RATIO ANALYSIS

FINANCIAL ANALYSIS
The financial position of any firm be appraised by analyzing its balance
sheet as ell as its statements of acco!nts" The financial statement of any
organization shos the res!lts of its operations and its position in b!siness"
There is a big difference beteen data and information" #hen the data is
arranged in s!ch a ay that it clearly indicate some facts the data becomes
information"
Altho!gh the balance sheet and income statement gi$es a great idea abo!t
the financial position of an organization b!t !nless the data of these
statements are not compared o$er the years they do not represent the
act!al position" The comparison shos the increases% decreases and
groth of an organization% hich helps to predict the f!t!re potential of
an organization" The financial statement of any organization incl!des&
The balance sheet
The profit and loss acco!nts
#ith the help of these fo!r items% financial analysis of an organization can
be cond!cted" Analysis of data helps to concl!de the financial strength of an
organization" Financial analysis can be done by
'orizontal analysis
(ertical analysis
'ORI)ONTAL ANALYSIS
Thro!gh this analysis e can chec* hat change is going on ithin the
years in the items of balance sheet and profit and loss acco!nt" In the
analysis year +,,- is considered base year for year +,,."
(/RTICAL ANALYSIS
In this analysis the percentage of each item of balance sheet and profit and
loss acco!nt is calc!lated to the total and then the change in this percentage
is chec*ed ithin years" The folloing pages shos the horizontal and
$ertical analysis of 0alance sheet and 1rofit and loss acco!nt"
0ALANC/ S'//T 2ASS/TS3
As on 45st 6ecember +,,.7,-
R!pees 2,,,3
Item 2008 2007
Cash and balance ith
treas!ry ban*s
489455-+ 489.4..4
0alance ith other ban* :,:45,, 4.,-;58
Lending<s to financial
instit!tions
:5,,,-8 5,;54-+
In$estments7net 89+;9.-: 554,.8+95
Ad$ances7net +9+;5,:-, +5.89,;8.
Operating fi=ed assets 5-+94-44 59,+:5+4
6eferred ta= asset7net > >
Other assets7net 58.5,:-9 5-.9.-95
Total 443615904 410485517
?@SLI? CO??/RCIAL 0ANA LI?IT/6
0ALANC/ S'//T 2LIA0ILTY3
As on 45st 6ecember +,,.7,-
R!pees 2,,,3
Item 2008 2007
0ills payable 5,;;5:9. 5,:-8,;.
0orroing from ban* ++994.:, 48:,9.45
6eposits and other acco!nts 44,+-:5;; +8+,8.,99
S!b7ordinated loan > :-8+4+
Liabilities against assets
s!bBect to finance lease
> >
6eferred ta= liability7net :4-54- 55.,59+
Other liabilities +5+;4+;, 55-++:84
TOTAL LIABILITES 385179850 355365842
NET ASSETS 58436054 55119675
Represente !"
Share capital 9+.+-9. 9+.+-9.
Reser$es 49-9.-9; 4:,,,94.
Inappropriate profit 858444+ ;54,-;,
;++::.9; :;:5:5;9
S!rpl!s on re$al!ation of
assets7 net of ta=
95855.8 8-,;;58
58436054 55119675
?@SLI? CO??/RCIAL 0ANA LI?IT/6
0ALANC/ S'//T 2ASS/TS3
'orizontal Analysis
As on 45st 6ecember +,,.7,-
R!pees 2,,,3
Item 2008 2007 #a$e
Cash and balance ith
treas!ry ban*s
489455-+ 489.4..4 25C3
0alance ith other ban* :,:45,, 4.,-;58 9C
Lending<s to financial
instit!tions
:5,,,-8 5,;54-+ +.8C
In$estments7net 89+;9.-: 554,.8+95 25;C3
Ad$ances7net +9+;5,:-, +5.89,;8. 58C
Operating fi=ed assets 5-+94-44 59,+:5+4 -C
6eferred ta= asset7net > > >
Other assets7net 58.5,:-9 5-.9.-95 5,C
Total 443615904 410485517 8#
?@SLI? CO??/RCIAL 0ANA LI?IT/6
0ALANC/ S'//T 2LIA0ILITI/S3
'orizontal Analysis
As on 45st 6ecember +,,.7,-
R!pees 2,,,3
Item 2008 2007 #a$e
0ills payable 5,;;5:9. 5,:-8,;. ,"98C
0orroing from
ban*
++994.:, 48:,9.45 2:+C3
6eposits and
other acco!nts
44,+-:5;; +8+,8.,99 54C
S!b7ordinated
loan
> :-8+4+ >
Liabilities against
assets s!bBect to
finance lease
> > >
6eferred ta=
liability7net
:4-54- 55.,59+ 294C3
Other liabilities +5+;4+;, 55-++:84 .5C
TOTAL
LIABILITES
385179850 355365842 8#
NET ASSETS 58436054 55119675 6#
Represente !"
Share capital 9+.+-9. 9+.+-9. >
Reser$es 49-9.-9
;
4:,,,94
.
.C
@nappropriated 858444 ;54,-; -8C
profit + ,
;++::.9; :;:5:5;9 5;C
S!rpl!s on
re$al!ation of
assets7 net of ta=
95855.8 8-,;;58 249C3
58436054 55119675 6#
?@SLI? CO??/RCIAL 0ANA LI?IT/6
0ALANC/ S'//T 2ASS/TS3
(/RTICAL ANALYSIS
As on 45st 6ecember +,,.7,-
R!pees 2,,,3
Items 2008 2007
Cash and balances ith treas!ry
ban*s
."84C 8"9-C
0alance ith other ban* ,"85 ,"84
Lending to financial instit!tions ,"8+ ,"+9
In$estment7net +5"-, +-";;
Ad$ance7net ;8"5. ;4"4:
Operating fi=ed assets 4"8, 4"8,
6eferred ta= asset7net > >
Other assets7net :":- :"4;
Total 100# 100#
?@SLI? CO??/RCIAL 0ANA LI?IT/6
0ALANC/ S'//T 2LIA0ILITI/S3
(/RTICAL ANALYSIS
As on 45st 6ecember +,,.7,-
2R!pees in ,,,3
Item 2008 2007
0ills payable +"4.C +";;C
0orroing from ban* ;"55 8"9,
6eposits and other acco!nts -:":; -5"59
S!b7ordinated loan > ,"5-
6eferred ta= liability7net ,",8 ,"+8
Other liabilities :"-8 +".9
Share capital 5":+ 5";4
Reser$es ."+8
."+.
@n7appropriated profit
+",-
5"+;
S!rpl!s on re$al!ation of
assets7 net of ta=
5":, +"49
Total 100# 100#
?@SLI? CO??/RCIAL 0ANA LI?IT/6
1ROFIT AN6 LOSS ACCO@NTS
For the period ended 6ecember +,,.7,-
R!pees 2,,,3
Items 2008 2007
?ar*!pDret!rnDinterest earned :,,:4.+: 45-.9;8;
?ar*!pDret!rnDinterest e=penses 55;9,-:, -.9;;44
Net mar%&p'(nterest (n)ome 28483084 23921062
1ro$ision for dimin!tion in the
$al!e of in$estments7net
+9.488: 5,;+98
1ro$ision against loans and
ad$ances7net
544;5+- +8;8;.4
0ad debts ritten off directly > 588
4019121 3065051
Net mar*!pDinterest income
after pro$isions
+::94894 +,.;9,55
NON*+AR,-.'INTEREST IN/O+E
Fee% commission E bro*erage
income
+.99-+8 +94:95,
6i$idend income 95-;;: 94+4,,
Income from dealing in foreign
c!rrencies
-+-;9: 984:,.
Fain on sale of sec!rities7net -:,:+8 5;,,.9;
@nrealized loss on re$al!ation
of in$estments classified as held
for trading
25,458.3 2545,;3
Other income7net 8:+49+ 5,,,5:8
Total non*mar%&p'(nterest
(n)ome
5791440 6448227
30255403 27304238
NON*+AR,-.'INTEREST E0.ENSES
Administrati$e e=penses -;:9.-. ;:+9559
Other pro$isionD2re$ersal37net 5,5+, 24-:43
Other charges .4,.48 ;-4.4,
Total non*mar%&p'(nterest
e1penses
8387837 5996203
/=tra ordinaryD!n!s!al item > >
.RO2IT BE2ORE
TA0ATION
21867566 21308035
Ta=ation7c!rrent year -4:5+;- 9::+4;9
7prior year 2.9:.+:3 25+8::-43
7deferred 59;44 .8:;8,
6492966 6042473
.RO2IT A2TER TA0ATION 15374600 15265562
@nappropriated profit bro!ght
forard
;54,-;, ;;4,8-4
Transfer from s!rpl!s on
re$al!ation of fi=ed assets7net
+5458 55.;;
5152069 5542828
.ro3(t a4a(la!le 3or
appropr(at(on
20526669 20808390
0asic and dil!ted /1S7after ta= +:":- +:"4,
?@SLI? CO??/RCIAL 0ANA LI?IT/6
1ROFIT AN6 LOSS ACCO@NTS 2INCO?/3
'ORI)ONTAL ANALYSIS
For the period ended 6ecember +,,.7,-
R!pees 2,,,3
Items 2008 2007 #a$e
Interest D ret!rn earned :,,:4.+: 45-.9;8; +;C
Fees% commission etc" +.99-+8 +94:95, 8C
Income from dealing in foreign
c!rrencies
-+-;9: 984:,. :C
6i$idend income 95-;;: 94+4,, 24C3
Other income 8:+49+ 5,,,5:8 29C3
?@SLI? CO??/RCIAL 0ANA LI?IT/6
1ROFIT AN6 LOSS ACCO@NTS 2/G1/NS/S3
'ORI)ONTAL ANALYSIS
For the period ended 6ecember +,,.7,-
R!pees 2,,,3
Items 2008 2007 #a$e
Interest e=penses 55;9,-:, -.9;;44 :9C
Administrati$e e=pense -;:9.-. ;:+9559 48C
1ro$ision against non7performing
ad$ances
544;5+- +8;8;.4 2;;C3
Other pro$isions 5,5+, 24-:43 25-,C3
0ad debts > 588 >
Other charges .4,.48 ;-4.4, ::C
1rofit before ta= +5.9-;99 +54,.,4; +C
Ta= 9:8+899 9,:+:-4 -C
?@SLI? CO??/RCIAL 0ANA LI?IT/6
1ROFIT AN6 LOSS ACCO@NTS 2INCO?/3
(ertical Analysis
As at 6ecember +,,.7,-
Items 2008 #a$e 2007 #a$e
Interest earned :,,:4.+: .-C 45-.9;8; .4"55C
Fees% commission etc" +.99-+8 9"+:C +94:95, 9".8C
Income for dealing foreign
c!rrency ADC
-+-;9: 5";.C 984:,. 5".5C
6i$idend income 95-;;: 5"4:C 94+4,, 5"99C
Other income 8:+49+ +",;C 5,,,5:8 +"95C
Fain on sale of sec!rities -:,:+8 5"95C 5;,,.9; 4"8+C
Total 45938462 100# 38247927 100#
?@SLI? CO??/RCIAL 0ANA LI?IT/6
1ROFIT AN6 LOSS ACCO@NTS 2/G1/NS/S3
(ertical Analysis
As at 6ecember +,,.7,-
Items 2008 #a$e 2007 #a$e
Interest e=penses 55;9,-:, +;"++C -.9;;44 +,";-C
Administrati$e e=pense -;:9.-. 59":-C ;:+9559 5:"58C
1ro$ision for dimin!tion
the $al!e of in$estment
+9.488: ;".9C 5,;+98 ,"+.C
1ro$ision against non7
performing ad$ance
544;5+- +"85C +8;8;.4 -"-:C
Other pro$isions 5,5+, ,",+C 24-:43 2,",,83
0ad debts > > 588 ,",,,;
Other charges .4,.48 5".5C ;-4.4, 5";,C
1rofit before ta= +5.9-;99 :-"-5C +54,.,4; ;;"-4C
Total 45835264 100# 38234822 100#
1/RFOR?ANC/ 58847+,,+
The folloing fig!res ill gi$e an idea of the progress made after
pri$atization"
(Rs. In million)
1993 2002
A!thorized share capital +,,, 4;,,
1aid7!p share capital 994 +99;
Reser$e f!nds E other reser$es 5+,5, 4,+-
Total assets 2e=cl" contra3 -;:+- +4;548
6eposits 9+-.4 5.+-,9
Ad$ances 4,-;4 -.8+:
In$estments +-.9: .895,
Imports 4+-4: :..:+
/=ports 59845 +.+.:
'ome remittance 4,+4 4+89+
1re7ta= profit 4:9 45,4
No" of branches 5+8, 5,:;
No" of employees 54-9. 5,8+9
No" of acco!nts 4:55:+- ::94;4,
0alance sheet 2assets3
'orizontal analysis
Comments
Cash is increased in +,,- b!t decrease in +,,.H it shos that the
liI!idity position of the ban* is going to be ea*% so it is alarming
sign for the ban*" Therefore ban* sho!ld ta*e necessary steps
according to the position"
There is decreasing trend in balance ith other ban*s hich is a
negati$e sign"
Increase in money at call and short notice% it means that c!stomers
of ban* are $ery p!nct!al in ma*ing payments" Therefore it is good
sign for the ban*"
In the field of in$estment there is increasing trend ith the passage
of time" It is common term of financeJ more in$estment more
ret!rn"
As e *no that main so!rce of profit of a ban* is the difference
beteen the percentages of interest% 0an*s pay less rate of interest
than recei$ing the interest from the c!stomers" In this case ad$ance
to c!stomers $ery lo in +,,- b!t increase in +,,." It means that
?C0 is r!nning $ery ell"
?C0 is in a position that it is earning more and more profit ith
passage of time" Then ban* can p!rchase more and more fi=ed
assets% and it is ban* is doing" Assets of the ban*s are increasing
day by day by p!rchasing the assets" ?ore assets mean that ban*
has more capacity to pay off its liabilities" There is increasing trend
in field of fi=ed assets" It is d!e to p!rchase of ne assets"
Other assets ha$e a decreasing trend hich is not a positi$e sign" 6ecrease in
assets decrease the orth of organization liabilities
There is increasing trend in dep osits and other acco!nts hich
shos the credibility of the ban*"
0orroing is decreasing in +,,. b!t there is increasing trend in the
year +,,-" Altho!gh it is seeing that ban*<s borroing is
increasing ith the passage of time hich is not a good sign b!t
there is a positi$e thing in this behalf% !s!ally ban*s borro money
at that time hen they o!ld ha$e to gi$e it for earning more
profit% I thin* the ?!slim Commercial 0an* doing the same thing
for increasing its profits"
0ills payable increase in +,,. b!t decrease in +,,- negati$e sign"
Other liability has an increasing trend not good beca!se increase in
liability decreases the liI!idity position of the ban*"
Share capital increase that shos the creditability of ban*"
The ?!slim Commercial 0an* Limited is increasing its reser$es
and @n7appropriated profit in order to increase its lending poer%
hich is good sign% beca!se according to the pr!dential reg!lations
of State 0an* of 1a*istan% a ban* can lend money 2per party
e=pos!re3 eI!al to the 4,C of its assigned capital pl!s reser$es"
?@SLI? CO??/RCIAL 0ANA LI?IT/6
1ROFIT AN6 LOSS ADC
'ORI)ONTAL ANALYSIS
Income
Interest income increase in +,,. ill great proposition hich is
fa$orable" It means that interest recei$ed by the ban* is increasing
ith the passage of time" It is good for a ban*ing company"
As e all *no that ban*s pro$ide many ser$ices for their
c!stomers and also act as a agent of the c!stomer" The ban*s
recei$e fee and commission after their ser$icesH it is a main so!rce
of ban* to recei$e fee and commission from their c!stomers" In
case ban* is ta*ing more fees as compared to pre$io!s years" This
is good for the ban*"
In foreign c!rrency dealing and di$idend there is h!ge increasing
trend hich shos the in$estment of ban* in healthy organization"
Other income decrease in +,,. b!t this increase mean positi$e
sit!ation"
/=pense
Ret!rn on deposit decreases hich shos good sign and it is d!e to
decrease in ret!rn rate"
Adam and dimin!tion and pro$ision against non performing loan
decreasing t!rned that is fa$orable"
0ad debts increased ith h!ge amo!nt not positi$e sign"
1rofit before ta=ation has increased ith greater proportion"
Ta= increases hich are not bad beca!se it is interrelated ith
profit% if profit increased% ta= also increase"
(ertical analysis
Income
Interest earned decrease hich is negati$e sign"
As e *no that ban*s pro$ide many facilities other than money
lending and borroing" 0an*s recei$e fee% commission etc" for
these ser$ices" Therefore fee and commission income are
increasing hich is good and fa$orable signs"
6i$ided income increased b!t it is $ery small"
Other income increase ith great proportion good sign"
/=penses
Ret!rn on deposit decrease good sign beca!se it increases the
profit"
Administration e=penses are increased b!t no alarming rate"
1osition against non performing loan !s zero hich sho ban*
ha$e good c!stomer"
All pro$ision is zero hich sos the good credit policy"
0ad debt and other charges increased b!t the sit!ation is not
alarming"
1rofit increased"
Ta= is increased b!t it is interrelated ith profit"
O$erall Re$ie
The 0an* has no completed more than 5+ years% since its
pri$atization and it is% indeed% gratifying to note that d!ring this period%
?C0 has performed ell and has s!stained its groth in all the maBor
sectors" The ell deser$ed credit% for this good performance and progress%
m!st s!rely go to the 0an*<s management% its 6irectors and% in no small
meas!re% to the entire ?C0 team for its dedication% concerted efforts and
e=cellent team spirit"
?C0 has been a pioneer among the ban*s in 1a*istan% partic!larly in
introd!cing a n!mber of inno$ati$e ban*ing prod!cts and ser$ices" For the
first time in the history of 1a*istan% these m!ltifario!s prod!cts mostly in the
shape of sa$ing schemes ha$e been introd!ced by ?C0 ith brand names"
This has set the trend and many other ban*s% both local and foreign% ha$e
since folloed in ?C0<s footsteps% by la!nching ne prod!cts and ser$ices%
on similar lines"
Ratios Analysis
Ratio analysis is an important and age7old techniI!e of financial
analysis" Ratios are important and helpf!l in the reference that&
These simplify the comprehension of financial statement and tell the
hole story of changes in the financial conditions of the b!siness"
These pro$ide data for inter7firm comparison" The ratios highlight the
factors associated ith s!ccessf!l and !ns!ccessf!l firms% also re$eal
strong and ea* firms"
These help in planning and forecasting these can assist management in
its basic f!nctions of forecasting% planning% coordination and control"
These help in in$estment decision in case of in$estor and lending
decision in case of 0an*ers etc"
'oe$er% the ratios are only indicators% they cannot be ta*en as final
regarding good or bad financial position of the b!siness other things ha$e
also to be seen"
5" 1ROFITA0ILITY RATIOS&

I" R/T@RN ON /K@ITY
Rs" 2,,,3
+,,. +,,-
eI!tiy holder Share
5,, N"1"A"T
5;4-:9,,L5,,
;.:49,;:
5;+9;;9+L5,,
;;5589-;
+9"45C +-"98C
CO??/NTS
/arning per share is a good meas!re of profitability E hen compared ith
/1S of similar other companies% it gi$es a $ie of the comparati$e earnings
poer of the company"
/1S of ?C0 is increasing from +,,, contin!o!sly% ha$ing a $ast difference
E it is good for shareholders"
+" R/T@RN ON ASS/TS
Rs" 2,,,3
+,,. +,,-
assets Total
5,, N"1"A"T
5;4-:9,,L5,,
::495;8,:
5;+9;;9+L5,,
:5,:.;;5-
4":9C 4"-+C
4" /ARNINF 1/R S'AR/
Rs" 2,,,3
+,,. +,,-
shares g o!tstandin of No"
N"1"A"T
5;4-:9,,
9+.+-9.:4
5;+9;;9+
9+.+-9.:4
+":: +":4
:" ret!rn on shareholders in$estmentD netorth

+,,. +,,-
N"1"A"TL5,,
Shareholder<s f!nd
5;4-:9,,L5,,
:4,;5;44
5;+9;;9+L5,,
:,+.4:,9
4;"-5C 4-".8C
CO??/NTS

There is a slight decrease in ret!rn on net orth" As the primary obBecti$e of
e$ery b!siness is to ma=imize its earnings so this re$eals that ho the
reso!rces of ?C0 are being !sed" This ratio is of great importance to the
present and prospecti$e shareholders as ell as for the management of the
company"
NOT/
#e ass!mes net orth by share capital M reser$es% as e ha$e not any clear7
c!t indication abo!t c!rrent assets and c!rrent liabilities by hich e co!ld
calc!late net orth"
;" INT/R/ST /G1/NS/S D TOTAL /G1/NS/S
RATIO
Rs" 2,,,3
+,,. +,,-
/=penses Total
/=penses Intrest
55;9,-:,L5,,
:;.4;+9:
-.9;;44L5,,
4.+4:.++
+;"++C +,";-C
9" INT/R/ST INCO?/ D TOTAL INCO?/ RATIO
Rs" 2,,,3
+,,. +,,-
Income Total
Income Intrest
:,,:4.+:L5,,
:;84.:9+
45-.9;8;L5,,
4.+:-8+-
.-C .4C
5" N/T 1ROFIT ?ARFIN
Rs" 2,,,3
+,,. +,,-
Income Total
5,, N"1"A"T
5;4-:9,,L5,,
:;84.:9+
5;+9;;9+L5,,
4.+:-8+-
44":9C 48"85C
0ALANC/ S'//T RATIO
C@RR/NT RATIO
+,,. +,,-
C!rrent assets
C!rrent liabilities
4+;88;+5.
49+,-..-4
+.,4+,-95
45:+8895-
,"8,&5 ,".8&5
CO??/NTS
#ith the help of c!rrent ratio e can see the stability of the firm" A ratio
eI!al to +&5 is acceptable hoe$er it is !sed to meas!re the short term
financial position of a firm"
The ?C0<S c!rrent ratio is grad!ally going !p and
in o$erall ?C0 is in good financial position E *non as bac*bone of
ban*ing ind!stry d!e to its credibility
NOT/
As there is no clear indication abo!t c!rrent assets so e or*ed on
ass!mptions" #e too* c!rrent assets as folloing
Cash
0alances ith treas!ry ban*s
0alances ith other ban*s
Ad$ances
Other assets
#e e=cl!de
Lending<s to financial instit!tion
In$estments
Considering them fi=ed e ass!med c!rrent liabilities as folloing
0ills payable
6eposits
Other liabilities
#e e=cl!de
0orroing from financial instit!tion
S!bordinated loans7as there are loans from directors"
6/0T TO /K@ITY RATIO
+,,. +,,-
Long7term loanM
deferred ta=
liability Dfi=ed assets
M deferred ta= assets
+45,,8--
5-+94-44
:5,99++;
59,+:5+4
5"44.&5 +";9&5
"
CO??/NTS
6ebt to eI!ity ratio is a relationship beteen e=ternal eI!ities or o!tsider
firms and the internal eI!ities and shareholders f!nd" The p!rpose of this
ratio is to get an idea of the c!shion a$ailable to the creditors on the profit of
the company" The standard for this ratio is 9,&:, b!t there can<t be any r!le
of th!mb for all types of b!sinesses"

NOT/
In long term loans% e ass!med
0orroings from financial instit!tion
Loan from directors
6eferred ta= liabilities

In fi=ed assets e ass!med
Operating fi=ed assets
6eferred ta= assets
1RO1RITORY RATIO
+,,. +,,-
Net orthDtotal assets +59;-49.
::495;8,:
+5;:.44,
:5,:.;;5-
:"..C ;"+;C
CO??/NTS
This is a $ariant of debt eI!ity ratio" It is !sed to meas!re the f!t!re position
of the b!siness" This ratio thros light on general financial position of the
company" 'igher the ratio better is the sol$ency position of the company"
?C0 is shoing increasing trend and ratio indicates
shareholder<s participation in total assets is eno!gh% hich indicates lo ris*
to creditors"
?ANAF/?/NT RATIO
5" 0R/AA7@1 (AL@/
+,,. +,,-
Net orthDo!tstanding
shares
+59;-49.
9+.+-9.:4
+5;:.44,
9+.+-9.:4
4:":-C 4:"+8C
CO??/NTS
0est price from the in$estor<s point of $ie is called brea* !p
$al!e"
0rea* !p $al!e of ?C0 is increasing from past three years% hich shos
stability of b!siness"