Thisis Paper of Commercial Bank Bangladesh

DETERMINANTS OF PROFITABILITY OF PRIVATE COMMERCIAL BANKS IN BANGLADESH: AN EMPIRICAL STUDY Presented by

Bhaskar Podder ST 112289

Examination Committee

Dr. Sundar Venkatesh (Chairperson) Dr. Winai Wongsurawat (Co-chair) Dr. Yousre Badir (Member) PMBF, 2011-12 ASIAN INSTITUTE OF TECHNOLOGY

Agenda

Introduction & Research Objectives

Overview of Banking Sector in Bangladesh

Literature Review and a proposed model & hypotheses Sample & Data Results Conclusions and areas for further research

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Objectives of the project paper

Provide an overview of banking sector in Bangladesh with a focus on the growth of PCBs.

Compare performance of PCBs and other categories of banks such as SCBs, DFIs and FCBs.

Analyze the determinants of PCBs’ profitability.

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Overview Banking Sector in Bangladesh

Banking structure in Bangladesh

Bank Types Number of Number of Banks Branches % of Branches Total Assets (Crore Tk.) 135,929.28 29,091.57 287,416.75 31,942.40 484,380.00 % of Industry Assets Deposits (Crore Tk.) % of Deposits

SCBs DFIs PCBs FCBs Total

4 4 30 9 47

3,447 1,382 2,828 72 7,729

44.60% 17.88% 36.59% 0.93% 100%

28.06% 6.01% 59.34% 6.59% 100%

101,357.14 18,408.22 222,182.25 22,677.42 364,625.03

27.80% 5.05% 60.93% 6.22% 100%

PCBs occupy more than half of total industry assets and total industry deposits

Source: Bangladesh Bank 4

Overview

Growth of selected variables of PCBs & other categories of banks

(Figures in crore, CAGR during 2001-10) Category of Banks Private Commercial Banks State owned Commercial Banks Development Financial Institutes Foreign Commercial Banks

Source: Bangladesh Bank

CAGR, Mean CAGR, Mean CAGR, Mean CAGR, Mean CAGR, Mean & Std Dev of & Std Dev of & Std Dev of & Std Dev of & Std Dev of Deposit Advance Asset Equity Net Income 22.28% 101,091.1 (65,396.7) 8.24% 68,316.4 (18,018.8) 14.07% 10,263.7 (4,352.6) 13.43% 13,780.0 (6,207.7) 22.59% 88,122.6 (59,529.4) 8.43% 47,207.7 (12,479.3) 6.54%...