Assignment on: Financial Ratio Analysis of National Credit &

Commerce Bank Ltd. (NCCBL) United Commercial Bank Limited

(UCBL) & South East Bank Limited (SEBL)

Prepared For
Ms. Tanzina Haque
Associate Professor
Department of A&IS
University of Dhaka

Prepared By
Prashanta Saha
ID: 15046
MBA 15th Batch
Section: C

Date of Submission: March 30th 2014

Contents
Objective of the Report ................................................................................................................... 5
Purpose of the Report...................................................................................................................... 5
Significance of the Study ................................................................................................................ 5
Methodology ................................................................................................................................... 6
Secondary sources of data are collected through ........................................................................ 6
Data Processing and Analysis ......................................................................................................... 6
Financial Analysis of NCCBL ........................................................................................................ 7
Profitability ratio ............................................................................................................................. 7
Return on equity.......................................................................................................................... 7
Return on asset ............................................................................................................................ 7
Net interest margin ...................................................................................................................... 7
Earnings per share ....................................................................................................................... 8
Retained earnings per share ........................................................................................................ 8
Retention Ratio ........................................................................................................................... 8
Operating Profit Margin Ratio .................................................................................................... 8
Net profit Margin Ratio .............................................................................................................. 9
Asset Utilization (AU) ................................................................................................................ 9
Equity Multiplier (EM) ............................................................................................................... 9
Tax Management efficiency Ratio .............................................................................................. 9
Expense control efficiency ratio (ECE) .................................................................................... 10
Asset management efficiency ratio (AME) .............................................................................. 10
Funds Management efficiency ratio (FME) .............................................................................. 10
Leverage Ratio .............................................................................................................................. 10
Total debt .................................................................................................................................. 10

Equity Multiplier (EM) ............................................................................................................. 11

Efficiency ratio.............................................................................................................................. 11
Operating efficiency Ratio ........................................................................................................ 11
Employee productivity ratio ..................................................................................................... 11
Asset Utilization (AU) .............................................................................................................. 11
Comments on Performance of NCCBL ........................................................................................ 12
Financial Analysis of UCBL ......................................................................................................... 16
Current Ratio ............................................................................................................................. 16
Leverage Ratios ............................................................................................................................ 16
Long-Term Debt To Equity Ratio............................................................................................. 16
Total Debt To Equity Ratio....................................................................................................... 17
Total Debt To Total Asset Ratio ............................................................................................... 17
Total Equity To Total Asset Ratio ............................................................................................ 17
Profitability Ratios ........................................................................................................................ 18
Net Profit Margin ...................................................................................................................... 18
Return on Equity ....................................................................................................................... 18
Return on Assets ....................................................................................................................... 18
Other Ratios .................................................................................................................................. 19
Price Earnings Ratio ................................................................................................................. 19
Loan To Asset Ratio ................................................................................................................. 19
Loan to Deposit Ratio ............................................................................................................... 19
Findings & Recommendation ....................................................................................................... 20
Financial Analysis of SEBL.......................................................................................................... 21
Return on Assets (ROA) ........................................................................................................... 21
Return on Equity (ROE) ........................................................................................................... 21

Return on Deposits (ROD)........................................................................................................ 21

Return on Shareholder capital ................................................................................................... 22
Operating expenses to revenue (OER) ...................................................................................... 22
Loans to Deposits (LTD) .......................................................................................................... 23
Equity Multiplier (EM) ............................................................................................................. 23
Equity to Deposits (ETD) ......................................................................................................... 23
Total liabilities to shareholder capital (TLSC) ......................................................................... 24

Objective of the Report

The report has conducted

To achieve the information regarding the banking environment and its services.

To find out the performance of NCCBL, UCBL & SEBL over years through ratio
analysis.

To estimate the future position of NCCBL, UCBL & SEBL

To find out the reason behind NCCBL, UCBL & SEBL enhancements or pitfalls of
performance over years.

Purpose of the Report

The purpose of this report is to know about the bank properly by analyzing its financial
statements over years.

Significance of the Study

This report is prepared to give a concrete idea about the performance and the condition of
NCCBL, UCBL & SEBL over past three years. I believe that my report will help a lot those who
want to get an overall idea of NCCBL, UCBL & SEBL as well as its financial statement. Bank
management also can be using the information of my observation for their managerial decision if
needed.

Methodology
For this report all data and information are collected from secondary sources.

Secondary sources of data are collected through

Websites
Articles
NCCBL, UCBL & SEBLs Annual Report 2010, 2009 and 2008
Many Research Report on ratio analysis

Data Processing and Analysis

The analytical portion of this report is the outcome of numerous numerical data collected mainly
from the external secondary source. Prior to analysis, data collected from the above mentioned
sources were classified further for making them suitable for analysis. In order to get appropriate,
accurate and quick result the use of MS Excel was advantageous.

Financial Analysis of NCCBL

Profitability ratio

Return on equity
2008

=1,231,832,174/6,696,770,778

=18.39%

2009

=2,784,218,989/11,745,223,217

=23.71%

2010

=3,002,876,567/16,768,521,255

=17.91%

Return on asset

2008

=1,231,832,174/110,437,103,311

=1.12%

2009

=2,784,218,989/124,806,383,846

=2.23%

2010

=3,002,876,567/152,796,945,827

=1.97%

Net interest margin

2008

=(9095891683-

=1.78%

7126309505)/110437103311
2009

=(10856416291-

=1.95%

8426118565)/124806383846
2010

=(120231586877789506602)/152796945827

=2.77%

Earnings per share

2008

=1,231,832,175/35,546,875

=34.65

2009

=2,784,218,989/51,212,521

= 54.37

2010

=3,002,876,567/52,774,028

= 56.9

Retained earnings per share

2008

=1,054,921,127/35,546,875

=29.68

2009

=2,217,834,432/51,212,521

=43.31

2010

=2,691,260,736/52,774,028

=51.00

Retention Ratio

2008

=1,054,921,127/1,547,592,026

=68.17%

2009

=2,217,834,432/3,135,678,230

=70.73%

2010

=2,691,260,736/3,798,836,049

=70.84%

Operating Profit Margin Ratio

2008

=(5777810297-

=3.48%

1930955801)/110437103311
2009

=(8195606688-

=4.24%

2906887699)/124806383846
2010

=(96808063283602929761)/152796945827

=3.98%

Net profit Margin Ratio

2008

=1,249,015,183/5,819,245,747

=21.46%

2009

=2,823,473,302/8,262,859,422

=34.17%

2010

=3,798,836,049/9,680,806,328

=39.24%

Asset Utilization (AU)

2008

=5819245747/110516618171

=5.27%

2009

=8262859422/124984702326

=6.61%

2010

=9680806328/152796945827

=6.34%

Equity Multiplier (EM)

2008

=110516618171/6708227542

=16.47

2009

=124984702326/11796677214

=10.59

2010

=152796945827/16769945827

=9.11

Tax Management efficiency Ratio

2008

=1249015183/3864393665

=32.32%

2009

=2823473302/5328807974

=52.99%

2010

=3798836049/6077876567

=62.50%

Expense control efficiency ratio (ECE)

2008

=3864393665/5819245747

=66.41%

2009

=5328807974/8262859422

=64.49%

2010

=6077876567/9680806328

=62.78%

Asset management efficiency ratio (AME)

2008

=5819245747/110516618171

=5.27%

2009

=8262859422/124984702326

=6.61%

2010

=9680806328/152796945827

=6.34%

Funds Management efficiency ratio (FME)

2008

=110516618171/6708227542

=16.47

2009

=124984702326/11796677214

=10.59

2010

=152796945827/16768521255

=9.11

Leverage Ratio

Total debt

2008

103,740,332,533/110,437,103,311

=93.9%

2009

113,061,160,629/124,806,383,846

=90.6%

2010

136,028,424,572/152,796,945,827

=89.0%

Equity Multiplier (EM)

2008

=110,437,103,311/6,696,770,778

=.939

2009

=124,806,383,846/11,745,223,217

=.906

2010

=152,796,945,82716,768,521,255

=.890

Efficiency ratio

Operating efficiency Ratio

2008

=1,930,955,801/5,777,810,297

=33.4%

2009

=2,906,887,699/8,195,606,688

=35.5%

2010

=3,602,929,761/9,680,806,328

=37.2%

Employee productivity ratio

2008

=5,777,810,297/1,551

=3725216.181

2009

=8,195,606,688/1,844

=4444472.174

2010

=9,680,806,328/2,139

=4525856.161

Asset Utilization (AU)

2008

=5,777,810,297/110,437,103,311

=5.2%

2009

=8,195,606,688/124,806,383,946

=6.6%

2010

=9,680,806,328/152,796,945,827

=6.3%

Comments on Performance of NCCBL

Profitability Ratios:
Return

ROE

on

Measures

Equity More efficient in 2008 than

the

fund others but decreasing trend in

management efficiency.
Return

ROA

Assets It is seen that NCCBLs RAO

on

measure

the

management

2009.

asset is fluctuating, shows the poor

efficiency performance then 2009.

for a company
Net

Interest How much the company Shows the better performance

Margin

earns interest by using in 2010, gradual increase

each amount of asset.

EPS

EPS

represents

from 2008.
the In 2008 they earn highest Tk.

number of currency earn On behalf of each outstanding

during the period on common stock, In 2010 show
behalf

of

outstanding

each gradual increase of EPS from

share

of 2008.

common stock. Higher

the ratio indicates higher
net income the share of
stock is generating.
Retain Earning It measures how much of In 2010 they retain 51 Tk.
Per Share

the net income has been After paying all dividends

retaining after paying out which is gradually increase
all dividends.

Retention Ratio

after 2008.

It shows the percentage In 2010 bank has the highest

of net income that is ratio after the big fall after
retained in the bank after 2008.
paying of all dividends.

Operating Profit Measure how large a In 2009 the bank earn highest
Margin Ratio

spared

between

total 4.24 tk by using 100 tk and

operating revenues and decrease in 2010.

total operating expense
of

bank

that

management has been

able to achieve by using
their asset.
Net

Highest the result show the

profit

better performance and in

margin ratio

2010 it shows the best result.

AU

It

measures

the The bank earn highest 6.61 tk

percentage of each taka by using 100 tk asset in 2009,

remaining after all cost fall down at 2010 (6.34).
and expense including
interest tax and preferred
stock dividend has been
deducted. It reflects the
effectiveness of expense
management cost control
service pricing policies
the higher the Banks
NPM

indicates

more

percentage

is

contributing to profit.
EM

higher

multiplier

equity In 2009 and 2010 the bank

indicates use less liability than 2008,

higher financial leverage, shows the good performance.

which

means

the

company is relying more

on debt to finance its

assets.
Tax

The higher ratio indicates Increasingly shows the good

Management

the bank could efficiently performance from 2008 to

Efficiency Ratio

manage its tax expense.

2010.

Expense Control The higher ratio indicates Continuously show the bad
Efficiency Ratio

the bank could efficiently performance due to increase

manage its expense.

of the man power, increase

branch and other expense.

Leverage Ratios:
Total debt ratio/ It
leverage ratios

indicates

the The bank financed more than

proportion a firms total its

90%

of

asset

with

asset that is financed borrowed funds but decrease

with

borrowed

funds. in 2010.

That means out of total

how much amount is
financed by liability.
EM

higher

multiplier

equity In 2009 and 2010 the bank

indicates relying

higher financial leverage, 2008,

which

means

less
shows

liability

than

the

good

the performance.

company is relying more

on debt to finance its
assets.

Efficiency Ratios:
Operating

It measures whatever the In 2010 the bank cover almost

Efficiency Ratio

revenue

is

being 38% of operating expense

generated by the bank from its revenue shows the

from operation, whether good performance the other

it is that enough to cover years.

all operating expense.
Employee

It is used to measure the In 2010 the banks employees

Productivity

operating efficiency of provide

Ratio

the bank by increasing performance then other years.

the productivity of the
employees through the
use

of

automated

equipment and improved

employee training.
Asset Utilization It
(AU)

measures

the

percentage of each taka

remaining after all cost
and expense including
interest tax and preferred
stock dividend has been
deducted. It reflects the
effectiveness of expense
management cost control
service pricing policies
the higher the Banks
NPM

indicates

more

percentage
contributing to profit.

is

their

best

Financial Analysis of UCBL

Current Ratio

Current Ratio = Current Assets / Current Liabilities

Year

Current Assets
Current Liabilities

2010

Result

121,482,617,208

32,910,157,947

3.69

2009

84,361,643,673

32,704,310,596

2.58

2008

60,771,317,505

16,875,268,499

3.61

Leverage Ratios
Long-Term Debt to Equity Ratio

Long-term Debt to Equity Ratio = Long-term Debt / Total Equity

Year

Long-term Debt /
Total Equity

Result

2010

2009

2008

89,149,594,558

7816471892
11.41

52,074,004,482

5705466765
9.31

43535352890

4384243099
9.93

Total Debt To Equity Ratio

Total Debt to Equity Ratio = Total Debt / Total Equity

Year

Total Debt / Total

Equity

2010

2009

2008

122059752505

7816471892
15.62

84778315078

5705466765
14.86

60410621389

4384243099
13.78

Result

Total Debt To Total Asset Ratio

Total Debt to Total Asset Ratio = Total Debt / Total Asset

Year

Total Debt / Total

Asset

2010

2009

2008

122059752505

129876224397
93.98%

84778315078

90483781843
93.69%

60410621389

64794884487
93.23%

Result

Total Equity To Total Asset Ratio

Total Equity to Total Asset Ratio = Total Equity / Total Asset

Year

Total Equity / Total

Asset

Result

2010

2009

2008

7816471892

129876224397
6.02%

5705466765

90483781843
6.31%

4384243099

64794884487
6.77%

Profitability Ratios
Profitability Ratios measure the overall earnings performance of an institution and its efficiency
in utilizing assets, liabilities and equity.
Net Profit Margin

Net Profit Margin = Net Profit after Taxation / Net interest Income

Year

2010

Net Profit after

Taxation / Net
interest Income

2181635425

3835360138
56.88%

Result

2009

932897890

2617086773
35.65%

2008

764745570

2008527966
38.07%

Return on Equity

Return on Equity = Net Profit after Taxation / Equity

Year

Net Profit after

Taxation / Equity
Result

2010

2009

2008

2181635425

7816471892
27.91%

932897890

5705466765
16.35%

764745570

4384243099
17.44%

Return on Assets

Return on Assets = Net Profit after Taxation / Total Assets

Year

Net Profit
Taxation /
Assets
Result

2010

after
Total

2181635425

129876224397
1.68%

2009

932897890

90483781843
1.03%

2008

764745570

64794884487
1.18%

Other Ratios
Price Earnings Ratio

Price Earnings Ratio = Stock Price per Share / Earnings per Share (EPS)
Year

2010

Stock Price Per

Share / Earnings Per
Share (EPS)
Result

226.80

7.50
30.24 times

2009

32.84

3.21

2008

533

42.71

10.23 times

12.48 Times

2010

2009

2008

93460300000

129876224397
71.96%

61692200000

90483781843
68.18%

44446000000

64794884487
68.60%

Loan To Asset Ratio

Loan to Asset Ratio = Total Loans/Total Asset

Year

Total Loans / Total

Assets
Result

Loan to Deposit Ratio

Loan to Deposit Ratio = Total Loans/Total Deposits

Year

Total Loans / Total

Deposits
Result

2010

93460300000
113070700000
82.66%

2009

61692200000
77730400000
79.37%

2008

44446000000

54485000000
81.57%

Findings & Recommendation

United Commercial Bank Ltd. is an established privatized bank in our country. This bank
is doing well over years. Based on my three months of internship program, my recommendations
towards the UCBLs operations are

UCBL had fair leverage ratios in where it uses the debt most to increase revenue rather
than the equity. It may increase the risk of the bank. So, to minimize the risk I think
UCBL should finance more equity.

From year 2008 to 2010 there was a lower growth in 2009 compare to 2008 and 2010. It
indicates that UCBL has no consistency in growth over years. UCBL should ensure a
better growth over year to reach a strong position.

UCBL had good liquidity ratios during year 2008 and 2010. In 2009 it had less liquidity
ratios than the others. It should give more concern about these types of fluctuations in
ratios.

UCBLs most of the works are done with papers where many bank uses computerized
systems. UCBL should use more computerized system to increase the efficiency in work.

UCBL had less supplementary assets in comparison to the Bangladesh Banks standard. To
secure the depositors UCBL should give concern to raise its supplementary assets.

Financial Analysis of SEBL

Return on Assets (ROA)
Year

Net income

Total Assets

% of Ratio

2010

2763.13

131943.48

2.26%

2009

1870.19

112676.98

1.66%

2008

887.24

81181.53

1.09%

The above figure represents the Return on Assets (ROA) Ratio of Southeast Bank Limited & we
see that in the year 2010 Southeast Bank was in highest profitable position. In 2008 the Bank
was in lowest profitable position.

Return on Equity (ROE)

Year

Net income

Total Shareholders

% of Ratio

Equity
2010

2763.13

17095.90

19.41%

2009

1870.19

9927.16

18.84%

2008

887.24

7657.01

11.59%

The above figure represents the Return on Equity (ROE) Ratio of Southeast Bank Limited & we
see that in the year 2010 Southeast Bank was in most profitable position. In 2008 the Bank was
in lowest profitable position.

Return on Deposits (ROD)

year

Net Income

Total Deposit

Ratio

2010

2763.13

107729.58

2.56%

2009

1870.19

96669

1.93%

2008

887.24

68714.67

1.29%

The above figure represents the Return on Deposit (ROD) Ratio of Southeast Bank Limited &
we see that in the year 2010 Southeast Bank was in most profitable position. In 2008 the Bank
was in lowest profitable position.

Return on Shareholder capital

Year

Net Income

Shareholder

Ratio

contribution capital
2010

2763.13

17095.90

16.16%

2009

1870.19

9927.16

18.84%

2008

887.24

7657.01

11.59%

The above figure represents the Return on Shareholder Capital (ROSC) Ratio of Southeast Bank
Limited & we see that in the year 2008 Southeast Bank was in most profitable position. In 2009
the Bank was in lowest profitable position.

Operating expenses to revenue (OER)

Year

(Amount)

Operating expenses

Times

(Amount)
2010

16071.33

9316.39

1.73

2009

13415.21

8800.55

1.51

2008

10250.33

7237.55

1.42

The above figure represents the Operating expenses to revenue (OER) Ratio of SOUTHEAST
Bank Limited & we see that in the year 2008 & 2009 Bank was in most Efficiency position. In
2008 the Bank was in lowest efficiency position. So this is the good sign of the bank.

Loans to Deposits (LTD)

year

Total loan and

Total Deposit

Ratio

Advance
2010

92452.62

107729.58

85.82%

2009

77497.57

96669

80.17%

2008

60281.26

68714.67

87.73%

The above figure represents the Loans to Deposits (LTD) Ratio of Southeast Bank Limited & we
see that in the year 2009 Southeast Bank was in lowest deposit position. In 2008, the Bank was
in most deposit position.

Equity Multiplier (EM)

Year

Total Assets

Total Equity

Ratio

2010

131943.48

17,095.90

7.72

2009

112676.98

9927.16

11.35

2008

81181.53

7657.01

10.60

The above figure represents the Equity Multiplier (EM) Ratio of Southeast Bank Limited & we
see that in the year 2005 Southeast Bank was in most equity multiplier position. In 2006 the
Bank was fall down but 2008 is the lowest position and 2008 & 2009 bank was also increase his
equity multiplier position & smoothly increasing.

Equity to Deposits (ETD)

Year

Shareholder

Total Deposit

Ratio

contribution
capital

2010

17095.90

107729.58

15.87%

2009

9927.16

96669

10.27%

2008

7657.01

68714.67

11.14%

The above figure represents the Equity to Deposits (ETD) Ratio of Southeast Bank Limited &
we see that in the year 2008 & 2009 Southeast Bank was in most equity to deposit position. In
2009 the Bank was slightly fall down his equity to deposit position.

Total liabilities to shareholder capital (TLSC)

Year

Liabilities

Shareholder

Ratio

contribution
capital
2010

131943.48

17095.90

7.72

2009

112677

9927.16

11.35

2008

81181.53

7657.01

10.60

The above figure represents the Total liabilities to shareholder capital (TLSC) Ratio of Southeast
Bank Limited & we see that in the year 2005 Southeast Bank was total liabilities to shareholder
position is higher. But in 2008, the Bank was fall down, again 2009 the bank was his total
liabilities to shareholder capital position is going to increase so this is the good sign of the bank.