THESIS ON PERFORMANC EVALUATION OF EASTERN BANK LTD.

(EBL)
(The dissertation report is submitted for the partial fulfillment of the degree of Master of Business Administration)

Prepared by
MD. SHAFIQUL ISLAM I.D.NO:- 0272930 Program: - MBA Semester: - summer -2011

Supervised by
KAMRUL HASAN Assistant professor Department of business administration Southern university Bangladesh.

Department of business administration Faculty of business administration Southern university Bangladesh Submission date: / 01/2012

Letter of Submission

To, The Dean Faculty of Business Administration. Southern university Bangladesh Chittagong. Sub: - submission of dissertation report. Dear Sir, In the processing pages, I have presented a report titled as performance Evaluation of Eastern bank ltd This is the most important requirement of MBA program. It has been a very positive and uplifting experience, as I have learnt a lot that would not have been possible otherwise. Finally, I would like to express my sincere administration and thanks for your help while preparing the report. I will be glad to answer any queries that you may have in this regard.

Sincerely Yours Md.Shafiqul Islam ID No: 027-29-30 Program: MBA Semester: Summer-2011 Department Of Business Administration. Southern University Bangladesh.

Students Declaration

This thesis on performance Evaluation of Eastern Bank Ltd Has been prepared by me, under the direct supervision of Kamrul Hasan, Assistant Professor, Department of BusinessAdministration, Southern University Bangladesh. I have tried to put my utmost sincerity in preparing this report. I would like to declare that it has not been submitted to any University or any institute for acquiring any degree or not submitted for publication.

Md.Shafiqul Islam ID No: 027-29-30 Program: MBA Semester: Summer-2011 Department Of Business Administration. Southern University Bangladesh

Supervisors declaration

This is to certify that the thesis on financial performance analysis through ratio a study on eastern bank ltd, has been prepared by MD. Shafiqul Islam, a student of MBA, bearing ID no: - 027-29-30 under my direct supervision and guidance. As per my knowledge goes it was not submitted to any other university or institute. I would also like to add that the student made hard work while preparing the dissertation. I wish him every success in life.

MR.Kamrul Hasan Assistant professor Department of Business Administration. Southern University Bangladesh.

Acknowledgement

First of all I pay a special thanks to my almighty that made me able to complete this report. It is very difficult to express my feelings that helped in completion of this report. But I think there are no other words except thanks, which can compliment my sentiments. I pay gratitude to the supervisor of the report Mr. Kamrul Hassan, Assistant professor, department of business administration, Southern university Bangladesh, Chittagong. I pay honor to the teachers for their contribution. I acknowledge with deep gratitude to the department of business administration of Southern university Bangladesh, Chittagong. I also want to give another special thanks to Mr. Amran Chy (my class fellow), lipi gosh (class fellow), who gave me support to finish this report.

MD. Shafiqul Islam ID no: - 027-29-30 Program: - MBA

Executive summery
This report name financial performance analysis through ratio A study on eastern bank ltd is an out come of my knowledge, which I have acquired from this university in MBA program since last two years .It has been prepared for the partial fulfillment of master of business administration (MBA) program. There are lots of facilities in EBL as well as there are also some problems in EBL. But now they are trying to remove the problem by recruiting more skilled person and efficient management. The report consist of eleven chapters ,first chapter covers the Introductory topic of the respective report ,second chapter covers the overview of EBL ,third chapter covers the different types of techniques of performance evaluation, forth chapter provides the authority who are responsible for performance evaluation of EBL, 5th chapter covers the short term position of EBL during the period (2006-2010), 6th chapter shows the long term solvency of EBL , 7th chapter shows the efficiency position of EBL, 8th chapter covers the profitability of EBL ,9th chapter shows the market position of EBL , 10th chapter shows the overall performance of EBL under balanced score card model and 11th chapter shows the findings ,recommendation ,conclusion and bibliography.

The findings of the study are as follows:i) Deposit trend of EBL Particular 2010 2009 2008 2007 2006 deposit 56425 49190 41573 30092 25734 Source: - data have been compiled from annual report of EBL Comment: - here we see that, the deposit trend of EBL is going up .its a good sing for the bank.
chart:-33-deposit trend of EBL
60000 56425 49190 50000 41573 40000 30092 30000 25734 20000 10000 0 2010 2008 2006

deposit trend of EBL

ii) Deposit utilization of EBL particular 2010 2009 2008 2007 2006 Deposit 58607 47668 39662 30962 26008 utilization or loan and advance of EBL Source: - data have been compiled from annual report of EBL Comment: - this table is also showing an upward trend of deposit utilization or loan and advance of EBL.
chart:-34- deposit utilization of EBL
60000 58607 50000 40000 30000 20000 10000 0 2010 2009 2008 2007 2006 47668 39662 30962 26008

deposit utilization of EBL

iii) According to the calculation of standard deviation of ROA and ROE, we have realized that the variability of ROE is less risky and the variability of ROA is few risky than that of ROE. Although the bank is doing well, but it has to try minimize the variability of that case. iv) According to the rules of central bank, it is known that every listed commercial bank has to maintain a legal reserve, which is consist of cash reserve ratio (5.5%) and statutory liquidity ratio (19%) for meeting the liquidity needs and other unexpected crisis faced by the bank. but we see that EBL does not maintain the requirement of central bank, because the bank issues more loan than deposit, so it shows inconsistent view.

v). deposit per employee:Formula 2010 2009 2008 2007 2006 Deposit per 56425 49190 41573 30092 25734 employee= 973 878 763 690 612 Total =57.990 =56.025 =54.486 =43.611 =42.049 deposit/no of employee Source: - data have been compiled from annual report of EBL and calculated by the researcher. Comment: - by this table we also see that the productivity of EBL is showing upward trend.
chart:-35- deposit per employee
60 57.99 56.025 54.486 50 43.61 42.05 40 30 20 10 0 2010 2009 2008 2007 2006 deposit per employee

vi). the RWA to deposit is showing lower liquidity position. vii). the bank issues more loan than deposit, it implies that the bank carries more risk. viii). the bank is more depend upon debt in building their capital structure. ix). the loan recovery position of EBL during the period is outstanding, because the average of loan recovery of EBL is 96.82% during the period. x). the ROE and ROA of EBL exists a satisfactory level. xi). the earning spread of EBL is also positive. xii). the overall market position of EBL is showing a fluctuating trend it implies the lacking of condense of the investors. xiii). the difference between non performing loans and the provision of loan losses is large. xiv). besides, the non financial performance of EBL is mentionable. Their innovation side of product and services is time befitting. xv. HRM department of EBL also arranges different types of training program to upgrade the efficiency of the employ

Recommendations of the study are as follows:1. First of all, the bank has to raise the equity capital instead of debt for building capital structure. 2. The bank has to give focus on issuing loan by considering the deposit amount. 3. EBL has to keep more marketable securities as liquid asset for ensuring both liquidity and profitability. 4. EBL has to give more dividends to the investors for encouraging their investment. 5. The bank has to keep more provision against the loan losses. 6. The bank to maintain legal liquidity requirement of central bank keep up with their profitability. 7. The bank has to keep balance between interest sensitive asset and interest sensitive liabilities. 8. According to the calculation of standard deviation of ROA and ROE, we have realized that the variability of ROE is less risky and the variability of ROA is few risky than that of ROE. Although the bank is doing well, but it has to try minimize the variability of that case.

TABLE OF CONTENTS
SL no particular Preliminaries: Letter of submission Students declaration Supervisors declaration Acknowledgement Executive summery Table of contents List of table and bar diagram Chapter one Introductory note 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 Introduction Statement of the problem Literature review Objective of the study Scope of the study Methodology of the study Importance of the study Limitation of the study Plan of the study Chapter two Overview of Eastern bank ltd Company milestones Corporate directory Strategic priority Norms Mission Vision Five years progression report of EBL(2006-2010) Structure of fund collection of EBL for the period (20062010) Structure of fund employment of EBL for the period (20062010) Chapter three Performance evaluation techniques and procedures Short term solvency ratios Long term solvency ratios Asset management or efficiency measurement ratios Profitability measurement ratios Market position measurement ratios Chapter -four Authorities involved in performance evaluation of EBL Introduction 14-15 16 16-17 18 18 19 19 20 20 Page no 01 02 03 04 05-09 10-12 13

2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9

21-22 23 24 25 26 26 27 28

3.1 3.2 3.3 3.4 3.5

29-30 30-31 31-32 32-33 32-33

4.1

34

10

4.2 4.3 4.4

5.1 5.2 5.3 5.4 5.5 5.6 5.7 6.1 6.2 6.3 7.1 7.2 7.3 7.4

8.1 8.2 8.3 8.4 8.5 8.6 9.1 9.2 9.3

10.1 10.2 10.3 10.4 10.5

Top-level management committee structure and their responsibility Executive level management structure Audit committee of EBL and their responsibility Chapter - five Liquidity position of EBL Cash position indicator Liquid security indicator Deposit composition ratio Liquid asset to deposit ratio RWA to deposit ratio Credit to deposit ratio Investment to deposit ratio Chapter -six Long term solvency of EBL Debt to asset ratio Debt to equity ratio Time interest earned or cash coverage ratio Chapter seven Efficiency position of EBL Operating efficiency ratio Employee productivity ratio Credit to deposit ratio Loan recovery position of EBL Chapter Eight Profitability position of EBL Return on equity (ROE) Return on asset (ROA) Net interest margin Net operating margin Cost to income ratio Profit to expenditure ratio Chapter -NINE Market position of EBL Earning per share (EPS) ratio Price earning ratio Market book ratio Chapter TEN Balanced score card ,Risk measurement and SWOT analysis of EBL Introduction Distinctive features of balanced score card Structure of balanced score card Performance evaluation of EBL based on balanced score card Different types of risk management procedure of EBL

34 34 35

36 37 37-38 38-39 39-40 40 40-41 42 43 44 45 45-46 46 46-47

48 48-49 49-50 50-51 51-52 52 53 54 55

56 56-57 57 58-65 65-68

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10.6 10.7 11.1 11.2 11.3

Risk measurement of EBL through relevant ratios SWOT analysis of EBL Chapter- Eleven Problems, Recommendations and conclusion Problems Recommendation Conclusion Bibliography

69 70 71 71-73 74 75

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LIST OF TABLE AND BAR DIAGRAM

SL NO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 PARTICULAR Structure of fund collection of EBL Structure of fund employment of EBL Cash position indicator Liquid security indicator Deposit composition ratio Liquid asset to deposit ratio RWA to deposit ratio Credit to deposit ratio Investment to deposit ratio Debt to asset ratio Debt to equity ratio Time interest earned ratio Operating efficiency ratio Employee productivity ratio Credit to deposit ratio Loan recovery position of EBL Return on equity Return on asset Net interest margin Net operating margin Cost to income ratio Profit to expenditure ratio Earning per share Price earning ratio Market book ratio Non performing loans to total loans ratio Annual provision for loan losses to total loan ratio Total loan to total deposit ratio Loans to total asset ratio Cash and deposit to total asset ratio Interest sensitive asset to interest sensitive liability ratio Book value of equity to market value of equity ratio Standard deviation of ROE Standard deviation of ROA Deposit trend of EBL Deposit utilization of EBL Deposit per employee

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Chapter -01 Introductory Note

1.1: INTRODUCTION

The main aim of a performance review is to provide an understanding of the business, and, together with an analysis of the relevant information, provide an interpretation of the results. The most effective performance review is provided from a balanced view of each of the activities of the organization, which necessarily involves the close cooperation of each role : marketing; research and development; design; engineering; manufacturing; sales; logistics; finance; human resources management (Davies & Boczko, 2005,p.149).

The stages of performance review are shown in the following figure.1.

(1) SWOT analysis

(10) Conclusions (9) Investment

(2) Consideration of major features (3) Profitability

Performance review (8) Management of financial risk (5) Growth (7) Financial (6) Liquidity (4) Efficiency

Figure-1: The stages of performance review Source: Davies and Boczko (2005)

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Finance always being disregarded in financial decision making since it involves investment and financing in short-term period. Further also act as a restrain in financial performance, since it does not contribute to return on equity. A well designed and implemented financial management is expected to contribute positively to the creation of a firms value. Dilemma in financial management is to achieve desired trade off between liquidity, solvency and profitability. Management of working capital in terms of liquidity and profitability management in essential for sound financial recital as it have a direct effect on the profitability of the company. In this thesis I want to know about the financial performance of eastern bank limited. Now the world is very competitive. So everybody has to be expert in both practical knowledge and theoretical knowledge. To make the dissertation report is a significant aspect in the direction of accomplishing the god. It is a systematic process for gathering, recording and analyzing of data about the topic that a student goes to learn on the program. The aim of preparing the dissertation report is to connect practical knowledge with the critical aspects. Being a student of MBA during my report preparing period, I have tried my best to use the opportunity to enrich my knowledge on financial performance analyzing system on the bank. My findings were mostly related to evaluation of liquidity, long term solvency, MGT efficiency, profitability and market position of EBL. As I have been working under this topic, beside this I come across many others findings which are reflected through this dissertation report. During my work I have faced various obstacles by the grace of almighty Allah and by the help of some related person I have overcome some problems successfully. Eventually, I want to say that the study will help investors and the students who will be interested to know the performance of EBL during the study period this report will help them partially.

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1.2 STATEMENT OF THE PROBLEM A thesis is highly needed to gain idea, knowledge and experience. This report has been prepared as a requirement for the master of business administration (MBA) program of southern university Bangladesh, Chittagong. Southern university Bangladesh, Chittagong one of the reputed private university in Bangladesh has international designed the curriculum of the (MBA) course such a way that the international standard semester will be produced. After completing 57 credit hours. One student needs to go completion a thesis paper, which is belonged further (6) credit hours. This report is an Endeavour to evaluate the financial performance of Eastern bank ltd.

1.3 Literature review

Financial performance analysis is vital for triumph of an enterprise. Financial performance analysis is an appraisal of the feasibility, solidity and fertility of a business. Financial performance analysis is a process of determining the operating and financial character of a firm from accounting and financial statement. The goal of such analysis is to determine the efficiency and performance of the firms management as reflected in the financial records and reports. The analysis attempt to measure the firms liquidity, profitability and other indicators that the business is conducted in a rational and normal way, ensuring enough return s to the shareholders to maintain at least its market value. Generally, the financial performance of banks has been measured using a combination of financial ratio analysis, bench marking, measuring performance against budget or a mix of the methodologies. Simply stated much of the current bank performance literature describes the objective of financial organizations that of earning acceptable returns and minimizing the risk taken to earn this return. There is a generally accepted relationship between risk and return that is the higher the risk the higher the expected return. Therefore the traditional measures of bank performance have measured both risk and return. The increasing competition in the national and international banking markets, the changes over

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towards monetary unions and the new technological innovations herald major changes in banking environment and challenges all banks to make timely preparations in order to enter into new competitive financial environment. Review of literature is an integral part of conducting a research. It is necessary to find out the knowledge gap in the field of the study. All studies are mostly focused on liquidity, solvency and profitability of different types of commercial bank with their dependent and independent variable. Choudhuri and Chowdhury (1993):- Have analyzed the performance of PCBs vis--vis banking sector as a whole. They expressed that the results of denationalized and privatization in the banking sector of Bangladesh did not indicate clear cut improvement in the efficiency of the banking system. Hoque and khan (2001):- have made research on financial performance of the bank ;a statistical analysis :the authors argued that nationalized banks are very much desirable from social point of view , despite the constraint that these banks can not be as profitable as foreign banks or private commercial banks due to profit seeking motives of letter. Ahmed and uddin (1994):- Have made a study on asset structure and aspects of its management in the private commercial banks in Bangladesh. The study was limited to five private commercial banks. Which are pubali bank ltd, uttara bank ltd, national bank ltd, city bank ltd, united commercial bank ltd, and the study covered a period of 5years from 1987 to 1991. They examined the quantum and a growth of total asset, quantum and classification of asset, composition of earning asset, credit advanced to economic purpose etc. they assessed the performance of banks in terms of credit deposit ratio. For credit MGT, liquid asset to total asset for liquid asset MGT, return on asset and return on equity for profitability performance. The detailed review of the aforesaid research studies reveals that many of the studies have been done on banks financial performance. But no such study has been on specifically Eastern bank ltd, during my study period. Basically, I have emphasized on the financial performance analysis through ratio of EBL for the period of (2006-2010), keeping that research gap in mind the present study is planned and it would be of immense help to the policy makers and other decision makers, students and to those who take interest in this area.

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1.4 OBJECTIVE OF THE STUDY

The main objective of this study is to evaluate the over all performance of eastern bank limited. To achieve this main objective the study covers the following objectivesA. To know the performance education techniques and procedures. B. To know the authorities involve in performance evaluation. C. To examine the short-term solvency/liquidity position of EBL. D. To examine the long-term solvency of EBL. E. To examine the efficiency/asset-MGT ratio of EBL. F. To examine the profitability of EBL. G. To examine the market value position of EBL. H. To examine the balanced score card, Risk measurement of EBL. I. To find out problem and recommendation in performance evaluation of EBL.

1.5 SCOPE OF THE STUDY:

Eastern bank ltd is one of the modern and digitalized commercial bank in Bangladesh. The report covers the organization structure, background, milestone functions and financial performance evaluation. From five point of view this are1. Liquidity position 2. Long term solvency 3. asset-mgt position 4. Profitability position 5. Z-score model based position. To work with these five sections I have acquired the knowledge about the financial activities execution done by the bank.

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1.6 METHODOLOGY OF THE STUDY:

The data needed for conducting the study has been collected from the secondary sources. Such as1. Bulletin published by the bank. 2. Websites. 3. Different books about financial institutes and banks. 4. Previous case study and journal. 5. Financial study of the bank. The collected data are properly scrutinized and for analyzing the data different techniques like z-score, different types of ratios diagram have been used.

1.7 IMPORTANCE OF THE STUDY

After completion of the study, it will help some related parties and various point of view. It has an importance also. These are depicted below
a. First of all, this analysis will help the top level mgt and decision making. b. Company will also be informed about their strength and weakness. c. Borrower, lender, investor, will be beneficial by this report. d. Foreign investment is influenced by this report.

e. By this report we the market position of the bank.

f. Finally the employee of the bank also benefited by the report.

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1.8 limitation of the study

This reports accuracy is minimized due to some limitation. The unavoidable limitations are as follow:1. Time: - the execution period of the study was quite short to carryout intensive report. 2. Accuracy of analysis: - the quality of data in this study is limited as the basic of data is taken from delicate source. All of the data had to be taken from the secondary sources (annual report and internet). 3. Lack of more practical and contemporary data was another short coming. 4. the most important thing that the lack of my knowledge and efficiency is the prime limitation of the study. such and

1.9 plan of the study:Chapter- 01: Introductory Note Chapter- 02: Overview of EBL Chapter- 03: performance evaluation techniques and procedures Chapter- 04: Authority involved in performance evaluation of EBL Chapter- 05: Liquidity position of EBL Chapter- 06: Long term solvency of EBL Chapter-07: Efficiency position of EBL Chapter-08: Profitability position of EBL Chapter-09: market position of EBL Chapter-10: Balanced score card, Risk Measurement and SWOT analysis Chapter-11: Problems, Recommendations and conclusion.

Under the above discussion the next chapter -02 will discuss with the Overview of EBL.

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Chapter -02 Overview of EBL

2.1: company milestones:August 8, 1992:- date of incorporation. August 16, 1992:- date of commencement of banking operations. March 20, 1993:- listed with Dhaka stock exchange ltd. November 12, 1998:- first dividend declared for income year 1997. January 19, 2002:- centralization of trade services. July 17, 2003:- first online banking operations across all the branches. January 25, 2004:- obtained permission from Bangladesh bank for offshore banking unit, Bangladesh. May 19, 2004:- commencement of operation of offshore banking unit, Bangladesh. September 11, 2004:- listed with Chittagong stock exchange ltd. June 27, 2005:- authorized share capital increased to BDT 3.3 billion. November 30, 2005:- became partner bank of IFC under global trade finance program to support EBL handle complex trade transactions. March 5, 2006:- centralization of liability product processes functions at service delivery. June 6, 2006:- launching of SME banking division. November 9, 2006:- signed agreement with ADB to become ADBs partner bank under their trade finance facilitation program supporting guarantee and revolving credit facility. July 1, 2007:- launched own managed cards software and production system. May 25, 2008:- first right issue declared @ 2:1 at par. February 13, 2009:- commencement of investment banks operations. April 19, 2009:- registration of EBL 1st mutual fund with Securities and Exchange Commission. April 26, 2009:- launched priority banking for premium customer segment. April 2009:- awarded super brand by super brand inc. for the period 2009-2011. December 2009:- established EBL investment limited a 99.99% owned subsidiary, to do merchant banking operations.

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March 1, 2010:- acquired 60% shares of a brokerage house LRK securities limited which was renamed afterwards as EBL security limited. April 4, 2010:- first bank in Bangladesh to launch universal banking system, world one of the renowned core banking solution. April 2010:- awarded most active GTFP issuing bank in south Asia by IFC of World Bank group. August 29, 2010:- EBL shares denominated to Tk10 per share with market lot of 200 shares first traded in the DSE. December 2010:- awarded 2nd position for annual report 2009 in the best published accounts by ICAB and conferred a certificate of merit award for best presented accounts and corporate governance disclosures awards 2009 by SAFA.

2.2 corporate directory:-

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Name of the company Eastern bank limited. Legal form A public limited company incorporate in Bangladesh with primary objective to carry out all kinds of banking business in and outside Bangladesh after taking over the business, asset, liability and losses of erstwhile bank of credit and commerce international limited as per BCCI reconstruction scheme 1992 of Bangladesh bank. Date of incorporate of EBL is august 8, 1992 and commencement date of banking operation is august 16, 1992. Company registration number C-22554(961)/92 Bangladesh bank license number BL/DA/5926/92 Capital (December 31, 2010) Authorized capital: TK 1200000000(1200000000 ordinary shares of Tk 10 each). Paid up capital: TK 2920811400(292081140 ordinary shares of TK 10 each). Accounting year end December 31. Stock exchange listing Ordinary share of the bank is listed with both Dhaka stock exchange and chittagong stock exchange limited .shares of EBL are categorized as A in the stock exchange .market lot is 200 each and stock symbol is EBL. Registered and head office Jiban bima bhaban 10, dilkusha commercial area Dhaka -1000, Bangladesh Telephone: 880-2-9556360 Swift: EBLDBDDH, cable: Eastbank e-mail:info@ebl-bd.com Web; www.ebl.com.bd

2.3 strategic priority:-

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Put all out emphasis on deposit growth Maintain asset quality with strengthened risk management facing above average growth projections. Focus on creating sustainable enterprise value not just making profits. Lower cost of deposit by strategizing mix and offering innovation products. Cost championship. Pursue inorganic growth M&A. Increase non funded business to further improve return on investment. Careful penetration in the capital market. Increase intrinsic value of the company by strengthening internal controls through installation of clearly laid down policies, procedures, and processes. Diversify corporate business by leading participation in PPPs. Increased focus on corporate social responsibility. Improve quality of human capital by strengthening their competencies. Continue to maintain world class IT infrastructure to deliver superior service to our customer.

2.4 Norms:-

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Service excellence

we passionately drive customer delight. We use customer satisfaction to accelerate growth. We believe in change to bring in timely solution.

Openness

we share the business plan. We encourage two way communications. We recognize achievements, celebrate results.

Trust

we care for each other We share learning /knowledge. We empower our people.

Commitment

we know our roadmap. We believe in continuous improvement. We do not wait to be told.

Integrity

we say what we believe in. We respect every relationship. We do not abuse information power.

Responsible Corporate citizen we are tax-abiding citizen. We promote protection of the environment for our Children. We conform to all laws, rules, norms, sentiments and Values of the land.

2.5: Mission:-

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We will deliver service excellence to all our customers, both internal and external.

We will ensure to maximize shareholders value.

We will constantly challenge our systems, procedures And training to maintain a cohesive and professional Team in order to achieve service excellence.

We will create an enabling environment and embrace a Team based culture where people will excel.

2.6 Vision:To became the bank of choice by Transforming the way we do business and Developing a truly unique financial Institution that delivers superior growth And financial performance and be the Most recognizable brand in the financial Services in Bangladesh.

2.8 structure of fund collection of EBL Table:-01

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Source fund Equity Borrowing s Deposit Others total

Fund collection of EBL for the period (2006-2010) of 2006(%) 2007(%) 2008(%) 2009(5) 2010(%) 9.25 12.25 71.51 6.99 100 9.54 9.287 74.45 6.723 100 8.71 8.67 76.47 6.15 100 12.063 12.644 70.40 4.892 100 14.726 11.288 68.766 5.28 100

average 10.85 10.815 72.319 6.087 100

Source: - data have been compiled from annual report (2006-2010) Comment: - IT is revealed from the table that deposit variable consumes highest percentage of fund followed by equity, borrowings and others.
chart:-01 - fund collection of EBL
80 60 40 20 0 equity borrowings deposit others

2.9 structure of fund employment of EBL Table:-02 Fund employee of EBL for the period (2006-2010) Uses of 2006(%) 2007(%) 2008(%) 2009(%) 2010(%) average fund Loans 72.28 76.98 72.54 68.22 71.425 72.29 Investment 16.389 8.614 9.796 12.60 11.976 11.875 Others 11.331 14.399 17.663 19.18 16.599 15.834 asset total 100 100 100 100 100 100 Source: - data have been compiled from annual report (2006-2010) Comment: - it is revealed that loan variable consumes the highest percentage of fund followed by others assets and investment.

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chart:-02-structure of fund employment o EBL

80 60 40 20 0 loans investment others

Under the above discussion the next chapter-03 will discuss with the performance evaluation techniques and procedures.

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Chapter -03 Performance evaluation techniques and procedures

Prelude: - generally there are some techniques, which are used in evaluating financial

performance of a firm. Basically this study is going to try the evaluation of the financial performance of EBL through ratio. So in this chapter, we will discuss the various financial ratio, those are used in evaluating the performance. These financial ratios are traditionally grouped into following categories 1. Short term solvency ratio 2. Long term solvency ratio 3. Efficiency management ratio 4. Profitability ratio 5. Market value ratio Now, every category is discussed briefly:3.1 short term solvency ratios: - short term solvency ratios as a group are intended to provide information about a firms liquidity. The primary concern is the firms ability to pay its bills over the short run without undue stress. Consequently these ratios focus on current asset and liabilities. For obvious reasons, liquidity ratios are particularly interesting to short term creditors. A. current ratio: - one of the best known and most widely used ratios is the current ratio. The ratio is defined as Current ratio = current asset/current liability B. quick or acid test ratio: - inventory is often the least liquid current asset. Its also the one for which the book values are least reliable as measures of market value. Because the quality of the inventory isnt considered. Some of the inventory may later turn out to be damaged. Quick ratio: =current asset inventory/current liability C. cash ratio: - a very short term creditor might be interested in the cash ratio. The formula is Cash ratio= cash /current liability

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D. net working capital to total asset ratio: - net working capital is frequently viewed as the amount of short term liquidity a firm has. Net working capital to total asset ratio =net working capital /total asset E. interval measure ratio= current asset /average daily operating cost Average daily operating cost is measured by total cost excluding depreciation and interest, divided by 365days. 3.2 long term solvency: - long term solvency ratios are intended to address the firms long run ability to meet its obligation. We consider three commonly used measure and some variations. A. total debt ratio: - total debt ratio takes into account all debts of all maturities to all creditors. The formula is:Total debt ratio = total asset total equity /total asset Debt-equity ratio = total debt/total equity B. long term debt ratio: - frequently, financial analysis are more concerned with the firms long term debt than its short term debt. Because the short term will constantly be changing. For these reasons the long term debt ratio is often calculated as:Long term debt ratio = long term debt /long term debt+total equity C. time interest earned:-another common measure of long term solvency is the time interest earned ratio. The formula is:Time interest earned = EBIT /interest D. cash coverage ratio: - a problem with (tie) ratio is that it is based on (EBIT). This is not really a measure of cash available to pay interest. The reason is that deprecation, a non cash expense has been deducted out. Because interest is most definitely a cash outflow. One way to define the cash coverage ratio is Cash coverage ratio = EBIT+depreciation /interest 3.3 Asset management measures: - these are intended to describe is how efficiently a firm uses its assets to generate sales. a. Inventory turnover = cost of goods sold /inventory B. receivable turnover: - our inventory measures give some indication of how fast we can sell product. We now look at how fast we collect on those sales. The formula is:-

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Receivable turnover = sales /account receivable c. Asset turnover ratio: - there are two formulas for fixed asset and total asset. Total asset turnover = sales /total assets D. operating efficiency ratio: - the efficiency ratio gives us a measure of how effectively a bank is operating. It is the cost required to generate each dollar of revenue. An increase means the company is losing a large percentage of its income to expense. If it is getting lower. It is good for the bank and its shareholders. The equation is Operating efficiency ratio = operating expense / total revenue E. employee productivity ratio: - the ratio measures the level of income that each employee generates. It helps to determine the efficiency of a bank in terms of employees. The equation is Employee productivity ratio = operating profit /no of employee 3.4 Profitability ratio:A. return on equity: - ROE measures banks profitability by revealing how much profit a bank generates with the shareholders investment. The formula is ROE = net income /total equity It measures the return on the money the investors have put into the company. This is the ratio potential investors may look at when deciding whether or not to invest in the company. B. return on asset: - ROA measures the efficiency with which the company is managing its investment in asset and utilizing them to generate profit. The higher the percentage is better, because that means the company is doing a good job using its assets to generate sales .the formula is ROA= net income /total asset C.Net interest margin: - is a measurement of the difference between the interest incomes generated by banks and the amount of interest paid out to their lenders .it examines how successfully a firms investment decision is compared to its debt situations. A negative value denotes that the firm did not make an optimal decision. Because interest expenses were greater than the amount of returns generated by investment. The equation is

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NIM= interest income from loan interest expense on deposit /total asset d. Net non interest margin: - it is expressed as a percentage of how much non interest revenue the bank are earning minus the non interest expense NNIM= non interest revenue non interest expenses/total asset e. Net operating margin: - a measure of how profitability the bank is operating. The ratio tells how well a company converts revenue from core operation into actual profit. NOM= total operating revenue total operating expenses /total asset F. earning per share: - the portion of a companys profit allocated to each outstanding share of common stock. EPS serve as an indicator of company profitability. It tells an investor how much of the companys profit belongs to each share of stock. EPS= net income after taxes /no of share outstanding
g.

Net profit margin: - it tells investors the percentage of money a company

actually earns per dollar of sales. The higher the net profit margin is the more effective the company is at converting revenue into actual profit. NPM= net income /sales
h.

Tax management ratio: - it reflects the use of security gains or loss to tax exposure. It indicates what portion of operating income generates

minimize
i.

net income after tax. . Expense control efficiency: - it indicates the portion of revenue after the operating expense is deducted .its a measure of operating efficiency and expense control.
j.

Asset utilization ratio: - it measures the rate at which a business is able to

turn assets into sales. And hence cash. The higher the ratio the more effectively assets are used to generate revenue. (AU)= total operating revenue /total assets
k.

Equity multiplier: - the ratio shows a bank total asset per dollar of

stockholders equity. A higher equity multiplier indicates higher financial leverage .which means the bank is relying more on debt to finance its assets. EM= total asset/total equity capital

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3.5 Market value ratio:A. price earning ratio: - it is a measure of the price paid for a share relative to the Annual profit earned by the firm per share. It gives us an indication of the confidence that investors have in the future prosperity of the business. P/E= price per share/earning per share B. market book ratio: - it measures how much a bank is worth at present in comparison with the amount of capital invested by current and past stockholders into it. If the balance sheet assets per share are much larger than the share price, this is taken to be a buy signal. Market book ratio = market value per share/book value per share All of these are the ratios, which is used in evaluating the performance.

Under the above discussion the next chapter -04 will discuss with the Authorities involved in performance evaluation of EB

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Chapter -04 Authorities involved in performance evaluation of EBL

4.1: Introduction:- every bank has specific organizational structure, or manual.

Basically these manual are divided into top level or decision making level, mid level, and execution level. Top level MGT is responsible for taking decision, determining goal, strategy, budget etc for future of the bank. Mid level MGT involves in executing and monitoring of the activities to ensure the fulfillment of the demand of high command. Execution level is the main mechanism of a bank. Because this level directly related to implementation of the plan. Regarding this study, all of these parties are involved in performance evaluation from their respective point of view.
4.2 top levels MGT committee structure of EBL is shown below:-

MANAGEMENT COMMITTEES

ALMC

BORC

MANCOM

EMT

BRMC

IC

PC

BIU

From the table we can see that, different types of committee are existing here in EBL, who are responsible for evaluating the performance of their respective area.
4.3 EXECUTIVE AUTHORITY STRUCTURE:-

EXECUTIVE COMMITTEE EXECUTIVE PRESIDENTS DEPUTY EX- PRESIDENTS EXECUTIVE VICE PRESIDENTS SENIOR VICE PRESIDENTS VICE- PRESIDENTS ASST. VICE PRESIDENTS PRENCIPAL

34

STAFF
4.4 AUDIT COMMITTEE OF EBL:Composition and qualification: - in compliance with the BRPD circular no. 12 dated 23

December 2002 of Bangladesh bank and sec notification .SEC/CMRRCD/2006158/ADMIN/02-08 dated 20, February 2006, the audit committee of the board of EBL was formed by the board of directors and was last reconstituted in April 2010. Following are the major responsibilities of the audit committee of EBL.
a. To review the activities and organizational structure of the internal audit

function and ensure that no unjustified restrictions are made.

b. Review the efficiency and effectiveness of internal audit function. c. Review that findings and recommendations made by the internal auditors for

removing the irregularities. If any detected are duly acted upon by the MGT in running the affairs of the bank.
d. Review the performance of auditing and their audit and MGT reports by the

external auditors.
e. Review the status of report findings of SF Ahmed and co, chartered accountants,

on the issues related to MGT of loan documentation etc.

f. Review the status of classified SME and consumers loan. g. Review the status of the pending guarantee files. h. Review the annual report and overall financial health of the bank.

i. Review the compliance and related risk level of branches and various departments. The united Endeavour of these parties is ensured the performance evaluation of EBL.

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Under the above discussion the next chapter -05 will discuss with the Liquidity position of EBL. Chapter-05 Liquidity position of EBL Introduction: - this chapter covers the liquidity position of EBL. Here we discuss the different types of liquid assets, their management and position in the bank. Generally, liquidity refers to the ability of a bank to raise a certain amount of fund at a certain cost with in a certain period of time (Burns, 1962). Liquidity management refers to the maintenance of adequate degree of liquidity for all the time it faces obvious difficulties. Liquidity management is a very important to a bank for its smooth running. The bank must ensure adequate amount of liquidity in the banks asset so as to meet any claims up it in cash on demand. Now we will try to expose the liquidity position of EBL by using some relevant ratios during the study period. 5.1 cash position indicator:Table:-03 Cash position indicator of EBL for the period (2010-2006) In million BDT

formula 2010 Cash position = Cash +deposit/total 8234 assets 82053 =10.03%

2009

2008

2007

2006

average

1018 69870 =14.57%

6924 54351 =12.74%

3894 40131 =9.70%

3094 35934 =8.61% 11.13%

Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher. Evaluation: - from this table, it is clear that the cash position of EBL is showing a fluctuating trend. The reason behind this trend is the interest rates on deposit in other institutions are moving up and down. It implies that when interest rate is increased, then the bank is interested to deposit his cash in depository institution and vice-versa.

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chart:-03- cash position indicator

15 10 10.03 5 0 2010 2009 2008 2007 2006 14.57 12.74 9.7 8.61

5.2 liquid security indicators:Table -04

Liquid security indicator of EBL for the period (2010-2006) In million BDT

formula 2010 Liquid security=govt.security/total asset 6828

2009 7716

2008 4923

2007 3312

2006 5620

average

82053 69870 54351 40131 35934 =8.32% =11.04% =9.06% =8.25% =15.64% =10.46% Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher. Evaluation: - from the table, it is clear that the liquid security indicator ratio shows a fluctuating trend. Basically it is depend upon the return of the investment.
chart:-04-liquid security indicator
20 15 10 5 0 2010 2009 2009 2007 2006 11.04 8.32 9.06 8.25 15.64

5.3 deposit composition ratio:Table -05 Deposit composition ratio of EBL for the period (2010-2006) In million BDT

Formula 2010 Deposit composition= Demand deposit /time 5522 deposit

2009

2008

2007

2006

average

4917

4393

3280

3257

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36947 33259 29192 20201 16992 =14.95% =14.78% =15.05% = 16.24% =19.16% Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.

=16.04%

Evaluation: - from the table we are observing a slightly declining trend in the deposit composition ratio. This is a positive liquidity indicator for the bank. It implies that the bank is having greater deposit stability and a lesser demand for liquidity
chart:-05-deposit composition ratio
20 19.16 deposit com position ratio 2010 2008 2006

16.24 15.05 14.78 15 14.95 10 5 0

5.4 liquid assets to deposit ratio:Table -06 Liquid assets to deposit ratio of EBL for the period (2010-2006) In million BDT

Formula Liquid asset to deposit =liquid asset /total deposit

2010 1806 56425 =32.01%

2009 1931 49189 =39.27%

2008 1294 41564 =31.15%

2007 7821 29878 =26.17%

2006 8984 25699 =34.95%

average =32.71%

Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher. Evaluation: - from the table, it is evidenced that the liquid asset to deposit ratio of EBL during the study period is showing a fluctuating trend. This ratio indicates that how much portion of deposit is occupied by liquid asset. The better the ratio the better the liquidity position of a bank.

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chart:-06-liquid asset to deposit ratio

40 30 20 10 0 2010 2008 2006 32.01 39.27 34.95 31.15 26.17 liquid asset to deposit ratio

5.5 RWA to deposit ratio:Table-7 RWA to deposit ratio of EBL for the period (2010-2006)
In million BDT

Formula 2010 2009 2008 2007 2006 average RWA to deposit 10444 73316 41315 30687 25721 =RWA/total 56425 49190 41573 30092 25734 =1.26 deposit =1.85 =1.49 =0.99 =1.01 =0.999 Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher. Evaluation: - from the table, it is evidenced that the RWA to deposit ratio of EBL is increasing The greater the ratio indicates the lower amount of liquidity position of the bank.
chart:-07- RWA to deposit ratio
2 1.85 1.5 1 0.5 0 2010 2008 2006 1.49 0.99 1.01 0.999 RWA to deposit ratio

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5.6 credit to deposit ratio:Table -8 Credit to deposit ratio of EBL for the period (2010-2006)
In million BDT

Formula 2010 2009 2008 2007 2006 average Credit to 58607 47668 39662 30962 26008 deposit=total 56425 49190 41573 30092 25734 credit /total =103.87% =96.91% =95.40% =102.89% =101.06% =100.02% deposit Source: - data have been compiled from annual report of EBL. Note: - :- the calculations have been made by the researcher. Evaluation: - from the table, we see that in 2010, 2007, 2006, here the amount of loan is greater than deposit. We know that, more loans ensure more profitability, but same time banks fall into the liquidity crisis.
chart:-08- credit to deposit ratio
104 103.87 102.89 102 101.06 100 98 96.91 96 95.4 94 92 90 2010 2008 2006

credit to deposit ratio

5.7 investments to deposit ratio:Table -9 Investment to deposit ratio of EBL for the period (2010-2006)
In million BDT

Formula 2010 2009 2008 2007 2006 average Investment to 9827 8806 5324 3456 5889 deposit= 56425 49190 41573 30092 25734 Investment/total =17.41% =17.90% =12.81% =11.57% =22.91% =16.52% deposit Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher. Evaluation: - from the table, we see that in 2006 the investment is higher than other years .EBL constantly invested a little portion of his total deposit.

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chart:-09-investment to deposit ratio

25 22.91 20 17.4117.9 15 12.81 11.57 10 5 0 2010 2008 2006

investment to deposit ratio

Conclusion: - after completion this chapter we have found some results. These ratios

are showing a declining liquidity position of EBL during the study period. Their loan to deposit ratio is also showing an alarming trend.

Under the above discussion the next chapter-06 will discuss with the Long term solvency of EBL.

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Chapter -06 Long term solvency of EBL Introduction: - this chapter covers the long term solvency of EBL. Long term solvency refers to the ability of a bank to meet the obligation in long run. Long term solvency indicates the strength and weakness of a bank in long run. It implies that how much the bank is able to meet his debts by his assets. Now, we will try to find out the long term solvency of EBL by using some relevant ratios during the study period. 6.1 debts to asset ratio:Table -10
Debts to asset ratio of EBL for the period (2010-2006) In million BDT

Formula 2010 2009 2008 2007 Debt to 69970 61441 49618 36303 asset 82053 69870 54351 40131 =total =85.27% =87.94% =91.29% =90.46% Debt/total asset Source: - data have been compiled from annual report of EBL. Note- the calculations have been made by the researcher.

2006 32620 35934 =90.77%

average =89.15%

Evaluation: - from the table, we see observing a very slight decreasing trend in this ratio. EBL has to try minimizing his risk by reducing his debt.
chart:-10-debt to asset ratio
92 90 88 91.29 90.4690.77 87.94 debt to asset ratio

86 85.27 84 82 2010 2008 2006

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6.2 Debt to Equity ratio:Table -11

Debts to equity ratio of EBL for the period (2010-2006) In million BDT

Formula 2010 2009 2008 2007 Debt to 69970 61441 49618 36303 equity 12083 8429 4733 3827 =total =5.79 =7.29 =10.48 =9.48 debt/ Total equity Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.

2006 32620 3314 =9.84

average =8.57

Evaluation: - from the table, it is clear that the debt to equity ratio of EBL is showing a decreasing trend. That means leverage and overall risk is decreasing for the bank.
chart:-11-debt to equity ratio
12 10 8 6 5.79 4 2 0 2010 2008 2006 7.29 debt to equity ratio 10.48

9.48 9.84

6.3 time interest earned ratio:Table -12

Time interest earned ratio of EBL for the period (2010-2006) In million BDT

Formula Time interest= EBIT/interest

2010 2009 2008 2007 10968 8916 7154 5093 4003 3899 3675 2498 =2.74 = 2.27 =1.95 =2.03 times times times times Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.

2006 3963 2160 =1.83 times

average =2.16 times

Evaluation: - from the table, the (TIE) ratio of EBL is showing an increasing trend. It implies that the interest payment ability of the bank is increasing year to year. Its a good sign for the bank.

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chart:-12-cash coverage ratio

3 2.5 2 1.5 1 0.5 0 2.74 2.27 1.95 2.03 1.83 cash coverage ratio

2010

2008

2006

Conclusion: - after completion this chapter we see that, the bank is trying to reduce his debt by increasing his equity capital. In the mean time the cash coverage ratio of EBL is not enough to fulfill his due.

Under the above discussion the next chapter-07 will discuss with the Efficiency position of EBL.

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Chapter -07 Efficiency position of EBL Introduction: - this chapter covers the efficiency position of EBL. Generally, efficiency means the ability of an individual, or an organization how it treats with his work, its effort ness, actual results which is compared by the standard. An other hand we can also say that how properly an organization used his resources to generate the profit, this Also a good indicator of efficiency. Here we are going to try disclosing the efficiency position of EBL by using some ratios during the study period. 7.1 operIntroduction: ating efficiency ratio:Table -13 Operating efficiency ratio of EBL for the period (2010-2006)
In million BDT

Formula 2010 2009 2008 2007 Operating 2073 1649 1318 951 efficiency 6460 4630 3701 2820 =operating =32.10% =35.62% =35.60% =33.72% cost/operating revenue Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.

2006 753 2110 =35.67%

average =34.54%

Evaluation: - from the table, it is shown that, the operating efficiency ratio of EBL is showing a fluctuating trend. The average is 34.54% during the study period. Here the MGT has to give more attention to minimize the ratio as much as possible.
chart:- 13- operating efficiency ratio
36 35 34 33 32 32.1 31 30 2010 2008 2006 33.72 operating efficiency ratio 35.62 35.6 35.67

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7.2 employee productivity ratio:Table- 14 Employee productivity ratio of EBL for the period (2010-2006)
In million BDT

Formula 2010 2009 2008 2007 Employee 4410 2980 2386 1876 productivity 973 878 763 690 =operating =4.53 =3.39 =3.13 =2.71 profit/no of million million million million employee Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.

2006 1358 612 =2.22 million

average =3.12 million

Evaluation: - from the table, we see that every year the number of employee is increasing, as well as the productivity of the employees is also increasing.
chart:-14- employee productivity ratio
5 4.53 4 3.393.13 3.12 3 2.71 2.22 2 1 0 2010 2008 2006

employee productivity ratio

7.3 credit to deposit ratio:Table-15 Credit to deposit ratio of EBL for the period (2010-2006)
In million BDT

formula 2010 2009 2008 2007 Credit to 58607 47668 39662 30962 deposit= 56425 49190 41573 30092 total =103.87% =96.91% =95.40% =102.89% loans/total deposit Source: - data have been compiled from annual report of EBL. Note- the calculations have been made by the researcher.

2006 average 26008 25734 =101.06% =100.02%

46

Evaluation: - from the table, we see that ,the efficiency of EBL is outstanding .because their effort of selling loans is always greater than deposit .it implies that their employees are more effective in expending their loans and advances activities.
chart:-15- credit to deposit ratio
104 103.87 102.89 102 101.06 100 98 96.91 96 95.4 94 92 90 2010 2008 2006

credit to deposit ratio

7.4 loan recovery position of EBL:Table -16 Loan recovery position of EBL for the period (2010-2006)
In million BDT

formula 2010 2009 2008 2007 Total 58607476683966230962loans-non 1169 1172 1309 1334 performing 58607 47668 39662 30962 loans/total =98.00% =97.54% =96.69% =95.69% loans Source: - data have been compiled from annual report of EBL. Note- the calculations have been made by the researcher.

2006 26008986 26008 =96.20%

average

=96.82%

Evaluation: - from the table, the recovery position of EBL is outstanding. It implies that the strategy of loan recovery of EBL is very effective and strong.

chart:-16-loan recovery position of EBL

98 98 97 96 95 94 2010 2008 2006 97.54 96.69 95.69 96.2 loan recoery position of EBL

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Under the above discussion the next chapter-08 will discuss with the profitability position of EBL. Chapter -08 Profitability position of EBL Introduction: - this chapter covers the profitability position of EBL.profitability is an important index of operational efficiency of an organization. Analysis of profitability of an enterprise provides an insight in to effectiveness of utilization of funds in the enterprise and also managerial efficiency (srivastava, 1977). Strong earnings and profitability profiles reflects the banks capacity to absorb losses by building the capital bases and through financing expansion programs and paying adequate dividends to its shareholders. 8.1 Return on equity:Table- 17 Return on equity of EBL for the period (2010-2006)
In million BDT

Formula 2010 2009 2008 2007 Return on 2425 1455 798 419 equity=net 10257 6581 4281 3572 income/total =23.64% =22.10% =18.64% =11.73% Average equity Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.

2006 513 3190 =16.07%

average =18.43%

Evaluation: - from the table, it is shown that, the ROE ratio of EBL is showing an increasing trend. It implies that, the higher return on investment during the period of study.

48

chart:-17- return on equity

25 23.64 20 15 10 5 0 2010 2009 2008 2007 2006 22.1 18.64 11.73 16.07 return on equity

8.2 return on asset:Table -18 Return on asset of EBL for the period (2010-2006) Formula 2010 2009 2008 2007 Return on 2425 1455 798 419 asset=net 75963 62235 47401 38087 income/total =3.19% =2.34% =1.68% =1.10% Average asset Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher. Evaluation: - from the table, we see that the ROA ratio of EBL is showing an increasing trend. It implies that the bank is properly utilizing assets and generating a good return during the study period.
chart:-18-return on asset
3.5 3.19 3 2.5 2.34 2 1.68 1.63 1.5 1.1 1 0.5 0 2010 2008 2006

2006 513 31300 =1.63%

In million BDT average =1.988%

return on asset

8.3 net interest margin:Table -19

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Net interest margin of EBL for the period (2010-2006)

In million BDT

formula 2010 2009 2008 2007 Net interest 2973 2317 1551 1312 Margin=net 66942 54478 40768 33728 interest =4.44% =4.25% =3.80% =3.89% income/total Average earning asset Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.

2006 670 29100 =2.30%

average =3.74%

Evaluation: - from the table, the NIM ratio of EBL is showing an increasing trend. It means that the spread between the interest income and interest expense has been increasing compared to average earning assets.
chart:-19- net interest margin
5 4 3 2 1 0 2010 2009 2008 2007 2006 4.44 4.25

3.8 3.89 2.3 net interest margin

8.4 net operating margin:Table -20 Net operating margin of EBL for the period (2010-2006)
In million BDT

Formula 2010 2009 2008 2007 Net 4410 2980 2386 1870 operating 82053 69871 54598 40204 margin=net =5.37% =4.26% =4.37% =4.65% Operating income/total asset Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.

2006 1358 35971 =3.77%

average =4.48%

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Evaluation: - from the table, the NOM ratio is showing a consistent trend during the study period. But in 2010 the ratio is better than other years. MGT has to try maximizing the ratio.
chart:-20-net operating margin
6 5 4 3 2 1 0 2010 2009 2008 2007 2006 5.37 4.26 4.37 4.65 3.77 net operating margin

8.5 cost to income ratio:Table -21 Cost to income ratio of EBL for the period (2010-2006)
In million BDT

Formula Cost to income=operating Cost/total revenue

2010 2073 6460 =32.10%

2009 1649 4630 =35.62%

2008 1318 3701 =35.60%

2007 951 2820 =33.72%

2006 average 753 2110 =35.67% =34.54%

Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher. Evaluation: - from the table, the cost to income ratio of EBL is showing a fluctuating trend. Because the expenditure of the bank vary from year to year.
chart:-21- cost to income ratio
36 35 34 33 32 32.1 31 30 35.62 35.6 35.67

33.72 cost to income ratio

2010

2008

2006

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8.6 profit to expenditure ratio:Table -22 Profit to expenditure ratio of EBL for the period (2010-2006)
In million BDT

Formula 2010 2009 2008 2007 Profit to 2425 1455 798 419 cost=net 2073 1649 1318 951 profit =116.9% =88.23% =60.54% =44.05% after tax/total cost Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.

2006 513 753 =68.12%

average =75.56%

Evaluation: - from the table, the ratio is going up; it implies that the profit is exceeding the cost. So its a good sign for the bank.
chart:-22-profit to cost ratio
120 116.9 100 80 60 40 20 0 2010 2009 2008 2007 2006 88.23 60.54 44.05 68.12 profit to cost ratio

Conclusion:- after completion this chapter we see that, their ROE,ROA,NIM is showing upward trend and cost to income and profit to cost ratio are showing downward trend. Thats a good sign for the bank. It implies that their profitability is going up, in the mean time their cost trend is going down.

Under the above discussion the next chapter-09 will discuss with the Market position of EBL.

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Chapter -09 Market position of EBL Introduction: - this chapter covers the market position of EBL. Market position refers to the stability of a company in the market. That means market value of equity of a company, share value and confidence of the investors on the companys share is expressed the market position of a firm. Here we will try to uncover the market position of EBL by using some relevant ratios during the study period. 9.1 earning per share:Table -23 Earning per share of EBL for the period (2010-2006)
In million BDT

Formula 2010 2009 2008 2007 EPS=net 2425 1455 798 419 profit after 292 250 139 104 tax/no of =8.30 =5.82 =5.74 =4.02 share outstanding Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.

2006 513 83 =6.18

average =6.012

Evaluation: - from the table, the EPS ratio of EBL has grown at satisfactory level. Basically the increase of EPS is the result of raising the faith of shareholders of the bank.
chart:-23- earning per share
10 8 6 4 2 0 2010 2009 2008 2007 2006 8.3 5.82 5.74 4.02 6.18 earning pershare

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9.2 price earning ratio:Table -24 Price earning ratio of EBL for the period (2010-2006)
In million BDT

Formula P/E =price per share/earning Per share

2010 129.40 8.30 =15.59

2009 64.43 5.82 =11.07

2008 58.93 5.74 =10.26

2007 107.08 4.02 =26.63

2006 79.25 6.18 =12.82

average =15.27

Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher. Evaluation: - from the table, we see that, in 2007 the P/E ratio was highest. It means the investors were willing to pay 26.63 taka for 1 taka return. That time the investors confidence on the bank was very high. But in 2008, 2009, the ratio was gone down. Eventually in 2010 the ratio is raised up.
chart:-24- price earning ratio
30 25 20 15 15.59 11.0710.26 10 5 0 2010 2008 2006 12.82 price earning ratio 26.63

9.3 markets book ratio:Table -25 Market book ratio of EBL for the period (2010-2006)
In million BDT

Formula Market book =market value per share/book value per

2010 129.40 41.37 =3.127 times

2009 64.43 33.76 =1.90 times

2008 58.93 34.13 =1.726 times

2007 107.08 36.99 =2.894 times

2006 79.25 40.04 =1.979 times

average =2.32 times

54

share

Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher. Evaluation: - from the table, we see that, there is a fluctuation from 2006 to 2010. Its not a good sign for the bank. But in 2010 the ratio is increased, it implies that the demand for share of EBL is raised.
chart:-25-market book ratio
3.5 3.127 3 2.894 2.5 1.979 2 1.9 1.726 1.5 1 0.5 0 2010 2009 2008 2007 2006

market book ratio

Conclusion: - after completion this chapter, we have found some results, which is indicates that the market position of EBL during the period is reasonable. Their EPS is increased in current year, but their P/E ratio is going down in that year. In other hand their M/B ratio is also increased.

55

Under the above discussion the next chapter-10 will discuss with the Balanced score card, Risk measurement and SWOT analysis of EBL.

Chapter -10 Balanced score card, Risk measurement and SWOT analysis
10.1introduction: - most companies have a performance measurement system that

includes financial measures as well as non financial measures. Financial measures are used primarily by senior mangers to monitor the performance of the firm as a whole and its business units or divisions, non financial measures are employed mainly by operating managers to control short term operations. Till recently, not much effort was made to combine financial and non financial measures in an integrated measurement framework. The balanced score card approach pioneered by Robert Kaplan, David Norton and others seeks to develop an integrated performance measurement system. Balanced score card has been defined as a set of measures that gives top managers a fast but comprehensive view of the business , combing in a single report the disparate elements of a companys competitive agenda while attempting to present suboptimization by managers as they must consider all of their organizations significant performance areas together.
10.2 distinctive features: - the balanced score card approach claim the following

distinctive features:A. the balanced score card is strategy driven. It is a mechanism for implementing the strategy of a business unit into a comprehensive system of performance measurement and management as Robert kaplan and David norton say, the balanced score card is more than a tactical or an operational measurement system. Innovative companies are using the scorecard as a strategy mgt system to manage their strategy over long run. B. the balanced score card covers four important perspectives in a business financial, consumer, internal business and learning and growth. C. the balanced score card represents a linked series of objectives and measures. The linkages capture cause effect relationship obtaining in a business.

56

10.3 structure of a balanced score card:-

FINANCIAL PERSPECTIVE

CUSTOMER PERSPECTIVE

INTERNAL PERSPECTIVE

INNOVATION AND LEARNING PERSPECTIVE

Source:-financial Management: theory and practice.

10.4 performance evaluation of EBL based on balanced score card:-now we will try to

present EBLs balanced score card in terms of the four perspectives as follows:A. innovative and learning perspective: - some of the specific measures as follows:1. New product and services: - EBL SME banking has been from the start. Introducing products that would suit the need of the market. This year they developed a new product EBL uddom main feature of which is 50% is EMI based and 50% is over draft facilities which partially secured. 2. In 2010, EBL have opened (8) new SME centers including above (5) krishi branches. 3. EBL received the trustee license for mutual funds from SEC in March 2010. 4. Besides, EBL also trying to add the new technology to ensure the quality of the service and for minimizing the delivery time of the service.

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5. EBL also formed a 99.99% owned subsidiary titled EBL ASSET MGT LTD in January 2011. 6. Very recently the bank also introduced pay roll banking with different companies. B. financial perspective: - as financial perspective this table represents the return on capital employed of EBL:particulars 2010 Return on equity 23.64% Return on asset 3.19% Yield on 12.75% advance 8.30 Earning per 98.00% share Loan recovery position From the table we see that, and stability of EBL. Besides, there are some other financial perspectives shown below:1. In 2010, credit to deposit ratio of EBL is increased by 6.96% which ensures the more profitability of the bank.
2. In 2010, net interest margin ratio of EBL is increased by 0.19%. 3. Net operating margin of EBL is also increased.

2009 22.10% 2.34% 13.69% 5.00 97.54%

2008 18.6% 1.68% 13.90% 3.45 96.69%

2007 11.73% 1.10% 13.76% 3.02 95.69%

2006 16.07% 1.62% 12.72% 4.96 96.20%

different ratios whose are represent the financial position

All of this figure are proofed that, as financial perspective of EBL during the study period is really satisfactory. C. customer perspective: - this table represents the customer loyalty on EBL during the study period. Particulars 2010 2009 2008 2007 2006 No of branches 49 39 34 28 25 No of 973 878 763 690 612 employees 194351 176080 159445 110321 90703 No of deposit 65656 35125 34324 21474 19016 a/c 74 55 36 19 12 No of loan a/c 33 23 18 16 12 ATMs 10 8 5 5 3 SME centers No of bill pay machine From the table, it is clear that, customer loyalty and confidence on EBL is showing upward trend.

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Besides, some other information is given below in favor of customer perspective:1. EBL follows the best customer service policy. 2. Their service charge is lower than other bank. 3. The processing period of loan and other services is very short. 4. The environment of office is comfortable for customer.
5. Eventually, the employees behavior is more soft and cordial.

D. internal business perspective: - we can divide the internal business of a firm into two parts. Such as their existing service and product, another is employee oriented program .some is given below:1. In EBL there are 4 types of product and services are existed. These are loan product, deposit product, card product, SME and corporate banking. 2. Basically the total internal business of EBL is conducted by providing these product and service. 3. Skill development of employee is a significant part of business. In this regard in 2010, HRM division of EBL arranged 165 training programs, 25 trainees were sent overseas and 1680 were coached and trained locally to upgrade their knowledge and enhancing the quality.
10.5 different types of risk MGT procedures of EBL:-

Introduction: - like any other commercial bank, EBL is also in the business of taking risk and mitigate those risks within banks appetite and maximize return. However risks are by their nature uncertain and the MGT of risk relies on judgments and predictions about the future. The principal risks and uncertainties faced by the bank in coming year are set out below:a. Capital adequacy risk: - EBL focuses on strengthening and enhancing its risk

MGT culture and internal control environment rather than increasing capital to cover up weak risk MGT and control practices. Capital adequacy risk is a risk where the bank does not have sufficient capital reserves to do the business. Or to absorb unexpected losses arising from credit, market, and operational risks. EBL has been generating most of its incremental capital from retained profit. To support incremental growth of risk weighted assets. Therefore, the banks capital

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adequacy ratio remains consistently within the comfort zone since the parallel run from 1 Jan, 2009. During the year 2010 the CAR ranges from 9.93% to 10.29% against minimum requirement of 8% of RWA. Risk governance: - assessing regulatory capital in relation to overall risk exposures of a Bank is an integrated and comprehensive process. EBL through its SRP team/ BRMC are taking active measures to identify, quantify, manage and monitor all risks to which the bank is exposed to. B. credit risk: - credit risk is the risk of loss that may occur from the failure of any counterparty to make required payment in accordance with agreed terms and conditions of credit worthiness. Credit risk is managed through a framework set by policies and procedures established by the board. Risk governance: - potential credit losses from any given account, customer or portfolio are mitigated using a range of tools such as collateral, netting agreement, credit insurance, and other guarantees. The reliance that can be placed on these mitigates is carefully assessed in light of issues such as legal certainty and enforceability, market valuation, and counterparty risk of the guarantor. EBL has special asset MGT division dedicated for MGT of problem credit .major responsibility of this department is to formulate strategy and action plans for minimization of risk. Presentation of loss, maximization of recoveries and restructuring .direct recovery and legal actions.
c. Interest rate risk: - the process of interest rate risk MGT by the bank involves

determination of the business objective, expectation about future macro variables and understanding the money market and debt market in which it operates. Risk MGT approaches: - the bank uses the following approach to manage interest rate risk inherent in the balance sheet:1. The approach is the traditional gap analysis of on balance sheet asset liability

MGT. this involves careful balancing of asset and liability based on the interest rate view of the bank.
2. The bank regularly monitors the duration gap of balance sheet and also the

duration of investment portfolio. These parameters are reviewed by the ALCO on a monthly basis.

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3. while preparing the interest rate sensitive gap analysis , bank takes into account the following matters : volatile and core portions of savings deposit

reprising character of CC and OD account Prepayment option of loan products.

d. Market risk: - market risk is recognized as loss resulting from changes in market

prices and rates. Our exposure to market risk arises principally from customer driven transactions. the primary categories of market risk for the bank are:1. Interest rate risk arises from changes in yield curves; credit spread and

implied volatilities on interest rate option.

2. Current exchange rate risk arises from changes in exchange rates and

implied volatilities on foreign exchange options.

3. Commodity price risk arises from changes in commodity prices and implied

volatilities on commodity options.

4. Equity price risk arises from changes in the prices of equity, equity indices,

equity baskets and implied volatilities on related options. Market risk MGT:- there are some steps are taken by EBL to manage the market risk .these are as follows :1. To manage the interest rate risk, ALCO regularly monitors various ratios

and parameters. 2. ALCO also regularly monitors the interest rate sensitive gap and duration gap of total portfolio.
3. To manage exchange rate risk, bank always keep its net open position

within the limit set by central bank.

4. To manage exchange rate risk in cross currency, bank always square its

position in cross currency. E. operational risk: - operational risk is the risk of direct or indirect loss due to an event or action resulting from the failure of internal process, people and system, or from external event. We seek to minimize exposure to operational risk, subject

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to cost trade offs. Bank operation risk MGT sits with all these reports and decides action plans to resolve risk issues by specific individual and group within an agreed timeline. The committee also escalates high level risk to MANCO and BRMC. F. liquidity risk:- liquidity risk is the risk that we either do not have sufficient financial resources available to meet all our obligation and commitments as they fall due or can only access these financial resources at excessive cost. The policy of EBL is to maintain adequate liquidity at all times. And to leverage the negative correlation between liquidity and profitability without taking any excessive risk. 1. In the short term the banks focus is on ensuring that the cash flow demands can be met through asset maturities and customer deposits. 2. In the medium term the bank focus is on ensuring the balance sheet remains structurally sound. g. legal risk :- legal risk includes the risk of loss arising from a failure to comply with the laws , regulations or codes applicable to the financial services industry. The legal risk functions are responsibility of banks internal control and compliance division. This unit is responsible for developing and maintaining an appropriate framework of regulatory compliance policy and procedures. H. reputation risk: - reputation risk is that we fail to meet the standards of performance or behaviors mandated by our board and expected by our stakeholders in the way in which business is conducted. The set following statement to protect EBLs reputation and brand value. 1. Under no circumstance banks reputation to be compromised by revenue generating activities. 2. EBL always avoids potential brand damaging issue. 3. EBL shall avoid anti environment and anti social elements in its business. All of these are the risk faced by EBL and which they properly overcome by using the above policy and procedures.

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10.6 risk measurement of EBL through relevant ratios:- generally , a bank faces six

types of risk .now we are going to measure these risk of EBL by using some relevant ratios is given below:A. credit risk measurement ratios: - these ratios are calculated by using the numerical figure of EBL for the period (2010-2006). 1. The ratio of non performing loans to total loans and leases:Table-26 Non performing loan to total loan ratio of EBL for (2010-2006)
In million BDT

Formula 2010 2009 2008 2007 Non 1169 1172 1309 1334 performing 58607 47668 39662 30962 loan/total =1.99% =2.46% =3.30% =4.31% loan Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.
chart:-26-non performing loan to total loan ratio
5 4 3 2 1.99 1 0 2010 2008 2006 2.46 3.3 4.31

2006 986 26008 3.79%

average =3.17%

3.79 non peforming loan to total loan ratio

2. The ratio of annual provision for loan losses to total loans:Table:-27 Annual provision for loan losses to total loan of EBL for (2010-2006)
In million BDT

Formula 2010 2009 2008 2007 Provision 611 756 692 660 for loan 58607 47668 39662 30962 losses/total =1.04% =1.58% =1.74% =2.13% loans Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.

2006 394 26008 =1.51%

average =1.60%

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chart:-27- annual provision for loan losses to total loan ratio

2.5 2 1.5 1 1.04 0.5 0 2010 2008 2006 1.58 1.74 2.13 1.51 annual provision for loan losses to total loan ratio

3. The ratio of total loans to total deposit:Table -28 Total loan to total deposit ratio of EBL for (2010-2006)
In million BDT

Formula Total loan/total deposit

2010 58607 56425 =103.78%

2009 47668 49190 =96.91%

2008 39662 41573 =95.40%

2007 30962 30092 =102.67%

2006 average 26008 25734 =101.06% =100.02%

Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.
chart:-28-total loan to total deposit ratio
105 103.78 100 96.91 95 90 102.67 101.06 95.4 total loan to total deposit ratio 2006

2010

2008

B. liquidity risk measurement ratios: - these ratios are calculated by using the numerical figure of EBL for the period (2010-2006). 1. Loans to total asset ratio:Table -29 Loans to total asset ratio of EBL for (2010-2006)
In million BDT

Formula Total loan/total asset

2010 58607 82053 =71.42%

2009 47668 69871 =68.22%

2008 39662 54598 =72.64%

2007 30962 40204 =77.01%

2006 26008 35971 =72.30%

average =72.32%

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Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.
chart:-29-loan to total asset ratio
78 77.01 76 74 72.64 72.3 72 71.42 70 68.22 68 66 64 62 2010 2009 2008 2007 2006

loan to total asset ratio

2. The ratio of cash and deposit held at other banks to total assets:Table -30 Cash and deposit held at others bank to loans ratio of EBL for (2010-2006)
In million BDT

Formula Cash and deposit/total assets

2010 8234 82053 =10.03%

2009 1018 69871 =14.57%

2008 6924 54351 =12.74%

2007 3894 40131 =9.70%

2006 3094 35934 =8.61%

average =11.13%

Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.
chart:-30- cash and deposit to total asset ratio
15 10 10.03 5 0 14.57 12.74 9.7 8.61 cash and deposit to total asset ratio

2010 2009 2008 2007 2006

C. interest rate risk measurement ratio: - these ratios are calculated by using the numerical figure of EBL for the period (2010-2006).

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1. The ratio of interest sensitive asset to interest sensitive liability:Table-31 Interest sensitive asset to interest sensitive liability ratio of EBL for (2010-2006)
In million BDT

Formula 2010 2009 2008 2007 Interest 71759 62125 46831 34706 sensitive 65634 58025 46521 33885 asset/interest =1.093 =1.070 =1.006 =1.024 sensitive liability Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.
chart:-31-interest sensitive asset to interest sensitive liability ratio
1.1 1.093 1.071 1.05 1 0.95 2010 2008 2006 1.086 interest sensitine asset to interest sensitive liability ratio

2006 32751 30139 =1.086

average =1.056

1.024 1.006

D. market risk measurement ratios: - these ratios are calculated by using the numerical figure of EBL for the period (2010-2006). 1. The ratio of book value of equity to market value of equity:Table -32 Book value of equity to market value of equity ratio of EBL for (2010-2006)
In million BDT

Formula 2010 2009 2008 2007 Book value 12084 8429 4733 3829 of 37785 16107 8191 11136 equity/market =31.98% =52.32% =57.78% =34.38% value of equity Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher.

2006 3315 6578 =50.39%

average =45.37%

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chart:-32-book value of equity to market value of equity ratio

60 57.78 52.32 50.39 50 40 34.38 31.98 30 20 10 0 2010 2008 2006

book value of equity to market value of equity ratio

E. earning risk measurement ratios: - these ratios are calculated by using the numerical figure of EBL for the period (2010-2006). 1. Standard deviation of ROE:Table -33 Standard deviation of ROE of EBL for the period (2010-2006). Year ROE(X1) X1-X (X1-X)2 2010 .2364 .2364-.1843=.0521 (.0521)=.002714 2009 .2210 .2210-.1843=.0367 (.0367)=.00135 2008 .1864 .1864-.1843=-.0021 (-.0021)=.00000441 2007 .1173 .1173-.1843=-.067 (-.067)=.00449 2006 .1607 .1607-.1843=-.0236 (-.0236)=.000557 (x-x)2 x = .9218 /N=.0091154/5=.00182308 x = x/N =.1843 Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher. So, standard deviation of ROE= () = .00182308 = .042697 And C.V of (ROE) = ()/x 100% = .042697/.1842 100% = 23.16% Comment: - the C.V of ROE is 23.16%, which is less variable and it means ROE is more uniform and less earning risk.

2. Standard deviation of ROA:Table -34

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Year 2010 2009 2008 2007 2006

Standard deviation of ROA of EBL for the period (2010-2006). ROA(X1) (X1-X) (X1-X) .0319 .0319-.0198=.0121 (.0121)=.0001464 .0234 .0234-.0198=.0036 (.0036)=.0000129 .0168 .0168-.0198=-.003 (-.003)=.000009 .0110 .0110-.0198=-.0088 (-.0088)=.00007744 .0162 .0162-.0198=-.0036 (-.0036)=.0000129 X1 = .0993 (X1-X)2 = . X = X/N= .0993/5 0002587/5 = .00005174 =.0198

Source: - data have been compiled from annual report of EBL. Note: - the calculations have been made by the researcher. So, standard deviation of ROA= () = .00005174 = .007193 And (C.V) of ROA = / X 100% = .007193/.0198100% = 36.32% Comment: - the C.V of ROA is 36.32%, which is more variable than that of variable of ROE and it means ROA is insignificant risky.

10.7 SWOT ANALYSIS OF EBL:PRELUDE:-SWOT analysis provides a good overview of whether a firms business

position is fundamentally healthy or unhealthy. The word is an acronym of strengths,

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weakness, opportunities, and threats of a company. SWOT analysis helps the bank to reconstruct different sorts of shortcoming of the bank. From the SWOT analysis the present scenario of the bank can be exhibited. In the SWOT analysis two factors act as prime movers. Internal factors, which are prevailing inside the concern that includes strength and weakness. External factors, which act as opportunity and threat.

Factors of SWOT Analysis

Internal factors: strength weakness

External factors: opportunity threat

In this context, SWOT analysis of EBL has been exhibited overleaf.

SWOT analysis of EBL

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Online banking operation across all the branches. Partner of IFC under global trade finance program. The growth of deposit and loan is upward. Well customer employee relationship. Strength Being a huge number of SME banking division. Member of DSE and CSE. Friendly working environment. Own managed cards software and product system. Strong loan recovery position. Strong position in camel rating. Strong MGT and administration. Good financial position. Centralized trade service. Have a risk for issuing more loan than that of deposit. weakness Imbalanced with liquidity requirement of central bank. More debt than that of equity. The loan processing system is not easy and swift. Introducing loan for specially emigrated person. Have an opportunity to do business by using the new concept of opportunity government Like public private partnership. To do business through mobile banking, such as bill payment, premium payment etc. A common and continuous threat for bank is the entrance of new bank. Yet, different types of MLM company are also a threat for a bank, threat because they give more return than that of bank. Macro economic factors are also a threat for the bank. Under the above discussion the next chapter-11 will discuss with the problems of EB

Chapter-11

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Problems, Recommendations and Conclusion

11.1 Problems: -

A. According to the calculation of standard deviation of ROA and ROE, we have realized that the variability of ROE is less risky and the variability of ROA is few risky than that of ROE. Although the bank is doing well, but it has to try minimize the variability of that case. B.According to the rules of central bank, it is known that every listed commercial bank has to maintain a legal reserve, which is consist of cash reserve ratio (5.5%) and statutory liquidity ratio (19%) for meeting the liquidity needs and other unexpected crisis faced by the bank. but we see that EBL does not maintain the requirement of central bank, because the bank issues more loan than deposit, so it shows inconsistent view. C. the RWA to deposit is showing lower liquidity position. D. the bank issues more loan than deposit, it implies that the bank carries more risk. E. the bank is more depend upon debt in building their capital structure. F. the overall market position of EBL is showing a fluctuating trend it implies the lacking of condense of the investors. G. the difference between non performing loans and the provision of loan losses is large.

11.2 Recommendations of the study are as follows:A. deposit trend of EBL Particular 2010 2009 2008 2007 deposit 56425 49190 41573 30092 Source: - data have been compiled from annual report of EBL
the bank. Now the bank has to try keeping it up.

in million BDT 2006 25734

Comment: - here we see that, the deposit trend of EBL is going up .its a good sing for

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chart:-33-deposit trend of EBL

60000 56425 49190 50000 41573 40000 30092 30000 25734 20000 10000 0 2010 2008 2006

deposit trend of EBL

B. deposit utilization of EBL particular 2010 2009 2008 2007 Deposit 58607 47668 39662 30962 utilization or loan and advance of EBL Source: - data have been compiled from annual report of EBL and advance of EBL. Now the bank has to try keeping it up.
chart:-34- deposit utilization of EBL
60000 58607 50000 40000 30000 20000 10000 0 2010 2009 2008 2007 2006 47668 39662 30962 deposit utilization of EBL

in million BDT 2006 26008

Comment: - this table is also showing an upward trend of deposit utilization or loan

26008

C. deposit per employee:Formula 2010 2009 2008 2007 Deposit per 56425 49190 41573 30092 employee= 973 878 763 690 Total =57.990 =56.025 =54.486 =43.611 deposit/no of employee Source: - data have been compiled from annual report of EBL.

in million BDT 2006 25734 612 =42.049

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Comment: - by this table we also see that the productivity of EBL is showing upward trend. Now the bank has to try keeping it up.
chart:-35- deposit per employee
60 57.99 56.025 54.486 50 43.61 42.05 40 30 20 10 0 2010 2009 2008 2007 2006 deposit per employee

D. the loan recovery position of EBL during the period is outstanding, because the average of loan recovery of EBL is 96.82% during the period. The bank has to try going on it. E. the ROE and ROA of EBL exists a satisfactory level. F. the earning spread of EBL is also positive. G. besides, the non financial performance of EBL is mentionable. Their innovation side of product and services is time befitting. H. HRM department of EBL also arranges different types of training program to upgrade the efficiency of the employee. I. First of all, the bank has to raise the equity capital instead of debt for building capital structure. J. The bank has to give focus on issuing loan by considering the deposit amount. K. EBL has to keep more marketable securities as liquid asset for ensuring both liquidity and profitability. L. EBL has to give more dividends to the investors for encouraging their investment. M. The bank has to keep more provision against the loan losses. N. O. The bank to maintain legal liquidity requirement of central bank keep up with The bank has to keep balance between interest sensitive asset and interest their profitability. sensitive liabilities.

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11.3: Conclusion: - this report is most important for getting the (MBA) degree. I
have learned a lot of thing by preparing this report. It was a great time for me when I prepared this report. Because I have never done this before. This report is prepared by using very common and traditional ratio. But at present many new model and formulas are used in analyzing a banks financial performance for getting an effective and accurate result. So, I cant say that this report is 100% perfect in terms of evaluation. From my point of view, I just say that, I am not an expert in this field. I have just gathered data from the annual report of EBL and then put it into the various formulas and finally I have found some relevant outcome from the calculation. Based on this result, I have just given my opinion as the recommendation of the study. So, eventually, I want to say that it is a very little Endeavour of me as a student.

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Bibliography
1. ANNUAL REPORT OF EBL 2. WEB SITE OF EBL-http://www.eblbd.com 3. Commercial bank MGT peter.s. Rose 4. Fundamentals of corporate finance (sixth edition)-Stephen, westerfield, jordon. 5. Srivastava, R.M Bank management pragoti prakashani, meerut,pp.204. 6. Burns, j.E(1962). Bank liquidity: a straight forward concept but hard to measure, in john A .haslem (Ed), Bank fund Management, opcit pp .185.

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