You are on page 1of 108

Letter of Transmittal

30th April 2014


Mr. Mokhdum Morshed
Senior Lecturer
North South University
SUBJECT: Submission of group project.
Sir,
Enclosed is a copy of the term paper entitled Financial ratio analysis of Prime Bank Ltd and
Lanka Bangla Finance Ltd. submitted as part of the requirements for the FIN 464 course in
the spring 2014 semester.
We have prepared the report including all the information required to meet the desired
research objectives. We tried our level best to follow the guidelines that you provided us
throughout the semester in preparing the report. Working with such diverse topics armed us
with valuable knowledge, experience; and provides us the opportunity of a lifetime that will
definitely help us in our later professional life. All the information stated in the report is
factual. This task was quite challenging and we enjoy thoroughly enjoyed working on
preparing this report.
Thank you for giving us this analysis-based course work which made the entire course very
creative and enjoyable. We would be extremely delighted if you accept the report.
Sincerely,
1. Md. Sanzid Ahsan
ID: 103 0315 030

Page | 1

2.Bingqing Xue 3.Sarker Md. Sadman


ID: 103 0913 030

ID: 121 0458 030

4. Sharzin Shavina Reza


ID: 111 0773 030

Acknowledgement
First and foremost, we would like to thank the Almighty for giving us the moral integrity,
devotion, patience, and the ability to carry out this comprehensive research oriented project.
We are greatly indebted to our course instructor, Mr. Mokhdum Morshed for his direction,
assistance, encouragement, and guidance. His suggestions, in particular, have been invaluable
for the improvement of this project.
We are also greatly thankful to the DSE, and Lanka Bangla Finance Ltd., particularly to
Prime Bank Ltd. who was kind enough to share with us important information about their
company. Without them, the completion of this project could not have been possible.

Page | 2

Table of Contents
Executive Summary ................................................................................................................... 5
Introduction ................................................................................................................................ 6
Objective .................................................................................................................................... 6
Methodology .............................................................................................................................. 6
Limitation ................................................................................................................................... 7
Company overview .................................................................................................................... 7
Prime bank: ............................................................................................................................ 7
Lanka Bangla Finance Ltd.: ................................................................................................... 8
Liquidity ratio ............................................................................................................................ 9
1. Cash Position Indicator: .................................................................................................. 9
2. Liquid Securities Indicator:........................................................................................... 10
3. Capacity Ratio:.............................................................................................................. 12
Profitability Ratio..................................................................................................................... 14
1. Return on Equity (ROE) ............................................................................................... 14
2. Return on Assets (ROA) ............................................................................................... 16
3. Net Interest Margin ....................................................................................................... 18
4. Net Non- Interest Margin .............................................................................................. 20
5. Net Operating Margin ................................................................................................... 22
6. Net Profit Margin .......................................................................................................... 24
7. Earnings per Share ........................................................................................................ 26
8. Retention Ratio ............................................................................................................. 28
Financial Risk Ratio ................................................................................................................. 30
1. Equity Multiplier/ Fund Management Ratio ................................................................. 30
2. Leverage Ratio .............................................................................................................. 32
3. Interest Coverage Ratio (Times Interest Earned Ratio) ................................................ 34
Efficiency Ratio ....................................................................................................................... 36
1. Tax Management Efficiency Ratio ............................................................................... 36
2. Expense Control Efficiency Ratio ................................................................................ 38
3. Asset Utilization Ratio .................................................................................................. 40
4. Operating Efficiency Ratio ........................................................................................... 42
5. Employee Productivity Ratio ........................................................................................ 44
6. Earning Spread Ratio .................................................................................................... 46
Market Ratios ........................................................................................................................... 48
1. Price/Earnings Ratio ..................................................................................................... 48
Page | 3

2. Market to Book Ratio.................................................................................................... 50


3. Dividend per Share ....................................................................................................... 52
4. Dividend Yield .............................................................................................................. 54
5. Dividend Payout Ratio .................................................................................................. 56
CAMELS Rating ...................................................................................................................... 58
Recommendations and conclusions ......................................................................................... 59
Bibliography ............................................................................................................................ 60
Appendix .................................................................................................................................. 61
Calculations.......................................................................................................................... 61
Financial Statement .............................................................................................................. 88

Page | 4

Executive Summary
This report contains a short overview of the financial condition and performance of Prime
Bank Ltd. based on the financial ratios of the bank from the year 2008 to 2013.
The report contains five types of ratio analysis and the ratios are liquidity, financial risk,
efficiency, profitability and stock market ratios. These ratios will give a very detailed
presentation of the banks financial performance and the conditions. The values and
interpretation of the ratios will give a very clear picture and will also provide information in
which areas the bank needs to improve. These ratios are then compared with the financial
ratios of another Non Bank Financial Institution, Lanka Bangla Finance Ltd. Graphical
representations are also given of each ratios over last six years via two methods Time series
analysis and Cross-functional analysis.
After all the ratios are calculated and interpreted, recommendations are provided as to where
the bank can improve from how it is performing right now. Net Income was going low owing
to a few reasons. The probable reasons are cited in the recommendations part as well. After
that we also included the CAMELS rating of Prime Bank taken from different websites.
Lastly, we have shown all the calculations of the ratios in the appendix part and have added
in text citations and references to avoid plagiarism.

Page | 5

Introduction
The purpose of this report is to analyze the financial ratios for Prime Bank Ltd. and a non
bank financial institution, which we chose to be Lanka Bangla Finance Ltd. The financial
ratios of the two financial institutions will have to be compared and analysis of their
performance will be shown based on the comparison. The analysis using financial ratios are
the oldest tools of analyzing financial position of any organization. Doing analysis of
financial position is difficult for these two financial institutions as the formats of their
financial reports are quite different. This is due to two reasons: first they are service oriented
and second they are highly leveraged. The basic financial statements containing (income
statement, balance sheet, the statement of stockholders` equity and the statement of cash
flow) of quantitative and qualitative information can be used in the analysis of financial and
economic decision making. Financial ratios can be divided into five basic categories:
liquidity, efficiency, debt, profitability, and market ratio. Each type of these ratios has its
unique appeal and is used extensively by the analyst to understand an organizations position
in a given industry. For example for financial service institution liquidity ratio, and efficiency
ratio is tremendously important because of their nature of the service as they are highly
leveraged and hence riskier.
This report would also try to explain what the difference are and why these difference exist
between bank and nonbank financial institution.

Objective
The objective of this study is to highlight the key difference between bank and nonbank
financial institution. Although bank and nonbank financial institutions provide similar service
they are quite different in structure. These can be understood at least up to a level from the
ratio analysis of these two organizations. Highlighting on these things by ratio analysis and
providing probable explanation is the key purpose of this term paper.

Methodology
Although we tried to use both qualitative and quantitative method in our report as the mixture
of these two would yield the best outcome but due to various constrain it was not possible.
We go for quantitative research method.
Among primary data we use financial statements of these institutions and as a secondary data
we use websites and looked into other media to get our desired data.

Page | 6

Limitation
Primary limitation was time constraint. Overcoming these hurdles was not an easy task.
Especially lack of data gives us much hard time as some of the data were confidential and
some of the data were only available for the insider. Because of these factors, significant
ratios like hot money ratio and several other liquidity ratios could not be found. We found
necessary values for three liquidity ratios only.

Company overview
Prime bank: Started its journey in 17th April 1995 it was a dream coming into existence of
a group of highly successful local entrepreneurs. They conceived an idea of floating a
commercial bank with different outlook.
As a fully licensed commercial bank, Prime Bank Ltd. is being managed by a highly
professional and dedicated team with long experience in banking. They constantly focus on
understanding and anticipating customer needs. As the banking scenario undergoes changes
so is the bank and it repositions itself in the changed market condition.
Being a second generation bank in the competitive banking industry of Bangladesh Prime
Bank Ltd. has done excellently well to climb up to the position they are now. Prime Bank
launched ATM on 2008 and started internet banking on the following year. Now Prime Bank
has 116 branches and more than 150 ATM terminals throughout the country.
Prime Bank Ltd. has already made significant progress within a very short period of its
existence. The bank has been graded as a top class bank in the country through internationally
accepted CAMELS rating. The bank has already occupied an enviable position among its
competitors after achieving success in all areas of business operation.
Prime Bank Ltd. offers all kinds of Commercial Corporate and Personal Banking services
covering all segments of society within the framework of Banking Company Act and rules
and regulations laid down by our central bank. Diversification of products and services
include Corporate Banking, Retail Banking and Consumer Banking right from industry to
agriculture, and real state to software (About Us: Prime Bank Ltd., 2014).

Page | 7

Lanka Bangla Finance Ltd.: Lanka Bangla Finance Limited (LBFL) a joint venture
financial institution established with multinational collaboration is in operation since 1997
having license from Bangladesh Bank under Financial Institutions Act, 1993. With
institutional shareholding structure, educated & motivated human resources, friendly working
environment & dynamic corporate culture has enabled LBFL to be a diversified financial
services providing institution of the country. Technical support provided by Sampath Bank
Limited, Sri Lanka has been working as a catalyst to emerge LBFL as most innovative
financial solution provider strictly in compliance with the rules & regulations of Bangladesh
Bank.
In recent time, Lanka Bangla Finance Ltd. has taken a series of growth policy which they
achieved through establishing branches countrywide. They also envisioned green banking
policy to be maintaining more intimate relationship with their customer and stake holder.
Its goal is to be the nation's most sought after facilitator in creating, nurturing and
maximizing value to the stakeholders, the society, the environment, and thereby, GROWING
TOGETHER.
Its mission to lead by example through a committed team of nurtured resources fostering
ownership that motivates thriving towards excellence in knowledge, systems, processes and
procedures, thereby empowering the organization on at every level to deliver the highest
quality of product, customer care, and stakeholder value keeping environmental safety a
priority (Corporate Profile: Lanka Bangla Finance Ltd., 2014).

Page | 8

Liquidity ratio
1. Cash Position Indicator:
It measures the cash position out of the total assets of a bank or any non-bank financial
institution. It equals to a fiscal years cash deposits divided by its total assets, expressed as a
percentage.
Cash Position Indicator=

2008

2009

2010

2011

2012

2013

Prime Bank

79.65%

85.58%

80.06%

79.51%

76.44%

82.24%

Lanka Bangla

10.45%

8.10%

9.62%

9.57%

6.62%

7.94%

Time Series Analysis:


88.00%
86.00%
84.00%
82.00%
80.00%
78.00%

Prime bank

76.00%
74.00%
72.00%
70.00%
2008

2009

2010

2011

2012

2013

Cross Sectional Analysis:


90.00%
80.00%
70.00%
60.00%
50.00%
Prime bank

40.00%

lanka bangla

30.00%
20.00%
10.00%
0.00%
2008

Page | 9

2009

2010

2011

2012

2013

Interpretation:
In 2013 in every TK. 100 worth of assets, there are Tk.82.24worth of cash for Prime Bank
Ltd. For 2008, 2009, 2010, 2011 and 2012 it was Tk.79.65, Tk.85.58, Tk.80.06, Tk.79.51,
Tk.76.44 respectively for every Tk. 100 worth of assets of Prime Bank Ltd.
The cash position indicator for Prime Bank Ltd. was quite stable in these six years from
2008- 2013 with a bit higher in 2009 and 2013. If we look at the time series analysis graph
we can see that for 2009 and 2013 the proportionate increase in cash deposits were more than
that of Total Assets and so the figures in these 2 years were higher. Overall the cash position
is good for Prime Bank Ltd as all of them are more than 70% of the total assets.
If we look at the cross sectional analysis we can see the Lanka Banglas cash position
indicator is way lower than that of Prime Bank Ltd. That means Prime Bank has more cash in
their hand which indicates that the cash liquidity for Prime Bank is way higher than the
Lanka Bangla and Prime Bank is in stronger position to handle immediate cash needs.

2. Liquid Securities Indicator:


It measures the proportion of the most marketable securities which is government securities
for the bank or non-bank institutions hold with the overall size of its asset portfolio.It equals
to a fiscal years government securities the entity hold divided by its total assets, expressed as
a percentage.
Liquid Securities Indicator=
2008
Prime Bank
Lanka Bangla

2009

2010

2011

2012

6.07%

0.00%

0.15%

2.55%

0.69%

2.14%

0.00%

5.46%

6.96%

8.05%

4.38%

3.15%

Time Series Analysis:


7.00%
6.00%
5.00%
4.00%
3.00%

Prime Bank

2.00%
1.00%
0.00%
2008

Page | 10

2013

2009

2010

2011

2012

2013

Cross Sectional Analysis:


9.00%
8.00%
7.00%
6.00%
5.00%
Prime Bank

4.00%

Lanka Bangla

3.00%
2.00%
1.00%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013 in every TK. 100 worth of assets, there are Tk.2.14worth of government securities
for Prime Bank Ltd. For 2008, 2009, 2010, 2011 and 2012 it was Tk.6.07, Tk.0.00, Tk.0.15,
Tk.2.55, Tk.0.69 respectively for every Tk. 100 worth of assets of Prime Bank Ltd.
The liquid securities indicator for Prime Bank Ltd. was not too stable in these six years from
2008- 2013 with the highest in 2008. If we look at the time series analysis graph we can see
that for 2008, the bank had the most amount of government securities than any other years
and the total assets at that time was also lower than any other years, so the ratio was the
highest in 2008.
If we look at the cross sectional analysis we can see the Lanka Banglas liquid securities
indicator is higher than the Prime Banks for all the years except year 2008. This means that
compared to the Prime Bank, Lanka Bangla is in greater position regarding its liquidity in the
usual manner.

Page | 11

3. Capacity Ratio:
It measures how much proportion of loans and leases are there in regarding of the total assets
of the banks and any non-bank institutions. It is a negative liquidity indicator because loans
and leases are often the most illiquid assets of an entity. So the greater is the indictor, the
lower liquid is the institution. It equals to a fiscal years net loans and leases divided by it
total assets, expressed as a percentage.

Capacity Ratio=

Prime Bank
Lanka Bangla

2008

2009

2010

2011

2012

2013

68.00%

71.41%

71.48%

70.55%

69.30%

62.56%

71.95%

59.97%

49.02%

46.64%

73.54%

77.47%

Time Series Analysis:


74.00%
72.00%
70.00%
68.00%
66.00%
Prime Bank
64.00%
62.00%
60.00%
58.00%
2008

Page | 12

2009

2010

2011

2012

2013

Cross Sectional Analysis:


90.00%
80.00%
70.00%
60.00%
50.00%
Prime Bank

40.00%

Lanka Bangla

30.00%
20.00%
10.00%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013 in every TK. 100 worth of assets, there are Tk.62.56 worth of government securities
for Prime Bank Ltd. For 2008, 2009, 2010, 2011 and 2012 it was Tk.68.00, Tk.71.41,
Tk.71.48, Tk.70.55, Tk. 69.30 respectively for every Tk. 100 worth of assets of Prime Bank
Ltd.
The liquid securities indicator for Prime Bank Ltd. was quite stable in these six years from
2008- 2013 with the higher amount in year 2009 and 2010. If we look at the time series
analysis graph we can see that for 2009 and 2010, the proportionate increase in net loans and
leases was more than that of Total Assets and so the figures in these 2 years were higher.
If we look at the cross sectional analysis we can see the Lanka Banglas capacity ratio has
more fluctuation than that of Prime Banks and for 3 years, Lanka Banglas capacity ratio is
higher and for the other 3 years, Prime Bank has higher capacity ratio. Therefore, the
liquidity regarding the net loans and leases for these 2 institutions are not that much
differences and Lanka Banglas uncertainty of taking loans and leases are higher than the
Prime Bank.

Page | 13

Profitability Ratio
1. Return on Equity (ROE)
It measures the rate of return on the ownership interest (shareholders' equity) of the common
stock owners. ROE is viewed as one of the most important financial ratios. It measures a
firm's efficiency at generating profits from every taka of net assets (assets minus liabilities),
and shows how well an organization uses investment taka to generate earnings growth.
ROE is equal to a fiscal year's net income (after preferred stock dividends but before common
stock dividends) divided by total equity (excluding preferred shares), expressed as a
percentage.

Return on Equity (ROE) =

Net Income
Total Equity Capital

2008

2009

2010

2011

2012

2013

Prime Bank

18.36%

23.93%

17.76%

19.11%

12.88%

7.83%

Lanka Bangla

40.94%

35.42%

38.40%

15.02%

5.38%

13.96%

Time Series Analysis:

Prime Bank
30.00%
25.00%
20.00%
15.00%
Prime Bank
10.00%
5.00%
0.00%
2008

Page | 14

2009

2010

2011

2012

2013

Cross Sectional Analysis:


45.00%
40.00%
35.00%
30.00%
25.00%
Prime Bank

20.00%

LankaBangla

15.00%
10.00%
5.00%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013 every common shareholders have earned Tk. 7.83 for every Tk. 100 invested. For
2008, 2009, 2010, 2011 and 2012 it was Tk. 18.36, Tk. 23.93, Tk. 17.76, Tk. 19.11 and Tk.
12.88 respectively for every Tk. 100 invested in Prime Bank Ltd.
For these six years from 2008- 2013, ROE was highest in 2009 with a 23.93% and lowest in
2013 with 7.83%. If we look at the time series analysis graph we can see that it has been
decreasing after the year 2009. The reason for this decline is that the proportionate increase in
Total Equity Capital was more than the Net Income for the bank after 2009. This is showing
bad performance of the bank after 2009. It is a very important ration in showing if the bank is
profitable or not and bad performance here is not good for the bank.
Compared to Lanka Bangla Finance, which is a Non Bank Financial Institution, Prime Bank
Ltd. showed better performance in the years 2011 and 2012. In the other years, Lanka Bangla
Finance showed way better performance than Prime Bank Ltd. Lanka Bangla had excellent
ROE results except for the years 2008-2010. In the years 2011 and 2012 proportionate
increase in Total Equity Capital was more than the Net Income by a huge margin. So the
ROE came down to 15.02% and 5.38% in 2011 and 2012 respectively.

Page | 15

2. Return on Assets (ROA)


It is a measure of a bank's profitability. It shows how profitable a company's assets are
in generating revenue. It equals to a fiscal year's earnings divided by its total assets,
expressed as a percentage.
Return on Assets (ROA) =

Net Income
Total Assets

2008

2009

2010

2011

2012

2013

Prime Bank

1.13%

2.26%

1.99%

1.85%

1.13%

0.75%

Lanka Bangla

4.64%

5.54%

9.52%

3.84%

1.37%

2.98%

Time Series Analysis:

Prime Bank
2.50%
2.00%
1.50%
Prime Bank

1.00%
0.50%
0.00%
2008

Page | 16

2009

2010

2011

2012

2013

Cross Sectional Analysis:


10.00%
9.00%
8.00%
7.00%
6.00%
5.00%

Prime Bank

4.00%

LankaBangla

3.00%
2.00%
1.00%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013 ever TK. 100 worth of assets generated a return of Tk. 0.75 for Prime Bank Ltd. For
2008, 2009, 2010, 2011 and 2012 it was Tk. 1.13, Tk. 2.26, Tk. 1.99, Tk. 1.85 and Tk. 1.13
respectively for every Tk. 100 worth of assets of Prime Bank Ltd.
The ROA for Prime Bank Ltd. was quite stable in these six years from 2008- 2014 with a bit
higher ROA in 2009 and 2010. For the other years it was almost the same. If we look at the
time series analysis graph we can see that for 2009 and 2010 the proportionate increase in Net
Income was more than that of Total Assets and so the ROA was higher. Overall the ROA is
not good for Prime Bank Ltd. A ROA ratio of .75%- 2.26%% does not show very good
utilization of assets in making profit for the bank. It shows average performance.
If we look at Lanka Bangla Finance, the ROA is better than that of Prime Bank Ltd. if we
look at the cross sectional analysis we can see that their asset utilization was way better than
that of Prime Bank Ltd. in making profit. Though Lanka Bangla Finance did a little bad in the
last two years but still their performance was better than Prime Bank Ltd. throughout the
period.

Page | 17

3. Net Interest Margin


It is a measure of the difference between interest income generated by banks or
other financial institutions by lending and interest paid on borrowings (for example,
deposits). It is considered analogous to the gross margin of non-financial companies.
Net Interest Margin =

(Interest Income Interest Expense )


Total Assets

2008

2009

2010

2011

2012

2013

Prime Bank

2.28%

2.95%

4.21%

3.19%

3.61%

2.75%

Lanka Bangla

2.93%

3.06%

3.03%

4.30%

2.09%

2.45%

Time Series Analysis:

Prime Bank
4.50%
4.00%
3.50%
3.00%
2.50%
2.00%

Prime Bank

1.50%
1.00%
0.50%
0.00%
2008

Page | 18

2009

2010

2011

2012

2013

Cross Sectional Analysis:


5.00%
4.50%
4.00%
3.50%
3.00%
2.50%

Prime Bank

2.00%

LankaBangla

1.50%
1.00%
0.50%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013, every Tk. 100 worth of Total Assets generated Tk. 2.75 of Net Income. For 2008,
2009, 2010, 2011 and 2012 it was Tk. 2.28, Tk. 2.95, Tk. 4.21, Tk. 3.19 and Tk. 3.61
respectively for every Tk. 100 worth of assets of Prime Bank Ltd.
In 2010 Prime Bank Ltd. had the highest Net Interest Margin ratio of 4.21%. In the other
years it was in the range of 2.28%-3.61%. In 2010 the Net Interest Income increased
proportionately more than Total Assets for Prime Bank Ltd. For the other years the
proportionate change of Net Interest Income and Total Assets were almost same. so the ratios
did not fluctuate much.
Even for Lanka Bangla Finance, NIM ratio is close to that of Prime Bank Ltd. It was within
2.45%- 4.30%. So both the financial institutions performed almost same incase of NIM ratio.
**NB: This ratio does not show proper results since Total Assets do not generate
Interest Income. Only Interest Sensitive Assets (ISA) generate Interest Income.
Miscellaneous Assets do not generate Interest Income.

Page | 19

4. Net Non- Interest Margin


This measure the amount of non-interest revenues stemming from deposit service charges and
other service fees the financial firm has been able to collect(fee income) relative to the
amount of non-interest costs incurred (including salaries and wages, repairs and maintenance
cost of facilities and loan loss expenses). For most of the banks the net non-interest margin is
usually negative. This is mainly because of the fact that non-interest costs generally outstrip
the fee income
Net Non-Interest Margin =

(Non Interest Income Non Interest Expense )


Total Assets

2008

2009

2010

2011

2012

2013

Prime Bank

2.17%

2.72%

1.50%

2.12%

1.60%

1.48%

Lanka Bangla

4.08%

4.86%

10.75%

1.90%

0.26%

1.69%

Time Series Analysis:

Prime Bank
3.00%
2.50%
2.00%
1.50%
Prime Bank
1.00%
0.50%
0.00%
2008

Page | 20

2009

2010

2011

2012

2013

Cross Sectional Analysis:


12.00%
10.00%
8.00%
6.00%

Prime Bank
LankaBangla

4.00%
2.00%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
For every Tk. 100 worth of Total Assets the bank generated Tk.1.48 Net Non Interest
Income. For 2008, 2009, 2010, 2011 and 2012 it was Tk. 2.17, Tk. 2.72, Tk. 1.50, Tk. 2.12
and Tk. 1.60 respectively for every Tk. 100 worth of assets of Prime Bank Ltd.
For this ratio as well, Prime Banks performance did not vary much over the years. Net Non
Interest Margin was highest in the year 2009 with a 2.72% and lowest in 2013 with a 1.48%.
In 2013 the proportionate increase in Net Non Interest Income was less than the increase in
Total Assets.
If we look at the cross sectional analysis we can see that, for Lanka Bangla Finance, the Net
Non Interest Margin ratio is better than that of Prime Banks one. Apart from 2011 and 2012,
for all the other years from 2008- 2013, for Net Non Interest Margin Prime Bank Ltd.
performed badly compared to Lanka Bangla Finance.

Page | 21

5. Net Operating Margin


This ratio shows how efficiently the assets of a firm are utilized to enlarge the spread/margin
between operating revenues and operating expenses. Operating revenue is the sum of interest
income and non interest income, and operating expense is the sum of interest expense and
non interest expense.
Net Operating Margin =

Total Operating Reveneues Total Operating Expense


Total Assets

2008

2009

2010

2011

2012

2013

Prime Bank

3.48%

4.26%

4.52%

4.06%

3.71%

3.15%

Lanka Bangla

7.01%

7.92%

13.78%

6.20%

2.35%

4.13%

Time Series Analysis:

Prime Bank
5.00%
4.50%
4.00%
3.50%
3.00%
2.50%
Prime Bank

2.00%
1.50%
1.00%
0.50%
0.00%
2008

Page | 22

2009

2010

2011

2012

2013

Cross Sectional Analysis:


16.00%
14.00%
12.00%
10.00%
8.00%

Prime Bank

6.00%

LankaBangla

4.00%
2.00%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
For every Tk. 100 worth of Total Assets the bank generated Tk. 3.15 Net Operating Income.
This Net Operating Income is the difference of Operating Revenue and Operating Expense of
a financial institution. For 2008, 2009, 2010, 2011 and 2012 it was Tk. 2.17, Tk. 2.72, Tk.
1.50, Tk. 2.12 and Tk. 1.60 respectively for every Tk. 100 worth of assets of Prime Bank Ltd.
Prime Banks performance has been quite constant throughout the six years. The Net
Operating Margin ranged from 3.15%- 4.52%. The highest was in 2010 with a 4.52% and the
lowest being in 2013 with a 3.15%. Possible reason for fluctuation is that proportionate
change in Net Operating Income was less than that of change in Total Assets.
For comparing the Net Operating Margin Ratio of Lanka Bangla Finance and Prime Bank
Ltd. we will have to look at the cross sectional analysis. Lanka Bangla Finance outperformed
Prime Bank Ltd. in this profitability ratio as well. Lanka Bangla Finance had high Net
Operating Margin ratio of 13.78%, while Prime Bank Ltd. Just had highest NPM of 4.52%..
Prime Bank Ltd. performed poor here as well compare to Lanka Bangla Finance.

Page | 23

6. Net Profit Margin


It is a measure of profitability. It is calculated using a formula and written as a percentage or
a number. Margin is mostly used for internal comparison.
Net Profit Margin =

Net Income After Tax


Total Operating Revenues

2008

2009

2010

2011

2012

2013

Prime Bank

9.54%

16.92%

16.46%

14.42%

8.44%

5.77%

Lanka Bangla

24.48%

30.66%

44.04%

25.19%

9.84%

19.29%

Time Series Analysis:

Prime Bank
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%

Prime Bank

6.00%
4.00%
2.00%
0.00%
2008

Page | 24

2009

2010

2011

2012

2013

Cross Sectional Analysis:


50.00%
45.00%
40.00%
35.00%
30.00%
25.00%

Prime Bank

20.00%

LankaBangla

15.00%
10.00%
5.00%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013 every Tk. 100 worth of Operating Revenue generated a profit of Tk. 5.77. For 2008,
2009, 2010, 2011 and 2012 it was Tk. 9.54, Tk. 16.92, Tk. 16.45, Tk. 14.42 and Tk. 5.77
respectively for every Tk. 100 worth of Total Operating Revenues.
Compared to the previous years the Net Profit Margin is low in 2013. The reason behind that
is Total Operating contributed less to the Bet Income in 2013 compared to other years.
Possible reasons might be that the difference of Net Operating Income and Net Operating
Expense increased compared to the previous years. This led to the proportionate increase of
Total Operating Margin to be more than that of NI. So the Net Profit Margin decreased in
2013.
If we compare Prime Bank Ltd. with Lanka Bangla Finance, we can see that Lanka Bangla
Finance had an upper hand in this ratio for the years 2008-2013. So this shows poor
performance of Prime Bank Ltd. for Net Profit Margin compared to Lanka Bangla Finance.

**NB: NPM also equals to the product of Expense Control Efficiency ratio and Tax
Management Efficiency ratio. Since, ECE and TME ratios deals with how efficiently
bank is managing operating expense and tax expense respectively, the product of this
two equals NPM ratio. Even mathematically the product of the formulas of ECE and
TME equals to the NPM ratios formula.

Page | 25

7. Earnings per Share


It represents the number the number of dollars earned during the period on behalf of each
outstanding share of common stock.

Earnings per Share =

Net Income After Tax


Number of Common Shares Outstanding

2008

2009

2010

2011

2012

2013

Prime Bank

Tk. 43.92

Tk. 79.43

Tk. 58.77

Tk. 4.79

Tk. 2.86

Tk. 1.98

Lanka Bangla

Tk. 10.79

Tk. 21.26

Tk. 34.62

Tk. 10.43

Tk. 1.84

Tk. 4.58

Time Series Analysis:

Prime Bank
90
80
70
60
50
40

Prime Bank

30
20
10
0
2008

Page | 26

2009

2010

2011

2012

2013

Cross Sectional Analysis:


90
80
70
60
50
Prime Bank

40

LankaBangla

30
20
10
0
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013, for Prime Bank Ltd. common shareholders had earnings of Tk. 1.98/share. For 2008,
2009, 2010, 2011 and 2012 the earnings per share was Tk.43.92, Tk. 79.43, Tk. 58.77, Tk.
4.79 and Tk. 2.86 respectively for every Tk. 100 worth of Total Operating Revenues.
The EPS for Prime Bank Ltd. took a sharp downturn from 2011because Prime Bank Ltd.
undertook new project for which they issued huge number of shares in the share market,
named Dhaka Stock Exchange. So, proportionate increase in number of common shares
outstanding increased by a great deal compared to proportionate increase in NI after tax.
Compared to Lanka Bangla Finance, Prime Bank Ltd. performed bad in this particular sector.
Earnings from the common shares were more for Prime Bank than Lanka Bangla till 2010.
But from 2011, since around 250 million new shares were issued in the stock market for
Prime bank, the EPS went down. So for now Lanka Bangla is showing better performance in
EPS than Prime Bank Ltd.

Page | 27

8. Retention Ratio
The ratio that shows future growth potential of a financial organization is called retention
ratio. Higher is the retention ratio better is the future reinvestment capacity of a bank or any
financial institution.
Retention ratio = 1- Dividend payout ratio
2008

2009

2010

2011

2012

2013

Prime Bank

99.42%

99.27%

99.32%

99.37%

93.07%

92.97%

Lanka Bangla

69.42%

79.17%

91.83%

65.98%

17.70%

56.35%

Time Series Analysis:


100.00%
98.00%
96.00%
94.00%

prime bank

92.00%
90.00%
88.00%
2008

Page | 28

2009

2010

2011

2012

2013

Cross Sectional Analysis:


120.00%
100.00%
80.00%
prime bank

60.00%

lanka bangla
40.00%
20.00%
0.00%
2008

2009

2010

2011

2012

Interpretation:
In 2013 for Prime Bank Ltd. out of total earnings 92.97% was retained for reinvestment. For
2008, 2009, 2010, 2011 and 2012 the retained earnings were 99.42%, 99.27%, 99.32%,
99.37% and 93.07%.
The retention ratio for Prime Bank Ltd. took a sharp downturn from 2012 because from that
year they started retaining more of the Net Income for reinvesting in the new project they
undertook in the year 2011. For that reason retention ratio graph of Prime Bank Ltd. took a
very sharp downturn after 2011.
Compared to Lanka Bangla Finance, Prime Bank Ltd. had better retention ratio. This shows
that Prime Bank had better future investment potentials than Lanka Bangla Finance.

Page | 29

Financial Risk Ratio


1. Equity Multiplier/ Fund Management Ratio
Funds management efficiency shows how effectively the management has utilized the
shareholders equity towards investing in assets.
Fund Management Ratio =

Total Assets

Total Equity Capital

2008

2009

2010

2011

2012

2013

Prime Bank

16.47 times

10.59 times

8.90 times

10.41 times

11.36 times

10.51 times

Lanka Bangla

8.82 times

6.40 times

4.03 times

3.91 times

3.91 times

4.69 times

Time Series Analysis:

Prime Bank
20
15
10
Prime Bank
5
0
2008

Page | 30

2009

2010

2011

2012

2013

Cross Sectional Analysis:


18
16
14
12
10
Prime Bank

LankaBangla

6
4
2
0
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013 for Prime Bank Ltd. Equity Multiplier was 10.51 times means, Total Assets were
financed by liability equal to 10.51 times equity. For 2008, 2009, 2010, 2011 and 2012 debt
financing was 16.47 times, 10.59 times, 8.9 times, 10.41 times and 11.36 times of equity
capital respectively.
This ratio was really high for Prime Bank Ltd. in 2013 which was 16.47 times. 16.47 times of
equity capital financing is debt capital financing. This shows high leverage of the bank and
indicates poor capital structure of the bank. This condition improved a little overtime. In 2013
the EM for Prime Bank Ltd. was 10.51 times.
Comparing Prime Bank Ltd. with Lanka Bangla Finance we can see that Lanka Bangla
Finance had less financial leverage than Prime Bank Ltd. for the all the years. This shows that
Prime Bank Ltd. is riskier of the two and is more leveraged financially. The reason for Prime
Bank Ltd. to have a high EM is that their capital structure has more debt financing than
equity financing.

Page | 31

2. Leverage Ratio
This describes the amount of equity in comparison to debt or the amount of earnings in
comparison to debt.
Leverage Ratio =

Total Libabilities
Total Assets

2008

2009

2010

2011

2012

2013

Prime Bank

94%

91%

89%

90%

91%

90%

Lanka Bangla

89%

84%

73%

73%

74%

78%

Time Series Analysis:

Prime Bank
0.95
0.94
0.93
0.92
0.91
0.9
0.89
0.88
0.87
0.86

Prime Bank

2008

Page | 32

2009

2010

2011

2012

2013

Cross Sectional Analysis:


1
0.9
0.8
0.7
0.6
0.5

Prime Bank

0.4

LankaBangla

0.3
0.2
0.1
0
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013, for Prime Bank Ltd., 90% of the assets were financed by debt. For 2008, 2009, 2010,
2011 and 2012 debt financing was 94%, 91%, 89%, 90% and 91% respectively in financing
total assets.
Prime Bank Ltd. was highly leveraged financially throughout the period. This also indicates
that the bank is very risky. We know banks are more dependent on debt financing more but
having 90% of total assets being financed by debt is highly not recommended and very risky
for any type of organization. Debt financing was very high all the six years in financing total
assets.
Compared to Lanka Bangla Finance, Prime Bank Ltd. had more financial leverage. So we can
say that Prime Bank Ltd. was more risky than Lanka Bangla Finance from the perspective of
Leverage ratio.

Page | 33

3. Interest Coverage Ratio (Times Interest Earned Ratio)


Interest coverage ratio measures a firms ability to make contractual interest payments. The
higher its value, the better able the firm is to fulfill its interest obligations.
Times Interest Earned Ratio =

Operating Income
Interest Expense

2008

2009

2010

2011

2012

2013

Prime Bank

0.81times

0.98 times

1.38 times

0.99 times

0.80 times

0.76 times

Lanka Bangla

1.18 times

1.59 times

3.11 times

1.44 times

0.65 times

0.81 times

Time Series Analysis:

Prime Bank
1.60
1.40
1.20
1.00
0.80
Prime Bank

0.60
0.40
0.20
0.00
2008

Page | 34

2009

2010

2011

2012

2013

Cross Sectional Analysis:


3.50
3.00
2.50
2.00
Prime Bank
1.50

LankaBangla

1.00
0.50
0.00
2008

2009

2010

2011

2012

2013

Interpretation:
In 2012, Operating Income of Prime Bank Ltd. was 0.76 times its interest expense. For 2008,
2009, 2010, 2011 and 2012 the operating income was 0.81 times, 0.98 times, 1.38 times, .99
times and 0.80 times of its interest expense respectively.
The graph from time series analysis shows that Prime Bank Ltd. had Interest Coverage ratio
of 0.81times in 2008 then it went upto 1.38 times in 2010 and then again dropped to 0.76
times in 2013. The performance degraded compared to the previous years.
Comparing Lanka Bangla Finance and Prime Bank Ltd. we can see that Lanka Bangla had
better Interest Coverage ratio compared to Prime Bank. This shows poor performance of
Prime Bank Ltd. compared to Lanka Bangla Finance. Higher the Interest Coverage ratio,
better off a financial institution is.

Page | 35

Efficiency Ratio
1. Tax Management Efficiency Ratio
This is related to the amount of tax paid by the bank. When the tax rate is lower the net profit
after tax will be higher and vice versa. The higher the tax management efficiency the better is
for Prime Bank Ltd.
Net Income After Tax

Tax Management Efficiency Ratio =Net Income before Taxes Securities


gains (or Losses )

2008

2009

2010

2011

2012

2013

Prime Bank

50.35%

60.99%

56.29%

52.25%

48.96%

55.06%

Lanka Bangla

79.97%

81.94%

78.90%

65.88%

68.20%

95.73%

Time Series Analysis:

Prime Bank
70.00%
60.00%
50.00%
40.00%
Prime Bank

30.00%
20.00%
10.00%
0.00%
2008

Page | 36

2009

2010

2011

2012

2013

Cross Sectional Analysis:


120.00%
100.00%
80.00%
60.00%

Prime Bank
LankaBangla

40.00%
20.00%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013, for Prime Bank, Net Income after tax was 55.06% of Net Income before tax. For
2008, 2009, 2010, 2011 and 2012 the Net Income after taxes were 50.35%, 60.99%, 56.29%,
52.25% and 48.96% of Net Income before taxes respectively.
For Prime Bank Ltd. the ratio fluctuated by a little amount over these six years. The graph
from the time series analysis reached its peak in the year 2009 and then came down till 2012
and again went up in 2013. The reason behind these fluctuations is that the NI before tax and
NI after tax did no change proportionally.
Comparing Lanka Bangla Finance with Prime Bank Ltd. we can see that, for all the six years
Lanka Bangla Finance had better managed its tax policies than Prime Bank. For this ratio
Prime Banks performance is poor compared to Lanka Bangla Finance.

Page | 37

2. Expense Control Efficiency Ratio


This ratio signifies the reliance of the bank on the operating revenue. The less reliant the bank
is on its operating revenue the better it will be as it means that the bank is generating more
income without being very dependent on the operating revenue.

Expense Control Efficiency=

Total Operating Income


Total Operating Revenue

2008

2009

2010

2011

2012

2013

Prime Bank

42.94%

56.03%

59.97%

56.78%

39.39%

27.58%

Lanka Bangla

68.31%

71.43%

84.25%

68.87%

42.90%

59.78%

Time Series Analysis:

Prime Bank
70.00%
60.00%
50.00%
40.00%
30.00%

Prime Bank

20.00%
10.00%
0.00%
2008

Page | 38

2009

2010

2011

2012

2013

Cross Sectional Analysis:


90.00%
80.00%
70.00%
60.00%
50.00%
Prime Bank

40.00%

LankaBangla

30.00%
20.00%
10.00%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013, for Prime Bank Ltd., Total Operating Income was 27.58% of Total Operating
Revenue. For 2008, 2009, 2010, 2011 and 2012 the Total Operating Incomes were 50.35%,
60.99%, 56.29%, 52.25% and 48.96% of Total Operating Revenues respectively.
For Prime Bank Ltd. the graph of this ratio went up from where it started in 2008 and came
down after 2010.It declined significantly in 2013. The reason behind this decline is because
Operating expense for 2013 was very high. So after covering operating expense only 27.58%
of the operating revenue contributed to the Operating Income.
Comparing Lanka Bangla Finance with Prime Bank Ltd. we can see that, for all the six years
Lanka Bangla Finance had better managed its operating expense than Prime Bank Ltd. For
this ratio Prime Banks performance is poor compared to Lanka Bangla Finance since its
Expense Control Efficiency ratio was very poor compared to Lanka Bangla Finance

Page | 39

3. Asset Utilization Ratio


This emphasizes on the contribution of the banks assets towards generating total operating
revenues
Total Operating Revenues

Asset Utilization Ratio =

Total Assets

2008

2009

2010

2011

2012

2013

Prime Bank

5.23%

6.61%

6.94%

6.23%

5.88%

5.47%

Lanka Bangla

10.26%

11.09%

16.35%

9.00%

5.49%

6.92%

Time Series Analysis:

Prime Bank
8.00%
7.00%
6.00%
5.00%
4.00%
Prime Bank

3.00%
2.00%
1.00%
0.00%
2008

Page | 40

2009

2010

2011

2012

2013

Cross Sectional Analysis:


18.00%
16.00%
14.00%
12.00%
10.00%
Prime Bank

8.00%

LankaBangla

6.00%
4.00%
2.00%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013, Tk. 100 worth of assets generated Tk. 5.47 operating revenue. For 2008, 2009, 2010,
2011 and 2012 Tk. 100 worth of assets generated Tk. 5.23, Tk. 6.61, Tk. 6.94, Tk. 6.23 and
Tk. 5.88 of operating revenues respectively.
For Prime Bank Ltd. the graph of this ratio went up from where it started in 2008 and came
down after 2010. It declined and reached 5.47% in 2013. The reason behind this decline is
because compared to the previous years the mix and yield of assets was not proper in
generating operating revenues. Asset portfolio was not good enough in 2013 compared to the
previous years.
Comparing Lanka Bangla Finance with Prime Bank Ltd. we can see that, for all the six years
Lanka Bangla Finance had better managed its asset portfolio than Prime Bank. For this ratio,
Prime Banks performance is poor compared to Lanka Bangla Finance since its mix and yield
of assets was not as good as that of Lanka Bangla Finances one.

Page | 41

4. Operating Efficiency Ratio


Its purpose is to evaluate the overhead structure of a financial institution. Banking is no
different from any mature industry - the surviving companies are those that keep costs down.
The efficiency ratio gives us a measure of how effectively a bank is operating. It is also
referred to as the "overhead burden" or "overhead efficiency ratio"
Operating Efficiency Ratio =

Operating Expense
Operatin Revenue

2008

2009

2010

2011

2012

2013

Prime Bank

33.42%

35.51%

34.93%

34.84%

36.87%

42.39%

Lanka Bangla

31.69%

28.57%

15.75%

31.13%

57.10%

40.22%

Time Series Analysis:

Prime Bank
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%

Prime Bank

15.00%
10.00%
5.00%
0.00%
2008

Page | 42

2009

2010

2011

2012

2013

Cross Sectional Analysis:


60.00%
50.00%
40.00%
30.00%

Prime Bank
LankaBangla

20.00%
10.00%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013, 42.39% of the operating revenue was operating expense. For 2008, 2009, 2010, 2011
and 2012 33.42%, 35.51%, 34.93%, 34.84% and 36.87% of operating revenue was operating
expense.
For Prime Bank Ltd. the graph of this ratio went up from where it started in 2008 and reached
42.39% in 2013. The higher is the ratio the worse it is. The reason for this ratio to be the
highest in 2013 is because the interest expense and non interest expense was very high in
2013. Comparatively the interest income and non interest income did not increase
proportionately. So, operating expense was 42.39% of operating revenue.
Comparing Lanka Bangla Finance with Prime Bank Ltd. we can see that, for all the six years
Lanka Bangla Finance had better managed its interest expense and non interest expense than
Prime Bank Ltd.. For the case of this ratio, Prime Bank Ltd. is showing bad performance
compared to Lanka Bangla Finance since Prime Banks operating expenses are going up.

Page | 43

5. Employee Productivity Ratio


This ratio shows how much each full-time employee is contributing to the net operating
income of the company.
Operating Income

Employee Productivity Ratio =

Total Number of Full Time Employees

2008

2009

2010

2011

2012

Prime Bank

Tk.1600577

Tk.2510471

Tk.3025662

Tk.3103818 Tk.2168196 Tk.1366090

Lanka Bangla

Tk.2769642

Tk.5168371

Tk.12924202

Tk.6732631 Tk.2894465 Tk.6436082

Time Series Analysis:

Prime Bank
3500000
3000000
2500000
2000000
1500000

Prime Bank

1000000
500000
0
2008

Page | 44

2009

2010

2011

2012

2013

2013

Cross Sectional Analysis:


14000000
12000000
10000000
8000000
Prime Bank
6000000

LankaBangla

4000000
2000000
0
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013, each employee contributed Tk. 1366090 to the operating income of Prime Bank Ltd.
For 2008, 2009, 2010, 2011 and 2012 each employee contributed Tk. 1600577, Tk. 2510471,
Tk. 3025662, Tk, 3103818 and Tk. 2168196.
For Prime Bank Ltd. the graph of this ratio went up from where it started in 2008 and reached
peak in 2011. From there the graph declined significantly and reached the lowest value in
2013. This is a very important ratio for the management of the bank to check the efficiencies
of the employees of the bank. Prime Bank Ltd. started underperforming in this ratio after
2011.
Comparing Lanka Bangla Finance with Prime Bank Ltd. we can see that, for all the six years
Lanka Bangla Finances employees performed better than Prime Banks employees. Lanka
Bangla Finances employees contributed more to the operating income that that of the
employees of Prime Bank Ltd. So the employees of Prime Bank Ltd. are underperforming
compared to the employees of Lanka Bangla Finance.

Page | 45

6. Earning Spread Ratio


Earning spread refers to the difference in borrowing and lending rates of financial institutions
(such as banks) in nominal terms. It is considered analogous to the gross margin of nonfinancial companies. Net interest spread is expressed as interest yield on earning assets (any
asset, such as a loan, that generates interest income) minus interest rates paid on borrowed
funds.

Earnings Spread Ratio =

Interest Income
Interest Sensitive Assets

Interest Expense
Interest Sensitive Liabilities

2008

2009

2010

2011

2012

2013

Prime Bank

5.03%

4.46%

7.13%

6.20%

7.63%

4.98%

Lanka Bangla

9.49%

9.42%

7.53%

10.35%

6.55%

7.47%

Time Series Analysis:

Prime Bank
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%

Prime Bank

3.00%
2.00%
1.00%
0.00%
2008

Page | 46

2009

2010

2011

2012

2013

Cross Sectional Analysis:


12.00%
10.00%
8.00%
6.00%

Prime Bank
LankaBangla

4.00%
2.00%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013, interest yield on earning assets minus interest rates paid on borrowed funds was
4.98%. For 2008, 2009, 2010, 2011 and 2012 interest yield on earning assets minus interest
rates paid on borrowed funds were 5.03%, 4.46%, 7.13%, 6.2% and 7.63%.
For Prime Bank Ltd. the graph of this ratio shows ups and downs. The ratio was highest in
2012 and lowest in 2013. The reason for this ratio to decline from 2012 is because
proportionate increase of interest yield from interest sensitive assets were lower than
proportionate increase in interest rates paid on borrowed funds. This shows that assets are not
being utilized properly to contribute to make profits for Prime Bank Ltd. in 2013
Comparing Lanka Bangla Finance with Prime Bank Ltd. we can see that, for all the six years
Lanka Bangla Finances earnings spread ratio is better than Prime Banks one. Lanka Bangla
Finances assets are being utilized properly in contributing to make profits whereas; Prime
Banks assets are not being utilized properly. So Prime Bank should be more watchful in
utilizing their assets.

Page | 47

Market Ratios
1. Price/Earnings Ratio
This ratio measures the amount that investors are willing to pay for each dollar of firms
earnings. The level of price/earnings ratio indicates the degree of confidence that investors
have in the firms future performance
P/E Ratio =

Market Price per Share


Earnings per Share

2008

2009

2010

2011

2012

2013

Prime Bank

1.23

0.82

24.28

9.29

12.94

13.08

Lanka Bangla

18.22

14.76

14.38

16.32

32.11

12.89

Time Series Analysis:

Prime Bank
30
25
20
15
Prime Bank
10
5
0
2008

Page | 48

2009

2010

2011

2012

2013

Cross Sectional Analysis:


35
30
25
20
Prime Bank
15

LankaBangla

10
5
0
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013 the shareholders of Prime Bank Ltd. were willing to pay Tk. 13.08 for every Tk. 1 of
reported earnings. For 2008, 2009, 2010, 2011 and 2012 shareholders were willing to pay Tk.
1.23, Tk. 0.82, Tk. 24.28, Tk. 9.29 and Tk. 12.94 respectively.
This ratio for Prime Bank was very low for the first two years. In 2010 the ratio went up
24.28 since in that year proportionate increase in market price of Prime Banks share was
more than that of the earnings per share. Moreover for the next three years the EPS went
down since a lot of new shares were issued in the market.
Compared to Lanka Bangla Finance, Prime Bank showed better PE ratio only in the year
2010. For the rest years Lanka Bangla showed better performance in PE ratio. So Prime Bank
performed badly compared to Lanka Bangla Finance.

Page | 49

2. Market to Book Ratio


This ratio provides an assessment of how investors view the firms performance. It relates the
market value of the firms share to their book value.
Market to Book Ratio =

Market Price pe r Share


Book value per Share

2008

2009

2010

2011

2012

2013

Prime Bank

0.23times

0.20 times

0.33 times

1.81 times

1.67 times

1.16 times

Lanka Bangla

7.46 times

5.23 times

5.52 times

2.45 times

1.73 times

1.80 times

Time Series Analysis:

Prime Bank
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0

Prime Bank

2008

Page | 50

2009

2010

2011

2012

2013

Cross Sectional Analysis:


8
7
6
5
4

Prime Bank
LankaBangla

3
2
1
0
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013 the market value per share was 1.16 times the book value. For 2008, 2009, 2010,
2011 and 2012 the market value per share was .23times, .20times, .33times, 1.81times and
1.67times.
This ratio for Prime Bank was very low for the three two years. In 2011 the ratio went up
1.81times. Since, in 2011 Prime Bank undertook a new project; they issued millions of new
shares. So the Book value per share went down. As a result, from 2011 to 2013 the Market to
Book ratio went up for Prime Bank.
Compared to Lanka Bangla Finance, Prime Bank showed better Market to Book ratio for all
these six years. Even in this volatile market conditions, Lanka Bangla Finance did a good job
in keeping their market share prices quite good. Prime Bank did not perform well compared
to Lanka Bangla Finance.

Page | 51

3. Dividend per Share


This ratio implies how much dividend a shareholder is getting for every share s/he has
invested in.
Dividend per Share=

Prime Bank

Lanka Bangla

Total Dividend to ordinary shareholders


Number of common shares outstanding

2008

2009

2010

2011

2012

2013

Tk0.25/

Tk0.40/

Tk0.40/

Tk0.30/

Tk0.20/

Tk0.13/

share

share

share

share

share

share

Tk3.30/

Tk4.43/

Tk2.83/

Tk3.55/

Tk1.51/

Tk2.00/

share

share

share

share

share

share

Time Series Analysis:

Prime Bank
0.45
0.4
0.35
0.3
0.25
0.2

Prime Bank

0.15
0.1
0.05
0
2008

Page | 52

2009

2010

2011

2012

2013

Cross Sectional Analysis:


5
4.5
4
3.5
3
2.5

Prime Bank
LankaBangla

2
1.5
1
0.5
0
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013 the common shareholder got a dividend of Tk. 0.13/share. For 2008, 2009, 2010,
2011 and 2012 the dividend per share was 0.25times, 0.40times, 0.40times, 0.30times and
0.13times.
This ratio for Prime Bank was low inh 2008. It went up in 2009 and 2010. Since, in 2011
Prime Bank undertook a new project; they issued millions of new shares. So the bank was
underperforming
Compared to Lanka Bangla Finance, Prime Bank showed better Dividend per share ratio for
all these six years. Even in this volatile market conditions, Lanka Bangla Finance did a good
job in giving dividends to the common shareholders than Prime Bank. Prime Bank did not
perform well compared to Lanka Bangla Finance.

Page | 53

4. Dividend Yield
It is a financial ratio that shows how much a company pays out in dividends each year
relative to its share price. It is one of the important ratios the investors will look into before
they decide which stock to invest. It equals to one fiscal years dividends per share divided by
its price per share of that year, expressed in percentage.
Dividend Yield=

Dividend per Share


Current market price of Share

2008

2009

2010

2011

2012

2013

Prime Bank

0.463%

0.613%

0.423%

0.674%

0.541%

0.483%

Lanka Bangla

1.68%

1.41%

0.57%

2.08%

2.56%

3.39%

Time Series Analysis:


0.80%
0.70%
0.60%
0.50%
0.40%
Prime Bank
0.30%
0.20%
0.10%
0.00%
2008

Page | 54

2009

2010

2011

2012

2013

Cross Sectional Analysis:


4.00%
3.50%
3.00%
2.50%
2.00%

Prime Bank
LankaBangla

1.50%
1.00%
0.50%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013 in every TK. 100 worth of price per share provided Tk.0.48 worth of dividends for
Prime Bank Ltd for their investors. For 2008, 2009, 2010, 2011 and 2012 it was Tk. 0.46, Tk.
0.88, Tk. 0.42, Tk. 0.07, Tk. 0.54 respectively for every Tk. 100 worth of price per Prime
Bank Ltd stock share.
The dividend yield ratio for Prime Bank Ltd. was not stable for the past 6 years from 20082013 with the highest amount of 0.88% and the lowest amount of 0.07%. However, the
overall amount of the ratio was really minor.
If we look at the cross sectional analysis we can see the Lanka Banglas dividend yield ratio
is way higher than that of Prime Banks, even it also did fluctuate a lot over the past 6 years
from 2008-2013. It indicated that the investors in Lanka Bangla were able to earn more than
the investors in Prime Bank in the form of dividends in related to the money they have
invested. So as a result, the investors are probably more into investing in Lanka Bangla than
Prime Bank regarding this ratio.

Page | 55

5. Dividend Payout Ratio


It indicates how well the earnings of the institution support its dividend payments. More
mature companies tend to have a higher payout ratio. It equals to a fiscal years total
dividends a bank or any non-bank institution pay to their shareholders divided by its total net
income after tax of that year, expressed as a percentage.
Dividend Payout Ratio=

Dividends Paid
Net Income

2008

2009

2010

2011

2012

2013

Prime Bank

0.57%

0.73%

0.68%

0.63%

6.93%

7.03%

Lanka Bangla

30.58%

20.83%

8.17%

34.02%

82.30%

43.65%

Time Series Analysis:

Prime Bank
8.00%
7.00%
6.00%
5.00%
4.00%
Prime Bank
3.00%
2.00%
1.00%
0.00%
2008

Page | 56

2009

2010

2011

2012

2013

Cross Sectional Analysis:


90.00%
80.00%
70.00%
60.00%
50.00%
Prime Bank

40.00%

LankaBangla

30.00%
20.00%
10.00%
0.00%
2008

2009

2010

2011

2012

2013

Interpretation:
In 2013 in every TK. 100 worth of net income after tax, there are Tk.7.03 worth of dividend
for Prime Bank Ltd paid to their shareholders. For 2008, 2009, 2010, 2011 and 2012 it was
Tk. 0.58, Tk. 0.73, Tk. 0.68, Tk. 0.63, Tk. 6.93 respectively for every Tk. 100 worth of assets
of Prime Bank Ltd.
The dividend payout ratio for Prime Bank Ltd. was quite stable in those 4 years from 20082011 and increased drastically at 2012 and remained almost same in the year 2013. The
reason for this is that if we look at the table from which we calculated the value, we can see
that the proportionate increase in dividends in 2012 has increased drastically higher than the
proportionate increase in net income after tax of that year and the same logic for 2013.
If we look at the cross sectional analysis we can see the Lanka Banglas dividend payout ratio
is way higher than that of Prime Banks, even it also did fluctuate a lot over the past 6 years
from 2008-2013. It indicate that the shareholders in Lanka Bangla were able to earn more
than the shareholders in Prime Bank in the form of dividends, and Lanka Bangla was in the
better shape than Prime Bank to earn the net income every year in the past 6 years.

Page | 57

CAMELS Rating
CAMELS is an international bank rating system in which bank supervisory authorities rate
institutions according to six factors. The six areas examined are represented by the acronym
CAMELS. The six factors are:
Capital Adequacy
Asset Quality
Management
Earnings
Liquidity
Sensitivity to Market
Performance of the banking sector under CAMELS involves analysis and evaluation of these
six crucial dimensions of banking operations. The CAMELS methodology was originally
adopted by North American bank regulators to evaluate the financial and managerial
soundness of U.S. commercial lending institutions.
In Bangladesh, since the early nineties, the same 5 components of CAMEL have been used to
evaluate the five crucial dimensions of a banks operations that reflect in a comprehensive
fashion an institutions financial condition, compliance with banking regulations and statuses
and overall operating soundness. Recently, Bangladesh Bank has upgraded the CAMEL into
CAMELS effective from June, 2006. After inserting S or Sensitivity to market risk, it is
presumed that this off-site supervision technique of central bank would make it a more
effective tool in rating banks. The present system requires that a banks condition and
performance be regularly appraised according to predetermined stress testing on asset and
liability and foreign exchange exposures, procedures, rules and criteria and on the basis of the
results obtained through risk-based audits under core risk management guidelines. A single
CAMELS rating for each bank is the result of both off-site monitoring, which uses monthly
financial statement information, and an on-site examination, from which bank supervisors
gather further private information not reflected in the financial reports. These examinations
results in the development of Credit Points ranging from 0 to 100. As noted above, the six
key performance dimensions- Capital adequacy, asset quality, management, earnings,
liquidity and sensitive to market riskare to be evaluated on a scale of 1 to 5 in ascending
order. Following is a description of the graduations of rating:

Rating 1 indicates strong performance: BEST rating.


Rating 2 reflects satisfactory performance.
Rating 3 represents performance that is flawed to some degree.
Rating 4 refers to marginal performance and is significantly below average.
Rating 5 is considered unsatisfactory: WORST raring.

Page | 58

According to CAMELS rating Prime Bank Ltd. is rated 1 (one) or this bank falls under
A-class or Strong Banks, which shows the stability and growth it has managed over the
small time frame. There are only seven banks under this class and Prime Bank is one of
them and it is indeed one of their greatest achievements. The bank has already occupied
an enviable position among its competitors after achieving success in all areas of
business operation (ReportBd, 2011).

Recommendations and conclusions


A few recommendations for Prime Bank

The Net Income decreased in the years after 2012. The banks finance department
should look into this issue and try to increase the Net Income as early as possible.
The Operating Expense also went up after 2011. If this expense can be kept in control
then Net Profit will also go up automatically.
The Bank is under high financial leverage. This shows greater risk as a financial
institution. If this financial leverage can be decreased then the risk factor for the bank
would go down
The assets of the bank are not properly utilized to generate enough revenue. So net
Income is less as a result.

**NB: These above stated recommendations are given keeping in mind the types of
ratios analyzed in this report. If the industry average was available a better analysis and
a better recommendation of for the bank to improve could have been given. These
recommendations are purely based on the financial ratio analysis of Prime Bank Ltd.
from 2008 to 2013.

To conclude we can say that there are a lot of sectors for Prime Bank to improve upon. The
Finance department of this bank should look closely into these issues and try to sort it out.
These ratios partially reflect the condition of the bank. To know the actual financial condition
of the bank we can apply other tools for analyzing financial condition of financial institution.

Page | 59

Bibliography
About Us: Prime Bank Ltd. (2014). Retrieved April 29, 2014, from Prime Bank Ltd. website:
https://www.primebank.com.bd/index.php/home/about_prime_bank
Blogs: Report Bd. (2014). Retrieved April 22, 2014, from Report Bd web site:
http://www.reportbd.com/blogs/448/Bangladesh-Bank-CAMELS-Rating-2011.html
Corporate Profile: Lanka Bangla Finance Ltd. (2014). Retrieved April 22, 2014, from Lanka
Bangla Finance Ltd. website: http://www.lankabangla.com/corporate_profile.php
Investopedia. (2014). Retrieved April 2014, from www.investopedia.com
Islam, S. (2013, March 22). First Page: The financial express bd. Retrieved April 22, 2014,
from
the
financial
express
bd
website:
http://www.thefinancialexpressbd.com/old/index.php?ref=MjBfMDNfMjJfMTNfMV8xXzE2NDA1Nw%3D%3D

Page | 60

Appendix
Calculations

Prime Bank Ratio Calculations


liquidity ratios:
1. cash position

2008

indicator

formula:

2009

2010

2011

2012

2013

cash deposits/total
assets
88,02 106,9 124,5 159,8 182,0 201,9

cash deposits

1,000 56,00 19,00 16,00 53,00 07,00


,000

0,000 0,000 0,000 0,000 0,000

110,5 124,9 155,5 200,9 238,1 245,5


total assets

16,61 84,70 32,78 95,68 69,04 22,64


8,171 2,326 9,526 0,436 9,276 5,636
79.65 85.58 80.06 79.51 76.44 82.24
%

6704

2. liquid securities
indicator
BD govt.
formula:

securities/total
assets

BD govt. securities

3649

Page | 61

238,8 5,124 1,635 5,246


85,68

,479,

,648,

,989,

34

346

489

603

110,5 124,9 155,5 200,9 238,1 245,5


total assets

16,61 84,70 32,78 95,68 69,04 22,64


8,171 2,326 9,526 0,436 9,276 5,636
6.07

0.00

0.15

2.55

0.69

2.14

3. capacity ratio
net
formula:

loans&leases/total
assets
75,15 89,25 111,1 141,8 165,0 153,5

net loans&leases

6,206 2,222 67,38 01,64 42,32 88,76


,817

,489

8,892 8,964 7,369 0,229

110,5 124,9 155,5 200,9 238,1 245,5


total assets

16,61 84,70 32,78 95,68 69,04 22,64


8,171 2,326 9,526 0,436 9,276 5,636
68.00 71.41 71.48 70.55 69.30 62.56
%

profitability ratio:
1. return on
equity(ROE)

formula:

NI after tax

Page | 62

net income after


tax/total equity

1,231 2,823 3,101 3,688 2,698 1,829

,832,

,473,

,398,

,952,

,992,

,495,

174

302

900

436

305

239

6,708 11,79 17,46 19,30 20,96 23,35


total equity

,227,

6,677 6,599 6,395 1,807 8,519

542

,214

,176

,326

18.36 23.93 17.76 19.11 12.88

7.83

,365

,169

2. return on asset

formula:

net income after


tax/total assets
1,231 2,823 3,101 3,688 2,698 1,829

NI after tax

,832,

,473,

,398,

,952,

,992,

,495,

174

302

900

436

305

239

110,5 124,9 155,5 200,9 238,1 245,5


total assets

16,61 84,70 32,78 95,68 69,04 22,64


8,171 2,326 9,526 0,436 9,276 5,636
1.11

2.26

1.99

1.84

1.13

0.75

3. net interest margin


(interest incomeformula:

interest
expense)/total
assets

interest income

9,095 10,85 12,69 17,57 23,80 22,61


,891,

Page | 63

6,114 5,374 4,814 7,748 5,648

683

,605

,976

,286

,522

,865

7,129 8,428 8,047 13,04 17,98 18,27


interest expense

,596,

,698,

,100,

6,539 7,629 6,343

990

978

451

,824

,591

,701

110,5 124,9 155,5 200,9 238,1 245,5


total assets

16,61 84,70 32,78 95,68 69,04 22,64


8,171 2,326 9,526 0,436 9,276 5,636
1.78

1.94

2.99

2.25

2.44

1.77

3,808

5765

5472

7556

8182

9081

,000,

0000

0000

0000

0627

8606

000

00

00

00

48

95

4. net non interest


margin
(non-interest
income-nonformula:

interest
expense)/total
assets

non interest income

1,931 2,907 3,618 4,190 5,162 5,689


non interest expense

,000,

,000,

,000,

,000,

,220,

,098,

000

000

000

000

245

440

110,5 124,9 155,5 200,9 238,1 245,5


total assets

16,61 84,70 32,78 95,68 69,04 22,64


8,171 2,326 9,526 0,436 9,276 5,636
1.70

Page | 64

2.29

1.19

1.67

1.27

1.38

5. net operating margin


net operating
formula:

income/total
assets
3,846 5,328 7,022 8,164 8,839 7,732

net operating income

,854,

,807,

,938,

,891,

,961,

,067,

496

974

721

533

434

419

110,5 124,9 155,5 200,9 238,1 245,5


total assets

16,61 84,70 32,78 95,68 69,04 22,64


8,171 2,326 9,526 0,436 9,276 5,636
3.48

4.26

4.52

4.06

3.71

3.15

6.net profit margin

formula:

net income after


tax/total revenue
1,231 2,823 3,101 3,688 2,698 1,829

NI after tax

total revenue

,832,

,473,

,398,

,952,

,992,

,495,

174

302

900

436

305

239

12,90

1669

1883

2557

3198

3169

7,407

1558

9706

6409

9811

7509

,287

400

584

679

270

560

8.44

5.77

9.54
%

Page | 65

16.92 16.46 14.42


%

7. earnings per share


net income after
formula:

tax/no. of c.s.
outstanding
1,231 2,823 3,101 3,688 2,698 1,829

NI after tax

,832,

,473,

,398,

,952,

,992,

,495,

174

302

900

436

305

239

28,43 35,54 52,77

no. of c.s. outstanding

7,500 6,875 4,028

779,8 935,7 1,029


09,55 71,46

,348,

616

43.32 79.43 58.77

4.73

2.88

1.78

7109

2048

2110

2339

1871

1286

375

5008

9611

4287

5429

6857

1231

2823

3101

3688

2698

1829

8321

4733

3989

9524

9923

4952

74

02

00

36

05

39

0.58

0.73

0.68

0.63

6.93

7.03

8. dividend payout ratio

formula:

dividends

NI after tax

9. retention ratio

Page | 66

dividends/NI after
tax

formula:

1-dividend payout
ratio

dividend payout ratio

0.58

0.73

0.68

0.63

6.93

7.03

99.42 99.27 99.32 99.37 93.07 92.97


%

10. dividend per share


total
formula:

dividends/no.of
shares outstanding

7,109 20,48 21,10 23,39

total dividends

,375

5,008 9,611 4,287

no. of shares

28,43 35,54 52,77

outstanding

7,500 6,875 4,028

187,1 128,6
54,29 68,57
4

779,8 935,7 1,029


09,55 71,46

,348,

616

0.25

0.58

0.40

0.03

0.20

0.13

0.25

0.58

0.40

0.03

0.20

0.13

11. dividend yield ratio


dividends per
formula:

share/price per
share

dividends per share


price per share
Page | 67

53.98 65.30 94.45 44.50 37.00 25.90

0.46

0.88

0.42

0.07

0.54

0.48

financial risk ratio:


1. equity multiplier

formula:

total assets/total
equity capital
110,5 124,9 155,5 200,9 238,1 245,5

total assets

16,61 84,70 32,78 95,68 69,04 22,64


8,171 2,326 9,526 0,436 9,276 5,636

total equity

6708

1179

1746

1930

2096

2335

2275

6677

6599

6395

1807

8519

42

214

365

169

176

326

16.47 10.59

8.90

10.41 11.36 10.51

7,214 11,34

1418

1628

1867

2503

,122,

1,578

9045

8099

2073

5397

131

,659

611

826

402

623

2. leverage ratio

formula:

total liability

total liability/total
assets

110,5 124,9 155,5 200,9 238,1 245,5


total assets

16,61 84,70 32,78 95,68 69,04 22,64


8,171 2,326 9,526 0,436 9,276 5,636
0.07

Page | 68

0.09

0.09

0.08

0.08

0.10

3. Interest Coverage
Ratio
operating
formula:

revenue/interest
expense
5,777 8,262 10,79 12,52 14,00 13,42

operating revenue

,810,

,859,

2,606 9,869 2,181 1,165

297

422

,133

,855

,679

,859

7,129 8,428 8,047 13,04 17,98 18,27


interest expense

,596,

,698,

,100,

6,539 7,629 6,343

990

978

451

,824

,591

,701

0.81

0.98

1.34

0.96

0.78

0.73

efficiency ratio:
1. Tax Management
Efficiency Ratio
NI after tax/NI
formula:

before
tax&securities
gains or losses
1,231 2,823 3,101 3,688 2,698 1,829

NI after tax

NI before

,832,

,473,

,398,

,952,

,992,

,495,

174

302

900

436

305

239

2,480 4,629 6,471 7,113 5,515 3,702

tax&securities gains or

,893,

,307,

,891,

,950,

,889,

,103,

losses

665

974

167

267

483

053

Page | 69

49.65 60.99 47.92 51.86 48.93 49.42


%

2. Expense Control
Efficiency Ratio
total operating
formula:

income/total
operating revenue
3,846 5,328 7,022 8,164 8,839 7,732

total operating income

,854,

,807,

,938,

,891,

,961,

,067,

496

974

721

533

434

419

5,777 8,262 10,79 12,52 14,00 13,42


total operating revenue

,810,

,859,

2,606 9,869 2,181 1,165

297

422

,133

,855

,679

,859

66.58 64.49 65.07 65.16 63.13 57.61


%

3. Asset Utilization
Ratio
total operating
formula:

revenue/total
assets
5,777 8,262 10,79 12,52 14,00 13,42

total operating revenue

total assets

,810,

,859,

2,606 9,869 2,181 1,165

297

422

,133

,855

,679

,859

110,5 124,9 155,5 200,9 238,1 245,5


16,61 84,70 32,78 95,68 69,04 22,64

Page | 70

8,171 2,326 9,526 0,436 9,276 5,636


5.23

6.61

6.94

6.23

5.88

5.47

4. Operating Efficiency
Ratio
operating
formula:

expense/operating
revenue
1,930 2,934 3,769 4,364 5,162 5,689

operating expense

,955,

,051,

,667,

,978,

,220,

,098,

801

448

412

322

245

440

5,777 8,262 10,79 12,52 14,00 13,42


operating revenue

,810,

,859,

2,606 9,869 2,181 1,165

297

422

,133

,855

,679

,859

33.42 35.51 34.93 34.84 36.87 42.39


%

5. Employee
Productivity Ratio
operating
formula:

income/total
number of full
time employees
3,846 5,328 7,022 8,164 8,839 7,732

operating income

Page | 71

,854,

,807,

,938,

,891,

,961,

,067,

496

974

721

533

434

419

total number of full


time employees

1550

1844

2139

2292

2544

2710

2481

2889

3283

3562

3474

2853

841.6 809.1 281.3 343.6 827.6 161.4


1

9095

1085

1269

1757

2380

2261

8916

6114

5374

4814

7748

5648

83

605

976

286

522

865

7491

8953

1004

1331

1512

1732

2425

7964

9862

9396

4690

1278

327

220

0872

9191

4327

6491

1931

2907

3618

4190

5162

5689

0000

0000

0000

0000

2202

0984

00

00

00

00

45

40

1002

1099

1421

1809

2147

2188

6137

0507

2959

0790

6311

4906

6209

4986

6571

5366

2205

0030

10.22

9.48

10.09 10.88 13.34 10.46

6. earnings spread ratio


formula:

interest income

ISA

interest expense

ISL

market position ratio:


1. Price/Earnings Ratio

Page | 72

II/ISA-IE/ISL

price per
formula:

share/earnings per
share

price per share


earnings per share

53.98 65.30 94.45 44.50 37.00 25.90


43.32 79.43 58.77

4.73

2.88

1.78

1.25

0.82

1.61

9.41

12.83 14.57

53.98

65.3

94.45

44.5

37

25.9

6708

1179

1746

1930

2096

2335

2275

6677

6599

6395

1807

8519

42

214

365

169

176

326

2. Market to Book
Ratio
formula:
market price per share
book value per share=
total common
eaquity/no. of shares
outstanding

total common equity

no.of shares

28,43 35,54 52,77


7,500 6,875 4,028

0.23

Page | 73

0.20

0.29

779,8 935,7 1,029


09,55 71,46

,348,

616

1.80

1.65

1.14

Lanka Bangla Ratio Calculations


liquidity ratios:
1. cash position

2008

indicator

formula:

2009

2010

2011

2012

2013

1,08

1,85

2,14

1,67

2,54

9,03

8,38

1,61

6,72

5,24

4,70

4,44

6,38

5,34

7,76

8,13

13,4

19,3

22,3

25,3

32,0

6,60

42,1

22,2

79,9

38,6

64,8

8,22

28,5

42,8

97,4

82,7

92,0

53

11

49

62

92

10.4

8.10

9.62

9.57

6.62

7.94

5%

734,

1,34

1,80

1,10

1,00

369,

5,69

1,81

9,10

9,10

cash deposits/total
assets

850,
cash deposits

586,
715

total assets

2. liquid securities
indicator
BD govt.
formula:

securities/total
assets

BD govt. securities

Page | 74

986

total assets

3,01

0,59

0,00

0,00

8,13

13,4

19,3

22,3

25,3

32,0

6,60

42,1

22,2

79,9

38,6

64,8

8,22

28,5

42,8

97,4

82,7

92,0

53

11

49

62

92

0.00

5.46

6.96

8.05

4.38

3.15

5,85

8,06

9,47

10,4

18,6

24,8

4,22

1,34

2,16

37,8

33,8

41,1

0,43

2,53

5,11

17,8

45,1

42,8

44

50

50

8,13

13,4

19,3

22,3

25,3

32,0

6,60

42,1

22,2

79,9

38,6

64,8

8,22

28,5

42,8

97,4

82,7

92,0

53

11

49

62

92

71.9

59.9

49.0

46.6

73.5

77.4

5%

7%

2%

4%

4%

7%

3. capacity ratio
net
formula:

loans&leases/total
assets

net loans&leases

total assets

profitability ratio:
1. return on
equity(ROE)

Page | 75

formula:

net income after


tax/total equity

NI after tax

377,

744,

640,

082,

621

808

9,32
4,24
2

859,

348,

954,

059,

018,

552,

881

182

560

2,10

4,79

5,72

6,47

6,83

0,52

0,04

0,16

3,96

9,91

6,95

1,22

5,43

0,23

1,82

40.9

35.4

38.4

15.0

5.38

13.9

4%

2%

0%

2%

6%

377,

744,

859,

348,

954,

640,

082,

059,

018,

552,

621

808

881

182

560

8,13

13,4

19,3

22,3

25,3

32,0

6,60

42,1

22,2

79,9

38,6

64,8

8,22

28,5

42,8

97,4

82,7

92,0

53

11

49

62

92

4.64

5.54

9.52

3.84

1.37

2.98

922,
total equity

1,83

475,
947

2. return on asset

formula:

NI after tax

total assets

Page | 76

net income after


tax/total assets
1,83
9,32
4,24
2

3. net interest margin


(interest incomeformula:

interest
expense)/total
assets

945,
interest income

328,
196

interest expense

total assets

4. net non-interest
margin
(non-interest
income-nonformula:

interest
expense)/total
assets

Page | 77

1,34

1,60

2,35

2,67

3,51

7,78

1,10

8,58

7,49

6,03

4,28

2,08

6,87

3,73

3,09

1,01

1,39

2,14

2,73

6,08

6,56

7,51

0,92

2,77

8,66

7,28

3,42

707,

936,

161,

612,

262

528

8,13

13,4

19,3

22,3

25,3

32,0

6,60

42,1

22,2

79,9

38,6

64,8

8,22

28,5

42,8

97,4

82,7

92,0

53

11

49

62

92

2.93

3.06

3.03

4.30

2.09

2.45

non interest income

non interest expense

total assets

597,

1079

2575

1051

8599

1432

012,

2845

0052

7444

3504

8031

307

57

44

63

58

264,

419,

495,

626,

791,

892,

611,

726,

682,

840,

675,

079,

420

267

449

582

348

847

8,13

13,4

19,3

22,3

25,3

32,0

6,60

42,1

22,2

79,9

38,6

64,8

8,22

28,5

42,8

97,4

82,7

92,0

53

11

49

62

92

4.09

4.91

10.7

1.90

0.27

1.69

6%

1,06

2,66

1,38

4,68

2,38

6,92

4,51

5,67

2,09

8,13

13,4

19,3

22,3

25,3

32,0

6,60

42,1

22,2

79,9

38,6

64,8

8,22

28,5

42,8

97,4

82,7

92,0

53

11

49

62

92

7.01

7.92

13.7

6.20

2.35

4.13

8%

5. net operating margin

formula:

net operating
income/total assets

570,
net operating income

546,
348

total assets

Page | 78

596,
259,
991

1,32
5,83
2,98
3

6.net profit margin

formula:

net income after


tax/total revenue

NI after tax

377,

744,

640,

082,

621

808

1,54

9,32
4,24
2

859,

348,

954,

059,

018,

552,

881

182

560

2427

4176

3410

3537

4948

0688

1073

3313

4287

8362

46

27

43

80

53

24.4

30.6

44.0

25.1

9.84

19.2

8%

6%

4%

9%

9%

377,

744,

859,

348,

954,

640,

082,

059,

018,

552,

621

808

881

182

560

35,0

35,0

53,1

82,3

189,

208,

00,0

00,0

30,0

51,5

408,

349,

00

00

00

00

450

295

10.7

21.2

34.6

10.4

1.84

4.58

2,34

total revenue

1,83

0,50
3

7. earnings per share


net income after
formula:

tax/no. of c.s.
outstanding

NI after tax

no. of c.s. outstanding

Page | 79

1,83
9,32
4,24
2

115,

154,

150,

292,

286,

416,

500,

962,

210,

215,

429,

698,

000

500

233

000

532

591

3776

7440

1839

8590

3480

9545

4062

8280

3242

5988

1818

5256

42

30.5

20.8

8.17

34.0

82.3

43.6

8%

3%

2%

0%

5%

30.5

20.8

8.17

34.0

82.3

43.6

8%

3%

2%

0%

5%

69.4

79.1

91.8

65.9

17.7

56.3

2%

7%

3%

8%

0%

5%

8. dividend payout ratio

formula:

dividends/NI after
tax

dividends

NI after tax

9. retention ratio

formula:

1-dividend payout
ratio

dividend payout ratio

10. dividend per share


total
formula:

dividends/no.of
shares outstanding

Page | 80

total dividends

no. of shares outstanding

115,

154,

150,

292,

286,

416,

500,

962,

210,

215,

429,

698,

000

500

233

000

532

591

35,0

35,0

53,1

82,3

189,

208,

00,0

00,0

30,0

51,5

408,

349,

00

00

00

00

450

295

3.30

4.43

2.83

3.55

1.51

2.00

3.30

4.43

2.83

3.55

1.51

2.00

196.

313.

497.

170.

1.68

1.41

0.57

2.08

2.56

3.39

8136

1344

1932

2237

2533

3206

6082

2128

2242

9997

8682

4892

20

553

811

449

762

092

11. dividend yield ratio


dividends per
formula:

share/price per
share

dividends per share

price per share

59

59.0
5

financial risk ratio:


1. equity multiplier

formula:

total assets

Page | 81

total assets/total
equity capital

total equity

9224

2100

4790

5720

6473

6839

7594

5269

0412

1654

9602

9118

50

21

36

31

24

8.82

6.40

4.03

3.91

3.91

4.69

7,21

11,3

4,12

41,5

1418

1628

1867

2503

2,13

78,6

9045

8099

2073

5397

59

611

826

402

623

8136

1344

1932

2237

2533

3206

6082

2128

2242

9997

8682

4892

20

553

811

449

762

092

0.89

0.84

0.73

0.73

0.74

0.78

1,49

3,16

2,01

1,38

2,21

0,45

0,02

3,76

9,91

7,91

6,31

4,55

2,68

1,49

2,83

2. leverage ratio

formula:

total liability/total
assets

total liability

total assets

3. Interest Coverage
Ratio
operating
formula:

revenue/interest
expense

835,
operating revenue

179,
241

Page | 82

interest expense

707,

936,

161,

612,

262

528

1.18

1.59

377,

744,

640,

082,

621

808

472,

908,

213,

066,

951

038

79.9
7%

1,01

1,39

2,14

2,73

6,08

6,56

7,51

0,92

2,77

8,66

7,28

3,42

3.11

1.44

0.65

0.81

859,

348,

954,

059,

018,

552,

881

182

560

510,

997,

309,

135,

775

949

efficiency ratio:
1. Tax Management
Efficiency Ratio
NI after tax/NI
formula:

before
tax&securities
gains or losses

NI after tax

NI before tax&securities
gains or losses

2. Expense Control
Efficiency Ratio

formula:

total operating
income/total

Page | 83

1,83
9,32
4,24
2
2,33

1,30

1,10

4,04

1,64

4,19

81.9

78.9

65.8

68.2

95.7

4%

0%

8%

0%

3%

operating revenue
1,06

2,66

1,38

4,68

2,38

6,92

4,51

5,67

2,09

1,49

3,16

2,01

1,38

2,21

0,45

0,02

3,76

9,91

7,91

6,31

4,55

2,68

1,49

2,83

68.3

71.4

84.2

68.8

42.9

59.7

1%

3%

5%

7%

0%

8%

1,49

3,16

2,01

1,38

2,21

0,45

0,02

3,76

9,91

7,91

6,31

4,55

2,68

1,49

2,83

8136

1344

1932

2237

2533

3206

6082

2128

2242

9997

8682

4892

20

553

811

449

762

092

10.2

11.0

16.3

9.00

5.49

6.92

6%

9%

5%

570,
total operating income

546,
348

835,
total operating revenue

179,
241

596,
259,
991

1,32
5,83
2,98
3

3. Asset Utilization
Ratio
total operating
formula:

revenue/total
assets

835,
total operating revenue

179,
241

total assets

4. Operating Efficiency
Page | 84

Ratio
operating
formula:

expense/operating
revenue

operating expense

264,

425,

497,

626,

793,

892,

632,

771,

638,

840,

651,

079,

893

807

875

582

503

847

1,49

3,16

2,01

1,38

2,21

0,45

0,02

3,76

9,91

7,91

6,31

4,55

2,68

1,49

2,83

31.6

28.5

15.7

31.1

57.1

40.2

9%

7%

5%

3%

0%

2%

1,06

2,66

1,38

4,68

2,38

6,92

4,51

5,67

2,09

206

206

206

206

206

206

2769

5168

1292

6732

2894

6436

835,
operating revenue

179,
241

5. Employee
Productivity Ratio
operating
formula:

income/total
number of full
time employees

570,
operating income

546,
348

total number of full time


employees

Page | 85

596,
259,
991

1,32
5,83
2,98
3

642.

371.

4202

631.

465.

082.

47

41

.33

54

98

44

9453

1347

1601

2358

2677

3516

2819

7842

1020

5868

4937

0330

89

83

79

37

94

6914

9778

1353

1602

2354

3070

4004

8957

7759

9752

3064

7882

05

13

421

140

972

207

2646

4197

4956

6268

7916

8920

1142

2626

8244

4058

7534

7984

6328

9758

1157

1436

1645

2242

1902

8130

2834

8950

3241

4643

77

81

905

999

743

019

9.49

9.48

7.54

10.3

6.56

7.47

5%

196.

313.

497.

170.

59

59.0

6. earnings spread ratio


formula:

II/ISA-IE/ISL

interest income

ISA

interest expense

ISL

market position ratio:


1. Price/Earnings Ratio
price per
formula:

share/earnings per
share

price per share

Page | 86

earnings per share

10.7

21.2

34.6

10.4

18.2

14.7

14.3

196.

1.84

4.58

16.3

32.1

12.8

313.

497.

170.

9224

2100

4790

5720

6473

6839

7594

5269

0412

1654

9602

9118

50

21

36

31

24

35,0

35,0

53,1

82,3

189,

208,

00,0

00,0

30,0

51,5

408,

349,

00

00

00

00

450

295

7.46

5.23

5.52

2.45

1.73

1.80

2. Market to Book Ratio


formula:

market price per share

59

59.0
5

book value per share=


total common
eaquity/no. of shares
outstanding

total common equity

no.of shares

Page | 87

Financial Statement

Page | 88

Page | 89

Page | 90

Page | 91

Page | 92

Page | 93

Page | 94

Page | 95

Page | 96

Page | 97

Page | 98

Page | 99

Page | 100

Page | 101

Page | 102

Page | 103

Page | 104

Page | 105

Page | 106

Page | 107

Page | 108