View with images and chartsCredit Risk Management: One Bank Ltd

History/Background

ONE Bank Ltd. is sponsored by a group of renowned and dynamic Bangladeshi industrialists, business persons and highly qualified professionals like medical practitioners, scientists and chartered accountants.

ONE Bank Limited was incorporated in May, 1999 With the Registrar of Joint Stock Companies under the Companies Act.1994, as a commercial bank in the private sector.

The Bank is pledge-bound to serve the customers and the community with utmost dedication. The prime focus is on efficiency, transparency, precision and motivation with the spirit and conviction to excel as ONE Bank Ltd. in both value and image.

The name 'ONE Bank' is derived from the insight and long nourished feelings of the promoters to reach out to the people of all walks of life and progress together towards prosperity in a spirit of oneness.

Company Profile

Third generation private commercial bank

OBL is a private sector commercial bank dedicated in the business line of taking deposits from public through its various saving schemes and lending the fund in various sectors at a higher margin. However, due attention is given in respect of risk undertaking, risk hedging and if not appropriately hedged, reflection of the same in pricing. In the financing side, the bank's major concentration is in trade finance covering about 20.88% of total financing as on 2009 which is mainly a short-term investment. The banks financing concentrate in both, working capital finance and long-term finance. OBL has major concentration of financing in medium and large industries. Since the short-term finance carries low risk compared to long-term finance; the financing strategy of OBL will assist the bank to keep the risk at minimal.

While financing the industrial sector, the major concentration of the bank appeared to be in the textile and RMG sector; both the above sectors cover 30.89% of the total portfolio. OBL also involved in cement construction and transport sector financing. In the investment portfolio, OBL have substantial investment in quoted and non-quoted shares of different organization including some very prospective financial institutions. The bank has shown its acumen in reducing its exposure from ship scrapping sector, steel re-rolling where the bank had investment earlier. With the increase in exposure to RMG, the bank has increased its non-funded business income substantially. With an age of only 8 years, the OBL has taken initiative to launch IT based banking products like ATM facilities, E-banking etc that are praiseworthy.

Corporate Vision & Mission

Vision: To establish ONE Bank Ltd. as a role model in the Banking sector of Bangladesh.

To meet the needs of the customers, provide fulfillment for the people and create shareholders value.

Mission: To constantly seek to better serve the customers Be pro-active in fulfilling social responsibilities To review all business lines regularly and develop the best practices in the industry Working environment to be supportive of teamwork, enabling the employees to

perform to the very best of their abilities

Slogan:

..... WE MAKE THINGS HAPPEN

Core Value:

The Bank will be a confluence of following three interests: Of the Bank: Profit maximization and optimum growth Of the Customers: Maximum benefits and satisfaction Of the Society: Maximization of welfare

The Bank will also cater to the new expectations of the customers. It will be a customer-driven Bank.

Functions:

Deposit mobilization ( Saving / Current / STD / FDR /Special Deposit Scheme Accounts)

Lending Guarantees Trade Finance ( Import / Export LCs) Remittances ( Local / Foreign) Investment advices Retail Banking ( SME / CCS) Counter for Utility Bills Locker facility for safe keeping of valuables and documents State of the technology facilities: ATM Services Credit Cards Mobile Banking ( SMS Banking) Online Banking ( Any Branch Banking)

Future Plans:

Introduction of Islamic Banking Louder corporate social welfare activities Introduction of Merchant Banking Strengthened global networking (Branch expansion/Increase of correspondent

networking)

Organization Chart of ONE Bank Limited (OBL)

Figure – Organization Chart of ONE Bank Limited (OBL)

Hierarchy of Mangement in OBL

Figure – Designation Structure of OBL

Each of the branches of ONE Bank Limited work independently towards a common goal set by the management of the bank. Each of these branches is arranged according to the customer base of the branch and their banking needs.

Resources & FacilitiesTotal full time regular employee strength had increased to 300 by the year-end. Excepting for the new inductees, the remaining employees are all skilled banking professionals with varying degrees of experience and exposure, recruited from the leading local and foreign banks.

Managing Director

Deputy Managing Director

Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President

Senior Assistant Vice President

First Assistant Vice President

Assistant Vice President

Senior Principal Officer

Principal Officer

Senior Officer

Officer

Probationary Officer

Junior Officer

Assistant Officer

Trainee Assistant Officer

Chairman

Entry Level through competitive Exam

Entry Level

TOPLEVEL

MIDLEVEL

LOWERLEVEL

The Bank has a strong focus on imparting training towards enhancement of the skills and competencies of the employees. During the year a total of forty-seven training for the employees were organized, both at home and abroad.

Management of the Bank, on a continuous basis, undertakes in-house training initiatives towards raising awareness among the Bank employees with respect to Bank's policies and instructions and directives of the various regulators so as to ensure that the employees are well informed and empowered towards providing customer services within the framework of laid-down regulatory requirements. The Bank offers a competitive compensation package towards successfully attracting, retaining and motivating its work force.

Products & Services

Service of the Professional PersonalThe Officers of ONE Bank Limited have, to their credit, decades of banking experience with National/ international banks at home and abroad. They are suitably equipped to meet customer expectations and are available at all times to provide a single-window customized and confidential service.

A State-Of-The-Art Technology BankingThe Bank will provide a state-of-the-art technology banking such as Any Branch Banking, ATM Services, Home-Banking, Tele-Banking, Mobile-Banking etc.

Retail BankingBank limited offers individuals the best services, including the following, to provide complete customer satisfaction:

Deposit services. Current Account in both Taka and major foreign currencies. Convertible Taka Accounts. Local and foreign currency remittances. Various types of financing to cater to the banking requirements of multinational

clients.

Institutional BankingONE Bank Limited will offer various services to foreign missions, NGOs and voluntary organizations, consultants, airlines, shipping lines, contractors, schools, colleges and universities. The services include mainly the following:

Deposit services. Current Account in both Taka and major foreign currencies. Convertible Taka Accounts. Local and foreign currency remittances. Various types of financing to cater to the banking requirements of multinational

clients.

Corporate BankingONE Bank Limited caters to the needs of the corporate clients and provides a comprehensive range of financial services, which include:

Corporate Deposit Accounts.

Project & Infrastructure Finance, Investment Business Counseling, Working Capital and other finances.

Bonds and Guarantees.

Commercial BankingBeing a commercial bank, ONE Bank Limited provides comprehensive banking services to all types of commercial concerns. Some of the services are:

Trade Finance. Commodity Finance. Issuance of Import L/Cs. Advising and confirming Export L/Cs. - Bonds and Guarantees. Investment advice.

ONE Bank Limited will provide specialized services to Ministries, Autonomous and Semi-autonomous bodies.

On-Line BankingONE Bank Limited offers 'Any Branch' banking service that facilitates its customers to deposit, withdraw and transfer funds through the counters of any of its branches within the country.

Merchant Banking Advisory ServicesThe Bank will provide Merchant Bank advisory services, offer complete packages in areas of promotion of new companies, evaluation of projects, mergers, take-over and acquisitions, liaise with the Government with regard to rules and regulations, management of new issues including underwriting support etc.

Capital Market OperationThe Bank will also introduce capital market operation which will include Portfolio Management, Investors Account, Underwriting, Mutual Fund Management, and Trust Fund Management etc.

Islamic Banking ServicesONE Bank Limited will open Islamic Banking Branches to serve the customers who are interested in banking based on Islamic Shariah.

Farm and Off-Farm Credits (Rural)Out of Bank's social commitment towards the population at the grass-root level, it will participate in farm and off-farm credit programmers in rural Bangladesh to bring in economic buoyancy in the periphery.

Seed Money for Self-EmploymentThe educated young people with an aptitude for organizing enterprises will be provided with the seed money primarily for self-employment and subsequently will be given advisory services as well as required fund for expansion into a fast growing productive and employment generating venture.

Credit To Women EntrepreneursThe Bank believes in 'Equal Opportunity Policy' and as such has a plan to introduce credit programmers for willing and talented women entrepreneurs.

Consumer Credit FacilityThe Bank offers a Consumer Credit Scheme, facilitating financial ease in acquiring various day to day consumer products such as usable appliances and other items.

Counter For Payment of BillsDedicated counters are available at ONE Bank Limited's branches to receive the payment of various utility (DESA, Mobile Phones) bills.

Other ServicesRemit funds from one place to another through DD, TT and MT etc. Conduct all kinds of foreign exchange business including issuance of L/C, Traveler’s Cheque etc Collect Cheques, Bills, Dividends, Interest on Securities and issue Pay Orders, etc. Act as referee for customers. Locker facility for safe keeping of valuables and documents.

Short Look at OBL:o Incorporated in : 1999o No of Employees : 1060o No of Branches : 39 noso Total Loans : BDT 3,239.57 crore [as on 31.12.2009]o Total Deposits : BDT 3,950.91 crore [as on 31.12.2009]

Five Years Financial Highlights

Financial Highlights   Taka in MillionPrime Indicators 2005 2006 2007 2008 2009Authorized Capital 1,200 1,200 1,200 4,150 4,150Paid up Capital 807 888 1,039 1,299 1,558Statutory Reserve 262 381 527 688 914Total Capital 1,307 1,650 2,107 2,658 3,573Total Deposit 18,030 20,253 24,484 27,861 39,365Total Loan & Advances 13,851 15,681 19,709 23,287 32,533Investment 2,165 3,321 3,587 3,715 6,789Import Business handled 17,435 21,601 25,133 27,844 34,442Export Business handled 11,916 16,360 19,413 25,214 25,561Guarantee Business handled 1,367 947 949 1,454 5,075Total income 2,007 2,886 3,587 4,293 5,824Total expenditure 1,520 2,211 2,658 3,186 4,145Net interest income 315 398 638 676 1,035Operating Profit 626 674 929 1,108 1,679Operating expenses 310 452 598 708 950Profit after tax & provisions 302.83 347.22 405.50 422.88 72962Total assets 20,105 23,143 27,475 31,744 45,163Number of correspondence 268 270 280 285 300Number of employees 386 580 781 859 1,039Number of Branches 18 23 30 32 39

Loan Deposit ratio 76.82% 77.43% 80.50% 83.58% 82.64%Capital adequacy Ratio 9.47% 10.03% 10.25% 11.02% 10.90%Tier-1 Capital 8.44% 8.69% 8.91% 9.33% 9.08%Return on Assets 2.87% 3.12% 3.67% 3.47% 4.37%Earnings per share 37.46 39.06 31.18 27.08 46.63Cash dividend 15% 10%      Bonus dividend 10% 17% 25% 20% 32%Net Asset Value 159.34 171.03 176.39 178.24 196.89

Bank is an institution that deals in money and its substitutes and provides other financial services. Banks accept deposits and make loans and derive a profit from the difference in the interest rates paid and charged, respectively. Banks are critical to our economy. The primary function of banks is to put their account holders' money to use by lending it out to others who can then use it to buy homes, businesses. When you deposit your money in the bank, your money goes into a big pool of money along with everyone else's, and your account is credited with the amount of your deposit. When you write checks or make withdrawals, that amount is deducted from your account balance. Interest you earn on your balance is also added to your account.

Credit & Credit RiskThe word credit comes from the Latin word “Credo” meaning “I believe”. It is a lender’s trust in a person’s/ firm’s/ or company’s ability or potential ability and intention to repay. In other words, credit is the ability to command goods or services of another in return for promise to pay such goods or services at some specified time in the future. For a Bank, it is the main source of profit and on the other hand, the wrong use of credit would bring disaster not only for the bank but also for the economy as a whole.

Figure Classification of Credit Risk

Risk ManagementRisk Management system and its application in practice is an important part of the bank management. In order to implement the system -based banking through appropriate risk management system, the Bangladesh Bank has circulated Five Core Risks Management Best Practice Guidelines- Internal Control & Compliances, Credit Risk Management, Foreign Exchange Risk Management, Asset Liability Management and Prevention of Money Laundering. Under only the credit risk management system as practiced in OBL is outlined below:

Credit Risk ManagementCredit Risk management is one of the main functions of Bank/FI management. The Credit Risk Management System of OBL is still at its primary stage. Although the bank has adopted the best practice guideline suggested by Bangladesh Bank, it is yet to be made operational to a great extent. If any loan exceeds the discretionary power of any base line authority, it goes to the Executive Committee/Board. The product pricings are still not based on risk mapping. OBL is still to develop and implement sophisticated system based risk management system which is essential to cope with changing environment.

Credit Risk management is crucial for commercial banks, be it in developed or developing countries. Mere accumulation of deposits gives rise to entries both in liabilities and assets sides of the balance sheets. So, portfolio management involves in both liability and assets of commercial banks. If deposits of a bank grow at a steady rate and if loan demands can be met from deposit growth, the bank will have no problem of liquidity. In real life, deposits do not grow steadily all the time, nor does loan demand grow in keeping with growth in deposits. Fund management, which is the central point of portfolio management, thus involves estimating deposit liquidity needs and loan liquidity needs in most efficient manner possible.

The objective of the credit risk management is to maximize the performing asset and the minimization of the non-performing asset as well as ensuring the optimal point of loan and advance and their efficient management. Credit risk management is a dynamic field where a certain standard of long-range planning is needed to allocate the fund in diverse field and to minimize the risk and maximizing the return on the invested fund. Continuous supervision, monitoring and follow-up are highly required for ensuring the timely repayment and minimizing the default. Actually the credit portfolio is not only constituted the banks asset structure but also a vital factor of the bank’s success. The overall success in credit risk management depends on the banks credit policy, portfolio of credit, monitoring, supervision and follow-up of the loan and advance. Therefore, while analyzing the credit risk management of OBL, it is required to analyze its credit principals, credit policy, credit procedure and quality of credit portfolio.

Credit Risk Management is a very modern & important concept now-a-days for the Bankers of modern age. As for the mainstream work in process of the Bank, every one keeps a personal credit policy for management of the credit portfolio and future marketing aspects. The credit policy of any Bank is very confidential and full of strategic tools for Relationship Managers of the Bank. This is written and compiled by the Head of CRM (Credit Risk Management) and other top credit analyst of the Bank. This is the procedural guideline of the Bank officials to marketing, disbursement, manage & monitor credit portfolio of the Bank.

Credit Department of One Bank Limited

At first I have been placed in the Credit Department at ONE Bank Ltd. KawranBazar Branch. Credit department performs the critical functions of a bank. One of the primary functions of commercial banks is the sanctioning of credit to borrowers. Bank credit is a catalyst for bringing about economic development. Without adequate finance there can be no growth or maintenance of a stable output. Bank lending is important to the economy, for it makes possible the financing of agriculture, commercial, and industrial activities of a nation. At the same time, a bank will, therefore, distribute its funds among various assets in a manner as to derive sufficient income.

Types of Loans and Advances Offered By OBL

OBL offers following types of loans and advances,-Secured Overdraft (SOD)Loan (General)House Building Loan (Staff)Demand LoanTransport LoanIndustrial CreditHouse Building Loan (General)Transport Loan (Staff)Cash Credit (Hypothecation) Past Due BillsLoan against Trust Receipt (LTR).

Credit Principles of OBL In our quest for maximizing the stakeholders’ value by establishing OBL as fundamentally sound financial institution, we will abide by the following ten credit principles which should always guide our behavior in our lending decisions:

1. Assess the customer’s character for integrity and willingness to repay2. Only lend what the customer will have the capacity and ability to repay3. Plan for the possibility of default 4. Only extent credit where we can sufficiently understand and manage the risk5. Ensure independent credit participation in the credit process6. Behave ethically in all credit activities7. Be proactive in identifying, managing and communicating credit risk8. Be diligent in ensuring that credit exposures and activities comply with OBL

requirements9. Optimize risk and reward10. Build and maintain a diversified credit portfolio

Credit in general sense means an act of allowing person / person immediate use of money with payment deferred until an agreed future date. Bank is highly levered firm. It collects money from different types of deposit and utilizes this money for different purpose. Loans and advance is one of the most important and fruitful area to utilize money.

A sound credit is one where timely repayment is assured. So, before giving financial accommodation, a banker should consider the source from which repayment is promised. In

some instances, debentures, which are to be redeemed in few months time or a life policy, which is to mature in near future, may be offered as security. An advanced against such security gives to trouble.

The central function of all banks is to collect deposits from surplus economic unit, and to lend those on deficit spenders. Both the surplus unit and spenders belong to real sector of the economy. Bank credit is catalyst for bringing about economic growth or development & without adequate finance there can be no growth or maintenance of actable output. So bank lending is important to the economy, for it makes possible financing of agriculture, commercial and industrial activities of a nation. At the same time a bank will, therefore, distribute its funds among different assets in a manner as to derive sufficient income.

Mission Statement

To deliver credit facilities to customers of ONE Bank Ltd. with prudence and efficiency and establish OBL as the preferred credit service provider in the country in terms of wide range of credit products, competitive price, adherence to credit norms, exercising due diligence and effective management of risk assets.

Procedure for Giving Advance

The prospective borrower has to apply to OBL for loan by filling up of a specific Application form. After receiving the loan application form, OBL sends a letter to Bangladesh Bank for obtaining a report from there. This report is called CIB (Credit Information Bureau) report. This report is essential if the loan amount exceeds Tk.50 Lac. But OBL usually collects this report if the loan amount exceeds Tk.10 Lac. The purpose of this report is to being informed that whether the borrower has taken loan from any other bank; if 'yes', then whether these loans are classified or not.

After receiving CIB report if the Bank thinks that the prospective borrower will be a good borrower, then the bank will scrutinize the documents. In this stage, the Bank will look whether the documents are properly filled up and signed then comes processing stage. In this stage, the Bank will prepare a Proposal.

A proposal contains following relevant information- a) Name of the Borrower b) Nature of Limit c) Purpose of Limit d) Extent of Limit e) Security f) Margin g) Rate of Interest h) Repayment

Credit Monitoring, Follow-Up and Supervision

OBL Officer Check on the following points,The borrower’s behavior of turnover The information regarding the profitability, liquidity, cash flow situation and trend in sales in maintaining various ratios.

The review and classification of credit facilities starts at Credit Department of the Branch with the Branch Manager and finally with Head office credit division.

Credit Policy of OBL

PreambleONE Bank Limited with prudence and efficiency and establish OBL as the preferred credit service provider in the country in terms of wide range of credit products, competitive price, adherence to credit norms, exercising due diligence, and effective management of risk assets.Thus, based on this credit principles, OBL undertakes to establish a credit risk management culture through outlining and practicing minimum credit standards, assessing and managing risks, segregating risk taking and risk managing activities, etc. to ensure that all the business pursuits are focused on building and maintaining a diversified and rewarding quality credit portfolio which will reflect OBL’s

Risk taking appetite and Risk managing skills and wisdom.

In light of the above, Credit Policy Guidelines are laid down to tap business opportunities within the parameters of Credit Risk Management constraints. These guidelines focus on corporate and commercial segment of OBL’s credit portfolio. A separate guideline for Retail Portfolio (Consumer and SME) is in place.

Annual Review of Policy GuidelinesPolicy guidelines are not static; they are reshaped with the changes of the economic and business environment. As such, there will be continuous updates, but focus will remain the same – maintaining a rewarding quality credit portfolio through anticipating and managing risks. However, formally Credit Policy will be reviewed once a year by the Board of Directors.

General Policy Guidelines OBL extends loans to individuals, proprietorships, partnerships, limited companies – both private and public, government organizations, financial institutions, joint ventures and such other organizations having legal existence and necessary permissions for conducting business in Bangladesh.OBL extends loans only to productive and legitimate business activities, which are socially desirable, nationally important, and financially viable; and will not lend for unproductive purposes, speculative ventures, or socially undesirable schemes. While extending loans, OBL will abide by its Know Your Customer (KYC) policy, money-laundering regulations and will conduct its credit activities within the prescribed regulatory parameters of Bangladesh Bank & Bank Company Act. All statutory guidelines outlined in BOI guidelines, Industrial Policy, Export Policy, Import Policy, Transfer of Property Act, Registration Act, etc. are to be strictly abided by.The intending borrower must have legitimate source of earnings, clear purpose of utilizing loans, specific sources of repayment, capacity to enter into loan agreements.OBL discourages low net-worth, or highly leveraged borrowersOBL does not engage in Name Lending or lending solely on the basis of market reputation of the borrower. All relevant information as required by OBL is to be furnished to support the credit proposal. However, exception may be allowed in specific cases where the borrower is not willing to divulge financial or proprietary information on the

plea that dissemination might hurt business prospects. Such cases are to be handled at the discretion of the management and on exception basis.OBL primarily extends loan in Taka. OBL does not allow any credit facility against owner’s cheque or pledge of goods.OBL’s unsecured lending practices are to be limited to extension of credit for short term, self-liquidating transactions.Overdraft or other continuous loans should have the provision of annual clean up unless there are evidences that such accounts have 3 / 4 times turnover.OBL may consider term loans for five years or more. OBL does not accept subordinate position to other lenders.Credit Portfolio must be in line with Bangladesh Bank guidelines of Capital Adequacy.OBL will primarily depend on its own deposits for lending and inter-bank borrowing will not exceed 20% of its loan portfolio.The tenor of Loans and Deposits should be matched as much as possible.OBL extends credit facilities in the areas where it has branch network and branches are sufficiently staffed to monitor the loans.OBL does not extend credit facilities where it does not have the industry / business knowledge or highly specialized skills needed to properly evaluate the loan proposals.Exceptions to the credit policy guidelines are to be referred to the Board of Directors.

Credit Portfolio Mix

Credit Portfolio to be guided by the following Sectoral Caps Table 4.1: Credit Portfolio Mix

Sector Caps * %

Trade Finance 40 %Industry -- Short term working capitals 30 %Retail & SME 10 %Project - Finance Medium & Long Term 10 %Others 10 %Total 100 %

Figure : Credit Portfolio Mix

*The Caps will be revised from time to time depending on the market conditions, shift in Government Policy and ONE Bank’s credit focus.

Trade Finance is prime focusBeing a new bank, trade finance is primary focus in the present context as: Relationship consists of specific transactions (deal basis), Fund based income is supplemented by FX gains, commission and fees, Transactions are short-term and self-liquidating in nature.

Retail and SME is the future focus, as it is a very promising sector because of: growth of micro, small and medium enterprises, burgeoning middle class with rising disposable incomes, installment loans allow for cash repayment on monthly basis matching the salary

cycle of borrowers commensurate with monthly disposable income, risk is minimized spreading among large number of borrowers, Higher interest rate.

Corporate / project financing is preferred

To take advantage of stream of multiple earnings over the years. But this is subject to meticulous appraisal of market, technical, financial and management aspects of the project over a period of 5 - 7 years in order to assess inherent risk because of long tenure.

Agro based industries / business is encouragedAs a thrust sector declared by the GOB to contribute to national goal of poverty alleviation through employment generation.

Loan Products and Services of OBL

The range of products and services of OBL includes Trade finance (i.e., export, import and domestic trading), Project Finance, Retail Finance, Correspondent Banking, Treasury etc. Each of these areas may involve credit risk to a client or to a third party, providing both revenue as well as risks.

However, ONE Bank offers the following loan products:

Table 4.2: Showing different types of Advances offered by OBL

Name: Description Purpose Risk/Payment Tenor/ ValiditySOD Secured Overdraft -General Purpose. -100% cash

covered.-No Credit Risk.-Evergreen.

-12 Months

OD Overdraft General Purpose. -High Credit Risk.-Recourse on Sales.-Ever Green.

-12 Months.

Time loan

Time Loan Against other security/collateral.

To Finance Inventory & accounts receivables on short

Recourse on Sales.

12 Months.

time. Term Loan

Term Loan against Fixed Assets.

-To finance fixed Assets/

-Recourse on fixed asset.-High credit risk.

-Over 12 Months-Max 7 years

PC Packing Credit Against Export Order.

- To finance export LC pre – shipment Finance

-Performance Risk-Lien on Export LC.

180 Days.

Fwd FX Forward contract. Cover exchange risk against LC

Performance Risk. 180/360 Days.

PAD Payment Against Document.

-Advance Against Sight LC.-Forced Loan

Recourse on title to import documents.

21 Days as per Bangladesh Bank rules.

LATR Loan Against Trust Receipt.

-To finance import LCs.

-Recourse on Sales.-Clean finance.

180 Days

CC Cash Credit against Inventory and Book debts.

-To finance inventory.-Other businesses operation.-General Purpose.

-Recourse on Sales.-Evergreen.

12 Months.

OAP Own Acceptance Purchase.

-To refinance OBL acceptance.-Forced loan.

-No recourse.-Clean finance-Evergreen.

12 Months.

LDBP Local Documentary Bill Purchase.

-To purchase against Usance LC.-Upfront interest to realize.

-Recourse on Banks through acceptance.-Residual on client.

180 Days.

FDBP Foreign Documentary Bill Purchased.

-To purchase / discount/ negotiate export document against sight export LC.- Upfront interest to be realized (diff in FX rate)

-Recourse on Banks.-Residual on client.

45/180 Days

SLC Sign Letter of Credit. For imports Recourse on titles to import documents.

12 Months.

ULC Usance Letter of Credit.

For imports. Recourse on sales. 12 Months.

BBLC Back to Back Letter of Credit against Master Export LC and subsequent Acceptance.

For imports of raw materials and accessories for subsequent.

From export proceeds.

-BBLC Max 180 Days.-Accept Max 180 Days.

LG -Letter of Guarantee. For contractual -Performance Risk -Specific Period

BB/PG/APG/Retention Bond/ Payment Guarantee.

obligations. -Evergreen. -Open ended to be discouraged

Loan PricingLoan pricing decision is taken by the ALCO, where among others HOM, HOC and Head of Treasury are members. The basis of pricing are:

Cost of FundsRisk exposure of obligor and industryRisk appetite of OBL in the industry / business segmentMaturity of loans

However, OBL will offer competitive price to remain as preferred banker to existing and potential clients. Their pricing schedule will be published in ranges with Mid Rates for different sectors. ALCO will decide in the Mid Rates considering the above factors. Lower ranges of price will be considered for prime clients on the basis of their low risk grades. Similarly higher range of prices will be considered for riskier clients because of their higher score in the risk grade.

Credit Risk Analysis (CRA)

Credit Risk is the possibility that a borrower or counter party will fail to meet obligations. Credit Risk arises from the bank’s dealing with or lending to the corporate, individual and other banks or the financial institutions. To minimize credit risk ONE Bank Limited has comprehensive Credit Risk Management (CRM) policies and procedures. They are –

Risk IdentificationRisk factors internal to bank and financial institutions.Risk factors on account of borrowing parties.

Internal Risk Factors External Risk FactorsRisk in planningRisk in execution Marketing riskFinancial risk Managerial risk

Input utility availabilityGovernment policies Natural calamities Technological obsolescencePolitical situation

Risk AssessmentIn this case, ONE Bank Limited measures the risk before the loan disbursement. It is a pre- sanction stage. Here the management tries to assess the risk which may be raised from the policy. Then the risk obligations are included in the agreement between the bank and party.

Credit Risk Grading (CRG)It is an important tool of CRM to understand dimensions of the risk in credit transactions. ONE Bank Limited aggregates grading across the borrowers’ activities and lines of business reflecting the quality of credit portfolio of a branch, region or a bank. It is a pre sanction of lending decision and price setting and post sanction of review of grading and precautions.

Table: 4.3 Short Name and Number which is used by ONE Bank Limited is-

Grading Short Name NumberSuperior SUP 01Good GD 02Acceptable ACCPT 03Marginal MG 04Special Mention SM 05Sub Standard SS 06Doubtful DF 07Bad &Loss BL 08

Source: ONE Bank Limited

Credit Risk Rating ModelONE Bank Limited follows the following steps in the credit risk rating model –

Include all relevant aspects Rating scale: Beginning from the minimum risk category to loss asset

category Rating parameters:

o Financialo Industrialo Management etc

Weight age of risk parameters Preview period of risk rating Authority to approve risk rating

Credit Rating Report

One Bank Limited has been rated by the Credit Rating Agency of Bangladesh (CRAB) Limited on the basis of Financial Statement for the year ended on 31st

December, 2009. The summery of the ratting is presented below:

Year 2008 [CRISL] Year 2009 [CRAB] DefinitionLong Term‘A’

Long Term‘A1’

Commercial Bank rated A1 in the Long Term means it has strong capacity to meet their financial commitments. A is judged to be of high quality and are subject to low credit risk.

Short Term‘ST-2’

Short Term‘ST-2’

Commercial Bank rated ST-2 in the Short Term is considered to have strong capacity for timely repayment and are characterized with commendable position in the term of liquidity, internal fund generation, and access to alternative sources of funds is outstanding.

Date of Rating June 7, 2010

This rating is one step higher than previous year’s rating reflecting the bank’s steady qualitative growth momentum.

Interest rate

3% above of the instrument rate but generally the minimum rate is 12% and the maximum rate is 18%.Applications Received & Declined

Table 4.4 reveals the loan application received by the bank for the year’s 2007 to2009. It is observed from the table that the major source of application was the sales force. The table given shows the member of loan application received for the last three years.

Table: Loan Applications Received Year No. of loan application % Change2007 3027 --2008 5700 88.30%2009 6128 7.51%

Source: ONE Bank LimitedThe reason behind the massive increase in the loan application from 2007 to 2009 is due to the flexible loan evaluation policy during that period and the aggressive marketing policy of the bank. It is observed from table 4.5 that the volume of loan application has received quite a lot in the last three years. In terms of volume the number of loan applications received are shown on table below,

Table: Loan Amount Received Form Applicant

Sources: ONE Bank Limited

The loan application received in terms of volume varies a little from the number of loan applications received. The loan applications received were much higher in 2008 than it was in 2007 and 2008 although it increased its growth rate was not as high.

The loan applications that have been received are not all approved. Some of these are approved while others are declined which can be observed from table 4.6. The following table states the approved loan applications.

Table: Approved Loan Application

Year Number Volume (BDT in ‘000) % Change (No)2007 1850 964,856 -2008 4077 2186,940 120.38%2009 4555 2490,875 11.17%

Sources: ONE Bank Limited

Year Volume of loan application % Change2007 1653,000 -2008 3175,920 92.14 %2009 3550,875 11.81 %

As discussed earlier not all the loan applications are approved. Some applications although are approved for different or lesser amount than the one applied for. The rest of the loan applications are declined as they fail to pass the loan evaluation criteria set by the bank which has already been discussed. The declined loan applications are those which are not approved by the Central Compliance Unit (CCU) as they fail to meet the loan evaluation criteria set by the bank. Table 4.4 in the next page states the figures for these declined loan application in terms of their number and volume,

Table: Declined Loan ApplicationYear Number Volume (BDT in ‘000) % Change (No.)2007 1177 688,144 -2008 1623 988,980 37.89%2009 1573 1060,000 - 3.08%

Source: ONE Bank Limited

We can see in the table that the performance of personal loan appraisal policy was good for the years. This has been possible due to the bank’s aggressive campaign in getting the loans and setting challenging yet attainable targets to the bank officials.

A thorough credit and risk assessment is to be conducted before granting of loans and once approved; all facilities are to be reviewed at least annually.

Origination of Credit Proposals

The result of such assessment is to be presented in a Credit Memorandum (CM) for approval. The CM is to be originated from Relationship Manager (RM), who should be the owner of the customer relationship and is responsible for ensuring the accuracy of the entire CM. RMs shall follow the OBL Credit Principles, Credit Guidelines and Conduct due diligence on new borrowers, principals and guarantors to ensure such parties are in fact who they are.

The RMs shall adhere to the OBL is established Know Your Customers (KYC), Money Laundering Guidelines and Bangladesh Bank regulation at all times.

Call Report

The Call Report is to be routed through Head of Credit (HOC) and Managing Director (MD), for initial review and guidance to the RMs for subsequent actions.

Disbursement

After verifying all the documents, the client disburses the loan to the borrower by issuing a cheque book. A loan repayment schedule is also prepared by the bank and supplied to the borrower.Follow – Up

Continuous supervision Working capital assessment Stock report Break even analysis Rescheduling of repayment.

RecoveryIn general, the loans are repaid in installment. This installment is according to bank directives. Some loans are repaid all at a time. If any loan is not repaid then notices are server to the customer. Sometimes legal action is also taken for recovery of the loan.

Assessment of Risk Area

The CM should also contain assessment of the following risk areas:

Borrower Analysis: The majority shareholder management team and group of affiliate companies shall be assessed. Any issue lack of management dept, succession, complicated ownership structure or inter- group transactions shall be addressed and related risk should be mitigated.

Industry Analysis: The risk factors of the borrowers industry shall be assessed. Any issues regarding the borrower’s position in the industry, overall industry concerns or competitive focus shall be addressed and the strengths and weaknesses of the borrower compared to its competitors shall be identified.

Supplier/Buyer Analysis: Any customer or supplier concentration shall be addressed, as these will have a significant impact on the future viability of the borrower.

Historical Financial Analysis: An analysis of a minimum of three years historical financial statements of the borrower shall be presented. Where reliance is placed on a corporate guarantor, guarantor’s financial statement shall also be analyzed. The analysis shall address the quality and sustainability of earnings, cash flow and the strength of the borrower’s balance sheet. Specifically, cash flows, leverage and profitability must be analyzed.

Projected Financial Performances: Where term facilities (tenor more than 1 year) are being proposed, borrower’s future/ projected financial performance should be provided, indicating an analysis of the sufficiency of cash flow to service debt repayment. Loans should not be granted if projected cash flow is insufficient to repay debts.

Account Conduct: For existing borrowers, the historical performance in meeting repayment obligations (trade payments, cheque payments, interest and principal payment etc.) should be assessed.

Mitigating Factors: Mitigating factors should be specified against risks identified in the credit assessment. Possible risks include but are not limited to the margin sustainability and/or volatility, high debt load (leverage/ gearing), over trading, overstocking or debtor issues; rapid growth, acquisition or expansion; management changes or succession issues; customer or supplier concentration and lack of transparency or industry issues.

Loan structure: The amount and tenors of financing proposed should be justified based on the projected repayment ability and loan purpose. Excessive tenor or amount compared to business needs load to increase in risk of fund diversion and adversely impact the borrowers repayment ability.

Security: A current valuation of collateral should be obtained and the quality and priority of security being proposed should be assessed. Loans should not be grated based solely on security. Adequacy and the extent of the insurance coverage should be assessed.

Name Lending: Credit proposals should not be unduly influenced by an over reliance on the sponsoring principals, reported independent means, or their perceived willingness to inject funds into various business enterprises in case of need. These situations should be discouraged and treated with great caution. Rather, credit proposals and granting of loans should be based on sound fundamentals, supported by thorough financial and risk analysis.

Adherence to Lending Guidelines: Credit Memorandum should clearly state whether or not the proposed loan is in compliance with the Bank’s lending guidelines. Exceptions are to be referred to the EC/ Board.

All directories sourced and syndicated loans are too assessed similarly.

At the time of review the consistency and accuracy of risk grades are to be examined carefully and to be mentioned in CM at Section D in the following format with comments on reasons for change of score / risk grades, if applicable.

Name of the Risk Highest Score

Score Obtained RemarksPrevious Present

Financial Risk 50Business/Industry Risk

18

Management Risk 12Security Risk 10Relationship Risk 10Total Score 100Risk Grade

Credit Management Process

Business procurement, Credit approval & loan disbursement process are separate. While RMs & Head of Marketing are responsible for business procurement, Head of Credit is responsible for approval & Head of Loan Admin will handle disbursement. All disbursements activation of limits is to be done on completion of documentation formalities which starts after receipt of acceptance of the sanction by client.

Continuous monitoring of the transactions within approved limits and recovering the Bank’s dues in time will be core function of post sanction part of CRM. Review of loans MIS is to done on regular basis to detect early alert signals for taking timely corrective actions and avoiding credit surprises.

Client all, factory visit, go down inspection, maintaining industry intelligence should be the part of ongoing proactive monitoring functions of RMs and heads of business units. NPL

management strategies should be set by the management for each loan and timely legal actions should be taken to recover bank’s dues and keep the credit portfolio healthy.

Documentation

Credit Administration Division is to ensure that all approval and documents are in placeSecurity documents are to be prepared in accordance with the approved terms and to be ensured that those are legally enforceableVetting of required documents by Bank’s approved lawyers and credit administration officers are to be done to ensure that bank’s security interests are perfectedExceptions are to be referred to legal counsel for advice after receiving authorization from HOC

DisbursementDisbursements under loan facilities are only made when all standard charge documents and security documentations are in place and preconditions for disbursements are metRM and Credit Administration officer to jointly prepare Documentation check listCredit Administration Division is to authorize disbursementEvidence of disbursement is to be documented in Disburse Authorization FromCredit Administration Divisions loads the approved facilities in the IT systemIncomplete documentation receives a temporary waiver from the approving authorityExcess Over Limit (EOL) are allowed under pre – fact approvalsAllowing one facility by earmarking unutilized credit lines of the client or the group will require pre – fact approvalA clean updated CIB report must be obtained before any disbursementAll formalities related to large loans and loans to Directors should be guided by Bangladesh Bank circulars and related section of Bank Company Act.Lending cap of the Bank should be maintained on single obligor basis.

Custodian DutyStorage of security documents shall be maintained in fire proof cabinets in strong room at Branch under joint custody of two authorized officialsAlternate officers are to be designated by Branch Manager in writingDocumentations are to be recorded in the Security Document Register and Safe – in & Safe – out RegisterAppropriate insurance coverage is to be maintained and renewed on timely basis. Authorization to debit client’s account to be taken to keep policy in order.

Compliance RequirementAll required Bangladesh Bank returns are submitted in the correct format as per scheduleBangladesh Bank circulars / regulations / guidelines / advises are communicated down the line immediately to ensure meticulous complianceAll third party service providers, viz., professional surveyors, lawyers, insurer etc., are approved and reviewed on annual basis.

Credit Files

Credit files are maintained at branch which should contain among others:Credit application of the borrowerMemorandum and Articles of Association of the client and authentic copies other legal paper evidencing existence and operation of the client viz. Trade license, TIN certificate, Audited Balance Sheet, etc.Call reports / Site Visits / Inspection reportsSurveyor’s valuation report / Branch valuation reportApproved CMSanction adviceAll other approvalsAll disbursement recordLoan MISAudit report and compliance reportAll chronological correspondences with the client and offices

Head Office Credit Division, Marketing Division and Credit Administration Division should maintain shadow credit files with chronological correspondences and documents. List of credit files are to be maintained at branches and Credit Division at Head Office and only authorized persons should handle the files.

Credit Monitoring

To minimize credit loss, a robust monitoring procedure and system to be in place that provides an early indication about the deteriorating financial health of a borrower. At a minimum, system shall be in place to produce and report the following status reports to MD, HOC, HOM, and Branch Managers and RMs:

Past due principals or interest payments, past due trade bills, EOLsBreach of covenantsLoan terms and conditions that are not complied with, financial statements that are nor received on a regular basisDocumentation deficienciesAny covenant breach or exception to be referred to HOC and RMs for timely follow up Expired Credit Lines / Expired CMs

Timely corrective actions are taken to address the above, and the findings of any internal, external, or regulatory audit.

Loan Review Committee (LRC)

OBL’s IT system produces over due positions on three periods viz, 30 days, 60 days and 90 days and above. It also produces expired limits, and EOLs. The loan MIS are duly distributed to branches, HOM, HOC, HOO, HOCA and MD. A designated Loan Admin Officer follows up the positions with the branches on daily basis. Besides, the Loan Review Committee (LRC) of the Bank formally follows up the overdue position, expired limits and EOL with the branches on monthly basis which is minted for taking actions at the earliest, before the account further deteriorates.

Early Alert Process

An Early Alert account is one that has risks or potential weaknesses of a material nature requiring monitoring, supervision, or close attention by management

If these weaknesses are left uncorrected, they may result in deterioration of repayment of the loan with the possibility of the asset being downgraded.

Early identification, prompt reporting, and proactive management of Early Alert Accounts are prime credit responsibilities of all RMs and must be undertaken one continuous basis. An Early Alert Report should be completed by the RM that is showing signs of deterioration within seven days from the identification of weakness. The Risk Grade should be updated as soon as possible and no delay should be made in referring problem accounts to CRM for assistance in recovery.

Despite a prudent credit approval process, loans may still become troubled. Therefore, it is essential that early identification and prompt reporting of deteriorating credit signs be done to ensure swift action to protect bank’s interest.

Moreover, regular contact with the customer will whence the likelihood of developing strategies mutually acceptable to both the customer and the bank.

An account may be upgraded as a regular account form Early Alert Account status when the symptom or symptoms causing the Early Alert status have been regularized or no longer exist. The concurrence of HOC is required for conversion of classification status.

NPL (Non Performing Loan) Management

All non – performing accounts (grade 6 or worse) should be transferred to the Recovery Unit. Within 7 days of an account being down grading to 6, a Request for Action (RFA) and a hand over / down grade check list shall be completed by the concerned RM and forwarded to Recovery Unit for acknowledgement.The account shall be assigned to an Account Manage / Workout Officer within the Recovery Unit, who will review all documentation, meet customer and prepare a Classified Loan Review Report (CLR) within 15 days of transfer. The CLR should be approved by HOC and copied to branch where the loan was originally sanctioned.The initial CLR shall highlight any documentation issues, loan structuring weaknesses, proposed workout strategy, and shall seek approval for any loan loss provision that are necessary.

NPL Provisioning and Write OffThe guidelines established by Bangladesh Bank for CIB reporting, provisioning, and write off of bad and doubtful debts, and suspension of interest should be followed in all cases.Regardless of length of time a loan is past due, provision should be raised against actual and expected loss at the time they are estimated.The approval to make provision, write offs release of provisions/ upgrade of an account shall be restricted based on recommendation of HOC.On quarterly basis, a Classified Loan Review Report (CLR) should be prepared by the Recovery Unit Manager to update the status of the action / recovery plan, review & assess adequacy of provision, & modify bank’s strategy as appropriate.

Loan MIS Reporting

The following statements are to be placed the Senior Management and the Board for reviewing:

Table: 6.1 Loan MIS Reporting

SL Loan Statement Origination Frequency1 Activity Statement Branches Daily2 Daily Position Treasury Daily3 New Loan Approved Credit Division Monthly4 Loans renewed / enhanced Credit Division Monthly5 Loans declined Credit Division Monthly6 Past due position Loan Admin Monthly7 Loan portfolio status of the bank-branch and product

wiseCredit Division Quarterly

8 Loan Classification Status Credit Division Quarterly9 Status report on top 20 defaulters Credit Division Quarterly10 Loan Concentration (Borrower, group, sector, branch) Credit Division Quarterly11 Large Loans Credit Division Quarterly12 Syndicate Loans Credit Division Quarterly13 Directors’ Loan Credit Division Quarterly14 Credit Risk Grading Report (consolidated, Branch Wise,

Grade Wise Borrower List)Credit Division Annually

Growth Rate of Loan and Advance

Growth rate (GR) is the fractional rate at which the amount of loan & advance increases or decreases. Specifically, GR ordinarily refers to the change in loan & advance over a unit time period, often expressed as a percentage of the amount of loan & advance at the beginning of that period. This can be written as the formula:

Figure Growth rate of Loan & Advances

Figure According to the data and the above figure it obvious that FY2008 year was generated highest loan and advance but in FY2009 the wheel became slow down. So the growth rate of 2009 is not satisfied and it may also increase the market risk and as well as credit risk in the future.

Interest in Income

Figure Interest in Income (2009)

Figure This graph show proportion of income that are generated from loan and advance, Discount from bills, purchased & discounted, Lease Finance and interest income from banks & other institutions in Bangladesh.

The highest proportion of income in interest is coming from Loan and Advance in BDT million 3980.75 which is 94% of total income in interest, 3% interest from Lease Finance, 2% income from banks & financial institutions in Bangladesh and only 1% income come from discount from bills purchased & discounted.

Loan RatioThe loan ratio indicates the extent to which assets are devoted to loans as opposed to other assets such as cash, securities, and plant and equipment. It measures what is the percentage of loan and advance portion out of the total assets of the Bank. Although loan and advance usually is the biggest part of the assets of the balance sheet of any commercial banks. But if the loan and advance is large then the credit risk is also high because chances of not getting the money bank are higher in loan investment then the investment in securities. Because securities, plant, equipment can provide a certain return with very minimum risk. But default risk in loan investment is very high. So a bank, which has high amount of provision for loan losses, should not expand its loan portfolio without proper consideration of all the factor of loan sanctioning.

Loan ratio=

Loan Ratio

From the above table it can be observed that the percentage of total loan out of the total assets of One Bank is fluctuating and in FY 2009 the loan ratio is downward. In FY 2008 is generated more Loan assent around 73.36% of total asset.

Credit Deposit Ratio

It is the proportion of loan-assets created by banks from the deposits received. The higher the ratio, the higher the loan-assets created from deposits. Some experts contend that a high credit-deposit ratio could lead to a rise in interest rates.

Credit deposit ratio=

Figure 7.4 Credit Deposit Ratio

From the Figure, it is found that from year of 2005-2008 credit deposit ratio was increasing but in 2009 it has been decreasing slowly. This ratio also shows the decreasing rate of loan-asset created by deposit and also indicating the increasing of business risk of credit.

Default rate

This indicates the bad loan as a percentage of total loans and advances. It measures that how much bad loan a commercial bank is carrying. Bad loan is the loan, which has almost no chance of recovery. So bad loan should not be very high for any bank. If the amount of bad loan is very high the ratio of bad loan to total loan will be high. If it is higher than the peer group it means that the competitors have better quality of loan portfolio.

Figure 7.5.1 Default Rate

It is observed that more 90% is recovered and this is the trend of default rate of the OBL. From the above table it is observed that percentage of bad loan of One Bank ltd. is slightly decreasing.

Profit after tax

7.6.1 Profit after Tax

According the figures Profit after tax is increasing slowly in five years in One Bank Limited. In FY 2005 it was 302.83 and FY 2009 it is increased at 727.62 BDT million.

Statement of OBL Karwan bazar Branch 2009’

Name of Loan Total Disbursement

Total Recovery

Percentage

General Loan, LTR, Packing Credit. PAD, House Building Loan, SOD Against, Financial Obligation, Personal Loan, Staff, loan Letter of Credit, Doctor’s Credit Scheme

16840 15589 93%

Lease Finance, Cash Credit Hypothecation 462 409 89%

SOD Work Order 384 347 90%

Car Loan 89 76 85%

Consumer Credit Scheme 3962 3463 87%

Small Loan 432 421 97%

A banker cannot sleep well with bad debts in his portfolio. The failure of commercial banks occurs mainly due to bad loans, which occurs due to inefficient management of the loans and advances portfolio. Therefore any banks must be extremely cautious about its lending portfolio and credit policy. So far ONE Bank Limited has been able to manage its credit

portfolio skillfully and kept the classified loan at a very lower rate - thanks go to the standard and stringent credit appraisal policy and practices of the bank. It is observed that OBL -

In practice, Credit Principles and Policies are being implemented which resulted the better credit management.

Delegation of Power is almost concentrated on Executive Committee which makes approval process slower.

Responsibilities of the Officials sometimes not clearly specified. No separate Recovery Unit formed yet. Lack of proper MIS due to IT system. From the figure 7.1.1 it is seen that the growth rate of 2009 is not satisfied and it may

also increase the market risk and as well as credit risk in the future. From the figure 7.3.1 it can be observed that the percentage of total loan out of the

total assets of One Bank is fluctuating and in FY 2009 the loan ratio is downward. From the Figure 7.4.1, it is found that from year of 2005-2008 credit deposit ratio was

increasing but in 2009 it has been decreasing slowly. This ratio also shows the decreasing rate of loan-asset created by deposit and also indicating the increasing of business risk of credit.

It is observed that more 90% is recovered and this is the trend of default rate of the OBL. From the above table it is observed that percentage of bad loan of One Bank ltd. is slightly decreasing.

According the figures Profit after tax is increasing slowly in five years in One Bank Limited.

Recommendation

Though OBL, Principal branch is making a huge amount of profit and generating a large volume of deposit, a number of problems have been observed, they may consider the following suggestions:

Need to speed up processing of loan application but give more importance to monitoring and screening. The procedure of credit facility has to be reduced, to compete with other commercial banks.

Approval authority should be delegated to individual executives rather than Executive Committee/ Board to ensure accountability. This system will not only ensure accountability of individual executives but also expedite the approval process.

Expand their export business for more export financing to minimize the difference between export & import financing.

Information system should be more developed. Bank should increase the usage of Internet for local and international correspondence. Computer division needs to be up dated and extensive for the greater welfare of the branch.

There should be a Recovery Unit to manage directly accounts with sustained deterioration. To encourage Recovery Unit incentive program may also introduced.

Geographical distribution of Loans to be more even so that OBL can contribute more in the development of rural economy.

Conclusion

Since the banking service especially the private Banks are doing an outstanding business, so it is clear that the modern people are more concerned about securing their valuable assets and

get high-quality and timely services. For this reason lot of new commercial bank has been established in last few years and these banks have made this banking sector very competitive. So, now banks have to organize their operation and do their operations according to the need of the market. Banking sectors no more depends on a traditional method of banking. In this competitive world this sector has trenched its wings wide enough to cover any kind of financial services anywhere in this world. The major task for banks, to survive in this competitive environment is by managing its assets and liabilities in an efficient way.

The ONE Bank’s philosophy - "We Make Things Happen" has been precisely an essence of the legend of success in the Asian countries. The bank has proved to be successful by offering quality and timely services to its customers.

The employees of ONE Bank are very efficient; everyone knows their work very well and can perform efficiently to produce the best output. The bank has plans to open more branches to expand their network.

They are also playing a significant role in the import and export of Bangladesh. Especially ONE Bank has more import business than its rivals. If this bank can concentrate on import business, it will give the opportunity to circulate the profit more rapidly than other sources. Besides these ONE Bank should also increase the export business. If the Bank can reduce the difference between imports financing to export financing, bank can make more profit and gain achievement.

With the current performance of the Bank and with little improvement here and there will certainly make ONE Bank one of the best Private Bank in Bangladesh in the near future.

Bibliography

Annual Report of ONE Bank Limited for the year 2007 Annual Report of ONE Bank Limited for the year 2008 Annual Report of ONE Bank Limited for the year 2009 Credit Policy of ONE Bank Limited http://www.onebankbd.com http://www.bangladesh-bank.org www.google/bank/bangladesh.com Lecture materials of Bangladesh Institute of Bank Management (BIBM)