Banks to obtain membership of SWIFT. SWIFT is a members’ owned cooperative which a first and accurate communication network for financial transaction such as Letter of credit, Fund Transfer etc. By being a member of SWIFT, the bank has opened up possibilities for uninterrupted connectivity with over 5700 user institutions in 150 countries all over the world.

 Power Card:

In Bangladesh, UCBL has first introduced the power card. The use of power card is very easy and the cost of transactions is very low. So anybody can use it like cash to do their daily transaction.

 Market and Target Customers:

Due to the predecessor company’s involvement in financing sector of the country, the bank inherited its top corporate customers. Moreover the bank is involved in import trade financing.  Bulk importers of consumer durable foods, gains, industrial raw materials are its customers.  The bank has financed in textile and apparels sectors. The bank has a trade of choosing customers from diversified groups. The bank has first class customers in the construction sectors involved in high-rise building, heavy construction and roads and high way construction.

 An Overview of UCBL:

UCBL started its journey since 1987 as the 33rd branch of UCBL. The bank is now in the top position among the competitor private banks in the arena. As a branch of commercial bank it provides all general banking services including a wide range of savings and investment scheme products, foreign exchange and ancillary services with the support of modern technology and professional management. The branch is always achieving better and better in respect of increasing number of deposits, loan sanctioned, number of accounts etc. Almost everyday huge number of customers is gathering in this branch for doing banking satisfactorily. It is an authorized dealer of foreign exchange. The branch is headed by an SVP (Senior Vice President).The branch is located at the centre of as it is renowned place for garment industry and doing foreign exchange activities. So as a private bank, UCBL is running steadily and within a very near future, it would take a vital responsibility for the national economy.

Management & Human Resource

A well-educated, skilled and enterprising workforce with wide experience in the banking is a precondition for the continued growth and progress of any bank. UCBL’ s aim is to recruit and retain a competent workforce. In the expectation of continued growth, the bank in 1987 established United Commercial Bank recruits experienced bankers as well as fresh graduates and trains them through the Training institute. As on 31^st December 2007, its human resources strength was 2408. These numbers include 238 executives, 1446 officers and 562 staffs.

Management hierarchy of UCBL

 Principles and Values:

United Commercial Bank Limited is committed to five core business principles:

• Outstanding customer service.
• Effective and efficient operations.
• Strong capital and liquidity.
• Prudent lending policy.
• Strict expense discipline.
• The business principles are supported by loyal and committed employees who make lasting customer relationships and international teamwork easier to achieve.
• United Commercial Bank Limited also operates according to certain key business values.
• The highest personal standards of integrity at all levels.
• Commitment to truth and fair dealing.
• Hands-on management at all levels.
• Commitment to quality and competence.
•  A minimum of bureaucracy.
• Fast decisions and implementation..

Vision:

The main vision of the United Commercial Bank Limited is to develop the economy of Bangladesh by profitable investment of public money and build up their confidence to the private institution. To ensuring highest standard of clientele services through best operation of latest information, technology, making due contribution to the national economy and establishing ourselves firmly at home and abroad as a front ranking bank of the country is our cherished vision.

Mission:

The missions of the United Commercial Bank Limited are as follows: The aim of UCBL is to become one of the leading Banks in Bangladesh by its prudence, fair and quality of operation.

• Its effort for expansion of its activities in home and abroad by adding new dimension to its banking services is contributed unabated.
• It is also putting highest priority in ensuring transparency, accountability, and improved clientele services as well as to its commitment to serve the society through which it wants to get closer and closer to the people.
• Its goal is to act as a caring companion in uplifting the national economic standard through continuous gradation and diversification of its clientele services in line with national and international requirement.
• It intends to meet the needs of its clients and enhance its profitability by creating corporate culture.
• It believes in strong capitalization.
• Its aim is to ensure its competitive advantages by upgrading banking technology and information system.
• It maintains high standard of corporate and business Seth’s. It provides high quality financial services to strengthen the well being and success of individual, industries and business communities.

Objectives:

The objectives of United Commercial Bank Limited are mentioned below:

• Offering quick and improved clientele services through application of modern information technology.
• Playing an important role in the national progress by including improved banker-customer relationship.
• Ensuring highest possible dividend to the respected shareholders by making best use of their equity.
• Pushing the policy of nurturing balanced growth of the bank in all sectors.
• Consolidating our position in the competitive market by introducing innovating banking products.
• Ensuring highest professional excellence for our workforce through enhancement of their work efficiency, discipline and technological knowledge
• Expanding the bank’s area of investment by taking part in syndicated large loan financing.
• Increasing finances to small and medium enterprise sector including agriculture and agro based industries, thus making due contribution to the national economy.
• Upholding the image of the bank at home and abroad by pushing dynamic and time befitting banking activities.
• Ensuring maintenance of capital adequacy and highest profit through successful implementation of the Management Core Risk Program.

Business Ideology:

Alongside providing the best services to the clienteles, patronizing and taking part in social development activities as well as making due contribution to growth of the national economy.

Organizational Strategy:

As the financial services industry is a very competitive industry, the main strategy of UCBL is the organic growth – to build branches and strengthen their distribution network. They will continue to invest and expand in Bangladesh as fast as local regulations allow.

The principle strategies are –

People – Attract, retain and reward top performers.

Profitable Growth – Growing sales and increase the revenues.

Credit Quality – Maintaining credit quality and understand the role in managing losses.

Customer Centered – Always providing exceptional customer service.

Ownership – The performance and results should be owned.

Efficiency – Lowering the costs and wise use of resources.

3.9 Capital Structure:

 Table-1: The Capital Structure of UCBL

Source of information-Annual Report 2008

Functions of United Commercial Bank Limited:

Some general function of United Commercial Bank Limited are given below-

• To maintain all types of deposit Accounts.
• To make investment.
• To conduct of reign exchange business.
• To conduct other Banking services.
• To conduct social welfare activities.
• To work for continues business innovation and improvements.
• To bui1d up strong-based capita1ization of the country.
• To ensure the best uses of its creativity, well disciplined, well manages and perfect growth.

 Organizational Structure and Departments:

Organizational setup of the United Commercial Bank Limited is consisting of three organizational domains. Firstly the central top management, which contains Board of Directors, Managing Director, Additional Managing Director and Deputy Managing director. The major responsibilities of this group are to take central decision and transmit it to the second step. Secondly the executives level management, which contains Executive Vice Presidents, Senior Vice Presidents, Vice Presidents and Assistant Vice Presidents. The major responsibilities of this part are to supervise and control divisions/ departments. Thirdly the branches operate management, which contains branch manager and other mid/ lower level management. The major responsibilities of this part are to the 100 branches of this bank and report to the Head Office from time to time.

Management Structure of United Commercial Bank Limited:

In 2008 United Commercial Bank Limited made commendable progress in all business, like deposit, credit, fund management, investment, foreign remittance, credit card & foreign exchange related business. Bank has expended business activities as holding previously & parallels by diversification its investment to a new product, as a major financier remarkable portion of total exports of the country.

The management processes are as follows:

Planning:

The strategic planning approach in UCBL is top-down. Top management formulates strategy at the corporate level, and then it is transmitted through the division to the individual objectives. Board of directors or executive committee usually takes the decision. In this process lower level managers are detached in making process, even brainstorming of lower level managers is absent in decision-making and planning process.

Organizing:

Organizing of the United Commercial Bank Limited is based on departmentalization. The organization is divided into twelve departments headed by Executive Vice President or Senior Vice President. In the United Commercial Bank Limited the whole operation is centralized and authority is delegated by written guidelines. These guidelines are:

• Operational manual approved by Head Office, where each aspect or banking operation is elaborately defined.
• Advance manual including advances limit for different management level.
• Bad and doubtful recovery manual.
• Foreign banking guidelines.
• Central bank directives.
• Different management position holders in departments and branches practice their authorized power in different cases with administrative loophole.

 Staffing:

Entry-level recruitment process of the United Commercial Bank Limited is conducted in three ways.   One way is recruitment of probationary officers. Each probationary officer has one-year probation period. After completion of probation period the officer joins as officer grade III (b). The career path of probationary officer is headed toward different management positions. Second way of recruitment is to recruit non-probationary officer who joins as an assistant officer. The career path of an assistant officer is lengthier than probationary officer. The third way of recruitment is recruitment of staff and sub-staff such as typists, messengers, drivers, guards, attendants, cleaners and other lower level positions. Promotion policy of UCBL is basically based on seniority basis. Sometimes, employees are promoted to the higher position for their outstanding perfoffi1ance. However, it is found that the average length of a position held by an employee is around five years.

 Controlling:

The bank has strict control over its all-organizational activities. The Bangladesh Bank directives indicate some control measures. Audits and inspection are conducted by different parties to check whether the bank implement these control systems properly or not. The central bank conducts credit inspection by a team. The United Commercial Bank Limited has audit and inspection department to take controlling measures in internal operations. Audit and inspection team send to the branches now and then and is responsible for preparing report that will be submitted to the Chief Administration to take necessary actions.

 UCBL-at glance:

Narayanganj Branch is one of the most productive branches of UCBL. In last four years the branch achieved a remarkable result. In this couple of years the output from this branch in terms of productivity, profit & efficiency has improved tremendously.

The output from this branch is increasing day by day

That is why; the branch is concentrating on the continuous improvement so that it can serve better service to the clients. Moreover, the branch has got an efficient team of manpower. And the given table shows the scenario of deposit, advance and profit of last four years and which shows that as a branch it increases its efficiency in mobilization fund and generating sufficient profit by doing banking activities.

 UCBL Performance Indicator:

Performance evaluation is an important pre-requisite for sustained growth and development of any situation. It is customary in commercial banks to evaluate the predetermined goals and objectives, with the changes goals and objectives, the criteria of revaluation have undergone changes overtime.

Analyzing of UCBL Performance with Financial Ratios:

• Ratio Analysis:

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as the indicated quotient of two mathematical impressions and as the relationship between two or more things. In financial analysis, a ratio is used as bench mark for evaluating the financial position and performance of a firm. We are describing some ratios for the measurement of the performance of the bank.

• Profit Ratio:

Return on Equity (ROE)

The rate of return on equity is a good condition last five years. ROE indicates the rate of return on equity capital. Generally bank stockholders prefer ROE to be high. Here, ROE is increased last four years, but last year’s ROE indicates lower than previous year. It is possible, however, that an increase in ROE indicates increased bank’s risk.

 From the table we can see that ROE of UCBL increasing except 2003. ROE of UCBL were 30.79%, 70.54%, 82.94%, 40.55%, and 24.03% in the year respectively. ROE has been increased as Net Income of the Bank has been increased over the years.

• Return on Asset:

The rate of return on assets (ROA) measures the ability of management to utilize the real and financial resources of the bank to generate returns. ROA is most commonly used to evaluate bank management.

 From the table we can see that ROA of UCBL has been increased and decreased over the year from 2005 to 2009. Both ROA and TAX of UCBL over  the last five years.

• Equity Multiplier:

Equity multiplier measures the Taka value of assets funded with each Taka of equity capital. The higher the equity multiplier ratio, the more leverage or debt the bank is using to funds its assets. Thus this ratio is a measure of degree of leverage the bank is using.

• Net Profit Margin:

Net profit margin ratio establishes a relationship between net income and operating income that indicates management efficiency in providing services, administrating and selling the product. It reminds us that bank can increase their earnings and their returns to their stockholders by successfully controlling expenses and maximizing revenues.

• Asset Utilization:

The asset utilization ratio represents the ability of management to employ asset effectively to generate revenue. The more income generated per Taka of assets, the more profitable is the bank.

• Loan Ratio:

The loan ratio indicates the extent to which assets are devoted to loan as opposed to other assets.

 From the table we can see that Loans and Advances

Ratio of the bank has been increasing and decreasing. As bank generate its major portion of income from interest income. So, bank generates its major portion of income from interest income. So, bank has to disburse more Loans and Advances for maximizing their income. In the year 2009, the bank engaged 61.39% of its TAX in loans and advances.

• Wages & Salaries Ratio:

This ratio indicates how much expenses required regarding Wages & Salaries to TAX of a bank. Lower the ratio indicates that the bank has been performing well.

 We can see that the UCBL has been performing badly, as the ratio of the bank has been increasing from the year 2005 to 2009.

• Occupancy Ratio:

Occupancy Ratio indicates the occupancy expenses of the Bank to its total assets. The lower ratio indicates better performance of the bank.

 We can see that the UCBL has been lowering its occupancy ratio. So, the bank’s performance is better than the previous years comparing to the year 2009.

Other Expenses Ratio

• Cash Ratio:

Cash ratio is measured by dividing cash by total assets of the bank.

• Deposit to capital Ratio:

This ratio measures Taka of deposit of per Taka capital.

 Deposit to capital ratio of UCBL has been increasing over the years. It was 13.54times in the year 2005 and 16.97 times in the year 2009. That means the deposit of the bank has been increasing much more than its equity capital.

• Deposit to Employee Ratio:

This ratio indicates how much Taka is deposited by each employee in the bank. Higher the ratio indicates the better the position of the banks.

The table reveals that each employee of UCBL mobilized deposit of TK. 10845130 in the year 2005 and it has been increased to TK. 12705775 in the year 2009. This indicates the better performance of the bank.

• Invest to Deposit Ratio:

The ratio indicates that how much Taka is invested to total deposit.

The profitability of commercial branch banking can be measured by using the above mentioned credit risk ratio, Liquidity ratio, profitability ratio, operational ratio and productivity ratio. And by analyzing the two month scenario of year 2010, it is found that United Commercial Bank-gradually increase its profitability and increases its efficiency in running branch banking operation.

Recommendation:

After analyzing over all performance of UCBL, we have some recommendation to improve the foreign exchange services.

• Businessmen are very much interested in import L/C. Export L/C is small in number. So UCBL should attract exporter. The personnel of UCBL can directly contract to the exporter. So first they have to find our exporter.
• Local L/C is not introduced in our society very much. UCBL can make a work force to attract the local businessman and make them understand about the benefit of local L/C.
• UCBL should open their branches in the business area like near EPZ, port etc. So that importer and exporter need not to find UCBL’s branches.
• Number of AD branches need to be increased.
• UCBL should be more conscious about the promotional activities. UCBL should use aggressive marketing campaign to attract clients.
• UCBL can pursue a diversification strategy in expanding its current line of business. The management can consider options of starting retail banking.
• UCBL should perform more and more welfare activities.
• UCBL should redesign the service scheme to provide better interest rate. If they establish a faster network system within their branches then it can easily transfer data within a shorter period of time.
• In foreign exchange department it is required to communicate with foreign banks frequently and quickly. To make the process easy and quick the whole bank should be computerized and use faster communication system.
• Margin and commission on L/Cs varies from customer to customer. A customer is allowed to open a L/C ever with nil margins, I think that the bank should review the customer’s transaction behavior for a period of time and should develop a certain policy in this regard.
• They can arrange training program for the employees who are not able to handle modern technology.
• They should automate the transaction recording system instead of manual time wasting process.
• Bank should offer new packages to attract new customer as well as existing customer.
• It can open new branches in places where concentration of people who live abroad is more.
• UCBL should increase the number of ATM booths.
• It should increase its promotional activities to attract its customer.
• Full-fledge online system should be implemented.

Conclusion:

UCBL is well positioned to meet the challenge and will take the opportunity of benefit from economic growth. The bank would serve as partner and advisor of the clients to trade, commerce and industry. This strategy is supported by wide spectrum of products and services.  

The mission of the bank is to be utmost trustworthy stakeholder, careful, committed for equitable and sustainable growth based on diversified deployment of fund/resources leading the bank to the peak of healthy and wholesome financial institution. If the bank is going to succeed internationally, it must know as much or more than its customers and competitors. A single misstep may not only cost its company business, it can lead to big delays and stiff fines. Unfortunately, most information about international trade is targeted at big companies with large logistics and legal staffs that know how to navigate the maze of import-export rules and regulations. Small and midsize companies lack the resources – and often the training – of larger corporations.

UCBL is maintaining a well-structured communication from top to bottom level. Each official should be valued and treated as a part of the bank and they must have the privilege to devote themselves for the betterment of service of the bank. UCBL places utmost importance on managing foreign exchange. The whole process includes management of export, import, remittance, Foreign Exchange Risk, and successful completion of trade.

The bank always tries to increase its foreign exchange performance. As the bank is located in commercial area it is a great opportunity for the bank to attract customers.  Though it has some problem with its foreign exchange department, it is always trying to accelerate its foreign trade.

The 24 years success story though helped the bank to attain a leading role but to remain unrivalled among new generation banks, the bank must face new challenges.

Overall, the bank must make a positive attempt to be more outward looking in their goals and aware of what is happening. They must also emphasize on the domestic scenario more closely and analyze any certain trends and strategies of their competitors. The bank must accept any failures and think of them as an objective to pursue future goals instead of blaming such failures on other factors.

REFERENCES

Books & Articles:

• Ali Syed Ashraf & Howlader R.A, “Banking Law and Practice”.
• Ali  Syed Ashraf, “ Foreign Exchange and Financing of Foreign trade” (1995)
• Bangladesh Bank, Guideline for Foreign Exchange Transaction, (vol-2)
• Export Policy’2006-2009
• Foreign Exchange Regulation Act -1947
• Import Policy’2006-2009
• UCBL, Annual Report- 2006
• UCBL, Annual Report-2007
• UCBL, Annual Report-  2008
• UCBL, Monthly Statement, October 31, 2009
• UCBL, Manual for Foreign Exchange Transaction of Foreign Exchange Department.
• UCPDC-600, ICC Publication No.600LF.
• Various Official Records of United Commercial Bank Limited

WEBSITES:

• www.bangladesh-bank.org
• www.epzbangladesh.org.bd.
• www.foreignexchange.com