CHAPTER 4

FINANCIAL STATEMENT ANALYSIS

4.1 Trend / Horizontal Analysis.

4.2 Vertical Analysis.
4.3 Financial Ratio Analysis.

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FINANCIAL STATEMNENT ANALYSIS

It is the responsibility of the bank’s board of directors to establish and maintain a system of
internal control and prepare and present the financial statements in conformity. Bank of Punjab
provides a reasonable basis for our opinion and after due verification, which is the case of loans
and advances covered more than 60% of the total loans and advances of the bank they report
that:

 The consolidated statement of financial position and consolidated profit and loss account
together with the notes there on have been drawn up in the conformity with the bank of
Punjab Act, 1989, the banking companies, 1962, 1984 and are in agreement with the
books of account and are further in accordance with accounting policies.
 The expenditure incurred during the year was for the purpose of the bank’s business.
 The business conducted, investments made and the expenditure incurred during the year
were in accordance with the objects of the bank and the transactions of the bank have
come to notice have been within the powers of the bank.

The process of analyzing the financial statements of a company to evaluate its profitability and
financial performance is referred as financial system analysis. External stakeholders use it to
understand the overall health of an organization as well as to evaluate financial performance and
business value. Internal constituents use it as a monitoring tool for managing the finances. There
are two statements of analysis:

 Balance sheet
 Income statement

Balance sheet

The accounting balance sheet is one of the major financial statements used by accountants and
business owners. (The order major financial statements are the income statement, statement of
cash flows, and statement of stockholders’ equity) The balance sheet is also referred to as the
statement of financial position. A balance sheet is a statement of the financial position of a
business that lists the assets, liabilities, and owner's equity at a particular point in time.

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A balance sheet is divided into two main sections. One that records assets and one that records
liabilities and shareholder equity. The assets should generally equal the liabilities and the
stockholder equity because the latter two are how the company paid for its assets. Examples of
items recorded as assets included accounts receivable and property, plants and equipment,
Examples of liabilities included account payable and long-term bonds.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

5 Years Statement of Balance Sheet

As at December 31,

PARTICULAR 2018 2017 2016 2015 2014

Assets
Cash balances
with treasury 43,589,007 42,478,204 35,756,160 26,190,481 23,622,411
banks
Cash balances
with treasury 43,589,007 42,478,204 35,756,160 26,190,481 23,622,411
banks
Balanced with
5,802,312 6,115,297 3,765,870 4,512,033 2,234,170
other banks
Lending to
financial 27,843,153 24,170,850 11,262,133 6,113,262 32,748,623
institution

Investment –net 210,071,483 242,487,965 199,724,840 176,079,793 154,943,390

Advances-net 381,877,256 295,841,425 268,189,551 219,356,020 170,273,415

Operating fixed
8,787,928 8,533,033 7,702,711 6,484,312 5,990,121
assets
Intangible assets 891,489 - - - -
Deferred tax
7,965,267 10,786,284 6,533,689 7,905,981 9,845,426
assets-net
Other assets-net 27,551,697 19,295,379 18,511,830 25,641,447 21,237,382

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Total assets 714,379,592 649,709,442 545,446,784 472,283,329 420,400,438

LIABILITIES
Bills payable 3,577,677 3,365,325 4,183,480 1,887,432 1,727,731

Borrowings 41,793,201 38,949,362 39,829,134 55,236,429 44,742,624

Deposits & other 595,581,962
556,191,873 453,219,740 374,960,986 343,290,693
A/C
Sub-ordinate
8,797,140 4,499,000 4,500,000 2,000,000 2,000,000
loan
Liabilities
against assets
- - - - 1,128
subject to
finance lease
Deferred for
- - - - -
liabilities
Other liabilities 26,909,321 16,864,004 15,627,465 15,520,712 10,281,610

Total liabilities 676,659,301 619,869,564 517,359,819 443,605,566 401,043,786

Net assets 3,720,291 29,830,878 27,854,487 22,677,763 19,356,652

EQUITY

Share Capital 26,173,766 26,436,924 15,551,132 15,551,132 15,551,132

Discount on
- - (263,158) (263,158) (263,158)
issue of shares
Reserves 4,990,570 3,296,781 1,117,439 2,329,001 2,081,243
Share deposit
- - 7,000,000 7,000,000 7,000,000
money
Accumulated
loss/un-
3,295,643 (3,034,749) 541,108 (5220,853) (9,083,209)
appropriated
profit

Non- controlling
- 254,320 151,395 - -
interest

Total 37,720,291 26,953,276 24,361,074 19,396,122 15,286,008

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 Surplus on
revaluation of 3,260,312 2,886,602 3,606,913 3,281,641 4,070,644
assets

29,731,760 27,854,498 22,678,340 19,326,707

Income Statement

The income statement is one of the major financial statements used by accountants and business
owners. The income statement is sometimes referred to as the profit and loss statement (P and L).
It shows the profitability of a company in a particular accounting period.

CONSOLIDATED INCOME STATEMENT

5 Years Statement of Income

(Rupees in 000)

Particulars 2018 2017 2016 2015 2014

Mark-
up/return/interest 46,893,398 34,532,045 29,671,465 31,262,880 29,517,673
earned

Mark-
up/return/interest 26,840,110 18,877,323 17,430,154 20,198,798 20,525,783
expensed
Net mark-
up/interest 20,053,288 15,654,722 12,241,311 11,064,082 8,991,890
income
Provision against
non-performing
- 14,131,418 922,236 3,431,451 1,118,605
loans and
advances-net

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Provision for
diminution in the
- 91,645 97,016 64,815 110,881
value of
investments-net
Net mark-up
/interest income - 14,223,123 1,019,252 3,528,653 1,178,099
after provisions
Non mark-
up/interest - 1,431,599 11,222,059 7,535,429 7,813,791
income
Fee, commission
and brokerage 3,245,309 1,227,035 976,419 828,229 909,596
income

Dividend income 81,661 91,361 68,434 57,581 39,918

Income from
dealing in
226,675 109,173 75,248 109,280 183,830
foreign
currencies
Gain on sale and
redemption of 27,767 1,316,155 2,525,572 5,013,546 667,322
securities-net
Unrealized loss
on revaluation of
investments - 80 (1,176) (8,522) (654)
classified as held
for trading
Other income 91,518 1,859,912 1,658,284 1,635,064 1,000,173
Total non- mark-
up/interest 3,672,930 4,603,716 5,302,781 7,635,178 2,800,185
Income
23,726,218 6,035,315 16,524,840 15,170,607 10,613,976
Operating
12,612,663 - - - -
expenses
Administrative
- 10089062 8,346,001 7,389,591 6,215,031
expenses
Provision against
- 513461 569,923 224,382 (2,416)
other assets

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 Reversal of
provision against
- - (485,668) 32,274 17,875
balance sheet
obligations
Other charges 53,565 43003 33,699 19,958 19,727
Total non-
markup interest 12,666,228 10645526 8,463,955 7,666,205 6,250,217
expenses
Accumulated
losses brought - - (5,220,853) (9,083,209) (11,275,026)
forward
Total profit
7,563,693 (3,317,076) (4,199,993) (9,938,652) (11,924,744)
After Tax

Financial Analysis

It is often useful to express balance sheet and income statement items as percentages. For this
common size analysis and index analysis are extremely helpful in comparing firms whose data
differ significantly in size because every item on the financial statements gets placed on a
relative, or standardized basis.

People who analyze the financial statements of a company include company executives,

competitors, creditors, managers and potential investors. Three of the most common types of
financial statement analysis are given below:

4.1 Horizontal Analysis

4.2 Vertical Analysis

4.3 Ratio analysis

4.1 Horizontal Analysis

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Horizontal common size analysis is also called “Year to Year “analysis in which we compare
each amount with a base amount for a selected base year. An analysis of percentage financial
statements where all balance sheet or income statement figures for a base year equal 100.0
(percent) and subsequent financial items are expressed as percentages of their values in Base
year. This analysis is also called Index Analysis.

Horizontal analysis (also known as trend analysis) is a financial statement analysis technique that
shows changes in the amount of corresponding financial statement items over a period of time. It
is a useful tool to evaluate the trend situations.

Formula:

Current Year - Base Year / Base Year * 100

Consolidated Statement of financial

5 years Statement of position

Balance sheet

As at dec,31

PARTICULAR 2018 2017 2016 2015

Assets
Cash and balances with
2% 19% 36% 11%
treasury and other banks
Balances with other
(5%) 62% 16% 102%
banks
Lending to financial
15% 115% 89% (8%)
institutions
Investments – net (13%) 21% 13% 14%

Advances – net 29% 13% 19% 29%

Operating Fixed assets 2% 11% 18% 18%

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Intangible assets 0% - - -
Deferred Tax Assets –
(26%) 65% (18%) (20%)
net
Other Assets 42% 4% 29% 21%

Total Assets 9% 19% 15% 12%

Liabilities
Bills payable 6% (20%) 122% 9%

Borrowings 7% (2%) (27%) 23%

Deposits and other
7% 23% 21% 10%
accounts

Sub-ordinate loans 95% (0%) 125% 0%

Liabilities against Assets

- - - -
subject to Finance Lease
Other liabilities 59% 8% 1% 51%
Total Liabilities 9% 20% 15% 12%
Represented By
Equity
Share Capital
(0.9%) 70% 0% 0%
Discount on issue of
- - 0% 0%
shares
Reserves
51% 195% (44%) 12%

Share deposit money - - 0% 0%

Accumulated loss/un
(208%) 461% (87%) 43%
appropriated profit

Non-controlling interest - 70% - -

Total Equity 54% 11% 25% 27%
Surplus on revaluation of
12% (20%) 10% (19%)
asset

INTERPRETATION

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The comparative income statement show that a number of significant changes have occurred in
Bank of Punjab financial structure from 2014 to 2018. The BOP has achieved substantial growth
in earnings and remained fully compliant with the State Bank of Pakistan (SBP) prescribed
capital and provisioning requirement. Cash and balances with treasury banks show that cash
reserves are decrease in 2018 which is 2% as compare to 2017 which is 19%. Low cash reserves
show decreased in the liquidity position of the bank.

Borrowing increased by 7% in 2018 as compared to -2% in 2017.Borrowings proportion has

increased over time which means bank increase their borrowing amount as that result bank
increase their interest expenses.

Deposits and other accounts constitute the largest portion of liabilities over time. There is a
decrease in deposit and other accounts which shows the creditability of the banks. Deposits are
decreased in 2018 by 7% as compared to 23% in 2017 .Total Liabilities have been increased in
2018 as compared to 2017 which means that bank don’t recover more amount of debt have been
taken by the bank this year. There is decrease in share capital in 2018 due to decrease their
reserve as compare to 2017. The reason of decrease in bank reserve is economical and political
instability. If bank should increase their earnings so they increase their share capital by
increasing their reserves.

Consolidated Income Statement

5 years’ Statement of Income

For the year ended Dec, 31

Rupee (000)

PARTICULAR 2018 2017 2016 2015

Mark-up/return/interest
35% 16% (5%) 6%
earned
Mark-up/return/interest
42% 8% (14%) (2%)
expense
Total net mark-up/interest
27% 28% 11% 23%
income

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Provision against non-
manufacturing advances - - (73%) 207%
and loans
Provision for diminution in
- (6%) (0.1%) 63%
the value of investment
Net mark-up/interest
- (87%) 49% (4%)
income after provision
Non mark-up/interest
income
Fees, commission 164% 26% 18% -9%
Dividend income (10%) 34% 19% 44%
Income from dealing in
107% 45% (31%) (41%)
foreign currencies

Gain on securities (99%) (48%) (50%) 651%

Unrealized loss on
- (95%) (86%) 1203%
revaluation of investment.

Other income (95%) 12% 1% 63%

Total non-mark-up 156% (92%) (31%) 23%

Non mark-up /interest

expenses

Administrative expenses - 22% 13% 19%

Charge of provision - (10%) 154% 9187%

Provision against off

- - 70% 81%
balance sheet obligation

Other charges - 28% 69% 2%

Total non-mark-up/ interest 175% 27% 10% 23%

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expenses
Profit before taxation
Profit before taxation (359%) (57%) 15% 83%
Profit after taxation

Profit after taxation (128%) (2%) (58%0 (17%)

INTERPRETATION

The comparative balance sheet shows that a number of significant change have occurred in Bank
of Punjab financial structure from 2014 to 2018. The BOP has achieved substantial growth in
earnings and remained fully compliant with the State Bank of Pakistan (SBP) prescribed capital
and provisioning requirement.

Net interest income of BOP has been decreased in 2018 as compared to 2017; the main reason is
increase their interest expenses. The decrease in net interest income affects our gain on securities
and dividend income because is not favorable for any bank. If bank increase their Net interest
income so they should decrease their expenses.

4.2 Vertical analysis

It is the analysis of financial statements, where all Financial statements items are divided by total
assets and all income statement items are divided by net sales or revenues. The process of
evaluating the financial performance of a company by comparing with various companies is
known as vertical analysis. Common-size analysis is a form of vertical analysis which shows the
percentages of each item in relation to its base item.

Formula

Balance Sheet

Balance items / Total Assets (liabilities) * 100

Income Statement

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 Income statement items / Total sales * 100

Consolidated Statement of financial

Balance sheet

As at dec, 31

PARTICULAR 2018 2017 2016 2015 2014

Assets
Cash and balances
with treasury and 6% 7% 7% 6% 6%
other banks
Balances with other
1% 1% 1% 1% 1%
banks
Lending to financial
4% 4% 2% 1% 8%
institutions

Investments – net 29% 37% 37% 37% 37%

Advances – net 53% 46% 48% 46% 41%

Operating Fixed
1% 1% 1% 1% 1%
assets
Intangible assets 1% - - - -
Deferred Tax
1% 2% 1% 2% 2%
Assets – net
Other Assets 4% 3% 3% 5% 5%
Total Assets 100% 100% 100% 100% 100%
Liabilities
Bills payable 1% 1% 1% 0% 0%

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Borrowings 6% 6% 8% 12% 11%
Deposits and other
88% 90% 88% 83% 85%
accounts
Sub-ordinate loans 1% 1% 1% 0% 0%
Liabilities against
Assets subject to - - - - 3%
Finance Lease
Other liabilities 4% 3% 3% 3% 3%
Total Liabilities 100% 100% 100% 100% 100%
Represented By
Equity
Share Capital 69% 89% 56% 69% 80%
Discount on issue
- - - -1% -1%
of shares
Reserves 13% 11% 4% 10% 11%
Share deposit
- - 25% 31% 36%
money
Accumulated loss/
un-appropriated 9% -10% 2% -23% -47%
profit
Non- controlling
- 1% 4% - -
interest

Surplus 9% 13% 14% 21% 7%

Total Equity 100% 100% 100% 100% 100%

INTERPRETATION

Vertical analysis of BOP balance sheet shows that Investments and advances covers the major
part of balance sheet. The share capital is decreased that means increase in reserves and losses.
The borrowing of bank constitutes to liabilities which have been declining rapidly every year that
is a good sign that they have less liability to account for.

The liability of borrowing is 6% in 2018, 6% in 2017 and 8% in 2016. Deposits and other
accounts constitute the largest portion of liabilities overtime and in year 2018 their portion is

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88%, in 2017 is 90% and in 2016 is 88% of total liabilities. Deposits and other accounts
decreased in 2018 but increase in a previous year. There is a slight difference in 2018 and 2017.
The bank has not pay return or interest on this deposit. So their larger portion is good for the
bank.

Consolidated Income Statement

5 years’ Statement of Income

For the year ended Dec, 31

PARTICULAR 2018 2017 2016 2015 2014

Mark-
up/return/interest 100% 100% 100% 100% 100%
earned
Mark-
up/return/interest 57% 55% 59% 65% 70%
expensed
Provision against
non-performing - 99% 90% 97% (4%)
loans and advances
Provision for
diminution in the - 1% 10% 3% 0%
value of investments
Non mark-up
/interest income
Fees , commission
and brokerage 7% 27% 18% 11% 3%
income
Dividend income 1% 2% 1% 1% 0%
Income from dealing
1% 2% 1% 1% 1%
in foreign currencies
Gain on sale and
redemption of 1% 29% 48% 66% 2%
securities-net
Unrealized loss on
revaluation of - 2% - - -
investments

Other income 2% 40% 31.27% 21% 3%

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Non mark-up/
interest expenses
Administrative
- 95% 99% 96% 21%
expenses

Provision against
- 5% 7% 3.4% 0%
other assets

Provision against off

balance sheet - - (6%) 0.4% 0%
obligations

Operating assets 27% - - - -

Other charges 1% - - - -

Profit before
Taxation

Profit before
24% - - - -
Taxation

Taxation Current
10% (165%) 30% 14% 1%
year

Prior year - 16% 11% 15% -

Deferred - (281%) 58% 51% 4%

Reserve (2%) (9%) - - -

Profit after Taxes (16%) (14%) (14%) (32%) (40%)

INTERPRETATION
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The comparative income statement show that a number of significant changes have occurred in
Bank of Punjab financial structure from 2014 to 2018. The BOP has achieved substantial growth
in earnings and remained fully compliant with the State Bank of Pakistan (SBP) prescribed
capital and provisioning requirement.

On the total mark up interest earned, larger part is contributed by net markup interest expense
which is 57% in 2018. Profit after taxation is increase in 2018 as compared to previous year, due
to more reserve and payment of taxes by the bank in this year. According to the vertical analysis
of income statement the net markup / interest income has decreased again in year 2018 the
reason is the increase in markup / return / interest expenses this year.

RATIO ANALYSIS

A ratio analysis is a quantitative analysis of information contained in a company's financial

statements. Ratio analysis is used to evaluate various aspects of a company's operating and
financial performance such as its efficiency, liquidity, profitability and solvency

 Liquidity ratio.
 Solvency ratio.
 Profitability ratio.

LIQUIDITY RATIO

The liquidity of a firm is measured by its ability to satisfy its short-term obligations as they come
due.

 Current Ratio.
 Quick Acid Test Ratio.

CURRENT RATIO

The current ratio one of the most commonly cired financial ratio, measures the firm’s ability to
meet its short term obligations.

FORMULA:

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 Current Ratio= Current Assets /Current Liabilities

Year 2018 2017 2016 2015 2014

Current Assets
314,857,652 630,390,125 622,884,527 457,893,036 405,064,891

Current
667,862,161 615,370,564 512,859,819 447,605,566 399,042,658
Liabilities
Ratio
0.47% 1.02% 1.2% 1.0% 1.01%

Current Ratio
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
1 2 3 4 5

INTERPRETATION

BOP current ratio analysis for 2018 is 0.47; it means current assets are slightly less than current
liabilities. In 2017 it was 1.20. As compared to previous year the ratio of 2018 is decreased.
Current ratio of BOP seems not satisfactory. They have enough assets to meet their obligations
but there is a need for improvement because their liabilities are increasing from their assets
which may cause liquidity issues in future if their liabilities overcome their assets.

QUICK ACID TEST RATIO

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The quick (acid test) ratio is similar to the current ratio except that its excludes inventory, which
is generally the least liquid current assets.

FORMULA

Acid Test Ratio= Liquid Assets /Current Liabilities

Year 2018 2017 2016 2015 2014

Liquid Assets 43,589,007 42,478,204 35,756,160 26,190,481 23,622,411

Current 667,862,161 615,370,564 512,859,819 447,605,566 399,042,658

Liabilities
Ratio 0.06% 0.06% 0.06% 0.05% 0.05%

QUICK ACID TEST RATIO

0.07%
0.06%
0.05%
0.04%
0.03%
0.02%
0.01%
0.00%
1 2 3 4 5

INTERPRETATION

BOP acid test ratio analysis for 2018 is 0.06%; the acid test ratio remains same in 2017 & 2016;
it means liquid asset are less than current liabilities. Due to the short term solvency of the bank to
pay off its short term debts has no change in 2018.

SOLVENCY RATIO

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The solvency ratio of an organization gives an insight into the ability of an organization to meet
its financial obligations. Solvency also indicates how much the organization depends on its
creditors and banks can use this when the organization applies for a credit facility.

Solvency analysis includes:

 Proprietary ratio
 Debt ratio
 Debt to equity ratio

PROPRIETARY RATIO
The proprietary ratio (also known as the equity ratio) is the proportion of shareholders' equity to
total assets, and as such provides a rough estimate of the amount of capitalization currently used
to support a business.

FORMULA

Proprietary Ratio = Total Equity/ Total Assets

Year 2018 2017 2016 2015 2014

34,459,979 26,953,276 24,361,074 19,396,122 15,286,008

Total Equity
714,379,592 649,709,442 545,446,784 472,283,329 420,400,438
Total Assets

Ratio 0.05% 0.04% 0.05% 0.04% 0.03%

Proprietary Ratio
0.06%

0.05%

0.04%

0.03%

0.02%

0.01% 53 | P a g e
0.00%
1 2 3 4 5
INTERPRETATION

BOP proprietary ratio in 2018 is 0.05% as slightly increase as compare to 2017 but same in 2016.
The increase show that BOP earn profit more than 2017 but same as 2016. It is a good sign that
they have less equity and high assets, but the need more to work on the portion of earning profit
for the better position of bank.

DEBT RATIO
The debt ratio is defined as the ratio of total debt to total assets, expressed as a decimal or
percentage. In other words, the company has more liabilities than assets.

FORMULA

Debt Ratio = Total Liabilities Total Assets

Year 2018 2017 2016 2015 2014

Total
676,659,301 619,869,564 517,359,819 449,605,566 401,043,786
liabilities.

Total
714,379,592 649,709,442 545,446,784 472,283,329 420,400,438
Assets.

Ratio 0.95% 0.95% 0.94% 0.9% 0.95%

Debt Ratio
0.96%
0.95%
0.94%
0.93%
0.92%
0.91%
0.90%
0.89%
0.88% 54 | P a g e
0.87%
1 2 3 4 5
INTERPRETATION

BOP debt ratio analysis for 2018 is 0.95%, but remain same in 2017, due to increase in assets
and decrease in liabilities. It shows that bank has in good position to pay off his debts but not
change from previous year.

DEBIT EQUITY RATIO

The debt-to-equity (D/E) ratio is calculated by dividing a company’s total liabilities by its
shareholder equity. These numbers are available on the balance sheet of a company’s financial
statements.

FORMULA

Debt Equity Ratio = Total Liabilities / Shareholder’s Equity

Year 2018 2017 2016 2015 2014

Total
714,379,592 619,869,564 517,359,819 449,605,566 401,043,786
liabilities.
Shareholder’s
26,909,321 26,953,276 24,361,074 19,396,122 15,286,008
Equity
Ratio 26.5% 22.9% 21.2% 23.1% 26.2%

Debt Equity Ratio

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
1 2 3 4 5
55 | P a g e
INTERPRETATION

BOP debt equity ratio in 2018 is 26.5%, because total liabilities are increase than the shareholder
equity. The debt equity ratio is increasing every year. It means that in this time period the portion
of finance that is provided by creditors increased.

PROFITABILITY RATIO

Profitability analysis of a firm indicates the overall efficiently of the management. Without profit
a company cannot attract the outside capital. Profitability analysis includes:

 Return on total assets

 Return on equity
 Return on investment
 Interest expense to total expenses
 Earnings Per Share

RETURN ON TOTAL ASSETS

Return on total assets (ROTA) is a ratio that measures a company's earnings before interest and
taxes (EBIT) relative to its total net assets. 

FORMULA

Return on Total Assets =After Tax Profit*100 / Total Assets

Year 2018 2017 2016 2015 2014

Net profit
7,563,693 (3,317,076) (4,199,993) (9,938,652) (11,924,744)
after tax
Total
676,659,301 649,709,442 545,446,784 472,283,329 420,400,438
assets
Return 1.12% (0.5)% (0.7)% (2.1)% (2.8)%

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 Return on Total Assets
1.50%
1.00%
0.50%
0.00%
1 2 3 4 5
-0.50%
-1.00%
-1.50%
-2.00%
-2.50%
-3.00%

INTERPRETATION
Return on total assets help us to calculate who we earn profit after tax and also help us to know
who we use our assets to increase our earning. In 2018 we see highly increase in the return on
total asset ratio which show in 2018 we use our all available assets to increase our profit.

RETURN ON EQUITY
Return on equity (ROE) is a measure of financial performance calculated by dividing net
income by shareholders' equity. Because shareholders' equity is equal to a company’s assets
minus its debt, ROE could be thought of as the return on net assets.

FORMULA

Return on Equity =After Tax Profit*100 / Total stockholders’equity

Year 2018 2017 2016 2015 2014

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 Net profit
7,563,693 (3,317,076) (4,199,993) (9,938,652) (11,924,744)
after tax

Total Equity 26,909,321 26,953,276 24,361,074 19,396,122 15,286,008

Return (28.1%) (12%) (17%) (51%) (78%)

Return on Equity
0.00%
1 2 3 4 5
-10.00%
-20.00%
-30.00%
-40.00%
-50.00%
-60.00%
-70.00%
-80.00%
-90.00%

INTERPRETATION

In year 2017 it is 12% and in 2018 it increases to 28.1%. The ratio is favorable in 2018 as
compared to 2017 and 2016. The return on equity ratio has positive effects which means that in
2018 bank earn the profit from the investment of investor.

RETURN ON INVESTMENT
Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an
investment or compare the efficiency of a number of different investments. 

FORMULA
Return on investment = Profit after Tax*100/ Investment

Year 2018 2017 2016 2015 2014

Profit After
7,563,693 (3,317,076) (4,199,993) (9,938,652) (11,924,744)
Tax

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 Investment 12,666,228 242,487,965 199,724,840 176,079,793 154,943,890

Ratio 59% (1.3%) (2.1%) (5.6%) (7.7%)

Return on Investment
70%
60%
50%
40%
30%
20%
10%
0%
1 2 3 4 5
-10%
-20%

INTERPRETATION

The return on investment is 59% in 2018 that increased from the previous year. Due to increase
in profit after tax as compared to 2017. This reflects the profit of the Bank. In BOP, return on
equity has increased during the year 2018 because interest earned incurring high cost.

INTEREST EXPENSE

Interest expense is a non-operating expense shown on the income statement. It

represents interest payable on any borrowings – bonds, loans, convertible debt or lines of credit.

FORMULA

Interest Expenses to Total Expenses = Total Expenses*100 / Interest Expenses

Year 2018 2017 2016 2015 2014

Total
12,666,228 10,731,460 8,468,483 7,670,756 6,252,530
expense

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 Interest
26,840,110 18,877,323 17,430,154 20,198,798 20,525,783
expense
Ratio 47% 57% 49% 38% 30%

Interest Expense
60%

50%

40%

30%

20%

10%

0%
1 2 3 4 5

INTERPRETATION

The interest expense ratio in 2018 is 47% but decrease as compared to 2017. Due to increase in
the total expense and interest expense in 2018. This rations have negative effect as compare to
2017 because interest expense increases with the increase of expenses.

EARNINGS PER SHARE

Earnings per share (EPS) is calculated as a company's profit divided by the outstanding shares of
its common stock.

FORMULA

Earnings per share =Net profit after tax*100 / Total numbers of share

Year 2018 2017 2016 2015 2014

Net profit
7,563,693 (3,317,076) (4,199,993) (9,938,652) (11,924,744)
after Tax
Total no of
26,173,766 26,436,924 15,551,132 15,551,132 15,551,132
shares

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 Ratio 28% (12%) (27%) (64%) (77%)

Earnings Per Share

40%

20%

0%
1 2 3 4 5
-20%

-40%

-60%

-80%

-100%

INTERPRETATION

Earing per share ratio has 28% in 2018, it is increased as compared to 2017 and 2016.due to the
increase highly net profit. In 2018 the ratio has positive effect which help us to decide BOP has
ability to produce profit compare to previous.

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