An Appraisal of IDLC Finance Limited

Abstract

The IDLC Finance Ltd. was incorporated in Bangladesh as a public limited company with a limited liability as on May 13, 1985 and commenced leasing operation on 22 February 1986.the firm has been listed in Dhaka Stock Exchange on 20 March 1993. In the year 2007-08,2008-09,2009-10, the bank has increased its paid up capital by issuance 500,000 bonus share each year. The number of branches opened by the firm and the number of employees recruited during the period 2005-06 to 2009-10 shows an increasing trend. The deposit and investing operation of IDLC Finance Ltd. from the year 2005-06 to 2009-10 has been shown in the report. IDLC Finance Ltd. deposit mix is a combination of Personal product, Annual profit Term Deposit, Double / Triple Money Deposit, Millionaire / Multi millionaire Scheme, Multimillionaire Scheme, Monthly / Quarterly Earner Deposit etc. The deposits growth rate shows an increasing trend during the period. The firm has a diversified advance and investment portfolio, which shows a positive association with the amount, of deposits of the firm. IDLC Finance Ltd. The risk management of firm covers five core risk areas of banking sector, mainly credit risk management, Market Risk, Liquidity risk , Operational risk, Business volume risk. IDLC Finance Ltd. has introduced a variety of product and services for their customers. The firm also performed CSR activities as it thinks it is an important responsibility of them toward the society. By analyzing the financial performance of IDLC Finance Ltd., it has been found that the operating expenditure of the bank shows a lower growth rate than the operating income over the year 2005-06 to 2009-10, which had impact on its net income. As a result, the profit indicating ratios (ROE, ROA, EPS, dividend payout ratio) and market ratios (Price/earnings ratio and Market! Book ratio) are also affected. However, the solvency ratios show that the bank gradually increases proportion of debt compared to its total assets and total equity. Also the risk ratios shows that the bank performed better during the period, it has been able to reduce the non performing loan as a proportion, decreases the amount of loan / deposit ratio. The current ratio shows a decreasing trend over the period, also its growth rate is declining. Finally some problems have been identified and suggestions have been given to the management to overcome the problems. At the end of the report, a conclusion has been given on the overall performance of IDLC Finance Ltd.