Financial Statements Analysis of an
Islami Bank in Bangladesh
A Study on First Security Islami
Bank Limited, Bangladesh

Internship Report
on
“Financial Statements Analysis of an Islami Bank in Bangladesh:
A Study on First Security Islami Bank Limited, Bangladesh”
Supervised By:
Mr. Iehit Sharma
Senior Lecturer
Department of Business Administration
Leading University, Sylhet
Submitted By:
Moez Al Azim Ansary
ID: 1101010183
Major in Accounting & Information Systems
BBA Program
27th Batch
Department of Business Administration
Leading University, Sylhet
Submitted To:
Department of Business Administration
For the partial fulfillment of the requirements for the
Degree of Bachelor of Business Administration (BBA)
Major in Accounting & Information Systems (AIS)
at
Leading University
Sylhet, Bangladesh
Date of Submission: February 28, 2015

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FSIBL/AMBI2O|5I25
Date 05.01 .2015
To whom it may Concern
This is to certify that Mr. Moez Al Azim Ansary S/o Abdul Hannan Ansary of 68 Payra
Jhamarpar, Dargah Moholla, Sylhet, an intern from Leading University, Sylhet has
completed his internship program at our Branch with adequate dedication sincerity &
responsibility. During the three months period Mr. Moez Al Azim Ansary rotated
himself to various working desk at the branch and has learned many primary level and
useful practical banking functions.
We wish him every success in life.
2-al{
Md. Sohrab Uddin Molla
Asstt Vice President & Manager
AMBARKHANABRANCH: MWenCornplex,Holding#&f0,641,WalrebsBSS,WestAmbarkhana,Sylhet-3100 www.fsiblbd.com

iv
Letter of Transmittal
February 28, 2015
Mr. Iehit Sharma
Senior Lecturer
Department of Business Administration
Leading University, Sylhet
Subject: Submission of Internship Report
Dear Sir,
With the passage of time, I am now standing on the verge of Bachelors of
Business Administration program, hence am finalized with my Internship Report
named “Financial Statements Analysis of an Islami Bank in Bangladesh: A
Study on First Security Islami Bank Limited, Bangladesh”. Vividly enough, my
research comprises adequate endeavors. But no doubt, my contribution will be
best evaluated on your sharp scale of acceptance and remarks.
Consequently, I am transmitting my Internship Report to your very concern.
Hopefully you will discover my well-researched, informative and innovative
approach as a hallmark of exploration. Rather, in case of any further clarification
or elaboration as to my research work, I would welcome the opportunity to
consult with you to explore how my findings could best meet your needs.
Thanking you.
Yours Sincerely,
___________________________
Moez Al Azim Ansary
ID No: 1101010183
Major: Accounting & Information Systems
BBA Program (27th Batch)
Department of Business Administration
Leading University, Sylhet

v
Letter of Acceptance
February 28, 2015
This is to certify that Internship Report titled “Financial Statements Analysis
of an Islami Bank in Bangladesh: A Study on First Security Islami Bank
Limited, Bangladesh” is submitted in partial fulfillment of the requirements for
the award of the degree in Bachelor of Business Administration from Leading
University, Sylhet is a record of the analysis carried out by Moez Al Azim Ansary,
ID No-1101010183 under my active supervision and guidance as the partial
fulfillment for the award of BBA degree.
I wish his success in the future.
Supervisor
___________________________________
Mr. Iehit Sharma
Senior Lecturer
Department of Business Administration
Leading University, Sylhet

vi
Declaration
I, Moez Al Azim Ansary, a student of BBA program at Leading University, Sylhet,
solemnly affirm and hereby declare that the Internship report titled “Financial
Statements Analysis of an Islami Bank in Bangladesh: A Study on First
Security Islami Bank Limited, Bangladesh” submitted in partial fulfillment of
the requirements for completion of the degree in Bachelor of Business
Administration at Leading University, Sylhet.
I also declare that this report is prepared after completing my three months
Internship period in First Security Islami Bank Limited, Amborkhana Branch,
Sylhet. This is my original work and not submitted for the award of any other
Degree, Diploma Fellowship or other similar title or prizes. It is prepared under
the extensive supervision and guidance of Mr. Iehit Sharma, Senior Lecturer,
Department of Business Administration, Leading University, Sylhet.
Declared by
___________________________
Moez Al Azim Ansary
ID No: 1101010183
Major: Accounting & Information Systems
BBA Program (27th Batch)
Department of Business Administration
Leading University, Sylhet

vii
Acknowledgement
First, I would like to express my gratitude to almighty ALLAH to give me the
strength to complete the study within the stipulated time.
I deeply thank to my honorable internship supervisor Mr. Iehit Sharma, Senior
Lecturer, Department of Business Administration, Leading University for
assigning me the project and for all his kind support to accomplish it. His
valuable suggestions and guidance helped me a lot to prepare the report in a
well-organized manner. I would like to thank our whole Department of Business
Administration specially Head of the Department Dr. Tofayel Ahmed, for
facilitating me to do internship and preparing this report.
I also wish to thank and give the due respect to my family and friends for their
cordial support and help they offered throughout the process of performing the
whole report.
Finally, my heartfelt gratitude goes to Mr. Md. Sohrab Uddin Molla (Branch
Manager and AVP), Mr. Md. Maksud Ibn Mustafa (SPO and Operation Manager),
Mr. Salahuddin Shamim (Probationary Officer), Mr. Md. Ishtiaque Uddin
(Probationary Officer), Mr. Anwar Hossain Misba (Senior Cash Officer), Mr. Ariful
Islam Nayeem (Assistant Officer), Mrs. Rabea Binte Shiraj (Principal Officer) and
all the co-workers of First Security Islami Bank Limited, Amborkhana Branch,
Sylhet for their keenness in giving me training and valuable information, which
was very helpful to complete my internship report.

viii
Executive Summary
Banks are the most important financial institutions in modern economy. They
are an integral part of modern economic activities. In a developing country like
Bangladesh, the Islamic banking system as a whole has a vital role play in the
process of economic development. First Security Islami Bank Limited (FSIBL) has
started its journey on 29th August 1999 with the said principles in mind and
conduct banking system according to Shariah based policy. This report mainly
deals with the financial statements analysis of an Islami bank in Bangladesh: a
study on First Security Islami Bank Limited. The horizontal analysis, vertical
analysis and ratio analysis are essential technique for financial statements
analysis. Different users such as investors, management, bankers and creditors
use the financial statements analysis of a company for their decision making
purpose. In this report, the financial statements of First Security Islami Bank
Limited have been studied for five years from 2009 to 2013 and also different
types of financial ratios of the bank are calculated. The clear concept on bank,
Islamic banking and different types of financial analysis are given in the report.
The liquidity, profitability, financial position and the financial trend of First
Security Islami Bank Limited are the main focus of this report which have been
analyzed and used for comparing different years. By analyzing the financial
statements of the bank, it has been traced the financial strengths and weakness
of the bank. Finally some comments are shown regarding the changes of this
bank’s financial performance for the last five years. By analyzing the horizontal,
vertical and different ratios like liquidity ratios, efficiency ratios, profitability
ratios, solvency ratios and market prospect ratios, and cash flow analysis, it can
be said that FSIBL has been improving and doing well in the last five years except
in few years. So the bank should be concern about the types of financial analysis
especially the types of ratios. However, FSIBL’s overall earnings performance
was satisfactory, but it should be improved.

ix
Table of Contents
Chapter Title Page No.
One Introduction 1-6
1.1
1.2
1.3
1.4
1.5
1.6
1.7
Origin of the Report
Significance of the Study
Objective of the Study
Scope of the Study
Methodology of the Study
Sources of Data
Limitation of the Study
2
2
3
3
4
5
6
Two Theoretical Overview 7-45
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
2.11
Bank
Functions of Bank
Islamic Banking
2.3.1: Principles of Islamic Banking
2.3.2: Riba or Interest
Difference between Riba and Profit
Difference between Conventional Banking and Islamic
Banking
Financial Statements
Components of Financial Statements
Components of Bank’s Financial Statements
Financial Statements Analysis
Techniques to Financial Statements Analysis
Literature Review
2.11.1: Classification of Assets and Liabilities
2.11.2: Limitations of Financial Statements
2.11.3: Building Blocks of Financial Statement
.................Analysis
2.11.4: Horizontal Analysis
2.11.5: Vertical Analysis
8
9
14
15
15
16
17
18
19
19
20
20
21
22
24
25
25
28

x
2.12
2.11.6: Ratio Analysis
Relationships between Financial Statements
30
44
Three Organizational Overview 46-63
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
Corporate Profile of FSIBL
Historical Background of FSIBL
Vision, Mission, Objective and Strategies of FSIBL
Organizational Structure of FSIBL
Branches of FSIBL
Functions of FSIBL
Features of FSIBL
Principal Products & Services of FSIBL
Society for Worldwide Interbank Financial
47
49
50
52
55
59
60
61
63
Four Core Part : Financial Statements Analysis of FSIBL 64-100
4.1
4.2
4.3
4.4
4.5
4.6
Introduction
Reconstruction of Financial Statements of FSIBL
Horizontal Analysis
4.3.1: Comparative Balance Sheet Analysis
4.3.2: Comparative Income Statement Analysis
4.3.3: Trend Analysis
Vertical Analysis
4.4.1: Common-size Balance Sheets Analysis
4.4.2: Common-size Income Statements Analysis
Ratio Analysis
4.5.1: Liquidity and Efficiency Ratio
4.5.2: Solvency Ratio
4.5.3: Profitability Ratio
4.5.4: Market Prospects Ratio
Analysis of Cash Flow Statement
65
65
68
68
70
73
76
79
82
83
83
89
93
96
98
Five Findings, Recommendation and Conclusion 101-106
5.1
5.2
5.3
Findings
Recommendations
Conclusion
102
105
106

xi
References
Appendix
107
109

1
Introduction
Chapter One
Introduction

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Financial statement analysis is the process of reviewing and analyzing a
company's financial statements to make better economic decisions. These
statements include the income statement, balance sheet, statement of cash
flows, and statement of retained earnings. Financial statement analysis is
required for evaluating risks, performance, financial health, and future
prospects of an organization. In this report, the financial statements of First
Security Islami Bank Limited (FSIBL) are analyzed. FSIBL is one of the reputed
banks in Bangladesh. It conducts its banking activities according to Islami
Shariah.
1.1: Origin of the Report
This report on “Financial Statements Analysis of an Islami Bank in
Bangladesh: A Study on First Security Islami Bank Limited, Bangladesh” has
been prepared as a partial requirement for the completion of the internship
program for the Bachelor of Business Administration (BBA) program of
Leading University, Sylhet. For internship purpose, I chose First Security
Islami bank Ltd. (FSIBL), Ambarkhana Branch, Sylhet. The preparation of
this report was supervised by Mr. Iehit Sharma, Senior Lecturer, Leading
University, Sylhet.
1.2: Significance of the Study
First Security Islami Bank Ltd. is one of the leading private banks in
Bangladesh. It provides highest benefits to its clients among the Islami
Banks in Bangladesh. There are few private banks those provide profits or
interest to their clients as high as FSIBL. FSIBL’s banking system is aiming to
attain the goal of Islamic Economy through setting well designed Islamic
Monitory System. Islam has clear-cut guidelines to avoid interest (Riba)
regarding use of money. So, Islamic Banking System strongly follows the
Islamic Shariah in its business. Islamic Shariah appreciates risk and profit
sharing. As an Islami bank FSIBL has to take risk when doing banking

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business and share profit to its stakeholders and customers. So, to know
about the ability of the bank to take risk and making profits, its financial
strength and performance should be understood. Therefore, the financial
statements of the bank should be analyzed for understanding the financial
strength and performance of the bank.
1.3: Objective of the Study
General Objective:
 To analyze the financial statements of First Security Islami Bank Ltd.
with the key focus of its overall financial performance.
Specific Objectives:
 To know the current financial position of First Security Islami Bank
Ltd.
 To know the five years financial performance of FSIBL by calculating
and analyzing different types of ratio.
 To know the financial trend of FSIBL focusing the five years’ financial
performance.
 To get the practical experience on banking activities.
 To give some recommendation for the development of First Security
Islami Bank Ltd.
1.4: Scope of the Study
This report is based on my observation and studies during my internship
period in First Security Islami Bank Limited, at Amborkhana Branch. The
prime focus was on financial statement analysis of First Security Islami Bank
Limited for giving some concepts about the financial position and financial
performance of the bank over at least five years. The scope of my study is
limited to the First Security Islami Bank Limited. During the three months
internship program almost all sections I have been observed. However, in
this report the financial statements of FSIBL are analyzed from different
viewpoint including ratio analysis. This repost may help those people who

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want to know about the financial performance of First Security Islami Bank
Limited.
1.5: Methodology of the Study
Several types of research methods are used in studies depending on the field
or research. As this research is on financial statement analysis, certain
methods were followed to fulfill the objectives of the report, making the
maximum utilization of the scopes and to avoid the limitations as much as
possible to prepare the final outcome of the report. There are four types of
research methods were used to complete this report. These methods are -
 Qualitative Method: Qualitative method is concerned with the quality or
kind and describing meaning. In this report I have used qualitative
research method to provide a clear concept about my research topic and
to maintain the standards of my research I have analyzed the financial
statements from different viewpoint.
 Quantitative Method: Quantitative research is based on the quantitative
measurements of some characters. It is applicable to phenomena that can
be expressed in terms of quantities. I have used the quantitative
approaches in this report for some statistical content analysis and to
determine the significance of findings.
 Analytical Method: In analytical research, the researcher has to use facts
or information those already available, and analyze these to make a
critical evaluation of the material. In this report, I have used analytical
method for ratio analysis and to evaluate the financial performance of
FSIBL.
 Descriptive Method: Descriptive research includes surveys and fact-
finding enquiries of different kinds. The major purpose of descriptive
research is description of the state of affairs as it exists at present. In this
repost, I have used the descriptive approach to explain the financial
statements, graphs, ratios, financial trend, financial performance and
current financial condition of FSIBL.

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Financial statement analysis needs the combination of mathematical
equations, graphical presentation and explanation. So, I have used above
four types of research methods to get proper and successful outcome from
my research.
1.6: Sources of Data
Data have been collected from two sources such as primary sources of data
and secondary sources of data. Primary sources of data are those sources
from which the researcher collects data directly by field work. And
secondary sources of data are those sources which provide data that are
already collected by another researcher. From this point of view data are
two types among them one is primary data and another is secondary data.
The data directly collected by the researchers are called primary data. The
data that has been already collected by another researcher or person for
his/her work purpose are called secondary data. I have collected the both
types of data from primary and secondary sources.
 Primary Sources of Data:
 Face to face conversation with the employees,
senior officers, SPO and the Manager.
 Studying different relevant files like register books,
statement of affairs, financial statements etc.
 Practical work at FSIBL during my internship
program to increase my knowledge.
 Secondary Sources of Data:
 Annual Reports including financial reports of FSIBL.
 Website of FSIBL.
 Journals and prospectus of FSIBL.
 Different books, magazines and journals related to
the finance and banking.
 Different websites and blogs.

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1.7: Limitation of the Study
I did my best and there has no dearth of sincerity on my part to make the
report. But there are some limitations which I have faced while reaching the
objectives of this report, because it is very difficult to analyze the financial
statements over five years of a Bank. Some of these following limitations are
apparent in this study:
 The time limit of the internship is only 3 months which is very short
period of time to learn about whole banking activities.
 As annual reports need 3-4 months to be published after end of the
period, I cannot collect the recent annual financial report (2014) of
FSIBL.
 As final financial statements are prepared in head office, it becomes
difficult to understand the elements of the statements from branch
office.
 When I have prepared the classified financial statement from
unclassified one then I faced problem to replacement of the items of
the statement, because the duration of all items are not properly
mentioned.
 There were lack of proper secondary information about First
Security Islami Bank Limited and its products. Annual reports,
policy guidelines, website and other related documents do not cover
full and sufficient information.
 As the bank officials are so much busy that it was difficult for them
to co-operate with me, which is also a constraint for this report.

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Chapter Two
Theoretical Overview
2
Theoretical Overview

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2.1: Bank
Bank is a financial institution that collects money from people as deposit
committing to pay interest or profit at a fixed or probable percentage rate
to the depositors for their deposited money and lends or invests it to the
businesses requiring interest or profit as return at a fixed or probable
percentage rate which is higher than the rate at which it pays interest or
profit to the depositors against the loan or investment and gains profit
from the difference between the interest or profit against loan or
investment and interest or profit against deposits. In broadly, any
financial institution that receives, collects, transfers, pays, exchanges,
lends, invests or safeguards money for its customers is called bank.
Generally we indicate the commercial bank when using the term “Bank”.
Commercial banks are those institutions which conduct the business
purely on profit motive. Commercial banks receive surplus money from
the people who are not using it and lend to those who need it for
productive purpose.
A commercial bank is a dealer in short and medium-term credit. It
borrows money from a group of people at a lower rate of interest and
lends to the other group of people at some higher rate of interest. The
difference between the two rates of interest is the profit of the bank.

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2.2: Functions of Bank
In modern time, the functions of commercial banks are modified. The
functions of a bank may broadly be divided into two parts.
Exhibit -2.1
2.2.1: Primary Functions
Basic or primary functions of a commercial bank are very important in nature.
These functions provide the base of the whole operation of the bank. The basic
functions of a commercial bank are as follows:
 Accepting deposits: Accepting deposits is the most important function of
all commercial banks. Deposit is the basis of commercial banks' activities. In
order to attract The general public to deposit their surplus money in the
bank, the bank offers to deposit money in any of the following accounts:
Functions of Bank
Secondary FunctionsPrimary Functions
 Accepting Deposits
 Current Account
 Saving Account
 Fixed Deposit Account
or Term Deposit
Account
 Making Advance and Loan
 Agency Functions
 General Utility Functions
 Miscellaneous Functions

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 Current Account: Current or demand account is one where the
amount can be withdrawn at any time by the depositor. Such deposit
accounts are generally maintained by businessmen or organizations.
They can be drawn upon by a cheque without any restriction. Banks
do not pay any interest on these accounts. Rather, banks impose
service charges for running these accounts.
 Saving Account: Saving account is suitable for non-trading and small
income earners. Saving account helps in mobilization of the saving of
low income people. The commercial banks pay interest on this type
of deposits. But, the interest rate is very poor.
 Fixed Deposit Account or Term Deposit Account: Fixed deposit
account is the account in which amounts are deposited for a certain
fixed period of time. The deposits cannot be withdrawn before the
expiry of this fixed period. The longer the period of deposits, the
higher is the rate of profit or interest.
 Deposit Scheme Account: These types of deposit accounts are newly
added by the commercial banks in the banking systems for
encouraging the fixed-income and low-income people to deposit. In
this system people have to pay monthly installment at a fixed amount
for a certain period of time to his/her deposit account, and after
maturity date he/she will get a large sum of money including the
principal and profit.
 Making Advance and Loan: The deposits received by banks are not
allowed to remain idle. So, after keeping certain cash reserves, the
balance is given to needy borrowers and interest is charged from them,
which is the main source of income for the banks. Different types of
loans and advances made by Commercial banks are:
 Overdraft: Overdraft is a short-term loan granted by commercial
banks to their account holders. Under this type of loan, the
customers are allowed to draw more than what they have in
their current account up to a certain limit. The excess amount
overdrawn is called overdraft.

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 Cash Credit: Cash credit refers to a loan given to the borrower
against his current assets like shares, stocks, bonds, etc. A credit
limit is sanctioned and the amount is credited in his account. The
borrower may withdraw any amount within his credit limit and
interest is charged on the amount actually withdrawn.
 Demand Loans: Demand loans refer to those loans which can be
recalled on demand by the bank at any time. The entire sum of
demand loan is credited to the account and interest is payable on
the entire sum.
 Loans: Commercial banks grant loans for short and medium-
term to individuals and traders against the security of movable
and immovable property. The amount of loan is credited to the
borrower's account. Interest is charged on the entire loan
sanctioned.
2.2.2: Secondary Functions
The secondary functions of commercial bank can be classified in three
heads. They are described below:
 Agency Functions: The banks render important services as agent on
behalf of their customers in return for a small commission. When banks
act as agent, law of agency applies. The agency functions or services of
bank are as follows:
 Collection of Cheques: Commercial banks collect the cheques, bills
of exchange, etc. on behalf of their customers. Banks collect local and
outstation cheques and bills of exchange through clearing house
facilities provided by the central bank.
 Collection of Income: The commercial banks collect dividends,
interest on investment, pension and rent of property due to the
customers. When any income is collected by the bank, a credit
voucher is sent to the customer for information.
 Payment of Expenses: The banks make payment of insurance
premiums, rent, trade subscription, school fee and other obligation of

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the customers. When any expense is paid by the bank, a debit voucher
is sent to the customer for information.
 Dealer in Securities: The banks carry out purchase and sale of
securities on behalf of their customers. Banks do it well because they
are aware of the market conditions.
 Acts as Trustee: The banks act as trustee to manage trust property
as per instructions of property owners. Banks are required to follow
the terms and conditions of trust deed.
 Acts as Agent: Commercial bank sometimes acts as an agent on behalf
of its customers at home or abroad in dealing with other banks or
financial institutions.
 Obeys Standing Instructions: Sometimes, customer may order his
bank to do something on his behalf regarding the conduct of his
account. This written order is called standing instruction. The bank
being the agent of its customer obeys the standing instructions.
 Acts as Tax Consultant: Commercial bank acts as tax consultant to its
client. The commercial bank prepares general sales tax return, income
tax return, etc. Tiles the same with tax authorities.
 Collection of Utility Bills: Commercial banks provide facilities for the
collection of utility bills from general public on behalf of government
bodies. This facilitates the public to pay utility bills in time.
 General Utility Functions: Commercial bank performs different utility
functions for their customers. When bank performs utility functions, it
does not act as an agent of the customers. The general utility functions
are as follows:
 Provides Lockers Facilities: Commercial banks provide lockers
facilities to its customers for safe custody of Jewelery, shares,
securities and other valuables. This has minimized the risk of losing
due to theft.

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 Issue of Travelers Cheque: Commercial banks preserve the wills of
their customers as trustees and execute them after their death as
executors.
 ATM Facilities: An ATM is also known as cash point. The banks
nowadays provide ATM facilities through issuing debit card and credit
card. The customers can withdraw money easily and quickly 24 hours
a day.
 Foreign Exchange: Commercial banks deal in foreign exchange. This
enables the individuals and businessmen to obtain foreign currency in
exchange of their home currency. For dealing in foreign exchange,
commercial banks have to obtain permission from the central bank.
 Transfer of Money: Commercial banks provide facilities for the
transfer of money to any place within and outside the country. The
funds are transferred by means of draft, telephonic transfer,
electronic transfer etc.
 Finance Foreign Trade: A commercial bank finances foreign trade by
accepting foreign bills of exchange. Bank also issues letter of credit on
behalf of its customers to facilitate foreign trade.
 Trade Information: Commercial banks collect and provide trade
information and tender advice to its customers about financial
matters.
 Issuing Credit Cards: Banks issue credit cards to their trustworthy
and valued customers. This facilitates the customers to pay for their
necessities of life.
 Miscellaneous Functions: Commercial banks perform the following
miscellaneous functions:
 Zakat Collection: Commercial banks collect Zakat from their account
holders and deposit the same into Central Zakat Fund, according to
Zakat and Usher ordinance - 1980.
 Hajj Services: The commercial banks provide free Hajj sendees to the
intending pilgrims. Banks receive Hajj applications. Banks also

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facilitate to form Hajj groups. Banks make necessary arrangements for
the training of intending pilgrims.
 Qarz-e-Hasna: The commercial banks provide Qarz-e-Hasna to
deserving patients for medical treatment and to students for higher
studies within the country and abroad. The Qarz-e-Hasna is refund Ale
in easy installments.
2.3: Islamic Banking
Islamic banking has been defined in a number of ways. The definition of
Islamic bank, as approved by the General Secretariat of the OIC, is stated in
the following manner. "An Islamic bank is a financial institution whose
status, rules and procedures expressly state its commitment to the
principle of Islamic Shariah and to the banning of the receipt and payment
of interest on any of its operations"(Ali & Sarkar 1995, pp.20-25). Ajaz A.
Khan viewing the concept from the perspective of an Islamic economy and
the prospective role to be played by an Islamic bank therein opines:
“Islamic banking is banking or banking activity that is consistent with the
principles of sharia and its practical application through the development
of Islamic economics. As such, a more correct term for 'Islamic banking' is
'Sharia compliant finance.”
It appears from the above definitions that Islamic banking is systems of
financial intermediation that avoids receipt and payment of interest in its
transactions and conducts its operations in a way that helps achieve the
objectives of an Islamic economy. Alternatively, this is a banking system
whose operation is based on Islamic principles of transactions of which
profit and loss sharing (PLS) is a major feature, ensuring justice and equity
in the economy. That is why Islamic banks are often known as PLS-banks.
In single sentence Islamic Bank can be defined as a financial intermediary
that conducts its banking activities according to Islamic Shariah by
avoiding receipt and payment of interest/riba in its transactions and
conducts its activities based on profit or loss sharing motive for achieving
the objectives of Islamic economy.

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2.3.1: Principles of Islamic Banking:
Islamic Banking has some exclusive principles by which it can be
distinguished from conventional banking. The core principles of Islamic
banking are stated below:
 Prohibition of Interest: Interest is strictly prohibited in Islam. Because,
Interest is fixed and predetermined benefit accepted by the lender for
lending his money and given by the borrower for borrowing money.
Islamic Shariah prohibits all benefits in transactions. Interest is called
Riba in Islam.
 Partnership Business: Islamic banks invest money to the business
organization as partner and they look after business for ensuring the
proper use of fund.
 Profit and Loss Sharing: It is the basic principle of Islamic banking.
Islamic banking system conducts the business activities based on profit
and loss sharing. As bank works as partner it accepts the losses if any
loss occurred in business and participates in profits when profits gain.
 Invest in Shariah approved Heads: Islamic Banking system is
concerned in use of fund. It only invests into Halal businesses that mean
Shariah approved business heads.
 Shariah Board: In every Islamic bank, there have a special governing
committee that governing the whole activities of the bank is called
Shariah Board. This board ensures that the investment is made to the
Halal business and activities are conducted according to Islamic Shariah.
2.3.2: Riba or Interest:
The word used by the Quran concerning 'interest' is Riba. The literal
meanings of Riba are money increase, increase of anything or increment of
anything from its original amount. However, all increases are not
considered as Riba in Islam. Money may increase in business activities as
well. This increase is not at all considered as Riba. Islam prohibits only
those increases that are charged on the loan with a prefixed rate.

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In the Shariah, Riba technically refers to the premium that must be paid by
the borrower to the lender along with the principal amount as a condition
for the loan or for an extension in its maturity. In other words, Riba is the
predetermined return on the use of money.
2.4: Difference between Riba and Profit
There are persons who try to equate Riba with profit. In effect, they are
fundamentally different from each other as can be seen from the following:
Riba Profit
1. When money is "charged", its
imposed positive and define result
is Riba
1. When money is used in trading, its
uncertain result is profit.
2. By definition, Riba is the premium
paid by the borrower to the lender
along with principal amount as a
condition for the loan.
2. By definition, profit is the difference
between the value of production and
the cost of production.
3. Riba is prefixed and hence there is
no uncertainty on the part of either
the givers or the takers of loans.
3. Profit is post-determined and hence
its amount is not known until the
activity is done.
4. Riba cannot be negative, it can at
best be very low or zero.
4. Profit can be positive, zero or even
negative.
5. From Islamic Shariah point of view,
it is Haram.
5. From Islamic Shariah point of view,
it is Halal.
Exhibit -2.2

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2.5: Difference between Conventional Banking and
Islamic Banking
The distinguishing features of the conventional banking and Islamic
banking are shown in terms of a box diagram as shown below:
Conventional Banks Islamic Banks
1. The functions and operating modes
of conventional banks are based on
manmade principles.
1. The functions and operating modes
of Islamic banks are based on the
principles of Islamic Shariah.
2. The investor is assured of a
predetermined rate of interest.
2. In contrast, it promotes risk sharing
between provider of capital (investor)
and the user of funds (entrepreneur).
3. It aims at maximizing profit without
any restriction.
3. It also aims at maximizing profit but
subject to Shariah restrictions.
4. It does not deal with Zakat. 4. In the modern Islamic banking
system, it has become one of the
service-oriented functions of the
Islamic banks to collect and
distribute Zakat.
5. Leading money and getting it back
with interest is the fundamental
function of the conventional banks.
5. Participation in partnership
business is the fundamental function
of the Islamic banks.
6. Its scope of activities is narrower
when compared with an Islamic bank.
6. Its scope of activities is wider when
compared with a conventional bank. It
is, in effect, a multi-purpose
institution.
7. It can charge additional money
(compound rate of interest) in case of
defaulters.
7. The Islamic banks have no provision
to charge any extra money from the
defaulters.
8. In it very often, bank's own interest
becomes prominent. It makes no effort
to ensure growth with equity.
8. It gives due importance to the public
interest. Its ultimate aim is to ensure
growth with equity.

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9. For interest-based commercial
banks, borrowing from the money
market is relatively easier.
9. For the Islamic banks, it is
comparatively difficult to borrow
money from the money market.
10. Since income from the advances is
fixed, it gives little importance to
developing expertise in project
appraisal and evaluations.
10. Since it shares profit and loss, the
Islamic banks pay greater attention to
developing project appraisal and
evaluations.
11. The conventional banks give
greater emphasis on credit-
worthiness of the clients.
11. The Islamic banks, on the other
hand, give greater emphasis on the
viability of the projects.
12. The status of a conventional bank,
in relation to its clients, is that of
creditor and debtors.
12. The status of Islamic bank in
relation to its clients is that of
partners, investors and trader.
13. A conventional bank has to
guarantee all its deposits.
13. Strictly speaking, and Islamic bank
cannot do that.
Exhibit -2.3
2.6: Financial Statements
Financial Statements are the summary of the financial activities of a firm
or an organization. AIS Board define the financial statement, “A financial
statement (or financial report) is a formal record of the financial activities
of a business, person, or other entity. Relevant financial information is
presented in a structured manner and in a form easy to understand.”
It appears from the above definitions that financial statements are the
records that outline the financial activities of a business, an individual or
any other entity. Financial statements are intended to present the financial
information of the entity in question as clearly and concisely as possible
for both the entity and for readers. Financial statements for businesses
usually include: income statements, balance sheet, statements of changes
in equity and cash flows, as well as other possible statements.

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2.7: Components of Financial Statements
According to International Accounting Standards (IAS) a complete set of
financial statements includes the flowing components.
 Statement of Financial Position / Balance Sheet
 Income Statement / Statement of Profit and Loss Account
 Statement of Cash Flow
 Statement of Changes in Equity
 Notes to these statements
2.8: Components of Bank’s Financial Statements
Since a bank is a financial institution, its financial statements are different
from other organization. Bank’s Financial Statements include an additional
component which is called Liquidity Statement. The basic components of
bank’s financial statements are given below.
 Balance Sheet
 Statement of Profit and Loss Account / Income Statement
 Cash Flow Statement
 Statement of Changes in Equity
 Liquidity Statement
 Notes to these statements
2.8.1:Balance Sheet: Balance sheet is a financial statement that
summarizes a company's assets, liabilities and shareholders' equity
at a specific point in time of a business' calendar year. These three
balance sheet segments give investors an idea as to what the
company owns and owes, as well as the amount invested by the
shareholders.
2.8.2:Statement of Profit and Loss Account / Income Statement:
Income statement is a financial report that shows an entity's results
of financial performance over a specific time period. The time
period usually covers for a month, quarter, half year or year.

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2.8.3:Cash Flow Statement: A cash flow statement is the financial
statement that measures the cash generated or used by a company
in a given period.
2.8.4:Statement of Changes in Equity: Statement of changes in equity
is a financial statement that presents a summary of the changes in
shareholders’ equity accounts in a company over an accounting
period. It reconciles the opening balances of equity accounts with
the closing balances.
2.8.5:Liquidity Statement: Liquidity Statement is a financial statement
that shows a company’s remaining liquid assets to meet the short
term obligations over a certain period of time. Liquid assets
mainly cover cash and cash equivalent assets. Liquidity statement
is necessary for banking companies and other financial
institutions.
2.8.6:Notes: Notes are not core financial statement, but they are
necessary understand other financial statements. Notes are the
details of summary statements like balance sheet, income
statement. Notes present process of calculation and particulars
included of significant items in core financial statements.
2.9: Financial Statements Analysis
Financial Statements Analysis is the process of reviewing and evaluating a
company's financial statements (such as the balance sheet or profit and loss
account statement), thereby gaining an understanding of the financial health
of the company and enabling to make more effective policies.
2.10: Techniques to Financial Statements Analysis
Financial statement analysis is an evaluative method of determining the
past, current and projected performance of a company. Several techniques
are commonly used as part of financial statement analysis. Widely used are
sated below.

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 Horizontal Analysis: It compares the financial data of two or more
years in both money and percentage form.
 Vertical Analysis: In vertical analysis each category of accounts on
the balance sheet is shown as a percentage of the total account.
 Ratio Analysis: Ratio analysis is a fundamental means of examining
the health of a company by studying the relationships of key financial
variables. It calculates statistical relationships between data.
A bank’s financial statements are always different from general companies. So,
banks’ financial statements analysis is critical. Among the stated techniques the
ratio analysis is mostly used for analysis of any organization’s financial
statements.
2.11: Literature Review
Financial statement analysis applies analytical tools to general-purpose
financial statements and related data for making business decisions. It
involves transforming accounting data into more useful information.
Financial statement analysis reduces our reliance on hunches, guesses, and
information as well as our uncertainty in decision making. It does not lessen
the need for expert judgment; instead, it provides us an effective and
systematic basis for making business decisions.
It is a standard practice for businesses to present financial statements that
adhere to generally accepted accounting principles (GAAP), to maintain
continuity of information and presentation across international borders. As
well, financial statements are often audited by government agencies,
accountants, firms, etc. to ensure accuracy and for tax, financing or investing
purposes. Financial statements are integral to ensuring accurate and honest
accounting for businesses and individuals alike. So, some basic requirement
must be fulfilled by a person when he/she prepares financial statements.
Balance sheet, income statement, statement of cash flow, statement of
equity and liquidity statement are the core financial statements of a banking
company. When one goes to analysis the financial statements he/she first

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concentrate to the balance sheet. Because balance sheet is required for
every type of financial analysis including ratio analysis. The balance sheet
depicts the assets and the liabilities at a stated point of time, for example
31st December. The figures of the assets and liabilities are given in the
balance sheet from the basis of financial appraisal and duration. In fact,
there are two stages in the evaluation of balance sheet:
 The analysis of balance sheet, refers examination of individual items
of assets and liabilities and their classification into well-defined
categories, and
 Interpretation of the balance sheet through the Ratio Analysis.
2.11.1: Classification of Assets and Liabilities
The first step in the analysis of balance sheet is the scrutiny and
examination of different items of assets and liabilities and they are classified
into various categories.
 Assets:
In the Balance sheet the assets are divided into three major
categories in general when organizations prepare the balance sheets.
These are as follows:
 Current Assets
 Fixed/Long-Term Assets
 Other Assets
 Current Assets: Current assets are those assets, which changes
their form in a short period and are exchanged for cash. In other
words, current assets are meant to be liquidated for cash in the near
future. Generally the duration of these assets is within one year.
 Fixed/Long-Term Assets: The assets which are not consumed or
sold during the normal course of business and they are used for
carrying on the business, such as land, building, machinery,
furniture and fixtures etc. are fixed assets.
 Other Assets: Other assets are a grouping of accounts that are listed
as a separate line item in the assets section of the balance sheet and

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which contain minor assets that do not naturally fit into any of the
main asset categories. “These assets do not represent any property;
rather they represent certain deferred revenue expenses or losses
which are being written-off over the years” (S. A. Ali & R. A.
Howlader, pp.345). But, some of the writers include the other assets
into fixed assets, some writers include them into current assets and
some of the writers include the other assets into both fixed assets
and current assets according to their duration and type.
It appears from the above definitions that other assets are the
miscellaneous assets that cannot be classified as current assets or
fixed assets. Examples of other assets include deferred tax assets,
bond issue costs, advances to officers, prepaid pension costs, and
long-term prepayments. But, other assets can be included into major
categories, if we have proper information or notes about their time
duration. Most of the case other assets include negligible accounts,
so it can be included in current assets. In the case of FSIBL, the
notes about other assets indicate that it should be included in
current assets when I have prepared the classified balance sheet
according maturity for the purpose of ratio analysis.
 Liabilities:
In the Balance sheet the liabilities are broadly divided into two
categories when organizations prepare the balance sheets. These are
as follows:
 Current Liabilities
 Long-Term Liabilities
 Current Liabilities: Current liabilities are the obligations those
are payable within one accounting year. Common examples are
accounts payable, wages payable, bank loan payable, interest
payable and tax payable. For a banking company placement from
Banks and other Financial Institutions, all deposit accounts, bills
payable, current portion of ling-term liabilities and other
liabilities are elements of current liabilities.

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 Long-Term Liabilities: Long-term liabilities are the obligations
that a company expects to pay after one accounting year.
Liabilities in this category include subordinated bonds, bonds
payable, and mortgages payable, loan payable, long-term notes
payable, lease liabilities, pension liabilities and other long-term
liabilities.
For the need of my research work I have prepared a comparative balance
sheet by classifying items of the balance sheets according to their duration
and character. Comparative Balance Sheets consist of balance sheet
amounts from two or more balance sheet dates arranged side by side. Its
usefulness is often improved by showing each item’s money amount
change and percentage change to highlight large changes.
Analysis of comparative financial statements begins by focusing on items
that shows large dollar and percent changes. We then try to identify the
reason for these changes and, if possible, determine whether they are
favorable or unfavorable. We also follow up on items with small changes
when we expected the changes to be large.
2.11.2: Limitations of Financial Statements
Though Balance Sheet and Profit and Loss Account of a company are
important sources for the analysis, the financial data contained therein have
certain limitations. The financial data depict the state of affairs or the
operating results in numerical terms. Sometimes wrong or illogical
conclusion may be derived from them if attention is not given to other
factors that are not evident from the financial statements. For example, the
production of a manufacturing company may fall due to labor strike or non-
availability of raw materials due to transport bottlenecks, but it should not
be interpreted as decline in the efficiency or profitability of the concern. It is,
therefore, essential that the investor should look beyond the financial data
and make future enquiries regarding the causes for any variation or
abnormal trend noted in analyzing the data. Besides, the financial

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statements represent the performance of the business concern. Any
meaningful analysis of these statements will depend upon the projections of
the future trend. Past events are just guides as to what may reasonably be
expected to occur in future.
2.11.3: Building Blocks of Financial Statement Analysis
Financial statements analysis focuses on one or more elements of a
company’s financial condition or performance. Our analysis emphasizes four
areas of inquiry with varying degrees of importance. These four areas are
described and illustrated in this chapter and considered the building blocks
of financial statements analysis:
 Liquidity and Efficiency: It refers the ability of a company to meet
short-term obligations and to efficiently generate revenues.
 Solvency: It refers the ability to generate future revenue and meet
long-term obligations by a company.
 Profitability: It is the ability to provide financial rewards sufficient
to attract and retain financing.
 Market prospects: It refers a company’s ability to generate positive
market expectation.
2.11.4: Horizontal Analysis
Analysis of any single financial number is of limited value. Instead, much of
financial statement analysis involves identifying and describing relations
between numbers, groups of numbers and changes in those numbers.
Horizontal analysis refers to examination of financial statement data across
time. The term “horizontal analyses” arises from the left-to-right movement
of our eyes as we review comparative statements across time.
2.11.4.1: Comparative Statements
Comparing amounts for two of more successive periods often helps in
analyzing financial statements. Comparative financial statements facilitate
this comparison by showing financial amount in side-by-side columns on a

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single statement, called comparative format. By using comparative financial
statements financial changes can be expressed in both dollar amount and
percentage.
 Computation of Dollar Change and Percent Change: Computing
financial statements over time periods generally two-to-five years is often
done by analyzing changes in line items. A change analysis usually
includes analyzing absolute dollar amount changes and percent changes.
Both analyses are relevant because dollar changes can yield large
percentage changes inconsistent their importance. Dollar amount is
necessary to retain a proper perspective and to assess the importance of
changes. The computation of dollar change for a financial statement item
as follows:
Dollar change = Analysis period amount - Base period amount
Analysis period is the point or period of time for the financial statements
under analysis, and base period is the point or period of time for financial
statements used for comparison purposes. The prior year is commonly
used as a base period. We compute percent change by dividing the dollar
change by the base period amount and then multiplying this quantity by
100 as follows:
(%) =
−
×
We can always compute a dollar change, but we must be aware of a few
rules in working with percent changes. These rules are as follows:
 When a negative amount appears in the base period and a positive
amount appears in the analysis period then we cannot compute a
meaningful percent change.
 When a positive amount appears in the base period and a negative
amount appears in the analysis period then we cannot compute a
meaningful percent change.
 When no value is in the base period then no percent is computable.
 When an item has a value in the base period and zero in the
analysis period, the decrease is 100 percent.

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 Comparative Balance Sheets: Comparative balance sheets consist of
balance sheet amounts from two or more balance sheet dates arranged
side by side. Its usefulness is often improved by showing each item’s dollar
change and percent change to highlight large changes.
Analysis of comparative financial statements focusing on items that shows
large dollar or percent changes. Then we try to identify the reasons for
these changes and, if possible, determine whether they are favorable or
unfavorable. We also follow up items with small changes when we
expected the changes to be large. The format of comparative balance sheet
showing dollar and percent change, their calculation process is as follows:
Company Name
Comparative Balance sheet
Ending date of Analysis year and Base/previous year
1 2 3 4=(2-3) 5=(4/3)
Particulars Analysis
Year
Base/previous
Year
Dollar
Change
Percent
Change (%)
Assets
Current Assets
Fixed Assets
Liabilities
Current Liabilities
Long-term Liabilities
Shareholders’
Equity
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Exhibit -2.4
 Comparative Income Statements: Comparative income statements are
prepared similarly to comparative balance sheets. Amounts for two or
more periods are arranged side by side, with additional columns for dollar
and percent changes.
2.11.4.2: Trend Analysis
Trend analysis is also called trend percent analysis or index number trend
analysis. It is a form of horizontal analysis that can reveal patterns in data
across successive periods. It involves computing trend percent for a series

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of financial numbers and is a variation on the use of percent changes. The
difference is that trend analysis does not subtract the base period amount in
the numerator. To compute trend percent, we do the following:
 Select a base period and assign each item in the base period a weight of
100%.
 Express financial numbers as a percent of their base period number.
Specially, a trend percent, also called an index number, is computed as
follows:
(%) = ×
It should be noted, that the percent change or index refers the comparison
of the analysis periods to the base period. Trend analysis expresses a
percent of base, not a percent of change.
2.11.5: Vertical Analysis
Vertical analysis is a tool to evaluate individual financial statement items or
a group of items in terms of a specific base amount. We usually define a key
aggregate figure as the base, which for an income statement is usually
revenue and for a balance sheet is usually total assets. The term “vertical
analysis” arises from the up-down or down-up movement of our eyes as we
review common-size financial statements. Vertical analysis is also called
common size analysis.
2.11.5.1: Common-Size Statements
Common-size statements express each item as a percent of a base amount.
We use common-size financial statements to reveal changes in the relative
importance of each financial statement item. All individual amounts in
common-size statements are redefined in terms of common-size percent. A
common-size percent is measured by dividing each individual financial
statement amount under analysis by its base amount. The formula of
common-size percent is as follows:

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- (%) = ×
 Common-Size Balance Sheet: Common-size balance sheets express each
item of balance sheets as a percent of a base amount, which is a usually
total asset. The base amount is assigned a value of 100%. This implies
that the total amount of liabilities plus equity equals 100% since this
amount equals total asset. We compute a common-size percent for each
asset, liability and equity items using total asset as base amount. When
we present a company’s successive balance sheets in this way, the
changes in the mixture of assets, liabilities and equity are apparent.
 Common-Size Income Statements: Analysis also benefited from using a
common-size income statement. Revenue is usually the base amount,
which is assigned a value of 100%. Each common-size income statement
items appears as a percent of revenue. If we think of the 100% revenues
amount as representing one sales dollar, the remaining items show how
each revenue dollar is distributed among costs, expenses and income.
2.11.5.2: Common-Size Graphics
Two of the most common tools of common-size analysis are trend analysis
of common-size statements and graphical analysis. The trend analysis of
common-size statements is similar to that of comparative statements
discussed under horizontal analysis. It is not illustrated here because the
only difference is the substitution of common-size percent for trend percent.
Instead, this section discusses graphical analysis of common-size
statements. Pie charts and bars are commonly sued for common-size
graphics analysis of common-size statement analysis. For common-size
income statement analysis, the revenue is considered as the base of the pie
chart because revenue affects nearby every item of an income statement.

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2.11.6: Ratio Analysis
Ratios are among the more widely used tools of financial statement analysis
because they provide clues to and symptoms of underlying conditions. A
ratio can help us uncover conditions and trends difficult to detect by
inspecting individual components making up the ratio. Ratios, like other
analysis tools, are usually future oriented. They are often adjusted for their
probable future trend and magnitude, and their usefulness depends on the
skillful interpretation. A ratio expresses a mathematical relation between
two quantities. It can be expressed as a percent, rate, or proportion.
Computation of ratio is a simple arithmetic operation, but its interpretation
is not. To be meaningful, a ratio must refer to an economically important
relation.
In this section an important set of financial ratios and its applications are
described. The selected ratios are organized into the four building blocks of
financial statement analysis. These are as follows:
(i) Liquidity and Efficiency Ratios
(ii) Solvency Ratios
(iii) Profitability Ratios
(iv) Market Prospects Ratios
2.11.6.1: Liquidity and Efficiency Ratios
Liquidity refers to the availability of resources of a company to meet short-
term cash requirements. It is affected by the timing of cash inflows and
outflows along with prospects for future performance. Analysis of liquidity
is aimed at a company’s funding requirements.
Efficiency refers to how productive a company in using its assets. Efficiency
is usually measured relative to how much revenue is generated from a
certain level of assets.
Both liquidity and efficiency are important and complementary. If a
company fails to meet its current obligations, its continued existence is
doubtful. From this view point, all other measures of analysis are in
secondary importance. Although accounting measurements assume the
company’s continued existence, our analysis must always assess the validity

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of this assumption using liquidity measures. Moreover inefficient use of
assets can cause liquidity problems. A lack of liquidity often precedes lower
profitability and fewer opportunities. A company’s customers and suppliers
are also affected by short-term liquidity problems, and it is keener, when it
is a banking company. This section describes the key ratios relevant to
assessing liquidity and efficiency.
 Current Ratio: Current ratio is widely used to show the ability of a
company to meet its current liabilities with its current assets. This ratio
is computed by dividing current assets by current liabilities. Its formula
is given below:
=
A high current ratio suggests a strong liquidity position and an ability to
meet current obligations by current assets. An excessively high current
ratio means that a company has invested too much in current assets
compared to its current liabilities. An excessive investment in current
assets is not an efficient use of fund, because current assets normally
generate a low return on investment. On the other hand, lower current
ratio indicates that a company may be failed to meet current obligations
by its current assets. Many users apply a guideline about composition of
current assets and current liabilities of 2:1, which means the result of
current ratio is 2. But, such a guideline or any analysis of the current
ratio must recognize at some additional factors such as, type of business,
composition of current assets, and Turnover of current assets. A service
company like bank that having no inventory can probably operate on a
current ratio of 1:1 or less than 1:1. The composition of a company’s
current assets is important to an evaluation of short-term liquidity. For
instance, cash, cash equivalents, and short-term investments are more
liquid then account and notes receivable. Cash, of course, can be used to
immediately pay current liabilities. But, for a banking company,
retaining excessive cash and cash equivalent as liquid assets decreases
profitability.

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A banking company may maintain current ratio of less than 1:1
according to its banking principle for efficient investment of its collected
deposits.
 Acid-Test (Quick) Ratio: The measurement used by business to
analysis their ability to pay their current liabilities with current assets
excluding less liquid assets is acid-test ratio. It is also called quick ratio.
Quick assets are cash, short-term investments and current receivables.
These are the most liquid types of assets. Acid-test ratio is differs from
current ratio by excluding less liquid assets such as inventory and
prepaid expenses, because they take longer time to be converted into
cash. The acid-test test or quick ratio is defined as quick assets (cash,
short-term investment and current receivable) divided by current
liabilities. Its formula is given below:
- =
( )
The common guideline for an acceptable acid-test ratio is 1:1. Similar to
analysis of current ratio, we need to consider other factors. For instance,
the frequency with which a company converts its current assets into
cash affects its working capital requirements. Acid-test ratio is the most
important measurement for banking companies as financial institutions.
 Accounts Receivable Turnover: We can measure how frequently a
company converts its receivables into cash by computing account
receivable turnover. Account receivable turnover is a measure of both
the quality and liquidity of account receivables. Quality of receivables
refers to the likelihood of collection without loss. Liquidity of receivable
refers to the speed of collection. Accounts receivable turnover is
computed by dividing net sales by average account receivable. Its
formula is given below:
=

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Average accounts receivable is computed as follows:
=
+
2
Accounts receivable turnover is more precise if net credit sales are used
for the numerator because net sales include cash sales, but external
users generally use net sales (or net revenue) because information about
net credit sales is typically not reported in financial reports. Some users
use net receivable as denominator when use net credit sales as
numerator, but using the average account receivable as denominator is
more perfect for computing accounts receivable turnover. A high
turnover is favorable because it means a company need not commits
large amount of funds to account receivable. A high turnover indicates
that a company is too efficient to collect receivables.
 Inventory Turnover: Inventory turnover shows how long a company
holds inventory before selling it affects working capital requirements.
Inventory turnover is also called merchandise turnover or merchandise
inventory turnover. It is computed as follows:
=
The average inventory is computed as follows:
=
+
2
If the beginning and ending inventory for the year do not represent the
usual inventory amount, an average of quarterly or monthly inventories
can be used. A generally agreed minimum value for inventory turnover
ratio is about 2:1 (from a secured creditor perspective), but the ratio
needs careful interpretation because it is based on the book value of
pledged assets. Inventory turnover is important for merchandisers, but
not for service providing company because service providing company
have a little or no inventory. So as service company banks and financial
institutions’ do not need analysis of the inventory turnover ratio for
their operations.

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 Days’ Sales Uncollected: Accounts receivable turnover provides insight
about how frequently a company converts its accounts receivable into
cash. This is important for evaluating a company’s liquidity. One
measure of the receivables’ nearness to cash is the days’ sales
uncollected. It is computed as follows:
= ×
A rough guideline states that days’ sales uncollectable should not exceed
1 times the days in its credit period, if discounts are not offered; or
discount period, if favorable discounts are offered.
 Days’ Sales in Inventory: Days’ sales in inventory, also called day’s
stock on hand, is a ratio that reveals how much inventory is available in
terms of the number of days’ sales. It can be interpreted as the number
of days one can sell from inventory if no new items are purchased. This
ratio is often viewed as a measure of the buffer against out-of-stock
inventory and is useful in evaluating liquidity of inventory. It is
computed as follows:
= ×
Days’ sales in inventory focuses on ending inventory and it estimates
how many days it will take to convert at the end of a period into
accounts receivable of cash. Notice that, days’ sales in inventory focuses
on ending inventory whereas inventory turnover focuses on average
inventory.
 Total Asset Turnover: Total asset turnover is a measure of a company’s
ability to use its assets to generate sales and is an important indicator of
operating efficiency. A company’s assets are important in determining
its ability to generate sales and earn income. Total asset turnover is
computed as follows:
=

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Average total assets is computed as follows:
=
+
2
Companies desire higher total asset turnover from their operations.
Interpreting the total asset turnover also requires an understanding of
the company’s operations. Some operations are capital intensive,
meaning that a relatively large amount is invested in assets to generate
sales. This suggests a relatively lower total asset turnover. Other
companies’ having labor intensive operations, meaning that generate
sales more by the efforts of people than using assets.
2.11.6.2: Solvency Ratios
Solvency refers to a company’s long-run financial viability and its ability to
cover long-term obligations. All of a company’s business activities like
financing, investing and operating activities affect its solvency. Analysis of
solvency is long term and uses less precise but more encompassing
measures than liquidity. One of the most important components of solvency
analysis is the composition of a company’s capital structure. Capital
structure refers to a company’s financing sources. It ranges from relatively
permanent equity financing to riskier or more temporary short-term
financing. This analysis focuses on a company’s ability to meet its
obligations and provide security to its creditors over long run. Indicators of
this ability include debt and equity ratios, the relation between pledged
assets and secured liabilities, and the company’s capacity to earn sufficient
income to pay fixed interest charges.
 Debt and Equity Ratios: One element of solvency analysis is to assess
the portion of a company’s assets contributed by creditors and the
portion contributed by its owners is called debt and equity ratio. A
company that finances a relatively large portion of its assets with
liabilities is said to have a high degree of financial leverage. Higher
financial leverage involves greater risk because liabilities must be repaid

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and often require regular interest payments. The risk that a company
might not be able to meet such required payments is higher if it has more
liabilities. One way to assess the risk associated with a company’s use of
liabilities is to compute the debt ratio. Debt ratio is computed as follows:
= ×
The equity ratio provides complementary information by expressing total
equity as a percent of total assets. A company is considered less risky if its
capital structure contains more equity. Equity ratio is computed as
follows:
= ×
 Pledged Assets to Secured Liabilities: A company’s ability to borrow
money with or without collateral agreements depends on its credit rating.
In some cases, debt financing is unavailable unless the borrower can
provide security to creditors with a collateral agreement. To borrow
funds at a favorable rate, many bonds and notes are secured by collateral
agreements in the form of mortgages. Investors of a company’s secured
debt obligations need to determine whether the debtor’s pledged assets
provide adequate security. One method to evaluate this is pledged assets
to secured liabilities ratio. This ratio also is relevant to unsecured
creditors because of what it implies about the remaining assets available.
This ratio is computed as follows:
=
A generally agreed minimum value for this ratio is about 2:1 (from a
secured creditor perspective), but the ratio needs careful interpretation
because it is based on the book value of pledged assets. Book values are
not necessarily intended to reflect amounts to be received from assets in
event of liquidation. Also, a company’s long-run earning ability is equally
important.

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 Times Interest Earned: The amount of income before deductions for
interest expense and income taxes is the amount available to pay interest
expense. A company incurs expenses on many of its current and long-
term liabilities. Interest expense is often viewed as a fixed expense
because the amount of these liabilities is likely to remain in one form or
another for a substantial period of time. This means that the amount of
interest is unlikely to vary due to change in sales or other operating
activities. While fixed expenses can be advantageous when a company is
growing, they create risk. This risk stems from the possibility that a
company might be unable to pay fixed expenses if sales decline. One
method that measures a company’s ability to pay interest expenses is
times interest earned ratio. This ratio is computed as follows:
=
The larger this ratio, the less risky is the company for creditors. One
guideline says that the creditors are reasonably safe if the company earns
its fixed interest expense two or more times each year.
2.11.6.3: Profitability Ratios
We are especially interested in a company’s ability to use its assets
efficiently to produce profits and positive cash flows. Profitability refers to a
company’s ability to generate an adequate return on invested capital. Return
is judged by assessing earnings relative to the level and source of financing.
Profitability is also relevant to solvency. This section describes key
profitability measures and their importance to financial statement analysis.
 Profit Margin: A useful measure of a company’s operating results is the
ratio of its net income to net sales. This ratio is called profit margin. It
reflects a company’s ability to earn net income from sales. Profit margin is
computed as follows:
= ×100

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To evaluate profit margin, we should consider the industry median if
possible. For instance, companies including banks might require a profit
margin between 10% and 15%.
 Return on Total Assets: Return on total assets is a profitability ratio that
measures the net income produced by total assets during a period by
comparing net income to the average total assets. In other words, the
return on assets ratio or ROA measures how efficiently a company can
manage its assets to produce profits during a period. Return on total
assets is computed as follows:
= × 100
An average total asset is computed as follows:
=
+
2
Since companies’ assets' sole purpose is to generate revenues and produce
profits, this ratio helps both management and investors to see how well
the company can convert its investments in assets into profits. In short,
this ratio measures how profitable a company's assets are. Generally
companies expect higher return on total assets because that indicates a
company’s assets provide more returns.
 Return on Common Stockholders’ Equity: Perhaps the most important
goal in operating a company is to earn net income for its owner(s). The
return on common stockholders’ equity measures a company’s success in
reaching this goal and is defined as follows:
=
−
×
Average common stockholders’ equity is computed as follows:
ℎ
=
Beginning shareholders′
+ shareholders′
2

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The denominator in this computation is the book value of common equity
including any minority interest. In the numerator, the dividends on
cumulative preferred stock are subtracted whether they are declared or
are in arrears. If preferred stock is noncumulative, its dividends are
subtracted only if declared.
2.11.6.4: Market Prospects Ratios
Market measures are useful for analyzing corporations with publicly traded
stock. These market measures use stock price, which reflects the market’s
(public’s) expectations for the company. This includes expectations of both
company’s return and risk as market perceives it.
 Price-Earnings Ratio: A stock’s market value is determined by its
expected future cash flows. A comparison of a company’s EPS and its
market value per share reveals information about market expectations.
This comparison is traditionally made using a price-earnings ratio. Price-
earnings ratio can be viewed as an indicator of the market’s expected
growth and risk for a stock. Some analysts interpret this ratio as what
price the market is willing to pay for a company’s current earnings
stream. Price-earnings ratios can differ across companies that have
similar earnings because of either higher or lower expectations of future
earnings. A high level of expected risk suggests a low PE ratio. A high
growth rate suggests a high PE ratio. The price-earnings ratio is defined
as follows:
− =
( )
This ratio is often computed using EPS from the most recent period.
However, many users compute this ratio using expected EPS for next
period. Some analysis view stocks with high PE ratios as more likely to be
overpriced and stocks with low PE ratios as more likely to be
underpriced. These investors prefer to sell or avoid buying stock with
high PE ratios and to buy or hold stocks with low PE ratios. However,

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investment decision making is rarely so simple as to rely on a single ratio.
For instance, a stock with a high PE ratio can prove to be a good
investment if its earnings continue to increase beyond current
expectations. Similarly, a stock with a low PE ratio can prove to be a poor
investment if its earnings decline below expectations.
 Dividend Yield: Investors buy shares of a company’s stock in
anticipation of receiving a return from either or both cash dividends and
stock price increases. Stocks that pay large dividends on a regular basis
called income stock are attractive to investors who want recurring cash
flows from their investments. In contrast, some stocks pay little or no
dividends but are still attractive to investors because of their expected
stock price increases. The stocks of companies that distribute little or no
cash but use their cash to finance expansion are called growth stocks. One
way to help identify whether a stock is an income stock or a growth stock
is to analyze its dividend yield. It is used to compare the dividend-paying
performance of different investment alternatives. Dividend yield is
computed as follows:
= ×
Dividend yield can be computed for current and prior periods using
actual dividends and stock prices and for future periods using expected
values.
2.11.6.5: Summary of Ratios
Exhibit -2.5 summarizes the major financial statement analysis ratios
described in this chapter. This summary includes each ratio’s title, its
formulas, and the purpose for which it is commonly used.

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| 41F i n a n c i a l S t a t e m e n t s A n a l y s i s
Exhibit -2.5
Financial Statement Analysis Ratios:
Ratio Formula Measure of
Liquidity and
Efficiency
Current Ratio =
Current Assets
Current Liabilities
Short-term debt-paying
ability
Acid-Test Ratio =
Cash and equivalents + Short − term investment + Current receivables (net)
Current Liabilities
Immediate short-term
debt-paying ability
Accounts Receivable
Turnover =
Net Sales
Average Accounts Receivable
Efficiency of collection
Inventory Turnover =
Cost of Goods Sold
Average Inventory
Efficiency of inventory
management
Days’ Sales Uncollected =
Account Receivable
Net Sales
× 365 Liquidity of receivables
Days’ Sales in
Inventory
=
Ending Inventory
Cost of Goods Sold
× 365 Liquidity of inventory
Total Asset Turnover =
Net Sales
Average Total Assets
Efficiency of assets in
producing sales

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| 42F i n a n c i a l S t a t e m e n t s A n a l y s i s
Exhibit -2.5
Solvency
Debt Ratio =
Total Liabilities
Total Assets
× 100 Creditor financing and
leverage
Equity Ratio =
Total Equity
Total Assets
× 100 Owner financing
Pledged Assets to
Secured Liabilities =
Book Value of Pledged Assets
Book Value of Secured Liabilities
Protection to secured
creditors
Times Interest Earned =
Income before Interest Expense and Income Taxes
Interest Expense
Protection in meeting
interest payments
Profitability
Profit Margin Ratio =
Net Income
Net Sales
× 100 Net income in each sales
dollar
Gross margin ratio =
Net Sales − Cost of Goods Sold
Net Sales
Gross margin in each
sales dollar
Return on Total Assets
Return on Equity
=
=
Net Income
Average Total Assets
× 100
Net Income
Total Shareholders Equity
× 100
Overall profitability of
assets
Overall profitability of
Equity

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| 43F i n a n c i a l S t a t e m e n t s A n a l y s i s
Exhibit -2.5
Return on Common
Stockholders’ Equity =
Net Income − Preferred Dividends
Average Common Stockholders Equity
× 100 Profitability of owner
investment
Book value Per
Common Share =
Shareholders Equity Applicable to Common Share
Number of Common Share Outstanding
Net income per common
share
Basic Earnings Per
Share =
Net Income − Preffered Dividends
Weighted − average Common Shares Outstanding
Net income per common
share
Market Prospects
Price-Earnings Ratio =
Market Value(price)Per Share
Earnings Per Share
Market value relative to
earnings
Dividend Yield =
Annual Cash Dividends Per Share
Market Price Per Share
× 100 Cash return per common
share
Exhibit -2.5
Above ratios are used for various purpose of financial analysis. These depend on the need of analyst. All ratios are not use for every type
of business. According to nature of business ratios are varying. For example, a service company generally has not any inventory, so it is
not required for it to compute the inventory turnover ratio. When I have analyzed the financial statements of First Security Islami Bank

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Limited, I only use those ratios which are useful for a banking company. A
banking company’s ratio analysis is different from the ratio analysis of a
merchandising company.
2.12: Relationships between Financial Statements
Exhibit -2.6
From the exhibit -2.6, it is appeared that all financial statements are correlated
and all transactions are directly or indirectly affect the cash flow. Cash flow
represents the actual cash generation by a business over a period. Further, a
business’s main aim is to generate enough cash. So a cash flow statement is
useful to the investors to know the actual cash generating capacity of a
business, trend of cash flow and management’s efficiency to increasing cash. In
my analysis, I analyze the FSIBL’s cash flow statement and try to lay bare the
trend of cash flow of FSIBL, and trace reason of cash increase or decrease.
Understanding the purpose of financial statement analysis is crucial to the
usefulness of any analysis. This understanding leads to efficiency of effort,
effectiveness in application, and relevance in focus. The purpose of most
financial statement analysis is to reduce uncertainty in business decisions
through a rigorous and sound evaluation. A financial statement analysis report
Previous Year
Balance Sheet
Current Year
Balance Sheet
Current Year
Income
Statement
Current Year
Cash Flow
Profit/Loss
Donations
Loan Loss
Depreciation
Profit/Loss
Non-Cash Items
Changes

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helps by directly addressing the building blocks of analysis and by identifying
weakness in inference by requiring explanation. If forces us to organize our
reasoning and to verify its flow and logic. A report also serves as a
communication link with readers, and the writing process reinforces our
judgments and vice versa.

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Chapter Three
Organizational Overview
3
Organizational
Overview

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3.1: Corporate Profile of FSIBL
Registered Name of the
Company
First Security Islami Bank Limited
Legal Form A scheduled commercial bank incorporated on August
29, 1999 as a Public Limited Company under the
Companies Act 1994 and Bank Companies Act 1991.
Registered Office 23 Dilkhusha Commercial Area, Dhaka-1000,
Bangladesh.
Tel: 9560229, Fax: 9561637, E-mail: info@fsiblbd.com
Head Office House No. SW(1) 1/A, Road No. 8, Gulshan-1, Dhaka-
1212, Bangladesh.
Tel: 88-02-9888446, Fax: 88-02-9891915
Authorized Capital Tk.10,000 Million
Paid up Capital Tk.4,114.38 Million (2014)
Incorporation Certificate C-38464(422)/99, Dated: August 29, 1999
Commencement of
Business Certificate
Issue No. 3060, Dated August 29, 1999
Bangladesh bank
Approval Certificate
BRPD(P) 744(73)/99-2931 Dated: 22/09/1999
Listing with Dhaka and
Chittagong Stock
Exchange Limited
September 22, 2008
Commencement of
trading with DSE & CSE
September 22, 2008
VAT Registration 9011047423 Dated: 28/11/1999
TIN Certificate 003-201-1101/Co-3/Tax Zone-1/Dhaka
Auditors Hoda Vasi Chowdhury & Co, Chartered Accountants
BTMC Bhaban (8th Floor), 7-9 Karwan Bazar C/A,
Dhaka-1215
Legal adviser The Law Counsel, Barrister & Advocate City Heart
(7th Floor), Suit No. 8/8, 67 Naya Paltan, Dhaka-1000
Tax Consultants K.M. Hasan & Co., Chartered Accountants Home Tower
Apartment, 87 New Eskaton Road, Dhaka-1000
Exhibit -3.1

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3.1.1: Financial Performance at a Glance of FSIBL
Exhibit -3.2
Sl. No. Particulars 2009 2010 2011 2012 2013
1 Authorized Capital 4,600.00 4,600.00 4,600.00 10,000.00 10,000.00
2 Paid-up Capital 2,300.00 2,036.00 3,400.00 3,740.35 4,114.38
3 Shareholders' Equity 2,865.41 3,920.01 4,548.95 5,664.48 6,433.60
4 Total Capital (Tier-1+Tire-2) 3,379.03 4,582.21 5,449.44 8,145.33 9,261.24
5 Statutory Reserve 263.44 460.16 704.20 1,004.57 1,310.40
6 Total Assets 47,978.55 63,619.79 91,012.89 129,733.17 161,822.98
7 Total Liabilities 45,113.14 59,699.78 86,463.94 124,068.69 155,389.38
8 Deposits 42,423.09 56,344.95 78,145.04 109,905.57 139,520.95
9 Total Investment and Advances 38,725.87 52,123.90 69,467.32 96,304.23 114,601.80
10 Total Contingent Liabilities 5,971.67 8,859.66 11,363.57 9,248.23 11,865.56
11 Total Risk Weight Asset 31,113.43 50,423.90 60,010.80 79,817.20 91,434.10
12 Total Fixed Assets 376.47 573.61 979.35 1,997.72 2,476.43
13 Operating Income 1,327.63 2,085.20 2,738.25 3,734.68 4,409.60
14 Operating Expenditure 576.79 881.60 1,148.66 1,792.72 2,383.88
15 Profit before Provision & Tax 750.83 1,203.60 1,589.58 1,941.96 2,025.72
16 Profit before Tax 646.83 983.60 1,219.95 1,501.86 1,529.12
17 Net Profit after Provision & Tax 326.83 548.60 579.93 761.86 769.12
18 Foreign Exchange Business: 20,208.92 35,103.57 40,807.30 36,067.20 2,580.48
a) Import Business 16,101.17 28,391.20 29,534.90 24,056.20 1,217.70
b) Export Business 3,549.00 5,868.90 10,260.60 7,279.40 650.00
c) Remittance 558.75 843.47 1,011.80 4,731.60 712.78
19 No. of Foreign Correspondent 240.00 240.00 1,400.00 1,400.00 1,400.00
20 Profit Earning Assets 41,371.52 56,040.95 79,211.72 112,003.37 135,976.09
21 Non Prifit Earning Assets 6,607.02 7,578.84 11,801.17 17,729.80 25,846.88
22 Investment as a % of Total Deposit 91.28% 92.51% 88.90% 87.62% 82.14%
23 Capital Adequacy Ration 10.91% 9.09% 9.07% 10.20% 10.13%
24 Divident
a) Cash Nil Nil Nil Nil 10%
b) Bonus 10% 12% 10% 10% Nil
c) Right Share Nil 20% Nil Nil Nil
25 Cost of Fund 9.28% 8.90% 10.01% 11.00% 11.64%
26 Net Asset Value Per Share 12.45 12.81 13.38 15.28 15.64
27 Earning Per Share (EPS) 1.42 1.61 1.71 1.85 1.87
28 Price Earning Ration (times) 15.39 25.21 15.37 9.99 8.08
29 Return on Assets (ROA) 1.56% 1.89% 1.75% 0.69% 0.53%
30 No. of Shareholders 54,400 82,230 90,954 89,994 90,985
31 Number of Employees 775 929 1,342 2,090 2,367
32 Number of Branches 52 66 84 100 117
(Amount in million Tk.)

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3.2: Historical Background of FSIBL
First Security Islami Bank Limited (FSIBL) was formed in Bangladesh on
29th August 1999 under Companies Act 1994 to start banking business. It
obtained permission from Bangladesh Bank on 22 September 1999 to begin
its business. The Bank carries banking activities through its 136 branches in
the country. Their commercial banking activities include a wide range of
services including accepting deposits, discounting bills, conducting money
transfer and foreign exchange transactions, and performing other related
services such as safe keeping, collections and issuing guarantees,
acceptances and letter of credit. FSIBL started their business with
traditional commercial banking services as First Security Bank Ltd.
However, from January 01, 2009 they converted their business to Islamic
Banking with Islamic Shariah Act and the bank changed its name and mode
of business and incorporated as First Security Islami Bank Ltd. It started
with 14 branches in 1999 but now has 134 branches in Bangladesh which
shows the impact they have had in the economy. The bank maintains a
friendly relationship with the top ranking banks. They have online, SMS and
ATM banking facilities for their clients.
The company philosophy “A step ahead in time” has been exactly the spirit
for Asian success; the bank has been operating with talented and brilliant
personnel, equipment with modern technology so as to make it most
efficient to meet the challenges of 21st century and to fulfill the needs and
wants of its customers.

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3.3: Vision, Mission, Objective and Strategies of FSIBL
3.3.1: Vision
To be the premier financial institution in the country by providing high quality
products and services backed by latest technology and a team of highly
motivated personnel to deliver excellence in Banking.
3.3.2: Mission
 To be the most caring and customer friendly and service oriented bank.
 To create a technology based most efficient banking environment for its
customers.
 To contribute to the socio-economic development of the country.
 To attain the highest level of satisfaction through the extension of
services by dedicated and motivated professionals.
 To maintain continuous growth of market share by ensuring quality.
 To ensure ethics and transparency in all levels.
 To ensure sustainable growth and establish full value of the honorable
shareholders and
 Above all, to contribute effectively to the national economy.
3.3.3: Objective
 To conduct banking service according to Islamic Shariah
 To provide efficient computerized banking system.
 To ensure foreign exchange operations.
 To accept deposit on profit-loss sharing basis.
 To establish a welfare-oriented banking system.
 To play a vital role in human development and employment generation.
 To contribute toward balanced growth and development of the country
through investment operations particularly in the less developed areas.

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3.3.4: Strategies
 To achieve our customer’s best satisfaction & win their confidence.
 To manage & operate the bank in the most effective manner.
 To identify customer’s need & monitor their perception towards meeting
those requirements.
 To review & update policies, procedures & practices to enhance the
ability to extend better customer services.
 To train & develop all employees & provide them adequate resources so
that customers’ needs can reasonably addressed.
 To promote organizational efficiency by disclosing company’s plans,
policies & procedures openly to the employees in a timely fashion.
 To ensure a congenial working environment.
 To diversify portfolio in both retail & wholesale market.

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3.4: Organizational Structure of FSIBL
3.4.1: Board of Director
Mohammed Saiful Alam
Chairman
Alhaj Mohammed Abdul Maleque
Vice-Chairman
Ms. Farzana
Parveen
Director
Ms. Rahima
Khatun
Director
Ms. Atiqur Nesa
Director
Md. Wahidul
Alam Seth
Director
Shahidul Islam
Director
Mohammad
Oheidul Alam
Director
Ahsanul Alam
Director
Md. Sharif Hussain
Independent Director
Mohammad Kutub
Uddowllah
Independent Director
Mohammad Ishaque
Independent Director
Khurshid Jahan
Depositor Director
Mr. Syed Waseque
Md. Ali
Managing Director
Exhibit -3.3

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3.4.2: Management of FSIBL
Organogram
Managing Director
Deputy Managing Director
Executive Vice President
Senior Vice President
Vice President
First Vice President
Assistant Vice President
Senior Executive Officer
Executive Officer
Principal Officer
Senior Officer
Officer
Assistant Officer
Junior Officer
Trainee Officer
Exhibit -3.4

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3.4.3: Shariah Board
Shariah Members
Name Position Address
Sheikh (Moulana)
Mohammad Qutubuddin
Chairman Baitush Sharaf Complex, Shah
Abdul Jabbar (R) Road
Dhanialapara, Chittagong-4100.
Mufti Sayeed Ahmed Vice Chairman Markaz-e- Eshaete Islam 2/2 Darus
Salam, Mirpur, Dhaka
Moulana M. Shamaun Ali Member
Secretary
491, Wireless Railgate, Bara
Moghbazar, Dhaka-1217
Moulana Abdus Shaheed
Naseem
Member 2/C Green Valley Apartment 493,
Wireless Railgate, Bara Moghbazar,
Dhaka-1217
Mr. Mohammad Azharul
Islam
Member Lecturer Department of law,
University of Dhaka, Dhaka-1000
Observers Members
Name Position Address
Alhaj Md. Abdul Maleque Vice Chairman, Board of
Directors, FSIBL &
Observer Member,
Shari’ah Council
8/A, OR Nizam Road
Panchlaish R/A Chittagong
Prof. Md. Sharif Hussain Board of Directors, FSIBL
& Observer Member,
Shari’ah Council
57, East Hajipara (5 th
Floor) Rampura, Dhaka-
1219
Mr. Shahidul Islam Board of Directors FSIBL
& Observer Member,
Shari’ah Council
House# 7, Road# 1,
Nasirabad Housing Society,
Post: Medical P.S:
Panchlaish, Dist.:
Chittagong
Managing Director
Name Position Address
Mr. Syed Waseque Md. Ali Managing Director
(Current Charge), FSIBL &
Observer Member,
Shari’ah Council
House SW(I)1/A(4th Floor),
Road – 8, Gulshan -1,
Dhaka-1212
Exhibit -3.5

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3.5: Branches of FSIBL
Division Serial No. Branch Name Branch Code
DHAKADIVISION
01 AZAMPUR 140
02 BANGSHAL 106
03 BHALUKA SME 168
04 BISWAROAD 120
05 CITY UNIVERSITY 178
06 DAMODYA 180
07 DILKUSHA 101
08 FARIDPUR 162
09 BANANI 115
10 BASHUNDHARA 177
11 BHUAPUR BRANCH 202
12 BONOSREE 138
13 COLLEGE GATE 125
14 DHANMONDI 108
15 DONIA 121
16 GAZIPUR CHOWRASTA 214
17 GULSHAN 112
18 KARWAN BAZAR 176
19 KONAPARA 191
20 MALIBAG 174
21 MASTERBARI 183
22 MOHAKHALI 103
23 MOTIJHEEL 129
24 MYMENSINGH 160
25 ISLAMPUR 155
26 KERANIGONJ BRANCH 207
27 MADHABDI SME/KRISHI 154
28 MANIKGANJ BRANCH 203
29 MIRPUR 113

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DHAKADIVISION
30 MOHAMMADPUR 186
31 MUKSUDPUR 127
32 NARAYANGANJ 170
33 NORIA 181
34 POSTOGOLA BRANCH 225
35 RING ROAD 133
36 SAVAR 149
37 SHAFIPUR 117
38 TONGI BARI BRANCH 199
39 UTTARA 158
40 PACCHOR BRANCH 210
41 RANABHOLA BRANCH 228
42 RUPNAGAR BRANCH 223
43 SENANIBASH 126
45 SREEPUR 143
46 TOPKHANA 118
47 ZIRABO 148
SYLHETDIVISION
48 AMBORKHANA 128
49 BISWANATH 105
50 MOULVIBAZAR 122
51 TALTOLA 153
52 SYLHET 111
53 GOBINDA GONJ 132
54 BEANI BAZAR 175
CHITTAGONG
55 AGRABAD 104
56 BAHADDARHAT 123
57 BANSKHALI 187
58 CHAWK BAZAR 166
59 COURT BAZAR 135
60 DOVASHI BAZAR 124
61 FENI 165
62 HATHAZARI 137

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CHITTAGONGDIVISION
63 ANDERKILLAH 000
64 BANDAR TILA 148
65 CHAKARIA 121
66 COMILLA 150
67 COX’S BAZAR 139
68 EID GAON 151
69 HALISHAHAR 185
70 HNILA 221
71 JUBILEE ROAD 107
72 KATIRHAT 206
73 KHATUNGONJ 102
74 MIRZAKHIL 218
75 MOHRA SME/KRISHI BR. 161
76 NAZU MEAH HAT 112
77 PAHARTOLI RAOZAN BR. 196
78 PATIYA 127
79 KADAMTALI 212
80 KERANIHAT 110
81 KUMIRA 193
82 MOHILA 167
83 NAZIR HAT 138
84 PAHARTOLI 159
85 PATHER HAT 145
86 PATIYA MOHILA 182
87 PEKUA 192
88 RAMGONJ 131
89 RANIR HAT SME/KRISHI BR. 156
90 PROBORTAK MOR 0
91 RAMU 200
92 TANTOR 229
93 BAGACHRA BRANCH 213
94 BARGUNA 0

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KHULNADIVISION
95 CHUADANGA 190
96 FAKIRHAT 0
97 FULTOLA 222
98 JESSORE 141
99 KALIGANJ 224
100 KESHABPUR 188
101 BAGERHAT 172
102 BAROBAZAR 211
103 DINAJPUR 171
104 FAKIRHAT 215
105 GALACHIPA 194
106 JHENAIDAHA 197
107 KAPILMUNI 208
108 KHAJURA BAZAR 220
109 KHULNA 116
110 MAGURA 173
111 MORRELGANJ 216
112 NARAIL 204
113 NARIA 0
114 SATKHIRA 146
115 KUSHTIA 179
116 MEHERPUR 219
117 NAOGAON 0
118 NARAIL LOHAGARA SME 157
119 NAVARON BRANCH 198
120 SHYAMNAGAR 205
RAJSHAHI
121 BOGRA BRANCH 0
122 KANSAT BRANCH 227
123 PABNA 169
124 DHUPOIL BAZAR BRANCH 217
125 NATORE BRANCH 231
126 RAJSHAHI BRANCH 136