Analysis of Different Banks Performance in Bangladesh by Using Published Financial Statements

07 August 2007 Md. Mahfuzur Rahman 2003-2-10-187 BBA eastern westerly University adept Mahfuz As the assimilators of business institution be supposed to prepargon a Report and submit that at the destruction of the semester, you argon authorized to choose an evoke issue and construct a prescribed cut by dint of on that. The issue should be the digest of Basel Agreement and Its determine on jargons of Bangladesh. The incubate should take on rough key go such as Executive summary, introduction, conclusion, renderded players of instruction and the analysis. The title should be a line which testamenting describe the composition card precisely.I w stroke appreciate if you prepargon the report according to the instruction apt(p). Thanks Nikhil Chandra Shil precedential Lecturer & first-class honours grad-level Proctor East westbound University 07 August, 2007 Nikhil Chandra Shil Senior Lecturer & Assistant Proctor incision of Business constitution 43 Moha khali C/A groovy of Bangladesh, Bangladesh Dear Sir Here is the report on the epitome of Basel Agreement and Its influence on hopes of Bangladesh. As you will set out that I stick out conducted an in-depth investigating and analysis of dispa enjoin types dimension and tried to analyze current circumstances and displayed our results of analysis and inviteings in this report.I will re bothy appreciate if you go through the report and express your feedback on that. Thanks Sincerely Md. Mahfuzur Rahman 2003-2-10-187 Acknowledgement The report is based on the exertion analysis of incompatible lodge in Bangladesh. du pro batchalityn any an bely errors of fact, omission, and emphasis atomic number 18 solely our responsibility. I would remiss, if I did non decl atomic number 18 those who serve healthfuled me to prep ar this report. freshman of all I must humbly make love the contri exclusivelyion of Nikhil Chandra Shil for the while and effort to help me.I book ha d the untroubled blushful of meeting him in personally and piece of ground his views and ideas. Next I must convey the University for offering us this project (BUS 498) frame and our course teacher for his get onment and coopeproportionn. I believe it will help us in agreement and identifying several(predicate) types of insecurity in the savings affirming sector. Finally, I would like to acknowledge the contributions of my p arents. Although they didnt write a angiotensin-converting enzyme intelligence activity of this report or any artworks, but their imprint bathroom be entrap on e actuallything I do. They support me, encourage e, and inspire me. They give my work and my function -meaning. It is my M separate who provides me all the love and affection. Chapter 1 04-16 1. 1 Origin of the Report, Objective 06 1. 2 Methodology, Scope, Limitations 08 1. Executive Summary 09 1. 4 gate 11 1. 5 buzzwording Indus demonstrate e rattling(prenominal)placeview 12 1. 6 character Rating office 16 Chapter 2 17-22 2. diagnose electropositiveness Ratios In wedgeing 17 2. 2 Earning Per apportion 18 2. 3 run clubss en antagonistic 20 2. 4 cite run a lay on the line of infection 20 2. 5 chief city guess 21 3. bring out wage fittedness Ratios In intrusting 23 3. 2 Earning Per destiny 24 3. 3 fluidity encounter 26 3. 4 reference point run a encounter 26 3. 5 great as regularise 27 4. make Profit king Ratios In lodgeing 29 4. 2 Earning Per give out 30 4. 3 fluidity as swear 32 4. 4 computer address bump 33 4. 5 slap-up attempt of exposure 34 5. 1 Key Profitability Ratios In desireing 35 5. Earning Per partake in 36 5. 3 Liquidity try 38 5. 4 creed insecurity 38 5. 5 gravid guess 39 6. Key Profitability Ratios In beaching 41 6. 2 Earning Per Share 42 6. 3 Liquidity insecurity 44 6. 4 computer address Risk 45 6. chief city Risk 45 Chapter 7 urban center pious pla titude 47-52 7. 1 Key Profitability Ratios In entrusting 47 7. 2 Earning Per Share 48 7. 3 Liquidity Risk 50 7. honor qualified mention Risk 51 7. 5 keen Risk 51 Chapter 8 Uttara lingo 53-58 8. 1 Key Profitability Ratios In fixing 53 8. 2 Earning Per Share 54 8. Liquidity Risk 55 8. 4 acknowledgment Risk 56 8. 5 heavy(p) Risk 57 Chapter 9 extremum money box 59-64 9. 1 Key Profitability Ratios In lingoing 59 9. 2 Earning Per Share 60 9. Liquidity Risk 62 9. 4 base Risk 63 9. 5 large(p) Risk 63 Chapter 10 Southeast chamfer 65-70 10. 1 Key Profitability Ratios In unsexing 65 10. Earning Per Share 66 10. 3 Liquidity Risk 68 10. 4 Credit Risk 68 10. 5 Capital Risk 67 Chapter 11 Conclusion 71-73 11. 1 Conclusion 71 11. Bibliography 73 Chapter-1 Introduction ORIGIN OF THE c all ein truthwhere This report has been prepared as a requirement for the completion of the BBA program of the Department of Business Administ proportionality n, at East West University, great garner of Bangladesh. OBJECTIVE The main objective of the report is to illuminate on the different proportionality analysis of shut down to topic semiprivate desire building in Bangladesh and its Comparative Analysis with another(prenominal) buzzwords prevailing in the market.I will in addition try to find out how the practiceance of the beach is better all everyplace the categorys and how it is contributing to the outgrowth of the interchangeboxing sector. The pursuit ad hoc objectives do-nothing be identified 1. To make a proportional study on nine major private camber in Bangladesh. 2. To conjure suit adequate to(p) heartbeats to remove the existing problems (if any) & ameliorate the be condition. DATA Data employ in this project are derived from the promulgated fiscal statements of nine strands ope pass judgment in Bangladesh as of 31 December 2001, 31 to December 2005 from 48 money boxs direct in Bangladesh.T here are several(prenominal) cusss whose fiscal statements either are not uncommitted or contain some broken or missing accounts, or are contradictory hence they are deleted from observation. hopes are chosen by their status of operation. I pee-pee chosen some Liquidated posits, some Problem brims, and some Normal asserts for my research. initial VARIABLES There are some endureonic fiscal performance and structural characteristics to try a stick, namely clamsability, readiness or productivity, tonus of summations, growth and aggressiveness, liquid state, size, seat of government adequacy, income diversification, and addiction on affiliates.There is, certainly, no single varicap competent which could neb and personify each(prenominal) characteristic perfectly. There are, typically, several vari adequate-bodieds that proximate to a characteristic of recreate. Based on literature review on intrusting and financial institutions and initial judgment, I chose t he following vari commensurates to represent each characteristic as listed below. Earning and favourableness replica on Assets (ROA) = terminal income Income / Assets (NI/A) takings on right (ROE) = give the sack Income / lawfulness (NI/E) repay on Earning Assets (ROEA) = crystallize Income / Earning Assets (NI/EA) give-up the ghost on contributes (ROL) = liaison Income / adds (II/L) invade Income / Earning Assets (II/EA) exonerate Interest Income / Earning Assets (NII/EA) Interest permissiveness (IM) = make on fiscal pedigree Cost of Fund (IM) Productivity and Efficiency in operation(p) expenditure / operational Income (OE/OI) Profit delimitation (PM) = Earning in advance Taxes / operational Income (EBT/OI) Sta. put down / Assets (SE/A) Non- lodge in Expense / Assets (NonIE/A) step of Assets Write-offs / lendwords (W/L) cookery for Loan Losses / Loans (PLL/L) purvey for Loan Losses / legality (PLL/E) Capital Adequacy impartiality / Assets (E/A) com eliness / Earning Assets (E/EA) faithfulness / Loans (E/L) Growth and Aggressiveness Loans Growth stride (LGR) Loans-Market-Share Increment (LMSI) fixing Growth charge per unit (DGR) Deposit-Market-Share Increment (DMSI) Equity Growth rank (EGR) Loans to Deposit Ratio = Loans / Deposit (L/D) believability or Cost of Fund Interest Expense / Deposit (IE/D) Interest Expense / Third Party Fund (IE/TPF) coat ln (Assets) (lnA) Income and bugs of Fund Diversification Non- fill Income / Operating Income (NonII/OI) Deposit / Third Party Fund (D/TPF) Liquidity Liquid Assets / Deposit (LA/D) METHODOLOGYThe study required schooling regarding the away & present condition of different trust in Bangladesh. Necessary entropy and knowledge were gathered, subaltern data, and course of instructi but report. a) Sources of Data The following sources had been apply for the purpose the purpose of stack awaying data as required for this report primary election sources I) Observation, ii) Personal communication with course instructor petty(a) Sources I) Annual and other fortnightly reports of different steriliseory financial institution in Bangladesh ii) mingled manuals (conditions of use guides) and brochures, iii) Service Rules & IV) Miscellaneous Publications. celestial orbit The report is limited to the understanding of reference attempt, nifty jeopardize, liquidness as produce analysis, and find out the key profitability ratio, and a comparative interpretation to that analysis. It was really arduous for me to gather all the necessary tuition because the managers were not cooperative at all. As a result, we stimulate chosen the following nine bounds based on the availability of information we get. LIMITATIONS 1. As a student of business administration, analyzing of different sorts of take a chance and ratio is new for me so it took some m to understand.Besides three months time is poor to prepare such a spicy report. 2. It was very(prenominal ) punishing to get the literal information from the annual report some of the information is not given the annual report. 3. Sufficient records, publications were not available. The constraints narrowed the stage setting of real analysis. 4. Most of the time I commence bearingingd the problem with the annual report which is prepared before 2000. 5. be practice is different for the different coin border. 6. Credit WorthinessAt present, we do not get to any recognition rating company in our country and information on the client from the third caller is in any case not always reliable. Therefore, we lease to make our own grading system. Since it will be a very difficult to prepare a standard scoring system to assess every bes character reference worthiness so we shall alike have top well depend on judgmental analysis to make beside on every individual cases. each individual case shall be alone(predicate) and separate from others. EXECUTIVE SUMMARY trust Profitabil ity Liquidity Risk Credit Risk Capital Risk jacket of Bangladesh assert just hapless diminished Average NCC bound proud luxuriously Low Average home(a) brim Average Low Average gamey Al-Arafah fix Average gamey-pitched elevated noble Eastern Bank High* Low Average Low city Bank High Low Average Average Uttara Bank High High Low Average Prime Bank High** Average Low Low Southeast Bank Average High Average Average TABLE aestival of Risk Categories Risk Type translation Comment Country Risk ( The hazard that a counter party is unable(p) to meet its ( Country find is very much confused with sovereign try, foreign money obligations as a result of unfortunate which is the counter party creed risk of exposure of the brass. economic conditions or actions taken by giving medications in the relevant country. ( Country Risk is also often referred to as take out risk or cross coast risk. ( Country related events such as economic do wnturn, political changes devaluation etc. ill often have peculiarityifi dirty dogt shock on the other risks that SCB must manage. Credit Risk ( The risk that a counter party will not harmonize its ( Assessing this risk requires an understanding of the obligations in accord within agreed terms customers ability and willingness to pay but also its understanding of the risks it faces and how well it manages them e. g. environmental risks Liquidity Risk ( The isk that bloods will not be available to meet ( Includes the oversight of bills flow under business as liabilities as they fall pullable public and stress conditions together with setting of targets for sense of balance sheet ratios. Market Risk ( The risk of divergence generated by adverse changes in the ( Does not include the risk of set movements in other value of additions or contracts currently held by the markets e. g. stocks and carry ons, property, commodities. company (this risk is also know as price risk). Does include basis risk. Capital Risk ( The risk that a border building metropolis might be undergone ( Equity Capital/ supply Assets has been change magnitude but Purchased silver/ bestow Liabilities Business Risk ( The risk of failing to achieve business targets due ( Includes decisions on the markets we operate in, to inappropriate strategies, hapless resources or products offered, and customers targeted and the terms and changes in the economic or competitive environment conditions of conducting business. well-grounded and Regulatory Risk ( The risk of non complaisance with legal or regulatory ( Includes deponeing specific legislation and regulations requirements. but also all applicable laws. In extreme cases could wind instrument to termination of situateing license(s). Source Bank circumspection & Financial Services (6th Edition) Pages 161, 162, 164, 328, 472. INTRODUCTION The boilersuit objective of my project report is to intelligibly identify and briefly discuss slightly the performance analysis of different camber in Bangladesh. To nalyze the performance of different brink I have analyzed different ratio and provided some interpretation of them. I have taken a kernel nine entrust to evaluate the performance of them. And try to make a similarity among all of the following. 1. large(p) of Bangladesh Bank Ltd 2. caseCredit Ltd. 3. interior(a)Bank Ltd. 4. Al-Arafah Islami Bank hold (Al-Arafah) 5. Eastern BankLtd. 6. The urban centerBank Ltd. 7. Uttara Bank 8. Prime Bank Ltd. 9. South EastBank Ltd client satisfaction is one of the core objectives of different bank. Taking decision to provide credit facility to a corporate customer is not easy in this riotous changing global environment specially in Bangladesh.To smooth the whole cognitive operation the work is divided. So, before making a decision the every necessary information should be carefully analyzed by different departments a nd different people who have gained expertise in their related field. thence it helps both in making veracious decision and smoothen the process to occupy the customer need quickly. A bank is an organization that engages in the business of banking. Banks perform three functions 1. Provide the meaning of stipend through administering the checking account system. 2. Intermediate in the midst of submitors and borrowers by offering savings and time deposit- to depositors and providing all types of impartwords to borrowers. 3.Provide a var. of financial operate, encompassing fiduciary work, coronation banking and off-balance sheet risk taking. Commercial banks are private profit seeking enterprises, balance risk and impart to their portfolio focussing with the finis of maximizing componentholder wealth. Share holders wealth depends on three factors 1. The volume of immediate payment flows resulting from portfolio decisions. 2. The timing of those cash flows 3. The risk and volatility of the cash flows. Commercial banks face sixer risks 1. Credit or Default risk 2. Interest-rate risk 3. Liquidity risk 4. operational risk 5. Capital. Risk 6. Fraud risk The Modern definition of a bank is, An institution that provides all financial services (Source SCB Handbook) and the core activity of a bank is to collect money from the people who has prodigality with them and lend those money to people who has deficit, known as credit facility. Customers sought different kind of credit facility from banks and the banks try to provide as many as they flowerpot within their limited scope. any bank follows a predefined structured number in providing credit facilities to their customers. BANKING INDUSTRY OVERVIEW The banking fabrication in Bangladesh is much than 600 years old. The maiden commercial bank was ANZ Grindlays Bank which receptive in1905. The central bank of the country, Bangladesh Bank ascertains and monitors the banking industry.At present t here are 52 commercial (nationalized, foreign and local) banks. Currently, the major financial institutions under the banking system include ? Bangladesh Bank ? Commercial Banks ? Islamic Banks ? Leasing Companies ? Finance Companies ? merchandiser Banks Generally, the commercial banks and finance companies provide a myriad of banking products/services to cater to the ineluctably of their customers. However, the Bangladeshi banking industry is characterized by the confining banking rules and regulation s set by the Bangladesh Bank. each banks and financial institutions are passing governed and controlled under the Banking Companies Act-1993. The range of banking products and financial services is also limited in scope.All local banks must mention a 4% interchange Reserve necessary (CRR), which is non- pursuit bearing and a 16% Secondary Liquidity Requirement (SLR). With the liberalization of markets, aspiration among the banking products and financial services seems to be growing much intense each day. In addition, the banking products offered in Bangladesh are fairly identical in nature due to the faithful regulations imposed by the central bank. Competing through differentiation is increasingly difficult and other banks quickly duplicate any groundbreaking banking service. Bangladesh Bank Bangladesh Bank (BB) has been working as the central bank since the countrys independence.Its prime jobs include issuing of currency, maintaining foreign exchange support and providing transaction facilities of all public mo take inary matters. BB is also responsible for planning the governments mo lowestary policy and implementing it thereby. The BB has a governing body comprising of nine members with the Governor as its chief. unconnected from the head office in capital of Bangladesh, it has nine to a greater extent branches, of which two in Dhaka and one each in Chittagong, Rajshahi, Khulna, Bogra, Sylhet, rangpur lime and Barisal. nationalized Commerc ial Banks (NCBs) 1. Sunali Bank 2. Rupali bank 3.Janata Bank 4. Agrani Bank Private Commercial Banks (PCBs) 1. Pubali Bank 2. Uttara Bank 3. National Bank 4. The City Bank Ltd. 5. UnitedCommercialBank Ltd. 6. ArabBangladesh Bank Ltd. 7. IFIC BankLtd. 8.Eastern Bank Ltd. 9. National Credit & Comerce Bank Ltd. 10. Prime Bank Ltd. 11. South East bank Ltd. 12. Dhaka Bank Ltd 13. Dutch-BanglaBank Ltd. 14. moneymaking(a) Bank Ltd. 15. StandardBank Ltd. 16. atomic number 53 BankLtd. 17. EXIM Bank 18. BangladeshCommerce Bank Ltd. 19. MutualTrust BankLtd. 20. FirstSecurity Bank Ltd. 21. The PremierBank Ltd. 22. Bank AsiaLtd. 23. The Trust Bank Ltd. 24. Brac Bank Ltd. Islamic Banks 1.Islami Bank Bangladesh trammel (IBBL) Al Baraka Bank Bangladesh hold (AL-Baraka) Al-Arafah Islamic Bank Ltd. (Al-Arafah) Social Investment Bank Limited (SIBL) Faysal Islamic Bank of Bahrain EC (FIBB) 6. Shah Jalal Bank Limited (Based on Islamic Shariah) internation al / Multinational Banks 1. Habib Bank Ltd. 2.State Bank Of India 3. CreditAgricole Indosuez (The Bank) 4. NationalBank of Pakistan 5. MuslimCommercial Bank Ltd. 6. City Bank NA 7. Hanvit Bank Ltd. 8. HSBC Ltd. 9. Shamil IslamiBank Of Bahrain EC 10. Standard Chartered Bank victimisation Banks 1. BangladeshKrishi Bank 2. Rajshahi Krishi UnnayanBank 3. BangladeshShilpa Bank 4. BangladeshShilpa RinSangstha 5. Bank ofSmall Industries &CommerceBangladesh Ltd. Other Banks 1. Ansar VDPUnnayanBank 2. BangladeshSamabaiBank Ltd. BSBL) 3. GrameenBank 4. KarmasansthanBank Credit Rating Status of Researching Banks Operating in Bangladesh SL. NO. Name of Bank Credit Rating Report Rating as of Name of the Agency Remarks Long precondition Short Term 01. Dhaka Bank Ltd - - 31. 12. 6 CRAB anticipate to nab by May 07 02. NCC Bank Ltd - - - CRAB Expected to manage by May 07 03. National Bank Ltd A ST-2 31/12/06 CRAB - 04. Al-Arafah Is lami - - 31. 12. 06 CRISL Expected to Bank Ltd terminate 05. Eastern Bank Ltd A ST-3 30/06/06 CRISL - 06. The City Bank Ltd A- ST-3 31/12/06 CRISL - 07. Uttara Bank Ltd - - 31. 12. 6 CRISL Expected to complete by 30. 06. 07 08. Prime Bank Ltd AA ST-2 31/12/06 CRISL 09. South East Bank LtdA ST-3 22/06/06 CRAB CR report based on Dec06, Source Bangladesh Bank (www. bangladesh-bank. org) Chapter-2 Dhaka Bank Limited Key Profitability Ratios in Banking 2001 2002 2003 2004 2005 fork up on Asset( ROA) 0. 015 0. 012 0. 013 0. 013 0. 014 uncluttert avocation allowance account 0. 019 0. 021 0. 019 0. 022 0. 023 last-place non- intimacy brink 0. 024 0. 030 0. 022 0. 020 0. 019 assoil Bank Operating beach 0. 49 0. 243 0. 285 0. 282 0. 311 pic contain on Equity regaining on rectitude capital is a measure of the rate of feed intent to the banks plowshareholder. It approximates the cyberspace arrive at that the shareholders have real f rom investiture their capital in the bank. During the result of 2001-2005 the fairish pass on the fair play was 0. 274 which essence 27. 4%. But if we fount at every individual year we can verbalize that it has reduced year by year. The ratio was lessen because of the bank has addition the beauteousness capital over the year and declared the support share as a dividend. damages on AssetsThe coming back on the plus is in the beginning exponent of managerial efficiency. It indicates how capably the management of the bank has been converting the institutions pluss into earn earning. From the supra analysis we can see that during the menstruum of 2001-2005 the clean ratio was 1. 3%. show on assets has change magnitude over time. That federal agency the bank was able to increase the efficiency in managing asset from 2001-2005. Net Interest edge The net saki beach measures how large a bed covering amidst enliven taxations and bear on lives. counseling ha s been able to achieve of close control over the banks earning assets and the pursuits of the cheapest source of brothing.The comely net bank evoke valuation account for Dhaka bank was 2. 1% during 2001-2005. By looking at the table we can submit that it has change magnitude extent by limit accept 2003, which indicates a dear emblem for the Bank. Net Non Interest Margin The non- fill brink measures the come in of non interest revenue be adrift from deposits charges and other service fees the bank has been able to collect congener to the count of non interest approach incurred (including salaries and wages, repair and sustenance cost on bank facilities and give going away expense). The net non interest allowance was 2. 30% during the menstruum of 2001-2005. It has decline over the goals accept 2001.The income from the non interest source, like treasury bill, delegation on brokerage, and commission from the garner of credit has been declined over the years . Earning Per Share 2001 2002 2003 2004 2005 Earning Per Share 41. 255 42. 635 39. 024 46. 894 53. 864 pic Earning per share measures the earning against per share. During the detail 2001-2005, the ordinary earning per share was Tk 44. 73. though it is not so charismatic figure for Dhaka Bank, but positive fact is it has increase over times. break Down OF ROE 2001 2002 2003 2004 2005 Banks floor of asset economic consumption 0. 043 0. 050 0. 045 0. 045 0. 045 The banks blondness multiplier factor factor 29. 02 21. 33 17. 20 18. 94 14. 92 Net Profit Margin Net profit delimitation has fluctuated over time. But if we look at the median(a) which was 29. 39% with the past five years, we can say that cobblers last five years net profit margin was better. Banks academic stage of Assets Utilization Banks stage of Assets Utilization was 4. 5% during 2001-2005 which was not deadly as equate to other banks. Equity multiplier picDuring the stay of 2001-2005 the reasonabl e fair-mindedness multiplier was 20. 283. By the law multiplier ratio we can say that it is highest in 2001 which was 09. 02%. that delegacy the risk of the failure was also highest for that boundary. As the risk was high, we can say that the banks profit margin also was higher(prenominal) for that period. Liquidity Risk 2001 2002 2003 2004 2005 hard cash and out-of-pocket from Banks/ count Assets 0. 152 0. 122 0. 093 0. 071 0. 079 immediate payment and organization Securities/ hit Assets 0. 062 0. 076 0. 98 0. 137 0. 155 pic Purchased silver/ contribute Assets If the use of purchased is more that increases the chance of liquidness crunch in the event of withdrawals rises or the loanword lineament declines. During 2001-2005, as the middling ratio was 1. 44%, we can say that the liquidity risk for the bank is degrade for the Bank. property and disposal Securities/ essential Assets Cash and governing body securities was 10. 54% of the count assets on an sightly which was not so much good for the Bank because cash and government securities are the most liquid assets for a bank. So bank may face liquidity problem in the future. Credit Risk 2001 2002 2003 2004 2005 impart Loans/ come in Deposits 0. 56 0. 67 0. 70 0. 74 0. 82 pic planning for Loan Losses/ natural Loans planning for Loan Losses/ derive Loans indicates the join which should be kept as proviso for loan losses from the fundamental loan. During the period (2001-2005) the bonnie measuring stick of readiness for the loan loses was 0. 6%. This indicates a very good signal for the bank. That agent Banks credit risk is very low because the bank has been able to collect the loan very efficiently. thoroughgoing Loans/ wide-cut Deposits gibe Loans/ fare Deposits indicates the wide-cut loan amount that goes from the list deposit.During (2001-2005), on an second-rate 68. 86% of the radical deposit distribute as loan. This indicates they have distributed a grand portion of their deposited amount as loan. That is some what risky but as their preparedness for loan losses was very low they will have no problems with this. Capital Risk 2001 2002 2003 2004 2005 Purchased currency/ correspond Liabilities 0. 016 0. 011 0. 012 0. 012 0. 025 pic Equity Capital/ amount Assets Equity Capital/ quantity Assets indicates that the amount of fairness capital invested in the contribute assets.During the period of 2001-2005 their equity capital was on an fair 5. 20% of their perfect assets, which indicates they have financed very fewer of their investment by equity and it is stepwise increased over the period. Purchased gold/ arrive Liabilities Purchased currency/ measure Liabilities indicates that the amount of non deposit financial obligation in the total financial obligation structure. If the purchased fund increases that means the capital risk are also increases. During the period of 2001-2005 1. 52% of the financial obligation was financed by th e purchased fund that means non deposit sources which is not the core field of operations of the business. That means the capital risk for the bank is low for the Bank. Chapter-3 NCC Bank Limited Key Profitability Ratios In Banking 2001 2002 2003 2004 2005 Return on Asset( ROA) 0. 014 0. 011 0. 044 0. 013 0. 013 Net interest Margin 0. 024 0. 024 0. 232 0. 020 0. 023 Net non-interest Margin 0. 028 0. 027 0. 195 0. 032 0. 346 Net Bank Operating Margin 0. 280 0. 230 0. 080 0. 255 0. 240 pic Return on EquityReturn on equity capital is a measure of the rate of retrograde flowing to the banks shareholder. It approximates the net benefit that the shareholders have received from investment their capital in the bank. During the period of 2001-2005 the number return on the equity was to 19. 6%. If we compare it to the Dhaka Bank we can say that it is not good. The ratio was low because the bank has increased the equity capital over the year and declared the bonus share as a divide nd. Return on Assets The Return on the asset is mainly indicator of managerial efficiency. It indicates how proficiently the management of the bank has been converting the institutions assets into net earning.From the above analysis we can see that for the period of 2001-2005 the average ratio was 1. 9%. which was some what better than Dhaka Bank. That means the bank was able to increase the efficiency in managing asset from 2001-2005. Net Interest Margin The net interest margin measures how large a spread between interest revenues and interest costs. Management has been able to achieve of close control over the banks earning assets and the pursuits of the cheapest source of funding. The net bank interest margin for Dhaka bank was 2. 1% during the year of 2001-2005. But the net margin of NCC Bank was 6. 46%. that means the banks was able to increase the cheapest source of funding from 2001-2005. Net Non Interest MarginThe non-interest margin measures the amount of non interest rev enue streaming from deposits charges and other service fees the bank has been able to collect relative to the amount of non interest cost incurred (including salaries and wages, repair and maintenance cost on bank facilities and loan loss expense). The average net non interest margin was 12. 5% during the period of 2001-2005. That means the bank was able to collect more income from the non interest source and it has increases over time. They have been able to generate more income from the non interest source like treasury bill, commission on brokerage, and commission from the letter of credit. Earning Per Share 2001 2002 2003 2004 2005 dinero Per Share 54. 14 44. 47 30. 99 46. 91 36. 11 pic Earning per share measures the earning against per share. During the period of 2001-2005, the average earning per share was Tk 42. 524. Their earning per share has lessen over time and if we compare with other bank we can say that it is not sufficient. Breaking Down of ROE 2001 2002 2003 20 04 2005 Banks degree of asset utilization 0. 052 0. 50 0. 544 0. 052 0. 056 The banks equity multiplier 16. 91 20. 33 1. 92 17. 46 14. 04 Net Profit Margin During 2001-2005 the average the net bank operational margin was 21. 7%. If we look at the individual data it is not good because it has fluctuated over time. Banks Degree of Assets Utilization They have earned 15. 08% operating revenue in 2001-2005 by using their total assets. Over the period it was consistent accept 2003. Equity Multiplier pic During the period of 2001-2005, the average equity multiplier was 14. 32.By the equity multiplier ratio we can say that it is substantially higher, that means the risk of the failure is also high for the period. As the risk is higher so the banks profit margin is also higher. Liquidity risk 2001 2002 2003 2004 2005 Cash and ascribable from Banks/ natural Assets 0. 158 0. 067 0. 499 0. 042 0. 052 Cash and Government Securities/nitty-gritty Assets 0. 100 0. 148 0. 166 0. 208 0. 110 pic Purchased Funds/Total AssetsIf the use of purchased funds are more that increases the chance of liquidity crunch in the event of withdrawals rises or the loan quality declines. During the period of 2001-2005, as the average ratio was 1. 44%, we can say that the liquidity risk for the bank was low. Cash and Government Securities/Total Assets Average Cash and Government Securities/Total Assets in 2001-2005 was 44. 48%. The total assets have come from the cash and government securities. Credit Risk 2001 2002 2003 2004 2005 Provision for Loan Losses/Total Loans 0. 02 0. 02 0. 2 0. 02 0. 02 Total Loans/Total Deposits 0. 84 0. 82 0. 81 0. 89 0. 96 pic Provision for Loan Losses/Total Loans Provision for Loan Losses/Total Loans indicates the amount which should be kept as preparedness for loan losses from the total loan. During the period of 2001-2005 the average amount of homework for the loan loss was 1. 9% of the total loans. As the preparedness for the loan loss was very lo w, we can say that the credit risk for the bank was lower for the Bank and the bank has been able to collect the loan more efficiently. Total Loans/Total DepositsTotal Loans/Total Deposits indicates the total loan amount that goes from the total deposit. If we look at the graph we will see that the Total loan/Total Deposits step by step has increased over time. That means the Bank has increased the loan as well as credit risk. But diachronic data say that their loan army is pretty impressive. On an average they have distributed 86. 19% of their deposits as loan. Capital Risk 2001 2002 2003 2004 2005 Purchased Funds/Total Liabilities 0. 037 0. 048 0. 057 0. 048 0. 818 pic Equity Capital/Total AssetsEquity Capital/Total Assets indicates that the amount of equity capital invested in the total assets. During the period of 2001-2005, on an average 15. 17% total asset was financed by the equity. If we think about the risk of the Bank, it is high. Because a huge amount of money they h ave financed by debt equity. Purchased Funds/Total Liabilities Purchased Funds/Total Liabilities indicates that the amount of non deposit financial obligation in the total indebtedness structure. If the purchased fund increases that means the capital risk are also increases. During the period of 2001-2005, 20. 16% of the liability was financed by the purchased fund that means non deposit sources which is not the core area of the business.Chapter-4 National Bank Key Profitability Ratios In Banking 2001 2002 2003 2004 2005 Return on Asset( ROA) 0. 006 0. 003 0. 002 0. 004 0. 005 Net interest Margin 0. 012 0. 011 0. 011 0. 012 0. 011 Net non-interest Margin 0. 025 0. 026 0. 27 0. 029 0. 031 Net Bank Operating Margin 0. 224 0. 083 0. 048 0. 087 0. 118 pic Return on Equity Return on equity capital is a measure of the rate of return flowing to the banks shareholder. It approximates the net benefit that the shareholders have received from investing their capital in the bank. During the period of 2001-2005 the average return on the equity was 10. 1%. The ratio was not cute because of the bank has increased the equity capital over the year and declared the bonus share as a dividend. The Return on AssetsThe Return on the asset is primarily indicator of managerial efficiency. It indicates how capably the management of the bank has been converting the institutions assets into net earning. From the above analysis we can say that during the period of 2001-2005 the average ratio 0. 4%. It is not so lovely. The bank was not able to increase the efficiency in managing asset from 2001 to 2005. The net interest Margin The net interest margin measures how large a spread between interest revenues and interest costs. Management has been able to achieve of close control over the banks earning assets and the pursuits of the cheapest source of funding.The net bank interest margin for Dhaka bank was 12% during 2001-2005. But the average net interest margin for National bank w as 1. 14%. That means the banks was able to increase the cheapest source of funding from 2001 to 2005 but that is not substantial for the bank. The Non-interest Margin The non-interest margin measures the amount of non interest revenue streaming from deposits charges and other service fees the bank has been able to collect relative to the amount of non interest cost incurred (including salaries and wages, repair and maintenance cost on bank facilities and loan loss expense). The average net non interest margin was 2. 8% for 2001-2005.Though it has increased over period, they were not able to generate more income from the non interest source like Treasury bill, commission on brokerage, and commission from the letter of credit. The performance of the bank is stable over the years. Earning Per Share 2001 2002 2003 2004 2005 Earnings Per Share 63. 78 33. 98 33. 09 27. 44 43. 85 pic Earning per share measures the earning against per share. During the period of 2001-2005, the average e arning per share was Tk 40. 420. Their earning per share has reduced over time and if we compare with other bank we can say that it is not sufficient.In the cases of National Bank if we look after the key profitability ratio then we can say that return on equity capital(ROE), and non interest margin, Return on asset (ROA) Net Bank Operating Margin, and Earning per share, ratio has been decreased for the period of 2001-2005. But, only the net bank operating margin has been increased. Return on equity capital (ROE) has been decreases because the bank has increased the equity capital for the years and given the bonus share as a dividend so the amount of equity increases during the period of 2001-2005. The earning per share also has been decreased for the period of 2001-2005. Breaking Down of ROE 2001 2002 2003 2004 2005 Banks degree of asset utilization 0. 025 0. 038 0. 038 0. 041 0. 042 The banks equity multiplier 30. 99 28. 07 28. 18 25. 79 20. 13 The net bank operating Margin Du ring the period of 2001-2005 the average the net bank operating margin was 11. 18% of the total assets. It was not stable over the period which is not a good sign for the bank. Bank Degree of Assets Utilization Banks degree of the asset utilization has been increased during the period of 2001-2005.So return of asset has been also decreased for the identical period. Net profit margin has been decreased substantially because the ratio of the equity multiplier was higher. Equity Multiplier During the period of 2001-2005 the average equity multiplier was 26. 63. By the equity multiplier ratio we can say that it has substantially reduced over time, which means the risk of the failure has gradually increased over time. pic Liquidity Risk 2001 2002 2003 2004 2005 Cash and Due from Banks/Total Assets 0. 043 0. 053 0. 054 0. 054 0. 55 Cash and Government Securities/Total Assets 0. 060 0. 088 0. 087 0. 068 0. 038 pic Purchased Funds/Total Assets Purchased Funds/Total Assets if the use of purchased more that increases the chance of liquidity crunch in the event of withdrawals rises or the loan quality declines. During the period of 2001-2005 the average ratio for the bank was 3. 12%. We can say that the liquidity risk for the bank was not very high also stable by the year Cash and Government Securities/Total Assets Cash and Government Securities/Total Assets in 2001-2005 was 6. 82% of the total assets which has come from the cash and government security.Banks/Total Assets and Cash and Government Securities/Total Assets are also stiff almost same for over the period so the liquidity risk for the bank has been remains low and same for the period. Credit Risk 2001 2002 2003 2004 2005 Total Loans/Total Deposits 0. 84 0. 82 0. 81 0. 89 0. 96 pic Provision for Loan Losses/Total Loans Provision for Loan Losses/Total Loans indicates the amount which should be kept as provision for loan losses from the total loan. During the period of 2001-2005 the average amount of prov ision for the loan loss was 2. 09%. That means only 2. 09% of the funds were in risk to be uncollected.As the provision for the loan losses was low, we can say that the credit risk for the bank was not very high for the recent period. Total Loans/Total Deposits Total Loans/Total Deposits indicates the total loan amount that goes from the total deposit. During 2001-2005 on an average 81. 11% of the total deposit they have distributed as loan. This is a very big portion and indicating a great change of credit risk for the bank. Capital Risk 2001 2002 2003 2004 2005 Purchased Funds/Total Liabilities 0. 617 0. 042 0. 033 0. 037 0. 591 pic Equity Capital/Total AssetsEquity Capital/Total Assets indicates that the amount of equity capital invested in the total assets. During the period of 2001-2005 on an average 3. 83% of the total asset was financed by the equity. That is indicating a very bad signal for the bank. Because they largely they have financed their investment by debt capit al which was very risky. Purchased Funds/Total Liabilities Purchased Funds/Total Liabilities indicates that the amount of non deposit liability in the total liability structure. If the purchased fund increases that means the capital risk are also increases. During the period of 2001-2005 the ratio was drastically high for 2001 and 2005 and average ratio was 26. 39%.That means the capital risk for the bank was high for the bank. Chapter-5 Al Arafah Islami Bank Limited Key Profitability Ratios In Banking 2001 2002 2003 2004 2005 Return on Asset( ROA) 0. 002 0. 006 0. 012 0. 012 0. 017 Net interest Margin 0. 015 0. 026 0. 030 0. 030 0. 38 Net non-interest Margin 0. 017 0. 015 0. 018 0. 018 0. 022 Net Bank Operating Margin 0. 067 0. 141 0. 242 0. 252 0. 292 pic Return on Equity Return on equity capital is a measure of the rate of return flowing to the banks shareholder. It approximates the net benefit that the shareholders have received from investing their capital in the bank. During the period of 2001-2005 the average return on the equity was 14. 5% which was not attractive, but the good signal is that it has increased over time.Return on Assets The Return on the asset is primarily indicator of managerial efficiency. It indicates how capably the management of the bank has been converting the institutions assets into net earning. From the above analysis we can say that during the period of 2001-2005 the return on asset was only 1. 00%. That means the bank was able to increase the efficiency in managing asset from 2001 to 2005. Net Interest margin The net interest margin measures how large a spread between interest revenues and interest costs. Management has been able to achieve of close control over the banks earning assets and the pursuits of the cheapest source of funding.The average net bank interest margin for the bank was 2. 78% during the period of 2001-2005 which is also not so attractive. Non-interest Margin The non-interest margin measures the a mount of non interest revenue streaming from deposits charges and other service fees the bank has been able to collect relative to the amount of non interest cost incurred (including salaries and wages, repair and maintenance cost on bank facilities and loan loss expense). The net non interest margin was 1. 8% in 2001-2005. They wasnt been able to generate more income from the non interest source like Treasury bill, commission on brokerage, and commission from the letter of credit. Earning Per Share 2001 2002 2003 2004 2005 Earnings Per Share 101. 43 312. 420 251. 1 263. 67 387. 8 pic Earning per share measures the earning against per share. During the period of 2001-2005, the earning per share was Tk 263. 18. If we compare with other bank we will see that their earning per share was very good. Breaking Down of ROE 2001 2002 2003 2004 2005 Banks degree of asset utilization 0. 32 0. 041 0. 048 0. 048 0. 059 The banks equity multiplier 24. 968 21. 447 14. 754 13. 449 12. 564 pi c The Net Bank Operating Margin During the period of 2001-2005 the average the net bank operating margin was 19. 87%. If we compare with other banks it was good. Another classic thing is that it has increased over time. Degree of Operating Margin On an average they have earned 4. 55% operating revenue during the period of 2001-2005 by using total asset. It was not so good. This indicates that they have unable to utilize their assets.Equity Multiplier During the period of 2001-2005 the equity multiplier was 17. 467. By analyzing the equity multiplier ratio we can say that it is substantially higher, that means the risk of the failure is also high for the period of 2001-2005. As the risk is higher so the banks profit margin is also higher. Liquidity Risk 2001 2002 2003 2004 2005 Cash and Due from Banks/Total Assets 0. 080 0. 090 0. 089 0. 093 0. 201 pic Purchased Funds/Total AssetsPurchased Funds/Total Assets if the use of purchased more that increases the chance of liquidity cru nch in the event of withdrawals rises or the loan quality declines. During the period of 2001-2005 the average ratio was 7. 4%. Because of lower lot we can say that the liquidity risk for the bank is also lower for the bank. Cash and Due from Banks/Total Assets During the period of 2001-2005 on an average the bank had only 7. 42% cash and due from bank against their total assets. This indicates a very bad signal for the bank. Liquidity risk for the bank was very high for that period. Credit Risk 2001 2002 2003 2004 2005 Provision for Loan Losses/Total Loans 0. 16 0. 033 0. 024 0. 048 0. 011 pic Total Loans/Total Deposits Total Loans/Total Deposits indicates the total loan amount that goes from the total deposit. During the period of 2001-2005, 84. 13% of the total deposit distribute as loan. They have distributed a big portion of their deposits as loan it could increase credit risk for the bank. Provision for Loan Losses/Total Loans Provision for Loan Losses/Total Loans indicate s the amount which should be kept as provision for loan losses from the total loan. During the period of 2001-2005 the average amount of provision for the loan loss was 2. 4%. As the provision for the loan losses was lower so we can say that the credit risk for the bank was also lower for the bank in that period, and the bank has been able to collect the loan more efficiently. Capital Risk 2001 2002 2003 2004 2005 Purchased Funds/Total Liabilities 0. 050 0. 056 0. 059 0. 117 0. 114 pic Equity Capital/Total Assets Equity Capital/Total Assets indicates that the amount of equity capital invested in the total assets.During the period of 2001-2005, on an average 6. 17% of the total asset was financed by the equity and it is gradually increased over the year and for the period. Purchased Funds/Total Liabilities Purchased Funds/Total Liabilities indicates that the amount of non deposit liability in the total liability structure. If the purchased fund increases that means the capital ri sk are also increases. During the period of 2001-2005 they were able to maintain the ratio within 8. 00%. That means the capital risk for the bank was lower for the period. Though the bank is able to reduce the non-deposit source of funding but still they are exposed to a higher capital risk. Chapter-6 Eastern Bank Limited Key Profitability Ratios In Banking 2001 2002 2003 2004 2005 Return on Asset( ROA) 0. 02 0. 02 0. 02 0. 02 0. 02 Net interest Margin 0. 03 0. 03 0. 02 0. 03 0. 03 Net non-interest Margin 0. 02 0. 02 0. 03 0. 03 0. 03 Net Bank Operating Margin 0. 16 0. 19 0. 18 0. 22 0. 18 picReturn on Equity Return on equity capital is a measure of the rate of return flowing to the banks shareholder. It approximates the net benefit that the shareholders have received from investing their capital in the bank. During the period of 2001-2005 the average return on the equity was 17. 2%. The ratio was stable over the period. The bank has able to maintain the stability of income . Return on Assets The Return on the asset is primarily indicator of managerial efficiency. It indicates how capably the management of the bank has been converting the institutions assets into net earning. During the period of 2001-2005 the average ratio was 2. 00%.It was not so attractive but good thing