Internship Report Title: “Financial Performance and Risk

Analysis Including Altman’s Z-Score Model”

Course Code: BBA 499A

SUPERVISED BY:
Mr. MD. Tanvir Islam
Lecturer B
Department of Accounting
Independent University, Bangladesh

PREPARED BY:
Sabrina Sultana
ID: 2030626
BBA, Department of Accounting
Minor: Finance
Independent University, Bangladesh

Date Of Submission: 5th May, 2025

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 Letter of Submission

Date: 5th May 2025

To
The Internship Supervisor
Department of Accounting
Independent University, Bangladesh
Bashundhara R/A

Subject: Submission of Internship Report on “Financial Performance Analysis and Risk Analysis
using Z-Score: A Study on Jamuna Bank PLC”

Dear Sir,

With due respect, I am pleased to submit my internship report titled “Financial Performance
Analysis and Risk Analysis using Z-Score: A Study on Jamuna Bank PLC” as a part of the
requirements for the completion of my BBA program.

This report is based on the practical experiences I gained during my internship at Jamuna Bank
PLC. It provides an analytical view of the bank’s financial performance over recent years and
evaluates its financial health and risk position using the Altman Z''-Score model. I have made
every effort to ensure that the report is insightful, well-structured, and informative, blending
theoretical knowledge with practical insights.

I sincerely hope that this report meets your expectations. I would be honored to receive any
feedback or suggestions you may have for further improvement.

I am grateful to you for your continuous guidance and support throughout the internship period.

Sincerely,

Sabrina Sultana
ID: 2030626
Department of Accounting
Independent University Bangladesh

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 Acknowledgement
First and foremost, I would like to express my gratitude to the almighty for granting me the
strength and patience to successfully complete my internship report.

I am deeply thankful to Independent University, Bangladesh and the department of Accounting

for providing me the opportunity to pursue this internship program as a part of my academic
curriculum.

I would like to extend my heartfelt appreciation to Jamuna Bank, PLC for granting me the
opportunity to complete my internship in such a dynamic and professional environment. My
sincere gratitude goes to my organizational supervisor Mr. Mostafa Zaman (Manager,
Department of General Banking) For their continuous guidance, support, and encouragement
throughout the internship period.
I am also incredibly thankful to my academic supervisor, Mr. MD. Tanvir Islam (Lecturer B,
Department of Accounting, Independent University, Bangladesh) for his valuable guidance,
feedback and endless support, which helped me to make this report properly.

Last but not least, I would like to thank all the employees and colleagues at Jamuna Bank, PLC,
who greeted me warmly and provided the essential resources, data, and support during my
internship. Their collaboration had made this learning journey both pleasant and enriching.

Sabrina Sultana
ID: 2030626
BBA, Department of Accounting

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 Table Of Contents

Contents
Executive Summary......................................................................................................................... 6
Chapter 1......................................................................................................................................... 7
1.1 Company Profile .................................................................................................................... 7
1.1.1 Vision Mission And objective of Jamuna Bank PLC........................................................ 8
1.1.2 Corporate Division of Jamuna Bank PLC ........................................................................ 8
1.1.3 Details of Services ........................................................................................................ 12
1.1.4 Operational Details ...................................................................................................... 13
1.1.5 Philanthropic Activities ................................................................................................ 13
Chapter 2....................................................................................................................................... 15
Job Responsibilities ................................................................................................................... 15
2.1 Introduction .................................................................................................................... 15
2.2 General Banking Department ......................................................................................... 16
2.3 Export Department ......................................................................................................... 18
2.4 Credit Department .......................................................................................................... 19
Chapter 3....................................................................................................................................... 20
Methodology............................................................................................................................. 20
3.1 Introduction .................................................................................................................... 20
3.2 Data Collection ................................................................................................................ 20
3.3 Background ..................................................................................................................... 21
3.4 Location of the Study ...................................................................................................... 21
3.5 Origin of the Report ........................................................................................................ 22
3.6 Purpose of the Study....................................................................................................... 22
3.7 Objectives of the Study ................................................................................................... 23
3.8 Meaning of the report .................................................................................................... 23
3.9 Importance of the Report ............................................................................................... 24
3.10 Limitations of Study ...................................................................................................... 24

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Chapter 4....................................................................................................................................... 25
Financial Performance Analysis- A Theoretical Aspect ............................................................. 25
4.1 Introduction .................................................................................................................... 25
4.2 Ratio Analysis .................................................................................................................. 25
4.3 Cautions About Ratio Analysis ........................................................................................ 26
4.4 Group of Financial Ratios ................................................................................................ 26
4.5 Analyzing Profitability Ratio ............................................................................................ 27
4.6 Analyzing Liquidity Ratio ................................................................................................. 27
4.7 Analyzing Efficiency Ratio ............................................................................................... 28
4.8 Analyzing Leverage/Capital Structure Ratios .................................................................. 29
Performance Analysis of Jamuna Bank PLC- Empirical Results and Graphs ............................. 29
Numerical Figures of Performance Analysis ......................................................................... 29
Graphical Figures of Performance Analysis .......................................................................... 31
Risk Analysis of Jamuna Bank PLC Using Altman Z-Score Model.............................................. 36
Chapter 5....................................................................................................................................... 38
Discussion and Implications for Jamuna Bank PLC ................................................................... 38
Conclusion and Strategic Implications ...................................................................................... 39
References .................................................................................................................................... 40

List of Tables
None
List of Figures
Figure-1
Figure-2
Figure-3
Figure-4
Graphical Figures
Graph-1 to Graph-10

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 Executive Summary
This report, labeled "Financial Performance Analysis and Risk Analysis using Z-score: A Study
on Jamuna Bank PLC," was prepared as an element of the Bachelor of Business Administration
(BBA) internship. The key objective of this report is to evaluate Jamuna Bank PLC's
performance, financial health, and the potential risk of financial distress from 2015 to 2024.
Two areas are the primary focus of the report: 1. Economic Performance Analysis using
Leverage/Capital Structure Ratios, Profitability, Liquidity, and Efficiency 2. Risk analysis
through using the Altman Z-Score model, a popular forecasting tool for determining bankruptcy
risk.

The monetary data was obtained for this analysis from trustworthy internet sources, the
institution's annual reports, and released financial reports.

To conduct this analysis, financial data was collected from the bank’s annual reports, published
financial statements and authentic online sources. Key ratios such as ROA, ROE, net profit
margin, current ratio and asset utilization were calculated to evaluate performance. The Altman
Z-score model was then applied to assess the risk of financial distress.
The result of the analysis shows that while Jamuna Bank PLC has maintained moderate
profitability and growth, its Z-score remained consistently within the distress zone, primarily due
to the nature of its capital structure- especially negative working capital and high leverage, which
are common in the banking industry. Therefore, while the z-score raises red flags, it must be
interpreted cautiously when applied to banks.

This report concludes by recommending more robust capital management, retention strategies
and cautious interpretation of traditional financial models when assessing banks. The findings
aim to provide practical insights to both academics and financial analysts in understanding the
performance and stability of banking institutions like Jamuna Bank PLC.

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 Chapter 1
1.1 Company Profile
Jamuna Bank PLC is incorporated as a public limited company under the Companies Act
1994 and started its commercial operations on June 3, 2001. Since its inception, Jamuna bank has
been dedicated to providing resourceful and customer-centric economic benefits. Over the years,
it has expanded its operations and earned a powerful standing in the banking industry of
Bangladesh.

The bank’s growth has been guided by a mission to support the economic development of the
country while ensuring long-term profitability and sustainability. With a focus on digital
innovation, ethical practices and customer-centric services, Jamuna Bank has steadily risen to
become one of the major privately owned commercial banks in the nation.

Jamuna Bank PLC presents a powerful corporate profile built on financial strength, customer
faith, and innovation. Main points of the bank’s corporate individuality include:

● Type: Public Limited Company

● Incorporated: 2001
● Listed: Dhaka Stock Exchange (DSE)
● Head Office: Jamuna Bank Tower, Gulshan-1, Dhaka
● Core Product: All sorts of financial products like Retail Banking, SME Banking,
Corporate Banking, Digital Banking, Islamic Banking, Foreign Exchange, and Cards.
● Tagline: “For you and all. To get more from life.”

The bank’s corporate image reflects a blend of professionalism, technological advancement and
deep-rooted commitment to economic development.
Specific Achievement and Awards:

● Top Tax Payer Award: Recognized by the NRB (National Board of Revenue) as one of
the most heightened taxpayers in the banking sector.
● Best Climate Focused Bank: Rewarded at the National Renewable Energy Conference
and Green Expo 2024.
● Sustainability Rating Recognition: Rewarded as one of the leading seven banks in the
2022 Sustainability Rating Recognition.
● Best CSR Bank: Rewarded by the Global Economics in 2021 and 2022.
● CRAB Rating: Received a long-term “AA1” and short-term “ST-1” rating from the
Credit rating Agency of Bangladesh Limited (CRAB).
● Financial Performance Recognition: Recognized for strong financial performance and
asset quality.

● Padma Bridge Toll Collection: Manages the toll collection for the Padma Bridge.

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 ● Corporate Social Responsibility: Actively involved in various CSR initiatives. Including
education, health and environmental protection.
● Annual Business Conference: Successfully hosts annual business conferences to unveil
new strategies and products.

1.1.1 Vision Mission And objective of Jamuna Bank PLC

Mission:
Jamuna Bank aims to satisfy customers with a range of products and services, using technology
and providing timely service.

Vision:
The bank envisions itself as a leading institution that plays a crucial role in national
development.

Objectives:
Customer Focus: Meeting diverse customer needs through a variety of products at competitive
prices.
Technological Advancement: Utilizing cutting-edge technology to enhance services.
Sustainable Growth: Ensuring long-term financial viability and profitability.
National Development: Contributing to the country's monetary development and improvement.
Sustainable Banking: Integrating sustainability principles into all business activities.

1.1.2 Corporate Division of Jamuna Bank PLC

Jamuna Bank Limited’s Corporate Banking orientation is focused on diversified zones of

business that include:

• Textile Spinning and Fiber Processing

• Garment and accessories
• Heavy Industry and materials (such as cement, iron and steel, and building materials)
• Furniture and materials
• All sorts of consumer goods (like Edible Oil, Food & Beverage items)
• Diverse Trading
• Ship Construction and Breaking
• Real Estate
• Infrastructure Building & Construction
• Electronics & Electrical Equipment

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 • Agro businesses & Agro Products
• Transport
• Telecommunication

What does Corporate Banking Service offers?

JBL’s Corporate Banking offers a broad range of financial services via both Traditional and
Islamic Banking products. It includes-

Project Finance:

JBL supports both greenfield and brownfield projects by providing long term support mainly for
capital infrastructure and equipment development. Some of the financing option includes

● Term Loans (Up to 5 years)

● Hire Buying Agreement
● Rent Financing Arrangements
In some high-profile cases with good potential, the bank also offers end-to-end funding options
even for full factory establishment.
Also, due to JBL's commitment to sustainability, the bank appreciates investing in eco-friendly
ventures like ETPs under the green banking enterprises.

Working Capital Finance:

One of the core areas of the bank’s corporate banking is that it aims to help operational liquidity
of a business’s financial health. For industrial, manufacturers and trading firms that offer short
term credit facilities.

JBL meets the operating fund requirement from local and international businesses that require
import-export help via Trade Finance.

JBL offers diverse kind of operating loan facilities for those businesses that purchases raw
materials and Stocks-in-trade from the local market to support their day-to-day financial needs.
Here are the following,

• Cash Credit (Hypothecation) It is commonly addressed as CC (Hypo. It is a short-term

loan for businesses with local procurements of raw materials and Stocks-in-trade. The
hypo (CC) lasts for up to one year but it can be renewed if the business shows enough
potential.

● Time Loan is a short-term loan plan to help businesses buy raw materials and inventory.
Usually, it is given for a fixed time frame depending on the business. For trading
companies, it may go up to 60 days and for manufacturers, it can go up to 90 to 180 days.

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 ● Cash Credit: CC also known as Pledge is designed for businesses that do not have
enough collateral. This product pays the supplier directly using pay order and the
purchased goods are kept in a warehouse secured by the bank. The client can take the
goods by paying a fraction of the actual value and receive a DO (delivery order).

Services Offered to Importers

Jamuna Bank Limited also offers some financial products for the importers as well. Here are the
followings:

Import Support: JBL Corporate Banking department completely supports importers with
irreversible letters of credit (LC). It can be used for immediate and delayed payments. The
financial institute also confirm, processes and assures these LCs go through its large international
network seamlessly.

Post Import Finance:

Loan against Trust Receipt: This is a well-known short-term loan given to businesses once the
goods are imported. It’s one most of the mostly used economic plan used because of its short-
term qualities. For tenure, trading businesses gets from 45 days to 90 days and for trading
businesses it can be up to 180 days.

Time Loan: This isn’t a frequent loan JBL proceeds. It’s mostly used for special cases where the
client have good reputation with the bank, a strong financial profile or reliable security. It mostly
helps businesses to cover the part of import duties for enormous shipments.

Loan against Imported Merchandise: It is known as LIM and is proposed for those businesses
that cannot deliver any guaranteed collateral protection. In that scenario, the bank allows LIM as
post-import finance.

For this service, imported goods are reserved in the godown beneath the bank's lock and key.
Clients discharge goods via a Delivery Order (DO) by completing a fraction of the gain against
the goods.

Services for Exporters

Jamuna Bank Limited offers a variety of financial services to Exporters to manage their
operations as follows:

● Back-to-Back Letter of Credit is a financial service issued mostly based on confirmed

export orders (Master LC) from reliable buyers. This service helps exporters to purchase
raw materials and other goods from local and international suppliers to meet export
orders.

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 ● Packing Credit, also known as PC, is a short-term loan given before shipment to cover
costs like manufacturing and cutting. PC is permitted at 10% to 20% of the export bill,
and the interest rate is around 7%. It is only allowed when the raw materials are already
available at the warehouse.
● Overdraft, also known as OD, is a facility used to handle urgent short-term cash needs to
run business operations.
● Foreign Documentary Bill Purchase (FDBP) is more likely to pay the payment in
advance if the exporter has all the required documents ready. The bank buys these
documents.
● Local Documentary Bill Purchase (LDBP) is a widely used funding option for
exporters as it comes with a lower interest rate. Exporters use these services to pay
postponed export bills from trusted local buyers.

Services Offered to Contractors and Suppliers

The Jamuna Bank offers multiple financial services to help contractors and suppliers, too.
The services are:
● Bid Bond is more like a facility that helps contractors to participate in tender processes
with a financial guarantee from JBL. This service is mostly offered to people with a
strong financial background.
● Overdraft (Pay Order): Sometimes a bid bond isn’t enough, and institutions look for an
overdraft; that’s when the bank issues a pay order for the contractor. JBL mostly offers to
cover up to 90 percent of the amount needed, whereas the contractor is only required to
make a deposit of 10 percent margin of cash.
● Performance Guarantee, also known as PG, is a document issued by Jamuna Bank
Limited, assuring the supplier will fulfil the terms of an accepted contract.
● Advance Payment Guarantee (APG) works like a guarantee that helps contractors and
suppliers receive advance payment based on the work order.
● Overdraft, also known as Work Order, is a funding option that helps with the smooth
implementation of a project under a precise work order. The funding capability mostly
depends on the project. For example, at JBL, construction projects can get up to 30% of
the work order value, whereas supply contracts can go up to 70% of the order value.
● Security Bond, also known as a payment guarantee, works as a financial guarantee for
purposes like paying the shipping agents, airlines, or other clients like utility companies.
It completely follows the appropriate regulatory rules.
● Foreign Bank Guarantee: JBL can issue an international guarantee backed by counter
guarantees from professional and powerful international banks. This requires a heavy
financial record from the client’s end.

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1.1.3 Details of Services
Jamuna Bank presents a variety of core banking services including retail banking, corporate
banking, and Islamic banking. These services cater to both individuals and businesses, providing
financial solutions such as deposits, loans and various banking products. The Bank also focuses
on digital banking, offering online and mobile platforms for convenient transactions.

Retail Banking

Savings Accounts:
Offer access to various features like online banking, debit cards and fund transfers through
different platforms like BEFTN and MFS.
Current Accounts:
Designed for business and offer features like cheque book, debit card and internet banking.
Fixed Deposits:
Provide a secure way to invest money with attractive returns.
Loan Products:
Offer a variety of loans for various purposes, including personal loans, housing loans and
educational loans.

Corporate Banking

Corporate Loan Products:

Provide a range of financial solutions for businesses including short-term finance, working
capital loans, and term loans.
Trade Finance:
Assist with international trade activities, including issuing and advising documentary credits and
providing pre-shipment finance.
Payroll Banking:
Offer a comprehensive payroll management platform for businesses and their employees,
including payroll accounts, credit cards, and debit cards.

Islamic Banking
Conventional and Islamic Banking:
JBL offers both traditional and Islamic banking through selected branches.
Islamic Products:
Provide multiple Islamic banking products and services that include investment accounts,
financing options, and Islamic loans.

Digital Banking
Internet Banking:
Provides users with access to various banking activities through a web-based platform.

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Mobile Banking:
Offers mobile banking apps for convenient transactions and banking activities.
Digital Channels:
Utilize various digital channels like ATMs, POS terminals and online portals to enhance
customer service.

Additional Services

● ATM Network: Jamuna Bank has a network of ATMs throughout the country both its
own and through partnerships.
● Branch Network: Offers a wide network of branches across both urban and rural areas.
● Customer Services: Provides customer services through various channels including call
centers and branch support.

1.1.4 Operational Details

Hierarchy Of Jamuna Bank PLC

Jamuna Bank PLC follows a well-structured hierarchical framework that ensures smooth
operational flow, accountability and decision making. The hierarchy includes:

● Board of Directors: Provides overall strategic direction and policy oversight.

● Managing Director & CEO: Executes Strategies and oversees all departments.

● Deputy Managing Director and Senior Executives: Handle core operational divisions
such as credit, Treasury, Finance and compliance.

● Branch Manager and Departmental Heads: Manage individual branch operations and
functional departments.

● Officers and Associates: Execute day-to-day operations and customer services.

This structure supports effective communication, delegation of authority and transparency across
the organization.

1.1.5 Philanthropic Activities

Jamuna Bank’s Foundation pulls off a broad range of corporate social responsibility activities.
The non-profit foundation by JBL supports noble causes and works against alternative energy,
assists those in need, and empowers communities. It also works against drug misuse. Encourage
moral values and work to strengthen national identity.
The foundation also focuses on various activities which includes:

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Scholarships & Education Support

● Scholarships for disadvantaged and disabled but qualified scholars

● Jamuna Bank BCS Nursing Computer Lab at Bangabandhu Sheikh Mujib Medical
University
● Vocational Training Center at Rayer bazar, Dhaka
● Jamuna Bank Primary School
● Complimentary primary school for slum inhabitants at Rayer bazar, Dhaka
● Jamuna Bank Madrasa at Rayer bazar, Dhaka
● Jamuna Bank Institute of Information, Communication & Technology

Healthcare & Medical Support

● Complimentary medical camps held nationwide

● Medical service camp at Bishwa Ijtema, Tongi
● Nationwide Plastic Surgery Camp (for Cleft Lip, Cleft Palate, and burn victims)
● Blood donation campaigns
● Monetary aid for medical treatments and education for the needy
● Economic support for cancer remedy for singer Sabina Yesmin
● Contribution to the National Heart Foundation, Sylhet
● Grant of wheelchairs for autistic and disabled individuals

Humanitarian & Relief Activities

● Humanitarian movements like disaster relief distribution

● Regular contributions (and blankets) to the Prime Minister’s Relief Fund
● Annual winter blanket distribution for the deprived
● Deep tube-well facility in Changer Chor, MATLAB, Chandpur
● Grant to the Liberation War Museum
● Donation for the establishment and renovation of mosques across the country

Religious & Cultural Support

● Spiritual event on the significance of Ramadan and Qirat competition

● Holy Quran Teaching Center
● Matrimony support scheme for the disabled
● Widow allowance scheme
● Restoration program for the disabled

Community Development & Empowerment

● Tree planting endeavors

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 ● Sewing machine apprenticeship for poor women
● Jamuna Bank After Care Center
● Model village in Thakurgaon
● Jamuna Bank Solar Village in Kishoreganj
● Monetary support for the government and NGOs
● Economic support for poor freedom fighters

Sports & National Contributions

● Assistance to the growth of sports in Bangladesh

● Tk. 15 lakh assistance to the Bangladesh National Cricket Team players for car purchases
● Donation to Bangladesh National Cricket Board, Sheikh Jamal Dhanmondi Club Ltd.

Support for Military Families & Martyrs

● Financial aid for the relatives of martyred army officers from the BDR carnage, and an
army officer killed in a helicopter crash
● Economic support for freedom fighter Binod Bihari Chowdhury

Chapter 2
Job Responsibilities
2.1 Introduction
I have completed my internship at Jamuna Bank PLC, Gulshan-2 Branch. My internship duration
is 3 months. Started from February last. It will end in May. I had the opportunity to work in three
departments. First, I have started my in General Banking department. Then moved to Export
department. After that I will work in credit department from next month. There is another
department call Clearing. As it’s a sensitive department always handle cash that’s why they
didn’t allowed me to work on that department. This exposure allowed me to gain hands-on
experience in professional life and understand the operational dynamics of banking activities and
gain a practical knowledge about the finance and accounts sector.

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2.2 General Banking Department
At first, I worked in this department. My supervisor was very welcoming. He slowly explained
all the procedures which I had to follow day by day. My colleagues were very helpful.

I have worked with account opening forms. Learned about account types and observed the
procedures. There were some limitations because of the confidentiality of the bank. They own
some software’s which requires password. Only the permanent employee of the bank has access
to it. So, I couldn’t work with that software. Listing works that I have done during the first one
month in GB department:

● Assisted clients in filling up account opening forms.

● Learned about different types of accounts
● Observed the cash transactions, cheque clearing and remittance services.
● Gained insights about the daily operational procedures of the bank
● Cleared account forms with proper documentation for final approval from manager
● Learned about which account need which documents to be opened

As I took note throughout the month I would like to add my notes for clarification.

Types of Accounts:
➢ DGDS - Double Growth Benefit skim(KYC)
➢ MDS- millionaire deposit skim
➢ FDR- Fixed deposit skim (KYC)
➢ MSS- Monthly Savings Skim (171)
➢ LDS- Lakh Poti Deposit Skim
➢ KDS – kror poti deposit skim
➢ MBS- Monthly Benefit Skim (181) (KYC)
Documents for Account opening form:
Foreign Account Tax Compliance Act (FATCA): This form is a compulsory for every kind of
account opening form. This form holds the details of the account opener if the person is a foreign
citizen or not. Generally foreign citizens are not allowed to open an account. Only Bangladeshi
citizens are allowed to open an account in Jamuna Bank PLC.
CBS screening result: It is used for identify that if account opener is working with or a member
of any foreign institution or not.

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SBS-2 and SBS-3 form: It is used for mentioning the sector codes for the account. The list of
the sectors codes attaching below.

KYC form: DGDS, MDS, FDR for this kind of risky account forms KYC form is a must. It
contains the whole risk calculations and parameters of how risky the client is. If the client
deposit cashes from a doubtful source, then the money laundering division of Jamuna Bank PLC
file STR (Suspicious Transaction Report) against the client to the Bangladesh Bank.
Account Opening Requirements:
SB Account:
1. NID card (account holder+ nominee)
2. Photo (2 copy account holder+ 1 copy nominee)
3. Utility bill
4. if service holder needs job id card
5. if businessman need trade license
Proprietorship Account:
1. NID card (A/C + nominee)
2. photo (a/c×2+ nominee×1)
3. Additional trade license

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4. TIN certificate
Limited Company:
1. Trade license
2. Board resolution
3. meeting minutes
4. certification of incorporation
5. memorandum
6. form ten (How many owners do the company have)
7. everyone's (NID, PHOTO, TIN)
Partnership:
1. Trade license
2. TIN (every partner's TIN+ Photo+ NID)
3. Partnership deed (RJC- Registered joint of company verified)
If the FDR account is owned by a person, then the documentation will be same as a SB account.
But if the client deposit amount is more than 10 lakhs in that case TIN certificate is a must. Other
FDR will be as it is.
Pay Order: It is issued when a person is not willing to take his or her receivable in hand. Then
they issue a pay order. It is issued by the payer to the bank then the bank sends it to the receiver’s
bank then the receiver’s bank sends it to the Bangladesh Bank. After that BB send it to the
clearing house then it comes to bank and finally to the other person. That’s how it works.

2.3 Export Department

After working at GB department for one month I was transferred to export department. I am
currently assigned here. I am including my main learnings and observation till now:

• Understanding the process and verification of the export process

• Learning about the LC (Letters of credit) and how it works
• Assisting with the basic documentation checking process under the supervision of the
senior officers.
• Gaining knowledge about the rules and regulation, legal procedures for foreign exchange
transaction.

Currently working in this department. That’s why the insights may be not that reach. But I
believe I will be able to get all the accessible learning information when I will complete by

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working days with this department. As I took some notes since started working. I would like to
add those:

As far as I understood the export department of Jamuna Bank PLC is accountable for managing
and enabling all export-related banking services. It manages export documentation and
compliance as international trade standards. They make sure to make the export and import
procedures for their client smooth and safe by playing a third-party role. The bank co-ordinates
with foreign banks for export L/C’s and gathering of bills. They provide pre-shipment and post
shipment financing facilities for the client. They also offer consultancy services for their client
over global trade practice so that it’s easier for the client to move and do trade by maintaining
proper rules and regulations. As my supervisor has told me at the first day of work they provide
these following services:
1. Advising and confirming export letters of credit which is well known as L/C
2. Negotiation and collection of export bills
3. Pre-shipment and post-shipment financing
4. Assistance in export incentives and rebates
5. Foreign currency account services.
6. Export proceeds realization and Bangladesh Bank reporting

I asked them that why would a client will choose them over other banks for export-import
procedures? They answered that they have a strong banking network which ensures fast payment
which attracts the customers mostly. Also, they are efficient in handling of documents with least
discrepancies. Their advisory service is also a great service of attraction. They have
technological export services. Less service charges compared to many private banks. And they
are famous for maintaining global compliance standards strictly.

2.4 Credit Department

As I have not started working here. From next month I will be transferred to this department. But
did talk about basic things about this department with the officers and as per my understanding
this department is responsible for credit risk analysis, Loan processing and loan portfolio
management etc. They help both the corporate and individual borrowers.

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 Chapter 3
Methodology
3.1 Introduction
Methodology is the foundation of any research-oriented report, as it outlines the path followed to
gather, analyze and interpret data. This chapter provides a detailed description of how the study
was conducted including the techniques and tools used to ensure the findings are valid, relevant
and aligned with the report objectives.

The report titled “Financial performance and Risk Analysis of Jamuna Bank PLC” is based on
both qualitative insights and quantitative data. To ensure accuracy and depth, multiple data
collection strategies and analytical approaches were used. This chapter highlights the process
followed to explore the financial structure of the bank, assess risks and interpret the results
effectively.

3.2 Data Collection

The analysis conducted in this report is based on both primary and secondary sources of data to
maintain a balanced and comprehensive approach.

• Primary data
Primary data was collected through informal interviews, direct observation and
discussions with employees at Jamuna Bank PLC. Interactions with officials from
departments such as Accounts, credit, treasury and risk management provided useful
insights into the bank’s internal operations, risk-handling procedures and decision-
making processes.
• Secondary Data
Secondary data formed the backbone of the financial analysis. These were collected
from:
a) Annual reports of Jamuna Bank PLC (Last 10 years)
b) Official publications and disclosures from the bank’s website.
c) Bangladesh Bank report circulars.
d) Relevant financial databases and journal articles.
e) Books and lecture materials on financial performance analysis and risk
assessments techniques

All data used were carefully reviewed, cross-verified and interpreted to ensure the reliability and
accuracy of the findings presented in the report.

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3.3 Background
As a complement of completing the Bachelor of Business Administration (BBA) curricular we
have to complete this internship program to gain hands-on experience based on our theoretic
acquaintance. Presently doing my internship at Jamuna Bank PLC and making my internship
report on their financial presentation and their company risk evaluation.

Jamuna Bank PLC is a third-generation private commercial banks in Bangladesh, recognized

under the Companies Act,1994. It began its banking processes on 3rd June 2001 with the vision
to contribute meaningfully to the country’s economic development and provide complete
financial services to a various range of clients. Since its beginning, the bank has upheld a
promise to innovation, customer satisfaction and maintainable growth.
Headquartered in Dhaka, Jamuna Bank PLC offers a wide range of services and that includes
corporate banking, retail banking, SME financing, commercial trade services, foreign exchange
transactions and digital banking solutions. The bank runs through a widespread network of
branches and sub-branches diagonally the country, supported by modern technological structure
to assure fast, secure and dependable services.

With a strong importance on professionalism, transparency and amenability the bank has
progressively improved its financial performance over the years. It has built a strong reputation
for being customer-centric and strong within economic and regulatory tests. Jamuna Bank PLC is
listed on the Dhaka Stock Exchange and unceasing to follow strategies focused on extensive
banking, financial revolution and risk supervision.

The bank’s commitment to ethical banking performs, technological progression and financial
presence has positioned it as a reliable name in Bangladesh’s banking sector. As an active
financial institution, it continues to discover new prospects and face the growing difficulties of
the financial industry with sureness.

3.4 Location of the Study

The internship and subsequent research were carried out at the Gulshan-2 branch of Jamuna
Bank PLC located in Gulshan, Dhaka, Bangladesh. This branch, being situated in a key
commercial hub, provided a dynamic environment to observe various banking activities in real
time.

Throughout the internship period, I was given the opportunity to work alongside experienced
professionals and gain first-hand exposure to practical banking operations. The branch’s high
volume of transactions, diverse customer base and well-structured departmental workflow made
it an ideal setting for collecting authentic data and conducting meaningful financial and risk
analysis.

21
3.5 Origin of the Report
As part of the Bachelor of Business Administration program at Independent University,
Bangladesh, we students are required to endure a three month or more internship program in a
standard organization.

The internship program allows students to increase practical acquaintance after gaining theoretic
knowledge through our university life. It also gives us an opportunity to apply the academic
knowledge on real life situation as an experience of our exposure to the work environment.

The report is based on the experience collected during my internship at Jamuna Bank PLC,
where I was assigned to learn by observing and assisting in numerous banking procedures.

The report is directed and administered by Mr. MD. Tanvir Islam (Lecturer B, Department of
Accounting, Independent University, Bangladesh). The topic was selected after having a
discussion with the academic supervisor to assure that it is associated with both academic
purposes and practical manner.

Additionally, the report has been established with understandings gained from my on-site
overseer at Jamuna Bank PLC, whose direction and support helped me to understand the Bank’s
financial observes and risk management measures more effectively.

The essential drive of this report is to tie academic learning with hands-on banking experience
and to assess the bank’s monetary spot from an analytical perception.

3.6 Purpose of the Study

In the present competitive and unpredictable financial setting, a bank should constantly monitor
their financial strength and risk revelation to assure long-standing sustainability. Evaluating
financial performance supports shareholders understand how effectively a bank is producing
returns, handling assets, and governing expenses. On the other hand, assessing financial risk
allows establishments to prepare for possible threats and take curative procedures before those
pressures influence steadiness.

Being a reputed private commercial bank in Bangladesh, Jamuna Bank PLC plays a noteworthy
role in the country’s economic segment. Considering the financially strong point and
defenselessness can provide appreciated insights not only for the bank’s management but also for
investors, supervisors and academic researchers.

The basis behind choosing this topic stay in the practical relevance and academic value it offers.
As a finance and accounting student, investigating financial proportions, understanding trends,
and applying risk valuation tools like the Z-score model offers an excellent prospect to apply
academical knowledge in a real-world setting. Moreover, estimating how interest rate changes

22
distress the bank’s loan and deposits growth enhances an appropriate and practical measurement
to the study.

Through this report, I aim presenting how I developed a profound knowledge of financial
analysis techniques, increase my analytical skills and figure out meaningful discoveries that
could hypothetically help Jamuna Bank PLC recognize areas for development and support its
monetary policies.

3.7 Objectives of the Study

The main objective of this report is to investigate the financial performance and risk experience
of Jamuna Bank PLC using both descriptive insights and measurable tools. The study aims to tie
theoretical models with practical banking procedures and provide a complete summary of the
bank’s monetary health.

Wide objectives of this report are to estimate the complete financial presentation and risk
position of Jamuna Bank PLC with in-depth analysis and clarification.

And if we talk about the specific objectives it serves:

➢ To measure the bank’s financial performance with the help of crucial financial ratios such
as profitability, liquidity, and efficiency.
➢ To use the Altman Z-Score model to forecast the financial anguish level of Jamuna Bank
PLC.
➢ To examine the impact of interest rate oscillations on the growth of loans and deposits.
➢ To classify the key financial risks faced by the bank and how they are managed.
➢ To relate theoretic financial analysis methods with real-life data and remarks collected
during the phase of internship.
➢ To recommend possible endorsements for filtering the bank’s financial performance and
risk management policies.

3.8 Meaning of the report

This report grasps worth for multiple shareholders including students, academics, financial
forecasters and banking experts. By focusing on monetary performance and risk breakdown, it
ties academic agendas with real-world banking data allowing for a more practical thoughtful of
financial evaluation methods.

For a student of finance and accounting, the report is practically noteworthy as it provides hands-
on experience in applying financial ratio analysis, risk assessment tools and rendering the impact
on macroeconomics variable quantity like interest rate fluctuations. It also shows valuable

23
understanding into the acts of one of Bangladesh’s leading private banks, Jamuna Bank PLC, and
it’s making it a useful case study for future position.

From an official standpoint, the discoveries of this report may spot key areas of strength and
weaknesses for the bank’s administration. It can also be used for future decision-making
progressions concerning performance development, risk moderation and deliberate forecasting.

3.9 Importance of the Report

The analytical depth and application to the current banking environment showcases the
importance of the report. As banks run in a progressively instable financial scene, it is essential
to monitor performance, system of measurement and manage related risks capably. This report
proposals a planned breakdown of Jamuna Bank PLC’s monetary health, providing a stronger
picture of its effectiveness, operational efficacy and risk experience.

For theoretical determinations, the report helps as a reserve for thoughtful how theoretical
perceptions such as ratio analysis and the Z-score model are applied in practice. It improves
academic knowledge by participating classroom knowledge with specialized knowledge.
Also, this report can be valued for Jamuna Bank’s interior evaluation, helping the bank evaluate
its financial intense and identify forecasts for development. In essence, the report adds value by
offering a complete, respectable and practically applicable assessment of the bank’s financial and
risk position.

3.10 Limitations of Study

Data Related Limitations: As I have worked with a wide range of data so, there are some
missing data because of they are missing in Jamuna Bank PLC’s annual reports.

Work place related Limitations: Couldn’t work with all department because of their privacy
concerns. They didn’t allow me to work with their customized software because those requires
password and only the permanent employees of Jamuna Bank PLC has that access.

24
 Chapter 4
Financial Performance Analysis- A Theoretical Aspect
4.1 Introduction
A strong and sustainable financial performance is the lifeline of any banking institution. It
reflects how well a bank is utilizing its resources, managing its costs and generating returns for
its stakeholders. Before diving into the actual performance of Jamuna Bank PLC, it is important
to understand the theoretical foundation behind financial performance analysis.

This chapter introduces the key concepts, tools and techniques commonly used to assess the
financial health of a bank. Financial performance analysis doesn’t just look at numbers it
interprets what those numbers mean in terms of profitability, liquidity, operational efficiency and
risk exposure. It helps stakeholders answer vital questions like is the bank making enough profit?
is it managing its assets well? Can it meet short-term obligations?

By exploring the theoretical aspect, this chapter sets the groundwork for the practical analysis
that follows. It covers widely used financial ratios, their interpretations and the significance of
these metrics in the context of a bank’s stability, growth and risk management. This foundation
will help ensure that the real data we analyze later can be accurately evaluated and clearly
understood.

4.2 Ratio Analysis

Ratio analysis is one of the most widely used tools for evaluating a bank’s financial performance.
It involves analyzing relationships between different financial statement items to understand the
bank’s profitability liquidity, efficiency and overall stability.

In the context of this report, ratio analysis will serve as a key technique to assess how well
Jamuna Bank PLC has performed over recent years. By using specific financial ratios such as
Return on Assets (ROA), Return on Equity (ROE), Current Ratio and Asset Turnover Ratio. We
can interpret the bank’s ability to generate profit, manage its resources and meet its obligations.

These ratios will be calculated using data from the bank’s annual reports and financial
statements. The purpose is not just to calculate the numbers but to analyze the trends, compare
them with industry benchmarks and draw conclusions about the bank’s financial health and
performance.

This section provides the theoretical basis while a more detailed, data-driven analysis will be
presented in later chapters.

25
4.3 Cautions About Ratio Analysis
While ratio analysis is a powerful tool for evaluating financial performance, it is important to
approach it with caution. Ratios alone do not provide the full picture of a bank’s financial health-
they are only as reliable as the data behind them and the context in which they are used.

Firstly, financial ratios are based on historical data and may not accurately reflect current or
future conditions. Changes in the economy, interest rates, regulations or internal policies can
quickly alter a bank’s performance. Secondly, the interpretation of ratios can be misleading if not
compared against industry averages or peer institutions. A “good” or “Bad” ratio is often
relative.

Moreover, differences in accounting practices, reporting standards or estimation methods across

banks can distort comparisons. Inflation and currency fluctuations can also affect the consistency
of ratio outcomes over time.
Therefore, while ratio analysis will be an essential part of this report, it will be complemented by
qualitative insights and external economic factors to ensure a more balanced and realistic
evaluation of Jamuna Bank PLC’s performance.

4.4 Group of Financial Ratios

Financial ratios are generally categorized into different groups based on the aspects of
performance they aim to measure. Each group focuses on a specific area of financial health
making it easier to analyze a bank from multiple perspectives. In this report, the performance of
Jamuna Bank PLC will be assessed using 4 key groups of financial ratios:

I. Profitability Ratios
These ratios evaluate the bank’s ability to generate profit relative to its revenue,
assets or equity. They help answer critical questions such as, Is the bank earning
enough from its operations? Is it effectively using its resources to generate returns?
II. Liquidity Ratios
Liquidity ratios measure the bank’s ability to meet its short-term financial
obligations. These ratios are essential in determining whether the bank has sufficient
cash or easily convertible assets to cover immediate liabilities.
III. Efficiency Ratios
Efficiency ratios assess how effectively the bank utilizes its assets and manages its
operations. They show how well the bank is converting its resources into revenue,
handling receivables and managing costs.
IV. Leverage/ capital structure Ratios
Leverage ratios, also known as capital structure ratios, help evaluate the extent to
which a bank relies on borrowed funds to finance its operations. These ratios reflect

26
 the balance between debt and equity and indicate the bank’s financial risk and long-
term solvency. A high reliance on debt may boost returns during good times but
increases risk during downturns. These ratios are essential in assessing how stable
and risk-resilient the bank’s capital structure is.

4.5 Analyzing Profitability Ratio

Profitability ratios are important for evaluating how a bank is generating income from its assets
and equity. These arrows not only reflect financial success but also provide insights into how
well the bank is utilizing its resources to create value for shareholders. In this report three key
profitability ratios are considered for Jamuna Bank PLC:
A. Return on Asset (ROA)
ROA measures how efficiently the bank is using its total assets to generate profit. A
higher ROA suggests more useful asset utilization and stronger financial performance.
This is particularly important in banking, where large asset bases are the norm.
ROA= Net profit/Total Asset
B. Return On Equity (ROE)
ROE reveals how much gain the bank generates with the fund’s shareholders have
financed. It’s a direct measure of the bank’s capability to award its equity investors and
reflects financial strength from an ownership perspective.
ROE= Net profit/ Shareholder’s Equity
C. Net Interest Margin
NIM is specific to banks and measures the difference between interest income earned on
loans and the interest paid on deposits, relative to the bank’s earning assets. It shows
how well the bank is managing its core lending and deposit activities. A healthy NIM
means the bank is earning a solid return from its primary operations.
NIM= (Interest Income- Interest Expenses)/Total Assets

4.6 Analyzing Liquidity Ratio

Liquidity ratios are key to understanding how well a bank can meet its short-term obligations
using its most liquid assets. In a sector where trust and stability are everything, a solid liquidity
position reflects both financial discipline and operational readiness. There is a lot of liquidity
ratio. But we will be using a few of it here which goes more with bank to complete our task.
Here are some of the major liquidity indicators that will be used in this report to assess Jamuna
Bank PLC’s financial health:

27
 A. Current Ratio
The current ratio approximates current support to current weaknesses. It helps us
understand if the bank can pay off its short-term debts with the help it already has. A ratio
above 1 is commonly believed to be good sign.

Current Ratio = Current assets/ Current liabilities

B. Loan-to-Deposits Ratio
It is a key financial metric used to assess a bank’s liquidity and risk. It shows the
proportion of a bank’s deposits that are given out as loans. A higher LDR means the bank
is using more of its deposits to issue loans that increase profits but may reduce liquidity.
And a lower LDR indicates more liquidity but possibly lower earnings.

LDR= Total loans/ Total deposits

4.7 Analyzing Efficiency Ratio

The efficiency ratio helps assess how well a bank is working its help and day-to-day operations.
In simple terms, they show whether the bank is doing more with less-maximizing outcome while
underestimating waste.

For Jamuna Bank PLC, efficiency will be measured by analyzing how effectively the bank is
using its assets and income to generate revenue and manage costs. Efficiency ratios give deeper
insight into the internal workings of the bank highlighting how well it balances performance,
cost and resource management in a competitive financial environment. A few key indicators that
fall under this category include:

A. Asset Turnover Ratio

This ratio shows how efficiently the bank uses its total assets to generate revenue. A
higher ratio means the bank is making good use of its assets, while a lower ratio may
indicate underutilization or inefficiency.
Asset Turnover Ratio = Total Rev/Total Assets
B. Cost-To-Income Ratio
Often measured by comparing operating expenses to operating income, this ratio tells us
how much it costs the bank to generate each unit of income. A lower ratio is generally
favorable, indicating better cost control and higher operational Productivity.
Cost-To-Income= Operating Expenses /Operating Income

28
4.8 Analyzing Leverage/Capital Structure Ratios
Leverage or capital structure ratios focus on how a bank finances its operations specifically, the
balance between debt and equity. These ratios help assess the bank’s long-term solvency and its
ability to sustain financial pressure during economic downturns.

For Jamuna Bank PLC, leverage analysis will send light on how much the bank depends on
borrowed funds and how well it manages the associated risks. A well-balanced capital structure
ensures financial stability, flexibility and investors’ confidence. Key indicators that have been
used:

A. Debt to Equity Ratio

This measures the proportion of debt used relative to shareholder equity. A high ratio
may signal higher financial risk, while a lower ratio suggests a more conservative capital
structure.
Debt to equity Ratio= Total debt/Shareholder’s Equity
B. Equity Capital Ratio
This ratio indicates the proportion of a bank’s total assets financed by shareholder’s
equity. It reflects financial stability and the bank’s ability to adsorb losses. A higher ratio
implies stronger capital support.
Equity Capital Ratio= Total Shareholder’s Equity/Total Assets
C. Debt to Asset Ratio
This ratio measures the percentage of a bank’s assets that are financed through debt. A
lower value suggests that the bank relies more on equity, while a higher value may signal
greater financial leverage and associated risk.
Debt To Asset = Total Debt/ Total Assets

Performance Analysis of Jamuna Bank PLC- Empirical Results and Graphs

Numerical Figures of Performance Analysis
In this part I will be presenting the performance analysis of Jamuna Bank PLC but in numbers.
Important Note: All the amount stated here are in BDT Billion

29
FIGURE: 1

Figure-1 holds all the data from 2014 to 2023. This data we have got from Jamuna Bank PLC’s
annual reports (Only from the audited one). On a special note, mentioning that 2024 data is not
included as it’s not audited yet.

FIGURE: 2

Figure-2 holds all the results of ratio analysis from the year 2023-2014. We have discussed the
details with each of the ratio’s formula in our theoretical chapter of performance analysis.

30
Graphical Figures of Performance Analysis

ROA
0.015

0.01

0.005

0
1 2 3 4 5 6 7 8 9 10

Graph:1

This graph shows us the ROA is below 1 for 10 consecutive years. Generally, it means the
company earning less than 1 BDT for every 100BDT of their asset. This indicates inefficient use
of assets or low net income. Its causes can be high operating or interest expenses. Large asset
base but low profit growth. High provisioning for non-performing loans. But for banks it
considered healthy to keep the ROA between 1%-2%. Here we can see consistently below one
which indicates management inefficiency which leads to riskier lending or operational weakness.

ROE
0.2

0.1

0
1 2 3 4 5 6 7 8 9 10

Graph:2
Their ROE is truly under 1% for a decade almost. It signals that Jamuna Bank PLC is not
utilizing shareholder’s equity effectively and major changes are needed to restore profitability
and competitiveness.

31
 NIM
0.03

0.02

0.01

0
1 2 3 4 5 6 7 8 9 10

Graph:3
As of the record the all can be said is that their lending and borrowing balance is not so good. It
is barely earning anything from its lending activities after paying its depositors. Their interest
rate management is not so in a good condition. Jamuna Bank’s peers have a healthier Net Interest
Margin than them of 3-4%.

ATR
0.06

0.04

0.02

0
1 2 3 4 5 6 7 8 9 10

Graph:4
their record for asset turnover ratio indicates inefficient use of resources to produce income.
Their asset base is large due to holding large amounts of low yield assets like excess cash or
government securities but on the contrary revenue growth of Jamuna Bank PLC is not that good.
There could be excessive idle asset. They do conservative lending and they have a poor asset
quality.

32
 CURRENT RATIO
1.4
1.2
1
0.8
0.6
0.4
0.2
0
1 2 3 4 5 6 7 8 9 10

Graph:5
A low current ratio below 1 for a decade may not be alarming for a bank by itself but it needs to
be viewed alongside other liquidity indicators like cash reserve ratio, LCR and quick asset
liquidity. Could still suggest liquidity management risks or an overly aggressive investment or
lending strategy.

LOAN_TO_DEPOSIT
140
120
100
80
60
40
20
0
1 2 3 4 5 6 7 8 9 10

Graph:6
Loan to deposit ratio indicates that Jamuna Bank PLC has a very volatile lending strategy. Graph
has shown very sharp ups and down in the year 2022 and 2021. They also have liquidity risk in
certain years. Especially in 2022, the bank may have relied on short-term borrowing or interbank
funding, exposit it to liquidity crunches if deposits declined. It also indicates inconsistent policy
because their wide fluctuations suggest lack of a consistent lending policy. They have improved
position in 2024 which might be intentional-de-risking but if they hold it too lo for too long then
it may hurt their profitability.

33
 Debt to asset ratio
0.12

0.1

0.08

0.06

0.04

0.02

0
1 2 3 4 5 6 7 8 9 10

Graph:7
They managed their debt to asset ratio well as we see can in the graph. It means the bank has not
over-leveraged itself and maintains a healthy balance between debt and equity financing. Their
low debt to asset ratio is a positive sign of financial structure. The bank maintains equity support
and is not fully reliant on debt. Their shareholders contribute a portion of the capital which helps
absorb shocks. They have long-term stability. Regulators see this as a sign that the bank has a
sufficient equity cushion. Investors may view it as a sign of lower risk but possible lower return.

COST_TO_INCOME
2.5
2
1.5
1
0.5
0
1 2 3 4 5 6 7 8 9 10

Graph:8
This ratio tells us how much the bank is spending to earn each unit of income. The lower the
better. As per the graph the bank is spending more than it earns from its core operations. The rise
in 2016-17 presents a sharp cost control. It’s a red flag for management. They have a poor cost
management. The slight drop in 2024 is a good sign. So we can hope they will get better in next
years. For this kind of dysfunction, the possible causes can be high employee or administrative
cost, weak fee-based income, rising loan defaults or low interest income due to poor asset
utilization. Poor asset utilization exists in Jamuna Bank PLC as we have seen in prior asset
management related ratio analysis.

34
 Debt to Equity Ratio
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
1 2 3 4 5 6 7 8 9 10

Graph:9
As per the graph we can see that Jamuna Bank PLC has gradually increased its reliance on debt
over years. While this can fuel growth but at the same time it pushes the bank towards financial
risk. Careful management is important for this kind of situation because only an expert
management can ensure that the debt level remains healthy balancing with the equity.

Equity Capital Ratio

0.12
0.1
0.08
0.06
0.04
0.02
0
1 2 3 4 5 6 7 8 9 10

Graph:10
as we can see in the graph that from the year 2014 to 2023 the equity capital ratio decreased by
going through many ups and downs. It indicates that the bank is increasing its leverage over time
and they are relying on borrowings rather than owner’s equity to fund its assets. In these years
the bank’s risk profile slightly increased. And recent years also shows that the total assets are
funded by shareholders money by 6-7%. Their equity position in 2015 was the strongest. Rather
than that their almost 93% assets are debt and liabilities. So, in conclusion we can say lower
equity capital can increase financial risk during bad economic conditions because debt must have
to repaid even if the revenue drops by any means. But banks often operate smooth even with low
equity if they manage risk with expertise. And I think it’s a common scenario for banking as it’s
a highly leveraged business.

35
 Risk Analysis of Jamuna Bank PLC Using Altman Z-Score Model
We are using Altman Z score model for analyzing the risk of Jamuna Bank PLC going bankrupt
in near future. Altman Z-score model is basically a formula which is used to find out if a firm
going bankrupt or not. This model helps to predict the bankruptcy earlier so that the firm can
take initiatives for prevent it. In some cases, it can predict the bankruptcy even before 2 years. Its
originally for manufacturing firm but later it is developed and modified for non-manufacturing
and emerging market firms. We are using the modified model which is more suitable for Jamuna
Bank PLC than the core model.

But We have to keep that in mind that it has limitations for banks. Why? Because bank typically
don’t report EBIT and working capital in the same way. We will be using the model by adapting
it with bank So, working capital will be replaced by (Liquid assets- Short-term Liabilities) and
their EBIT by NET OPERATING PROFIT. It is being used for academic purpose and
comparative analysis.

Figure-3

36
Figure-4

Here we can see 2017 to 2014 Jamuna Bank’s Z-score is in safe zone by indicating that the bank
was healthy and financially stable during this period. It’s profitability, retained earnings, asset
utilization ability was higher. So, their bankruptcy possibility was very low during these years. In
our previous discussion of ratio analysis, we also got good result which is another solid proof
that they did good during these years and as a result of this the Z-score is also in safe zone.

But from the year 2023 to 2018 indicating distress which indicates its financial health weakened
throughout this period. It handled higher risk of financial instability. The probable reasons could
be decreased profitability indicated by lower EBIT, lower retained earnings, higher leverage,
economic pressure such as higher non-performing loan, pandemic COVID-19 etc. Since banks
operate differently so, the explanation for distress here is different. Negative working capital is
normal for banks. Banks take deposits and use them as asset. Their deposits are their short-term
liabilities and they use it as long-term loans. So, their working capital is always negative and
after calculation because of this reason it drags the Z-score down. Here this model treats banks
unfairly for this ratio.

We didn’t get any grey zone here as you can notice. Jamuna Bank PLC makes their report
quarterly and audit yearly. So, between the year 2017 and 2018 if we would have analyzed their
quarterly report we might get a grey zone. But as for the pattern of this research which is yearly
calculation, we didn’t consider month wise data. Here a question rises that what is the reason
behind this sudden sharp change? Jamuna Bank PLC’s management may have faced very sudden
crisis which led them to this kind of result.

Here I have tried my best to find the Altman Z-score model for banks as this model was first
proposed for manufacturing companies then it was developed for non-manufacturing companies.
So, the perfection can’t be marked by full fledge. There are some limitations and we have to
consider it to build a new perspective and develop something even more applicable.

37
Jamuna Bank PLC has low retained earnings and EBIT compared to its asset in recent years
which is another reason for which the Z-score is low in those recent years. It reflects low capital
reserve which can be a red flag in raging times.

A thin equity reserve which means the bank is highly leveraged but it is common in banking
sector. But still, we consider it risky.

As Altman Z-score model is not designed for banks so showing distress is not leading us to
predict that the Jamuna Bank PLC will go bankrupt or had face any bankruptcy phase as serious
as a manufacturing company would face if they have this kind of long-term distress.
Nonetheless, the consistently low scores highlight areas such as low retained earnings, high
leverage and negative working capital that warrant attention from a risk management
perspective.

Chapter 5
Discussion and Implications for Jamuna Bank PLC
Over the past decade, the financial ratios and performance indicators of Jamuna Bank PLC
present a mixed but insightful picture of its operational and financial standing. Several key
findings emerge:

1. Conservative Liquidity Management (Current Ratio < 1)

The consistently low current ratio below 1 indicates that Jamuna Bank operates with tight short-
term liquidity. While this might seem alarming for non-financial firms, it is common in the
banking industry due to the nature of deposit liabilities and liquid asset management. However, it
also suggests the bank heavily relies on maintaining confidence and uninterrupted access to
liquid assets to meet obligations.

2. Volatile Lending Strategy (Loan to Deposit Ratio)

The Loan to Deposit Ratio has shown significant fluctuations, peaking at an alarming 121.27%
in 2022 and dropping to a conservative 68.36% by 2024. This suggests Jamuna Bank may have
adopted an overly aggressive lending policy during certain years, possibly exposing itself to
liquidity risks. The recent drop reflects a shift toward more cautious liquidity management but
could also indicate weak credit demand or excess idle funds.

38
3. Long-Term Low Profitability (ROA & ROE < 1)
Return on Assets (ROA) and Return on Equity (ROE) being below 1 for ten consecutive years is
a clear signal of underperformance. This points to inefficiencies in asset utilization and the
inability to generate strong returns for shareholders. Such persistently low profitability may raise
concerns about the bank’s competitiveness, cost management, and revenue generation strategies.

4. Weak Net Interest Income (Net Interest Margin < 1)

Net Interest Margin consistently below 1 implies poor management of interest-earning assets
relative to interest costs. It also suggests Jamuna Bank may not be taking full advantage of its
core banking operations to maximize profit, possibly due to non-performing loans, high funding
costs, or inefficient pricing strategies.

5. Low Efficiency (Asset Turnover < 1)

The Asset Turnover Ratio below 1 for a decade shows the bank is not generating sufficient
revenue from its asset base. This indicates potential inefficiency in asset allocation or a sluggish
revenue model that is not capitalizing on the size of its balance sheet.

6. Healthy Financial Structure (Debt to Asset Ratio < 1)

On a positive note, the bank’s debt to asset ratio remaining below 1 over ten years reflects a
structurally sound balance between debt and equity. It implies that while the bank is debt-heavy,
it is not overly leveraged, maintaining a reasonable equity buffer to withstand financial stress.

Conclusion and Strategic Implications

Jamuna Bank PLC must focus on enhancing operational efficiency, strengthening its asset
quality, and reforming its interest income strategy to improve profitability. A more balanced and
consistent loan-to-deposit strategy, alongside targeted efforts to reduce non-performing loans and
cost overheads, could significantly boost its ROA and ROE.
Furthermore, investing in technology, improving customer retention, and diversifying revenue
streams will be crucial in enhancing margins and creating long-term shareholder value.
Continuous monitoring of liquidity and leveraging data-driven decision-making can also help the
bank navigate external financial shocks more effectively.

39
 References
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Joshi, M. K. (2020). Financial performance analysis of select Indian Public Sector Banks using
Altman's Z-Score model. SMART Journal of Business Management Studies, 16(2), 74-87.

https://www.researchgate.net/publication/362579817_IS_THE_GENERAL_INSURANCE_BUSINE
SS_IN_BANGLADESH_FINANCIALLY_DISTRESSED

Hamid, T., Akter, F. A. R. Z. A. N. A., & Rab, N. B. (2016). Prediction of financial distress of non-
bank financial institutions of Bangladesh using Altman’s Z score model. International Journal of
Business and Management, 11(12), 261-270.

Azim, M., & Sharif, M. J. (2020). Usability of Z score: a case study on peoples leasing and
financial services limited & Bangladesh industrial finance company limited. Int. J. Manag.
Account, 2(3), 38-46.

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