4.

1 Analysis
4.1.1 Ratio of Interest Income to Total Assets:
The "Interest income to total assets ratio" reflect banks' reliance
on interest from bank lending as a source of funding. A high ratio is a good
indicator (but a too high ratio is not necessarily a good indicator), while a
low ratio might indicate that banks rely on non-interest source of funds.
(Source: intellectualresearch.com)

Interest Earned
Interest Income to Total Assets = × 100
Total Assests

Table 4.1.1: Ratio of Interest Income to Total Assets:

Bank/ Year 2017 2018 2019
Sonali Bank Limited 2.20 2.50 2.80
Rupali Bank Limited 6.10 5.14 5.32
Agrani Bank Limited 5.89 6.59 6.20
Janata Bank Limited 5.02 3.98 3.72
Source: Annual Reports of SBL, RBL, ABL, JBL, BBL and BDBL (2017-2019)
Graphical Presentation:

Ratio of Interest Income to Total Assests

6.59
7 6.1 6.2
5.89
6 5.14 5.32 5.02
5 3.98
3.72
4
2.8
2.5
3 2.2

2
1
0
Sonali Bank Limited Rupali Bank Agrani Bank Janata Bank
Limited Limited Limited

2017 2018 2019

Chart 4.1.1: Ratio of Interest Income to Total Assets

Interpretation:
The presenting graph clarified the highest the higher this ratio the better indicating the bank is
earning a high interest rate or the proportion of interest earning assets (loans) to total assets is
high or both of these effects. This ratio showing that, Agrani Bank earned a highest interest rate
in 2008. In the year of 2007, Rupali bank earned highest interest income than the other
commercial banks. This ratio refers the lowest interest rate earner as Sonali Bank Limited from
the year of 2017 to 2019. Too high of interest income to total assets ratio would be attributed to
the high interest income (rate) derived from high risk loans (subject to default). Also, if the high
interest income is being generated by too high a proportion of assets in loans that could stem
from lack of liquidity. That is, the bank should have a reasonable amount of cash and cash like
securities (easily converted to cash such as Treasury bills) as part of their total assets to meet
withdrawal needs. If the interest income to total assets ratio is too low that usually is from
earning low interest income (rate) and/or too little lending.

4.1.2 Ratio of Securities of Total Assets:

(Marketable Securities+Cash)
Ratio of Securities of Total Assets =
Current Liabilities

Bank/ Year 2017 2018 2019

Sonali Bank Limited 0.11 0.13 0.08
Rupali Bank Limited 0.14 0.10 0.29
Agrani Bank Limited 0.37 0.28 0.57
Janata Bank Limited 1.45 0.07 6.68
4.1.2 Securities of Total Assets

Securities of Total Assets

6.68
7
6
5
4
3 1.45
2 0.370.280.57
0.110.130.08 0.14 0.1 0.29 0.07
1
0
Sonali Bank Rupali Bank Agrani Bank Janata Bank
Limited Limited Limited Limited

2017 2018 2019

The cash asset ratio is the current value of marketable securities and cash,
divided by the company's current liabilities. Also known as the cash ratio, the
cash asset ratio compares the amount of highly liquid assets (such as cash and
marketable securities) to the amount of short-term liabilities. This figure is used to
measure a firm's liquidity or its ability to pay its short-term obligations.

4.1.3 Ratio of Earning Assets to Total Assets:

Avg . Earning Assests
Ratio of Earning Assets to Total Assets =
Avg .Total Assets
 Bank/ Year 2017 2018 2019
Sonali Bank Limited 0.021947539 0.0230497 0.02611021
Rupali Bank Limited 0.0594165 0.0574069 0.05210022
Agrani Bank Limited 0.375782206 0.287728 0.57596832
Janata Bank Limited 0.049304468 0.0441792 0.05165268

Ratio of Earning Assets to Total Assets

0.6

0.5

0.4

0.3

0.2

0.1

0
Sonali Bank Rupali Bank Agrani Bank Janata Bank
Limited Limited Limited Limited

2017 2018 2019

The earning assets to total assets ratio is a formula that banks commonly use to
evaluate the proportion of a company's assets that are actively generating
income. It provides the bank—or any individual investor—with insight into how
likely the company is to generate a profit.

4.1.4 Ratio of Current Deposits to Total Liabilities:

A large base of retail deposits would be evidenced by a high total deposit ratio.

Total customer deposits

Ratio of Current Deposits to Total Liabilities =
Total assets

Bank/ Year 2017 2018 2019

Sonali Bank Limited 0.84 2.6 2.6
Rupali Bank Limited 0.82 0.83 0.83
Agrani Bank Limited 0.78 0.78 0.08
Janata Bank Limited 0.8 0.78 0.77
 Ratio of Current Deposits to Total Assets
3 2.6 2.6

2.5

1.5
0.84 0.82 0.83 0.83 0.78 0.78 0.8 0.78 0.77
1

0.5 0.08

0
Sonali Bank Rupali Bank Agrani Bank Janata Bank
Limited Limited Limited Limited

2017 2018 2019

4.1.4 Current Deposits to Total Liabilities

Liability liquidity refers to the ease with which a bank can obtain new debt to acquire cash assets
at low reasonable cost. A potential lender to a bank will look at the loan performance, capital
base and the composition of the outstanding deposits and other liabilities of the Bank.

The higher the total deposit ratio, the lower is the perceived liquidity risk because contrary to
purchased funds, retail deposits are less sensitive to a change in interest rates or a minor
deterioration in business performance.

4.1.5 Ratio of Bank Capital to Total Assets:

T 1∧T 2 Capital
Ratio of Bank Capital to Total Assets =
Total Assets

  2017 2018 2019

Sonali Bank
0.34 0.17
Limited 0.88
Rupali Bank
0.83 0.8 0.73
Limited
Agrani Bank
1.4 0.49 0.37
Limited
Janata Bank
2.54 1.23 1.9
Limited
 Bank Capital to Total Assets
3 2.54
2.5
1.9
2
1.4
1.5 1.23
0.88 0.83 0.8 0.73
1
0.49
0.34 0.37
0.5 0.17

0
Sonali Bank Rupali Bank Agrani Bank Janata Bank
Limited Limited Limited Limited

2017 2018 2019

The Bank Capital-to-Total Assets ratio calculates a banks assets and capital to determine whether
there is enough capital to cover the assets, expressed as a percentage. In banking, the capital-to-
asset ratios are used in several ways, including the variable capital asset ratio and capital
adequacy ratio (CAR).

The variable capital asset ratio is a method of credit control. Set by the central bank – a
“banker’s bank” that manages the country’s finances – the variable capital asset ratio applies to
commercial banks and determines the ratio of capital a commercial bank should have to its total
assets.

4.1.6 Ratio of Per Employee Assets:

Total Assets
Assets Per Employee =
Total Full−Time Employee

  2017 2018 2019

Sonali Bank 7.27 7.56 8.52
 Limited
Rupali Bank
6.78 8.25 8.86
Limited
Agrani Bank
3.044147523 3.7024336 4.49008381
Limited

Assets Per Employee

4.49
2019 8.86
8.52

3.7
2018 8.25
7.56

3.04
2017 6.78
7.27

0 1 2 3 4 5 6 7 8 9 10

Sonali Bank Limited Rupali Bank Limited Agrani Bank Limited

The assets per employee ratio reflects the amount of assets a credit union holds per each full-time
employee. The metric is an effective measure of productivity as credit unions derive the bulk of
their incomes from their assets.

4.1.7 Ratio of Salaries and Allowances per Employee:

Salaries and Allowances Per Employee =

(Basic + HRA + Transport Allowances + FBP Allowances + Bonus) – (Provident

Fund – Income Tax – Insurance)
Bank/ Year 2017 2018 2019
Sonali Bank Limited 36,819.80 35,128.01 33,668.47
Rupali Bank Limited - - -
Agrani Bank Limited 10,148.06 10,540.33 10,452.00
Janata Bank Limited
4.1.8 Ratio of Loan and Advances to Total Assets:
Loan and advances are the major component in the total working fund (total assets), which
indicates the ability of bank to utilize its deposits in the form of loan and advances to earn high
return. The ratio is calculated as below:
Loan∧ Advanves
Loan & Advances to Total Assets Ratio =
Total Assets
  2017 2018 2019
Sonali Bank
0.018 0.0375
Limited 0.019
Rupali Bank
0.66 0.68 0.65
Limited
Agrani Bank
0.003 0.0023 0.0044
Limited
Janata Bank
0.055 0.0616 0.0612
Limited

Loan and Advances to Total Assets (%)

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Sonali Bank Rupali Bank Agrani Bank Janata Bank
Limited Limited Limited Limited

2017 2018 2019

From the above table and figure, it is clear that the loan and advances to total assets
ratio of banks have been regular throughout the study period with only slight
fluctuations.
4.1.9 Ratio of Interest Expenses to Total Assets:
The interest expense ratio is calculated by dividing total interest expense on all loans for one
fiscal or calendar year by the earnings before interest, income taxes, depreciation or amortization
(commonly referred to as EBITDA).

Total Interest Expenses

Interest Expenses to Total Assets =
EBITDA
In a balanced use of the 100% of the EBITDA funds available to a business,

 The interest expense ratio should be no more than 25 percent

 Owner draws should be 25 percent or less
 Term loan principal payments should be 25 percent or less
 The remaining 25 percent or more is available for asset purchases.