1. Welcome to our Presentation On Credit Management and Financial performance of Islamic Finance and Investment Limited. Welcome to our Presentation On Credit Management and Financial performance of Islamic Finance and Investment Limited.

2. General Objective The prime objective of the report is to “Credit management and financial Performance Evaluation of Islamic Finance and Investment Limited” Specific Objectives  To identify and assess the impact of the present performance of IFIL  To know the credit management system applied in IFIL  To calculate the financial ratios and identify the areas of concern.  To know their business performance over the year.  To know their products and services  To know the issues that they follow while disbursement  To identify the findings and raise possible recommendations for IFIL. Objectives

3. Islamic Finance and Investment Ltd. is a financial institution incorporated in Bangladesh on February 27, 2001 as a public ltd. Co. under the company act, 1994. The company obtained its license from BB on April 12, 2001as required under section 4(1) of the financial institution Act, 1993. The company went for public issue in 2005 and its shares are listed in both Dhaka Stock Exchange ltd. and Chittagong Stock Exchange ltd. About Islamic Finance and Investment Ltd

4. Strategic objective  To introduce new products and services with Islamic values through diversification and customization of existing products and services to ensure maximum market coverage.  To provide employees with high motivation, extensive opportunities for learning and career development, competitive pay and benefits and congenial environment where diversify is valued.  To create sustainable economic value for stakeholders.  To conduct business in a socially responsible manner under Islamic principle.  To elevate ethical and business standard with high corporate governance.

5. Products and services at a glance Investment productsDeposit productsCorporate service MusharakaMudaraba Term Deposit SchemeLoan Syndication MudarabaMudaraba Term Deposit Scheme (Monthly Profit) Corporate Advisory Services MurabahaMudaraba Pension Deposit SchemeGuarantee Issue Ijahrah (lease)Mudaraba Hajj Deposit Scheme Hire Purchase Sherkatul Melk (HPSM) Mudaraba House Owning deposit Scheme Bai MuajjalMudaraba Mohor Deposit Scheme Bai-SalamMudaraba Special Deposit Scheme, and so on Bai-Istanza

6. Credit Management Credit management is a dynamic field where a certain standard of long-range planning is needed to allocate the fund in diverse field and to minimize the risk and maximizing the return on the invested fund. Continuous supervision, monitoring and follow-up are highly required for ensuring the timely repayment and minimizing the default

7. Principles of Sound Lending The basic lending criteria can be considered as eight main headings, as follows:  Principle of Safety  Principle of Liquidity  Principle of Purpose  Character and ability of the borrower  Principle of Security  Principle of profitability  Source of repayment  Principle of National Interest

8. Credit approval system ClientIFIC Preparation of Proposal by the Credit Officer Endorsed/ Signed by Branch Credit Committee Evaluated by the Head Office Credit Committee Evaluated By Managing Director Executive Committee: Approves or rejects the proposal Loan Documentation Disbursement Continuous Follow up till adjustment Figure: 3.5.1 Credit Appraisal Systems Loan Application

9. Business Performance Year Taka in Million 20042005200620072008 Sanction8509538799551316 Disbursement6088746636781053 Deposit7441057110012641635 Outstanding Investment 9531637189521522615

10. Financial Performance 20042005200620072008 Total Operating Revenue240186250291345 Non Operating Income8148109 Profit Before Tax2552546162 Profit After Tax1849 5156 Total Assets10171769199722702755 Share Holder’s Equity170319343360376 Paid up Capital147261274 Current Assets3346338099971258 Current Liabilities402654103110031120

11. Financial Ratios 20042005200620072008 Debt Equity Ratio3.52:13.24:11.88:12.58:13.29:1 Return on Average Assets (%)2.124.612.652.402.49 Return on Average Equity (%)14.4920.2315.0614.5515.43 Profit Margin on Operating Income (%) 7.6026.6419.9317.5616.47 Capital Adequacy (%)33.0432.9344.1630.3122.68 Current Ratio0.83:10.97:10.78:10.99:11.12:1 Net Worth to Total Assets (%)19.7929.1717.2115.8813.65 Earning Per Share (After Tax)18.2227.8418.1818.6520.68 Price Earning Ratio (P/E)-10.9210.5611.2116.32 Dividend Pay out-DP-0.540.690.800.77 Dividend10% S5% S-10% C12.50% C15% C16% S Right Issue1:1----

12. Facility wise disbursement YearTaka in Million 20042005200620072008 Lease400605460380562 HPSM187155128230322 Bai Muajjal211147569169 Total6088746636791053

13. Sectoral Disbursement of Investment for the Year 2008 SectorAmount Taka in Million % Taxicab39.042 Other Transport220.379 Cargo Vessels75.453 Textile / Garments & Accessories621.5926 Printing & Packaging14.241 Medical, Pharmacy, Chemical & Cosmetics66.933 Power Generators69.283 Agriculture1.120 Others (Lease)339.8314 Real Estate696.8029 Information Technology0.890 Others (HPSM)73.763 BAIM187.577 HDS3.180 Total2410.05100.00

14. Sectoral Disbursement of Investment for the Year 2008

15. Allocation of Expenses 2008 SectorsAmount (Taka in Thousand)Percentage Profit paid on Borrowed Fund64,79645% Salaries & Allowance20,09314% Other General Expenses2,3992% Administrative Expenses21,07015% Depreciation on fixed Assets3,6113% Provision for Doubtful Accounts & Future Losses23,35417% Tax Expenses5,6784% Total3,29,007100%

16. Dividend Policy The Board of Directors has decided to create a Dividend Equalization Reserve to face uncertain profit growth and to stabilize dividend payment. It was also a demand of the shareholders in the previous AGMs. Therefore, a portion of the profit has been earmarked for this reserve and this will continue in future also. We, however, have tried to give the honourable shareholders as much as possible. After tax provision of Tk. 56.78 lac, our distributable profit stood at Tk. 5.68 crore. The Board of Directors recommends 16% stock dividend for the year 2008 compared to 15% cash dividend for the year 2007. Dividend trend for the last few years is given below: Dividend Trend 20042005200620072008 Dividend10% S5% C 10% S12.50% C15% C16% S (proposed)

17. Findings  They have maintain a strong but lengthy process for granting credit to a particular area of investment  In 2005 the company was in boom condition all the ratios such as ROA, ROE, EPS, P/E shows that better position than any of the year.  Current ratio in 2008 is 1.12:1 which is greater than all previous year.  Capital adequate ratio is decreasing which indicates the bank is being greater risk.  By analyzing previous four years financial data we have found that the company was able to generate more operating revenue than its preceding year but their earnings after tax was reduced by on an average of 1.5% than previous year because of cost amount is increased.  They have maintain a strong but lengthy process for granting credit to a particular area of investment  In 2005 the company was in boom condition all the ratios such as ROA, ROE, EPS, P/E shows that better position than any of the year.  Current ratio in 2008 is 1.12:1 which is greater than all previous year.  Capital adequate ratio is decreasing which indicates the bank is being greater risk.  By analyzing previous four years financial data we have found that the company was able to generate more operating revenue than its preceding year but their earnings after tax was reduced by on an average of 1.5% than previous year because of cost amount is increased.

18.  The ratio between Debt and equity, in 2008, is increased to 3.29:1 which represent that they have Tk. 3.29 debt capital in against of Tk. 1 of equity capital, which is better for its cost of capital but at the same time they are in more risk.  One of the major findings is it can not disburse its sanction money efficiently.  Outstanding investment increased to 261.49 crore at the end of 2008 from 215.18 in 2007  Their major expense sector is interest paid to deposit holder which is more than 50% of total expenses.  The ratio between Debt and equity, in 2008, is increased to 3.29:1 which represent that they have Tk. 3.29 debt capital in against of Tk. 1 of equity capital, which is better for its cost of capital but at the same time they are in more risk.  One of the major findings is it can not disburse its sanction money efficiently.  Outstanding investment increased to 261.49 crore at the end of 2008 from 215.18 in 2007  Their major expense sector is interest paid to deposit holder which is more than 50% of total expenses. Findings

19.  They should reduce their lengthy process in credit granting procedure by maintaining a standard.  Their capital adequacy ratio is decreasing so they should increase it as soon as possible by increasing to optimal equity capital or taking other strategy.  Their current assets are too low to backup the current liability, so they should increase current asset or should reduce the current liability.  They should pay more attention their sanctioning because they can not efficiently disburse its sanction money as result investment can not be placed according to planning.  They should reduce their lengthy process in credit granting procedure by maintaining a standard.  Their capital adequacy ratio is decreasing so they should increase it as soon as possible by increasing to optimal equity capital or taking other strategy.  Their current assets are too low to backup the current liability, so they should increase current asset or should reduce the current liability.  They should pay more attention their sanctioning because they can not efficiently disburse its sanction money as result investment can not be placed according to planning. Recommendations

20.  In consideration of all economic situations in 2008 the business performance of IFIL is satisfactory. But in 2005 it was more than satisfactory, so they should analyze why they could not retain in such position like 2005.  There investment amount was increased in 2008 than any other previous year but there return on investment was not increased because of higher cost associated with the investment appraisal system.  In consideration of all economic situations in 2008 the business performance of IFIL is satisfactory. But in 2005 it was more than satisfactory, so they should analyze why they could not retain in such position like 2005.  There investment amount was increased in 2008 than any other previous year but there return on investment was not increased because of higher cost associated with the investment appraisal system. Recommendations

21. Thank You All