Internship Report on Interest Rate Risk Management of Eastern Bank Limited

Economy is the strength of any country’s development and the expansion power with the rapid growth of sustainability. So retain this sustainability is the core jingle of any country in today. Bank is the major and supreme actor of this development and sustainability. Commercial bank plays an imperative role in the economic development of a nation through the fluctuation of interest rate where we know that this interest rate is the major role player in a financial growth. So it is more crucial for an economy to judge this interest rate fluctuation in a hasty movement and adjust this fluctuation with the proper way of monetary policy. Specifically Central Bank of our Country i.e. Bangladesh Bank always put their attention in this interest rate and try to adjust this interest rate through the controlling inflation and recession. And commercial banks of Bangladesh play this role directly and indirectly in various economic sectors with adequate supervision and monitoring of Central Bank which ultimately led to the economic solvency or net worth of financial institution as well as economical growth of a country.
There are 48 commercial Banks operating in our country. Out of this 5 are operating as specialized bank, 9 foreign banks, 7 Islamic banks and 4 are state owned banks. Different banks are providing different services and products to the individual and as well as corporate clients to meet up their needs and necessity. But their primary objectives are almost same - create the sound financial cycle. And interest rate is the major actor for that through the proper monitoring of central bank.
Interest rate is the more crucial and supreme part of the macroeconomic variable of any country especially in our country where excessive inflation can create the impediment of the total financial growth. In our country recently Eastern Bank Limited (EBL) proved itself as a most growing and sustainable bank even in the recent financial crisis. Their total performance in recent years makes itself as an efficient one. Though their policies sometimes are criticized for the aggressive profit movement with fewer cushions but still they are one of the leading and profit making bank in our country through their clear and efficient policy. Today it is more demandable to judge them in the verge of interest rate risk. For the importance of this risk EBL already take some steps by proper maintaining portfolio in case of purchasing assets with the proper valuation of assets duration.
But it is not the only prevention to reduce this risk. There are something’s more needed for the proper reduction of that risk. And really it will be more beneficial if the bank judge their total interest rate risk through the several analyses. The basic importance lies in the proper estimation of interest rate fluctuation, repo rate, duration, GAP etc. This research report intends to explore the pattern of the interest rate risk over the 5 years in this specific bank and find out the way to address its risk exposure.

The ultimate objective of this study is to search the total interest rate risk and to find out net mismatch of bank whereas we know that banks are supreme actor of that economical growth. The concise objective of this research is to search the interest rate risk of EBL (Eastern Bank Limited) and find out the factors explicitly addressed by this bank. The specific objectives are:
To know about the position of EBL in interest rate GAP
To know about the way how the bank proceed in case of interest rate risk
To analyze which factors the bank consider to minimize that risk
To scrutinize the last 5 years data to evade its risk position implemented through the previous policy
To find out the relation among various factors which affect in this risk
To find out the sensitivity and mismatched maturity of the bank assets and liabilities