Business Activities and Financial Position of Prime Bank Limited

Business Activities and Financial Position of Prime Bank Limited

In the backdrop of economic liberalization and financial sector reforms, a group of highly successful local entrepreneurs conceived an idea of floating a commercial bank with different outlook. For them, it was competence, excellence and consistent delivery of reliable service with superior value products. Accordingly, Prime Bank Ltd. was created and commencement of business started on 17th April 1995. The sponsors are reputed personalities in the field of trade and commerce and their stake ranges from shipping to textile and finance to energy etc.

As a fully licensed commercial bank, Prime Bank Ltd. is being managed by a highly professional and dedicated team with long experience in banking. They constantly focus on understanding and anticipating customer needs. As the banking scenario undergoes changes so is the bank and it repositions itself in the changed market condition.

Prime Bank Ltd. has already made significant progress within a very short period of its existence. The bank has been graded as a top class bank in the country through internationally accepted CAMEL rating. The bank has already occupied an enviable position among its competitors after achieving success in all areas of business operation.

Prime Bank Ltd. offers all kinds of Commercial Corporate and Personal Banking services covering all segments of society within the framework of Banking Company Act and rules and regulations laid down by our central bank. Diversification of products and services include Corporate Banking, Retail Banking and Consumer Banking right from industry to agriculture, and real state to software.

The bank has consistently turned over good returns on Assets and Capital. During the year 2009, the bank has posted an operating profit of Tk.1520.34 million and its capital funds stood at Tk.3177.32 million. Out of this, Tk.1400 million consists of paid up capital by shareholders and Tk.1777.32 million represents reserves and retained earnings. The bank’s current capital adequacy ratio of 9.96% is in the market. In spite of complex business environment and default culture, quantum of classified loan in the bank is very insignificant and stood at less than 0.96%.

Prime Bank Ltd., since its beginning has attached more importance in technology integration. In order to retain competitive edge, investment in technology is always a top agenda and under constant focus. Keeping the network within a reasonable limit, our strategy is to serve the customers through capacity building across multi delivery channels.

Prime Bank Limited   

VISION

To be the most efficient Bank in terms of customer service, profitability and technology application.

 MISSION

Continuous improvement in Bank’s business policies, procedures and cost reduction through integration of technology at all levels.

OBJECTIVE

• Design and introduction of new products and services
• Shaping and developing the system to face new challenges and emerging need of the market
• Full implementation and utilization of the Bank’s excellence program which aims to provide service to customers.

Brief Description of Business Activities, Product & services and  Financial Position of Prime  Bank  Limited 

Business Activities of PBL

The Principal activities of the bank were banking and related businesses. The banking businesses included deposits taking, extending credit to corporate organization, retail and small & medium enterprises, trade financing, project financing, international credit card etc. Prime Bank Limited provides a full range of products and services to its customers, some of which are mentioned below with a brief overview of the major business activities.

Retail Banking:

As a part of risk diversification strategy PBL expended the lending activities in this sector during 2006.

The growth rate of PBL’s consumer financing was 38% during this year. The loan schemes offered by the bank include Home Loan, Loan against Salary, Marriage Loan, Car Loan, Hospitalization Loan, Education Loan, Doctors Loan, Travel Loan etc.

SME Lending:

Job creation is essential and it must come from Small and Medium Enterprise that will ultimately dominate the private sector. During 2006 bank’s Strategy was focused on customer convenience. The Bank provided working capital loans to suppliers or dealers of large corporations or clusters of small exporters of non‐traditional items. Outstanding loan of SME is Tk.437 million. The growth rate of PBL’s SME Lending was 41% during this year.

Corporate Credit:

PBL’s strategy is to provide comprehensive service to the clients of this segment who are large and medium size corporate customers with expertise in trade finance and related services. Besides trade finance bank are providing working capital finance, project finance and arranging syndication for our Prime Bank Limited corporate clients. Syndication and structured Finance Unit of the Bank strengthened its footstep in the consortium financial market and arranged a number of syndication deals for its corporate clients.

Islamic Banking:

For the development of Islamic Banking Business, 2006 was also a commendable year. It has been observed that compliance of Shariah has improved in 2006 as compared to the preceding years. According to their advice Islamic Banking operation of the bank has been separated from the operation of Conventional Banking and shown separately in the bank’s financial statement. It is found that the investment and deposits grew by 38% and 89% respectively in the year 2006. The operating profit of Islamic Banking Branches grew by 45% during the Year.

Credit Card:

In the year of 2005, Prime Bank Ltd has launched VISA. Before that PBL started its credit card operation in 1999 by introducing Master Card. Now PBL has become the first local Bank of the country to achieve principal membership of both the worldwide‐accepted plastic money network i.e. Master Card and VISA. PBL has redesigned the credit card facility by providing the incentive of “Free Life Insurance Coverage” for their valued cardholders to mitigate the financial risk.

Custodial Service:

PBL equator fulfills its strategic commitment to provide custody and clearing services. Equator’s focuses are on the following:

• ƒ Commitment to quality
• ƒ Dedication to customer needs
• ƒ Sustained investment in people and systems

International Trade Management:

This division is operational throughout the group and PBL’s core strength is trade finance and services.

With an experience, Prime Bank has developed knowledge of trade finance, which is world class. Principle services to importers include imports letter of credit, import bills for collection and back‐to‐back letters of credit facilities. Services provide to exporters include export letters of credit, direct export bills, bonds, and guarantees.

Cash Management:

Prime Bank recognizes the importance of cash management to corporate and financial institutional customers, and offers a comprehensive range of services and liquidity management.

Institutional Banking:

Prime Bank Limited provides a wide range of services to institutional clients, commercial, merchant and central banks; brokers and dealers; insurance companies; funds and managers, and others. It provides relationship managers who are close to their customers and speak local language. This wide network of institutional banking facilities includes transaction, introduction, problem solving and renders advice and guidelines on local trading condition.

Treasury:

Treasury operations had been consideration as an important avenue for income generation purpose within Head Office. In fact, in the past, income from treasury operation was quite sizable and significant to the total income generated by the bank. The treasury division publishes daily and weekly currency newsletters, which provide analyses of currency trends and related issues. Seminars and workshops are conducted for customers from time to time on foreign exchange related topics. Prime Bank is one of the firstlocal banksin Bangladesh to integrate treasury dealings of local money market and foreign currency under one Treasury umbrella. The bank has handled significant volumes of treasury over the last several years. Prime Bank’s Dealing Room is connected with automated Reuters Terminal facility thus enabling the bank to provide forward/futurefacilitiestoits corporate clients at a very competitive rate.

Foreign Exchange Business:

Over the years, foreign trade operations of the bank played a pivotal role in the overall business development of the bank. The bank has established relationship with as many as 110 new foreign correspondents abroad thereby raising the total number of correspondents to 553. The total import & export business handled by the bank during the year 2006 was Tk. 70,616.80 million and Tk. 51,316.40 million. The growth rate was 46%. The bank has also entered into remittance arrangements with several banks and exchange houses and expects to handle increased volume of remittance business over then future.

Merchant Banking:

The Bank’s operation in this sector was limited to Underwriting, Portfolio Management and Banker to the Issue functions. The compulsory requirement for opening BO account for share trading has increased the demand for opening BO account.

Online Branch Banking:

The bank has set up a Wide Area Network (WAN) across the country to provide online branch banking facility to its valued clients. Under this scheme, clients of any branch shall be able to do banking transaction at other branches of the bank.

Under this system a client will be able to do following type of transactions:

• Cash withdrawal from his/her account at any branch of the bank.
• Cash deposit in his/her account at any branch of the bank irrespective of the location.
• Cash deposit in other’s account at any branch of the bank irrespective of the location.
• Transfer of money from his/her account with any branch of the bank.

At present 24 (Twenty Four) branches are under online. Clients can easily deposit and withdraw money from those online branches in amoment.

SWIFT:

Prime Bank Limited is one of the first few Bangladeshi banks, which have become member of SWIFT (Society for Worldwide Inter‐bank Financial Telecommunication) in 1999. SWIFT is a member‐owned co‐operative, which provides a fast and accurate communication network for financial transactions such as Letters of Credit, Fund Transfer etc. By becoming a member of SWIFT, the bank has opened up possibilities for uninterrupted connectivity with over 5,700 userinstitutionsin 150 countries around the world.

Information Technology in Banking Operation:

Prime Bank Limited adopted automation in banking operation from the first day of its operation. The main objective of this automation is to provide efficient and prompt servicesto the bank’s clients. At present, all the branches of the bank are computerized. At branch level, the bank is using server‐based multi‐user software under UNIX operating system to provide best security of automation.

Profitability and Shareholder Satisfaction:

The bank had been one ofthemost profitable in the banking sector. The bank’sreturn on assets(ROA) was 1.99% in the year 2006. Even though the capital market of the country has been suffering over the last few years, the good performance of Prime Bank made sure that the banks share price remainedinarespectableposition.

Products and Services of PBL

Prime Bank Limited offers various kinds of deposit products and loan schemes. The bank also has highly qualified professional staff members who have the capability to manage and meet all the requirements of the bank. Every account is assigned to an account manager who personally takes care of it and is available for discussion and inquiries, whether one writes, telephones or calls.

Deposit Schemes

• Fixed Deposit Scheme
• Contributory Saving Scheme
• Monthly Benefit Deposit Scheme
• Special Deposit Scheme
• EducationSavings Scheme
• Prime Bank Monetary Scheme
• Savings DepositAccount
• STDAccount
• Multi Currency Account
• Foreign Currency Deposit Account
• Non Resident Taka Account
• NFCD (Non Resident Foreign Currency Deposit Account)
• NITA (NonResident Investor’s Taka Account)

Financial Position of PBL

Investment:

The Bank’s investment increased during the year by Tk. 4854 million and stood at Tk. 12698 million as at 31 December 2006.

Loan & Advances and Deposits:

Loans and Advances of the Bank grew strongly by 28% to 57683 million in 2006. Bills purchased and discounted increased by 5% indicating strong growth in export performance.

The Bank’s deposits and the Customer deposits of the Bank grew by 29% & 29% respectively in 2007. However, fixed deposits remained the main component of deposits contributing about 26% of total deposits.

Liabilities:

Total liabilities of the Bank are increased by Tk. 17,276 million during 2007.

Shareholders Fund:

The Shareholder’s Fund is increased by 30% during the year. Paid‐up capital increased by Tk.525 million and stood at Tk.2275 million during 2007.

Non­interest & Investment Income:

Non‐interest & Investment Income are increased by 28% & 62% respectively in year 2007.   Net Profit before & After Tax:

Net Profit before Tax stood at Tk.2347 million and Net Profit after Tax had become Tk.1401 million. Thus the growth rate of the Net Profit before Tax was 35% then that of previous year. In case of Net profit after Tax it was 33% during 2007.

CONSUMER CREDIT SCHEME OF PRIME BANK LIMITED

In order to provide financial assistance to the limited income group for raising their standard of living by acquiring domestic durables like Refrigerator, T.V., Washing machine, Furniture, Computer, Motor Car, etc., we have introduced a Scheme to improve the quality of life particularly of the fixed income earner of the society and this scheme is known as Consumer Credit Scheme.

Objectives of the Scheme:

• Prime Bank Limited started the Consumer Credit Scheme program with a view to fulfill its benevolent institutional objectives through financing the middle class limited income group.
• To ensure the credit facility to the both middle class Limited income group and upper class income group.
• To improve the living standard of limited income group through financing in purchasing necessary goods.
• To participate in the socio‐economic development of the country.

Eligibility of Consumers    

The persons having confirmed/permanent job in any one of the following organizations and age between 20 to 50 years are eligible for availing of Credit facilities under the Scheme.

1. Government Organization
2. Semi‐Government and Autonomous Bodies
3. Banks, Insurances Companies or any other Financial Institutions
4. Armed Forces, B.D.R, Police and Ansar
5. Private Organizations having corporate structure
6. Teachers of Universities, Colleges and Schools

Besides the above, Professionals like Doctors, Engineers, Architects, Lawyers, Journalists, Chartered Accountants; Self Employed Business Executives are also eligible for enjoying credit facilities under this scheme subject to the providing of Bank Guarantee or Insurance Guarantee for the amount of Credit.

Credit Limit, Period of Loan, down payment:

Under CCS program of Prime Bank Limited a borrower can get maximum of taka 40,00,000 and minimum taka 10,000. The down payment is 10% of the loan for each product.

Interest and other charges:

The interest rate is 16% for the all products. And Prime Bank charges 1% service charge and 1% risk fund for all products other than for Car loan, Doctor’s loan, Advance against salary and CNG Conversion loan.

Monitoring and Recovery

The credit under this scheme is fully supervised and as such, the success of the scheme depends on proper and persistent supervision, follow up, persuasion and monitoring of the credits by the Branches.

Branches shall maintain proper records of the applications received, loan sanctioned, disbursement and recovery made. It is worthwhile to mention here that optimum recovery can be ensured by developing relationship with the customers and the beneficiaries and maintaining supervision thereon without filing any suit/case. The mechanism of supervision and monitoring are as follows:

• Regular checking of the balance of the clients account
• Regular communication with the defaulting customer and guarantors physically/over telephone.
• Issuance of letter to customers immediately after dishonor of cheque.
• Issuance of letter to defaulting customers and respective guarantors.
• Contacting the employers of the defaulting customers (after there overdue installments)
• Issuance of legal notice to the customers and guarantors prior classification of loans.
• Issuance of application/greeting letter  to the regular customers.
• Periodical visit to the customer to maintain relationship and supervision of supplied goods/items.
• Legal actions to be taken after all possible efforts to recover the Bank’s dues have in vain.

Steps against Defaulters:

If a borrower fails to pay 3(three) installments consecutively he/she consider as a defaulter. Prime Bank Limited usually follows the following guidelines for treatment of its overdue installments.

• Telephone contact
• Cheque bounce Letter
• Overdue recover Letter
• Letter of guarantors
• Letter to authority
• Legal notice to borrower and guarantor
• Suit notice

Conclusion 

Prime Bank Limited Bangladesh is one of the developing countries in the world. The economy of the country has a lot left to be desired and there are lots of scopes for massive improvement. In an economy like this, banking sector can play a vital role to improve the overall social – economic condition of the country. The banks by playing the role of an intermediary can mobilize the excess fund of surplus sectors to provide necessary finance, to those sectors, which are needed to promote for the sound development of the country.

Prime Bank is – a bank with a difference. Prime Bank’s strategy is to add more strength to the company’s performance by highlighting the areas where they have the advantage today and where they can grow faster than their competitors. The bank thinks different to give differentiated service to its customers and try to run business better every day and better than their competitors.

During the time of my internship program I have gathered lots of practical knowledge and experiences and finally agreed this statement to be true. Working and getting involved in such a reputed bank is really a great pleasure for me. This internship program is obviously helpful for further thinking about my career. I am thankful to all of the officials and specially my supervisor Ms. Syeda Shaharbanu Shahbazi, Senior Lecturer, Brac Business School, Brac University, for her supporting, advice and valuable guidance in the preparation of this report and Mr. Kazi Nurul Islam, JO, Prime Bank Limited, Motijheel Branch with whom I have worked and who have given me appropriate opportunities to apply my theoretical knowledge in the practical field. I was assigned to work in Credit, General Banking and Foreign Exchange where I have to go through different steps related to the Banks. Here I felt that, though banking is constantly changing and being equally challenging, Prime Banks major concentration is always on quality service not on quantity. Customer focus is their priority not volume of the business.