Bangladesh Bank Training Academy Journal

Abstract

Non-bank Financial Institutions (NBFIs), involved mainly with long-term financing, have earned significant changes in terms of both number and list of their activities. Thus, performance evaluation of NBFIs, considering this changed environment, is a time demanding issue. The study aims to analyze the revenue and expense compositions of listed NBFIs in Bangladesh and examine the impacts on their profitability. The study covers all 20 NBFIs listed on DSE and data have been collected from the annual reports during the year 2008 to 2011. Data have been presented through table and graphs for better visual understanding. For the purpose of the analysis, the revenues composition has been classified into interest revenue and non-interest revenue whereas the expenses are classified as interest expense and operating expense. Profitability has been measured by return on assets. It is found that revenues are not well diversified and they are heavily dependent on their interest revenues. On the other hand, the interest cost against borrowing is the major source of expense and NBFIs are heavily dependent on the banking financial institutions for borrowing. NBFIs are suggested to increase their product diversification with value added services along with efficient and skilled manpower to reduce their interest expenditure in ruising high cost fund unlike the banking institutions on the way to magnify their profitability.