Dynamics of Market Capitalization and GDP Relationship

Gross Domestic Product or GDP is a commonly used measure of a country's economic development where market capitalization signifies the performance of stock market. N. Gregory Mankiw in his book “Principles of Macroeconomics” has defined GDP as “the market value of all final goods and services produced within a country in a given period of time”. In DSE website, Market Capitalization is stated as “the total market value, at the current stock exchange list price of the total number of equity shares issued by a company”.  It is calculated by multiplying the individual share price of a company with total number of common share outstanding of that company. For the whole market, this is simply the summation of market capitalization of all companies listed in that market.

Study on the Financial Management of Prime Bank Limited: Part 05

In this final part of the "Financial Management of Prime Bank Limited" blog series (Part 01, Part 02, Part 03, and Part 04), interest rate risk management and market risk management are discussed.

Interest Rate Risk Management of PBL

To understand the interest rate risk management of Prime Bank Limited Repricing/Funding Gap Model is used. Table 21 shows the repricing gaps for 2010-14 in 6 categories. Here, it can be observed that the bank has a cumulative negative repricing gap over the years representing more rate sensitive liabilities than rate sensitive assets. It interprets that rising interest rate would have negative effect on the bank’s earnings because the bank will have to source fund with higher interest rate while their earlier assets were utilized at lower interest rate. In addition, rising borrowing rate will lead the rise in lending rate which is a negative incentive to borrowing, therefore, the bank may need to economize their spread. Reverse scenario can be observed in case of decrease of interest rate.

Study on the Financial Management of Prime Bank Limited: Part 04

In this part of the "Financial Management of Prime Bank Limited" blog series (Part 01, Part 02, Part 03) the discussion is made over treasury performance, capital adequacy, liquidity gap and financing gap of PBL.

Study on the Financial Management of Prime Bank Limited: Part 03

In this part of the "Financial Management of Prime Bank Limited" blog series (Part 01, Part 02) the discussion is made over provision. A bank has to maintain provision against different types of assets according to the regulations of central bank. The percentage of provision differs based on the quality of assets. For example, bad loan has the least probability of recovery, therefore, has 100% provision requirement. Credit quality of PBL and subsequent provision are highlighted below.

Does the Performance of Banking Sector Affect GDP in Bangladesh?

In this blog post, I tried to study the relationship between banking sector performance and GDP growth in the context of Bangladesh. The banking sector performance is calculated by the year to year growth of banking sector (all the commercial banks) income and profit. Banking sector related data was collected from the “Monthly Economic Trend” May 2016 Issue published by Bangladesh Bank and GDP growth data was collected from the World Data Bank. 

Incomes and Expenses Scenarios of Banking Sector of Bangladesh

Other day I was checking the “Monthly Economic Trend” May 2016 Issue published by Bangladesh Bank. I found some interesting data there and thought about writing a blog about those. And, here, it is. This is basically a general discussion on the income and expenses of Banking Sector of Bangladesh.  I’ve observed that, after 2002, banking sector has experienced single digit growth in 2013 and 2014. Individually, only the State Owned Commercial Banks (SOCBs) have reported double digit growth in 2014 while Foreign Commercial Banks (FCBs) have reported negative growth. But, if we dig deep to the SOCBs, then the double digit growth doesn’t look pleasing.

Financial Management of Prime Bank Limited: Part 02

In this part of the "Financial Management of Prime Bank Limited" blog series the credit-deposit section is discussed. 

Composition of Credit

Table 6 shows the credit mix of PBL for 2010-14 in percentage.  It can be observed that the major areas of fund employment are Secured overdraft / Quard against TDR, Cash credit / Murabaha, and Loans (General) holding average 24.50%, 14%, and 20.73% respectively of total credit. Over the years, Loans (General) and Credit card are showing increasing trend where Loans against trust receipt, Payment against document, Lease finance, and SME loan are decreasing

Financial Management of Prime Bank Limited: Part 01

This work was actually done as a part of academic requirement in my MBA program. This was a group project and I would like to acknowledge and thank my group members, Urmi Das, Nadisha Ahmed, and Jafrin Siddique for their valuable support in doing this work. We tried our best to produce a work of value and I think it will be helpful for others wanting to know about or work on bank financial management.

IPO Offering Price Determination in BD: Examples

Three Companies i.e. Dragon Sweater and Spinning Limited, Bangladesh National Insurance Company Limited, and Doreen Power Generations and Systems Limited, are joining DSE and CSE in the coming periods. Dragon Sweater and Bangladesh National Insurance are coming at the face value of Tk. 10 while Doreen Power is coming with Tk. 19 premium at Tk. 29. 

Performance Analysis: Ratio Analysis

For performance analysis a widely used tool is ratio analysis. It’s an age old method which represents relationship between two variables. For business organization, financial ratio represents significant relationship among different financial statement components and shows how one component is related to another. Thus, ratio helps to identify the liquidity, profitability, and operational efficiency of a firm. It also facilitates the comprehension of the financial statements and the comparative analysis among firms in the same industry.